Chinese Maritime Cases: Selection for Year of 2017 (Chinese Maritime Cases Series) 3662640287, 9783662640289

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Chinese Maritime Cases Series Series Editors in Chief: Martin Davies · Jiang Lin

Martin Davies · Jiang Lin Editors

Chinese Maritime Cases Selection for Year of 2017

Chinese Maritime Cases Series Series Editors Martin Davies, Tulane University Law School, New Orleans, LA, USA Jiang Lin, Law School, Shanghai Maritime University, Shanghai, China

The primary aim of this series is to, for the first time, provide the academics, practitioners and businessmen worldwide with a crucial source to perceive how the specially designed Chinese maritime courts apply, interpretate and develop the shipping law in practice to strike a balance of interest among the domestic and international market players. Each year, China trades with other states in trillions of USD, and more than 90% of the cargoes are carried by ocean-going ships. In view of the enormous trade volume and maritime activities, foreign trading houses, shipping companies and marine underwriters, as well as their legal advisors, are keen to track down the developments of Chinese maritime law and court practice so as to predicate and avoid the potential problems or resolve the emerging disputes properly. Cases and judgments are regarded as a crucial source of learning. However, so far, no serial Chinese casebooks, which contain full English translation of selected judgments, have been published. The authors try to make an audacious break-through in this field. This series has a secondary aim: to establish a core part of the database, which can be further developed to be an innovative tool for the foreign students, professors and lawyers to have a systematic study of Chinese maritime law.

More information about this series at http://www.springer.com/series/16710

Martin Davies Jiang Lin •

Editors

Chinese Maritime Cases Selection for Year of 2017

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Editors Martin Davies Law School Tulane University New Orleans, LA, USA

Jiang Lin Law School Shanghai Maritime University Shanghai, China

ISSN 2730-9851 ISSN 2730-986X (electronic) Chinese Maritime Cases Series ISBN 978-3-662-64028-9 ISBN 978-3-662-64029-6 (eBook) https://doi.org/10.1007/978-3-662-64029-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer-Verlag GmbH, DE part of Springer Nature. The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany

Foreword

I am pleased to note that Prof. Martin Davies of Tulane University Law School and Associate Prof. Jiang Lin of Shanghai Maritime University Law School have embarked on the great project of publishing selected Chinese maritime judgments on year-by-year basis. This book is the fourth in the Chinese Maritime Cases series they have published through the esteemed press Springer. I would like to thank them, as well as Springer, for opening a window to professionals worldwide and other people interested in maritime law and trial to look into the current status of Chinese maritime law and adjudication and the progress Chinese draftsmen and judges have made in the past decades. China had her own maritime statute in 1992, which went into effect on July 1, 1993, almost 30 years ago. The history of Chinese maritime court system can be traced back to 1984, nearly 40 years ago. I, with honor, participated in the legislation process of China Maritime Law (the “CML”) to certain extent. Then, while discussing and drafting the CML, the law-drafting institutes and other personnel engaged all agreed that this special law would be founded on, among others, two fundamental principles. One is internationalization, which means that the CML provisions would be in line with the pertinent international conventions and customs. Shipping is a cross-border business, which derives from and serves the international trade. To balance the interest of various groups in different countries, there exist a number of international conventions and customs in the shipping field. Thus, China should cause the CML to recognize and embrace the predominant international rules as much as feasible. The other principle is localization, which means that the CML provisions would demonstrate Chinese features. The CML is a delicate combination of international conventions and customs and Chinese features. As I observe in Chinese judicial practice, the above fundamental principles are followed by the maritime courts and judges when deliberating and making the maritime judgments. That is clearly reflected in the 200 judgments selected by this book. Those judgments show that Chinese maritime adjudication is connected with the world, while fully acknowledging the domestic reality, and Chinese maritime judges apply Chinese maritime law in a dynamic and innovative manner to achieve the principles. v

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Foreword

I sincerely wish that the Chinese Maritime Cases series, initiated by Prof. Martin Davies and Associate Prof. Jiang Lin with great support of Springer, will be sustained for a very long time, leaving the window opened for observation, communication and co-development. June 2021

Shi Cheng Yu Professor in Law Former President of Shanghai Maritime University Shanghai, China

Acknowledgements

The editors would like to acknowledge the following for their assistance with the Chinese end of this project: from Shanghai Maritime University Law School, Prof. Dong Nian Yin, Prof. Shi Cheng Yu and Prof. Cun Qiang Cai; from Shanghai Maritime Court, Judge Tong Wang, Judge Zhen Kun Jia and Judge Hai Long Lin; and Assistants to Editors in particular, Yu Ming Wang, Yun Fei Han, Rui Ying Chen, Yu Tong Wang and Mu Fan Jia Yang. The editors would also like to acknowledge the following present and former students of Tulane University Law School, who have served as Assistant Editors for the American part of this project: Richard Beaumont (2014–2015); Scott Ferrier (2015–2016); Guyer Bogen (2017–2018); Lindsey Magee Gordley and Katherine Kaplan (2018–2019); Erica Endlein (2019–2020); and Robert Bradley and Mary Katherine Koch (2020–2021). The editors also acknowledge the efforts of Jocelyn Mahan and Andrea Felice of IQnection for their work in building the companion Web site for this project, www.chinesemaritimecases.com.

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About the Editors

Professor Martin Davies is Admiralty Law Institute Professor of Maritime Law at Tulane University Law School in New Orleans and Director of the Tulane Maritime Law Center. He holds the degrees of M.A. and B.C.L. from Oxford University, England, and an LL.M. from Harvard Law School. Before joining Tulane, he was Harrison Moore Professor of Law at the University of Melbourne in Australia and before that he taught at Monash University, The University of Western Australia and Nottingham University. He has also been Visiting Professor at universities in China, Italy, Azerbaijan and Singapore. In 2019, he was elected to be Titulary Member of the Comité Maritime International (CMI). He is Author (or Co-author) of books on maritime law, international trade law, conflict of laws and the law of torts. He has also published many journal articles on these topics. He has extensive practical experience as a consultant for over 30 years on maritime matters and general international litigation and arbitration, in Australia, Hong Kong, Singapore and the USA. Associate Professor Jiang Lin (John Lin) is Associate Professor of Maritime Law at Shanghai Maritime University and Deputy Director of Shipping Policy and Law Research Center of Shanghai International Shipping Institute. He is also Adjunct Professor at Tulane University Law School. After graduation with a B.Sc. degree from Shanghai Maritime University in 1996 and an LL.M. degree from Southampton University in 1999, he commenced his legal career at Sinclair Roche & Temperley (SRT) and later joined Ince & Co. He was dually qualified as English solicitor and Chinese lawyer. In 2008, he came back to his mother college to be a lecturer and researcher. Meanwhile, he keeps practicing English and Chinese laws at Sinopar Law Firm. He is also an arbitrator with China Maritime Arbitration Association, Shanghai Arbitration Commission and Shanghai International Arbitration Center and a supporting member of London Maritime Arbitrators’ Association.

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About the Editors

He is Author and Chief Editor of two serial books: Shanghai Shipping Policy and Law Development White Book and Shipping Finance Law Review. He also writes books and articles on cruise commerce, offshore trade and insurance. He is a member of Jiusan Society, one of the eight democratic parties in China.

Table of Contents

Table of Cases by Name of Plaintiff in Judgment of First Instance. Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of Cases by Cause of Action for Maritime Cases in the People’s Republic of China . . . . . . . . . . . . . . . . . . . . . . . . . . List of Maritime Courts and their Appeal and Petition Courts in the People’s Republic of China . . . . . . . . . . . . . . . . . . . . . . . . . . List of Causes of Action for Maritime Cases in the People’s Republic of China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table of References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chinese Maritime Litigation Digital Report 2017 . . . . . . . . . . . . . .

.......

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. . . . . . . xxxi . . . . . . . xlvii . . . . . . . lxiii . . . . . . . lxv . . . . . . . lxxi . . . . . . . xciii

xi

Table of Cases by Name of Plaintiff in Judgment of First Instance

An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2015) Yong Hai Fa Shang Chu Zi No. 440, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2016) Zhe Min Zhong No. 513, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2017) Zui Gao Fa Min Shen No. 3274, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

28

Bank of China Limited Fujian Branch v. Fujian Haibang Dredging Engineering Co., Ltd. et al. (2015) Xia Hai Fa Shang Chu Zi No. 383, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . .

31

Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2016) Jin 72 Min Chu No. 805, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . .

43

Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2017) Jin Min Zhong No. 319, judgment of second instance of Tianjin High People’s Court . . . . . . . . . .

50

Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2016) Hu 72 Min Chu No. 3193, judgment of first instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . .

57

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Table of Cases by Name of Plaintiff in Judgment of First Instance

Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2017) Hu Min Zhong No. 271, judgment of second instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . .

64

Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2015) Yong Hai Fa Shang Chu Zi No. 1036, judgment of first instance of Ningbo Maritime Court . . . . . . . .

73

Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2017) Zhe Min Zhong No. 93, judgment of second instance of Zhejiang High People’s Court . . . . . . . . .

85

CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2016) E 72 Min Chu No. 84, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . 101 CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2017) E Min Zhong No. 2790, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . 109 CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2016) Yue 72 Min Chu No. 93, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2017) Yue Min Zhong No. 2329, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Yong Hai Fa Zhou Shang Chu Zi No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145 China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 243, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3547, ruling of retrial of the Supreme People’s Court . . . . 172 China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2016) Yue 72 Min Chu No. 600, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Table of Cases by Name of Plaintiff in Judgment of First Instance

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China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2017) Yue Min Zhong No. 389, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . 183 China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2018) Zui Gao Fa Min Zai No. 79, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch v. Ningbo Shanglun Co., Ltd. (2015) Yong Hai Fa Shi Chu Zi No. 101, judgment of first instance of Ningbo Maritime Court . . . . . . . . . 205 China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2300, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 217 China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe Min Zhong No. 905, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . 224 Dalian Deli Shipping Co., Ltd. et al. v. Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. (2016) Hu 72 Min Chu No. 2044, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . 233 Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2016) Yue 72 Min Chu No. 721, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267 Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2017) Yue Min Zhong No. 583, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275 Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2018) Zui Gao Fa Min Shen No. 5830, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 ESSAREXPORTS LIMITED v. Shenzhen Ya Dong International Freight Forwarding Co., Ltd. (2016) Hu 72 Min Chu No. 2696, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . 293 Fangchenggang Beibu Gulf Port Co., Ltd. v. Guangxi Heshun Sanyuan Mining Co., Ltd. (2017) Gui 72 Min Chu No. 149, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . 299

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Table of Cases by Name of Plaintiff in Judgment of First Instance

FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 1577, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2017) Yue Min Zhong No. 955, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 Far East Horizon Limited v. On Best Shipping Limited (2017) Hu 72 Min Chu No. 526, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327 GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 95, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . 335 GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2017) Yue Min Zhong No. 1541, No. 1542, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348 GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2019) Zui Gao Fa Min Shen No. 4600, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . 370 GAO Wenbin v. Agricultural Bank of China LTD. Fangchenggang Branch et al. (2017) Gui 72 Min Chu No. 79, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E 72 Min Chu No. 150, judgment of first instance of Wuhan Maritime Court . . . . . . . . . 383 GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E Min Zhong No. 3207, judgment of second instance of Hubei High People’s Court . . . 396 Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2016) Jin 72 Min Chu No. 491, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . 409 Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2017) Jin Min Zhong No. 430, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . 415 Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2014) Hai Shang Chu Zi No. 141, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423

Table of Cases by Name of Plaintiff in Judgment of First Instance

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Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2015) Gui Min Si Zhong Zi No. 69, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. v. BOC Insurance Co., Ltd. Guangxi Branch (2017) Gui 72 Min Chu No. 341, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . 453 Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue 72 Min Chu No. 5, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . 465 Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue Min Zhong No. 2219, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471 Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2793, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2017) Zhe Min Zhong No. 422, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 HONG KONG KENTOP TRADING LIMITED v. Shenzhen Ruide Global Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 312, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . 519 Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2015) Wu Hai Fa Shi Zi No. 00022, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527 Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2017) E Min Zhong No. 1867, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534 Jiangsu Haichang Construction Engineering Co., Ltd. v. PICC Property & Casualty Co., Ltd. Jianhu Sub-branch (2017) Hu 72 Min Chu No. 368, judgment of first instance of Shanghai Maritime Court . . . 543 Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2016) Gui 72 Min Chu No. 242, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551 Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2017) Gui Min Zhong No. 93, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . 559

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Table of Cases by Name of Plaintiff in Judgment of First Instance

Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2016) E 72 Min Chu No. 157, judgment of first instance of Wuhan Maritime Court . . . . . 569 Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2017) E Min Zhong No. 2776, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580 Jiangsu Province Foreign Trade Corporation et al. v. Hong Union Shipping Limited (2016) Hu 72 Min Chu No. 402, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 591 Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2014) Wu Hai Fa Shang Zi No. 01256, judgment of first instance of Wuhan Maritime Court . . . . . . . 607 Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2016) E Min Zhong No. 251, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . 616 Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3335, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . 625 Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E 72 Min Chu No. 91, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629 Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E Min Zhong No. 2785, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . 635 JM Marine Ltd. v. CSSC Guijiang Co., Ltd. (2016) Gui 72 Min Chu No. 76, judgment of first instance of Beihai Maritime Court . . . . . . . . . . 641 Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2015) Wu Hai Fa Shang Zi No. 01773, judgment of first instance of Wuhan Maritime Court . . . . . . . 655 Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2016) E Min Zhong No. 1617, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . 668 Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2017) Zui Gao Fa Min Shen No. 2847, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . 680 LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2016) E 72 Min Chu No. 1573, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685

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LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2017) E Min Zhong No. 3219, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . 693 LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2018) Zui Gao Fa Min Zai No. 452, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . 701 LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2015) Yong Hai Fa Tai Shang Chu Zi No. 412, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2016) Zhe Min Zhong No. 132, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731 Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2016) Hu 72 Min Chu No. 1841, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 739 Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2017) Hu Min Zhong No. 236, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . 755 Lifu Petroleum (International) Co., Ltd. v. Guangxi Ruifeng Shipping Co., Ltd. (2017) Gui 72 Min Chu No. 414, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 769 Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2016) Zhe 72 Min Chu No. 2097, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . 773 Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2017) Zhe Min Zhong No. 131, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . 779 LV Xiangyin et al. v. Tianjin Sheng Quan Construction Engineering Group Co., Ltd. et al. (2017) Jin 72 Min Chu No. 150, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787 Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2016) Jin 72 Min Chu No. 1002, judgment of first instance of Tianjin Maritime Court . . . . . . . . 797 Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2017) Jin Min Zhong No. 393, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812

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Ningbo Feng Hu An He Investment Partnership (Limited Partnership). v. Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. et al. (2016) Hu 72 Min Chu No. 2915, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe 72 Min Chu No. 449, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843 Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe Min Zhong No. 681, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 851 Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2013) Yong Hai Fa Shang Chu Zi No. 632, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . 861 Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 219, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . 875 Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2016) Zui Gao Fa Min Shen No. 1484, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . 890 Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2016) Zhe 72 Min Chu Zi No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . 897 Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2017) Zhe Min Zhong No. 52, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 910 Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2018) Zui Gao Fa Min Shen No. 3919, ruling of retrial of the Supreme People’s Court . . . . . . . . 920 Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2016) Zhe 72 Min Chu No. 224, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925 Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2017) Zhe Min Zhong No. 251, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931

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PICC Property and Casualty Company Limited Quanzhou Branch v. Zhanjiang Port International Container Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 1428, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 939 PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2016) E 72 Min Chu No. 2102, judgment of first instance of Wuhan Maritime Court . . . . . . . . 967 PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2017) E Min Zhong No. 2780, judgment of second instance of Hubei High People’s Court . . . . 975 PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2016) Hu 72 Min Chu No. 2556, judgment of first instance of Shanghai Maritime Court . . . . . . 983 PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2017) Hu Min Zhong No. 305, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 995 Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2016) Min 72 Min Chu No. 960, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1005 Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2017) Min Min Zhong No. 419, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1016 Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1023, judgment of first instance of Guangzhou Maritime Court . . . . . 1027 Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2017) Yue Min Zhong No. 1544, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1036 Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu 72 Min Chu No. 228, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . 1047 Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu Min Zhong No. 298, judgment of second instance of Shanghai High People’s Court . . . . . . . . 1058 Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2016) Hu 72 Min Chu No. 2817, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 1069

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Table of Cases by Name of Plaintiff in Judgment of First Instance

Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2017) Hu Min Zhong No. 211, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . 1087 Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2016) Min 72 Min Chu No. 300, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 1101 Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2017) Min Min Zhong No. 271, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . 1111 Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2016) Jin 72 Min Chu No. 1044, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . 1121 Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2017) Jin Min Zhong No. 401, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . 1133 Shanghai Jiahang Shipping Co., Ltd. v. Tianjin CCCC BOMESC Marine Industry Co., Ltd. (2017) Jin 72 Min Chu No. 295, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1147 Shanghai Pan Asia Shipping Co., Ltd. v. Guangxi Wuzhou Bangda International Logistics Co., Ltd. (2017) Gui 72 Min Chu No. 209, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . 1153 Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin 72 Min Chu No. 55, judgment of first instance of Tianjin Maritime Court . . . . . . 1161 Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin Min Zhong No. 580, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1167 Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2016) Zhe 72 Min Chu No. 1710, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1175 Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2017) Zhe Min Zhong No. 421, ruling of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1181 Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2015) Guang Hai Fa Chu Zi No. 1081, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . 1185

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Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2017) Yue Min Zhong No. 822, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . 1189 Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2016) Yue 72 Min Chu No. 384, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . 1197 Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2017) Yue Min Zhong No. 679, judgment of second instance of Guangdong High People’s Court . . . . . . . 1203 Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1527, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1211 Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No. 2330, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . 1226 Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1585, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1243 Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No. 1885, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . 1258 Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2016) Yue 72 Min No. 991, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . 1275 Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2017) Yue Min Zhong No. 1343, judgment of second instance of Guangdong High People’s Court . . . . . . . 1282 SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E 72 Min Chu No. 376, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1293 SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E Min Zhong No. 2778, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1299 Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2015) Xia Hai Fa Shi Chu Zi No. 102, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . 1307

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Table of Cases by Name of Plaintiff in Judgment of First Instance

Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2016) Min Min Zhong No. 875, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . 1319 SUMPU INTERNATIONAL LIMITED et al. v. Pacific Container Service (China) Limited Guangzhou Branch et al. (2014) Guang Hai Fa Chu Zi No. 507, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1333 Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2015) Wu Hai Fa Shang Zi No. 00447, judgment of first instance of Wuhan Maritime Court . . . . . 1351 Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2016) E Min Zhong No. 488, judgment of second instance of Hubei High People’s Court . . . . 1360 Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2017) Zui Gao Fa Min Zai No. 269, judgment of retrial of the Supreme People’s Court . . . . . . . 1369 Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2015) Wu Hai Fa Shi Zi No. 00057, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . 1383 Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2017) E Min Zhong No. 3212, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . 1391 TAN Yang v. Maoming Xiangyuan Shipping Transportation Co., Ltd. (2017) Yue 72 Min Chu No. 908, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399 TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe 72 Min Chu No. 833, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . 1409 TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe Min Zhong No. 683, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . 1420 Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2016) Jin 72 Min Chu No. 570, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1431 Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2017) Jin Min Zhong No. 324, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1448

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Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2014) Guang Hai Fa Chu Zi No. 118, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1469 Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2015) Yue Gao Fa Min Si Zhong Zi No. 23, judgment of second instance of Guangdong Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1477 Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2017) Zui Gao Fa Min Zai No. 69, judgment of retrial of the Supreme People’s Court . . . . . . . . 1489 The People’s Procuratorate of Ningbo, Zhejiang v. Allan Mendoza Tablate (2017) Zhe 72 Xing Chu No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1499 Tianjin Guo Dian Shipping Co., Ltd. v. Jiangsu Leshi Fuel Co., Ltd. (2017) Jin 72 Min Chu No. 450, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1509 Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2015) Hu Hai Fa Shang Chu Zi No. 2860, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 1515 Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2016) Hu Min Zhong No. 480, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1531 WANG Bin v. CMA CGM S.A. (2015) Hu Hai Fa Shang Chu Zi No. 2170, judgment of first instance of Shanghai Maritime Court . . . . . . 1545 WANG Bin v. CMA CGM S.A. (2017) Hu Min Zhong No. 199, judgment of second instance of Shanghai High People’s Court . . . . . . . . 1554 WANG Bin v. CMA CGM S.A. (2018) Zui Gao Fa Min Shen No. 2862, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . 1562 WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2016) Gui 72 Min Chu No. 312, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1567 WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2017) Gui Min Zhong No. 291, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . 1576 WEI Xinyou et al. v. LIN Xinyong et al. (2017) Gui 72 Min Chu No. 67, judgment of first instance of Beihai Maritime Court . . . . . . . . . . 1589

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Table of Cases by Name of Plaintiff in Judgment of First Instance

Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2016) Zhe 72 Min Chu No. 1585, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . 1597 Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zhe Min Zhong No. 89, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . 1610 Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zui Gao Fa Min Shen No. 4824, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . 1625 Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe 72 Min Chu No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 1631 Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe Min Zhong No. 696, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . 1646 Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2016) E 72 Min Chu No. 2020, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 1661 Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2017) E Min Zhong No. 2314, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . 1677 Xiamen C&D Inc. v. Jiangsu Sinopacific Shipbuilding Group Co., Ltd. (2016) Min 72 Min Chu No. 811, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1689 Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2016) Zhe 72 Min Chu No. 457, judgment of first instance of Ningbo Maritime Court . . . . . 1701 Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2017) Zhe Min Zai No. 2, judgment of retrial of Zhejiang High People’s Court . . . . . . . . . . . 1712 XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E 72 Min Chu No. 759, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1723 XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E Min Zhong No. 2310, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1730 XU Jintian v. PENG Kunxiong (2017) Gui 72 Min Chu No. 260, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . 1737

Table of Cases by Name of Plaintiff in Judgment of First Instance

xxvii

Xuwen County Branch of Postal Savings Bank of China v. SU Chunhai et al. (2017) Yue 72 Min Chu No. 988, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1743 Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2011) Hu Hai Fa Shang Chu Zi No. 753, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . 1751 Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2013) Hu Gao Min Si (Hai) Zhong Zi No. 24, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . 1768 Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2015) Min Shen Zi No. 1896, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1788 Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin 72 Min Chu No. 125, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1797 Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin Min Zhong No. 532, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1805 Youyang Import & Export (Ningbo) Co., Ltd. v. Maersk Line A/S (2016) Zhe 72 Min Chu No. 929, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1819 Youyang Import & Export (Ningbo) Co., Ltd. v. Maersk Line A/S (2017) Zhe Min Zhong No. 126, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1829 YU Yanping v. Tianjin Jinchengyun Forwarding Co., Ltd. et al. (2017) Jin 72 Min Chu No. 464, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1841 ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe 72 Min Chu No. 1349, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 1845 ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe Min Zhong No. 790, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . 1849 ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2279, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1855 ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2017) Zhe Min Zhong No. 534, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1865

xxviii

Table of Cases by Name of Plaintiff in Judgment of First Instance

Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2016) Yue 72 Min Chu No. 172, judgment of first instance of Guangzhou Maritime Court . . . . . . 1873 Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2017) Yue Min Zhong No. 2331, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1889 Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2015) Yong Hai Fa Shang Chu Zi No. 534, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1907 Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2016) Zhe Min Zhong No. 222, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1914 Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2017) Zui Gao Fa Min Zai No. 412, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1924 Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2016) Jin 72 Min Chu No. 655, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . 1937 Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2017) Jin Min Zhong No. 123, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . 1950 ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue 72 Min Chu No. 515, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1967 ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue Min Zhong No. 2617, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1976 Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2016) Zhe 72 Min Chu No. 2445, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . 1987 Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2017) Zhe Min Zhong No. 686, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . 2003 ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2016) E 72 Min Chu No. 2209, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021

Table of Cases by Name of Plaintiff in Judgment of First Instance

xxix

ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2017) E Min Zhong No. 3210, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2027 Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2016) Yue 72 Min Chu No. 306, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2033 Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2017) Yue Min Zhong No. 680, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2043 ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2015) Jin Hai Fa Shang Chu Zi No. 730, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2055 ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2017) Jin Min Zhong No. 320, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2063 Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E 72 Min Chu No. 56, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2077 Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E Min Zhong No. 2784, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2087

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Effective Judgments Made by Maritime Courts Shanghai Maritime Court Dalian Deli Shipping Co., Ltd. et al. v. Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. (2016) Hu 72 Min Chu No. 2044, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . ESSAREXPORTS LIMITED v. Shenzhen Ya Dong International Freight Forwarding Co., Ltd. (2016) Hu 72 Min Chu No. 2696, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Far East Horizon Limited v. On Best Shipping Limited (2017) Hu 72 Min Chu No. 526, judgment of first instance of Shanghai Maritime Court. . . . Jiangsu Haichang Construction Engineering Co., Ltd. v. PICC Property & Casualty Co., Ltd. Jianhu Sub-branch (2017) Hu 72 Min Chu No. 368, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . Jiangsu Province Foreign Trade Corporation et al. v. Hong Union Shipping Limited (2016) Hu 72 Min Chu No. 402, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Feng Hu An He Investment Partnership (Limited Partnership) v. Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. et al. (2016) Hu 72 Min Chu No. 2915, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 233

. . 293 . . 327

. . 543

. . 591

. . 829

Tianjin Maritime Court LV Xiangyin et al. v. Tianjin Sheng Quan Construction Engineering Group Co., Ltd. et al. (2017) Jin 72 Min Chu No. 150, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787 Shanghai Jiahang Shipping Co., Ltd. v. Tianjin CCCC BOMESC Marine Industry Co., Ltd. (2017) Jin 72 Min Chu No. 295, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1147

xxxi

xxxii

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Tianjin Guo Dian Shipping Co., Ltd. v. Jiangsu Leshi Fuel Co., Ltd. (2017) Jin 72 Min Chu No. 450, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1509 YU Yanping v. Tianjin Jinchengyun Forwarding Co., Ltd. et al. (2017) Jin 72 Min Chu No. 464, judgment of first instance of Tianjin Maritime Court . . . . . 1841 Guangzhou Maritime Court HONG KONG KENTOP TRADING LIMITED v. Shenzhen Ruide Global Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 312, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . PICC Property and Casualty Company Limited Quanzhou Branch v. Zhanjiang Port International Container Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 1428, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUMPU INTERNATIONAL LIMITED et al. v. Pacific Container Service (China) Limited Guangzhou Branch et al. (2014) Guang Hai Fa Chu Zi No. 507, judgment of first instance of Guangzhou Maritime Court . . . . . . TAN Yang v. Maoming Xiangyuan Shipping Transportation Co., Ltd. (2017) Yue 72 Min Chu No. 908, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuwen County Branch of Postal Savings Bank of China v. SU Chunhai et al. (2017) Yue 72 Min Chu No. 988, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 519

. . 939

. . 1333

. . 1399

. . 1743

Xiamen Maritime Court Bank of China Limited Fujian Branch v. Fujian Haibang Dredging Engineering Co., Ltd. et al. (2015) Xia Hai Fa Shang Chu Zi No. 383, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . 31 Xiamen C&D Inc. v. Jiangsu Sinopacific Shipbuilding Group Co., Ltd. (2016) Min 72 Min Chu No. 811, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1689 Ningbo Maritime Court China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch v. Ningbo Shanglun Co., Ltd. (2015) Yong Hai Fa Shi Chu Zi No. 101, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . 205 The People’s Procuratorate of Ningbo, Zhejiang v. Allan Mendoza Tablate (2017) Zhe 72 Xing Chu No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1499

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

xxxiii

Beihai Maritime Court Fangchenggang Beibu Gulf Port Co., Ltd. v. Guangxi Heshun Sanyuan Mining Co., Ltd. (2017) Gui 72 Min Chu No. 149, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GAO Wenbin v. Agricultural Bank of China LTD. Fangchenggang Branch et al. (2017) Gui 72 Min Chu No. 79, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. v. BOC Insurance Co., Ltd. Guangxi Branch (2017) Gui 72 Min Chu No. 341, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . JM Marine Ltd. v. CSSC Guijiang Co., Ltd. (2016) Gui 72 Min Chu No. 76, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . Lifu Petroleum (International) Co., Ltd. v. Guangxi Ruifeng Shipping Co., Ltd. (2017) Gui 72 Min Chu No. 414, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Pan Asia Shipping Co., Ltd. v. Guangxi Wuzhou Bangda International Logistics Co., Ltd. (2017) Gui 72 Min Chu No. 209, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . WEI Xinyou et al. v. LIN Xinyong et al. (2017) Gui 72 Min Chu No. 67, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . XU Jintian v. PENG Kunxiong (2017) Gui 72 Min Chu No. 260, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . .

. . 299

. . 375

. . 453 . . 641

. . 769

. . 1153 . . 1589 . . 1737

Effective Judgments Made by Appeal Courts Shanghai High People’s Court Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2016) Hu 72 Min Chu No. 3193, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2017) Hu Min Zhong No. 271, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2016) Hu 72 Min Chu No. 1841, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2017) Hu Min Zhong No. 236, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2016) Hu 72 Min Chu No. 2556, judgment of first instance of Shanghai Maritime Court . . . . . . PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2017) Hu Min Zhong No. 305, judgment of second instance of Shanghai High People’s Court . . . . . . . .

..

57

..

64

. . 739

. . 755

. . 983

. . 995

xxxiv

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu 72 Min Chu No. 228, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu Min Zhong No. 298, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2016) Hu 72 Min Chu No. 2817, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2017) Hu Min Zhong No. 211, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2015) Hu Hai Fa Shang Chu Zi No. 2860, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2016) Hu Min Zhong No. 480, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 1047

. . 1058

. . 1069

. . 1087

. . 1515

. . 1531

Tianjin High People’s Court Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2016) Jin 72 Min Chu No. 805, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2017) Jin Min Zhong No. 319, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2016) Jin 72 Min Chu No. 491, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2017) Jin Min Zhong No. 430, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2016) Jin 72 Min Chu No. 1002, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project et al. (2017) Jin Min Zhong No. 393, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2016) Jin 72 Min Chu No. 1044, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2017) Jin Min Zhong No. 401, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . .

..

43

..

50

. . 409

. . 415

. . 797

. . 812

. . 1121

. . 1133

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin 72 Min Chu No. 55, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin Min Zhong No. 580, judgment of second instance of Tianjin High People’s Court . . . Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2016) Jin 72 Min Chu No. 570, judgment of first instance of Tianjin Maritime Court . Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2017) Jin Min Zhong No. 324, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin 72 Min Chu No. 125, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin Min Zhong No. 532, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2016) Jin 72 Min Chu No. 655, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2017) Jin Min Zhong No. 123, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2015) Jin Hai Fa Shang Chu Zi No. 730, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2017) Jin Min Zhong No. 320, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxxv

. . 1161

. . 1167 . . 1431

. . 1448

. . 1797

. . 1805

. . 1937

. . 1950

. . 2055

. . 2063

Guangdong High People’s Court CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2016) Yue 72 Min Chu No. 93, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2017) Yue Min Zhong No. 2329, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 1577, judgment of first instance of Guangzhou Maritime Court . . . . . . . . FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2017) Yue Min Zhong No. 955, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

117

131 307

317

xxxvi

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue 72 Min Chu No. 5, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue Min Zhong No. 2219, judgment of second instance of Guangdong High People’s Court . . . . . . Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1023, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2017) Yue Min Zhong No. 1544, judgment of second instance of Guangdong High People’s Court . . . . . . Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2015) Guang Hai Fa Chu Zi No. 1081, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2017) Yue Min Zhong No. 822, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2016) Yue 72 Min Chu No. 384, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2017) Yue Min Zhong No. 679, judgment of second instance of Guangdong High People’s Court . . . . . . Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1527, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al.(2017) Yue Min Zhong No. 2330, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1585, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No. 1885, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2016) Yue 72 Min No. 991, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2017) Yue Min Zhong No. 1343, judgment of second instance of Guangdong High People’s Court . . . . . .

. . 465

. . 471

. . 1027

. . 1036

. . 1185

. . 1189

. . 1197

. . 1203

. . 1211

. . 1226

. . 1243

. . 1258

. . 1275

. . 1282

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2016) Yue 72 Min Chu No. 172, judgment of first instance of Guangzhou Maritime Court . . . . . . Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2017) Yue Min Zhong No. 2331, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue 72 Min Chu No. 515, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue Min Zhong No. 2617, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2016) Yue 72 Min Chu No. 306, judgment of first instance of Guangzhou Maritime Court . . . . . . Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2017) Yue Min Zhong No. 680, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xxxvii

. . 1873

. . 1889

. . 1967

. . 1976

. . 2033

. . 2043

Hubei High People’s Court CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2016) E 72 Min Chu No. 84, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2017) E Min Zhong No. 2790, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E 72 Min Chu No. 150, judgment of first instance of Wuhan Maritime Court . . . . . . . . . GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E Min Zhong No. 3207, judgment of second instance of Hubei High People’s Court. . . Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2015) Wu Hai Fa Shi Zi No. 00022, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2017) E Min Zhong No. 1867, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2016) E 72 Min Chu No. 157, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2017) E Min Zhong No. 2776, judgment of second instance of Hubei High People’s Court . . . . . . . . . . .

. . 101

. . 109 . . 383 . . 396

. . 527

. . 534

. . 569

. . 580

xxxviii

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E 72 Min Chu No. 91, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E Min Zhong No. 2785, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2016) E 72 Min Chu No. 2102, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2017) E Min Zhong No. 2780, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E 72 Min Chu No. 376, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E Min Zhong No. 2778, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2015) Wu Hai Fa Shi Zi No. 00057, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2017) E Min Zhong No. 3212, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2016) E 72 Min Chu No. 2020, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2017) E Min Zhong No. 2314, judgment of second instance of Hubei High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E 72 Min Chu No. 759, judgment of first instance of Wuhan Maritime Court . . . . . XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E Min Zhong No. 2310, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2016) E 72 Min Chu No. 2209, judgment of first instance of Wuhan Maritime Court . . . . ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2017) E Min Zhong No. 3210, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E 72 Min Chu No. 56, judgment of first instance of Wuhan Maritime Court . . . . . .

. . 629

. . 635

. . 967

. . 975

. . 1293

. . 1299

. . 1383

. . 1391

. . 1661

. . 1677 . . 1723

. . 1730 . . 2021

. . 2027 . . 2077

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

xxxix

Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E Min Zhong No. 2784, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2087 Fujian High People’s Court Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2016) Min 72 Min Chu No. 960, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2017) Min Min Zhong No. 419, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2016) Min 72 Min Chu No. 300, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2017) Min Min Zhong No. 271, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2015) Xia Hai Fa Shi Chu Zi No. 102, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2016) Min Min Zhong No. 875, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . .

. . 1005

. . 1016

. . 1101

. . 1111

. . 1307

. . 1319

Zhejiang High People’s Court Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2015) Yong Hai Fa Shang Chu Zi No. 1036, judgment of first instance of Ningbo Maritime Court . . . . . . . . Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2017) Zhe Min Zhong No. 93, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2300, judgment of first instance of Ningbo Maritime Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe Min Zhong No. 905, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2793, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2017) Zhe Min Zhong No. 422, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

..

73

..

85

. . 217

. . 224

. . 479

. . 502

xl

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2015) Yong Hai Fa Tai Shang Chu Zi No. 412, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2016) Zhe Min Zhong No. 132, judgment of second instance of Zhejiang High People’s Court . . . . Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2016) Zhe 72 Min Chu No. 2097, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2017) Zhe Min Zhong No. 131, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe 72 Min Chu No. 449, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe Min Zhong No. 681, judgment of second instance of Zhejiang High People’s Court . . . Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2016) Zhe 72 Min Chu No. 224, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2017) Zhe Min Zhong No. 251, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2016) Zhe 72 Min Chu No. 1710, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2017) Zhe Min Zhong No. 421, ruling of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe 72 Min Chu No. 833, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe Min Zhong No. 683, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe 72 Min Chu No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe Min Zhong No. 696, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2016) Zhe 72 Min Chu No. 457, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . .

717 731

773

779

843

851

925

931

1175

1181

1409

1420

1631

1646 1701

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2017) Zhe Min Zai No. 2, judgment of retrial of Zhejiang High People’s Court . . . . . . . . . . . Youyang Import & Export (Ningbo) Co., Ltd. v. Maersk Line A/S (2016) Zhe 72 Min Chu No. 929, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Youyang Import & Export (Ningbo) Co., Ltd. v. Maersk Line A/S (2017) Zhe Min Zhong No. 126, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe 72 Min Chu No. 1349, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe Min Zhong No. 790, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2279, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2017) Zhe Min Zhong No. 534, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2016) Zhe 72 Min Chu No. 2445, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2017) Zhe Min Zhong No. 686, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . .

xli

. . 1712

. . 1819

. . 1829

. . 1845

. . 1849

. . 1855

. . 1865

. . 1987

. . 2003

Guangxi Zhuang Autonomous Region High People’s Court Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2014) Hai Shang Chu Zi No. 141, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2015) Gui Min Si Zhong Zi No. 69, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2016) Gui 72 Min Chu No. 242, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2017) Gui Min Zhong No. 93, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2016) Gui 72 Min Chu No. 312, judgment of first instance of Beihai Maritime Court . .

. . 423

. . 436

. . 551

. . 559 . . 1567

xlii

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2017) Gui Min Zhong No. 291, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 1576 Effective Judgments Made by Petition Court The Supreme People’s Court An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2015) Yong Hai Fa Shang Chu Zi No. 440, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2016) Zhe Min Zhong No. 513, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2017) Zui Gao Fa Min Shen No. 3274, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Yong Hai Fa Zhou Shang Chu Zi No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 243, judgment of second instance of Zhejiang High People’s Court . . . . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3547, ruling of retrial of the Supreme People’s Court . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2016) Yue 72 Min Chu No. 600, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2017) Yue Min Zhong No. 389, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2018) Zui Gao Fa Min Zai No. 79, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2016) Yue 72 Min Chu No. 721, judgment of first instance of Guangzhou Maritime Court . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2017) Yue Min

1

14

28

145

158

172

177

183

191

267

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Zhong No. 583, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2018) Zui Gao Fa Min Shen No. 5830, ruling of retrial of the Supreme People’s Court . . . . . . . GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 95, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2017) Yue Min Zhong No. 1541, No. 1542, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2019) Zui Gao Fa Min Shen No. 4600, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2014) Wu Hai Fa Shang Zi No. 01256, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2016) E Min Zhong No. 251, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3335, ruling of retrial of the Supreme People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2015) Wu Hai Fa Shang Zi No. 01773, judgment of first instance of Wuhan Maritime Court . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2016) E Min Zhong No. 1617, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2017) Zui Gao Fa Min Shen No. 2847, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2016) E 72 Min Chu No. 1573, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2017) E Min Zhong No. 3219, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2018) Zui Gao Fa Min Zai No. 452, judgment of retrial of the Supreme People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2013) Yong Hai Fa Shang Chu Zi No. 632, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . .

xliii

. . 275

. . 288

. . 335

. . 348

. . 370

. . 607

. . 616

. . 625

. . 655

. . 668

. . 680

. . 685

. . 693

. . 701

. . 861

xliv

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 219, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2016) Zui Gao Fa Min Shen No. 1484, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2016) Zhe 72 Min Chu Zi No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2017) Zhe Min Zhong No. 52, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2018) Zui Gao Fa Min Shen No. 3919, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2015) Wu Hai Fa Shang Zi No. 00447, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2016) E Min Zhong No. 488, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2017) Zui Gao Fa Min Zai No. 269, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2014) Guang Hai Fa Chu Zi No. 118, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2015) Yue Gao Fa Min Si Zhong Zi No. 23, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2017) Zui Gao Fa Min Zai No. 69, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . WANG Bin v. CMA CGM S.A. (2015) Hu Hai Fa Shang Chu Zi No. 2170, judgment of first instance of Shanghai Maritime Court . . . . . . WANG Bin v. CMA CGM S.A. (2017) Hu Min Zhong No. 199, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . WANG Bin v. CMA CGM S.A. (2018) Zui Gao Fa Min Shen No. 2862, ruling of retrial of the Supreme People’s Court. . . . . . . . . . . . . . . . . . . . . Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2016) Zhe 72 Min Chu No. 1585, judgment of first instance of Ningbo Maritime Court. . . . . . . . . . . . . . . . . . . . . . . . .

. . 875

. . 890

. . 897

. . 910

. . 920

. . 1351

. . 1360

. . 1369

. . 1469

. . 1477

. . 1489 . . 1545 . . 1554 . . 1562

. . 1597

Table of Cases by Jurisdiction (Which Chinese Court Makes the Effective Judgment)

Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zhe Min Zhong No. 89, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zui Gao Fa Min Shen No. 4824, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2011) Hu Hai Fa Shang Chu Zi No. 753, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2013) Hu Gao Min Si (Hai) Zhong Zi No. 24, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2015) Min Shen Zi No. 1896, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2015) Yong Hai Fa Shang Chu Zi No. 534, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2016) Zhe Min Zhong No. 222, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2017) Zui Gao Fa Min Zai No. 412, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xlv

. . 1610

. . 1625

. . 1751

. . 1768

. . 1788

. . 1907

. . 1914

. . 1924

Table of Cases by Cause of Action for Maritime Cases in the People’s Republic of China

55. Dispute over sea area utilisation right ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue 72 Min Chu No. 515, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1967 ZHONG Huiling v. Shenzhen Yantong Marine Technology Co., Ltd. (2017) Yue Min Zhong No. 2617, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1976 123. Dispute over intermediary contract JM Marine Ltd. v. CSSC Guijiang Co., Ltd. (2016) Gui 72 Min Chu No. 76, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . 641 193. Dispute over liability for ship collision damage China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch v. Ningbo Shanglun Co., Ltd. (2015) Yong Hai Fa Shi Chu Zi No. 101, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . Dalian Deli Shipping Co., Ltd. et al. v. Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. (2016) Hu 72 Min Chu No. 2044, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2015) Wu Hai Fa Shi Zi No. 00057, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . Taizhou Jiangdong Transportation Co., Ltd. v. Wuhu County Lianshun Shipping Co., Ltd. et al. (2017) E Min Zhong No. 3212, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2279, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 205

. . 233

. . 1383

. . 1391

. . 1855

xlvii

xlviii

Table of Cases by Cause of Action for Maritime Cases in the People’s …

ZHANG Guoping v. Bank of Communications Financial Leasing Co., Ltd. et al. (2017) Zhe Min Zhong No. 534, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1871 200. Dispute over liability for personal injury at sea CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2016) Yue 72 Min Chu No. 93, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2017) Yue Min Zhong No. 2329, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe 72 Min Chu No. 833, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TANG Suyun et al. v. Ningbo Economic Development Zone Long Sheng Shipping Co., Ltd. (2017) Zhe Min Zhong No. 683, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2016) Zhe 72 Min Chu No. 457, judgment of first instance of Ningbo Maritime Court . . . . . . . . . Xiangshan Dongmen Shipyard v. SU Xianhe et al. (2017) Zhe Min Zai No. 2, judgment of retrial of Zhejiang High People’s Court . . . . . . . . . . . ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2016) E 72 Min Chu No. 2209, judgment of first instance of Wuhan Maritime Court . . . . ZHOU Wenhua v. Nanjing Feixiong Shipping Co., Ltd. (2017) E Min Zhong No. 3210, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 117

. . 131

. . 1409

. . 1420 . . 1701 . . 1712 . . 2021

. . 2027

201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2015) Wu Hai Fa Shi Zi No. 00022, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2017) E Min Zhong No. 1867, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Province Foreign Trade Corporation et al. v. Hong Union Shipping Limited (2016) Hu 72 Min Chu No. 402, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2016) Min 72 Min Chu No. 960, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 527

. . 534

. . 591

. . 1005

Table of Cases by Cause of Action for Maritime Cases in the People’s …

xlix

Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2017) Min Min Zhong No. 419, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1016 Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2015) Xia Hai Fa Shi Chu Zi No. 102, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1307 Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2016) Min Min Zhong No. 875, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . . . 1319 202. Dispute over contract of carriage of goods by sea or sea-connected waters Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2016) Jin 72 Min Chu No. 805, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2017) Jin Min Zhong No. 319, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2016) Hu 72 Min Chu No. 3193, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2017) Hu Min Zhong No. 271, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2015) Yong Hai Fa Shang Chu Zi No. 1036, judgment of first instance of Ningbo Maritime Court . . . . . . . . Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2017) Zhe Min Zhong No. 93, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2016) Yue 72 Min Chu No. 600, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2017) Yue Min Zhong No. 389, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2018) Zui Gao Fa Min Zai No. 79, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2300, judgment of first instance of Ningbo Maritime Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

..

43

..

50

..

57

..

64

..

73

..

85

. . 177

. . 183

. . 191

. . 217

l

Table of Cases by Cause of Action for Maritime Cases in the People’s …

China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe Min Zhong No. 905, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2016) Yue 72 Min Chu No. 721, judgment of first instance of Guangzhou Maritime Court . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2017) Yue Min Zhong No. 583, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2018) Zui Gao Fa Min Shen No. 5830, ruling of retrial of the Supreme People’s Court . . . . . . . . . ESSAREXPORTS LIMITED v. Shenzhen Ya Dong International Freight Forwarding Co., Ltd. (2016) Hu 72 Min Chu No. 2696, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 1577, judgment of first instance of Guangzhou Maritime Court . . . . . . . . FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2017) Yue Min Zhong No. 955, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2016) Jin 72 Min Chu No. 491, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2017) Jin Min Zhong No. 430, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2014) Hai Shang Chu Zi No. 141, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2015) Gui Min Si Zhong Zi No. 69, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2014) Wu Hai Fa Shang Zi No. 01256, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2016) E Min Zhong No. 251, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3335, ruling of retrial of the Supreme People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

224

267

275

288

293 307

317

409

415

423

436

607

616

625

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2016) Zhe 72 Min Chu No. 2097, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2017) Zhe Min Zhong No. 131, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2013) Yong Hai Fa Shang Chu Zi No. 632, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 219, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2016) Zui Gao Fa Min Shen No. 1484, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2016) Zhe 72 Min Chu Zi No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2017) Zhe Min Zhong No. 52, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2018) Zui Gao Fa Min Shen No. 3919, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2016) Zhe 72 Min Chu No. 224, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2017) Zhe Min Zhong No. 251, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2016) E 72 Min Chu No. 2102, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2017) E Min Zhong No. 2780, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2016) Hu 72 Min Chu No. 2556, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2017) Hu Min Zhong No. 305, judgment of second instance of Shanghai High People’s Court . . . . . . . .

li

. . 773

. . 779

. . 861

. . 875

. . 890

. . 897

. . 910

. . 920

. . 925

. . 931

. . 967

. . 975

. . 983

. . 995

lii

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Shanghai Pan Asia Shipping Co., Ltd. v. Guangxi Wuzhou Bangda International Logistics Co., Ltd. (2017) Gui 72 Min Chu No. 209, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin 72 Min Chu No. 55, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin Min Zhong No. 580, judgment of second instance of Tianjin High People’s Court . . . . . Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2016) Zhe 72 Min Chu No. 1710, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2017) Zhe Min Zhong No. 421, ruling of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2015) Guang Hai Fa Chu Zi No. 1081, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2017) Yue Min Zhong No. 822, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . SUMPU INTERNATIONAL LIMITED et al. v. Pacific Container Service (China) Limited Guangzhou Branch et al. (2014) Guang Hai Fa Chu Zi No. 507, judgment of first instance of Guangzhou Maritime Court . . . . . . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2014) Guang Hai Fa Chu Zi No. 118, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2015) Yue Gao Fa Min Si Zhong Zi No. 23, judgment of second instance of Guangdong High People’s Court . . . Tangshan Zhonghai Ningxing Logistics Co., Ltd. v. China Pacific Property Insurance Co., Ltd. Xiamen Branch (2017) Zui Gao Fa Min Zai No. 69, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . Tianjin Guo Dian Shipping Co., Ltd. v. Jiangsu Leshi Fuel Co., Ltd. (2017) Jin 72 Min Chu No. 450, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2015) Hu Hai Fa Shang Chu Zi No. 2860, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Udaya Anugerah Abadi, PT v. Shanghai Xuan Run Shipping Co., Ltd. et al. (2016) Hu Min Zhong No. 480, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WANG Bin v. CMA CGM S.A. (2015) Hu Hai Fa Shang Chu Zi No. 2170, judgment of first instance of Shanghai Maritime Court . . . . . . . .

1153

1161

1167

1175

1181

1185

1189

1333

1469

1477

1489

1509

1515

1531 1545

Table of Cases by Cause of Action for Maritime Cases in the People’s …

WANG Bin v. CMA CGM S.A. (2017) Hu Min Zhong No. 199, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . WANG Bin v. CMA CGM S.A. (2018) Zui Gao Fa Min Shen No. 2862, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E 72 Min Chu No. 759, judgment of first instance of Wuhan Maritime Court . . . . . XU Jianguo v. Changsha Changtong Logistics Co., Ltd. (2017) E Min Zhong No. 2310, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2011) Hu Hai Fa Shang Chu Zi No. 753, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2013) Hu Gao Min Si (Hai) Zhong Zi No. 24, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . Xuzhou Tianye Metal Resources Co., Ltd. v. Tokyo Sangyo Kaisha Co., Ltd. et al. (2015) Min Shen Zi No. 1896, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin 72 Min Chu No. 125, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yangpu Shengda Shipping Co., Ltd. v. Weihai Shuiluzhang Co., Ltd. (2017) Jin Min Zhong No. 532, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Youyang Import & Export (Ningbo) Co., Ltd. v. Maersk Line A/S (2016) Zhe 72 Min Chu No. 929, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Youyang Import & Export (Ningbo) Co., Ltd v. Maersk Line A/S (2017) Zhe Min Zhong No. 126, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2015) Yong Hai Fa Shang Chu Zi No. 534, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2016) Zhe Min Zhong No. 222, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhejiang Longda Stainless Steel Co., Ltd. v. A.P. Moller-Maersk A/S (2017) Zui Gao Fa Min Zai No. 412, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2015) Jin Hai Fa Shang Chu Zi No. 730, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

liii

. . 1554 . . 1562 . . 1723

. . 1730

. . 1751

. . 1768

. . 1788

. . 1797

. . 1805

. . 1819

. . 1829

. . 1907

. . 1914

. . 1924

. . 2055

liv

Table of Cases by Cause of Action for Maritime Cases in the People’s …

ZIM Integrated Shipping Services Co., Ltd. v. Hefei Salt Chemical Co., Ltd. et al. (2017) Jin Min Zhong No. 320, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2063 Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E 72 Min Chu No. 56, judgment of first instance of Wuhan Maritime Court . . . . . . . . 2077 Zoucheng Guangyuan Shipping Co., Ltd. v. JIN Xitong (2017) E Min Zhong No. 2784, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2087 205. Dispute over ship operation contract . . . . . . . . . . . . . . . . . . . . . . . . . WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2016) Gui 72 Min Chu No. 312, judgment of first instance of Beihai Maritime Court . . . . 1567 WANG Hao v. Guangxi Xinminhang Shipping Co., Ltd. (2017) Gui Min Zhong No. 291, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . 1576 206. Dispute over ship sales and purchases contract Shanghai Jiahang Shipping Co., Ltd. v. Tianjin CCCC BOMESC Marine Industry Co., Ltd. (2017) Jin 72 Min Chu No. 295, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . WEI Xinyou et al. v. LIN Xinyong et al. (2017) Gui 72 Min Chu No. 67, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2016) E 72 Min Chu No. 2020, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wuhan Baotongjiang Shipping Co., Ltd. v. Zhumadian Nanhai Shipping Co., Ltd. et al. (2017) E Min Zhong No. 2314, judgment of second instance of Hubei High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XU Jintian v. PENG Kunxiong (2017) Gui 72 Min Chu No. 260, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . .

. . 1147 . . 1589

. . 1661

. . 1677 . . 1737

207. Dispute over shipbuilding contract CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2016) E 72 Min Chu No. 84, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2017) E Min Zhong No. 2790, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E 72 Min Chu No. 150, judgment of first instance of Wuhan Maritime Court . . . . . . . . . GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E Min Zhong No. 3207, judgment of second instance of Hubei High People’s Court. . .

. . 101

. . 109 . . 383 . . 396

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2016) Gui 72 Min Chu No. 242, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2017) Gui Min Zhong No. 93, judgment of second instance of Guangxi Zhuang Autonomous Region High People’s Court . . Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2016) Jin 72 Min Chu No. 1002, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2017) Jin Min Zhong No. 393, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2016) Yue 72 Min Chu No. 306, judgment of first instance of Guangzhou Maritime Court . . . . . . Zijinshan Shipyard of Nanjing Changjiang Oil Transportation Company v. Bank of China Financial Leasing Co., Ltd. et al. (2017) Yue Min Zhong No. 680, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

lv

. . 551

. . 559

. . 797

. . 812

. . 2033

. . 2043

211. Dispute over ship mortgage contract Bank of China Limited Fujian Branch v. Fujian Haibang Dredging Engineering Co., Ltd. et al. (2015) Xia Hai Fa Shang Chu Zi No. 383, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Yong Hai Fa Zhou Shang Chu Zi No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No. 243, judgment of second instance of Zhejiang High People’s Court . China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No. 3547, ruling of retrial of the Supreme People’s Court . . . . . . .

..

31

. . 145

. . 158

. . 172

212. Dispute over voyage charter party Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1023, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . 1027 Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2017) Yue Min Zhong No. 1544, judgment of second instance of Guangdong High People’s Court . . . . . . . . 1036

lvi

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2016) Min 72 Min Chu No. 300, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2017) Min Min Zhong No. 271, judgment of second instance of Fujian High People’s Court . . . . . . . . . . . . . . . . . . . . Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2016) Jin 72 Min Chu No. 1044, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2017) Jin Min Zhong No. 401, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . YU Yanping v. Tianjin Jinchengyun Forwarding Co., Ltd. et al. (2017) Jin 72 Min Chu No. 464, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2016) Jin 72 Min Chu No. 655, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . Zhenhua Logistics Group Co., Ltd. v. Zhongyou Baoshishun (Qinhuangdao) Petropipe Co., Ltd. (2017) Jin Min Zhong No. 123, judgment of second instance of Tianjin High People’s Court . . . . . . . . . .

. . 1101

. . 1111

. . 1121

. . 1133

. . 1841

. . 1937

. . 1950

213.(2) Dispute over bareboat charter party Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2016) Zhe 72 Min Chu No. 2793, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2017) Zhe Min Zhong No. 422, judgment of second instance of Zhejiang High People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe 72 Min Chu No. 1349, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ZHANG Caokui v. Ninghai County Ninghai Bay Tourism Investment Development Co., Ltd. (2017) Zhe Min Zhong No. 790, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . .

. . 479

. . 502

. . 1845

. . 1849

216. Dispute over undertaking contract of fishing ships Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2016) Yue 72 Min No. 991, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . 1275 Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2017) Yue Min Zhong No. 1343, judgment of second instance of Guangdong High People’s Court . . . . . . . . 1282

Table of Cases by Cause of Action for Maritime Cases in the People’s …

lvii

221. Dispute over contract on custody of cargo in port Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2016) Jin 72 Min Chu No. 570, judgment of first instance of Tianjin Maritime Court . . . . . . . . 1431 Tangshan Port Group Co., Ltd. v. Xiamen Jianfa Co., Ltd. (2017) Jin Min Zhong No. 324, judgment of second instance of Tianjin High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1448 223. Dispute over freight forwarding contract on the sea or sea-connected waters HONG KONG KENTOP TRADING LIMITED v. Shenzhen Ruide Global Logistics Co., Ltd. (2016) Yue 72 Min Chu No. 312, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519 224. Dispute over tally contract Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1527, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1211 Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No. 2330, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1226 225. Dispute over contract for marine stores and spare parts supply Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E 72 Min Chu No. 91, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E Min Zhong No. 2785, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . Lifu Petroleum (International) Co., Ltd. v. Guangxi Ruifeng Shipping Co., Ltd. (2017) Gui 72 Min Chu No. 414, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2016) Hu 72 Min Chu No. 2817, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2017) Hu Min Zhong No. 211, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2016) Yue 72 Min Chu No. 384, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . .

. . 629

. . 635

. . 769

. . 1069

. . 1087

. . 1197

lviii

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2017) Yue Min Zhong No. 679, judgment of second instance of Guangdong High People’s Court . . . . . . . . 1203 Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe 72 Min Chu No. 1139, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1631 Wenzhou Mingzhu Yacht Co., Ltd. et al. v. Hefei Swan Refrigeration Technology Co., Ltd. (2017) Zhe Min Zhong No. 696, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . 1646 226. Dispute over contract for employment of seaman TAN Yang v. Maoming Xiangyuan Shipping Transportation Co., Ltd. (2017) Yue 72 Min Chu No. 908, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1399 230. Dispute over marine insurance contract on the sea or sea-connected waters An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2015) Yong Hai Fa Shang Chu Zi No. 440, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2016) Zhe Min Zhong No. 513, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2017) Zui Gao Fa Min Shen No. 3274, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. v. BOC Insurance Co., Ltd. Guangxi Branch (2017) Gui 72 Min Chu No. 341, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue 72 Min Chu No. 5, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue Min Zhong No. 2219, judgment of second instance of Guangdong High People’s Court . . . . . . Jiangsu Haichang Construction Engineering Co., Ltd. v. PICC Property & Casualty Co., Ltd. Jianhu Sub-branch (2017) Hu 72 Min Chu No. 368, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . .

..

1

..

14

..

28

. . 453

. . 465

. . 471

. . 543

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2016) E 72 Min Chu No. 157, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2017) E Min Zhong No. 2776, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2015) Wu Hai Fa Shang Zi No. 01773, judgment of first instance of Wuhan Maritime Court . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2016) E Min Zhong No. 1617, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2017) Zui Gao Fa Min Shen No. 2847, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . SHU Shiyun v. PICC Property and Casualty Comapany Limited Luzhou Branch (2017) E 72 Min Chu No. 376, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SHU Shiyun v. PICC Property and Casualty Comapany Limited Luzhou Branch (2017) E Min Zhong No. 2778, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2015) Wu Hai Fa Shang Zi No. 00447, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2016) E Min Zhong No. 488, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2017) Zui Gao Fa Min Zai No. 269, judgment of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2016) Zhe 72 Min Chu No. 1585, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zhe Min Zhong No. 89, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . Wenzhou Hongda Shipping Co., Ltd. v. Sunshine Property Insurance Co., Ltd. Wenzhou Central Branch (2017) Zui Gao Fa Min Shen No. 4824, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . .

lix

. . 569

. . 580

. . 655

. . 668

. . 680

. . 1293

. . 1299

. . 1351

. . 1360

. . 1369

. . 1597

. . 1610

. . 1625

lx

Table of Cases by Cause of Action for Maritime Cases in the People’s …

233. Dispute over ship operation loan contract Far East Horizon Limited v. On Best Shipping Limited (2017) Hu 72 Min Chu No. 526, judgment of first instance of Shanghai Maritime Court. . . . Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2016) Hu 72 Min Chu No. 1841, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2017) Hu Min Zhong No. 236, judgment of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Xuwen County Branch of Postal Savings Bank of China v. SU Chunhai et al. (2017) Yue 72 Min Chu No. 988, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . 327

. . 739

. . 755

. . 1743

234. Dispute over maritime security contract Ningbo Feng Hu An He Investment Partnership (Limited Partnership) v. Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. et al. (2016) Hu 72 Min Chu No. 2915, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 236. Dispute over contract for construction of dock or harbor Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe 72 Min Chu No. 449, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe Min Zhong No. 681, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2016) Yue 72 Min Chu No. 172, judgment of first instance of Guangzhou Maritime Court . . . . . . . . Zhanjiang Henghai Dredging Engineering Co., Ltd. v. Zhanjiang Fengyong Construction Engineering Co., Ltd. (2017) Yue Min Zhong No. 2331, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

843

851

1873

1889

238. Dispute over maritime security Xiamen C&D Inc. v. Jiangsu Sinopacific Shipbuilding Group Co., Ltd. (2016) Min 72 Min Chu No. 811, judgment of first instance of Xiamen Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1689

Table of Cases by Cause of Action for Maritime Cases in the People’s …

lxi

239. Dispute over liability for major transport accident on the sea or sea-connected waters The People’s Procuratorate of Ningbo, Zhejiang v. Allan Mendoza Tablate (2017) Zhe 72 Xing Chu No. 1, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1499 240. Dispute over liability for major accident of port operation GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 95, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335 GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2017) Yue Min Zhong No. 1541, No. 1542, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . 348 GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2019) Zui Gao Fa Min Shen No. 4600, ruling of retrial of the Supreme People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370 241. Dispute over port operation Fangchenggang Beibu Gulf Port Co., Ltd. v. Guangxi Heshun Sanyuan Mining Co., Ltd. (2017) Gui 72 Min Chu No. 149, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2016) E 72 Min Chu No. 1573, judgment of first instance of Wuhan Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2017) E Min Zhong No. 3219, judgment of second instance of Hubei High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2018) Zui Gao Fa Min Zai No. 452, judgment of retrial of the Supreme People’s Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2015) Yong Hai Fa Tai Shang Chu Zi No. 412, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2016) Zhe Min Zhong No. 132, judgment of second instance of Zhejiang High People’s Court . . . . PICC Property and casualty Company Limited Quanzhou Branch v. Zhanjiang Port International Container Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 1428, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No. 1585, judgment of first instance of Guangzhou Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299

685

693

701

717 731

939

1243

lxii

Table of Cases by Cause of Action for Maritime Cases in the People’s …

Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No. 1885, judgment of second instance of Guangdong High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1258 Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2016) Zhe 72 Min Chu No. 2445, judgment of first instance of Ningbo Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1987 Zhongdong (Zhoushan) Harbor Affairs Co., Ltd. v. Daishan County Youli Sand Yard et al. (2017) Zhe Min Zhong No. 686, judgment of second instance of Zhejiang High People’s Court . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 243. Dispute over marine development and utilization of sea LV Xiangyin et al. v. Tianjin Sheng Quan Construction Engineering Group Co., Ltd. et al. (2017) Jin 72 Min Chu No. 150, judgment of first instance of Tianjin Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787 471.(1) Contest to enforcement by an outsider GAO Wenbin v. Agricultural Bank of China LTD. Fangchenggang Branch et al. (2017) Gui 72 Min Chu No. 79, judgment of first instance of Beihai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu 72 Min Chu No. 228, judgment of first instance of Shanghai Maritime Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1047 Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu Min Zhong No. 298, judgment of second instance of Shanghai High People’s Court . . . . . . . . . . . . . . . . . . . . 1058

List of Maritime Courts and their Appeal and Petition Courts in the People’s Republic of China

Maritime Courts

Appeal Courts

Petition Court

Shanghai Maritime Court http://shhsfy.gov.cn/hsfyytwx/ hsfyytwx/

Shanghai High People’s Court http://www.hshfy.sh.cn/

The Supreme People’s Court of the People’s Republic of China http://www.court.gov.cn/

Tianjin Maritime Court http://tjhsfy.chinacourt.gov.cn/index. html

Tianjin High People’s Court http://tjfy.chinacourt.gov. cn/index.shtml Shandong High People’s Court http://sdcourt.gov.cn/ Liaoning High People’s Court http://lnfy.chinacourt. gov.cn/index.shtml Guangdong High People’s Court http://www.gdcourts.gov. cn/ Hubei High People’s Court http://www.hbfy.gov.cn/ Hainan High People’s Court http://www.hicourt.gov. cn/ Fujian High People’s Court http://www.fjcourt.gov. cn/

Qingdao Maritime Court http://qdhsfy.sdcourt.gov.cn/qdhsfy/ sjb/index.html Dalian Maritime Court http://www.dlhsfy.gov.cn/court/

Guangzhou Maritime Court http://www.gzhsfy.gov.cn/

Wuhan Maritime Court http://whhsfy.hbfy.gov.cn/ Haikou Maritime Court http://www.hkhsfy.gov.cn/

Xiamen Maritime Court http://www.xmhsfy.gov.cn/

(continued)

lxiii

lxiv

List of Maritime Courts and their Appeal and Petition Courts in the People’s …

(continued) Maritime Courts

Appeal Courts

Ningbo Maritime Court https://www.nbhsfy.cn/court/index. html

Zhejiang High People’s Court http://www.zjsfgkw.cn/

Beihai Maritime Court http://www.bhhsfy.gov.cn/ platformData/infoplat/pub/bhhs_32/ shouye_1003/index.html

Guangxi Zhuang Autonomous Region High People’s Court http://www.gxcourt.gov. cn/ Jiangsu High People’s Court http://www.jsfy.gov.cn/

Nanjing Maritime Court www.njhsfy.gov.cn/

Petition Court

List of Causes of Action for Maritime Cases in the People’s Republic of China (Extracted from the Regulations on Causes of Action for Civil Disputes made by the Supreme People’s Court of the People’s Republic of China 2020)

Part 6 Ownership Dispute 49. Dispute over return of property buried underground Part 7 Usufruct Dispute 55. Dispute over sea area utilisation right Part 8 Mortgage Dispute 67. Dispute over mortgage (8) Dispute over mortgage of movables (9) Dispute over mortgage of vessels and aircrafts under manufacture (10) Dispute over floating charge of movables (11) Dispute over right of mortgage of ceiling amount 68. Dispute over right of pledge (1) Dispute over right of pledge of movables (2) Dispute over right of re-pledge (3) Dispute over right of pledge of ceiling amount (7) Dispute over right of pledge of warehouse receipts (8) Dispute over right of pledge of bills of lading (9) Dispute over right of pledge of equity interest (12) Dispute over right of pledge of receivables 69. Dispute over right of lien Part 10 Contract Dispute 74. Dispute over liability for fault in contracting 76. Dispute over confirming the validity of contract (1) Dispute over confirming the validity of contract (2) Dispute over confirming the invalidity of contract 77. Dispute over contract for assignment of creditor’s rights 103. Dispute over contract of loan (1) Dispute over contract of financial loan 104. Dispute over contract of suretyship 106. Dispute over pledge contract (continued)

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List of Causes of Action for Maritime Cases in the People’s Republic of China …

(continued) 114. Dispute over contract for contracting work (1) Dispute over contract for processing (2) Dispute over contract for manufacturing (5) Dispute over contract for testing (6) Dispute over contract for inspecting 116. Dispute over contract for carriage (3) Dispute over contract for carriage of passengers by waterway (4) Dispute over contract for carriage of goods by waterway (10) Dispute over contract for combined transport (11) Dispute over contract for combined transport by multiple way 118. Dispute over contract of warehouse 119. Dispute over agency contract (1) Dispute over contract for agency contract for import/ export 121. Dispute over commission contract 123. Dispute over intermediary contract 143. Dispute over right of recourse Part 19 Maritime Dispute 193. Dispute over liability for ship collision damage 194. Dispute over liability for contact of vessel 195. Dispute over liability for damage to facility in the air or under water 196. Dispute over liability for damage of ship pollution 197. Dispute over liability for marine pollution damage on the sea or sea-connected waters 198. Dispute over liability for damage to breeding on the sea or sea-connected waters 199. Dispute over liability for damage to property on the sea or sea-connected waters 200. Dispute over liability for personal injury at sea 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship 202. Dispute over contract of carriage of goods by sea or sea-connected waters 203. Dispute over contract of carriage of passenger by sea or sea-connected waters 204. Dispute over contract of carriage of luggage by sea or sea-connected waters 205. Dispute over ship operation contract 206. Dispute over ship sales and purchases contract 207. Dispute over shipbuilding contract 208. Dispute over ship repairing contract 209. Dispute over ship rebuilding contract 210. Dispute over ship dismantling contract 211. Dispute over ship mortgage contract 212. Dispute over voyage charter party 213. Dispute over charter party (1) Dispute over time charter party (2) Dispute over bareboat charter party 214. Dispute over ship financial leasing contract (continued)

List of Causes of Action for Maritime Cases in the People’s Republic of China …

lxvii

(continued) 215. Dispute over undertaking contract of transporting ship on the sea or sea-connected waters 216. Dispute over undertaking contract of fishing ships 217. Dispute over contract for lease of utensils affixed to ship 218. Dispute over contract for custody of utensils affixed to ship 219. Dispute over contract on lease of shipping container 220. Dispute over contract on custody of shipping container 221. Dispute over contract on custody of cargo in port 222. Dispute over shipping agency contract 223. Dispute over freight forwarding contract on the sea or sea-connected waters 224. Dispute over tally contract 225. Dispute over contract for marine stores and spare parts supply 226. Dispute over contract for employment of seaman 227. Dispute over salvage contract 228. Dispute over contract on refloatation on the sea or sea-connected waters 229. Dispute over towage contract on the sea or sea-connected waters 230. Dispute over marine insurance contract on the sea or sea-connected waters 231. Dispute over contract for protection and indemnity insurance on the sea or sea-connected waters 232. Dispute over contract for joint transport on the sea or sea-connected waters 233. Dispute over ship operation loan contract 234. Dispute over maritime security contract 235. Dispute over channel and port dredging contract 236. Dispute over contract for construction of dock or harbor 237. Dispute over contract for inspection of ship 238. Dispute over maritime security 239. Dispute over liability for major transport accident on the sea or sea-connected waters 240. Dispute over liability for major accident of port operation 241. Dispute over port operation 242. Dispute over general average 243. Dispute over marine development and utilization of sea 244. Dispute over joint ownership of ship 245. Dispute over ownership of ship 246. Dispute over maritime fraud 247. Dispute over confirmation of maritime claim Part 20 Business-related Dispute 256. Dispute over contract for affiliated operation 258. Dispute over contract for joint operation Part 27 Insurance Dispute 333. Dispute over contract for property insurance (4) Dispute over contract for guarantee insurance (5) Dispute over insurer’s right of subrogation (continued)

lxviii

List of Causes of Action for Maritime Cases in the People’s Republic of China …

(continued) 335. Dispute over contract for reinsurance 336. Dispute over contract for insurance brokerage 337. Dispute over contract for insurance agency Part 31 Tort Liability Dispute 390. Dispute over liability for damage caused by water transport (1) Dispute over liability for personal injury caused by water transport (2) Dispute over liability for property damage caused by water transport 392. Dispute over damage caused by application for pre-litigation property preservation 393. Dispute over damage caused by application for pre-litigation evidence preservation 395. Dispute over damage caused by application for advance execution Part 32 Cases of Declaration of Missing and Declaration of Death 400. Application for adjudication of death of citizen 401. Application for revocation of adjudication of death of citizen Part 36 Cases of Holding Properties Unclaimed 407. Application for determining certain property as ownerless 408. Application for revocation of determination of certain property as ownerless Part 40 Cases of Procedure for Hastening 418. Application for payment orders Part 41 Cases of Procedure of Public Summons for Exhortation 419. Application for public summons for exhortation Part 45 Cases of Application for Preservation 431. Application for pre-litigation property preservation 432. Application for pre-litigation behaviors preservation 433. Application for pre-litigation evidence preservation 434. Application for pre-arbitration property preservation 435. Application for pre-arbitration behaviors preservation 436. Application for pre-arbitration evidence preservation 437. Property preservation in arbitration proceedings 438. Evidence preservation in arbitration proceedings 439. Application for suspending payment of the amount under a letter of credit 441. Application for suspending payment of the amount under a letter of guarantee Part 48 Arbitration Cases 444. Application for confirmation of effectiveness of arbitration agreements 445. Application for revocation in arbitral award Part 49 Special Maritime Procedure Cases 446. Application for reservation of maritime claims (1) Application for detention of vessels (2) Application for auction of detained vessels (3) Application for seizure of vessel cargoes (4) Application for auction of seizure vessel cargoes (5) Application for seizure of bunker oil and ship’s stores (6) Application for auction of seizure bunker oil and ship’s stores (continued)

List of Causes of Action for Maritime Cases in the People’s Republic of China …

lxix

(continued) 447. Application for maritime payment orders 448. Application for maritime injunctions 449. Application for maritime evidence preservation 450. Application for establishment of a fund for limitation liability for maritime claims 451. Application for publicizing notices for assertion of maritime priority rights 452. Application for registration and repayment of maritime claims Part 50 Application for Recognition and Enforcement of Judgments and Awards Cases 453. Application for enforcement of maritime arbitral award 454. Application for enforcement of intellectual property arbitral award 455. Application for enforcement of foreign affairs arbitral award 456. Application for recognition and enforcement of civil judgment rendered by court of the Hong Kong Special Administrative Region 457. Application for recognition and enforcement of arbitration award rendered by court of the Hong Kong Special Administrative Region 458. Application for recognition and enforcement of civil judgment rendered by court of the Macao Special Administrative Region 459. Application for recognition and enforcement of arbitration award rendered by court of the Macao Special Administrative Region 460. Application for recognition and enforcement of civil judgment rendered by court of Taiwan Special Administrative Region 461. Application for recognition and enforcement of arbitration award rendered by court of Taiwan Special Administrative Region 462. Application for recognition and enforcement of civil judgment rendered by foreign court 463. Application for recognition and enforcement of foreign arbitration award Part 54 Contest to Enforcement Cases 471. Contest to enforcement (1) Contest to enforcement by an outsider (2) Contest to enforcement by applicant 472. Addition or alteration of respondent

Table of References

Chinese Legislation Administration of Domestic Water Transport and Administrative Provisions on the Operation Qualifications for Domestic Waterway Transport General......China Pacific (Xiamen Branch) Banking Supervision Law of the People’s Republic of China General......China Construction Civil Procedure Law of the People’s Republic of China General......Chem-Together, Shanghai Pan Art. 13 Para. 2......GAN Muan, Jiangsu Xinshengyuan Art. 24......An Bang Art. 27......Luy International, Ningbo Youyang, Zhejiang Longda Art. 48......Dalian Deli Art. 51......Jiangsu Province Art. 56......Wuhan Baotongjiang Art. 60 Para. 1......LI Fan Art. 63......Wuhan Baotongjiang Art. 64......FANG Hao, Lianyungang Wuzhou, Ningbo Jiangbei Art. 64 Para. 1......Changzhou Woyuan, CHEN Hongbing, China Construction, China Pacific, China Shipping, COSCO Shipping, Dalian Deli, Dalian Deli, Dongguan Yihai, ESSAREXPORTS LIMITED, FANG Hao, Far East, GAN Muan, Great Xinhua, Guangxi Jufeng, Guangxi Qinzhou, Guangzhou Ansheng, Hefei Gui He Ju, Heifei Swan, Jiangsu Haichang, Jiangyin Parter, JM Marine, Chongqing Kuixia, LIG Property, Lianyungang Wuzhou, Ningbo Jiangbei, Ningbo Shun, Ningbo Yinzhou, PICC P&C, PICC Property, Qinzhou Xiangli, Shanghai Anrita, Shanghai Pudong, SHU Shiyun, Sinotrans Guangdong, Taizhou Jiangdong, TANG Suyun, Xiamen Jianfa, Udaya Anugerah, WANG Bin, Shandong Xinhai, Wenzhou Hongda, Xiamen C&D, Xiangshan Dongmen, XU Jianguo, ZHANG Caokui, ZHANG Guoping, ZHONG Huiling, Zhongdong (Zhoushan) Art. 64 Para. 2......WANG Bin lxxi

lxxii

Table of References

Art. 70......CHEN Hongbing Art. 87......Xiangshan Dongmen Art. 93 Para. 1 Sub-Para. 5......Yangpu Shengda Art. 93 Para. 2......Yangpu Shengda Art. 102......Shandong Xinhai Art. 112......WEI Xinyou Art. 117 Para. 1 Sub-Para. 1......Guangzhou Ansheng Art. 119......CHEN Hongbing, GAO Yunhua, SUMPU INTERNATIONAL, TAN Yang Art. 142......CHEN Hongbing, GAO Yunhua, Jiangsu Oriental, Jiangsu Xinshengyuan, Jiangyin Parter, JIN Xitong, Chongqing Kuixia, LIG Property, PICC P&C Shanghai, SHU Shiyun, Taizhou Changxin, Taizhou Jiangdong, Wuhan Baotongjiang, XU Jianguo, ZHOU Wenhua Art. 144......Bank of China, China Construction, China Shipping, COSCO Shipping, ESSAREXPORTS LIMITED, Fangchenggang Beibu, GAN Muan, GAO Wenbin, Great Xinhua, Huainan Junfei, Lianyungang Wuzhou, Ningbo Feng, Shandong Xinhai, Shanghai Pan, Shenzhen West, Tianjin Guo, Shandong Xinhai, WEI Xinyou, Xiamen C&D, Xiangshan Dongmen, XU Jintian, Zijinshan Shipyard, ZIM Integrated Art. 154 Para. 1 Sub-Para. 5......Shaoxing Shang Art. 169......PICC Property Art. 170 Para. 1......Xiamen Jianfa, Zhongdong (Zhoushan) Art. 170 Para. 1 Sub-Para. 1......Beijing Hengshui, Changzhou Woyuan, Chem-Together, CHEN Hongbing, CHEN Minsheng, China Construction, China Pacific, China Pacific (Xiamen Branch), COSCO Shipping, Dongguan Yihai, FANG Hao, GAN Muan, GAO Yunhua, Great Xinhua,Guangxi Jufeng, Hefei Gui He Ju, Heifei Swan, Huainan Junfei, Jiangsu Xinshengyuan, Jiangyin Parter, JIN Xitong, Chongqing Kuixia, LIG Property, LI Fan, Lianyungang Wuzhou, Luy International, Nantong Kanghai, Ningbo Jiangbei, Ningbo Yinzhou, Paper Creative, PICC P&C Shanghai, PICC Property, Qinzhou Xiangli, Rizhao Guanshun, Shandong Xinhai, Shanghai Anrita, Shanghai COSCO, Shanghai Dingheng, Shanghai Pudong, Shenzhen Chinatrans, Shenzhen Maritime, Shenzhen Ocean, Shenzhen West, Shenzhen Xiasha, SHU Shiyun, Sinotrans Guangdong, Taizhou Changxin, Taizhou Jiangdong, TANG Suyun, Udaya Anugerah, WANG Bin, Shandong Xinhai, Wuhan Baotongjiang, Xiangshan Dongmen, XU Jianguo, Xuzhou Tianye, Yangpu Shengda, Ningbo Youyang, ZHANG Caokui, ZHANG Guoping, Zhejiang Longda, Zhenhua Logistics, ZHONG Huiling, ZHOU Wenhua, Zijinshan Shipyard, ZIM Integrated Art. 170 Para. 1 Sub-Para. 2......An Bang, China Pacific, LIG Property, Ningbo Shun, China Pacific (Xiamen Branch), Wenzhou Hongda, Zhejiang Longda Art. 174......Great Xinhua Art. 175......Changzhou Woyuan, Lianyungang Wuzhou, PICC Property, Shandong Xinhai, Udaya Anugerah, WANG Bin, Xuzhou Tianye Art. 200......An Bang, China Construction, Dongguan Yihai, GAN Muan, Jiangsu Xinshengyuan, Chongqing Kuixia, Ningbo Yinzhou, Shanghai Anrita, WANG Bin

Table of References

lxxiii

Art. 200 Sub-Para. 2.....GAN Muan, Ningbo Shun, Ningbo Yinzhou, Wenzhou Hongda, Xuzhou Tianye Art. 200 Sub-Para. 6......GAN Muan, Ningbo Yinzhou, Taizhou Changxin, Wenzhou Hongda, Xuzhou Tianye Art. 204 Para. 1......An Bang, China Construction, Dongguan Yihai, GAN Muan, Jiangsu Xinshengyuan, Chongqing Kuixia, Ningbo Shun, Ningbo Yinzhou, WANG Bin, Wenzhou Hongda, Xuzhou Tianye Art. 207 Para. 1......LIG Property, Zhejiang Longda Art. 227......Shandong Xinhai Art. 232......China Pacific (Xiamen Branch) Art. 253......An Bang, Bank of China, Changzhou Woyuan, Chem-Together, CHEN Minsheng, China Construction, China Pacific, China Pacific (Xiamen Branch), China Shipping, COSCO Shipping, Dongguan Yihai, ESSAREXPORTS LIMITED, Fangchenggang Beibu, Far East, GAN Muan, GAO Yunhua, Hefei Gui He Ju, Heifei Swan, HONG KONG, Huainan Junfei, Jiangsu Haichang, Jiangsu Oriental, Jiangsu Xinshengyuan, JIN Xitong, JM Marine, LIG Property, LI Fan, Lianyungang Wuzhou, Lifu Petroleum, Luy International, LV Xiangyin, Nantong Kanghai, Ningbo Feng, Ningbo Shun, Paper Creative, PICC Property, Postal Savings, Qinzhou Xiangli, Rizhao Guanshun, Shanghai Anrita, Shanghai COSCO, Shanghai Dingheng, Shanghai Jiahang, Shanghai Pan, Shanghai Pudong, Shenzhen Chinatrans, Shenzhen Maritime, Shenzhen Ocean, Shenzhen West, Sinotrans Guangdong, SUMPU INTERNATIONAL, Taizhou Changxin, Taizhou Jiangdong, TAN Yang, Xiamen Jianfa, Tianjin Guo, WEI Xinyou, Wenzhou Hongda, Wuhan Baotongjiang, Xiamen C&D, Xiangshan Dongmen, XU Jianguo, XU Jintian, Yangpu Shengda, Ningbo Youyang, Tianjin Jinchengyun, ZHANG Caokui, Zhanjiang Henghai, Zhejiang Longda, Zhenhua Logistics, Zhongdong (Zhoushan), ZHOU Wenhua, Zijinshan Shipyard, ZIM Integrated Art. 259......An Bang, Chem-Together, Ningbo Youyang, Zhejiang Longda, Zhenhua Logistics Companies Ordinance of the Hong Kong Special Administrative Region of the People’s Republic of China General......Jiangsu Province Art. 2......SUMPU INTERNATIONAL Art. 22......SUMPU INTERNATIONAL Art. 122......SUMPU INTERNATIONAL Company Law of the People’s Republic of China Art. 58......Shenzhen West Art. 63......Shenzhen West Contract Law of the People’s Republic of China General......Dongguan Yihai, Shenzhen West, ZHANG Guoping, Zhenhua Logistics, ZIM Integrated Art. 5......Zhejiang Longda Art. 6......Jiangsu Province Art. 8......Chongqing Kuixia, PICC P&C, ZHANG Caokui

lxxiv

Table of References

Art. 10......China Construction Art. 11......China Pacific (Xiamen Branch) Art. 13......China Construction Art. 30......Shenzhen Maritime Art. 32......WANG Hao Art. 41 Para. 1......Guangxi Qinzhou, WANG Hao Art. 44 Para. 1......Guangxi Qinzhou, Shandong Xinhai Art. 52......ZHONG Huiling Art. 52 Sub-Para. 5......China Pacific (Xiamen Branch) Art. 53......PICC P&C Art. 54......ZHONG Huiling Art. 54 Para. 2......Qinzhou Xiangli Art. 56......An Bang Art. 58......China Pacific (Xiamen Branch) Art. 60......Great Xinhua, Shanghai Dingheng, Shandong Xinhai, Shandong Xinhai Art. 60 Para. 1......ESSAREXPORTS LIMITED, GAO Yunhua, LI Fan, Lianyungang Wuzhou, Ningbo Feng, Wuhan Baotongjiang, ZHANG Caokui, Zhongdong (Zhoushan) Art. 61......Shanghai Pan, Shenzhen West, Yangpu Shengda Art. 62......Shenzhen Maritime Art. 62 Para. 4......JIN Xitong, Rizhao Guanshun, Shenzhen Maritime Art. 65......Great Xinhua, ZIM Integrated Art. 68......Shanghai Dingheng Art. 77......GAO Yunhua Art. 77 Para. 1......Zhenhua Logistics Art. 78......Rizhao Guanshun Art. 80......CHEN Hongbing Art. 80 Para. 1......Shenzhen Ocean Art. 81......Shenzhen Ocean Art. 82......Shenzhen Ocean Art. 82 Para. 1......Shenzhen Ocean Art. 85......ZIM Integrated Art. 91......Shandong Xinhai Art. 91 Para. 1 Sub-Para. 1......Shandong Xinhai Art. 91 Para. 1 Sub-Para. 7......Shandong Xinhai Art. 93......Shenzhen Xiasha, WEI Xinyou Art. 93 Para. 2......Jiangsu Haitun, Shenzhen Xiasha Art. 94......GAO Yunhua, Shenzhen Xiasha, hongdong (Zhoushan) Art. 94 Para. 4......Zhongdong (Zhoushan) Art. 95......Shenzhen Xiasha Art. 95 Para. 2......Jiangsu Haitun Art. 96......Shenzhen Xiasha, Zhongdong (Zhoushan) Art. 96 Para. 1......Hefei Gui He Ju, Shenzhen Xiasha Art. 97......Nantong Kanghai, WEI Xinyou, Zhongdong (Zhoushan) Art. 98......Zhongdong (Zhoushan)

Table of References

lxxv

Art. 107......An Bang, CHEN Hongbing, China Construction, ESSAREXPORTS LIMITED, Fangchenggang Beibu, Guangxi Jufeng, Hefei Gui He Ju, Heifei Swan, Jiangsu Haitun, Jiangsu Oriental, Jiangsu Xinshengyuan, JIN Xitong, JM Marine, LI Fan, Lianyungang Wuzhou, Lifu Petroleum, Ningbo Jiangbei, Ningbo Shun, Ningbo Yinzhou, Rizhao Guanshun, Shanghai Anrita, Shanghai COSCO, Shanghai Dingheng, Shanghai Jiahang, Shanghai Pan, Shenzhen Maritime, Shenzhen Ocean, Shenzhen West, Xiamen Jianfa, Tianjin Guo, Udaya Anugerah, WEI Xinyou, Xiamen C&D, XU Jianguo, Yangpu Shengda, Zhenhua Logistics, Zhongdong (Zhoushan) Art. 108......ESSAREXPORTS LIMITED, Lianyungang Wuzhou, Xiamen C&D Art. 109......Fangchenggang Beibu, GAO Yunhua, WEI Xinyou, Wuhan Baotongjiang, XU Jianguo, Zhongdong (Zhoushan) Art. 112......JM Marine, Shanghai Pudong, Shenzhen Ocean, Tianjin Guo Art. 113......WEI Xinyou Art. 113 Para. 1......Lianyungang Wuzhou, PICC Property, Shanghai Anrita, Wenzhou Hongda Art. 114......GAO Yunhua Art. 114 Para. 1......Shenzhen Ocean, XU Jintian, Zijinshan Shipyard Art. 114 Para. 2......Lifu Petroleum, ZIM Integrated Art. 117......China Pacific Art. 117 Para. 2......China Pacific Art. 119......XU Jintian Art. 119 Para. 1......China Shipping, COSCO Shipping, ZIM Integrated Art. 119 Para. 3......Shanghai Anrita Art. 120......Zhongdong (Zhoushan) Art. 122......Guangxi Jufeng Art. 125......Heifei Swan, XU Jianguo, Zhongdong (Zhoushan) Art. 126 Para. 1......HONG KONG, Shenzhen West Art. 130......Jiangsu Haitun Art. 133......Shandong Xinhai Art. 158......Heifei Swan Art. 158 Para. 1......Heifei Swan Art. 159......Heifei Swan, Lifu Petroleum, XU Jintian Art. 161......Heifei Swan, Lifu Petroleum, XU Jintian Art. 174 Para. 1......XU Jintian Art. 205......Bank of China, Ningbo Feng, Postal Savings Art. 206......Bank of China, China Construction, Ningbo Feng, Postal Saving Art. 207......Bank of China, China Construction, Ningbo Feng, Postal Savings, WEI Xinyou Art. 251......Jiangsu Haitun Art. 251 Para. 1......CHEN Hongbing Art. 263......Shenzhen West Art. 264......GAO Yunhua, Shenzhen West Art. 268......Jiangsu Haitun Art. 272......Zhanjiang Henghai

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Table of References

Art. 272 Para. 2......Zhanjiang Henghai Art. 292......Guangxi Jufeng, JIN Xitong, Rizhao Guanshun, Shanghai COSCO, Tianjin Guo Art. 298......Shenzhen Maritime Art. 308......Zhejiang Longda Art. 309......FANG Hao Art. 311......China Pacific, Dongguan Yihai, Jiangsu Xinshengyuan, Ningbo Shun, Yangpu Shengda Art. 312......Yangpu Shengda Art. 315......Guangxi Jufeng, Qinzhou Xiangli Art. 321......Ningbo Shun Art. 366......Shenzhen West Art. 380......Shenzhen West Art. 381......Xiamen Jianfa Art. 394......Xiamen Jianfa Art. 396......Shenzhen Maritime Art. 398......Shanghai Pudong Art. 402......Shenzhen Ocean, Shenzhen West Art. 403......Shanghai Pan, Shenzhen West Art. 403 Para. 1......Shanghai Pa Art. 403 Para. 2......Shenzhen Ocean, Shenzhen West Art. 406......Guangxi Jufeng, HONG KONG Art. 424......JM Marine Art. 426 Para. 1......JM Marine Criminal Law of the People’s Republic of China Art. 6......The People’s Art. 67 Para. 1......The People’s Art. 133......The People’s Detailed Rules for the Implementation of Work-related Injury Insurance of Zhejiang Province Art. 6 Para. 2......TANG Suyun Enterprise Bankruptcy Law of the People’s Republic of China Art. 20......Zijinshan Shipyard Art. 21......TAN Yang Art. 46......Xiamen C&D General Principles of the Civil Law of the People’s Republic of China General......PICC P&C Art. 4......China Pacific (Xiamen Branch) Art. 42......Xiamen C&D Art. 43......Xiamen Jianfa Art. 63......Shenzhen West Art. 63 Para. 1......Dalian Deli Art. 92......Shenzhen Maritime Art. 104......An Bang

Table of References

Art. Art. Art. Art.

lxxvii

106......Huainan Junfei 135......JM Marine 137......JM Marine 153......China Pacific

Guaranty Law of the People’s Republic of China General......Shenzhen West Art. 6......Dalian Deli Art. 18......Bank of China, Xiamen C&D Art. 31......Bank of China Art. 40......ZHONG Huiling Art. 42......Xiamen C&D Art. 46......Ningbo Feng Art. 53......Ningbo Feng Art. 63 Para. 2......Changzhou Woyuan Art. 82......Shenzhen West Art. 84......Shenzhen West Guiding Opinions on Regulating Marine Traffic Accident Investigation and Maritime Trials Art. 5......Wenzhou Hongda Guiding Opinions of the Supreme People’s Court on the Legal Issues Involving Domestic Water Transport Disputes General......China Pacific (Xiamen Branch) Art. 3......China Pacific (Xiamen Branch) Art. 4......China Pacific (Xiamen Branch) Implementation Measures for Paid Annual Leave for Employees of Enterprises Art. 10 Para. 1......TAN Yang Insurance Law of the People’s Republic of China General......Wenzhou Hongda Art. 2......Wenzhou Hongda Art. 6......SHU Shiyun Art. 12......An Bang Art. 12 Para. 1......SHU Shiyun Art. 16......Jiangsu Oriental Art. 16 Para. 4......Jiangsu Oriental Art. 16 Para. 5......Jiangsu Oriental Art. 16 Para. 7......Jiangsu Haichang, SHU Shiyun Art. 17......Jiangsu Haichang Art. 17 Para. 2......Wenzhou Hongda Art. 18 Para. 4......Wenzhou Hongda Art. 19 Para. 1......Wenzhou Hongda Art. 22 Para. 1......Guangzhou Ansheng

lxxviii

Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art. Art.

Table of References

22 Para. 2......Guangzhou Ansheng 23......Jiangsu Oriental 23 Para. 1......Wenzhou Hongda 23 Para. 2......Taizhou Changxin, Wenzhou Hongda 25......Taizhou Jiangdong 30......Jiangsu Haichang, Taizhou Changxin, Wenzhou Hongda 31 Para. 1 Sub-Para. 3......SHU Shiyun 31 Para. 1 Sub-Para. 4......SHU Shiyun 55 Para. 1......Wenzhou Hongda 60......Dongguan Yihai, PICC P&C Shanghai 60 Para. 1......PICC P&C 65 Para. 1......Dalian Deli, Taizhou Jiangdong 65 Para. 2......Dalian Deli 65 Para. 4......SHU Shiyun, Wenzhou Hongda 74 Para. 2......Dalian Deli 182......Jiangsu Oriental

Interpretation of the Supreme People’s Court of Several Issues on the Application of Law in the Trial of Labor Dispute Cases General......TAN Yang Art. 15......TAN Yang Interpretation of the Supreme People’s Court of Several Issues concerning the Application of the Guaranty Law of the People’s Republic of China Art. 42......Bank of China Art. 57......ZHONG Huiling Art.108......Shenzhen West Interpretation of the Supreme People’s Court on Certain Issues concerning the Application of Law in the Trial of Cases Involving Compensation for Personal Injury Art. 3 Para. 2......CHEN Minsheng Art. 3 Para. 3......CHEN Minsheng Art. 11......Xiangshan Dongmen, ZHOU Wenhua Art. 11 Para. 1......Xiangshan Dongmen Art. 12......TANG Suyun Art. 14 Para. 1......Xiangshan Dongmen Art. 17 Para. 3......CHEN Minsheng Art. 18 Para. 1......CHEN Minsheng Art. 19 Para. 1......CHEN Minsheng Art. 20 Para. 3......ZHOU Wenhua Art. 25......ZHOU Wenhua Art. 27......CHEN Minsheng Art. 28......CHEN Minsheng Art. 28 Para. 2......CHEN Minsheng Art. 29......CHEN Minsheng

Table of References

lxxix

Art. 30 Para. 1......ZHOU Wenhua Art. 30 Para. 3......ZHOU Wenhua Art. 35 Para. 2......CHEN Minsheng Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law in Trial of Criminal Cases of Traffic Accidents Art. 4......The People’s Interpretation of the Supreme People’s Court on Issues Concerning the Application of Law for the Trial of Cases of Dispute over Contracts on Undertaking Construction Projects Art. 2......China Pacific (Xiamen Branch), Zhanjiang Henghai Art. 17......Zhanjiang Henghai Interpretation of the Supreme People’s Court on Issues concerning the Application of Law for the Trial of Cases of Disputes over Sales Contracts Art. 3......ZHONG Huiling Art. 8......Jiangyin Parter Art. 24 Para. 4......Shanghai Jiahang Interpretation of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects General......ZHANG Guoping Art. 2......LV Xiangyin Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Contract Law of the People’s Republic of China (I) Art. 4......ZHONG Huiling Art. 10......China Pacific (Xiamen Branch) Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Contract Law of the People’s Republic of China (II) Art. 7 Para. 2......Shanghai Dingheng, Xiamen Jianfa, Yangpu Shengda Art. 29......Lifu Petroleum Art. 29 Para. 2......ZIM Integrated Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Insurance Law of the People’s Republic of China (II) Art. 6......Jiangsu Oriental Art. 8......Jiangsu Oriental Art. 9 Para. 1......Wenzhou Hongda Art. 10......Wenzhou Hongda Art. 11......Wenzhou Hongda Art. 13......Wenzhou Hongda Art. 16 Para. 4......Jiangsu Oriental Art. 16 Para. 5......Jiangsu Oriental

lxxx

Table of References

Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Marriage Law of the People’s Republic of China (II) Art. 24......Postal Savings, WEI Xinyou Interpretation of the Supreme People’s Court on Several Issues concerning the Application of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China (I) Art. 12......SUMPU INTERNATIONAL Art. 16......SUMPU INTERNATIONAL Art. 19......Far East, SUMPU INTERNATIONAL Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law to the Calculation of Interest on Debt for the Period of Deferred Performance in the Enforcement Procedure Art. 1......Wenzhou Hongda Interpretation of the Supreme People’s Court on Issues regarding the Ascertainment of Compensation Liability for Emotional Damages in Civil Torts Art. 9 Para. 2......CHEN Minsheng Art. 10 Para. 1......CHEN Minsheng Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China General......Shenzhen Maritime Art. 3......An Bang Art. 21 Para. 1......An Bang Art. 52 Para. 6......Dalian Deli Art. 62......FANG Hao Art. 72......GAN Muan Art. 90......FANG Hao, GAN Muan, LIG Property, Lianyungang Wuzhou, Shanghai COSCO, Shaoxing Shang, ZHANG Guoping Art. 90 Para. 2......Dongguan Yihai, Shenzhen Maritime, Shandong Xinhai Art. 91 Para. 1......Dongguan Yihai, Shenzhen Maritime Art. 91 Para. 1 Sub-Para. 4......Shanghai COSCO Art. 101......Chongqing Kuixia Art. 102 Para. 2......Chongqing Kuixia Art. 114......Wenzhou Hongda Art. 117......China Construction Art. 295 Para. 2......An Bang Art. 312......Shandong Xinhai Art. 312 Para. 1 Sub-Para. 2......GAO Wenbin Art. 338 Para. 1......Shaoxing Shang Art. 344......Guangzhou Ansheng Art. 395 Para. 2......China Construction, Dongguan Yihai, GAN Muan, Jiangsu Xinshengyuan, Chongqing Kuixia, Ningbo Shun, Ningbo Yinzhou, WANG Bin, Wenzhou Hongda

Table of References

Art. Art. Art. Art. Art. Art.

lxxxi

403......LIG Property 407 Para. 2......China Pacific, China Pacific (Xiamen Branch) 522......Beijing Hengshui 522 Para. 1......ZIM Integrated 522 Para. 4......Zhenhua Logistics, ZIM Integrated 551......An Bang

Interpretation of the Supreme People’s Court on the Application of the Special Maritime Procedure Law of the People’s Republic of China Art. 8......TAN Yang Island Protection Law of the People’s Republic of China General......ZHANG Caokui Labor Contract Law of the People’s Republic of China Art. 10 Para. 2......TAN Yang Art. 15......TAN Yang Art. 36......TAN Yang Art. 38......TAN Yang Art. 40......TAN Yang Art. 40 Para. 1......TAN Yang Art. 44......TANG Suyun Art. 44 Para. 1......TAN Yang Art. 44 Para. 2......TAN Yang Art. 44 Para. 4......TAN Yang Art. 44 Para. 5......TAN Yang Art. 46......TAN Yang, TANG Suyun Art. 47......TAN Yang Art. 47 Para. 1......TAN Yang Art. 47 Para. 2......TAN Yang Art. 82......TAN Yang Art. 87......TAN Yang Labor Dispute Mediation and Arbitration Law of the People’s Republic of China Art. 27......TAN Yang Art. 27 Para. 1......TAN Yang Art. 27 Para. 2......TAN Yang Art. 27 Para. 4......TAN Yang Art. 45......TAN Yang Labor Law of the People’s Republic of China Art. 79......TAN Yang Law of Succession of the People’s Republic of China Art. 33......China Construction Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China

lxxxii

Table of References

Art. 3......An Bang, Beijing Hengshui, Chem-Together, Luy International, Ningbo Youyang, Zhejiang Longda, Zhenhua Logistics Art. 8......ZIM Integrated Art. 10......Far East, Ningbo Yinzhou, Shaoxing Shang Art. 10 Para. 1......Shaoxing Shang Art. 14......An Bang, SUMPU INTERNATIONAL Art. 16......Shenzhen West Art. 41......Far East, JM Marine, Ningbo Yinzhou, Xiamen C&D Law of the People’s Republic of China on Commercial Banks General......China Construction Law of the People’s Republic of China on Ports Art. 22 Para. 1......GAN Muan Law of the People’s Republic of China on the Administration of Sea Areas Art. 19......ZHONG Huiling Art. 20......ZHONG Huiling Art. 27......ZHONG Huiling Art. 27 Para. 2......ZHONG Huiling Maritime Code of the People’s Republic of China General......Chem-Together, China Shipping, COSCO Shipping, Jiangsu Oriental, Chongqing Kuixia, Wenzhou Hongda, Xuzhou Tianye, Ningbo Youyang, Zhejiang Longda, Zhenhua Logistics Art. 3......Wenzhou Hongda Art. 6......Taizhou Changxin Art. 9 Para. 1......GAO Wenbin Art. 11......Bank of China, China Construction Art. 22 Para. 1 Sub-Para. 1.....TAN Yang Art. 22 Para. 1 Sub-Para. 2.....ZHOU Wenhua Art. 26......TAN Yang Art. 28......TAN Yang Art. 29......TAN Yang Art. 29 Para. 1 Sub-Para. 1.....ZHOU Wenhua Art. 41......ZIM Integrated Art. 42 Para. 1......Changzhou Woyuan Art. 42 Para. 4......Jiangsu Province Art. 46......Ningbo Shun, Udaya Anugerah, Zhejiang Longda Art. 46 Para. 1......Ningbo Yinzhou, PICC Property, SUMPU INTERNATIONAL, WANG Bin, Ningbo Youyang Art. 48......SUMPU INTERNATIONAL, Xuzhou Tianye, Ningbo Youyang, Zhejiang Longda Art. 49 Para. 2......Xuzhou Tianye Art. 50......Xuzhou Tianye Art. 50 Para. 3......Xuzhou Tianye Art. 51......SUMPU INTERNATIONAL, Zhejiang Longd Art. 51 Para. 1 Sub-Para. 3......SUMPU INTERNATIONAL

Table of References

lxxxiii

Art. 51 Para. 1 Sub-Para. 5......Zhejiang Longda Art. 51 Para. 1 Sub-Para. 8......Xuzhou Tianye Art. 51 Para. 1 Sub-Para. 9......Xuzhou Tianye Art. 52......Zhejiang Longda Art. 55......PICC Property, SUMPU INTERNATIONAL Art. 55 Para. 1......PICC Property, Udaya Anugerah Art. 56......SUMPU INTERNATIONAL Art. 57......Xuzhou Tianye Art. 63......Udaya Anugerah Art. 68......Xuzhou Tianye Art. 68 Para. 1......Xuzhou Tianye Art. 68 Para. 2......Xuzhou Tianye Art. 69......Shanghai Pudong, Shenzhen Chinatrans Art. 69 Para. 1......Shanghai Pudong, Shenzhen Chinatrans Art. 71......Changzhou Woyuan, Chem-Together, Jiangsu Province, Luy International, Paper Creative, SUMPU INTERNATIONAL, Udaya Anugerah, WANG Bin Art. 72......Chem-Together Art. 78 Para. 1......China Shipping, COSCO Shipping Art. 86......China Shipping, COSCO Shipping, Zhejiang Longda, ZIM Integrated Art. 87......ZIM Integrated Art. 88......China Shipping, COSCO Shipping, ZIM Integrated Art. 141......Qinzhou Xiangli Art. 144......Hefei Gui He Ju Art. 152 Para. 1......Hefei Gui He Ju Art. 165......China Ping An Art. 165 Para. 1......ZHANG Guoping Art. 169......China Ping An Art. 169 Para. 1......Dalian Deli Art. 169 Para. 2......Dalian Deli Art. 204......China Pacific (Xiamen Branch), Dongguan Yihai Art. 207......China Pacific (Xiamen Branch) Art. 207 Para. 1 Sub-Para. 1......China Ping An Art. 209......Dongguan Yihai Art. 210......Dongguan Yihai Art. 210 Sub-Para. 3......China Ping An Art. 210 Sub-Para. 4.......China Ping An Art. 216......An Bang, Chongqing Kuixia, Taizhou Changxin Art. 217 Para. 6......Taizhou Changxin Art. 219......An Bang Art. 222......Jiangsu Oriental Art. 222 Para. 1......Jiangsu Oriental Art. 223 Para. 2......Jiangsu Oriental Art. 237......An Bang, Guangxi Qinzhou, Jiangsu Haichang, Wenzhou Hongda Art. 240......Guangxi Qinzhou

lxxxiv

Table of References

Art. 240 Para. 1......Guangxi Qinzhou Art. 242 Para. 1......Wenzhou Hongda Art. 244......Wenzhou Hongda Art. 252......China Pacific, Dalian Deli Art. 257......Beijing Hengshui, WANG Bin Art. 257 Para. 1......WANG Bin Art. 264......An Bang, Jiangsu Haichang Art. 267......An Bang, WANG Bin Art. 267 Para. 1......WANG Bin Art. 269......Ningbo Yinzhou, SUMPU INTERNATIONAL, Xuzhou Tianye, ZIM Integrated Art. 277......Dongguan Yihai, SUMPU INTERNATIONAL Charter 6......China Pacific (Xiamen Branch) Maritime Traffic Safety Law of the People’s Republic of China General......The People’s, Wenzhou Hongda Marriage Law of the People’s Republic of China Art. 19 Para. 3......Postal Savings Art. 41......Bank of China Measures on the Payment of Litigation Costs Art. 13......Jiangyin Parter Art. 13 Para. 1......Huainan Junfei, Jiangsu Xinshengyuan, Chongqing Kuixia, PICC P&C Shanghai, Taizhou Changxin, Taizhou Jiangdong, Wuhan Baotongjiang Art. 38 Para. 3......Shenzhen Ocean, Shenzhen West Merchant Ship (Registration) Ordinance of the Hong Kong Special Administrative Region of the People’s Republic of China General......Far East Art. 44(1)......Far East Art. 44(3)......Far East Art. 45(1)......Far East Art. 47(1)......Far East Money Lenders Ordinance of the Hong Kong Special Administrative Region of the People’s Republic of China General......Far East Art. 2......Far East Notice by the Supreme People’s Court of Issuance of the Provisions on the Causes of Action for Civil Cases General......Jiangsu Province Notice of the People’s Bank of China on Some Issues concerning RMB Loan Interest Rates Art. 3 Para. 1......Shanghai Jiahang

Table of References

lxxxv

Notice of the Supreme People’s Court on Certain Issues concerning the Application of the Tort Law of the People’s Republic of China Art. 4......CHEN Minsheng Opinions of the Supreme People’s Court on Several Issues concerning the Implementation of the General Principles of the Civil Law of the People’s Republic of China (For Trial Implementation) Art. 70......Qinzhou Xiangli Property Law of the People’s Republic of China General......Shenzhen West Art. 23......Shandong Xinhai Art. 24......GAO Wenbin, WANG Hao Art. 26......Shandong Xinhai Art. 33......WANG Hao Art. 176......China Construction Art. 186......ZHONG Huiling Art. 230......Lianyungang Wuzhou Art. 230 Para. 1......Guangxi Jufeng Art. 233......Guangxi Jufeng Provisions Concerning the Limitation of Liability for Maritime Claims for Ships With a Gross Tonnage Not Exceeding 300 Tons and Those Engaging in Coastal Transport Services As Well As Those for Other Coastal Operations General......Dongguan Yihai Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading Art. 1......Changzhou Woyuan Art. 2......Changzhou Woyuan, Chem-Together, Luy International, Paper Creative Art. 3 Para. 1......Shaoxing Shang Art. 6......Changzhou Woyuan, Chem-Together, Luy International, Paper Creative Art. 7......Luy International, Zhejiang Longda Art. 8......Zhejiang Longda Art. 9......Zhejiang Longda Art. 14......Beijing Hengshui Provisions of the Supreme People’s Court on Several Issues about the Trial of Cases concerning Marine Insurance Disputes Art. 4......Jiangsu Oriental Art. 13......PICC P&C, PICC P&C Shanghai, PICC Property Art. 14......Dongguan Yihai, PICC P&C, PICC Property

lxxxvi

Table of References

Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Law in Cases Involving the Acquisition, Management and Disposal of Assets Formed from Non-Performing Loans of State-owned Banks by Financial Asset Management Companies Art. 7......Ningbo Feng Art. 9......Ningbo Feng Art. 10......Ningbo Feng Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases Art. 23 Para. 2......Lianyungang Wuzhou Art. 24......ZHONG Huiling Provisions of the Supreme People’s Court on Several Issues concerning the Application of Statute of Limitations During the Trial of Civil Cases Art. 5......Heifei Swan Art. 16......An Bang Provisions of the Supreme People’s Court on Several Issues concerning the Handling of Property Preservation Cases by the People’s Courts Art. 27 Para. 1......Shandong Xinhai Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Cases of Disputes over Marine Freight Forwarding Art. 2......Shanghai Pudong Art. 3......Zhenhua Logistics Art. 4......Beijing Hengshui Art. 10......HONG KONG Provisions of the Supreme People’s Court on the Scope of Cases to Be Accepted by Maritime Courts Art. 48......Ningbo Feng Provisions of the Supreme People’s Court on the Trial of Certain Issues in Cases of Disputes over Collision of Ships Art. 4......Dalian Deli Provisions of the Supreme People’s Court on the Trial of Compensation for Property Damage in Cases of Collision and Contact of Ships Art. 1......Dalian Deli Art. 1 Para. 1......China Ping An Art. 3......China Ping An Art. 3 Sub-Para. 2......Dalian Deli Art. 3 Sub-Para. 3......Dalian Deli Art. 10 Para. 1......Dalian Deli Art. 10 Para. 2......Dalian Deli Art. 16 Para. 6......Dalian Deli

Table of References

lxxxvii

Art. 16 Para. 7......Dalian Deli Provisions on the Administration of the Right to Use Sea Areas Art. 37......ZHONG Huiling Art. 38......ZHONG Huiling Art. 39......ZHONG Huiling Art. 40......ZHONG Huiling Quality Inspection Standard for Waterway Engineering (JTS257-2008) General......Zhanjiang Henghai Regulations of the Supreme People’s Court of the People’s Republic of China on Certain Issues concerning the Disputes over Compensation for Oil Pollution Damage of Vessel Art. 4......Dalian Deli Regulation of the People’s Republic of China on Seamen Art. 29 Para. 1......TAN Yang Art. 30......TAN Yang Art. 30 Para. 2......TAN Yang Regulation on the Administration of Domestic Water Transport General......China Pacific (Xiamen Branch) Art. 8......China Pacific (Xiamen Branch) Art. 33......China Pacific (Xiamen Branch) Regulation on Paid Annual Leave for Employees Art. 3......TAN Yang Art. 5......TAN Yang Regulation on the Implementation of the Employment Contract Law of the People’s Republic of China Art. 5......TAN Yang Regulations on the Scope of the Relatives to Be Supported by the Employees Killed in Work-related Accidents General......TANG Suyun Art. 2......TANG Suyun Art. 3......TANG Suyun Regulations on Work-related Injury Insurance General......TANG Suyun Art. 39 Para. 1 Sub-Para. 1......TANG Suyun Art. 39 Para. 1 Sub-Para. 2......TANG Suyun Art. 39 Para. 1 Sub-Para. 3......TANG Suyun Art. 62 Para. 2......TANG Suyun

lxxxviii

Table of References

Reply of the Supreme People’s Court to the Request for Instructions on How to Determine the Interest Rates of Key Foreign Currency Loans in the Trial of Foreign-Related Civil and Commercial Cases General......Zhenhua Logistics Rules for the Classification of Steel Ships at Sea General......Jiangsu Haitun Rules of Domestic Waterway Container Goods Transport General......Great Xinhua, PICC P&C Shanghai Art. 15......Great Xinhua Rules of Domestic Waterway Goods Transport General......China Pacific, China Pacific (Xiamen Branch), Great Xinhua Art. 3......Great Xinhua Art. 14......Great Xinhua Art. 46......PICC P&C Shanghai Art. 47......PICC P&C Shanghai Art. 48......Yangpu Shengda Art. 63......Yangpu Shengda Art. 83......Great Xinhua Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures General......Guangzhou Ansheng, Shenzhen Maritime Art. 2......Guangxi Jufeng, Huainan Junfei Art. 11 Para. 1......ZIM Integrated Art. 58......GAN Muan Art. 69 Sub-Para. 4......Lianyungang Wuzhou Art. 72 Para. 1.....Sinotrans Guangdong Art. 75......PICC P&C Special Maritime Procedure Law of the People’s Republic of China Art. 93......China Pacific (Xiamen Branch), Dalian Deli, Dongguan Yihai, PICC Property Supplementary Notice of the Supreme People’s Court about the Purchase and Disposal of Non-performing Assets by Financial Asset Management Companies Art. 2......Ningbo Feng The Supreme People’s Court’s Guiding Opinions on Legal Issues concerning Domestic Waterway Cargo Transport Dispute Cases Art. 11......China Pacific Tort Liability Law of the People’s Republic of China Art. 2......GAN Muan, LIG Property Art. 3......GAN Muan Art. 5.....ZHOU Wenhua

Table of References

lxxxix

Art. 6......China Pacific, GAN Muan, Huainan Junfei, Qinzhou Xiangli Art. 6 Para. 1......China Pacific, GAN Muan, Sinotrans Guangdong, Taizhou Jiangdong Art. 8.....Sinotrans Guangdong Art. 9......LIG Property Art. 14......Xiangshan Dongmen Art. 15......Huainan Junfei Art. 15 Para. 1 Sub-Para. 5......Taizhou Jiangdong Art. 15 Para. 1 Sub-Para. 6......Qinzhou Xiangli, Sinotrans Guangdong, ZHOU Wenhua Art. 16......CHEN Minsheng Art. 19......Huainan Junfei, Taizhou Jiangdong Art. 26......GAN Muan, Taizhou Jiangdong, ZHOU Wenhua Art. 35......CHEN Minsheng Zhejiang Province Forest Fire Control Regulations General......ZHANG Caokui Zhejiang Province Leisure Fisheries Ship Management Measures General......ZHANG Caokui Zhejiang Zhe Zheng Fa (2009) No.50 Document Art. 3......TANG Suyun

International Conventions and Customs International Maritime Solid Bulk Cargoes Code General......Xuzhou Tianye Art. 1.1.4.4......Xuzhou Tianye Art. 1.7.5......Xuzhou Tianye Art. 1.7.10......Xuzhou Tianye Art. 1.7.20......Xuzhou Tianye Art. 1.7.23......Xuzhou Tianye Art. 1.7.27......Xuzhou Tianye Art. 4.2......Xuzhou Tianye Art. 4.2.1......Xuzhou Tianye Art. 4.3......Xuzhou Tianye Art. 4.3.2......Xuzhou Tianye Art. 4.4.1......Xuzhou Tianye Art. 4.5.1......Xuzhou Tianye Art. 7.2.3......Xuzhou Tianye Art. 7.3......Xuzhou Tianye Art. 7.3.1......Xuzhou Tianye Art. 7.3.1.1......Xuzhou Tianye Appendix 2......Xuzhou Tianye

xc

Table of References

International Convention for Safety of Life at Sea, 1974 General......Xuzhou Tianye Art. 34-1......Xuzhou Tianye International Regulations for Preventing Collisions at Sea, 1972 General......China Ping An Art. 5......China Ping An, The People’s Art. 6......The People’s Art. 7......The People’s Art. 7 Para. 1......China Ping An Art. 8......The People’s Art. 8 Para. 4......China Ping An, The People’s Art. 19 Para. 2......The People’s Art. 19 Para. 5......The People’s Art. 35 Para. 1......The People’s Manila Amendments to STCW Convention Art. A-VIII 45......The People’s

Chinese Judgments (2007) Yong Hai Fa Shang Chu Zi No.292......WANG Bin (2010) Jin Yi Shang Chu Zi No.389......WANG Bin (2011) Zhe Jin Shang Zhong Zi No.1037......WANG Bin (2011) Zhe Min Shen Zi No.19......WANG Bin (2013) Yue Gao Fa Li Min Zhong Zi No.228......China Pacific (Xiamen Branch) (2013) Yong Hai Fa Shang Chu Zi No.632 Civil Ruling......Ningbo Shun (2014) Da Hai Shang Chu Zi No.34......Shanghai Pan (2014) Hai Shang Chu Zi No.141-1 Civil Ruling......Guangxi Jufeng (2014) Hu Hai Fa Chu Zi No.1016......Zhenhua Logistics (2014) Min Shen Zi No.1041......China Pacific (2014) Qiong Hai Fa Shang Chu Zi No.137......Taizhou Changxin (2014) Qiong Hai Fa Shang Chu Zi No.36......Taizhou Changxin (2014) Qiong Min San Zhong Zi No.47......Taizhou Changxin (2014) Wu Hai Fa Shi Zi No.00063......Jiangsu Oriental (2014) Wu Hai Fa Shi Zi No.00051......Jiangsu Oriental (2014) Yong Hai Fa Shang Chu Zi No.889......An Bang (2014) Zhe Hai Zhong No.32......Nantong Kanghai (2015) Guang Hai Fa Chu Zi No.1125......Zhanjiang Henghai (2015) Guang Hai Fa Zhi Zi No.171-181 Satisfaction of Judgment......China Pacific (Xiamen Branch) (2015) Guang Hai Fa Zhi Zi No.182-194 Satisfaction of Judgment......China Pacific (Xiamen Branch)

Table of References

xci

(2015) Guang Hai Fa Zhi Zi No.195 Satisfaction of Judgment......China Pacific (Xiamen Branch) (2015) Hai Shang Chu No.106......WANG Hao (2015) Hai Shang Chu No.107......WANG Hao (2015) Hai Shang Chu Zi No.227 Civil Ruling......Lianyungang Wuzhou (2015) Hai Zhi Yi Zi No.110 Enforcement Ruling......Lianyungang Wuzhou (2015) Hai Shang Chu Zi No.227 Civil Ruling......Lianyungang Wuzhou (2015) Hong Min Wu (Shang) Chu Zi No.115......Ningbo Feng (2015) Hu Hai Fa Shang Chu Fi No.2979......Ningbo Feng (2015) Jin Gao Min Si Zhong Zi No.87......Nantong Kanghai (2015) Jin Gao Min Si Zhong Zi No.88......Nantong Kanghai (2015) Jin Hai Fa Shang Chu Zi No.24......Nantong Kanghai (2015) Jin Hai Fa Shang Chu Zi No.69......Nantong Kanghai (2015) Jin Hai Fa Shang Chu Zi No.527......Yangpu Shengda (2015) Mao Zhong Fa Min Si Po Zi No.4-1 Civil Ruling......TAN Yang (2015) Mao Zhong Fa Min Si Po Zi No.4-2 Civil Ruling......TAN Yang (2015) Min Si Ta Zi No.43......GAO Wenbin (2015) Wu Hai Fa Shang Zi No.000297 Civil Ruling......Zijinshan Shipyard (2015) Xia Hai Fa Qiang Zi No.6 Civil Ruling......Sinotrans Guangdong (2015) Yong Hai Fa Shang Chu Zi No.235......Jiangsu Province (2015) Yong Hai Fa Tai Deng Zi No.154 Civil Ruling......Ningbo Feng (2015) Yong Hai Fa Tai Shang Chong Zi No.2......LI Fan (2015) Zhan Xia Fa Min San Chu Zi No.390......Zhanjiang Henghai (2016) E 72 Min Chu No.84-1 Civil Ruling......CHEN Hongbing (2016) E Min Xia Zhong No.98 Civil Ruling......CHEN Hongbing (2016) Gui 72 Min Chu No.129 Civil Ruling......GAO Wenbin (2016) Gui 72 Min Chu No.12......WEI Xinyou (2016) Gui 72 Min Chu No.129 Civil Judgmen......GAO Wenbint (2016) Gui 72 Min Chu No.183......GAO Wenbin (2016) Gui Min Zhong No.350......GAO Wenbin (2016) Gui 72 Zhi No.269......GAO Wenbin (2016) Hu 72 Cai Bao No.94......Lianyungang Wuzhou (2016) Hu 72 Cai Bao No.94-1 Civil Rulings......Lianyungang Wuzhou (2016) Hu 72 Cai Bao No.95......Lianyungang Wuzhou (2016) Hu 72 Min Chu No.1841 Civil Ruling......Lianyungang Wuzhou (2016) Hu 72 Min Chu No.2940 Civil Ruling......Shandong Xinhai (2016) Hu Min Xia Zhong No.180 Civil Ruling......Lianyungang Wuzhou (2016) Jin 72 Min Chu No.897......Shanghai Dingheng (2016) Jin Bei Fang Zheng Jing Zi No.9231......Beijing Hengshui (2016) Jin Bei Fang Zheng Jing Zi No..9233......Beijing Hengshui (2016) Jin Bei Fang Zheng Jing Zi No.9234......Beijing Hengshui (2016) Lun Lao Zhong An Zi No.1479 Arbitral Award......TANG Suyun (2016) Min 72 Cai Bao No.40 Civil Ruling......Xiamen C&D (2016) Min Min Xia Zhong No.175 Civil Ruling......Shanghai COSCO (2016) Wan 0111 Min Chu No.1620......Heifei Swan

xcii

Table of References

(2016) Wan 01 Min Xia Zhong No.750 Civil Ruling......Heifei Swan (2016) Yue 72 Min Chu No.172 Civil Ruling......Zhanjiang Henghai (2016) Zhe 72 Min Chu No.2279 Civil Ruling......ZHANG Guoping (2016) Zhe 72 Min Chu No.2279-1 Civil Ruling......ZHANG Guoping (2016) Zhe 72 Min Chu No.2279-2 Civil Ruling......ZHANG Guoping (2016) Zhe Min Xia Zhong No.257 Civil Ruling......ZHANG Guoping (2016) Zhe Zhi Fu No.24 Enforcement Ruling......LI Fan (2017) E 72 Min Chu No.91 Civil Ruling......Jiangyin Parter (2017) Liao 02 Po Shen No.5 Ruling......Zijinshan Shipyard (2017) Gui 72 Zhi Yi No.1 Civil Ruling......GAO Wenbin (2017) Yue Min Xia No.10 Civil Ruling......TAN Yang (2017) Zhe 72 Min Chu No.1608......Zhongdong (Zhoushan) (2017) Zui Gao Fa Min Shen No.3978 Civil Ruling......China Pacific Execution Decision (2016) Gui 72 Zhi No.143......WEI Xinyou Execution Decision (2016) Gui 72 Zhi Yi No.6......WEI Xinyou Yong Jian Xing Su (2017) No.53......The People’s

xciii

377

77

14

23

742

77

1

165

93

Maritime Courts (Sub-total)

Shanghai Maritime Court

Tianjin Maritime Court

Qingdao Maritime Court

Dalian Maritime Court 12

12

22

54

337

Dispute over contract of carriage of goods by sea or seaconnected waters

12

33

10

4

174

Dispute over contract for marine stores and spare parts supply

25

27

1

9

153

Dispute over liability for personal injury at sea

1

8

2

3

144

Dispute over ship mortgage contract

11

5

/

3

113

Dispute over ship sale and purchase contract

15

15

1

6

108

Dispute over marine insurance contract on the sea or seaconnected waters

5

2

10

12

90

Dispute over voyage charter party

(continued)

2

11

3

5

70

Dispute over shipbuilding contract

The court system in China runs the so-called writs system, which means that the court will entertain and adjudicate a case if that falls in one of the statutory causes of action. Now, there are about 90 statutory causes of action for maritime cases, which may grow in the future. This Report only covers the cases/judgments of top 10 maritime causes of action assessed by number of cases/judgments, and the covered cases/judgments are about 2,710, representing about 79% of the cases/judgments analyzed for the year of 2017. The cases/judgments analyzed (about 3,460) refer to those which are accessible to the public via internet, and those cases/judgments are estimated to be 65–70% of all the cases/judgments adjudicated by the 11 maritime courts, their appeal courts (11) and the petition court (i.e., the Supreme People’s Court of China).

1

No. of Cases Judged by Courts

9

Dispute over freight forwarding contract on the sea or seaconnected waters

Top 10 Causes of Action

Dispute over contract for employment of seaman

Chinese Maritime Litigation Digital Report 20171

49

114

1

14

75

21

152

8

56

124

45

/

72

Guangzhou Maritime Court

Wuhan Maritime Court

Haikou Maritime Court

Xiamen Maritime Court

Ningbo Maritime Court

Beihai Maritime Court

Nanjing Maritime Court2

Appeal Courts (Sub-total)

59

/

78

/

9

48

14

2/

90

76

Dispute over contract of carriage of goods by sea or seaconnected waters

19

/

3

64

6

/

37

5

Dispute over contract for marine stores and spare parts supply

53

/

6

35

18

2

16

14

Dispute over liability for personal injury at sea

6

/

/

24

4

/

102

/

Dispute over ship mortgage contract

29

/

10

33

7

4

31

9

Dispute over ship sale and purchase contract

Nanjing Maritime Court was established at the end of 2019, so did not hand down any judgments in 2017.

2

No. of Cases Judged by Courts

1

Dispute over freight forwarding contract on the sea or seaconnected waters

Top 10 Causes of Action

Dispute over contract for employment of seaman

(continued)

26

/

7

37

3

1

16

7

Dispute over marine insurance contract on the sea or seaconnected waters

22

/

/

23

5

7

15

11

Dispute over voyage charter party

(continued)

26

/

2

9

4

3

27

4

Dispute over shipbuilding contract

xciv Chinese Maritime Litigation Digital Report 2017

18

19

1

3

/

1

12

2

23

10

2

2

/

7

Shanghai High People’s Court

Tianjin High People’s Court

Shandong High People’s Court

Liaoning High People’s Court

Guangdong High People’s Court

Hubei High People’s Court

Hainan High People’s Court

Fujian High People’s Court

No. of Cases Judged by Courts

3

3

Dispute over freight forwarding contract on the sea or seaconnected waters

Top 10 Causes of Action

Dispute over contract for employment of seaman

(continued)

3

/

7

7

2

9

6

20

Dispute over contract of carriage of goods by sea or seaconnected waters

2

1

4

1

/

1

2

1

Dispute over contract for marine stores and spare parts supply

2

2

6

9

4

7

1

8

Dispute over liability for personal injury at sea

/

/

2

4

/

/

/

/

Dispute over ship mortgage contract

/

2

6

5

/

3

/

4

Dispute over ship sale and purchase contract

1

/

5

6

/

9

/

1

Dispute over marine insurance contract on the sea or seaconnected waters

5

1

2

5

1

/

3

2

Dispute over voyage charter party

(continued)

1

/

14

2

/

1

2

/

Dispute over shipbuilding contract

Chinese Maritime Litigation Digital Report 2017 xcv

1

/

1

1

2

/

/

/

814

Guangxi Zhuang Autonomous Region High People’s Court

Jiangsu High People’s Court3

Petition Court (Sub-total)

The Supreme People’s Court of China

Total

416

1

1

/

/

24

Dispute over contract of carriage of goods by sea or seaconnected waters

193

/

/

/

1

6

Dispute over contract for marine stores and spare parts supply

206

/

/

/

1

13

Dispute over liability for personal injury at sea

150

/

/

/

/

/

Dispute over ship mortgage contract

143

1

1

/

3

6

Dispute over ship sale and purchase contract

136

2

2

/

2

2

Dispute over marine insurance contract on the sea or seaconnected waters

113

1

1

/

/

3

Dispute over voyage charter party

96

/

/

/

/

6

Dispute over shipbuilding contract

As Nanjing Maritime Court was established at the end of 2019 and did not hand down any judgments in 2017, there was no appeal case to Jiangsu High People’s Court in 2017.

3

10

12

Zhejiang High People’s Court

No. of Cases Judged by Courts

437

Dispute over freight forwarding contract on the sea or seaconnected waters

Top 10 Causes of Action

Dispute over contract for employment of seaman

(continued)

xcvi Chinese Maritime Litigation Digital Report 2017

Ningbo Maritime Court Civil Judgment An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2015) Yong Hai Fa Shang Chu Zi No.440 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 14 and page 28 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Plaintiff assured, bareboat charterer of ship that was totally lost, held entitled to recover indemnity in full from defendant hull insurer, despite the fact that the insurance premium, which was to be paid in installments, had not been paid in full, and despite the fact that there were two other co-assureds. Summary The Plaintiff, a bareboat charterer, sued the Defendant-insurer for compensation under an all-risks insurance policy. The parties insured under the insurance contract were the bareboat charterer, the ship owners, and the ship managers. It was agreed between the parties to the contract that the insurance premium would be paid in installments. Before the full premium had been paid, the vessel sank and was a total loss. The Defendant-insurer refused to compensate the Plaintiff bareboat charterer for any more than what had been already paid on the premium, and since not all of the insured parties had rendered payment, the Defendant-insurer only compensated those parties that had paid a portion of the premium. The court held that the Plaintiff was not hindered in its right to be compensated due to the divided ownership of the vessel and the other insureds’ interests in the vessel. According to the insurance contract, it was agreed that should the ship suffer a total loss, the insurer would compensate the insured parties immediately. Thus, the court ordered the Defendant-insurer to compensate the Plaintiff, in full, the amount under the policy, plus interest.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_1

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M. Davies and J. Lin

Judgment The Plaintiff: An Bang (Hong Kong) Shipping Development Co., Ltd. Domicile: Room 01B3, Floor 10, Carnival Commercial Building, 18 Java Rood, North Point, Hong Kong Special Administrative Region. Legal representative: HE Zhongfeng, director. Agent ad litem: WAN Renshan, lawyer of Shanghai Trend Law Firm. The Defendant: Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch. Domicile: No.1, Baiti Road, Nan Kai District, Tianjin, the People’s Republic of China. Legal representative: WANG Ran, vice manager. Agent ad litem: TONG Dengyong, lawyer of Beijing Dentons (Ningbo) Law Firm. Agent ad litem: LV Jing, lawyer of Beijing Dentons (Ningbo) Law Firm. With respect to the case arising from dispute over marine insurance contract between the Plaintiff, An Bang (Hong Kong) Shipping Development Co., Ltd. (hereinafter referred to as “An Bang Hong Kong”) and the Defendant, Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (hereinafter referred to as “Ping An Tianjin”), the Plaintiff filed an action on March 4, 2015. After entertaining this case on the same day, the court organized a collegiate panel to try this case in accordance with the law. The court organized a pre-trial hearing on September 21. 2015. HE Zhongfeng and CHEN Zhijun submitted a Notice of Dismissal. On January 18, 2016, the court held a hearing in public. WAN Renshan, agent ad litem of the Plaintiff, and TONG Dengyong and LV Jing, agents ad litem of the Defendant, appeared in court and participated in the action. Now the case has been concluded. An Bang Hong Kong claimed that: on January 22, 2013, Jiu Xin Shipping Co., Ltd. (hereinafter referred to as “Jiu Xin Company”) applied to Ping An Tianjin to arrange all-risks insurance and Ping An Tianjin agreed to provide an all-risks insurance policy (No.18803761900084361404) for the vessel M.V. AN FENG 8. The range of navigation included Far East and Southeast Asia. Both the insured value and the premium were RMB11,000,000 yuan. The period of insurance was from 00:00 February 1, 2013 to 24:00 January 31, 2014. The policy listed the ship owners, HE Zhongfeng, WANG Junqiang, and CHEN Zhijun, the demise charterer, An Bang Hong Kong, and the manager, Hong Kong Tian Cheng Ship Management Co., Ltd. (hereinafter referred to as “Tian Cheng Company”). In 2013, due to heavy winds and currents, M.V. AN FENG 8’s anchor dragged and the vessel grounded at 139°55′40 E and 40°34′30 N in the Japanese sea area. M.V. AN FENG 8 suffered leakage and its marine engine room flooded, which resulted the total loss of the vessel. In order to reduce its insurance indemnity, Ping An Tianjin reached an agreement with WANG Junqiang, the one of co-insured, and paid part of the insurance

An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping …

3

indemnity in the amount of RMB3,250,000 yuan. According to the insurance contract of M.V. AN FENG 8, if the vessel suffered a total loss, the insurer was to indemnify according to the agreed insured amount. Ping An Tianjin, the insurer, was to pay the insurance indemnity of RMB9,900,000 yuan (reduced by 10% from RMB11,000,000 yuan). However, Ping An Tianjin only indemnified a portion of the insured amount of RMB3,250,000 yuan to the one of the insured parties and did not pay the rest of the insured amount of RMB6,650,000 yuan. An Bang Hong Kong filed suit to recover the rest of the insured amount of RMB6,650,000 yuan (plus interest, calculated from March 1, 2013 based on the interest rate for loans of the People’s Bank of China). Ping An Tianjin proffered the following defenses: 1. An Bang Hong Kong is not owed interest on the insurance. 2. The accident was completely and timely indemnified in full, and it owed no follow-up indemnity for the rest of the claimed amount. 3. An Bang Hong Kong had entrusted WANG Junqiang and Tian Cheng Company to claim indemnity, and thus, WANG Junqiang and Tian Cheng Company were An Bang Hong Kong’s agents. The consequence of indemnity shall be undertaken by each of the insured parties. 4. An Bang Hong Kong claimed an excessive amount of indemnity. The insurer and the insured parties agreed to pay the premium by installments, but as of yet, An Bang Hong Kong had only paid half of the premium, so the insured was not liable to compensate the insured parties for more than half of the indemnity. 5. M.V. AN FENG 8 was owned, pro rata, by WANG Junqiang, ZENG Shuguang, and CHEN Zhijun, proportionately, 60%, 34%, and 6% each. ZENG Shuguang was the actual controller of Tian Cheng Company, which means that 94% of ownership had been transferred to the insurer after the insurance claim. An Bang Hong Kong lost the right to claim indemnity and could only apportion the indemnified amount between WANG Junqiang and Tian Cheng Company. 6. This case was brought after the expiration of the two-year statute of limitations, as this accident occurred on March 1, 2013. 7. HE Zhongfeng and LU Zhijun have exited the lawsuit, so the amount claimed by An Bang Hong Kong should be reduced. Consequently, Ping An Tianjin objects to all of the claims raised by An Bang Hong Kong. An Bang Hong Kong, in support of its claims, timely submitted the following evidence to the court: 1. Marine insurance proposal form and insurance policy, which purportedly proves that Jiu Xin Company had arranged insurance for M.V. AN FENG 8 in 2013 with Ping An Tianjin. The all-risks insurance covered February 1, 2013 to February 1, 2014. The insurance provisions provided that the insurer shall pay indemnity based on the amount insured should the vessel suffer a total loss. The insurance indemnity payment was to be made to An Bang Hong Kong, the demise charterer. 2. Invoice of the premium, to prove that the insured parties had already paid the premium of RMB44,000 yuan before March 7, 2013. 3. Payment intention and subrogation receipt, to prove that, on May 16, 2013, WANG Junqiang, the assignor of the payment intention and subrogation

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4. 5.

6.

7.

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receipt, requested Ping An Tianjin transfer the insurance indemnity of RMB3,250,000 yuan to WANG Junqiang’s bank account. The notice of payment, to prove that Ping An Tianjin transferred RMB3,250,000 yuan to WANG Junqiang on May 24, 2013. Notice of abandonment, to prove that Ping An Tianjin confirmed that M.V. AN FENG 8 had grounded in Aomori-cho, Aomori Prefecture, Japan; that the hull had broken which was hard to repair; and that the vessel had lost operation value and constituted total loss. Ping An Tianjin waived its property rights and interest in the wreck of M.V. AN FENG 8. Proposal form for M.V. AN FENG 8 in 2012, to prove that Tian Cheng Company, as the insurance applicant, arranged the all-risks insurance for M.V. AN FENG 8 in 2012. Insurance policy and the invoice of the premium of M.V. AN FENG 8 in 2012, to prove that Ping An Tianjin was the insurer of M.V. AN FENG 8; that the insurance period was from February 1, 2012 to February 1, 2013; and that the insured parties were HE Zhongfeng, WANG Junqiang, and CHEN Zhijun, all of whom were owners of M.V. AN FENG 8. An Bang Hong Kong was the demise charterer; Tian Cheng Company was the manager of the vessel. Tian Cheng Company had paid the RMB46,750 yuan premium of the second installment and renewed the insurance for M.V. AN FENG 8 in 2013. Notarial certificate of demise charter party registration, to prove that An Bang Hong Kong was the demise charterer and entitled to possess, employ, and operate the insured vessel. Temporary certificate of registration of M.V. AN FENG 8, to prove that M.V. AN FENG 8 had revoked its Chinese nationality and registered in the nationality of Cambodia. An Bang Hong Kong was the stated ship owner of M. V. AN FENG 8 in this certificate of nationality. Notarial certificate and supplementary copy of the notarial certificate given by the Zhoushan Fang Zheng notary office, to prove that the correspondences related to the grounding accident of M.V. AN FENG 8 between Ping An Tianjin and the agent of An Bang Hong Kong on March 1, 2013. The details were as follows: (1) on March 4, 2013, An Bang Hong Kong notified Ping An Tianjin of the dangerous condition of the vessel and requested the vessel be salvaged. (2) Ping An Tianjin (or its classification surveyor) confirmed the breakage of the vessel and offered a salvage fee of 650,000 USD to the salvager, the Japan Fukuda Salvage Company; however, the salvager insisted on JPY90,000,000 (about 850,000 USD) as the salvage fee. (3) Ping An Tianjin ignored the warning by the salvage company and refused to the master of M.V. AN FENG 8 to sign and submit the salvage contract which resulted in the failure of the vessel to float and escape from danger. (4) On March 20, 2013, because Ping An Tianjin refused to sign the salvage contract, the tug was navigated out of the salvage accident scene. (5) On March 28, 2013, at the expiration of the residence of the crewmen, the Japanese government ordered all but three crewmen to leave the ship. (6) Ping An Tianjin’s classification surveyor reported to Ping An Tianjin, confirming that the hull had broken, the

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frame had shifted, the cabin and cabin control room had flooded, and the main engine, auxiliary engine, and the equipment had flooded. (7) The P&I Club of M.V. AN FENG 8 repeatedly supervised and urged Ping An Tianjin perform salvage as soon as possible and deal with the accident. Ping An Tianjin, within the period of producing evidence, submitted the claim application form for property insurance to support its defense, which purportedly proved that, Tian Cheng Company, as well as WANG Junqiang, both claimed indemnity at the same time. The Defendant applied to the court to obtain two court records of (2014) Yong Hai Fa Shang Chu Zi No.889 and QQ conversation records, which purportedly prove that other ship-owners of M.V. AN FENG 8 confirmed RMB3,250,000 yuan as the final insurance indemnity. (1) The Defendant, through cross-examination in court, responded to the evidence submitted by An Bang Hong Kong as follows: 1. form of the insurance policy was different from the form signed by Ping An Tianjin, but the content was the same. Whether the policy was the original must be verified. 2. Ping An Tianjin did not object to the invoice of policy invoice. The payer was Tian Cheng Company. 3. Ping An Tianjin did not object to the payment intention and subrogation receipt, on which was present the stamp of Tian Cheng Company. 4. Ping An Tianjin did not object to the notice of payment, which affirmed that Ping An Tianjin had paid RMB3,250,000 yuan to WANG Junqiang. 5. The notice of abandonment must be verified. 6. Ping An Tianjin objected to the 2012 proposal form, the insurance policy, and invoice of the premium presented in evidence 7. This evidence must be verified. 7. Ping An Tianjin objected to the notarial certificate of the demise charter party registration, and to evidence 9, the temporary certificate registration of M.V. AN FENG 8. 8. Ping An Tianjin did not object to the authenticity of evidence 10, the Defendant had no objection to the authenticity of evidence 10, the notarial certificate, and the supplementary copy of the notarial certificate given by the Zhoushan Fang Zheng Notary Office. However, Ping An Tianjin objected to the relevance of evidence 10, which it alleges cannot prove that Ping An Tianjin was indolent in exercising their obligations. Further, Ping An Tianjin did not authorize the attachment of evidence 10. An Bang Hong Kong, through cross-examination, objected to Ping An Tianjin’s claim application for property insurance, which it alleges could merely represent WANG Junqiang’s individual act, and not the intent or purpose of the other insured parties’ actions. The other insured parties did not authorize this application form. An Bang Hong Kong did not object to the court records or the QQ conversation records of (2014) Yong Hai Fa Shang Chu Zi No.889. However, An Bang Hong Kong stated that these records contained solely Wang Jiecheng’s answers. Wang Jiecheng was not a party to this case and most of his answers were dishonest. An Bang Hong Kong did not authorize the content or the opinions presented by Wang Jiecheng, and thus, those court records should not be used to prove that the insured

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parties, including An Bang Kong Kong, had approved RMB 3,250,000 as the final insurance indemnity amount. The transaction of RMB 62,658 in QQ conversation record, verified by ZENG Shuguang, was the contribution of general average in 2011. The insurance company paid RMB400,000–500,000 yuan to An Bang Hong Kong’s ordered account. ZENG Shuguang shall be compensated RMB62,658 yuan, which had no relevance to this accident. After investigating the evidence submitted by An Bang Hong Kong, the court holds that: 1. Confirm Evidence No.1, the proposal form, and the insurance indemnity. The insurance policy was the original, and the proposal form and the insurance policy can both corroborate each other. 2. Confirm Evidence No.2, the invoice of the premium, as the original, to which Ping An Tianjin did not object. 3. Confirm Evidence No.3, the payment intention and subrogation receipt. 4. Confirm Evidence No.4, the notice of payment. 5. Confirm Evidence No.5, the notice of abandonment. Though such notice was a copy of the original, Evidence No.3 and No.4 could corroborate it. Ping An Tianjin had no evidence to counter this. 6. Confirm Evidence No.6, the 2012 proposal form for M.V. AN FENG 8. 7. Confirm Evidence No.7, the invoice of the premium and the insurance policy, which are original documents. The listed amounts in the proposal form and the invoice corroborate each other. 8. Confirm Evidence No.8, the notarial certificate of the demise charter party registration, which is an original, and is the same as the copy. 9. Reject Evidence No.9, the temporary certificate of registration of M.V. AN FENG 8, as no evidence was presented to corroborate this certificate. 10. Confirm Evidence No.10, which is the original. 11. Confirm the claim application form for property insurance. Though it is a copy, other evidence can corroborate it. 12. Confirm the authenticity of the court records and the QQ conversation record of (2014) Yong Hai Fa Shang Chu Zi No.889. After cross-examination and investigation, the court finds the following facts: M.V. AN FENG 8 was a dry cargo ship, registered and owned pro rata by HE Zhongfeng 34%, WANG Junqiang 60%, and CHEN Zhijun 6%. An Bang Hong Kong was the registered demise charterer. Tian Cheng Company, on January 31, 2012, arranged all-risks insurance for M.V. AN FENG 8 and Ping An Tianjin issued the insurance policy. This policy covered the navigation range from Far East and Southeast Asia; it covered RMB11,000,000 yuan; and it was in effect from February 1 to January 31, 2013. The insured parties under the policy were the ship-owners HE Zhongfeng, WANG Junqiang, and CHEN Zhijun; the demise charterer, An Bang Hong Kong; and the manager of the vessel, Tian Cheng Company.

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The premium was to be paid in two installments on February 29, 2012 and August 30, 2012. On March 7, 2013, Tian Cheng Company paid the second installment of RMB46,750 yuan. On November 20, 2012, the proportion of ownership of M.V. AN FENG 8 had been changed to where WANG Junqiang occupied 60%, ZENG Shuguang occupied 34% and CHEN Zhijun occupied 6%. An Bang Hong Kong was still the registered demise charterer. On January 22, 2013, Jiu Xin Company arranged all-risks insurance for M.V. AN FENG 8 and Ping An Tianjin issued the insurance policy stating that the range of navigation was Far East and Southeast Asia, the insured value and amount was RMB11,000,000 yuan, the period of insurance was from February 1, 2013 to January 31, 2014, the insureds were HE Zhongfeng, WANG Junqiang and CHEN Zhijun, as the shipowners, the Plaintiff, as the demise charterer, and Tian Cheng Company as the manager of the vessel. The premium, agreed in policy, shall be paid in two installments on February 15, 2013 and August 15, 2013 separately, and each installment shall be paid in RMB44,000 yuan. The special provision for the payment of the premium stated, “if the insurance premium is paid in installments, the insurer shall undertake the insurance liability pro rata according to the proportion of the insurance premium actually collected before the insured accident and the total insurance premium shall be paid by the insured parties.” The insurance policy provided that the deductive franchise was 10% of the insured loss. The insurance provision 7(2) attached on the reverse of the policy provided that “all of the insurance premium shall be paid off when the insurance contract concluded; if the insurer agrees, the premium can also be paid in installments. However, should the insured ship suffer a total loss within the insurance period, the unpaid premium shall be paid in full, immediately.” Provision 10(2) provided a claim for total loss and indemnity “if the insured vessel is destroyed or so damaged as to cease to be a thing of the kind insured. Where the insured is irretrievably deprived thereof, as actual total loss, the insurer shall pay based on the insurance amount. If actual total loss is unavoidable, or the expenditure of recovery, repair, salvage or the total amount of these fees exceed the insurance value, after delivering the notice of abandonment, such loss can be regarded as a constructive total loss. Should the insurer accept the abandonment, the insurer shall pay based on insurance amount.” Tian Cheng Company paid the first installment of RMB44,000 yuan on March 7, 2013. On March 1, 2013, M.V. AN FENG 8 dragged anchor due to heavy winds and currents and grounded at 139°55′40 E and 40°34′30 N Japanese sea area. After the grounding accident, the insurance broker sent a notice of loss and salvage to Ping An Tianjin by e-mail. Ping An Tianjin’s classification surveyor reported to Ping An Tianjin and confirmed that the hull had broken, the frame had shifted, the ship cabin and the cabin control room had been flooded, and the main engine, the auxiliary engine as well as the equipment had completely flooded into the sea. On May 14, 2013, Ping An Tianjin received the claim application form for property insurance, which stated the reason for the loss as follows: on March 1, 2013, at 22:00, M.V. AN FENG 8 was navigated from Akita Japan to Solan Port

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Japan, and dragged anchor due to heavy winds and waves at 139°55′40 E and 40° 34′30 N. On May 16, WANG Junqiang and Tian Cheng Company delivered the payment intention and subrogation receipt to Ping An Tianjin, providing that “the insured vessel of WANG Junqiang/Tian Cheng Company, covered by all-risks insurance (No.18803761900094361404) dragged anchor and grounded due to heavy winds and waves at 139°55′40 E and 40°34′30 N on March 1, 2013. We agree to accept RMB3,250,000 yuan as the final insurance indemnity and such payment shall be transferred to WANG Junqiang’s account. WANG Junqiang and Tian Cheng Company agree that such payment is the final indemnity and agree to not request further indemnity from the insurer. When the insurer agrees to pay for said indemnity, WANG Junqiang and Tian Cheng Company agree to transfer all legal rights to the insured subject, which is indemnified by the said indemnity, to the insurer, and the insurer shall legally obtain the right of subrogation and exercise the right of recourse against the liable party.” On March 24, Ping An Tianjin paid WANG Junqiang RMB3,250,000 yuan. Ping An Tianjin, after payment, issued a statement of abandonment to the P&I Club (New Zealand) and submitted a copy to the Northwestern civil authority of Aomori Prefecture Japan, stating that “Ping An Tianjin, as the hull insurer of M.V. AN FENG 8, paid the insurance indemnity on May 22, 2013, according to the requirement of the ship-owners after the vessel grounded.” Therefore, the ship-owners discharged all of the insurer’s liabilities under the hull insurance contract. Ping An Tianjin knew that the hull was broken and had lost operational value. In order to control and mitigate the environmental pollution and damage caused by the wreck of the vessel, Ping An Tianjin, waived all rights and interest in such vessel/wreck to promote the decontamination by the relevant liable parties. An Bang Hong Kong claimed, against Ping An Tianjin, that in order to mitigate the insurance indemnity, Ping An Tianjin entered into an agreement with one of the insured parties, WANG Junqiang, and merely paid part of the insurance indemnity of RMB3,250,000 yuan. However, in accordance with the provision under the insurance contract for M.V. AN FENG 8, if the insured vessel suffered a total loss, the insurer shall indemnify according to the insurance amount, paying for the rest of the insurance indemnity of RMB6,650,000 yuan. The court holds that the dispute under this case is a maritime insurance dispute relating to Hong Kong region. Both the Plaintiff and Defendant agree to apply Chinese law. According to the Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, Chinese law shall apply. The vessel is registered in Zhoushan Zhejiang, according to Article 24 of the Civil Procedure Law of the People’s Republic of China and Article 21 Paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China. Thus, the court has jurisdiction over this case. The legal issues of this case are as follows: (1) whether or not An Bang Hong Kong has the right to claim against Ping An Tianjin; (2) whether An Bang Hong Kong brought its claim beyond the expiration of the statute of limitations;

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(3) whether M.V. AN FENG 8 suffered a total loss; and (4) whether An Bang Hong Kong is entitled to acquire insurance indemnity. As to the first issue, whether or not An Bang Hong Kong has the right to claim against the Ping An Tianjin: Neither party signed the insurance contract. However, Ping An Tianjin issued the insurance policy, in which the rights and obligations of both parties were listed. Under the two insurance policies of 2012 and 2013, the insured parties were the same. HE Zhongfeng, WANG Junqiang and CHEN Zhijun were stated as the ship-owners; An Bang Hong Kong was stated as the demise charterer; and Tian Cheng Company was stated as the ship manager. The shares of M.V. AN FENG 8 were changed on November 20, 2012: 34% of the shares owned by HE Zhongfeng were transferred to ZENG Shuguang through the change in registration. As to whether the effect of the insurance policy had been impacted by this change, the court holds that the coverage was all-risks insurance; the insured subject was the vessel; and other statements on the policy in 2013 were the same as the policy in 2012, despite the fact that there was no alteration of the ship-owners stated on the policy. The demise charterer and the manager of M.V. AN FENG 8 had not been changed, and the range of navigation was also the same, so the risk born by the vessel and the liability undertaken by the insurer had not be increased at all. The insurer collected a premium based on the standard of the whole vessel. Consequently, the difference between the actual ship-owners’ registered shares and the shares stated on the policy would not affect the validity of the insurance contract. HE Zhongfeng and CHEN Zhijun exited the lawsuit. The demise charterer, An Bang Hong Kong, who was one of the stated insured parties under the policy and also the operator of the vessel, was entitled to possess, utilize, and profit from the vessel, and was liable to the ship-owners for loss or damage of the vessel. As a result, An Bang Hong Kong enjoyed the insured interest on the vessel and had the right to claim against Ping An Tianjin. As to the second issue, whether An Bang Hong Kong’s claim was brought beyond the expiration of the statute of limitations: The accident occurred on March 1, 2013. Ping An Tianjin paid the insurance indemnity to WANG Junqiang and Tian Cheng Company on March 24, 2013. According to Article 16 of the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Statute of limitations during the Trial of Civil Cases, where an obligor makes a commitment to or commits an act of performance in installments, partial performance, provision of a guaranty, or request for deferred performance or making of a debt repayment, shall be determined as falling within the meaning of Article 140 of the General Principles of Civil Law. The act of payment by Ping An Tianjin to WANG Junqiang and Tian Cheng Company shall be regarded as “agreeing to perform the obligation” based on Chinese Civil Law and the Chinese Maritime Code. This situation constituted an interruption of the statute of limitations for every insured party. An Bang Hong Kong filed suit on May 4, 2015, which did not exceed the 2 years statute of limitations.

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As to the third issue, whether M.V. AN FENG 8 suffered a total loss: M.V. AN FENG 8 suffered dragged anchor on March 1, 2013 because of heavy winds and waves at E 139°55′40 and N 40°34′30. According to correspondences, the salvage fee was 850,000 USD, excluding the fee for cleaning up the oil pollution. Ping An Tianjin’s classification surveyor reported to Ping An Tianjin and confirmed that the hull had broken, the frame had shifted, the ship cabin and the cabin control room had been flooded, and the main engine, the auxiliary engine, as well as the equipment had completely flooded into the sea. Ping An Tianjin paid the insurance indemnity to WANG Junqiang and acquired the receipt of subrogation. Then the Defendant issue a notice of abandonment to the P&I Club (New Zealand), stating that “the hull of the vessel has broken and the vessel no longer has an operational value.” This evidence proves that M.V. AN FENG 8 was damaged severely, and the expenditure for salvage and repair would exceed the insurance value. The vessel had suffered a total loss. As to the fourth issue, whether An Bang Hong Kong is entitled to acquire insurance indemnity: Ping An Tianjin defended that An Bang Hong Kong had entrusted WANG Junqiang and Tian Cheng Company, the agents for the insured party, to claim indemnity, and the insurance indemnity had been already paid off. M.V. AN FENG 8 is owned pro rata 60% by WANG Junqiang, 34% by ZENG Shuguang, and 6% by CHEN Zhijun. ZENG Shuguang was the actual controller of Tian Cheng Company, which means that 94% of ownership was transferred to Ping An Tianjin after insurance indemnity. The court holds that WANG Junqiang is merely one of the ship-owners among the insured parties, and is not entitled to delegate other ship-owners. Tian Cheng Company, as the manager of the vessel, was not involved in the operation of the ship. Consequently, the performance of final payment by Ping An Tianjin shall not bind other insured parties without the authorization of those other parties. At present, there is no evidence proving that the insurer shall pay insurance indemnity to the insured parties based on the proportion of shares owned by the insured parties. When An Bang Hong Kong claimed indemnity, An Bang Hong Kong was not bound by the shares of the vessel. Ping An Tianjn defended that even if it continued to pay, both parties agreed to pay the premium in installments, and An Bang Hong Kong, at present, merely paid 50% of the premium, so Pin An Tianjin would pay no more than half of the insurance indemnity. The court holds that it was agreed that the two policies would be paid in two installments. Ping An Tianjin did not object to that fact that the accident occurred on March 1, 2013, and that Tian Cheng Company had paid the second installment for the 2012 policy and the first installment for the 2013 policy on March 7, 2013, and that Ping An Tianjin had paid the insurance indemnity to WANG Junqiang and Tian Cheng Company. The policy provision that states “if the insurance premium is paid in installments, the insurer shall undertake the insurance liability pro rata according to the proportion of the insurance premium actually collected before the insured accident and the total insurance premium shall be paid by the insured parties.” The

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court construes this provision to state that only if An Bang Hong Kong pays the premium based on the agreement (or in the agreed upon with the insurer), then Ping An Tianjin shall undertake all of the insurance indemnity. However, article 7(1) stated, “when the insured ship suffered a total loss within insurance period, the unpaid premium shall be paid off immediately.” The court construes this provision to mean that even if the insured parties do not pay off the premium, this dispute is a dispute over an insurance premium and could have been resolved by other litigation or other measures. This dispute had no bearing on the present case. The policy in the present case provided that the deductible franchise for each total loss accident was 10% of damages, and that both the vessel’s value and insurance amount is RMB11,000,000 yuan. Deducting the deductible franchise, the complete insurance indemnity shall be RMB9,900,000 yuan. Deducting the RMB3,250,000 yuan paid already, Ping An Tianjin shall indemnify RMB6,650,000 yuan. As both parties did not agree on interest and An Bang Hong Kong alleged interest damage, the court awards An Bang Hong Kong interest damage, calculated from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period. In summary, the court supports An Bang Hong Kong’s reasonable claims. According to Article 107 of the Contract Law of People’s Republic of China, Article 216, Article 219, and Article 237 of the Maritime Code of People’s Republic of China, Article 259 of the Civil Procedure Law of People’s Republic of China and Article 551 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Ping An Tianjin shall compensate An Bang Hong Kong RMB6,650,000 yuan plus interest, calculated from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period, within 10 days after this judgment comes into effect. If Ping An Tianjin fails to fulfill its obligation of payment within the period stipulated in this Judgment, according to Article 253 of the Civil Procedure Law of the People’s Republic of China, Ping An Tianjin shall pay double the interest for the delayed period. Court acceptance fee in the amount of RMB58,350 yuan, shall be borne by Ping An Tianjin. If either party is dissatisfied with this judgment, An Bang Hong Kong may, within 30 days, and Ping An Tianjin may, within 15 days of service of this judgment submit a statement of appeal to the court, together with duplicates in accordance with the number of opposing parties, in order to lodge an appeal with the Zhejiang High People’s Court. Presiding Judge: LI Xianda Acting Judge: YAO Nina Acting Judge: SHAO Yingfeng May 16, 2016 Clerk: XU Meina

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Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 107 If a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses. 2. Maritime Code of the People’s Republic of China Article 216 A contract of marine insurance is a contract whereby the insurer undertakes, as agreed, to indemnify the loss to the subject matter insured and the liability of the insured caused by perils covered by the insurance against the payment of an insurance premium by the insured. Article 219 The insurable value of the subject matter insured shall be agreed upon between the insurer and the insured. Where no insurable value has been agreed upon between the insurer and the insured, the insurable value shall be calculated as follows: (1) The insurable value of the ship shall be the value of the ship at the time when the insurance liability commences, being the total value of the ship's hull, machinery, equipment, fuel, stores, gear, provisions and fresh water on board as well as the insurance premium; (2) The insurable value of the cargo shall be the aggregate of the invoice value of the cargo or the actual value of the non-trade commodity at the place of shipment, plus freight and insurance premium when the insurance liability commences; (3) The insurable value of the freight shall be the aggregate of the total amount of freight payable to the carrier and the insurance premium when the insurance liability commences; (4) The insurable value of other subject matter insured shall be the aggregate of the actual value of the subject matter insured and the insurance premium when the insurance liability commences. Article 237 The insurer shall indemnify the insured promptly after the loss from a peril insured against has occurred. 3. Civil Procedure Law of People’s Republic of China Article 253 After the people’s court makes an order granting property preservation, if the party against whom the application is made provides a guaranty, the people’s court shall cancel the property preservation.

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Article 259 In a case in which an award has been made by an arbitral organ of the People’s Republic of China handling cases involving a foreign element, the parties may not bring an action in a people’s court. If one party fails to comply with the arbitral award, the other party may apply for its enforcement to the intermediate people’s court of the place where the party against whom the application for enforcement is made has his domicile or where his property is located. 4. Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 55 The people’s courts may refer to the special provisions on foreign-related civil procedures when trying civil lawsuits involving the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan region.

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Zhejiang High People’s Court Civil Judgment An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2016) Zhe Min Zhong No.513 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 1 and page 28 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Affirming lower court decision that plaintiff assured, bareboat charterer of ship that was totally lost, was entitled to recover indemnity in full from defendant hull insurer, despite the fact that the insurance premium, which was to be paid in installments, had not been paid in full, and despite the fact that there were two other co-assureds; plaintiff assured would have to settle with other co-assureds. Summary The Plaintiff, a bareboat charterer, sued the Defendant-insurer for compensation under an all-risks insurance policy. The parties insured under the insurance contract were the bareboat charterer, the ship owners, and the ship managers. It was agreed between the parties to the contract that the insurance premium would be paid in installments. Before the full premium had been paid, the vessel sank and was a total loss. The Defendant insurer refused to compensate the Plaintiff bareboat charterer for any more than what had been already paid on the premium, and since not all of the insured parties had rendered payment, the Defendant-insurer only compensated those parties that had paid a portion of the premium. The Court of first instance held that the Plaintiff was not hindered in its right to be compensated due to the divided ownership of the vessel and the other insureds’ interests in the vessel. According to the insurance contract, it was agreed that should the ship suffer a total loss, the insurer would compensate the insured parties immediately. Thus, the first instance Court ordered the Defendant-insurer to compensate the Plaintiff, in full, the amount under the policy, plus interest.

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The Defendant-insurer appealed. No new evidence was presented. The appeal Court affirmed the lower court judgment, holding that the Plaintiff-demise charterer had the right to receive payment of the insurance indemnity, despite there being multiple insured parties under the contract, as the Plaintiff-demise charterer was liable to compensate the other insured shipowners.

Judgment The Appellant (the Defendant of first instance): Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch. Domicile: No.1, Baiti Road, Nan Kai District, Tianjin, the People’s Republic of China. Legal representative: WANG Ran, vice manager. Agent ad litem: TONG Dengyong, lawyer of Beijing Dentons (Ningbo) Law Firm. Agent ad litem: LV Jing, lawyer of Beijing Dentons (Ningbo) Law Firm. The Respondent (the Plaintiff of first instance): An Bang (Hong Kong) Shipping Development Co., Ltd. Domicile: Room 01B3, Floor 10, Carnival Commercial Building, 18 Java Rd, North Point, Hong Kong Special Administrative Region. Legal representative: HE Zhongfeng, director. Agent ad litem: WAN Renshan, lawyer of Shanghai Trend Law Firm. With respect to the case arising from dispute over marine insurance contract between the Appellant Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (hereinafter referred to as Ping An Tianjin) and the Respondent An Bang (Hong Kong) Shipping Development Co., Ltd. (hereinafter referred to as An Bang Hong Kong), the Appellant was not satisfied with (2015) Yong Hai Fa Shang Chu Zi No.440 Civil Judgment, and then lodged an appeal to the court. After entertaining this case, the court organized a collegiate panel and held a hearing in public on August 17, 2016. TONG Dengyong and LV Jing, agents ad litem of Ping An Tianjin, and WAN Renshan, agent ad litem of An Bang Hong Kong, appeared and participated in the hearing. Now the case has been concluded. An Bang Hong Kong, HE Zhongfeng and CHEN Zhijun claimed on May 4, 2015 that on January 22, 2013, Jiu Xin Shipping Co., Ltd. (hereinafter referred to as “Jiu Xin Company”) applied to Ping An Tianjin to arrange all-risks insurance and Ping An Tianjin agreed to provide an all-risks insurance policy (No.18803761900084361404) for the vessel M.V. AN FENG 8. The range of navigation included Far East and Southeast Asia. Both the insured value and the premium were RMB11,000,000 yuan. The period of insurance was from 00:00 February 1, 2013 to 24:00 January 31, 2014. The policy listed the ship owners, HE Zhongfeng, WANG Junqiang, and CHEN Zhijun, the demise charterer, An Bang

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Hong Kong, and the manager, Hong Kong Tian Cheng Ship Management Co., Ltd. (hereinafter referred to as “Tian Cheng Company”). In 2013, due to heavy winds and currents, M.V. AN FENG 8’s anchor dragged and the vessel grounded at 139° 55′40 E and 40°34′30 N in the Japanese sea area. M.V. AN FENG 8 suffered leakage and its marine engine room flooded, which resulted the total loss of the vessel. In order to reduce its insurance indemnity, Ping An Tianjin reached an agreement with WANG Junqiang, the one of co-insured, and paid part of the insurance indemnity in the amount of RMB3,250,000 yuan. According to the insurance contract of M.V. AN FENG 8, if the vessel suffered a total loss, the insurer was to indemnify according to the agreed insured amount. Ping An Tianjin, the insurer, was to pay the insurance indemnity of RMB9,900,000 yuan (reduced by 10% from RMB11,000,000 yuan). However, Ping An Tianjin only indemnified a portion of the insured amount of RMB3,250,000 yuan to the one of the insured parties and did not pay the rest of the insured amount of RMB6,650,000 yuan. An Bang Hong Kong filed suit to recover the rest of the insured amount of RMB6,650,000 yuan (plus interest, calculated from March 1, 2013 based on the interest rate for loans of the People’s Bank of China). In litigation, HE Zhongfeng and CHEN Zhijun applied for withdrawal to the court of first instance. The court of first instance approved it. Ping An Tianjin proffered the following defenses: 1. An Bang Hong Kong is not owed interest on the insurance. 2. The accident was completely and timely indemnified in full, and it owed no follow-up indemnity for the rest of the claimed amount. 3. An Bang Hong Kong had entrusted WANG Junqiang and Tian Cheng Company to claim indemnity, and thus, WANG Junqiang and Tian Cheng Company were An Bang Hong Kong’s agents. The consequence of indemnity shall be undertaken by each of the insured parties. 4. An Bang Hong Kong claimed an excessive amount of indemnity. The insurer and the insured parties agreed to pay the premium by installments, but as of yet, An Bang Hong Kong had only paid half of the premium, so the insured was not liable to compensate the insured parties for more than half of the indemnity. 5. M.V. AN FENG 8 was owned, pro rata, by WANG Junqiang, ZENG Shuguang, and CHEN Zhijun, proportionately, 60%, 34%, and 6% each. ZENG Shuguang was the actual controller of Tian Cheng Company, which means that 94% of ownership had been transferred to the insurer after the insurance claim. An Bang Hong Kong lost the right to claim indemnity and could only apportion the indemnified amount between WANG Junqiang and Tian Cheng Company. 6. This case was brought after the expiration of the two-year statute of limitations, as this accident occurred on March 1, 2013. 7. HE Zhongfeng and LU Zhijun have exited the lawsuit, so the amount claimed by An Bang Hong Kong should be reduced. Consequently, Ping An Tianjin objects to all of the claims raised by An Bang Hong Kong. After cross-examination and combined with investigation in the trial, the court of first instance found the facts as follows: M.V. AN FENG 8 was a dry cargo ship, registered and owned pro rata by HE Zhongfeng 34%, WANG Junqiang 60%, and CHEN Zhijun 6%. An Bang Hong Kong was the registered demise charterer. Tian Cheng Company, on January 31,

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2012, arranged all-risks insurance for M.V. AN FENG 8 and Ping An Tianjin issued the insurance policy. This policy covered the navigation range from Far East and Southeast Asia; it covered RMB11,000,000 yuan; and it was in effect from February 1 to January 31, 2013. The insured parties under the policy were the ship-owners HE Zhongfeng, WANG Junqiang, and CHEN Zhijun; the demise charterer, An Bang Hong Kong; and the manager of the vessel, Tian Cheng Company. The premium was to be paid in two installments on February 29, 2012 and August 30, 2012. On March 7, 2013, Tian Cheng Company paid the second installment of RMB46,750 yuan. On November 20, 2012, the proportion of ownership of M.V. AN FENG 8 had been changed to where WANG Junqiang occupied 60%, ZENG Shuguang occupied 34% and CHEN Zhijun occupied 6%. An Bang Hong Kong was still the registered demise charterer. On January 22, 2013, Jiu Xin Company arranged all-risks insurance for M.V. AN FENG 8 and Ping An Tianjin issued the insurance policy stating that the range of navigation was Far East and Southeast Asia, the insured value and amount was RMB11,000,000 yuan, the period of insurance was from February 1, 2013 to January 31, 2014, the insureds were HE Zhongfeng, WANG Junqiang and CHEN Zhijun, as the shipowners, the Plaintiff, as the demise charterer, and Tian Cheng Company as the manager of the vessel. The premium, agreed in policy, shall be paid in two installments on February 15, 2013 and August 15, 2013 separately, and each installment shall be paid in RMB44,000 yuan. The special provision for the payment of the premium stated, “if the insurance premium is paid in installments, the insurer shall undertake the insurance liability pro rata according to the proportion of the insurance premium actually collected before the insured accident and the total insurance premium shall be paid by the insured parties.” The insurance policy provided that the deductive franchise was 10% of the insured loss. The insurance provision 7(2) attached on the reverse of the policy provided that “all of the insurance premium shall be paid off when the insurance contract concluded; if the insurer agrees, the premium can also be paid in installments. However, should the insured ship suffer a total loss within the insurance period, the unpaid premium shall be paid in full, immediately.” Provision 10(2) provided a claim for total loss and indemnity “if the insured vessel is destroyed or so damaged as to cease to be a thing of the kind insured. Where the insured is irretrievably deprived thereof, as actual total loss, the insurer shall pay based on the insurance amount. If actual total loss is unavoidable, or the expenditure of recovery, repair, salvage or the total amount of these fees exceed the insurance value, after delivering the notice of abandonment, such loss can be regarded as a constructive total loss. Should the insurer accept the abandonment, the insurer shall pay based on insurance amount.” Tian Cheng Company paid the first installment of RMB44,000 yuan on March 7, 2013. On March 1, 2013, M.V. AN FENG 8 dragged anchor due to heavy winds and currents and grounded at 139°55′40 E and 40°34′30 N Japanese sea area. After the grounding accident, the insurance broker sent a notice of loss and salvage to Ping

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An Tianjin by e-mail. Ping An Tianjin’s classification surveyor reported to Ping An Tianjin and confirmed that the hull had broken, the frame had shifted, the ship cabin and the cabin control room had been flooded, and the main engine, the auxiliary engine as well as the equipment had completely flooded into the sea. On May 14, 2013, Ping An Tianjin received the claim application form for property insurance, which stated the reason for the loss as follows: on March 1, 2013, at 22:00, M.V. AN FENG 8 was navigated from Akita Japan to Solan Port Japan, and dragged anchor due to heavy winds and waves at 139°55′40 E and 40° 34′30 N. On May 16, WANG Junqiang and Tian Cheng Company delivered the payment intention and subrogation receipt to Ping An Tianjin, providing that “the insured vessel of WANG Junqiang/Tian Cheng Company, covered by all-risks insurance (No.18803761900094361404) dragged anchor and grounded due to heavy winds and waves at 139°55′40 E and 40°34′30 N on March 1, 2013. We agree to accept RMB3,250,000 yuan as the final insurance indemnity and such payment shall be transferred to WANG Junqiang’s account. WANG Junqiang and Tian Cheng Company agree that such payment is the final indemnity and agree to not request further indemnity from the insurer. When the insurer agrees to pay for said indemnity, WANG Junqiang and Tian Cheng Company agree to transfer all legal rights to the insured subject, which is indemnified by the said indemnity, to the insurer, and the insurer shall legally obtain the right of subrogation and exercise the right of recourse against the liable party.” On March 24, Ping An Tianjin paid WANG Junqiang RMB3,250,000 yuan. Ping An Tianjin, after payment, issued a statement of abandonment to the P&I Club (New Zealand) and submitted a copy to the Northwestern civil authority of Aomori Prefecture Japan, stating that “Ping An Tianjin, as the hull insurer of M.V. AN FENG 8, paid the insurance indemnity on May 22, 2013, according to the requirement of the ship-owners after the vessel grounded.” Therefore, the ship-owners discharged all of the insurer’s liabilities under the hull insurance contract. Ping An Tianjin knew that the hull was broken and had lost operational value. In order to control and mitigate the environmental pollution and damage caused by the wreck of the vessel, Ping An Tianjin, waived all rights and interest in such vessel/wreck to promote the decontamination by the relevant liable parties. An Bang Hong Kong claimed, against Ping An Tianjin, that in order to mitigate the insurance indemnity, Ping An Tianjin entered into an agreement with one of the insured parties, WANG Junqiang, and merely paid part of the insurance indemnity of RMB3,250,000 yuan. However, in accordance with the provision under the insurance contract for M.V. AN FENG 8 if the insured vessel suffered a total loss, the insurer shall indemnify according to the insurance amount, paying for the rest of the insurance indemnity of RMB6,650,000 yuan. The court holds that the dispute under this case is a maritime insurance dispute relating to Hong Kong region. Both the Plaintiff and Defendant agree to apply Chinese law. According to the Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, Chinese law shall apply. The vessel is registered in Zhoushan Zhejiang, according to Article 24 of the Civil Procedure Law of the People’s Republic of China and Article 21

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Paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China. Thus, the court has jurisdiction over this case. The legal issues of this case are as follows: (1) whether or not An Bang Hong Kong has the right to claim against Ping An Tianjin; (2) whether An Bang Hong Kong brought its claim beyond the expiration of the statute of limitations; (3) whether M.V. AN FENG 8 suffered a total loss; and (4) whether An Bang Hong Kong is entitled to acquire insurance indemnity. As to the first issue, whether or not An Bang Hong Kong has the right to claim against the Ping An Tianjin: Neither party signed the insurance contract. However, Ping An Tianjin issued the insurance policy, in which the rights and obligations of both parties were listed. Under the two insurance policies of 2012 and 2013, the insured parties were the same. HE Zhongfeng, WANG Junqiang and CHEN Zhijun were stated as the ship-owners; An Bang Hong Kong was stated as the demise charterer; and Tian Cheng Company was stated as the ship manager. The shares of M.V. AN FENG 8 were changed on November 20, 2012: 34% of the shares owned by HE Zhongfeng were transferred to ZENG Shuguang through the change in registration. As to whether the effect of the insurance policy had been impacted by this change, the court holds that the coverage was all-risks insurance; the insured subject was the vessel; and other statements on the policy in 2013 were the same as the policy in 2012, despite the fact that there was no alteration of the ship-owners stated on the policy. The demise charterer and the manager of M.V. AN FENG 8 had not been changed, and the range of navigation was also the same, so the risk born by the vessel and the liability undertaken by the insurer had not be increased at all. The insurer collected a premium based on the standard of the whole vessel. Consequently, the difference between the actual ship-owners’ registered shares and the shares stated on the policy would not affect the validity of the insurance contract. HE Zhongfeng and CHEN Zhijun exited the lawsuit. The demise charterer, An Bang Hong Kong, who was one of the stated insured parties under the policy and also the operator of the vessel, was entitled to possess, utilize, and profit from the vessel, and was liable to the ship-owners for loss or damage of the vessel. As a result, An Bang Hong Kong enjoyed the insured interest on the vessel and had the right to claim against Ping An Tianjin. As to the second issue, whether An Bang Hong Kong’s claim was brought beyond the expiration of the statute of limitations: The accident occurred on March 1, 2013. Ping An Tianjin paid the insurance indemnity to WANG Junqiang and Tian Cheng Company on March 24, 2013. According to Article 16 of the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Statute of limitations during the Trial of Civil Cases where an obligor makes a commitment to or commits an act of performance in installments, partial performance, provision of a guaranty, or request for deferred performance or making of a debt repayment, shall be determined as falling within the meaning of Article 140 of the General Principles of Civil Law. The act of payment by Ping An Tianjin to WANG Junqiang and Tian Cheng Company shall

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be regarded as “agreeing to perform the obligation” based on Chinese Civil Law and the Chinese Maritime Code. This situation constituted an interruption of the statute of limitations for every insured party. An Bang Hong Kong filed suit on May 4, 2015, which did not exceed the 2 years statute of limitations. As to the third issue, whether M.V. AN FENG 8 suffered a total loss: M.V. AN FENG 8 suffered dragged anchor on March 1, 2013 because of heavy winds and waves at E 139°55′40 and N 40°34′30. According to correspondences, the salvage fee was 850,000 USD, excluding the fee for cleaning up the oil pollution. Ping An Tianjin’s classification surveyor reported to Ping An Tianjin and confirmed that the hull had broken, the frame had shifted, the ship cabin and the cabin control room had been flooded, and the main engine, the auxiliary engine, as well as the equipment had completely flooded into the sea. Ping An Tianjin paid the insurance indemnity to WANG Junqiang and acquired the receipt of subrogation. Then the Defendant issue a notice of abandonment to the P&I Club (New Zealand), stating that “the hull of the vessel has broken and the vessel no longer has an operational value.” This evidence proves that M.V. AN FENG 8 was damaged severely, and the expenditure for salvage and repair would exceed the insurance value. The vessel had suffered a total loss. As to the fourth issue, whether An Bang Hong Kong is entitled to acquire insurance indemnity: Ping An Tianjin defended that An Bang Hong Kong had entrusted WANG Junqiang and Tian Cheng Company, the agents for the insured party, to claim indemnity, and the insurance indemnity had been already paid off. M.V. AN FENG 8 is owned pro rata 60% by WANG Junqiang, 34% by ZENG Shuguang, and 6% by CHEN Zhijun. ZENG Shuguang was the actual controller of Tian Cheng Company, which means that 94% of ownership was transferred to Ping An Tianjin after insurance indemnity. The court of first instance holds that WANG Junqiang is merely one of the ship-owners among the insured parties, and is not entitled to delegate other ship-owners. Tian Cheng Company, as the manager of the vessel, was not involved in the operation of the ship. Consequently, the performance of final payment by Ping An Tianjin shall not bind other insured parties without the authorization of those other parties. At present, there is no evidence proving that the insurer shall pay insurance indemnity to the insured parties based on the proportion of shares owned by the insured parties. When An Bang Hong Kong claimed indemnity, An Bang Hong Kong was not bound by the shares of the vessel. Ping An Tianjn defended that even if it continued to pay, both parties agreed to pay the premium in installments, and An Bang Hong Kong, at present, merely paid 50% of the premium, so Pin An Tianjin would pay no more than half of the insurance indemnity. The court of first instance holds that it was agreed that the two policies would be paid in two installments. Ping An Tianjin did not object to that fact that the accident occurred on March 1, 2013, and that Tian Cheng Company had paid the second installment for the 2012 policy and the first installment for the 2013 policy on

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March 7, 2013, and that Ping An Tianjin had paid the insurance indemnity to WANG Junqiang and Tian Cheng Company. The policy provision that states “if the insurance premium is paid in installments, the insurer shall undertake the insurance liability pro rata according to the proportion of the insurance premium actually collected before the insured accident and the total insurance premium shall be paid by the insured parties.” The court construes this provision to state that only if An Bang Hong Kong pays the premium based on the agreement (or in the agreed upon with the insurer), then Ping An Tianjin shall undertake all of the insurance indemnity. However, article 7(1) stated, “when the insured ship suffered a total loss within insurance period, the unpaid premium shall be paid off immediately.” The court construes this provision to mean that even if the insured parties do not pay off the premium, this dispute is a dispute over an insurance premium and could have been resolved by other litigation or other measures. This dispute had no bearing on the present case. The policy in the present case provided that the deductible franchise for each total loss accident was 10% of damages, and that both the vessel’s value and insurance amount is RMB11,000,000 yuan. Deducting the deductible franchise, the complete insurance indemnity shall be RMB9,900,000 yuan. Deducting the RMB3,250,000 yuan paid already, Ping An Tianjin shall indemnify RMB6,650,000 yuan. As both parties did not agree on interest and An Bang Hong Kong alleged interest damage, the court awards An Bang Hong Kong interest damage, calculated from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period. In summary, the court supports An Bang Hong Kong’s reasonable claims. According to Article 107 of the Contract Law of People’s Republic of China, Article 216, Article 219, and Article 237 of the Maritime Code of People’s Republic of China, Article 259 of the Civil Procedure Law of People’s Republic of China and Article 551 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Ping An Tianjin shall compensate An Bang Hong Kong RMB6,650,000 yuan plus interest, calculated from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period, within 10 days after this judgment comes into effect. If Ping An Tianjin fails to fulfill its obligation of payment within the period stipulated in this Judgment, according to Article 253 of the Civil Procedure Law of the People’s Republic of China, Ping An Tianjin shall pay double the interest for the delayed period. Court acceptance fee of first instance in the amount of RMB58,350 yuan, shall be borne by Ping An Tianjin. 1. Ping An Tianjian was not satisfied the judgment of first instance and appealed to the court that: 1. An Bang Hong Kong does not have legal insurance interest. (1) The major shareholder WANG Junqiang who holds 60% of shares of M.V. AN FENG 8 and the vessel manager Tian Cheng Company had submitted all insurance claims documents on behalf of the insureds after accident, and signed the Payment intention and subrogation receipt with Ping AN Tianjin. Ping An Tinjin had paid all insurance indemnity based on agreement. Therefore, other

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insureds shall not be able to duplicate claim for the same accident. (2) Although the first instance regarded the demise charterer, An Bang Hong Kong, was one of the stated insureds and entitled to claim for indemnity, the court neglected that An Bang Hong Kong was neither the insurance payer, nor undertook any liability or indemnity to the shipowner for this accident. (3) Even if An Bang Hong Kong, as demise charterer, shall be liable to indemnify the shipowner, the demise charterer shall just indemnify to each of the shipowners based on the proportion of shares. WANG Junqiang, holding 60% of shares, and Tian Cheng Company (the actual controller was ZENG Shuguang who held 34% of shares of the vessel) had issued Payment intention and subrogation receipt, and waived the right to claim after insurance indemnity as RMB3,250,000 yuan. Consequently, the insurance indemnity in the first instance shall deduce 60% and 34% of the insurance amount; otherwise, WANG Junqiang objectively formed fraudulent claim. (4) The judgement, holding An Bang Hong Kong enjoys insurance interest, was lack of reasoning. An Bang Hong Kong, as demise charterer, neither actually indemnify the shipowner nor was required to pay indemnity by the shipowners. And the demise charterer did not burden of proof that it had been suffered employment and benefit damage. Consequently, the demise charterer obviously did not enjoy any insurance interest. (5) It was not reasonable for the opinion held by the first instance that WANG Junqiang was not entitled to delegate all the insureds. WANG Junqiang was the major shareholder and payer of premium under present case and also the only representative for everything after the accident. On the contrary, other shipowner and the demise charterer never directed any presentation to claim for insurance indemnity. Besides, Tian Cheng Company, as the ship manager, completely accepted the role of representative of WANG Junqiang and stamped on the final agreement to make sure. The logic of the court of first instance was controversial as whilst upholding WANG Junqiang and Tian Cheng Company, supporting other insureds for indemnity. 2. The opinion holding by the court of first instance about the statute limitation is not reasonable. The court of first instance, on the one hand, held that the act of claim WANG Junqiang and Tian Cheng Company shall not bind other insureds. One the other hand, the act of claim by WANG Junqiang resulted in the interruption of statute limitation. The opinion is obviously inconsistent. 3. The opinion holding by the court of first instance about insurance indemnity is not reasonable. An Bang Hong Kong, at present, suffered no loss at all. And the insureds did not pay premium as the contract agreed, so it cannot gain enough insurance indemnity. Consequently, the Appellant requests the court to reverse the claims of An Bang Hong Kong in the first instance, or remand a lawsuit for a new trial. In respect of the requirements and reasoning alleging by Ping An Tianjin, An Bang Hong Kong responded that: 1. WANG Junqiang’s personal act shall not be deemed as presenting the whole insureds, nor apparent agency. The agreement WANG Junqiang signed with the insurer under total loss of the vessel would prejudice other contractors. Ping An Tianjin, as a professional insurer who was insuring the vessel

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for 2 years, shall know and ought to know who the counterparty is under the insurance contract, and continue to paying the rest of insurance indemnity. (1) There were five stated insureds on the policy, including the shipowner, the demise charterer and the ship manager. WANG Junqiang, while signing the Payment intention and subrogation receipt, did not mention he presenting all the insureds, and therefore apparent agency would not constitute. Additionally, WANG Junqiang held the undertaker was Tian Cheng Company, but the actual underwriter was Jiu Xin Company, which proving the misrepresentation by WANG Junqiang. Also, Ping An Tianjin, because of the intention of mitigating insurance indemnity and individual agreement with other insured, deviated from the indemnity purpose of the insurance contract. (2) An Bang Hong Kong enjoys the insurance interest, and is legally entitled to claim against Ping An Tianjin for insurance indemnity. (3) The right of claim for insurance indemnity shall base on the ship insurance contract after the ship being demise chartered, instead of the proportion of ownership of the ship. 2. Ping An Tianjin had paid a part of insurance indemnity to one of the insureds on May 22, 2013, which was a performance of obligation resulting in interruption of the statute limitation. 3. The second installment of premium became due on August 15, 2013, and the insureds shall merely pay the first installment the accident occurred on March 1, 2013. There is no evidence to support the claims held by Ping An Tianjin. Consequently, the Respondent requested the court to dismiss the appeal. In the second instance, both parties did not submit new evidence, and the court has no objection to the fact evidenced by the court of first instance. Other provided by the court that M.V. AN FENG 8’s shipowner Wang Junqaing, ZENG Shuguang and Che Zhijun issued notice of abandonment of the vessel to P&I club (New Zealand) in 2013, agreeing to entrust An Bang Hong Kong to perform all rights under insurance contract. The court holds the view that An Bang Hong Kong is the registered legal person in Hong Kong region, and both parties agree to apply law of the People’s Republic of China for dispute resolution. The legal issues under the present case are as follows: 1. Whether An Bang Hong Kong has the insured interest and the right to raise a litigation for indemnity? 2. Whether WANG Junqiang and Tian Cheng Company had the right to present all the insureds to claim for insurance indemnity and sign to indemnity agreement? 3. Whether An Bang Hong Kong was more than the statute limitation? 4. Whether the insurance indemnity decided by the court of first instance is reasonable? Both parties have no objection to the legal issues under this case, and the analysis given by the court are as follows: 1. Whether An Bang Hong Kong has the insurable interest and the right to raise a litigation for indemnity? Through investigation, the previous shipowners of M.V. AN FENG 8 were HE Zhongfeng, WANG Junqiang and CHEN Zhijun. HE Zhongfeng had transferred the shares of ownership of the ship to ZENG Shuguang in November 20, 2012 registered the transference. However, when Jiu Xin Company arranged the insurance for 2013 policy on January 22, 2013, still stated the shipowners as HE

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Zhongfeng, WANG Junqiang and CHEN Zhijun. Although Jiu Xin Company neglected to disclose fact faithfully, there was no evidence proving that Jiu Xin Company deliberately fail to disclose or such unfaithful disclosure would impose heavy impact on the insurance contract. And therefore, the insurance contract was effective and valid. Article 12 of the Insurance Law of the People’s Republic of China defines the insurance interest as “an insurable interest refer to a legally recognized interest owned by an insurance applicant or insurant in the subject matter insured.” And “the insurant in property insurance shall have an insurable interest in the subject matter insured when an insured incident occurs.” However, at present, HE Zhongfeng, when the accident occurring, had no insurable interest and no right to claim for indemnity, and the act of entrusting An Bang Hong Kong was also ineffective. An Bang Hong Kong, as the demise charterer, had the operation right on the vessel and Tian Cheng Company, as the ship manager, had the management role on the vessel, both of which had insurable interest on the vessel. Consequently, the qualified insureds shall be ZENG Shuguangm WANG Junqiang, CHEN Zhijun An Bang Hong Kong and Tian Cheng Company. During litigation, CHEN Zhijun, WANG Junqiang and Tian Cheng Company had issued a announcement that all litigation right and actual interest had transferred to An Bang Hong Kong. Under Agreement of Insurance Indemnity signed by each of parties on October 27, 2015, ZENG Shuguang also transferred the litigation right to An Bang Hong Kong. Consequently, An Bang Hong Kong had acquired all authorities from all the insureds and therefore was entitled to claim for indemnity and interest. 2. Whether WANG Junqiang and Tian Cheng Company had the right to present all the insureds to claim for insurance indemnity and sign to indemnity agreement? After the accident occurred, the shipowner WANG Junqiang, holding the original policy, claimed for insurance indemnity to Ping An Tianjin and issued the payment intention and interest assignment. under litigation, both parties had no objection to the issue that ZENG Shuguang is the legal representative of Tian Cheng Company Because ZENG Shuguang held 34% ownership of the ship, WANG Junqiang held 60% of ownership of the ship and the total proportion was up to 94%, Ping An Tianjin, Ltd held that such payment agreement had been authorized by the majority of shipowners which shall bind all the insureds. The court held that WANG Junqiang did not present any authorization documents of other shipowner and demise charterer when claiming against Ping An Tianjin. for indemnity, and there was no any evidence proving that WANG Junqiang and Tian Cheng Company’s act constituted apparent agency. So the payment agreement was not able to affect other insureds. As for the validity of Tian Cheng Company’s stamp, both parties had no objection to the reality of the stamp, but Ping An Tianjin was not able to identify the staff. The agent of An Bang Hong Kong argued that it inquired ZENG Shuguang, and ZENG Shuguang said he does not agree with the agreement and WANG Junqiang take the official seal to stamp.

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Tian Cheng Company is the registered legal person in Hong Kong region, and based on Article 14 the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, issue of legal capacity shall apply Hong Kong law. The real intention of the payment intention and subrogation receipt cannot be authorized by merely official stamp without signature of staff, and this agreement cannot bind Tian Cheng Company and ZENG Shuguang. Ping An Tianjin, as a professional insurer institution who failed to exam, shall undertake the liability. Although, on the policy, the shipowner, demise charterer and ship manager were stated as insureds, as for a same object, different insured had different insurable interest and ant of the insureds can just get indemnity in the scope of their insurable interest. The demise charterer and ship manager, based on contractual relationship, enjoy the liability insurance, the indemnity limit of such insurance shall be limited to the amount that the insured is responsible for the shipowner. WANG Junqiang and CHEN Zhijun stating that: according to law, An Bang Hong Kong, as the demise charterer of M.V. AN FENG 8, damaged the ship and cause the shipowner suffered loss, An Bang Hong Kong shall be liable to the shipowner. An Bang Hong Kong, in the second instance, also held that if he get the insurance indemnity, he would pay to WANG Junqiang and other shipowners immediately. When all the shipowners joined the insurance indemnity, An Bang Hong Kong, as the demise, had no right to claim against the shipowner. The vessel was owned pro rata by WANG Junqiang, ZENG Shuguang and CHEN Zhijun by different proportion, and these three shipowners shall contribute the indemnity based on their shares. The payment intention and subrogation receipt signed by WANG Junqiang would not affect other insured, but such agreement had stated that “this indemnity is the final indemnity for this accident, the assignor shall not claim for indemnity for the same accident in other measures.” “WANG Junqiang agrees to transfer all the legal right and interest to the insurer, and the insurer shall get the right of subrogation and is entitled to claim against the liable party based on insurer’s name”. After WANG Junqiang signed the agreement and got indemnity, the related right and interest had been transferred to Ping An Tianjin and the latter party got the right of subrogation. This part of insurance indemnity obtained by An Bang Hong Kong shall belong to Ping An Tianjin. So An Bang Hong Kong had no right to claim for WANG Junqiang’s legal part. Consequently, the payment intention and subrogation receipt signed by Wan Junqiang can merely bind the other 60% of ownership instead of other insureds. 3. Whether An Bang Hong Kong was more than the statute limitation, namely, the issue of the statute limitation. Article 264 of the Maritime Code of the People’s Republic of China provides that: the statute limit for right of claim against the marine insurer is 2 years, calculating from the day accident occurred. The present case occurred on March 1, 2013, but WANG Junqiang signed the payment intention and subrogation receipt on May 16, so the act of payment by Ping An Tianjin is the act within the situation of “agree to perform the obligation” of Article 267 the Maritime Code of the People’s Republic

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of China and resulted in the interruption of statute limit. An Bang Hong Kong, raising litigation in the court of first instance on May 4, 2015, was not more than 2 years’ statute limit. The decision given by the court of first instance is right. 4. Whether the insurance indemnity decided by the court of first instance is reasonable? In the first instance, Ping An Tianjin held that it paid the insurance indemnity based on the part of loss of the vessel, and after that, the vessel suffered total loss was caused by the negligence of the assured in respect of mitigating the loss and damage. The insureds did not abandon the ship based on the Maritime Code of the People’s Republic of China and the insurance contract, and the payment intention, subrogation receipt and notice of abandonment prove that Ping An Tianjin did not receive the abandonment. The court held that, based on the communication of email provided by An Bang Hong Kong, both parties did not negotiate about towage and salvage, and also both parties had no objection to the fact that the vessel had suffered total loss. Ping An Tianjin did not raise appeal for the issue of total loss, so the court holds that the vessel is constructive total loss. As for the reason alleged by Ping An Tianjin that it only pays no more than half of insurance indemnity because An Bang Hong Kong did not pay the enough premium. The policy stated that the first installment of premium is on February 5, 2013 and amount is 44,000 yuan; the second installment is on August 15, 2013. “If the insurance premium is paid in installments, the insurer shall undertake the insurance liability pro rata according to the proportion of the insurance premium actually collected before the insured accident and the total insurance premium shall be paid by the insureds.” But Tian Cheng Company paid the first installment on March 7, 2013 as amount of 44,000 yuan. It is inconsistent with the principle that payment of premium is not relevant with insurance contract validity if Ping An Tianjin does not bear any liability based on the said provisions. It is reasonable for the first instance decision related to insurance indemnity. As for the insurance indemnity shall be paid by Ping An Tianjin, the value and insurance amount of M.V. AN FENG 8 is 11,000,000 yuan and, reducing deductible franchise (10% of insurable value), the insurance indemnity shall be 9,900,000 yuan, and 60% of which shall be deduced because WANG Junqiang had confirm by payment agreement. Ping An Tianjin, Ltd shall pay 40% of 9,900,000 yuan as 3,960,000 yuan. As for interest, the decision given by the first instance is reasonable and interest shall be calculated from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period. In summary, the insurance contract is effective and valid. After accident, WANG Junqiang signed the payment intention and subrogation receipt with Ping An Tianjin, and this agreement shall not bind other insureds. But WANG Junqiang, as one of the shipowners, is entitled to dispose of the part of indemnity, which, he owned, shall be deduced. The court upholds the reasoning submitted by Ping An Tianjin that WANG Junqiang is entitled to dispose of his own part of indemnity. Other reasonings are inconsistent with facts and dismissed by the court. The first instance is correct in fact finding but incorrect in application of law. According to

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Article 56 of the Contact Law of People’s Republic of China and Article 170 Paragraph 1 Sub-paragraph 2 of the Civil Procedure Law of People’s Republic of China, the judgement is as follows: 1. Revoke Ningbo Maritime Court (2015) Yong Hai Fa Shang Chu Zi No.440 Civil Judgment; 2. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch shall compensate the Plaintiff An Bang (Hong Kong) Shipping Development Co., Ltd. 3,960,000 yuan and interest, calculating from May 4, 2015, based on People’s Bank of China benchmark loan interest rate for the same period within 10 days upon the service of this judgment. If the Defendant Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch fails to fulfill the obligation of payment within the period ascertained by this Judgment, according to Article 253 of the Civil Procedure Law of the People’s Republic of China, the Defendant shall double pay the interest for the delayed period. Court acceptance fee of first instance and second instance in amount of RMB58,350 yuan, 34,750 yuan shall be borne by Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch, and 23,600 yuan shall be borne by An Bang (Hong Kong) Shipping Development Co., Ltd. The judgment is final. Presiding Judge: QIU Jianfeng Acting Judge: ZHENG Enliang Acting Judge: CHU Ningyu February 28, 2017 Clerk: DING Lin

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The Supreme People’s Court of the People’s Republic of China Civil Ruling An Bang (Hong Kong) Shipping Development Co., Ltd. v. Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (2017) Zui Gao Fa Min Shen No.3274 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 1 and page 14 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote The Supreme Court rejected plaintiff’s application for a new trial, affirming lower court decisions that plaintiff assured, bareboat charterer of ship that was totally lost, was entitled to recover indemnity in full from defendant hull insurer, despite the fact that there were two other co-assureds; however, because one of the other co-assureds had already settled with defendant insurer for 60% of the total loss, plaintiff could only recover 40%. Summary The Plaintiff-assured, bareboat charterer of ship that was totally lost, filed this petition for retrial, claiming that the first and second instance courts erred in apportioning to it only 40% of the compensation under an insurance policy entered into between it, other assureds, and the Defendant-insurer. The Supreme Court affirmed that since one of the assureds had already disposed of, in a private agreement with the insurer, his 60% of the insurance indemnity, the Plaintiff-demise charterer was only entitled to 40% of the insurance compensation. Thus, the Court rejected the Plaintiff-demise charterer’s application for retrial.

Ruling The Claimant of Retrial (the Plaintiff of first instance, the Respondent of second instance): An Bang (Hong Kong) Shipping Development Co., Ltd. Domicile: Room 01B3, Floor 10, Carnival Commercial Building, 18 Java Road, North Point, Hong Kong Special Administrative Region.

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Legal representative: HE Zhongfeng, director. Agent ad litem: WAN Renshan, lawyer of Shanghai Trend Law Firm. The Respondent of Retrial (the Defendant of first instance, the Appellant of second instance): Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch. Domicile: No.1, Baidi Road, Nan Kai District, Tianjin, the people’s Republic of China. Representative: WANG Ran, vice manager. Dissatisfied with the Civil Judgment (2016) Zhe Min Zhong No.513 rendered by the Zhejiang High People’s Court in respect of the case of dispute over marine insurance contract, the Claimant of Retrial An Bang (Hong Kong) Shipping Development Co., Ltd. (hereinafter referred to as “An Bang Hong Kong”) against the Respondent of Retrial Ping An Property & Casualty Insurance Company of China Co., Ltd. Tianjin Branch (hereinafter referred to as “Ping An Tianjin”), filed a retrial application to the court. The court entertained the case and constituted a trial bench in light of law, this case has been concluded. An Bang Hong Kong applied that: firstly, the original judgment violated the basic principles of the contract law. The disbursement of insurance claims shall be jointly determined by all insured. WANG Junqiang and Ping An Tianjin have not obtained the consent of the insured, and the insurance contract does not provide that WANG Junqiang shall have the right to split 60% of the compensation. WANG Junqiang does not have the right to dispose of 60% of the compensation. The original judgment held that WANG Junqiang had the right to dispose of 60% of the indemnity share and ordered Ping An Tianjin to pay only 40% of the insured amount to An Bang Hong Kong. Its distribution of insurance claims violated the intrinsic autonomy of the insured. Secondly, there is new evidence to overturn the original judgment. 1. The ship registration certificate of the International Ship Registry of Cambodia shows that An Bang Hong Kong is the owner of M.V. AN FENG 8, so An Bang Hong Kong has the right to claim all insurance compensation for the vessel. 2. Ningbo Maritime Court’s transcript proves that the court’s handling of insurance compensations follows the principle of common and unanimous decisions of the insured, and the original judgment violated the principle. Therefore, they apply for retrial according to law. Upon review, the court held that: 1. Regarding the original judgment, Ping An Tianjin has paid 40% of the insurance claims to An Bang Hong Kong as a violation of the principle of party autonomy. According to the facts reviewed, WANG Junqiang and Ping An Tianjin reached a payment intention and agreed to pay 3.25 million yuan. Because WANG Junqiang had reached an intention of paying compensation with Ping An Tianjin without obtaining authorization from other insurers, the act could only bind him and could not bind other insured persons. Therefore, WANG Junqiang’s waiver of part of the claim is only valid within the limits of his power. Since WANG

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Junqiang’s insurance interest as insured person is derived from his ownership of the ship involved in the case, and there is no agreement in the insurance contract regarding distribution of the claim share, and there is no evidence to prove otherwise agreed between the parties, WANG Junqiang’s claims for compensation shall be subject to its share of the ownership of the ship, and he has the right to dispose of 60% of the insurance compensation. This part has been determined through agreement and actually paid. Therefore, the original judgment ordered Ping An Tianjin to pay 40% of the insurance compensation to An Bang Hong Kong. The part is not inappropriate. 2. Whether the new evidence submitted by An Bang Hong Kong is enough to overturn the original judgment. The original judgment found that the basis for An Bang Hong Kong’s claims for insurance compensation claims was the insurance policy issued by Ping An Tianjin. According to the insurance policy, An Bang Hong Kong was recorded in the insured as a bareboat charterer, and An Bang Hong Kong’s insurance benefits were limited to the scope of interest as a bareboat charterer. An Bang Hong Kong submitted the Ship Registration Certificate of the International Ship Registry of Cambodia, which it considers to be registered as a shipowner and enjoys the right to claim all insurance claims of the ship. The ship registration certificate submitted by An Bang Hong Kong was marked as “BAREBOAT CHARTERSHIP”, which registered An Bang Hong Kong in the “Name and Address of CHARTERER” column. Therefore, the content of this evidence proves that An Bang Hong Kong was recorded in the insurance policy is consistent with the bareboat charterer and cannot overturn the original judgment. The Ningbo Maritime Court’s transcript is an agreement entered into by the relevant parties for the distribution of the execution of the case after the original judgment took effect. The original judgment was that without the agreement of the parties, the owner of the ship was deemed to have the right to dispose of the insurance compensation in accordance with the ownership of the ship, and the Ningbo Maritime Court’s record could not overturn the original judgment. In summary, the retrial application of An Bang Hong Kong did not meet the requirements of Article 200 of the Civil Procedure Law of the People’s Republic of China. According to Article 204 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China and Article 295 Paragraph 2 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the ruling is as follows: Dismiss the application for retrial of An Bang (Hong Kong) Shipping Development Co., Ltd. Presiding Judge: REN Xuefeng Acting Judge: LIANG Ying Acting Judge: YANG Lei September XX, 2017 Clerk: DING Yi

Xiamen Maritime Court Civil Judgment Bank of China Limited Fujian Branch v. Fujian Haibang Dredging Engineering Co., Ltd. et al. (2015) Xia Hai Fa Shang Chu Zi No.383 Related Case(s) None. Cause of Action 211. Dispute over ship mortgage contract. Headnote Mortgagee bank recovers default judgment in default of appearance by mortgagee and guarantors. Summary The Plaintiff, Bank of China Limited Fujian Branch (Bank of China) filed suit against Fujian Haibang Dredging Engineering Co., Ltd. (Haibang) for the remaining amount owed on a loan furnished by Bank of China. Haibang mortgaged its ship as security on the loan. The remaining defendants and their spouses agreed to bear joint and several liability on the loan, including each couple’s community property as security for the loan. Though the Bank of China appeared in court to argue its case, none of the named defendants in this case appeared in court. As a result, the court ruled in favor of the Bank of China against the named defendants.

Judgment The Plaintiff: Bank of China Limited Fujian Branch. Domicile: No. 136, Wusi Road, Fuzhou, Fujian. Representative: YANG Zhanpeng, president of a bank. Agent ad litem: LIN Huozhong, the lawyer of Fujian Chuangyuan Law Firm. Agent ad litem: LIN Yun, the lawyer of Fujian Chuangyuan Law Firm. The Defendant: Fujian Haibang Dredging Engineering Co., Ltd. Domicile: Unit 503, Floor 1st, Fuzhou Zhengda Square, Middle Wuyi Road No. 18, Gulou District, Fuzhou, Fujian. Legal representative: LIU Yuren.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_2

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The Defendant: SU Qijin, male, born on April 5, 1971, Han, living in Mingxi County, Fujian. The Defendant: LUO Jujin, male, born on June 14, 1959, Han, living in Mingxi County, Fujian. The Defendant: LIU Yuren, male, born on December 20, 1967, Han, living in Changle City, Fujian. The Defendant: LI Lixiang, female, born on April 9, 1971, Han, living in Mingxi County, Fujian. The Defendant: HUANG Fengzhao, female, born on February 9, 1959, Han, living in Mingxi County, Fujian. The Defendant: LIN Yanfang, female, born on August 1, 1974, Han, living in Changle City, Fujian. With respect to the case arising from dispute over contract of ship mortgage between the Plaintiff, Bank of China Limited Fujian Branch (hereinafter referred to as Fujian BOC) and the Defendant, Fujian Haibang Dredging Engineering Co., Ltd (hereinafter referred to as Haibang), SU Qijin, LUO Jujin, LIU Yuren, LI Lixiang, HUANG Fengzhao, and LIN Yanfang, the case was brought to the court on May 12, 2015. After entertaining, this court legitimately constituted the collegiate bench to try the case. On June 5, 2015, the Plaintiff presented application of preservation and requested to freeze deposit of the Defendant 18,463,312.62 yuan (RMB, similarly hereinafter) or to seal up or freeze other equivalent property. On the same day, the court decided to approve the application of preservation of the Plaintiff, and decided to freeze the procedure of transfer, change of name, new mortgage, bareboat charter registration, change of port of registry of M.V. “HAI RONG 16” owned by Haibang, and the bank account of the Defendant. October 10, 2015, the court held a session in public. Agent ad litem of the Plaintiff Fujian BOC, appeared in the court. The Defendants, Haibang, SU Qijin, LUO Jujin, LIU Yuren, LI Lixiang, HUANG Fengzhao and LIN Yanfang, their present whereabouts was unknown, after service by publication, they did not appear in the court by no reasons, the court tried the case in absentia according to law. Now the case has been concluded. The Plaintiff Fujian BOC alleged that on August 27, 2013, it signed Credit Line Agreement with the Defendant Haibang. The agreement stated that it provided 20,000,000 yuan credit lines to the Defendant Haibang, the Defendant Haibang provided maximum mortgage, the Defendant SU Qijin, LUO Jujin and LIU Yuren provided maximum potential liability. On the same day, the Defendant Haibang mortgaged its M.V. “HAI RONG 16” to the Plaintiff to as mortgage for 20,000,000 yuan of loan, and registered mortgage. On September 24, 2013, the Plaintiff signed Contract for Maximum Potential Liability with the Defendant SU Qijin, the Defendant LUO Jujin, the Defendant LIU Yuren. On the same day, the Defendant LI Lixiang (wife of the Defendant SU Qijin), the Defendant HUANG

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Fengzhao (wife of the Defendant LUO Jujin) and the Defendant LIN Yanfang (wife of the Defendant LIU Yuren) signed letter of approval that they agreed to bear liability of guarantee under Contract for Maximum Potential Liability by couple’s joint property. After that, the Plaintiff and the Defendant Haibang signed two pieces of Working Capital Loan Contract, and offered loans 8,000,000 yuan and 12,000,000 yuan respectively on October 28, 2013 and November 5, 2013. Because the Defendant Haibang failed to repay the loans timely, it owed overdue principal 16,905,373.34 yuan and corresponding interest, punitive interest, compound interest, which was breach of contract. The Plaintiff requested the court to judge that: 1. the Defendant should repay principal 16,905,373.34 yuan and corresponding interest, punitive interest, compound interest 2,389,215.32 yuan (interest at year rate 6.6%, punitive interest and compound interest at year rate 9.9%, 8,000,000 yuan was temporarily calculated to September 26, 2015, which was 1,094,610.23 yuan, 8,955,374.51 yuan temporarily calculated to September 20, 2015, which was 1,294,605.09 yuan), the later interest, punitive interest and compound interest was calculated to the actual date of fulfillment; 2. the Defendant Haibang should pay lawyer’s fee 136,000 yuan; 3. the Plaintiff had the right of mortgage to the vessel of the Defendant Haibang, the vessel mortgaged should be converted, auctioned or sold and the payment should be paid in priority to the first and the second claims; 4. the Defendants, SU Qijin, LUO Jujin and LIU Yuren, should bear joint and several liability to the first and the second debts of the Defendant Haibang; 5. the Defendants, LI Lixiang and SU Qijin, HUANG Fengzhao and LUO Jujin, LIN Yanfang and LIU Yuren, should respectively bear joint and several liability to the first and the second debts of the Defendant Haibang; 6. court acceptance fee should be borne by the Defendants. To support the claims, the Plaintiff provided the following evidence to the court: evidence 1: business license for legal person, resident identification card, marriage certificate, to prove the qualified subject of the Defendants; evidence 2: credit line agreement (No: Year 2013 SME Fu Ying Ren Jie Zi No.003), evidence 3: printed copy of working capital loan contract (No: Year 2013 SME Fu Ying Ren Jie Zi No.004), to jointly prove that the Plaintiff loaned 20,000,000 yuan in two times to the Defendant Haibang, both parties agreed on life of loan, interest, punitive interest, compound interest, responsibility for breach of contract, liability of guaranty, mortgage and guarantee, etc.; evidence 5, maximum mortgage contract (No: Year 2013 SME Fu Ying Ren Zui Di Zi No.002), evidence 6: registration certificate of ship mortgage, to jointly prove that the Defendant used its M.V. “HAI RONG 16” as ship mortgage for loan guarantee; evidence 7: maximum potential liability contract (No: Year 2013 SME Fu Ying Ren Zui Bao Zi No.005), to prove that the Defendants, SU Qijin, LUO Jujin and LIU Yuren, should bear joint and several guarantee liability to the Defendant Haibang, the Defendants, LI Lixiang, HUANG Fengzhao and LIN Yanfang, should bear joint and several guarantee liability to the Defendant Haibang within community property; evidence 8: loan note, to prove that the Plaintiff offered loans 8,000,000 yuan and 12,000,000 yuan respectively on

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October 28, 2013 and November 5, 2013 to the Defendant Haibang; evidence 9: loan repayment statement, to prove that the Defendant had repaid part of money and interest; evidence 10 and 14: calculation list of interest, punitive interest and compound interest, to prove that the Defendant Haibang still owed principal 16,905,373.34 yuan and interest, punitive interest and compound interest; evidence 11: commission contract, evidence 12: Fujian VAT invoice, evidence 13: special transfer credit subpoena, to jointly prove that the lawyer’s fee caused by the breach of contract of the Defendant paid by the Plaintiff. After summon to court, the Defendants, Haibang, SU Qijin, LUO Jujin, LIU Yuren, LI Lixiang, HUANG Fengzhao and LIN Yanfang, did not appear to the court, without submitting any defense, which was deemed to abandon their right of civil action. After investigation, there was no objection to the evidence provided by the Plaintiff through checking the original copies or corroborating with other evidence. According to the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 65 and Article 66, the court confirmed these evidence, and investigated the following facts: On August 27, 2013, the Plaintiff and the Defendant Haibang signed Credit Line Agreement (No: Year 2013 SME Fu Ying Ren Shou Zi No.003). The parties agreed that: the Plaintiff offered 20,000,000 yuan credit line to the Defendant Haibang, time period limit of credit line was from the effective date of agreement to July 26, 2014, the Defendant Haibang could recycle the corresponding amount within the limit of each single credit extension business agreed herein in the time period limit of credit line agreed in this agreement, the specific types of amount were that: short-term working capital loan quota, bank acceptance draft limit and trade finance quota. Both parties agreed that SU Qijin, LUO Jujin and LIU Yuren provided maximum potential liability and Haibang provided maximum mortgage to the debts occurred according to this agreement and individual agreement between the Plaintiff and the Defendant. On the same day, the Plaintiff (mortgagee) and Haibang (mortgagor) signed Maximum Mortgage Contract (No: Year 2013 SME Fu Ying Ren Zui Di Zi No.002), the Defendant Haibang mortgaged its M.V. “HAI ROGN 16” to the Plaintiff. The main contracts agreed in Maximum Mortgage Contract were that Credit Line Agreement which number was Year 2013 SME Fu Ying Ren Shou Zi No.003 and the individual agreement to be signed according to the agreement, and amendment or supply, it was agreed that it belonged to the master contract under this contract; loan letter, TF letter, L/G, capital business and other credit line business contract (collectively referred to as “single contract”) signed by the Plaintiff and the Defendant from July 26, 2013 to July 26, 2014, and amendment or supply, it was agreed that it belonged to the master contract under this contract. Maximum Mortgage Contract stated that: the max principal amount was 20,000,000 yuan under this contract, at the date of expiration of the period of occurrence of the principal claims specified in this contract, the principal creditor’s

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right that was confirmed according to this contract should be used as the basis of interest (including legal interest, contract interest, compound interest and punitive interest), liquidated damages, damage awards, expenses for the realization of claims (including but no limited to court acceptance fee, counsel fee, notarial charge, enforcement expenditure, etc.), losses and all other charges payable to the mortgagee as a result of the mortgagor’s default, which also belonged to guaranteed claims, the specific amount should be determined when it was liquidated; the sum of the amounts of creditor’s right mentioned above were the max credit’s right mortgaged under this contract; if the debtor failed to pay to the mortgagee as agreed on any normal or advance payment date under the principal contract, the mortgagee should have the right to exercise the mortgage according to law and as agreed herein that the mortgaged property could be paid in prior within the maximum amount specified in this contract; the normal date of repayment of principal, the date of interest payment, or the date on which the debtor should make any payment to the mortgagee pursuant to the terms of the contract; after the guarantee liability occurred, the mortgagee should have the right to exercise the right of mortgage on the mortgaged property in accordance with the provisions of laws and regulations on ordinary mortgage in respect of all or part, multiple or single of the main creditor’s rights in the liquidation period; after the guarantee liability occurs, the mortgagee had the right to agree with the mortgagor to discount the mortgaged property or to pay off the principal creditor’s rights with the proceeds of auction or sale of the mortgaged property. If they failed to reach an agreement, the mortgagee should have the right to request the People’s Court to auction or sell off the mortgaged property according to law. On October 16, 2013, The ship has handled the ship mortgage registration certificate in Fuzhou Maritime Safety Administration (number of mortgage registration was DY0801130031), the amount of secured claim was 20,000,000 yuan, remark or change: maximum mortgage. On September 24, 2013, the Plaintiff and the Defendants SU Qijin, LUO Jujin and LIU Yuren signed Contract for Maximum Potential Liability (No: Year 2013 SME Fu Ying Ren Zui Bao Zi No. 005), the main contract and the maximum guaranteed amount of claim were the same as Maximum Mortgage Contract, the guarantee method was joint and several liability guarantee, guaranty period should be two years from the date of expiration of the period of occurrence of the principal claims. On the same day, the Defendant LI Lixiang (wife of the Defendant SU Qijin), the Defendant HUANG Fengzhao (wife of the Defendant LUO Jujin) and the Defendant LIN Yanfang (wife of the Defendant LIU Yuren) signed letter of approval, they agreed to assume the security liability with the husband and wife property of the guarantor under Contract for Maximum Potential Liability. On September 27, 2013, the Plaintiff and the Defendant Haibang signed Working Capital Loan Contract (No: Year 2013 SME Fu Ying Ren Jie Zi No.004) that the amount of loan was 8,000,000 yuan. The two Working Capital Loan Contracts were individual agreements under Credit Line Agreement Year 2013 SME Fu Ying

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Ren Shou Zi No.003, borrowing purposes were used for spare parts, stock procurement and other working capital operating turnover needs, the period of the loans were 12 months, calculated from the actual date of taking money, if it was an instalment, it should start from the date of the first actual withdrawal. Among there contracts, loan period agreed in Working Capital Loan Contract Year 2013 SME Fu Ying Ren Jie Zi No.003 was from October 28, 2013 to October 27, 2014, the Defendant Haibang should repay all the loan under the contract on the date which the loan term expired; loan period agreed in Working Capital Loan Contract Year 2013 SME Fu Ying Ren Jie Zi No.004 was from November 5, 2013 to September 21, 2014, the Defendant Haibang should repay loan in four instalment respectively on December 21, 2013, March 21, 2014, June 21, 2014 and September 21, 2014, and should repay 3,000,000 yuan quarterly. The two contracts agreed that, annual interest rate of loan was 6.6%, interest should be calculated from the actual drawing date of the borrower, and should be calculated according to the actual drawing amount and the number of days for use; the interest rate of overdue loan was 50% higher than the base interest rate, the overdue part should collect the penalty interest at the agreed interest rate until paying off the principal and interest; for the interest and penalty interest that the borrower could not pay on schedule, compound interest should be calculated and collected at the agreed penalty interest rate. On October 28, 2013, the Plaintiff offered 8,000,000 yuan to the Defendant Haibang, and offered 12,000,000 yuan on November 5, 2013. As for 12,000,000 yuan, the Defendant Haibang only repaid 3,000,000 yuan of principal and 44,625.49 yuan of principal, and owed 8,955,374.51 yuan up to now. As for 8,000,000 yuan, the Defendant Haibang only repaid 50,001.17 yuan of principal on August 3, 2015, and owed 7,949,998.83 yuan of principal. According to the data in core system of Bank of China, the Defendant Haibang owed the Plaintiff 16,905,373.34 yuan of principal and 2,389,215.32 yuan of corresponding interest, punitive interest and compound interest (interest was calculated at annual rate 6.6%, punitive interest and compound interest was calculated at annual rate 9.9%, the interest, punitive interest and compound interest, 1,094,610.23 yuan, of principal 7,949,998.83 yuan was calculated to September 26, 2015, the interest, punitive interest and compound interest, 1,294,605.09 yuan, of principal 8,955,374.51 yuan was calculated to September 20, 2015). Additionally, the court found out that, the Plaintiff entrusted the lawyer of Fujian Trend Associates Law Firm because the case caused by dispute over loan of contract, the two parties signed [2015] Min Chuang Min Zi No.04008 Contract of Agency on April 3, 2015. After signing Contract of Agency, the Plaintiff paid lawyer’s fee 13,600 yuan to Fujian Trend Associates Law Firm on July 17, 2015. The court held that, this case was caused by dispute over loan of contract. The Plaintiff and the Defendant Haibang signed Credit Line Agreement, Working Capital Loan Contract, Maximum Mortgage Contract and a series of contracts, which were real intention expression of the two parties, and did not violate mandatory provisions of laws and regulations, those should be effective, and the

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two parties should fulfill those contracts. After signing loan of contract, the Plaintiff offered 20,000,000 yuan to the Defendant Haibang as agreed. Now according to the contract, the repayment period of the loan of 8,000,000 yuan and 12,000,000 yuan had expired, but the Defendant Haibang did not repay 16,905,373.34 yuan and corresponding interest, punitive interest, compound interest after the Defendant Haibang repaid some principal, which constituted breach of contract. The Plaintiff claimed to the Defendant to repay 16,905,373.34 yuan principal and interest, punitive interest, compound interest expired (interest was calculated at annual rate 6.6%, punitive interest and compound interest was calculated at annual rate 9.9%), and to pay lawyer’s fee 13,600 yuan, which was in accordance with the Contract Law of the People’s Republic of China Article 205, Article 206, Article 207 and agreements of both parties, so the court supported it. The Defendant Haibang used its M.V. “HAI RONG 16” as ship mortgage for loan guarantee, as agreed in Maximum Mortgage Contract, M.V. “HAI RONG 16” should be used as mortgage and guarantee to interest (including legal interest, contract interest, compound interest and punitive interest), liquidated damages, damage awards, expenses for the realization of claims (including but no limited to court acceptance fee, counsel fee, notarial charge, enforcement expenditure, etc.), losses and all other charges payable, and the procedures for registering the mortgage of a ship should be completed. According to the Maritime Code of the People’s Republic of China Article 11, the Plaintiff had the right to mortgaged ship M.V. “HAI RONG 16” within the scope of the creditor’s rights stipulated in the said mortgage contract, the claims that the proceeds from the auction or sale of the mortgaged ship should be in priority of the repayment of the principal, interest, penalty interest, compound interest and lawyer’s agency fee in arrears of the Defendant Haibang had a legal basis, which should be supported by the court. The Defendants, SU Qijin, LUO Jujin, LIU Yuren and the Plaintiff signed Contract for Maximum Potential Liability, and were willingly to offer guarantee of joint and several liability for 20,000,000 yuan principal and its interest, penalty interest, compound interest and lawyer’s agency fee, the Defendant LI Lixiang (wife of the Defendant SU Qijin), the Defendant HUANG Fengzhao (wife of the Defendant LUO Jujin) and the Defendant LIN Yanfang (wife of the Defendant LIU Yuren) signed letter of approval that they agreed to bear liability of guarantee under Contract for Maximum Potential Liability by couple’s joint property. Therefore, the claims of the Plaintiff that the Defendants, SU Qijin, LUO Jujin and LIU Yuren, should bear joint and several liability to the above debts, and the Defendants, LI Lixiang and SU Qijin, HUANG Fengzhao and LUO Jujin, LIN Yanfang and LIU Yuren, should bear joint and several liability of guarantee under by couple’s joint property, which were completely in accordance with the Guaranty Law of the People’s Republic of China Article 18, the Marriage Law of the People’s Republic of China Article 41, the court supported those claims. After the guarantors, SU Qijin, LUO Jujin, LI Lixiang, HUANG Fengzhao, LIN Yanfang, bore guaranty liability, according to the

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Guaranty Law of the People’s Republic of China Article 31, they could exercise the right of recourse against Haibang. Pulling the threads together, according to the Contract Law of the People’s Republic of China Article 205, Article 206, Article 207, the Maritime Code of the People’s Republic of China Article 11, the Guaranty Law of the People’s Republic of China Article 18, the Marriage Law of the People’s Republic of China Article 41, Interpretation of the Supreme People’s Court of Several Issues concerning the Application of the Guaranty Law of the People’s Republic of China Article 42 and the Civil Procedure Law of the People’s Republic of China Article 144, the judgment is as follows: 1. The Defendant, Fujian Haibang Dredging Engineering Co., Ltd., should repay loan principal 16,905,373.34 yuan and its interest, punitive interest, compound interest (interest was calculated at annual rate 6.6%, punitive interest and compound interest was calculated at annual rate 9.9%, the interests of principal 7,949,998.83 yuan were calculated from October 28, 2013 to the actual date of payment confirmed by the effective judgment, the interest, the interests of principal 8,955,374.51 yuan were calculated from November 5, 2013 to the actual date of payment confirmed by the effective judgment) to the Plaintiff, Bank of China Limited Fujian Branch within 10 days after the judgment came into effect; 2. The Defendant, Fujian Haibang Dredging Engineering Co., Ltd., should repay lawyer’s fee 13,600 yuan to the Plaintiff, Bank of China Limited Fujian Branch within 10 days after the judgment came into effect; 3. The Plaintiff, Bank of China Limited Fujian Branch, had mortgage right to M.V. “HAI RONG 16”, and it could request that the vessel mortgaged should be converted, auctioned or sold and the payment should be made in priority to the first and the second items’ claims; 4. The Defendants, SU Qijin, LUO Jujin and LIU Yuren, should bear joint and several guarantee liability regarding the first and the second items’ debts owed by the Defendant, Fujian Haibang Dredging Engineering Co., Ltd.; 5. The Defendants, LI Lixiang and SU Qijin, HUANG Fengzhao and LUO Jujin, LIN Yanfang and LIU Yuren, should bear joint and several liability of guarantee regarding the first and the second items’ debts by couple’s joint property respectively owed by the Defendant, Fujian Haibang Dredging Engineering Co., Ltd.; 6. After the guarantors, SU Qijin, LUO Jujin, LI Lixiang, HUANG Fengzhao, and LIN Yanfang bore guaranty liability, they could exercise the right of recourse against the Defendant, Fujian Haibang Dredging Engineering Co., Ltd.; 7. Reject other claims of the Plaintiff, Bank of China Limited Fujian Branch. If the payment obligation was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253.

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Court acceptance fee in amount of 133,396 yuan, application fee for property preservation in amount of 5,000 yuan, total amount 138,396 yuan, should be borne by the Defendant, Fujian Haibang Dredging Engineering Co., Ltd. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit copies of the original petitions for appeal to the Fujian High People’s Court. Presiding Judge: CAI Fujun Judge: YU Jianlin People’s Juror: WU Yanting October 15, 2015 Clerk: LI Yue

Appendix: Main Legal Provisions Applied in this Case and Execution Application Notice Firstly, Main Legal Provisions 1. Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 65 The judges may examine and verify a single evidence from the following aspects: 1. Whether the evidence is the original document or thing; whether the photocopy or reproduction is identical to the original document or original thing; 2. Whether the evidence is relevant to the facts of the present case; 3. Whether the forms and sources of the evidence is consistent to the legal provisions; 4. Whether the evidence is real; 5. Whether the witness or evidence provider has an interest in any party concerned. Article 66 In the process of litigation, the evidences which they have affirmed through compromise for the sake of reaching a mediation or agreement or reconciliation may not be used by the parties concerned in later litigations as an evidence unfavorable to the other party. 2. Contract Law of the People’s Republic of China Article 205 Time of Interest Payment The borrower shall pay the interest at the prescribed time. Where the time of interest payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, if the loan term is less than one year, the interest shall be paid together with the principal at the time of repayment; if the loan term is one year or longer, the interest shall be

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paid at the end of each annual period, and where the remaining period is less than one year, the interest shall be paid together with the principal at the time of repayment. Article 206 Time of Principal Repayment The borrower shall repay the principal at the prescribed time. Where the time of repayment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time. Article 207 Delayed Repayment Interest Where the borrower failed to repay the loan at the prescribed time, it shall pay delayed repayment interest in accordance with the contract or the relevant stipulations of the state. 3. Maritime Code of the People’s Republic of China Article 11 The right of mortgage with respect to a ship is the right of preferred compensation enjoyed by the mortgagee of that ship from the proceeds of the auction sale made in accordance with law where and when the mortgagor fails to pay his debt to the mortgagee secured by the mortgage of that ship. 4. Guaranty Law of the People’s Republic of China Article 18 A suretyship of joint and several liability refers to a suretyship contract wherein the parties agree that the surety and the debtor shall be jointly and severally liable. Where the debtor of a suretyship of joint and several liability defaults when the time limit for his performance of the obligation provided in the principal contract expires, the creditor may demand that the debtor perform his obligation, or demand that the surety undertake the suretyship liability within the scope of the suretyship agreement. 5. Supreme People’s Court of Several Issues concerning the Application of the Guaranty Law of the People’s Republic of China Article 42 Where the surety of a judgment made by a people’s court bears the surety responsibility or the liability for compensation, it shall specify in the main text of the judgment that the surety enjoys the rights prescribed in article 31 of the security law. Where the right of recourse is not specified in the judgment, the guarantor may only file a separate lawsuit in accordance with the fact of liability. The limitation of action of the surety for exercising the right of recourse against the debtor shall be counted from the date on which the surety bears his liability to the creditor. 6. Marriage Law of the People’s Republic of China Article 41 At the time of divorce, debts incurred by the husband and wife during their marriage shall be paid off out of their jointly possessed property. If such property is insufficient to pay off the debts or, the items of the property are in the

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separate possession, the two parties shall work out an agreement with regard to the payment. If they fail to reach an agreement, the people’s court shall make a judgment. 7. Civil Procedure Law of the People’s Republic of China Article 144 If a defendant, having been served with a summons, refuses to appear in court without justified reasons, or if he withdraws during a court session without the permission of the court, the court may make a judgment by default. Secondly, Execution Application Notice 1. Civil Procedure Law of the People’s Republic of China Article 239 The period of application implementation is two years. The suspension and interruption of the application for time limitation shall be governed by the relevant provisions of the law concerning the suspension and suspension of the limitation of action. The period provided for in the preceding paragraph shall be counted from the last day of performance as provided for in the legal document; Where a legal document provides for performance in stages, such performance shall be counted from the last day of each prescribed period of performance; If the period for performance is not specified in the legal instrument, it shall be counted from the date on which the legal instrument enters into force. Article 253 If the person subjected to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment. If the person subjected to execution fails to fulfil his other obligations within the period specified in the judgment or written order or any other legal document, he shall pay a charge for the dilatory fulfillment.

Tianjin Maritime Court Civil Judgment Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2016) Jin 72 Min Chu No.805 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 50. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff shipper held to miss the time bar so as to lose the chance to win against Defendant carrier regarding claim arising from delivery of cargo without original bill of lading, as Defendant’s promise to chase the cargo receiver for unpaid cargo price should not be deemed as an event stopping and renewing the 1-year time bar. Summary Plaintiff shipper contracted with Defendant carrier to transport goods from China to Brazil. Defendant issued bill of lading to Plaintiff, which never left Plaintiff. In June 2015, after arriving at port of discharge, the cargo was released by Defendant to the receivers without collection of original bill of lading. In August 2015, Plaintiff wrote to Defendant that it received only part of cargo price from the receivers and asked Defendant to help chase the receivers to pay the remining part. In October 2015, Defendant replied that it would try to get the unpaid price from receivers. However, Plaintiff never got the unpaid price and then sued Defendant in August 2016. Defendant raised the defence that the claim was time barred, as the normal 1-year time bar lapsed. Court of first instance agreed with Defendant that 1-year time bar lapsed (from June 2015 to August 2016), and further held that Defendant’s promise to chase the cargo receiver for payment of unpaid cargo price should not be deemed as an event stopping and renewing the 1-year time bar.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_3

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Judgment The Plaintiff: Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. Domicile: Room 206, Door 4, Building 17, District 1 of Fanggu Park, Fangzhuang, Fengtai District, Beijing. Legal representative: YAO Peilin, general manager of the company. Agent ad litem: TIAN Xueyi, lawyer of Shanghai Allbright (Tianjin) Law Offices. Agent ad litem: YANG Ying, lawyer of Shanghai Allbright (Tianjin) Law Offices. The Defendant: DB Schenker (China) Co., Ltd. Domicile: No.266, Yiwei Road, Free Trade Experimental Area, Shanghai. Legal representative: THOMASLINDYSORENSEN, CEO of the company. Agent ad litem: GUO Xinwei, lawyer of Guangdong WANG JING & CO. (Tianjin). Agent ad litem: YAN Xinfeng, lawyer of Guangdong WANG JING & CO. (Tianjin). The Defendant: DB Schenker (China) Co., Ltd. Beijing Branch. Domicile: No.5, Tianwei 4th Street, Tianzhu Airport Industrial Zone, Shunyi District, Beijing. Representative: THOMASLINDYSORENSEN, general manager of the branch. Agent ad litem: GUO Xinwei, lawyer of Guangdong WANG JING & CO. (Tianjin). Agent ad litem: YAN Xinfeng, lawyer of Guangdong WANG JING & CO. (Tianjin). With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, Beijing Hengshui Yuanda Commerce and Trade Co., Ltd., the Defendants, DB Schenker (China) Co., Ltd. (hereinafter referred to as “DB Schenker”) and DB Schenker (China) Co., Ltd. Beijing Branch (hereinafter referred to as “DB Schenker Beijing Branch”), after entertaining the case on September 6, 2016, the court applied for summary procedure and legitimately constituted the collegiate bench to try the case. The court held a hearing in public on October 21, 2016. Agents ad litem of the Plaintiff, TIAN Xueyi and YANG Ying, and agent ad litem of the Defendants, GUO Xinwei to attend the hearing. Now the case has been concluded. The Plaintiff claimed to the court that: 1. the Defendants should compensate 59,751.45 dollars for the value loss of the goods; 2. the Defendants should pay the interests of the fund above, which should be calculated from August 31, 2016 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period; 3. the Defendants should assume all the court acceptance fee of this case. Facts and reasons: on February 12, 2015, the Plaintiff, through communication platform Whatsapp and emails, confirmed the order of hydraulic hose with BRH-SULFLEX INDUSTRIA DE ARTEFATOS

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DE BORRACHA LTDA (hereinafter referred to as BRH Company) and the Plaintiff issued a commercial invoice which indicated the value of the goods of 135,751.45 dollars. BRH Company paid 76,000 dollars in advance according to the commercial invoice, payment for goods of 59,751.45 dollars remaining to be paid. To fulfill the order, the Plaintiff entrusted DB Schenker Beijing Branch to book cargo space for shipment and transport the goods. On April 12, 2015, DB Schenker Beijing Branch issued the original bill of lading No.CNBJS0000007490. The bill of lading stated that the shipper was the Plaintiff, the carrier was DB Schenker Beijing Branch, the consignee was BRH Company, the loading port was Tianjin New Harbor, and the unloading port was Paranagua, Brazil. After the goods were shipped, the Plaintiff found that the goods involved were delivered at the port of discharge without the original bill of lading on June 3, 2015, yet not receiving the full payment for the goods. The Defendants should be liable for compensation. The two Defendants argued that: 1. the Defendants were not the carriers of the carriage in the case and should not be liable for any loss claimed by the Plaintiff; 2. the limitation of action of this case had expired, and the Plaintiff lost the right to win the case according to law; 3. the Defendants’ delivery of the goods at the port of destination complied with the provisions of law at the port of destination and they did not have to be liable for compensation according to law. In order to prove its claims, the Plaintiff provided the following evidence: Evidence 1-1 commercial invoice No.R001/2015, evidence 1-2 authentic act (2016) Jin Bei Fang Zheng Jing Zi No.9232, evidence 1-3 credit advice from China Citic Bank, evidence 1-4 dealing records between the Plaintiff and BRH Company, to prove the contract of sale established between them, and both sides recognized the value of the goods was 135,751.45 dollars and that BRH Company paid totally 76,000 dollars for the payment in advance. Evidence 2-1 marine power of attorney issued by the Plaintiff, evidence 2-2 a full set of original bill of lading No. CNBJS0000007490, to prove that the Plaintiff now holds the full set of original bill of lading involved in this case. The carrier of the goods involved was DB Schenker Beijing Branch and the shipper was the Plaintiff. Evidence 3-1 declaration for exportation, evidence 3-2 packing list, to prove that the goods involved were loaded in three container and imported. Evidence 4 transfer information of the three containers involved on the internet ShipmentLink, to prove the three empty containers involved were returned on June 3, 2015, namely that the goods involved were released without the original bill of lading. Evidence 5 authentic acts (2016) Jin Bei Fang Zheng Jing Zi No.9231, No.9233, No.9234, to prove that from June 5, 2015 to February 29, 2016, the staff of both parties claimed to the Defendants by email that there was no single release of the goods without the original bill of lading. The Plaintiff’s claim did not exceed the limitation of action. The two Defendants, after cross-examination, argued about the Plaintiff’s evidence that: the first set of evidence related to the sales contract had nothing to do with the Defendants and their authenticity could not be verified. There was no objection to the authenticity of the second and fourth set of evidence. The third set of evidence was different in recorded content from the first group of evidence and there was objection to the authenticity. The fifth set of evidence could not prove the

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interruption of the limitation of action. There was no content of claims for compensation for the release of the goods without the bill of lading in the email. The court’s advice on confirmation about all the evidence from the Plaintiff was as follows: the Plaintiff’s evidence could corroborate each other. The court confirmed the authenticity of the evidence which proved the fact that the Plaintiff signed the contract of sale and purchase, its identity of the shipper and the fact that the goods were released without corresponding documents. In order to prove their claims, the two Defendants provided the following evidence: Evidence 1 bill of lading, evidence 2 business qualification registration certificate of Non-Vessel Operating Common Carry and the agency agreement, to prove that the carrier was SCHENKER OCEAN LIMITED, who had the qualification of NVOCC and that the Defendants were the agent issuing the bill of lading, which prescribed after the goods were unloaded at the port of destination in Brazil, according to applicable laws and regulations in Brazil, the goods could be transferred only with the approval of the custom without producing the original bill of lading. Evidence 3 the explanation published by Fair Trade Bureau of Ministry of Commerce on new rules about delivery without the original bill of lading in Brazil, to prove that from May 6, 2013, Brazil’s Finance Ministry executed the order No.1356 which proved that the consignee could take delivery of the goods without the original bill of lading. Evidence 4 customs clearance records and customs declaration at the port of destination and notarized documents, to prove that the consignee was recognized as the green channel clearance by the customs at the unloading port. Evidence 5 introduction from Ministry of Commerce on Brazil’s foreign trade network (SISCOMEX), to prove that the website system was the only network system under the law of Brazil for the unified management of foreign trade and the authority of the system’ s searching results. Evidence 6 judgment of Santa Catarina Court in Brazil, to prove that according to the order No.1356 executed from May 6, 2013, Brazil’s court sentenced that the consignee had no right to detain the goods on account that there was no producing of the original bill of lading. Evidence 7 Brazil’s Internal Revenue Service’s stipulations No.680 revised on October 2, 2006, to prove that, upon the regulations of the Brazilian Tax Bureau on the bill of lading after the revision of the order No.1356 on May 6, 2013, the consignee no longer needed to provide the bill of lading or equivalent documents to take delivery of the goods. The Plaintiff, after cross-examination, argued about the two Defendants’ evidence that: there was no objection to the authenticity of evidence 1, but it could not prove that DB Schenker Beijing Branch was the shipping agent. There was no original certificate for the qualification of NVOCC, and the authenticity was disputed. Evidence 3 and 5 were network screenshots, which had not been notarized and whose authenticity was disputed. The translation document of evidence 4 was not consistent with China’s legal requirements for the evidence formed abroad, and the green channel customs clearance could not exclude the obligation to release goods with documents, and the effectiveness of evidence was not recognized. Evidence 6 could not be regarded as the basis of judgment in China, and there was

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objection to its relevance. Evidence 7 merely intercepted part of the content which was beneficial to the Defendants and then translated the abstract, so there was objection to the authenticity. The court’s advice on confirmation about all the evidence from the two Defendants was as follows: the authenticity of the certificate for the qualification of NVOCC in evidence 2 should be confirmed. The agency agreement signed through email should not be confirmed since the Defendants did not provide evidence to prove the authenticity of the email. It could not be proved that DB Schenker Beijing Branch had the right to issue the bill of lading simply owing to its qualification of NVOCC. Other evidence could verify each other and the authenticity should be confirmed. The extraterritorial judgment was not relevant to the case and illustration on website of Ministry of Commerce and the translation of incomplete Brazilian law could not confirm the content of foreign law. According to the statements of litigants and evidence confirmed after examination, the court’s confirmation about the facts was as follows: on February 12, 2015, the Plaintiff signed the sales contract of hydraulic hose through the communication platform Whatsapp and emails with BRH Company. The Plaintiff issued a commercial invoice for the content in contract, recording the value of the goods as 135,751.45 dollars. BRH Company paid 26,000 dollars in advance on March 16, 2015 according to the commercial invoice. In order to fulfill the order, the Plaintiff issued a marine power of attorney to DB Schenker Beijing Branch and entrusted it to transport the goods. On April 12, 2015, DB Schenker Beijing Branch issued a full set of original bills of lading No.CNBJS0000007490. The bill of lading recorded that the consignor was the Plaintiff, the consignee was BRH Company, the loading port was Tianjin New Harbor, and the unloading port was Paranagua, Brazil. The goods involved were loaded in three TEU containers No.FCIU4513568, EMCU3918471, EMOU2020712. The issuing column in the bill of lading recorded the signature of “SCHENKE Ocean” as the carrier by procuration and the issuing (Signed and issued as agents for Schenker Ocean as Carrier) and the column was covered by the special seal of DB Schenker Beijing Branch for bill of lading (SCHENKER CHINA LTD. BEIJING BRANCH) and its signature. The returning date of the three involved empty containers at the unloading port was June 3, 2015. Up till now, the Plaintiff still held the full set of original bills of lading for the goods involved. On June 5, 2015, the Plaintiff sent an email to DB Schenker Beijing Branch asking about the circumstance of the release of goods without original bill of lading. Since then, until February 29, 2016, the Plaintiff had been communicating by email with DB Schenker Beijing Branch about relevant matters. During this period, on August 27, 2015, BRH Company paid the Plaintiff 50,000 dollars of the payment for goods. On August 28, 2015, the Plaintiff sent the email to DB Schenker Beijing Branch to inform that the Plaintiff received the payment abroad, about 60,000 dollars left to be paid and that DB Schenker should contact with the abroad to help the Plaintiff urge for the rest of the payment. But the Plaintiff did not receive the rest payment of 59,751.45 dollars and consequently it initiated the legal proceeding on August 29, 2016.

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The court held that, the cause of action of this case was dispute over contract of carriage of goods by sea. The Plaintiff was the carrier recorded on the bill of lading and DB Schenker Beijing Branch issued the bill of lading. The two Defendants advocated that DB Schenker Beijing Branch was only the agent issued the bill of lading for SCHENKER OCEAN LIMITED and SCHENKER OCEAN LIMITED was the carrier of the bill involved. DB Schenker Beijing Branch should bear the burden of proof for this claim, for which it provided the agency agreement signed through email. But it did not provide evidence to prove the authenticity of the email, and the agency agreement did not meet the requirement of the form of evidence and its resource could not be confirmed. Therefore, it could not be affirmed that DB Schenker Beijing Branch was entrusted by the carrier to issue the bill of lading. The Plaintiff advocated that DB Schenker Beijing Branch was the carrier of the goods involved according to the bill of lading, which should be supported. The Plaintiff was in the contract of carriage of goods by sea with DB Schenker Beijing Branch. Regarding to the question whether the Plaintiff’s action exceeded the limitation of action. The Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading Article 14 was that: “where the holder of an original bill of lading brings an action on the ground that the carrier has delivered goods without the original bill of lading, the provisions of Article 257 of the Maritime Code shall apply, and the time limitation period shall be one year, calculated from the day when the carrier shall deliver the goods”. In this case, through searching the website, the Plaintiff learned that the returning date of the empty containers involved was June 3, 2015. On June 5, 2015, the Plaintiff inquired with DB Schenker Beijing Branch about matters of the release of goods without the bill of lading. Therefore, regarding the returning date of the empty containers as a reasonable date for the goods to be delivered was in line with the facts of the case. The Plaintiff contended that it had been in contact with DB Schenker Beijing Branch for the compensation until February 29, 2016, and that the buyer of the goods BRH Company paid 50,000 dollars for the goods on August 27, 2015. The limitation of action was interrupted and was recalculated from February 29, 2016. According to the Maritime Code of the People’s Republic of China Article 257, the limitation for period is interrupted when the claimant brings a lawsuit, submits the arbitration or the respondent agrees to perform the obligation. The Plaintiff inquired with DB Schenker Beijing Branch about matters of the release of goods without the bill of lading but it did not bring a lawsuit or submit the arbitration, nor could it prove that DB Schenker Beijing Branch agreed to perform the obligation, which was not the legal cause of interruption. The payment for goods by the buyer was based on the legal relationship of the contract of sale and purchase, which had nothing to do with DB Schenker Beijing Branch and did not cause the legal consequences of the interruption of limitation of action. Therefore, the effective date of limitation of action was June 3, 2015 and there was no legal cause of the interruption of the limitation of action. The Plaintiff brought the lawsuit on June 26, 2016, which had exceeded the limitation of action.

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According to the Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading Article 14 and the Maritime Code of the People’s Republic of China Article 257, the judgment is as follows: Reject all the claims of the Plaintiff, Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. Court acceptance fee in amount of 3,554 yuan, the Plaintiff, Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. should bear all of it. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit 5 copies of the original petitions for appeal to the Tianjin High People’s Court. Within seven days from the date of filing the appeal petition, the fee of the appeal against the judgment of first instance should be paid (bank of deposit: Tianjin Tiancheng Branch of Agricultural Bank of China 02200501040006269; account: Finance Department of Tianjin High People’s Court). If the payment is overdue, the appeal should be withdrawn automatically. Judge: YANG Ling December 29, 2016 Clerk: LU Zhennan

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Tianjin High People’s Court Civil Judgment Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. v. DB Schenker (China) Co., Ltd. et al. (2017) Jin Min Zhong No.319 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 43. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming the first instance Court’s decision holding that in claim arising from delivery of cargo without original bill of lading, Defendant carrier’s promise to chase the cargo receiver for unpaid cargo price did not stop or renew the 1-year time bar. Summary Plaintiff shipper contracted with Defendant carrier to transport goods from China to Brazil. Defendant issued bill of lading to Plaintiff, which never left Plaintiff. In June 2015, after arriving at port of discharge, the cargo was released by Defendant to the receivers without collection of original bill of lading. In August 2015, Plaintiff wrote to Defendant that it received only part of cargo price from the receivers and asked Defendant to help chase the receivers to pay the remining part. In October 2015, Defendant replied that it would try to get the unpaid price from receivers. However, Plaintiff never got the unpaid price and then sued Defendant in August 2016. Defendant raised the defence that the claim was time barred, as the normal 1-year time bar lapsed. Court of first instance agreed with Defendant that 1-year time bar lapsed (from June 2015 to August 2016), and further held that Defendant’s promise to chase the cargo receiver for payment of unpaid cargo price should not be deemed as an event stopping and renewing the 1-year time bar. Plaintiff appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

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Judgment The Appellant (the Plaintiff of first instance): Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. Domicile: Room 206, Door 4, Building 17, District 1 of Fanggu Park, Fangzhuang, Fengtai District, Beijing. Legal representative: YAO Peilin, general manager of the company. Agent ad litem: TIAN Xueyi, lawyer of Shanghai Allbright (Tianjin) Law Offices. Agent ad litem: LI Ailin, lawyer of Shanghai All bright (Tianjin) Law Offices. The Respondent (the Defendant of first instance): DB Schenker (China) Co., Ltd. Beijing Branch. Domicile: No.5, Tianwei 4th Street, Tianzhu Airport Industrial District, Beijing. Person in charge: THOMASLINDYSORENSEN, general manager Agent ad litem: GUO Xinwei, lawyer of Guangdong WANG (Tianjin). Agent ad litem: YAN Xinfeng, lawyer of Guangdong WANG (Tianjin).

Zone, Shunyi of the branch. JING & CO. JING & CO.

The Respondent (the Defendant of first instance): DB Schenker (China) Co., Ltd. Domicile: No.266, Yiwei Road, Free Trade Experimental Area, Shanghai. Legal representative: THOMASLINDYSORENSEN, CEO of the company. Agent ad litem: GUO Xinwei, lawyer of Guangdong WANG JING & CO. (Tianjin). Agent ad litem: YAN Xinfeng, lawyer of Guangdong WANG JING & CO. (Tianjin). The Appellant, Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. (hereinafter referred to as Yuanda Company), the Respondent, DB Schenker (China) Co., Ltd. Beijing Branch (hereinafter referred to as DB Schenker Beijing Branch) and DB Schenker (China) Co., Ltd. (hereinafter referred to as DB Schenker) disagreed with (2016) Jin 72 Min Chu No.805 Civil Judgment (hereinafter referred to as the judgment of first instance) made by Tianjin Maritime Court (hereinafter referred to as the court of first instance) and an appeal was filed to the court. The case was caused from a dispute over the contract of carriage of goods by sea. After registering this case on April 18, 2017, the court legitimately constituted the collegiate bench to try the case. The Appellant Yuanda Company’s legal representative YAO Peilin and its agent ad litem, TIAN Xueyi, the Respondent DB Schenker and DB Schenker Beijing Branch’s agent ad litem, YAN Xinfeng, attended the lawsuit. Now the case has been concluded. Yuanda Company appealed that: request to dismiss the judgment of first instance and adjust to support the claims of Yuanda Company. Court acceptance fee of first

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and second instance should be paid by DB Schenker Beijing Branch and DB Schenker. Facts and reasons: it was wrong that the judgment of first instance confirmed that this case exceeded the limitation of action. As DB Schenker Beijing Branch released the goods without the bill of lading at the port of destination, which resulted in the loss of Yuanda Company. Yuanda Company repeatedly urged DB Schenker Beijing Branch to solve the matter of releasing the goods without the bill of lading. In the email sent to Yuanda Company on October 28, 2015, DB Schenker Beijing Branch promised to send the notification to the non-vessel carrier to ask for the rest of the payment of 60,000 dollars. DB Schenker Beijing Branch’s practical action indicated that it agreed to fulfill its obligation to recover the remaining loss. Therefore, the limitation of action of the lawsuit was interrupted on October 28, 2015 and the lawsuit raised by Yuanda Company on August 29, 2016 did not exceed the limitation of action. DB Schenker Beijing Branch and DB Schenker argued that: 1. the limitation of action of this case had expired and Yuanda Company lost the right to win this case according to law. Before the proceeding, Yuanda Company had never filed a lawsuit or applied for arbitration in any other court, and its claim of the behavior of DB Schenker Beijing Branch only indicated the limited role of DB Schenker Beijing Branch as a linkman who helped Yuanda Company to convey the declaration of will urging the buyer to pay the price of the goods. Yuanda Company claimed the arrears to the buyer based on the contract of sale and purchase, which could never cause the suspension of the limitation of action in the contract of carriage of goods by sea between it and Schenker Beijing Branch. 2. DB Schenker Beijing Branch was the agent of the carrier for issuing the bill, who should not undertake the responsibility as a carrier, nor should it compensate for the damage of releasing the goods without the bill of lading. In conclusion, request to dismiss the appeal and affirm the original judgment. The claims lodged by Yuanda Company to the court of the first instance were showed as follows: 1. DB Schenker Beijing Branch and DB Schenker should compensate 59,751.45 dollars for the value loss of the goods; 2. DB Schenker Beijing Branch and DB Schenker should pay the interests of the fund above, which should be calculated from August 31, 2016 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period; 3. DB Schenker Beijing Branch and DB Schenker should assume all the costs of this case. The court of first instance confirmed the fact that: on February 12, 2015, Yuanda Company signed the sales contract of hydraulic hose through the communication platform Whatsapp and emails with BRH-SULFLEX INDUSTRIA DE ARTEFATOS DE BORRACHA LTDA (hereinafter referred to as BRH Company). Yuanda Company issued a commercial invoice for the content in contract, recording the value of the goods as 135,751.45 dollars. BRH Company paid 26,000 dollars in advance on March 16, 2015 according to the commercial invoice. In order to fulfill the order, Yuanda Company issued a marine power of attorney to

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Schenker Beijing Branch and entrusted it to transport the goods. On April 12, 2015, DB Schenker Beijing Branch issued a full set of original bill of lading No. CNBJS0000007490. The bill of lading recorded that the shipper was Yuanda Company, the consignee was BRH Company, the loading port was Tianjin New Harbor, and the unloading port was Paranagua, Brazil. The goods involved were loaded in three TEU containers No.FCIU4513568, EMCU3918471, EMOU2020712. The issuing column in the bill of lading recorded the signature of “SCHENKE Ocean” as the carrier by procuration and the issuing (Signed and issued as agents for schenker ocean as carrier) and the column was covered by the special seal of DB Schenker Beijing Branch for bill of lading (SCHENKER CHINA LTD. BEIJING BRANCH) and its signature. The returning date of the three involved empty containers at the unloading port was June 3, 2015. Up till now, Yuanda Company still held the full set of original bill of lading for the goods involved. On June 5, 2015, Yuanda Company sent an email to DB Schenker Beijing Branch asking about the circumstance of the release of goods without original bill of lading. Since then, until February 29, 2016, Yuanda Company had been communicating by email with DB Schenker Beijing Branch about relevant matters. During this period, on August 27, 2015, BRH Company paid Yuanda Company 50,000 dollars of the payment for goods. On August 28, 2015, Yuanda Company sent the email to DB Schenker Beijing Branch to inform that Yuanda Company received the payment abroad, about 60,000 dollars left to be paid and that DB Schenker should contact with the abroad to help Yuanda Company urge for the rest of the payment. But Yuanda Company did not receive the rest payment of 59,751.45 dollars and consequently it initiated the legal proceeding on August 29, 2016. The court held that, the cause of action of this case was dispute over contract of carriage of goods by sea. Yuanda Company was the carrier recorded on the bill of lading and DB Schenker Beijing Branch issued the bill of lading. DB Schenker and DB Schenker Beijing Branch advocated that DB Schenker Beijing Branch was only the agent issued the bill of lading for SCHENKER OCEAN LIMITED and SCHENKER OCEAN LIMITED was the carrier of the bill involved. DB Schenker Beijing Branch should bear the burden of proof for this claim, for which it provided the agency agreement signed through email. But it did not provide evidence to prove the authenticity of the email, and the agency agreement did not meet the requirement of the form of evidence and its resource could not be confirmed. Therefore, it could not be affirmed that DB Schenker Beijing Branch was entrusted by the carrier to issue the bill of lading. Yuanda Company advocated that DB Schenker Beijing Branch was the carrier of the goods involved according to the bill of lading, which was supported by the court of first instance. Yuanda Company was in the contract of carriage of goods by sea with DB Schenker Beijing Branch. Regarding to the question whether Yuanda Company’s action exceeded the limitation of action. The Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 14 was that: “where the holder of an original bill of lading brings an action on the ground that the carrier has

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delivered goods without the original bill of lading, the provisions of Article 257 of the Maritime Code of China shall apply, and the time limitation period shall be one year, calculated from the day when the carrier shall deliver the goods”. In this case, through searching the website, Yuanda Company learned that the returning date of the empty containers involved was June 3, 2015. On June 5, 2015, Yuanda Company inquired with DB Schenker Beijing Branch about matters of the release of goods without the bill of lading. Therefore, regarding the returning date of the empty containers as a reasonable date for the goods to be delivered was in line with the facts of the case. Yuanda Company contended that it had been in contact with DB Schenker Beijing Branch for the compensation until February 29, 2016, and that the buyer of the goods BRH Company paid 50,000 dollars for the goods on August 27, 2015. The limitation of action was interrupted and was recalculated from February 29, 2016. According to the Maritime Code of the People’s Republic of China Article 267, the limitation for period is interrupted when the claimant brings a lawsuit, submits the arbitration or the Respondent agrees to perform the obligation. Yuanda Company inquired with DB Schenker Beijing Branch about matters of the release of goods without the bill of lading but it did not bring a lawsuit or submit the arbitration, nor could it prove that DB Schenker Beijing Branch agreed to perform the obligation, which was not the legal cause of interruption. The payment for goods by the buyer was based on the legal relationship of the contract of sale and purchase, which had nothing to do with DB Schenker Beijing Branch and did not cause the legal consequences of the interruption of limitation of action. Therefore, the effective date of limitation of action was June 3, 2015 and there was no legal cause of the interruption of the limitation of action. Yuanda Company brought the lawsuit on August 29, 2016, which had exceeded the limitation of action. According to the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 14 and the Maritime Code of the People’s Republic of China Article 257, the judgment of first instance was: reject all the claims of Yuanda Company. Court acceptance fee of first instance in amount of 3,554 yuan should be afforded by Yuanda Company. During the second trial of the court, DB Schenker Beijing Branch and DB Schenker additionally handed in Notification that the Ministry of Transport’s Applying for Disclosure of Government Information No.4 in 2017, tending to prove that DB Schenker was merely the domestic organization for liaison of the non-vessel operation carrier, SCHENKER OCEAN LIMITED and that DB Schenker Beijing Branch was not the actual carrier. In addition, the original copy of agency agreement of evidence 2 of the first instance was submitted, which was supplemented at the second instance. Yuanda Company recognized the authenticity of Notification that the Ministry of Transport’ s Applying for Disclosure of Government Information, but not its purpose of proof, which could only prove that DB Schenker was the domestic organization for liaison of SCHENKER OCEAN LIMITED but could not prove DB

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Schenker Beijing Branch obtained the authorization to issue the bill of lading as an agent. The authenticity of the agency agreement was not recognized. Yuanda Company did not submit additional evidence. Upon analysis by synthesis of the evidence and cross-examinations of each parties, the court held that, since Yuanda Company had no objection to the authenticity of Notification that the Ministry of Transport’s Applying for Disclosure of Government Information, its authenticity should be confirmed. But this evidence could not prove that DB Schenker Beijing Branch obtained the authorization to issue the bill of lading as an agent. Since Yuanda Company did not recognize the authenticity of the agency agreement, SCHENKER OCEAN LIMITED was not a party to the case, and it had not affixed the company’s seal in the agreement, in the absence of other evidence, the court did not confirm its authenticity. Except for the facts confirmed in the first instance, the court found out that: On October 28, 2015, DB Schenker Beijing Branch sent an email to Yuanda Company, which recorded: “our legal department will send a formal notice to SCHENKER abroad, asking for the rest of the payment of 60,000 dollars.” The court held that, the cause of action of this case was dispute over contract of carriage of goods by sea. This case was caused by the releasing of the goods at the port of destination without the bill of lading. Since it happened in Brazil, according to the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 522 “under any of the following circumstances, the people’s court may determine a case as a foreign-related civil case: … (4) The legal fact that leads to the establishment, change or termination of civil relationship occurs outside the territory of the People’s Republic of China”, the court recognized the case as a foreign-related civil case. According to the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 3, the parties may explicitly choose the laws applicable to foreign-related civil relations in accordance with the provisions of law. Now the parties explicitly chose the laws of China as the applicable law. The issues of the second instance were so follows: 1. whether DB Schenker and DB Schenker Beijing Branch should compensate for the loss of the value and its interests of the involved goods to the Yuanda Company; 2. whether the claims of Yuanda Company exceeded the limitation of action. Regarding to the question whether DB Schenker and DB Schenker Beijing Branch should compensate for the loss of the value and its interests of the involved goods to Yuanda Company. DB Schenker Beijing Branch advocated that it was a freight forwarding business and, in this case, Yuanda Company only entrusted it to book the space for cargo and at the same time it issued the bill of lading on behalf on the carrier and it was not the carrier. In view of this, the court held that according to the relevant bill of lading, SCHENKER OCEAN LIMITED was the carrier of the goods involved, Yuanda Company was the shipper, and DB Schenker Beijing Branch was the agent of the carrier to issue the bill of lading. However, DB Schenker Beijing Branch did not prove that it had obtained the authorization of SCHENKER OCEAN LIMITED to issue the bill of lading. According to the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of

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Cases of Disputes over Marine Freight Forwarding Article 4 “when a freight forwarding enterprise issues bills of lading, seaway bills or other shipping documents in its own name in the course of handling marine freight forwarding affairs, if the consignor claims that the freight forwarding enterprise assume carrier’s liability on those grounds, a people’s court shall uphold such a claim”, when each party acknowledged that the goods involved were released at the port of destination without the bill of lading, Yuanda Company should have the right to claim DB Schenker Beijing Branch to assume the legal liability of the carrier’s releasing the goods without the relevant document. Regarding to the question whether the claims of Yuanda Company exceeded the limitation of action. According to the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 14, the limitation of action of this case was 1 year and each party recognized June 3, 2015, as affirmed by the court of first instance, was the date of limitation of action. According to the Maritime Code of the People’s Republic of China Article 267, the limitation for period is interrupted when the claimant brings a lawsuit, submits the arbitration or the Respondent agrees to perform the obligation. Yuanda Company advocated that Schenker Beijing Branch sent email to Yuanda Company on October 28, 2015 to imply that it agreed to recover the rest of the loss and that the limitation of action was interrupted since the Respondent agreed to perform the obligation. In view of this, the court held that, in the email above, DB Schenker Beijing company only indicated that it would send a notice to SCHENKER OCEAN LIMITED to claim for the rest of the payment, but did not explicitly indicate that it would bear the loss of the payment to Yuanda Company. Therefore, the email did not constitute the condition that the Respondent agreed to perform the obligation and the claim of Yuanda Company above should not be supported. Therefore, there was no legal cause of the interruption of the limitation of action. Yuanda Company brought the lawsuit on August 29, 2016, which had exceeded the limitation of action. In conclusion, Yuanda Company’s claims in the appeal could not be established and should be rejected. The judgment of first instance affirmed the facts and applied the law correctly and should be maintained. According to the Civil Procedure Law of the People’ s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 7,108 yuan, the Appellant Beijing Hengshui Yuanda Commerce and Trade Co., Ltd. should bear all of it. The judgment is final. Presiding Judge: ZHAO Wei Judge: ZHAO Qingquan Acting Judge: TANG Na July 13, 2017 Clerk: YIN Qi

Shanghai High People’s Court Civil Judgment Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2016) Hu 72 Min Chu No.3193 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 64. Cause of Action 202. Dispute over contract of carriage of goods by sea or seaconnected waters. Headnote US governing law clause on reserve side of the bill of lading issued by Defendant carrier was not binding on Plaintiff shipper, because the terms contained in the bill of lading were pre-made standard terms rather than terms negotiated and agreed between the parties. Summary Defendant carrier issued straight bill of lading to Plaintiff shipper, which contained US governing law clause. Carrier delivered the goods in the port of discharge without collection of the original bill of lading. Shipper, who was unpaid, sued carrier for the total price of the goods. Carrier contended that US law should be applied under which carrier could deliver the goods to the named consignee without original bill of lading. Court of first instance disagreed and held that as shipper argued for application of Chinese law whereas carrier for US law, the parties to the carriage of goods by sea contract had not reached an agreement on the issue of governing law. The bill of lading was a set of standard terms unilaterally tailored by carrier in advance. Though it contained US governing law clause, that should not be deemed as the parties’ true meaning and agreement, after negotiation, on the governing law issue, so the US governing law clause was not binding on shipper. In consideration that the loading port was Shanghai and the parties were both Chinese companies, Court of first instance decided that China was the state which was most connected with this case and Chinese law should be applied to resolve the parities’ disputes.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_4

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Judgment The Plaintiff: Changzhou Woyuan Textile Co., Ltd. Domicile: No.XXX Dawei Village, Shengli, Village Committee, Hongmei Street, Tianning District, Changzhou, Jiangsu. Legal representative: BAI Zhenghai, chairman of the company. Agent ad litem: ZHOU Qi, lawyer of Shanghai SLOMA Law Firm. Agent ad litem: LIU Chong, lawyer of Shanghai SLOMA L Law Firm. The Defendant: Shenzhen Cohesion Freight Forwarding Co., Ltd. Shanghai Branch. Domicile: Room XXX, No.XXX, Yunguang Road, Hongkou District, Shanghai. Legal representative: HUANG Shun, general manager of the branch. Agent ad litem: ZHANG Changtao, lawyer of Shanghai GL & CO. Agent ad litem: ZHANG Xiuxia, lawyer of Shanghai GL & CO. The Defendant: COHESION FREIGHT (HK) LIMITED. Domicile: Room XX, Building XX, Sanxiang, Kowloon Bay Cargo Centre, XX Tai Yi Street, Kowloon Bay, Hong Kong Special Administrative Region. Representative: HU Huiling, director of the company. Agent ad litem: ZHANG Changtao, lawyer of Shanghai GL & CO. Agent ad litem: ZHANG Xiuxia, lawyer of Shanghai GL & CO. With respect to the case arising from the dispute over contract of carriage of goods by sea, the Plaintiff Changzhou Woyuan Textile Co., Ltd. filed an action against the Defendant Shenzhen Cohesion Freight Forwarding Co., Ltd. (hereinafter referred to as “Shenzhen Cohesion Company”), and the Defendant Shenzhen Cohesion Freight Forwarding Co., Ltd. Shanghai Branch (hereinafter referred to as “Cohesion Shanghai Branch”) and COHESION FREIGHT (HK) LIMITED (hereinafter referred to as “Cohesion Company”), before the court on December 7, 2016. After the court entertained the case on the same day, it constituted a collegiate panel to hear the case. In the course of this case, the Plaintiff applied to withdraw the lawsuit against the Defendant, Shenzhen Cohesion Company, and the court ruled that it should be permitted. On March 8, 2017 and April 27, 2017, the parties submitted evidence in the case. On May 24, 2016, the court held a public hearing to hear the case. Agent ad litem of the Plaintiff, Lawyer LIU Chong, and agents ad litem of the two Defendants, Lawyer ZHANG Xiuxia, appeared in court to attend the lawsuit. Now the case has been concluded. The Plaintiff claimed that, in September 2016, the Plaintiff entrusted the Defendant, Cohesion Shanghai Branch to handle a shipment of goods from Shanghai Port of China to the Port of Los Angeles, USA. The value of the goods was USD63,807.53. On September 27, 2016, the goods were shipped on board, and the Defendant, Cohesion Shanghai Branch, issued a bill of lading with the title “COHESION Freight Worldwide” No.SHA6090699AK to the Plaintiff. This bill of lading pattern is consistent with the one that the Defendant filed with the Ministry

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of Communications. The Plaintiff had a full set of the original bills of lading, but the Plaintiff found that the goods involved in the case were already been released on October 9, 2016. The Plaintiff alleged that the two Defendants caused the Plaintiff to suffer a loss due to the release of the goods without the Plaintiff’s instructions, and therefore requested that: 1. The two Defendants should jointly compensate the Plaintiff for the loss of USD63,807.53 with interest (from December 7, 2017) (the interest shall be calculated according to the Bank of China’s US dollar current deposit interest rate, until the effective date of this judgment); 2. the Defendant Cohesion Shanghai Branch should return the freight agent fee of RMB3,590 yuan. The Defendant Cohesion Shanghai Branch argued that, as the freight forwarder involved in the case, it had completed the performance of the contractual obligations under the freight forwarding contract and there is no legal basis to request the Defendant to bear release of cargo without presentation of the B/L, and so it requested the court to reject the claims. The Defendant Cohesion Company argued that: 1. the goods involved were extracted by the consignee’s own counterfeit bill of lading (the carrier did not know about it and there was no fault); 2. the cargo involved in the case should be governed by U.S. law, and the U.S. law stipulates that if the goods are released to the consignee of the named bill of lading, the carrier shall not be liable; 3. the payment for the goods involved in the case has been paid, therefore the Plaintiff has suffered no loss. In summary, the Defendant requested to reject the claims. In support of its claims, the Plaintiff submitted the following evidence to the court: Evidence 1, the packing lists, bills of lading, and expense confirmation, to prove that the Plaintiff and the Defendant, Cohesion Shanghai Branch, had established a freight forwarding contract, and the Defendant, Cohesion Shanghai Branch, issued the bills of lading on behalf of the Defendant Cohesion Company; evidence 2, the electronic declarations, to prove that the value of the goods involved in the case was USD USD63,807.53; evidence 3, the container circulation records, to prove that the Defendant had released the goods; Evidence 4, the mail exchanges between the Plaintiff and the trade buyer, to prove that even if the trade buyer has paid the Plaintiff, the payment has nothing to do with the trade involved in the case. During the cross-examination the two Defendants are of the view that the authenticity of the bills of lading and the packing lists in evidence 1 is admissible. However, the expense confirmation is not stamped, thus such confirmation is not admissible. The Defendants accepted the authenticity of evidence 2 and evidence 3. The Defendants accepted the content of evidence 4’s authenticity. But the Defendant considered that the identity of the user of the mail cannot be proved, and therefore, the evidence 4 does not relate to the Plaintiff’s claim. The court should not admit evidence 4. According to the certification of the court, the Defendant recognized the authenticity of the bills of lading and the packing lists in evidence 1, evidence 2, and evidence 3. The above evidence has corresponding probative force to prove the facts of this case. The court confirms the effectiveness of the evidence and the content of the evidence is subject to the content of the remaining evidence. But the

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expense confirmation in evidence 1 was not sealed by the Defendant, and the two Defendants also do not confirm the authenticity. The court does not accept the admissibility of the evidence. Evidence 4 is electronic evidence, in which the contents of the e-mail is acknowledged by the two Defendants. However, the identity of the user of the mail cannot be confirmed, and the evidence is not related to the facts to be proved. Hence the court does not confirm the validity of this evidence. The two Defendants submitted the following evidence in support of their arguments: Evidence 1, the e-mail, and evidence 2, the payment voucher, which are both used to prove that the Plaintiff has received the payment for the goods involved in the case, and there is no legal basis for the claimant’s claim for the loss of the payment. Evidence 3, the copy of the bill of lading filing format, and evidence 4, the declaration letter, to prove that the bill of lading involved in the case is the bill of lading format filed by the Defendant Cohesion Company with the Ministry of Communications. The Defendant Cohesion Company is the transport carrier involved in the case. The Defendant Cohesion Shanghai Branch only acted as the agent of the Defendant Cohesion Company. Evidence 5, the clauses on the back of the bills of lading, and evidence 6, local courts’ judgments, which are used to prove that the dispute arising from the bills of lading involved in the case shall be governed by the laws of the United States, under which the named bill of lading is only a document of title, and the carrier shall not be liable for the delivery of the goods to the consignee of a named bill of lading. During the cross-examination, the Plaintiff argued that evidence 1 did not perform the notarization procedure as electronic evidence, and that the evidence could not show the relevance of the goods involved. Therefore, the Plaintiff did not recognize the validity of the evidence. The authenticity of the remittance certificate of USD USD25,000 in evidence 2 was recognized. But such evidence does not relate to the amount involved in the case. Therefore, the Plaintiff denied the relevance of the evidence, the authenticity and relevance of other remittance certificates. The Plaintiff accepted the authenticity of evidence 3 and evidence 4. The Plaintiff accepted the authenticity of evidence 5 and evidence 6. But the Plaintiff denied the content and effectiveness of the certification. According to the certification of the court, evidence 1 is not notarized. Also, the Plaintiff does not recognize its authenticity, so the court does not confirm the validity of the evidence. Evidence 2 fails to show the relevance of the facts involved in the case; therefore, the court does not confirm the admissibility of the evidence. The Plaintiff acknowledges the authenticity of evidence 3 and evidence 4, and the evidence has corresponding probative force to prove the facts of this case. The court confirms the validity of the evidence, and the content of the evidence is subject to the content of the remaining evidence. Evidence 5 and evidence 6 cannot prove the facts that the two Defendants’ claims. Therefore, the court does not confirm the admissibility of its evidence.

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The court found: In September 2016, the Plaintiff had to transport a batch of textiles from Shanghai, China to New York, USA in order to fulfill the export trade contract with a third party. For this reason, the Plaintiff entrusted the Defendant, Cohesion Shanghai Branch, to make bookings and customs declarations on behalf of itself. Cohesion Shanghai Branch completed the corresponding agency matters and issued the bill of lading No.SHA6090699AK on behalf of the Defendant Cohesion Company. The bill of lading states that: the shipper is the Plaintiff; the consignee is FABRIC AVENUE; the port of origin is Shanghai, China; the port of destination is Los Angeles; and the voyage of the ship is YM VANCOUVER98E. The name of the cargo is cotton and polyester stretch satin, with a total weight of 9,789 kg and a total volume of 32.640 m3; the container number is: YMMU4083612; the delivery method is from the yard to the yard FCL (CYCY); the payment method is freight collect. The bill of lading is on COHESION Freight Worldwide letterhead. The bill of lading style is the same as the bill of lading style of the Defendant Cohesion Company filed with the Ministry of Communications. On September 27, 2016, the Defendant Cohesion Shanghai Branch issued the bill of lading as an agent. Thereafter, the goods were actually carried by Yangming Shipping Co., Ltd. According to the dynamic records of container cargoes, the goods involved in the case were taken away on October 19, 2016. It has also been found out that the customs declaration forms involved in the case show that the Plaintiff is the business unit; the transportation vehicle is YM VANCOUVER/98E; the container number is YMMU 4083612; and the value of the goods is USD 63,807.53. During the trial, the Plaintiff and the Defendant both confirmed that the Defendant, Cohesion Shanghai Branch, was the signing agent of the Defendant Cohesion Company. During transportation business involved in the case, the Defendant Cohesion Company registered with the Ministry of Transport and had the qualification of an NVOCC. The court found that: This case is a dispute over contract of carriage of goods by sea. As the Defendant Cohesion Company’s domicile is in the Hong Kong Special Administrative Region, and the port of destination involved in the case is overseas, this case has foreign-related factors. According to the law, parties to the contract may choose to resolve the applicable law of foreign-related contract disputes through consensus. The Plaintiff clearly chose to apply the laws of the Mainland of China to settle the dispute in the lawsuit. The two Defendants claimed that the law of the United States should be applied according to the provisions on the back of the bill of lading. The parties have not reached an agreement on the applicable law involved in the case. The court held that, although the provisions on the back of the bill of lading contains a provision relating to the applicable law, this clause is a standard term that was unilaterally printed by the carrier. It cannot prove that the content of the clause is the true meaning of the agreement between the shipper and the carrier. The applicable law clause cannot bind the Plaintiff in this case. Therefore, the court does not accept the opinions of the two Defendants on applying the US law of the port of

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destination. The goods involved in the case were shipped from Shanghai, China. The Plaintiff and the Defendant, Cohesion Shanghai Branch, are all located in China. It follows that the mainland China has the closest connection with the dispute in this case. Therefore, the law of the mainland China should be the applicable law for handling the dispute in this case. In this case, the Defendant Cohesion Shanghai Branch, as the agent of the Defendant Cohesion Company, issued a bill of lading to the Plaintiff on the Defendant Cohesion Company letterhead. The Defendant Cohesion Company also clearly stated that the Defendant, Cohesion Shanghai Branch, was its signing agent during the trial. Therefore, the Plaintiff was the shipper, the Defendant, Cohesion Company, was the carrier, and the Defendant, Cohesion Shanghai Branch, was the signing agent. As the shipper, the Plaintiff now holds a full set of original bills of lading involved in the case and has submitted evidence that the goods have been released at the port of destination. In the case where the two Defendants do not provide evidence that the goods involved in the case are still under the control of the carrier, the Defendant Cohesion Company, as the carrier, should be deemed to have delivered the goods without presentation of the original bill of lading. The Defendant, Cohesion Company, as the carrier, delivered the goods without an original bill of lading and thus damaged the original bill of lading holder’s rights under the bill of lading and should bear the corresponding liability for compensation to the Plaintiff. The Defendant Cohesion Shanghai Branch issued the bill of lading as the agent of the Defendant Cohesion Company, and the issue of the bill of lading was authorized by the Defendant Cohesion Company. The principal shall be liable for the civil legal act performed by the agent in the name of the principal within the scope of the mandate. Therefore, the claim made by the Plaintiff requesting that the Defendant, Cohesion Shanghai Branch, be jointly and severally liable is not in accordance with the law and, therefore, is not supported by the court. The Defendant Cohesion Shanghai Branch accepted the Plaintiff’s entrustment and has completed matters such as booking and customs declaration. The Plaintiff requested that the Defendant, Cohesion Shanghai Branch, return the freight agency contract fee under the transport contract in this case. There is no factual or legal basis for this claim, and the court, therefore, does not support it. The customs declarations involved in the case showed that the value of the goods was USD63,807.53. The two Defendants claimed that the Plaintiff had received the payment, but the consignee’s remittance certificate provided did not reflect the relevance of the goods involved in the case. Although the Plaintiff affirmed that he had received USD25,000 from the consignee, the Plaintiff explained that the payment was made for other trades, not for the payment of the goods involved in the case. The court held that given the situation that the goods were delivered without presentation of a bill of lading, the carrier should bear an even stricter burden of proof. In the absence of other evidence, it cannot be assumed that the amount paid by the consignee to the Plaintiff is the amount of money for the goods involved in the case. The two Defendants failed to prove that the Plaintiff had received the money for the goods involved in the case. Therefore, the Defendant,

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Cohesion Company, as the carrier, should compensate the Plaintiff for the loss of goods of USD63,807.53 according to the value of the goods displayed on the declaration form. With respect to the loss of interest, the Plaintiff advocated that it should be calculated from the date of prosecution in accordance with the Bank of China’s US dollar current deposit interest rate until the effective date of the judgment, and this claim is not in violation of the law. Therefore, the court supports it. In summary, according to Article 63 Paragraph 2 of the General Principles of the Civil Law of the People’s Republic of China, Article 42 Paragraph 1 and Article 71 of the Maritime Code of the People’s Republic of China, Article 1, Article 2 and Article 6 of the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Case of Delivering Goods without Original Bill of Lading, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

1. COHESION FREIGHT (HK) LIMITED, the Defendant, should pay compensation to the Plaintiff, Changzhou Woyuan Textile Co., Ltd., within 10 days from the date of entry into force of the judgment, USD63,807.53 with interest (calculated from December 7, 2016, in accordance with the Bank of China’s current US dollar deposit interest rate until the effective date of the judgment); 2. Other claims made by the Plaintiff, Changzhou Woyuan Textile Co., Ltd., are not supported. In the event that COHESION FREIGHT (HK) LIMITED fails to perform its monetary payment obligations within the period specified in this judgment, the interest on debts during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB7,740 yuan, shall be borne by the Defendant, COHESION FREIGHT (HK) LIMITED. In case of any disagreement with this judgment, the Plaintiff, Changzhou Woyuan Textile Co., Ltd., and the Defendant, Shenzhen Cohesion Freight Forwarding Co., Ltd. Shanghai Branch, may, within fifteen days from the date of delivery of the judgment, and the Defendant, COHESION FREIGHT (HK) LIMITED, within 30 days from the date of delivery of the judgment, file an appeal, together with copies of the appeal according to the number of opponents, to the Shanghai High People’s Court.

Presiding Judge: ZHU Jie Judge: XIE Zheng People’s Juror: SONG Kai June 21, 2017 Clerk: JI Xiaoqing

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Shanghai Maritime Court Civil Judgment Changzhou Woyuan Textile Co., Ltd. v. COHESION FREIGHT (HK) LIMITED et al. (2017) Hu Min Zhong No.271 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 57. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court’s decision that US governing law clause on reserve side of the bill of lading issued by carrier was not binding on shipper, because the terms contained in the bill of lading were pre-made standard terms rather than terms negotiated and agreed between the parties. Summary Defendant carrier issued straight bill of lading to Plaintiff shipper, which contained US governing law clause. Carrier delivered the goods in the port of discharge without collection of the original bill of lading. Shipper, who was unpaid, sued carrier for the total price of the goods. Carrier contended that US law should be applied under which carrier could deliver the goods to the named consignee without original bill of lading. Court of first instance disagreed and held that as shipper argued for application of Chinese law whereas carrier for US law, the parties to the carriage of goods by sea contract had not reached an agreement on the issue of governing law. The bill of lading was a set of standard terms unilaterally tailored by carrier in advance. Though it contained US governing law clause, that should not be deemed as the parties’ true meaning and agreement, after negotiation, on the governing law issue, so the US governing law clause was not binding on shipper. In consideration that the loading port was Shanghai and the parties were both Chinese companies, Court of first instance decided that China was the state which was most connected with this case and Chinese law should be applied to resolve the parities’ disputes.

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Carrier appealed. Court of appeal affirmed the decision of Court of first instance, and further held that while deciding the most connected state and law in a foreign-related carriage of goods by sea contract case, special attention should be given to carrier and its domicile, as carrier’s performance would most demonstrate the features of the carriage of goods contract. In the current case, carrier was domiciled in HK, China and in consideration of other factors such as the place of execution of contract, loading port, business places of the parties, Chinese law was most connected with and should be applied to this case. Under Chinese law, carrier was liable for delivery of goods without collection of the original bill of lading even if the bill is straight and the goods were delivered to the named consignee.

Judgment The Appellant (the Defendant of first instance): COHESION FREIGHT (HK) LIMITED. Legal representative: HU Moumou. Agent ad litem: ZHANG Changtao, lawyer of Shanghai GL & CO. Agent ad litem: ZHANG Xiuxia, lawyer of Shanghai GL & CO. The Respondent (the Plaintiff of first instance): Changzhou Woyuan Textile Co., Ltd. Legal representative: BAI Moumou. Agent ad litem: ZHOU Qi, lawyer of Shanghai SLOMA & Co. Agent ad litem: LIU Chong, lawyer of Shanghai SLOMA & Co. The Defendant of first instance: Shenzhen Cohesion Freight Forwarding Co., Ltd. Shanghai Branch. Legal representative: HUANG Mou. Agent ad litem: ZHANG Changtao, lawyer of Shanghai GL & CO. Agent ad litem: ZHANG Xiuxia, lawyer of Shanghai GL & CO. With respect to the case arising from the dispute over contract of carriage of goods by sea between the Appellant COHESION FREIGHT (HK) LIMITED (hereinafter referred to as “Cohesion Company”) and the Respondent Changzhou Woyuan Textile Co., Ltd. (hereinafter referred to as “Woyuan Company”) and the Defendant of first instance Shenzhen Cohesion Freight Forwarding Co., Ltd. Shanghai Branch (hereinafter referred to as “Cohesion Shanghai Branch”), the Appellant disagreed with the Shanghai Maritime Court (2016) Hu 72 Min Chu No.3193 Civil Judgment, and appealed to the court. After the court entertained the case on August 14, 2017, it formed a collegiate bench according to law and held a public hearing to hear the case on September 13, 2017. ZHANG Xiuxia, agent ad litem of Cohesion

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Company, LIU Chong, agent ad litem of Woyuan Company and Cohesion Shanghai Branch, appeared in court. The case has now been concluded. Cohesion Company appealed that: the first-instance judgment should be dismissed, and all the claims of Woyuan Company should be rejected; Woyuan Company should assume all the case acceptance fees for the first and second instance of this case. Facts and reasons: 1. Cohesion Company submitted the mail exchanges and the payment voucher in the first instance to prove that Woyuan Company has received the entire purchase price for the goods involved, and there is no loss. The first-instance decision did not recognize the Appellant’s claim, and therefore the basic facts of the dispute is unclear; 2. the dispute in this case arises from the delivery of the carrier in the United States port. According to the principle of the closest and most real connection, the local United States law should be applied. The Chinese law is not the law that has the closest connection with the dispute in this case. 3. The disputes involved are fundamentally caused by the improper delivery of the goods by the actual carrier Yangming Shipping Co., Ltd. (hereinafter referred to as “Yangming Shipping”). Yangming Shipping shall be the ultimate responsible party. Cohesion Company once applied for adding Yangming Shipping as a joint Defendant in this case in accordance with the law. The court of first instance did not allow Yangming Shipping to be added as a joint Defendant, thus violating the legal procedures. Woyuan Company argued that: 1. the facts found by the court of first instance are correct. The money received by Woyuan Company is not the payment for the goods involved in the case, but the payment of standing arrears; 2. regarding the application of the law, the foreign law stated in the bill of lading is not determined by negotiation between Cohesion Company and Woyuan Company and therefore cannot be applied. With regard to the principle of the closest and most real connection, the ports of departure, the place of the contract, etc. pointed out by the court of first instance are sufficient to prove that the Chinese law should be applied to this case; 3. Cohesion Company claims that Yangming Shipping should be added as the joint Defendant, and the actual carrier should be responsible for releasing the goods. However the actual carrier and Cohesion Company should not be added to this case to solve the dispute. In summary, Woyuan Company requested the court to dismiss Cohesion Company’s appeal and affirm the judgment of first instance. Cohesion Shanghai Branch expressed its opinion in accordance with Cohesion Company’s opinions. In the first instance, Woyuan Company alleged that: in September 2016, Woyuan Company entrusted Cohesion Shanghai Branch to handle a shipment of goods from Shanghai Port of China to Los Angeles, USA. The value of the goods was USD63,807.53. On September 27, 2016, the goods were shipped on board and Cohesion Shanghai Branch issued a bill of lading under the name of “COHESION Freight Worldwide” No.SHA609XXXXXX to Woyuan Company. This bill of lading format is consistent with Cohesion’s filing with the Ministry of Communications. Woyuan Company held the full set of the original bills of lading but found that the goods involved in the case were released on October 9, 2016. Woyuan Company alleged that Cohesion Company and Cohesion Shanghai Branch

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released the goods without the instruction of Woyuan Company and so caused Woyuan Company to suffer the payment loss. Therefore, they requested: 1. Cohesion Company, Cohesion Shanghai Branch should jointly compensate for Woyuan Company’s loss of USD63,807.53 and interest (calculated from December 7, 2017 according to the Bank of China’s US dollar current deposit interest rate, until the effective date of this judgment); 2. Cohesion Shanghai Branch should return Woyuan Company’s freight agent fee of RMB3,590 yuan. Cohesion Company argued in the first instance: 1. the goods involved in the case were extracted by the consignee’s forged bill of lading. The carrier was unaware of the fact that there was no fault; 2. the cargo involved in the case shall be subject to the US law, and the US law stipulated that the goods shall be delivered to the consignee named in the bill of lading, and so the carrier shall not assume responsibility; 3, the payment of goods involved in the case has been paid off, Woyuan company has no loss. In summary, Cohesion Company requested to reject Woyuan Company’s claims. Cohesion Shanghai Branch argued in the first instance that as a freight forwarder involved in the case it had fulfilled the contractual obligations under the freight forwarding contract, there is no legal basis for asking it to bear the loss of delivery of cargo without bills of lading, and requested the court to reject the claim of Woyuan Company. The court of first instance found that: In September 2016, Woyuan Company had to transport a batch of textiles from Shanghai Port to New York City for the purpose of fulfilling its export trade contract with a third party. For this purpose, Woyuan Company entrusted Cohesion Shanghai Branch to make bookings and customs declarations on behalf of itself. Cohesion Shanghai Branch completed the corresponding agency matters and issued a bill of lading No.SHA609XXXXXX on behalf of Cohesion Company. The bill of lading states: the shipper is Woyuan Company, the consignee is FABRIC AVENUE., the port of origin is Shanghai, China, the port of destination is Los Angeles, the voyage of the vessel is YM VANCOUVER98E, the name of the cargo is cotton and polyester stretch satin, the total weight is 9,789 kg, and the volume is 32.640 m3, the container number is: YMMU40XXXXXX, the delivery method is from the yard to the yard FCL (CY-CY), the payment method is freight collect. The bill of lading is on COHESION Freight Worldwide letterhead. The bill of lading style is the same as that of Cohesion Company filed with the Ministry of Communications. On September 27, 2016, Cohesion Shanghai Branch issued the bill of lading as an agent. Thereafter, the goods were actually carried by Yangming Shipping. According to the dynamic records of container cargoes, the goods involved in the case were taken away on October 19, 2016. The court of first instance further found that: the relevant customs declaration shows that the business unit is Woyuan Company, the transportation vehicle is YM VANCOUVER/98E, the container number is YMMU40XXXXXX, and the value of the goods is USD63,807.53.

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In the trial of the first instance, all the parties confirmed that Cohesion Shanghai Branch was the signing agent of Cohesion Company. During the transportation business involved in the case, Cohesion registered with the Ministry of Transport and had the qualification of an NVOCC. The court of first instance found: This case is a dispute over contract of the carriage of goods by sea. Since Cohesion Company’s domicile is in the Hong Kong Special Administrative Region, and the port of destination in the case is overseas, this case has foreign-related factors. According to the law, parties to the contract may choose to resolve the applicable law of foreign-related contract disputes through consensus. In the lawsuit, Woyuan Company clearly chose to apply the laws of the Mainland of China to handle the dispute in this case. Cohesion Company and Cohesion Shanghai Branch claimed that the US law should be applied according to the provisions on the back of the bill of lading. It can be seen that the parties have not reached an agreement on the applicable law involved in this case. The court of first instance held that although the clauses on the back of the bill of lading contains a provision relating to the applicable law, this clause is a standard clause unilaterally printed by the carrier. It cannot prove that the content of the clause is the true meaning of the agreement between the shipper and the carrier. The applicable law clause cannot bind Woyuan Company, so that the court of first instance rejected the opinions of Cohesion Company and Cohesion Shanghai Branch that the US law of the port of destination is the applicable law. The goods involved in the case were shipped from Shanghai Port of China. Both Woyuan and Shenzhen Cohesion Shanghai are located in China. It follows that the Mainland of China has the closest connection with the dispute in this case. Therefore, the law of the Mainland of China should be the applicable law to solve the dispute in this case. In this case, Cohesion Shanghai Branch as the agent of Cohesion Company issued a bill of lading on Cohesion Company letterhead to Woyuan. In the hearing, Cohesion Company also made it clear that Cohesion Shanghai Branch was its signing agent. Therefore, Woyuan Company was the shipper, Cohesion Company was the carrier, and Cohesion Shanghai Branch was the signing agent. As the shipper, Woyuan Company now holds a full set of original bills of lading involved in the case and has submitted evidence that the goods have been released at the port of destination. Since Cohesion Company and Cohesion Shanghai Branch did not prove that the goods involved in the case are still under the control of the carrier, the fact that Cohesion Company as the carrier delivered the goods involved in the case without the original bill of lading was established. Cohesion Company as the carrier did not deliver the goods against the original bill of lading, and thus damaged the original bill of lading holder’s rights and shall bear the corresponding liability for compensation to Woyuan. Cohesion Shanghai Branch as the agent of Cohesion Company, issued the bill of lading, and the issue of the bill of lading is issued by Cohesion Company. The principal shall be liable for the civil legal act performed by the agent in the name of the principal within the scope of the mandate. Therefore, the claim made by Woyuan Company requesting Cohesion Shanghai Branch to assume joint and

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several liability is not in accordance with the law and therefore the court of first instance did not support it. Cohesion Shanghai Branch accepted Woyuan Company’s entrustment and has completed matters such as booking and customs declaration. Woyuan requested Cohesion Shanghai Branch to return the freight agency contract fee under the carriage contract of this case. There is no factual or legal basis for this claim, and the court of first instance did not support it. The customs declarations involved in the case showed that the value of the goods was USD63,807.53. Cohesion Company and Cohesion Shanghai Branch claimed that Woyuan Company had received payment, but the consignee’s remittance certificate provided did not reflect the relevance of the goods involved in the case. Woyuan Company confirmed that he had received USD25,000 from the consignee, but it also explained that the payment was made for other trades, not for the payment of the goods involved in the case. The court of first instance held that given the situation that the goods were delivered without presentation of a bill of lading, the carrier should bear an even stricter burden of proof. In the absence of other evidence, it cannot be presumed that the consignee’s payment to Woyuan was the purchase price for the goods involved in the case. Cohesion Company and Cohesion Shanghai Branch failed to prove that Woyuan Company had received the money for the goods involved in the case. Therefore, Cohesion Company as the carrier should compensate Woyuan Company for the loss of goods of USD63,807.53 in accordance with the value of the goods displayed on the customs declaration form. With respect to interest losses, Woyuan Company advocated that it should be calculated from the date of prosecution in accordance with the Bank of China’s US dollar current deposit interest rate until the effective date of the judgment, and this claim is not in violation of the law. The court of first instance supported this. In summary, based on Article 63 Paragraph 2 of the General Principles of the Civil Law of the People’s Republic of China and Article 42 Paragraph 1 and Article 71 of the Maritime Code of the People’s Republic of China, Article 1, Article 2 and Article 6 of the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Case of Delivering Goods without Original Bill of Lading, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the court of first instance held that: COHESION FREIGHT (HK) LIMITED, within ten days from the effective date of the judgment, should compensate Changzhou Woyuan Textile Co., Ltd. for a loan loss of USD63,807.53 and the interest (calculated from December 7, 2016, in accordance with the Bank of China’s US dollar current deposit interest rate until the effective date of the judgment). Second, the other claims of Changzhou Woyuan Textile Co., Ltd. shall not be supported. If COHESION FREIGHT (HK) LIMITED fails to fulfill its obligations for the payment of money in accordance with the period specified in the judgment, the interest on debts during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. The first-instance court acceptance fee is RMB7,740 yuan, and shall be borne by COHESION FREIGHT (HK) LIMITED.

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During the second instance, Cohesion Company submitted the notarized certificate of the consignee’s sent e-mail in order to prove that the goods involved in the case were taken by the consignee’s own forged bill of lading from the terminal controlled by the actual carrier. Cohesion Company was not at fault, and the consignee has already paid for the goods, there is no factual basis for the loss claimed by Woyuan Company. Woyuan Company recognizes the authenticity of the e-mail notarization certificate but does not recognize its relevance and the purpose of proof. During the cross-examination Woyuan Company submits that: 1. the way in which the consignee took the delivery of the goods does not affect the fact that Cohesion Company is delivered the goods without bills of lading. The question of whether or not the actual carrier has a fault in the delivery of goods should be resolved between Cohesion and the actual carrier, and has nothing to do with Woyuan. 2. It has been found in the first trial that the payment claimed in the e-mail has nothing to do with the goods involved in the case but is the historical debt owed by the consignee to Woyuan Company. The court considers the above material certification as follows: In view of the fact that the materials submitted by Cohesion Company have been notarized and Woyuan Company also recognizes its authenticity, the court confirms the effectiveness of the evidence. As to its probative force and whether Cohesion Company should bear the liability for compensation, they will be discussed below. In the second instance, Woyuan Company and Shenzhen Cohesion Shanghai did not submit new evidence. The court found: The facts ascertained by the court of first instance are supported by relevant evidence. The court confirms the facts that have been verified in the first instance. The court also found: On October 21, 2016, the manager of the consignee SXXXX MXXXX wrote in an e-mail to Cohesion, “we have paid the full amount for the textile goods, please refer to the following communication between us and the consignor, but at the last moment the consignor wanted us to pay USD165,000 to release the bill of lading.” During the second-instance Woyuan Company explained that the amount mentioned by the consignee in the e-mail is the standing arrears of the transaction between the parties. The process of communication between consignee and Woyuan Company attached in the above-mentioned mail is as follows: On September 15, 2016, the consignee’s staff named “AXXXX RXXXXXX” wrote in an e-mail to a staff member of Woyuan Company called “GXXXX” that, “Please see the attached USD50,000 remittance request made today. You should receive it tomorrow.” On October 15, 2016, the consignee’s staff member named “AXXX RXXXXXX” wrote in an e-mail to a staff member of Woyuan Company called “GXXXX” that, “please refer to the attached USD25,000 remittance confirmation issued by our bank. I will send another e-mail to inform you of the invoice for this remittance. Please confirm after receiving it and prepare the telex release as soon as

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possible.” At the trial of the second instance, Cohesion Company contended that the consignee did not subsequently send an e-mail to Woyuan to inform them of the invoice corresponding to the USD25,000 remittance as stated in the e-mail. On October 18, 2016, the consignee’s staff member named “PXXXX” wrote in an e-mail to a staff member of Woyuan company called “GXXXX” that “we have tried our best to cooperate with you and will do our best to pay you. We will surely keep our promises and remit money to you.” The court found: This case is a dispute over contract of carriage of goods by sea. The merits of the dispute between the parties in the second instance are: 1. whether Woyuan Company has received the money involved in the case; 2. what law should be applied in the case according to the principle of the closest and most real connection; 3. whether Yangming Shipping should be added as a co-Defendant in the first-instance procedure. Whether or not Woyuan Company has received the money involved in the case. Given the situation that the goods were delivered without presentation of a bill of lading, Cohesion Company should bear the burden of proof for its claim that Woyuan Company has received the amount of money in dispute which is the money involved in the case. Although Cohesion Company claimed that Woyuan Company has received two payments of 50,000 USD and 25,000 USD from the consignee, but for the nature of the above-mentioned payment, Woyuan Company had explained that it is not the money involved in the case but the standing arrears paid by the consignee. The court believes that, first of all, the e-mail exchanges between the consignee and Woyuan Company did not specify the relevance of the two disputes and the transaction involved in the case, but reflected the possibility that the amount in dispute was the payment of standing arrears instead. It can also be inferred from the content of the mail on October 18, 2016 that the consignee acknowledged that the promised amount has not been paid. Secondly, the manager of the consignee stated that Woyuan Company requested that it pay USD165,000, and the amount of standing arrears claimed by Woyuan Company in the first trial could correspond to each other. Woyuan Company explained its detention of the bill of lading in exchange for the payment by the consignee is reasonable in trade practice. In addition, the customs declaration of goods involved in the case shows that the value of the goods is USD63,807.53. If there is no standing arrears between the consignee and Woyuan Company, the consignee’s overpayment is not in line with common sense. In view of the above, even if Woyuan Company received the amount in dispute claimed by Cohesion Company, Cohesion Company’s existing evidence cannot exclude the possibility that the amount in dispute is the consignee’s payment for the standing arrears to Woyuan Company, that is, it cannot prove that Woyuan Company has received the money involved in the case. Cohesion Company’s claim that Woyuan Company has received the money involved in the case is not supported by the court. With respect to the application of the law in this case, Cohesion Company asserts that according to the principle of the closest and most real connection, the United States law shall be applied in this case. The court held that the principle of

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the closest and most real connection determines the law of contract which should be applied to the entire process of the contract from its establishment to its performance, and not to only one of the links. The Chinese law provides that the parties can agree to choose the law applicable to the contract. Where the parties do not choose, the law that fulfills the obligation to best reflect the characteristics of the contract, or the law of the permanent residence of the party, or other laws that have the closest connection with the contract shall apply. The contract involved in this case is a contract of the carriage of goods by sea and the carrier’s obligation to perform transportation is a characteristic performance. Its domicile is in China, and the elements of the contract signing place, the origin of transport, and the party’s place of business, etc., are taken into consideration. The law of the Mainland of China is the law most closely related to the contract involved in the case. Although the delivery involved in the case occurred in the United States, this fact cannot prove that the U.S. law is the law most closely related to the case in question. Cohesion Company’s claim that the case should apply the U.S. local law based on the principle of the closest and most real connection is not supported by the court. As to whether Yangming Shipping should be added as a joint Defendant in the first-instance procedure, the court held that Yangming Shipping is the actual carrier entrusted by Cohesion Company and is not a party in the contract of carriage involved in the case, and is not a party who must jointly conduct litigation, also Woyuan Company did not agree to add Yangming Shipping as a joint Defendant. Cohesion Company’s claim that Yangming Shipping should be added as a joint Defendant in the first-instance procedure lacks factual and legal basis and so the court does not support it. In summary, Cohesion Company’s appeal cannot be established and should be dismissed. The facts found in the first-instance judgment are clear, the application of law is correct, and the judgment is not improper and therefore could be affirmed. According to Article 170 Paragraph 1 Sub-paragraph 1 and Article 175 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB7,740 yuan, shall be borne by the Appellant COHESION FREIGHT (HK) LIMITED. The judgment is final. Presiding Judge: SUN Chenwen Judge: ZHOU Yi Judge: ZHANG Jun December 21, 2017 Clerk: CHEN Xi

Ningbo Maritime Court Civil Judgment Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2015) Yong Hai Fa Shang Chu Zi No.1036 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 85. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant shipowner who issued the bill of lading to Plaintiff shipper held to be the carrier and liable for loss of cargo suffered by shipper, despite the shipowner was under a time charter engaged by the time charterer to issue the bill of lading and the ship was employed by the time charterer to carry the cargo. Summary Plaintiff shipper, also seller, sold the cargo to foreign buyer on FOB term, and buyer, who was responsible for transporting the cargo, signed a voyage charter with the time charterer of the ship. The ship was loaded with the cargo and the Master instructed the ship agent in the loading port to issue the bill of lading. In the port of discharge, the cargo was delivered to the buyer without collection of the original bill of lading. Plaintiff sued Defendant shipowner, who contended that though it issued the bill of lading, it was not the carrier, as it was performing a time charter at the relevant time, the ship was employed by the time charterer to carry the cargo and the Master was instructed by the time charterer to issue the bill of lading. Defendant further contended that as there existed the afore-said time charter and voyage charter, the time charterer should be deemed as the carrier. Court of first instance disagreed with Defendant, and held that Defendant was the carrier under the carriage of goods by sea contract with the shipper, because the bill of lading was issued by the Master for shipowner and the cargo was physically transported by the ship, despite of the existence of the time charter and voyage charter. Court of first instance further held that shipowner was faulty in delivery of cargo without original bill of lading and therefore liable for shipper’s loss of cargo.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_5

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Judgment The Plaintiff: Chem-Together Int’l Group Limited Domicile: Unit A&B15/F Neich Tower 128 Gloucester Road Wanchai Hong Kong, the People’s Republic of China. Legal representative: XIAO Hui, chairman of the company. Agent ad litem: ZHANG Jianfeng, lawyer of Zhejiang HIGHTAC PRC LAWYERS. Agent ad litem: LIN Ji, intern lawyer of Zhejiang HIGHTAC PRC LAWYERS. The Defendant: Transportation and Trading Services Joint Stock Company Domicile: No.1, Hoang Van Thu, MinhKhai Ward, Hong Bang District, Haiphong City, Vietnam. Legal representative: Le TatHung, director of the company. Agent ad litem: ZHU Guolin, lawyer of Shanghai Hightime Law office. The Defendant: Jiaxing Ocean Shipping Agency Co., Ltd. Domicile: (7th Floor of Zhongan Business Building) No.783, South Hexing Road, Jiaxing, Zhejiang, the People’s Republic of China. Legal representative: CHEN Qingdong, general manager of the company. Agent ad litem: HU Liang, staff of the company. With respect to the case arising from the dispute over contract of carriage of goods by sea, the Plaintiff Chem-Together Int’l Group Limited filed an action against the Defendants Transportation and Trading Services Joint Stock Company (hereinafter referred to as Transportation Company) and Jiaxing Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Jiaxing Ocean Shipping Agency) before the court. This court entertained the case on December 12, 2015 and heard the case on May 27 and November 25, 2017 in general procedure. ZHANG Jianfeng and LIN Ji, agents ad litem of the Plaintiff, ZHU Guolin, agent ad litem of the Defendant Transportation Company, HU Liang, agent ad litem of the Defendant Jiaxing Ocean Shipping Agency, appeared in court and participated in the action. Now the case has been concluded. The Plaintiff, Chem-Together Int’l Group Limited, filed the following claims to the court: the two Defendants should be ordered to jointly compensate the Plaintiff for the economic loss of 781,922.5 US dollars (according to the exchange rate of 1:6.1342 convert to RMB4,796,469 yuan on the date of the withdrawal of the goods on January 26, 2015) and from the date of the payment to the date of payment off, the interest calculated by the interest of the People’s Bank of China during the same period. Facts and reasons: on December 10, 2014, the Plaintiff, through a Vietnamese middleman, signed a sales contract with Vietnamese buyer CUU Long Vietnam Fertilizer Company (hereinafter referred to as CUU) for the sale of the lactam-grade ammonium sulphate. The total price of the goods was 781,922.5 US dollars. On January 16, 2015, Jiaxing Ocean Shipping Agency issued

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a bill of lading numbered TSZPL01 to the Plaintiff, stating that the goods was shipped in Zhapu Port, China, and was transported by M.V. “TRANSCOSTAR” to the port of unloading, QUYNYON PORT, Vietnam, the consignee according to instructions, the gross weight of the goods was 6,085 tons. After the goods arrived at the port of destination, the two Defendants released the goods in late January 2015 without recovering the original bill of lading, resulting in the Plaintiff not receiving the payment of 781,922.5 US dollars under the bill of lading. Since the two Defendants released the goods without recovering the original bill of lading, they should be liable for the shipper and the original bill of lading holder, namely, the Plaintiff in this case. The Defendant Transportation Company claimed that: 1. the bill of lading involved was not issued by the Transportation Company, but was issued by Jiaxing Ocean Shipping Agency that authorized by the time charterer of the vessel involved in the case, Tongli Shipping Co., Ltd., Samoa (hereinafter referred to as Tongli Company). The Transport Company was not the carrier of the goods involved, did not need to bear the liability for compensation under the contract of carriage of goods by sea. 2. Tongli Company not only controlled the issuance of bills of lading, but also controlled the operation of the ship. The lading and unloading agents of the goods were entrusted by Tongli Company and paid the corresponding fees. The agent of the port issued a bill of lading to release the goods according to the order of Tongli Company. The Transportation Company was completely unaware of the fact and it had not implemented the act of delivery of goods without bill of lading and did not have to bear any liability for compensation. 3. Even if the bill of lading was issued by the captain of the representative of Jiaxing Ocean Shipping Agency, the master could issue the bill of lading on behalf of the carrier, but did not mean that the carrier was the owner, and the carrier could also be a charterer; in this case, the charterer Tongli Company should be identified as the carrier of the transportation involved in the case and bore the responsibility of not releasing the goods, which should not be borne by Transportation Company. 4. The trade in goods involved was the settlement of the letter of credit. According to the principle of settlement of letters of credit, the Plaintiff could settle the bank from the bank as long as the bill of lading and the corresponding trade certificate are provided. It was unclear why the Plaintiff could not collect the payment according to the settlement of the letter of credit, nor it was clear whether the Plaintiff had already filed a lawsuit or arbitration request against the consignee under the trade contract to exercise the right of relief in order to fulfill the obligation of derogation. Therefore, the Plaintiff could not recover the purchase price was a normal commercial risk under the trade contract and should not be borne by Transportation Company. 5. There was no legal basis or factual basis for the Plaintiff to claim that the interest should be calculated according to the loan interest rate for the same period. Even if there was any loss, it should be calculated according to the deposit interest rate. In summary, the Plaintiff’s claims against Transportation Company should be rejected. The Defendant Jiaxing Ocean Shipping Agency argued that it was agent of the lading port and issued bills of lading under the authorization of Tongli Company. It had no fault in this case. The Plaintiff sued the goods was released without bill of

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lading at the port of discharge, but the Defendant was not the agent of the port of discharge. Therefore, this case had nothing to do with Jiaxing Ocean Shipping Agency, the Plaintiff’s claims against Jiaxing Ocean Shipping Agency should be rejected. The parties submitted evidence in accordance with the law according to the lawsuit, and the parties involved were the organized to conduct evidence exchange and cross-examination. For the evidence that has not been objected to the parties shall be confirmed by the court and supported in the volume (see attached list of evidence). For controversial evidence and facts, the court found that: evidence 8, a case of Tianjin Maritime Court provided by the defendant Transportation Company was not evidence of facts, the court does not recognize it; evidence 9 authenticity can be identified, but according to the evidence 1 Articles 27 provided by Transport Company, the rights and obligations of both parties shall be agreed upon by the parties first, those not agreed shall be decided according to the time charter party of NYSE 1993 version of the New York Native Exchange; the Plaintiff has no objection to the authenticity of evidence 10 and it is also relevant to this case, the court admits it. Based on the evidence of the parties and the evidence confirmed by the review, this court finds the facts as follows: M.V. “TRANSCOSTAR” was a Vietnam-registered general cargo ship. It was built in Japan in 1997 and was a Japanese classification society. It was 6607 DWT and belonged to the Defendant Transportation Company. On January 29, 2014, Transportation Company signed a time charter party with Tongli Company and agreed to charter M.V. “TRANSCOSTAR” to Tongli Company for delivery. The delivery period was February 5–10, 2014, with a term of 6 months plus 3 months. The charterer chose to deliver the ship from Sang Yi Port, Philippines, Southeast Asia to a safe port in Japan; the charter party used a bill of lading or a Congenbill in the form of a charterer. The charterer or his agent was authorized by the shipowner to represent the captain and/or the shipowner, in accordance with the conditions of the charter, the bill of lading was issued strictly in accordance with the vouchers; the charterer accepted and compensated the shipowner for all consequences of the issue of the bill of lading due to the failure of the charterer and/or its agent to comply with the acknowledgment of the mate’s receipt, liability or loss; if the original bill of lading did not arrive at the port of discharge in time, the charterer could require the shipowner to release all the goods by the consignee’s bank guarantee or the ship owner’s insurance association’s letter of guarantee issued by the charterer, and the charterer would try to complete the voyage. The original bill of lading would be returned to the shipowner no later than 45 calendar days, and the letter of guarantee would be canceled. The unfinished matters should be in accordance with the 1993 NYPE time charter party. On December 10, 2014, the Plaintiff signed a contract for the sale of bulk ammonium sulphate with the Vietnamese buyer CUU, the quantity of 6,600 metric tons plus or delete 5%, the unit price of 128.5 US dollars per metric ton FOB Zhapu, the current letter of credit payment, goods shipped no later than January 20, 2015. In order to transport the goods, CUU signed a voyage chartering contract

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with Tongli Company on December 16, 2014, and the contracted bill of lading format was Congenbill 94 format. The carrier/captain authorized the lading agent to check according to the chief receipt and water gauge. The bill of lading was issued, and the carrier/captain allowed the charterer to unload the letter in accordance with the letter of the Shipowners P&I Association or the consignee’s bank guarantee; the charterer appointed Jiaxing Ocean Shipping Agency and Duonglong Shipping Co., Ltd. as the lading and unloading port (the carrier agreed and paid the port fee and agency fee). On January 16, 2015, the above-mentioned goods were loaded on M.V. “TRANSCOSTAR” in Zhapu Port. The chief receipt recorded 6085 tons of actual cargo. The first receipt was stamped with the chief seal and the seal was displayed as “Transportation Business Service Co., Ltd. M.V. ‘TRANSCOSTAR’ chief”. On the same day, the captain of Jiaxing Ocean Shipping Agency representative issued a bill of lading numbered TSZPL01 to the Plaintiff. The bill of lading stated that the shipper was the Plaintiff Chem-Together Int’l Group Limited and the consignee was instructed by the Saigon branch of the Vietnam Foreign Trade Commercial Bank to inform CUU. The port of lading was China’s Zhapu port, the port of unloading, Vietnam Guiren, the carrier ship name M.V. “TRANSCOSTAR”, the gross weight of the goods was 6,085 tons. On the power of attorney issued by the captain to Jiaxing Ocean Shipping Agency, the seal of the captain was stamped and the seal was displayed as “the Transportation Company M.V. ‘TRANSCOSTAR’ captain”. After the goods arrived at the port of destination, the port of discharge Duonglong Shipping Co., Ltd. issued a bill of lading on January 22, 2015, and the goods involved were handed over to the consignee CUU for extraction. The Plaintiff submits a full set of negotiating documents to the buyer’s issuing bank through the seller’s bank, but the issuing bank believed that the negotiating documents were submitted with the lease of the bill of lading instead of the discrepancies of the ocean bill of lading as stipulated in the credit, which was filed on February 5, 2015. The payment was refused, and the full set of negotiating documents was returned the next day, so the original bill of lading involved was returned to the Plaintiff. After the Plaintiff and the consignee CUU negotiated, the buyer and the seller reached a sales contract supplement agreement on July 15, 2015, and changed the payment method from letter of credit to wire transfer payment. The payment should be paid on August 1, 2015. All original shipping documents were sent to the buyer immediately upon receipt of the payment of USD781,922.5. However, the Plaintiff still failed to collect any payment, so the case was filed. The court holds that this case is a dispute over the delivery of goods under the contract of carriage of goods by sea. According to the Civil Procedure Law of People’s Republic of China, litigation arising from railway, highway, water, air transport and joint transport contract disputes is governed by the people's court of the place of origin, destination or defendant’s residence. The origin of the sea cargo transportation in this case is Zhapu, China, which is under the jurisdiction of this court, so the court has jurisdiction. Both the Plaintiff and the Defendants confirmed that the law of the People’s Republic of China is applicable to this case. According

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to Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the case applies to Chinese law. According to Chinese Maritime Code, a bill of lading is a document used to prove a contract for the carriage of goods by sea and the goods have been received or loaded by the carrier, and that the carrier has promised to deliver the goods. The Plaintiff sold the goods involved to the Vietnamese buyer CUU and entrusted the goods to M.V. “TRANSCOSTAR” to legally obtain the original bill of lading. The plaintiff was the shipper of the maritime transport, it got the original bill of lading after submitting the letter of credit negotiation which was withheld. The bill of lading is the legal holder of the original bill of lading who has the right to take delivery of the goods to the carrier on the original bill of lading. The bill of lading holder can ask the carrier to compensate the loss if the holder cannot get goods. According to Article 72 of the Maritime Code of the People’s Republic of China: when the goods have been taken over by the carrier or have been loaded on board, the carrier shall, on demand of the shipper, issue to the shipper a bill of lading. The bill of lading may be signed by a person authorized by the carrier. A bill of lading signed by the Master of the ship carrying the goods is deemed to have been signed on behalf of the carrier. In this case, the bill of lading involved was issued by Jiaxing Ocean Shipping Agency which authorized by the captain of M.V. “TRANSCOSTAR”. So the important issue is the identification of carrier, namely, the carrier was the shipowner Transportation Company or the charterer Tongli Company. In this regard, the court holds that, first of all, in the case of a shipping document or document with a ship seal, the company name on the ship’s seal can be a preliminary proof of the carrier. On the captain’s seal and the chief seal stamped on the issuing of the bill of lading authorization and the chief receipt of Jiaxing Ocean Shipping Agency, the name of Transportation Company is printed around the name of the ship, which not only visually shows that the ship is owned by Transportation Company or on behalf of the Transportation Company to carry goods. It can be a preliminary proof of that Transportation Company was carrier. Secondly, from the point of view of the reliance interests of both parties to the contract of carriage, the Plaintiff first obtained the first receipt after the goods were delivered to M.V. “TRANSCOSTAR”. The seal stamped by the first receipt showed the name of Transport Company. For the Plaintiff, the trust of it has been handed over to the carrier and the carrier ship as indicated by the seal, rather than Tongli Company that has never indicated its identity to the Plaintiff. Thirdly, although Jiaxing Ocean Shipping Agency stated in the trial that they were entrusted by Tongli Company to engage in porting agency business, they failed to provide evidence to prove that they are authorized by Tongli Company to issue bill of lading. M.V. “TRANSCOSTAR” captain, not Tongli Company, authorizes Jiaxing Ocean Shipping Agency to issue bill of lading; although the ship agents in the lading and unloading of the two ports are entrusted by Tongli Company and paid by Tongli Company, they can only indicate that Tongli Company has ship agency entrustment contractual relationship with the lading and unloading agents. It shall not be a proof of the subject identity of the party involved in the contract of carriage of goods by sea between the shipper and the carrier. Finally, it is expressly agreed

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in the time charter party between Tongli Company and the shipowner Transportation Company that the charterer or his agent is authorized by the shipowner to issue the bill of lading on behalf of the master and/or the shipowner… If the original bill of lading does not arrive at the port of discharge in time, the charterer may require the shipowner to release all the goods by the consignee’s bank guarantee or by the charterer’s letter of guarantee issued by the charterer. It can be seen that the tenant charterer Tongli Company or its agent is authorized by the shipowner to issue the bill of lading on behalf of the shipowner Transport Company, instead of the opposite, namely, the argument of the transport company that the captain is authorized by the charterer Tongli Company and issues a bill of lading represents Tongli Company; in the unloading port, the charterer can ask the shipowner to release the goods with the tenant’s letter of guarantee or the consignee’s bank guarantee, but the original bill of lading should be returned to the shipowner in time. This rule fully indicating that the shipowner has the total power of control and decision on the original bill of lading. The charterer needs to provide a letter of guarantee, follow the instructions of the shipowner, and be responsible for recovering the original bill of lading and handing it over to the shipowner. Based on the above factors, the court determines that the carrier involved in the contract for the carriage of goods by sea is the transportation company, not the time charterer Tongli Company. In summary, the contract for the carriage of goods by sea between the Plaintiff and Transport Company is legal and valid. Transport Company shall deliver the goods to the holder of the original bill of lading in accordance with the law. Otherwise, the Plaintiff shall be compensated for the economic losses suffered by. The value of the goods should be calculated according to its value at the port of lading plus insurance premiums and freight. The Plaintiff made a claim with the FOB price of 781,922.5 US dollars when the cargo was in lading port Zhapu which is in compliance with the law and is protected by the court. The Plaintiff requested for the exchange rate of 1:6.1342 RMB4,796,469 yuan on the date of the withdrawal of the goods on January 26, 2015, the interest calculated on the basis of the People’s Bank of China from the same day to the date when the payment is completed is also reasonable. The Defendant Jiaxing Ocean Shipping Agency is the shipment agency in the port of lading. Its conduct of issuing bill of lading according to the authorization of the master has no fault and should not bear any responsibility. Regarding the reasonable part of the Plaintiff’s claims, the court will protect. According to Articles 71 and 72 of the Maritime Code of the People’s Republic of China, Articles 2 and 6 of the Provisions of the Supreme People’s Court on the Applicable Law for the Trial of Cases Delivering Goods without Original Bills of Lading, Article 259 of the Civil Procedure Law of the People’s Republic of China, and Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the judgment is as follows:

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1. The Defendant Transportation and Trading Services Joint Stock Company shall compensate the Plaintiff Chem-Together Int’l Group Limited for a loss of RMB4,796,469 yuan and interest. The payment shall be executed within 10 days after the judgment comes into effect. The interest shall be calculated according to the deposit loan interest of the People’s Bank of China from January 27, 2014 to the date of performance as determined by the judgment; 2. Reject other claims of the Plaintiff Chem-Together Int’l Group Limited against the Defendant Jiaxing Ocean Shipping Agency Co., Ltd. If the obligation to pay money is not fulfilled within the time limit specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB45,170 yuan, shall be borne by the Defendant Transportation and Trading Services Joint Stock Company. If the parties disagree with this judgment, the Plaintiff Chem-Together Int’l Group Limited and the Defendant Transportation and Trading Services Joint Stock Company within 30 days from the date of delivery of the judgment, and the Defendant Jiaxing Ocean Shipping Agency Co., Ltd. within 15 days from the date of delivery of the judgment, can submit the appeal and petition copies according to the number of the other parties to the Zhejiang High People’s Court. Presiding Judge: CHEN Xiaoming Acting Judge: YANG Shimin Acting Judge: QIAN Bingbing November 29, 2016 Clerk: XU Meina

Appendix 1: Evidence List Evidence Number Evidence Name Proof Purpose The other party’s cross-examination Evidence 1 of the Plaintiff Sales contract, commercial invoice, packing list To prove that the Plaintiff signed sale contract with CUU Company on December 10, 2014. The value of the goods is 781,922.5 US dollars No objection. Evidence 2 of the Plaintiff Stowage map, fact statement, bill of lading

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To prove that the goods involved were loaded with the M.V. “TRANSCOSTAR” on January 16, 2015, and Jiaxing Ocean Shipping Agency issued the bill of lading. No objection. Evidence 3 of the Plaintiff Vietnam sea boat registration certificate, industrial and commercial public information To prove that the Transportation Company is the owner of the M.V. “TRANSCOSTAR” and prove the qualification of Jiaxing Ocean Shipping Agency. No objection. Evidence 4 of the Plaintiff QQ chat record, mail, Vietnam FCC quality inspection certificate To prove that the goods involved were unloaded at the Guiren Port in Vietnam in late January 2015 and were released without bill of lading. No objection. Evidence 5 of the Plaintiff Bank message, sales contract annex I To prove that the Vietnam buyer CUU Company did not pay the Plaintiff. No objection. Evidence 6 of the Plaintiff Customs declaration To prove that all goods had been shipped. No objection, the contract and the payment voucher of the Plaintiff’s purchase of the goods from the company will be provided. Evidence 7 of the Plaintiff Chief receipt The name on the chief stamp was the transportation company. No objection, not the official seal of the transportation company. Evidence 8 of the Plaintiff Issued a bill of lading authorization The captain used the name of the Transportation Company on the stamp, and Jiaxing Ocean Shipping Agency issued the bill of lading according to the authorization of the Transportation Company. No objection, not the official seal of the transportation company. Evidence 1 of the Defendant Transportation Company Time charter party To prove that the Transportation Company will hand over the ship to the tenant of the renter, the captain is the employee of the tenant, but is directed by the Tongli Company. There was no objection of the authenticity but cannot limit the Plaintiff. Evidence 2 of the Defendant Transportation Company Voyage charter party Prove that Tongli Company has entered into a voyage charter with the consignee. The two port agents are appointed by the consignee and are entrusted by the Tongli Company to provide bill of lading and delivery services.

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There was no objection of the authenticity but cannot limit the Plaintiff and inconsistent with the evidence 8 of the Plaintiff. Evidence 3 of the Defendant Transportation Company Contacts from Tongli and Jiaxing from December 24th to 25th, 2014 To prove that the Tongli Company entrusted Jiaxing Ocean Shipping Agency representative as the lading agent and paid the fee and the lading agent signed the order according to the instructions of the Tongli Company. No objection but cannot prove that Jiaxing Ocean Shipping Agency issued the bill of lading was ordered by Tongli Company. Evidence 4 of the Defendant Transportation Company Contacts from Tongli and Jiaxing Ocean Shipping Agency on 26th January 2015. To prove that Tongli Company let Jiaxing Ocean Shipping Agency to give the bill of lading involved to the Plaintiff. Ibidem. Evidence 5 of the Defendant Transportation Company Email from Tongli Company to the port of discharge on 6th January 2016. To prove that the Tongli Company entrusted the port of discharge as the discharge agent and paid the fee and the discharge agent signed the bill of lading according to the instructions of the Tongli Company. No objection but cannot prove that Tongli Company was carrier. Evidence 6 of the Defendant Transportation Company Email from Tongli Company to the port of discharge on 23rd-26th January 2016. To prove that is Tongli Company not Transportation Company to order the port of discharge to sign bill of lading to consignee and released goods without bill of lading. No objection and can prove the fact that the goods were released without bill of lading. Evidence 7 of the Defendant Transportation Company Bill of lading from the port of discharge. To prove that the port of discharge signed and gave B/L to consignee on behalf of Tongli Company. The withdrawal of the bill of lading is “representing the shipowner”, which just proves that the shipowner released without bill of lading. Evidence 8 of the Defendant Transportation Company Related case from Tianjin Maritime Court. In a similar case, the court found that the time charterer Tongli Company was the carrier rather than the shipowner. Not evidence of facts, no relevance. Evidence 9 of the Defendant Transportation Company Time charter party New York Native Exchange format 1993 edition. Article 8 stipulates that although the captain is appointed by the shipowner, he obeys the instructions and orders of the charterer. No relevance, and should be subject to evidence 1 of the Defendant which has clear agreement. Evidence 10 of the Defendant Transportation Company

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The letter of credit involved and the message that the buyer’s bank’s refusal to pay. The Plaintiff fell into the consignee trap and was refused to pay the letter of credit. The loss was not caused by the defendant. No correlation, trade contract disputes have nothing to do with the delivery of goods without bills of lading.

Appendix 2: Relevant Laws 1. Maritime Code of the People’s Republic of China Article 71 A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or lading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. A provision in the document stating that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking. Article 72 When the goods have been taken over by the carrier or have been loaded on board, the carrier shall, on demand of the shipper, issue to the shipper a bill of lading. The bill of lading may be signed by a person authorized by the carrier. A bill of lading signed by the Master of the ship carrying the goods is deemed to have been signed on behalf of the carrier. 2. Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Cases Delivering Goods without Original Bill of Lading Article 2 If the carrier violates the law and fails to deliver the goods on the original bill of lading and damages the right of the bill of lading of the original bill of lading, the holder of the original bill of lading may require the carrier to bear the civil liability for the loss. Article 6 The amount of compensation for the loss of the holder of the original bill of lading caused by the carrier’s delivery of the goods without the original bill of lading shall be calculated according to the value of the goods at the time of shipment and the freight and insurance premium. Article 13 After the carrier has not delivered the goods on the original bill of lading, the holder of the original bill of lading and the person who has picked up the goods without the original bill of lading have reached an agreement on the payment of the goods, and will not affect the holder of the original bill of lading when the amount of the agreement is not paid. In respect of the losses suffered by the carrier, the carrier is required to bear the civil liability for the delivery of the goods without the original bill of lading.

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3. Civil Procedure Law of the People’s Republic of China Article 259 If one party fails to comply with the award made by the arbitration agency on foreign-related disputes of the People’s Republic of China, the other party may apply for execution to the intermediate people’s court in the place where the person against whom the application is made has his or her domicile or where the property of the said person is located. 4. Law of the Application of Law for foreign-related Civil Relations of the People’s Republic of China Article 3 The Party can choose applicable foreign-related civil relations law in accordance with laws.

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Zhejiang High People’s Court Civil Judgment Chem-Together Int’l Group Limited v. Transportation and Trading Services Joint Stock Company et al. (2017) Zhe Min Zhong No.93 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 73. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court’s decision that shipowner who issued the bill of lading to shipper was carrier and liable for loss of cargo suffered by shipper, despite the shipowner was under a time charter engaged by the time charterer to issue the bill of lading and the ship was employed by the time charterer to carry the cargo. Summary Plaintiff shipper, also seller, sold the cargo to foreign buyer on FOB term, and buyer, who was responsible for transporting the cargo, signed a voyage charter with the time charterer of the ship. The ship was loaded with the cargo and the Master instructed the ship agent in the lading port to issue the bill of lading. In the port of discharge, the cargo was delivered to the buyer without collection of the original bill of lading. Plaintiff sued Defendant shipowner, who contended that though it issued the bill of lading, it was not the carrier, as it was performing a time charter at the relevant time, the ship was employed by the time charterer to carry the cargo and the Master was instructed by the time charterer to issue the bill of lading. Defendant further contended that as there existed the afore-said time charter and voyage charter, the time charterer should be deemed as the carrier. Court of first instance disagreed with Defendant, and held that Defendant was the carrier under the carriage of goods by sea contract with the shipper, because the bill of lading was issued by the Master for shipowner and the cargo was physically transported by the ship, despite of the existence of the time charter and voyage charter. Court of first instance further held that shipowner was faulty in delivery of cargo without original bill of lading and therefore liable for shipper’s loss of cargo. Shipowner appealed. Court of appeal affirmed the decision of first instance Court, and further held that though there existed the voyage charter between the

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buyer and time charterer and the bill of lading mentioned the voyage charter, shipper was not a party to the voyage charter and it did not know or ought to have known the charter. Thus, the voyage charter was not binding on shipper. Further, as indicated in the letter of authority given by the Master, the local ship agency was authorized by the Master, not the time charterer, to issue the bill of lading. The Master was employed by shipowner to operate the ship. Due to chain of authority, the bill of lading was issued for and on behalf of shipowner.

Judgment The Appellant (the Defendant of first instance): Transportation and Trading Services Joint Stock Company Domicile: No.1, Hoang Van Thu, MinhKhai Ward, Hong Bang District, Haiphong City, Vietnam. Legal representative: Le TatHung, director of the company. Agent ad litem: ZHU Guolin, lawyer of Shanghai Hightime Law office. Agent ad litem: LUO Hongjuan, lawyer of Shanghai Hightime Law office. The Respondent (Plaintiff of the first instance): Chem-Together Int’l Group Limited Domicile: Unit A&B15/F Neich Tower 128 Gloucester Road Wanchai Hong Kong, the people’s Republic of China. Legal representative: XIAO Hui, chairman of the company. Agent ad litem: ZHANG Jianfeng, lawyer of Zhejiang HIGHTAC PRC LAWYERS. Agent ad litem: LIN Ji, intern lawyer of Zhejiang HIGHTAC PRC LAWYERS. The Defendant of first instance: Jiaxing Ocean Shipping Agency Co., Ltd. Domicile: (7th Floor of Zhongan Business Building) No.783, South Hexing Road, Jiaxing, Zhejiang, the People’s Republic of China. Legal representative: CHEN Qingdong, general manager of the company. Agent ad litem: XIE Shizhong, staff of Ningbo Ocean Shipping Agency Co., Ltd. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant Transportation and Trading Services Joint Stock Company (hereinafter referred to as Transportation Company), the Respondent Chem-Together Int’l Group Limited (hereinafter referred to as Chem-Together Company) and the Defendant of first instance Jiaxing Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Jiaxing Ocean Shipping Agency), the Appellant disagreed with (2015) Yong Hai Fa Shang Chu Zi No.1036 Civil Judgment rendered by Ningbo Maritime Court of the People’s Republic of China, and appealed to the court. The court entertained the case on February 6, 2017 and the court

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formed a collegiate bench and heard this case in public on April 11, 2017. ZHU Guolin, agent ad litem of the Appellant Transportation Company, ZHANG Jianfeng and LIN Ji, agents ad litem of the Respondent Chem-Together Company, XIE Shizhong, agent ad litem of the Defendant of first instance Jiaxing Ocean Shipping Agency, appeared in court and participated in the action. Now the case has been concluded. Chem-Together Company claimed in first instance that: on December 10, 2014, Chem-Together Company, through a Vietnamese middleman, signed a sales contract with the Vietnamese buyer CUU Long Vietnam Fertilizer Company (hereinafter referred to as CUU) for the sale of the lactam-grade ammonium sulphate. The total price of the goods was 781,922.5 US dollars. On January 16, 2015, Jiaxing Ocean Shipping Agency issued a bill of lading numbered TSZPL01 to Chem-Together Company, stating that the goods was shipped in Zhapu Port, China, and was transported by M.V. “TRANSCOSTAR” to the port of unloading, QUYNYON PORT, Vietnam, the consignee according to instructions, the gross weight of the goods was 6,085 tons. After the goods arrived at the port of destination, Transportation Company and Jiaxing Ocean Shipping Agency released the goods in late January 2015 without recovering the original bill of lading, resulting in Chem-Together Company not receiving the payment of 781,922.5 US dollars under the bill of lading. Since Transportation Company and Jiaxing Ocean Shipping Agency released the goods without recovering the original bill of lading, they should be liable for the shipper and the original bill of lading holder, namely, Chem-Together Company in this case. In conclusion, it claimed that: Transportation Company and Jiaxing Ocean Shipping Agency should jointly compensate Chem-Together Company for the economic loss of 781,922.5 US dollars (according to the exchange rate of 1:6.1342 convert to RMB4,796,469 yuan on the date of the withdrawal of the goods on January 26, 2015) and from the date of the payment to the date of payment off, the interest calculated by the interest of the People’s Bank of China during the same period. Transportation Company argued in first instance that: 1. the bill of lading involved was not issued by the Transportation Company, but was issued by Jiaxing Ocean Shipping Agency that authorized by the time charterer of the vessel involved in the case, Tongli Shipping Co., Ltd., Samoa (hereinafter referred to as Tongli Company). The Transport Company was not the carrier of the goods involved, did not need to bear the liability for compensation under the contract of carriage of goods by sea. 2. Tongli Company not only controled the issuance of bills of lading, but also controled the operation of the ship. The lading and unloading agents of the goods were entrusted by Tongli Company and paid the corresponding fees. The agent of the port issued a bill of lading to release the goods according to the order of Tongli Company. The Transportation Company was completely unaware of the fact and it had not implemented the act of delivery of goods without bill of lading and did not have to bear any liability for compensation. 3. Even if the bill of lading was issued by the captain of the representative of Jiaxing Ocean Shipping Agency, the master could issue the bill of lading on behalf of the carrier, but did not mean that the carrier was the owner, and the carrier could also be a charterer; in this case, the

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charterer Tongli Company should be identified as the carrier of the transportation involved in the case and bore the responsibility of not releasing the goods, which should not be borne by Transportation Company. 4. The trade in goods involved was the settlement of the letter of credit. According to the principle of settlement of letters of credit, Chem-Together Company could settle the bank from the bank as long as the bill of lading and the corresponding trade certificate are provided. It was unclear why Chem-Together Company could not collect the payment according to the settlement of the letter of credit, nor it was clear whether Chem-Together Company had already filed a lawsuit or arbitration request against the consignee under the trade contract to exercise the right of relief in order to fulfill the obligation of derogation. Therefore, Chem-Together Company could not recover the purchase price was a normal commercial risk under the trade contract and should not be borne by Transportation Company. 5. There was no legal basis or factual basis for Chem-Together Company to claim that the interest should be calculated according to the loan interest rate for the same period. Even if there was any loss, it should be calculated according to the deposit interest rate. In summary, Chem-Together Company’s claims against Transportation Company should be rejected. Jiaxing Ocean Shipping Agency argued in first instance that, it was agent of the lading port and issued bills of lading under the authorization of Tongli Company. It had no fault in this case. Chem-Together Company sued the goods was released without bill of lading at the port of discharge, but Jiaxing Ocean Shipping Agency was not the agent of the port of discharge. Therefore, this case had nothing to do with Jiaxing Ocean Shipping Agency, Chem-Together Company’s claims against Jiaxing Ocean Shipping Agency should be rejected. The court of first instance found the facts as follows: M.V. “TRANSCOSTAR” was a Vietnam-registered general cargo ship. It was built in Japan in 1997 and was a Japanese classification society. It was 6607 DWT and belonged to the Defendant Transportation Company. On January 29, 2014, Transportation Company signed a time charter party with Tongli Company and agreed to charter M.V. “TRANSCOSTAR” to Tongli Company for delivery. The delivery period was February 5–10, 2014, with a term of 6 months plus 3 months. The charterer chose to deliver the ship from Sang Yi Port, Philippines, Southeast Asia to a safe port in Japan; the charter party used a bill of lading or a Congenbill in the form of a charterer. The charterer or his agent was authorized by the shipowner to represent the captain and/or the shipowner, in accordance with the conditions of the charter, the bill of lading was issued strictly in accordance with the vouchers; the charterer accepted and compensated the shipowner for all consequences of the issue of the bill of lading due to the failure of the charterer and/or its agent to comply with the acknowledgment of the mate’s receipt, liability or loss; if the original bill of lading did not arrive at the port of discharge in time, the charterer could require the shipowner to release all the goods by the consignee’s bank guarantee or the ship owner’s insurance association’s letter of guarantee issued by the charterer, and the charterer would try to complete the voyage. The original bill of lading would be returned to the shipowner no later than 45 calendar days, and the letter of guarantee

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would be canceled. The unfinished matters should be in accordance with the 1993 NYPE time charter party. On December 10, 2014, Chem-Together Company signed a contract for the sale of bulk ammonium sulphate with the Vietnamese buyer CUU, the quantity of 6,600 metric tons plus or delete 5%, the unit price of 128.5 US dollars per metric ton FOB Zhapu, the current letter of credit payment, goods shipped no later than January 20, 2015. In order to transport the goods, CUU signed a voyage chartering contract with Tongli Company on December 16, 2014, and the contracted bill of lading format was Congenbill 94 format. The carrier/captain authorized the lading agent to check according to the chief receipt and water gauge. The bill of lading was issued, and the carrier/captain allowed the charterer to unload the letter in accordance with the letter of the Shipowners P&I Association or the consignee’s bank guarantee; the charterer appointed Jiaxing Ocean Shipping Agency and Duonglong Shipping Co., Ltd. as the lading and unloading port (the carrier agreed and paid the port fee and agency fee). On January 16, 2015, the above-mentioned goods were loaded on M.V. “TRANSCOSTAR” in Zhapu Port. The chief receipt recorded 6085 tons of actual cargo. The first receipt was stamped with the chief seal and the seal was displayed as “Transportation Business Service Co., Ltd. M.V. ‘TRANSCOSTAR’ chief”. On the same day, the captain of Jiaxing Ocean Shipping Agency representative issued a bill of lading numbered TSZPL01 to Chem-Together Company. The bill of lading stated that the shipper was Chem-Together Company and the consignee was instructed by the Saigon branch of the Vietnam Foreign Trade Commercial Bank to inform CUU. The port of lading was China’s Zhapu port, the port of unloading, Vietnam Guiren, the carrier ship name M.V. “TRANSCOSTAR”, the gross weight of the goods was 6,085 tons. On the power of attorney issued by the captain to Jiaxing Ocean Shipping Agency, the seal of the captain was stamped and the seal was displayed as “the Transportation Company M.V. ‘TRANSCOSTAR’ captain”. After the goods arrived at the port of destination, the port of discharge Duonglong Shipping Co., Ltd. issued a bill of lading on January 22, 2015, and the goods involved were handed over to the consignee CUU for extraction. Chem-Together Company submits a full set of negotiating documents to the buyer’s issuing bank through the seller’s bank, but the issuing bank believed that the negotiating documents were submitted with the lease of the bill of lading instead of the discrepancies of the ocean bill of lading as stipulated in the credit, which was filed on February 5, 2015. The payment was refused, and the full set of negotiating documents was returned the next day, so the original bill of lading involved was returned to Chem-Together Company. After Chem-Together Company and the consignee CUU negotiated, the buyer and the seller reached a sales contract supplement agreement on July 15, 2015, and changed the payment method from letter of credit to wire transfer payment. The payment should be paid on August 1, 2015. All original shipping documents were sent to the buyer immediately upon receipt of the payment of USD781,922.5. However, Chem-Together Company still failed to collect any payment, so the case was filed.

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The court of first instance held that this case was a dispute over the delivery of goods under the contract of carriage of goods by sea. According to the Civil Procedure Law of People’s Republic of China, litigation arising from railway, highway, water, air transport and joint transport contract disputes was governed by the people’s court of the place of origin, destination or defendant’s residence. The origin of the sea cargo transportation in this case was Zhapu, China, which was under the jurisdiction of this court, so the court of first instance had jurisdiction. Both Chem-Together Company and Transportation Company and Jiaxing Ocean Shipping Agency confirmed that the law of the People’s Republic of China was applicable to this case. According to Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the case applied to Chinese law. According to Chinese Maritime Code, a bill of lading was a document used to prove a contract for the carriage of goods by sea and the goods had been received or loaded by the carrier, and that the carrier had promised to deliver the goods. Chem-Together Company sold the goods involved to the Vietnamese buyer CUU and entrusted the goods to M.V. “TRANSCOSTAR” to legally obtain the original bill of lading. Chem-Together Company was the shipper of the maritime transport, it got the original bill of lading after submitting the letter of credit negotiation which was withheld. The bill of lading was the legal holder of the original bill of lading who had the right to take delivery of the goods to the carrier on the original bill of lading. The bill of lading holder could ask the carrier to compensate the loss if the holder could not get goods. According to Article 72 of the Maritime Code of the People’s Republic of China: when the goods had been taken over by the carrier or had been loaded on board, the carrier should, on demand of the shipper, issue to the shipper a bill of lading. The bill of lading could be signed by a person authorized by the carrier. A bill of lading signed by the Master of the ship carrying the goods was deemed to have been signed on behalf of the carrier. In this case, the bill of lading involved was issued by Jiaxing Ocean Shipping Agency which authorized by the captain of M.V. “TRANSCOSTAR”. So the important issue was the identification of carrier, namely, the carrier was the shipowner Transportation Company or the charterer Tongli Company. In this regard, the court of first instance held that, first of all, in the case of a shipping document or document with a ship seal, the company name on the ship’s seal could be a preliminary proof of the carrier. On the captain’s seal and the chief seal stamped on the issuing of the bill of lading authorization and the chief receipt of Jiaxing Ocean Shipping Agency, the name of Transportation Company was printed around the name of the ship, which not only visually showed that the ship was owned by Transportation Company or on behalf of the Transportation Company to carry goods. It could be a preliminary proof of that Transportation Company was carrier. Secondly, from the point of view of the reliance interests of both parties to the contract of carriage, Chem-Together Company first obtained the first receipt after the goods were delivered to M.V. “TRANSCOSTAR”. The seal stamped by the first receipt showed the name of Transport Company. For Chem-Together Company, the trust of it had been handed

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over to the carrier and the carrier ship as indicated by the seal, rather than Tongli Company that had never indicated its identity to Chem-Together Company. Thirdly, although Jiaxing Ocean Shipping Agency stated in the trial that they were entrusted by Tongli Company to engage in porting agency business, they failed to provide evidence to prove that they are authorized by Tongli Company to issue bill of lading. M.V. “TRANSCOSTAR” captain, not Tongli Company, authorized Jiaxing Ocean Shipping Agency to issue bill of lading; although the ship agents in the lading and unloading of the two ports were entrusted by Tongli Company and paid by Tongli Company, they could only indicate that Tongli Company had ship agency entrustment contractual relationship with the lading and unloading agents. It should not be a proof of the subject identity of the party involved in the contract of carriage of goods by sea between the shipper and the carrier. Finally, it was expressly agreed in the time charter party between Tongli Company and the shipowner Transportation Company that the charterer or his agent was authorized by the shipowner to issue the bill of lading on behalf of the master and/or the shipowner… If the original bill of lading did not arrive at the port of discharge in time, the charterer could require the shipowner to release all the goods by the consignee’s bank guarantee or by the charterer’s letter of guarantee issued by the charterer. It could be seen that the tenant charterer Tongli Company or its agent was authorized by the shipowner to issue the bill of lading on behalf of the shipowner Transport Company, instead of the opposite, namely, the argument of the transport company that the captain was authorized by the charterer Tongli Company and issued a bill of lading represented Tongli Company; in the unloading port, the charterer could ask the shipowner to release the goods with the tenant’s letter of guarantee or the consignee’s bank guarantee, but the original bill of lading should be returned to the shipowner in time. This rule fully indicating that the shipowner had the total power of control and decision on the original bill of lading. The charterer needed to provide a letter of guarantee, follow the instructions of the shipowner, and be responsible for recovering the original bill of lading and handing it over to the shipowner. Based on the above factors, the court of first instance determined that the carrier involved in the contract for the carriage of goods by sea was the transportation company, not the time charterer Tongli Company. In summary, the contract for the carriage of goods by sea between Chem-Together Company and Transport Company was legal and valid. Transport Company should deliver the goods to the holder of the original bill of lading in accordance with the law. Otherwise, Chem-Together Company should be compensated for the economic losses suffered by. The value of the goods should be calculated according to its value at the port of lading plus insurance premiums and freight. Chem-Together Company made a claim with the FOB price of 781,922.5 US dollars when the cargo was in lading port Zhapu which was in compliance with the law and was protected by the court of first instance. Chem-Together Company requested for the exchange rate of 1:6.1342 RMB4,796,469 yuan on the date of the withdrawal of the goods on January 26, 2015, the interest calculated on the basis of the People’s Bank of China from the same day to the date when the payment was completed was also reasonable. Jiaxing Ocean Shipping Agency was the shipment

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agency in the port of lading. Its conduct of issuing bill of lading according to the authorization of the master had no fault and should not bear any responsibility. The reasonable part of Chem-Together Company’s claims, the court of first instance would protect. According to Articles 71 and 72 of the Maritime Code of the People’s Republic of China, Articles 2 and 6 of the Provisions of the Supreme People’s Court on the Applicable Law for the Trial of Cases Delivering Goods without Original Bills of Lading, Article 259 of the Civil Procedure Law of the People’s Republic of China, and Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the judgment was as follows: 1. Transportation Company should compensate Chem-Together Company for a loss of RMB4,796,469 yuan. The payment should be executed within 10 days after the judgment came into effect. The interest should be calculated according to the of the deposit and loan interest of the People’s Bank of China from January 27, 2014 to the date of performance as determined by the judgment; 2. reject the claims of Chem-Together Company against Jiaxing Ocean Shipping Agency. If the obligation to pay money is not fulfilled within the time limit specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee of first instance in amount of RMB45,170 yuan, should be borne by Transportation Company. Dissatisfied with the civil judgment, Transportation Company appealed to the court that: 1. the court of first instance misidentified the carrier and the facts. (1) Judging from the establishment of the contract for carriage of goods by sea, Tongli Company was the carrier of related shipping contract. The consignee of the case was the shipper CUU, and Chem-Together Company was the consignor or the shipper under the FOB bill of lading. Transportation Company was not the party involved in the contract for the carriage of goods by sea. According to the sales contract of the goods involved, the Vietnamese buyer was responsible for the transportation of the goods involved; according to the conclusion of the contract for the carriage of goods by sea, Tongli Company was the carrier, CUU was the shipper, and Transportation Company could only act as the actual carrier of the goods involved. Chem-Together Company could only be the shipper under the FOB trade contract at best, namely the actual shipper; the bill of lading involved was not the maritime transport contract itself, but only the proof of the contract of carriage of goods by sea. Chem-Together Company who thought it was the shipper on the bill of lading to claim that the contractual relationship with Transportation Company for the carriage of goods by sea was contrary to the facts of the contract of carriage of the goods involved, and was also inconsistent with the relevant laws. (2) In the course of the performance of the contract of carriage of goods in sea, the captain and the chief officer involved in the case were the employees of Tongli Company, acting in accordance with the instructions and orders of Tongli Company, providing employment services and performing agency duties. Tongli Company or the captain involved in the case was obliged to issue a bill of lading according to the contract of the voyage chartering contract (marine cargo transport contract); on the contrary, Transportation Company had no obligation to issue bills

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of lading under the voyage chartering contract; in this case, the captain was directly liable. According to the company’s instructions, the captain’s behavior reflected the will of the company and not the will of Transportation Company. In fact, captain was the agent of the company. (3) In the process of transporting the goods involved, Transportation Company had never had any contact with Jiaxing Ocean Shipping Agency; Jiaxing Ocean Shipping Agency was not instructed and ordered by Transportation Company, but issued and released bill of lading under the instructions and ordered of Tongli company. The court of first instance directly determined the captain was represented by Jiaxing Ocean Shipping Agency in accordance with Article 17 of the time charter party, but the logic of the captain on behalf of Transportation Company was obviously wrong. (4) In the authorization of attorney and the issuance of the bill of lading, the chief and the ship’s seal of M.V. “TRANSCOSTAR” could not change the contractual relationship of the carriage of goods by sea involved, nor could change the fact that the chief and the chief represented Tongli Company to receive the goods involved. 2. Transportation Company did not release goods without bill of lading. Tongli Company took control of the unloading and delivery of the port of destination and instructed its destination port agent to arrange and operate. The first-instance judgment determined that Transportation Company had the right to control and decide on the delivery of the original bill of lading according to the stipulation of Article 7 Paragraph BB of the time charter party involved, and then determined that Transportation Company was actually engaged in the act of releasing the goods without bill of lading and was liable for compensation. 3. Chem-Together Company had not proved its losses. 4. Chem-Together Company had not fulfilled its obligation to reduce its losses and had no right to claim compensation from Transportation Company for the expanded losses. 5. Chem-Together Company did not have the right to claim interest on the goods and had no factual or legal basis. In summary, the first-instance judgment should be revoked, and all first-instance claims of Chem-Together Company should be rejected; the costs of the first and second instances should be borne by Chem-Together Company. Chem-Together Company argued that: firstly, the first-instance identification of the carrier was correct. 1. The cause of the case was based on the contract of carriage of goods by sea generated by the bill of lading, and the carrier should be identified according to the bill of lading. The bill of lading involved was issued by the captain of the ship in charge of Jiaxing Ocean Shipping Agency, and the captain was employed by the shipowner. Therefore, the shipowner of the ship involved that was Transportation Company should be identified as the carrier of the case dispute. 2. In the actual business process, the carrier that had been visually indicated to Chem-Together Company had always been Transportation Company. The name and identity of Tongli Company had never appeared in all the written documents proving the transportation relationship of the bill of lading. Therefore, Tongli Company could not be identified as a carrier in this case. 3. Transportation Company confused the bill of lading contract in this case with the time charter party between Tongli Company and Transportation Company, and the voyage charter party between Tongli Company and the Vietnamese buyer CUU. 4. The time

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charter party between Transportation Company and Tongli Company did not make an agreement on the crew of the vessel involved. Therefore, according to Article 129 of the Maritime Code of the People’s Republic of China, the crew of the vessel involved was equipped by the shipowner Transportation Company. The captain and chief of the case were the servants of Transportation Company, and the bill of lading was issued on behalf of Transportation Company. The legal consequences should be borne by Transportation Company. 5. The authorization for the issuance of bills of lading by Jiaxing Ocean Shipping Agency was from the authorization of the captain. The captain did not state that he was employed by Tongli Company in the authorization and ordered Jiaxing Ocean Shipping Agency agent to issue a bill of lading based on the instructions of the company. Therefore, in the absence of a clear explanation, the captain’s instructions were derived from the ship owner’s authorization. This was in accordance with Articles 17 and 12 of the time charter party. Therefore, the captain of Jiaxing Ocean Shipping Agency had issued a bill of lading on behalf of Transportation Company rather than Tongli Company. 2. The court of first instance found that Transportation Company had no objection to the fact that the goods were delivered without a bill at the port of destination. According to Article 17 of the time charter party, Transportation Company had not recovered the bill of lading. Therefore, the reason could not be established that Transportation Company thought Tongli Company released goods rather than Transportation Company. 3. The loss of Chem-Together Company had actually occurred and it had the right to file a claim with the carrier. In summary, it required the court to dismiss the appeal, and affirm the original judgment. Jiaxing Ocean Shipping Agency stated that the fact that Jiaxing Ocean Shipping Agency issued the bill of lading under the authority of the captain had been confirmed in the first instance, and Transportation Company had not appealed Jiaxing Ocean Shipping Agency. Therefore, Jiaxing Ocean Shipping Agency did not submit a reply. In summary, it required the court to dismiss the appeal, and affirm the original judgment. During the second-instance trial, neither Chem-Together Company nor Jiaxing Ocean Shipping Agency submitted new evidence. Transportation Company submitted the following evidence: evidence 1, On January 16, 2015, Tongli Company sent an email to Jiaxing Ocean Shipping Agency, to prove that Tongli Company required Jiaxing Ocean Shipping Agency to provide a draft of the bill of lading for the purpose of reviewing, confirming and instructing. Evidence 2, on January 19, 2015, Jiaxing Ocean Shipping Agency emailed Tongli Company attachments, attached to the draft of the bill of lading, to prove that Jiaxing Ocean Shipping Agency produced and provided drafts of bills of lading according to the instructions of Tongli Company. Jiangsu Branch of Sinopec Chemical Sales Co., Ltd. (hereinafter referred to as Jiangsu Petrochemical) was the shipper of the bill of lading, and Chem-Together Company was the informed party and the consignee of the bill of lading, freight at destination, and details of the port of discharge agent. Evidence 3, on January 19, 2015, Tongli Company emailed and sent attachments to Jiaxing Ocean Shipping Agency, to prove that the Tongli Company confirmed the draft of the bill of lading and instructed Jiaxing Ocean

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Shipping Agency to designate Jiangsu Petrochemical as the shipper of original bill of lading. Tongli Company and Chem-Together Company have already reached a consensus agreement for the exchange of orders, and Chem-Together Company provided a letter of guarantee for the exchange of new bills of lading, invalidated the bill of lading of Jiangsu Petrochemical, and issued the second set of bill of lading for the shipper. Tongli Company instructed Jiaxing Ocean Shipping Agency to request Chem-Together Company to provide a letter of guarantee in the specified format; the format and content of the letter of guarantee. Evidence 4, on January 19, 2015, Jiaxing Ocean Shipping Agency e-mailed to Tongli Company and the accompanying bill of lading of Jiangsu Petrochemical, to prove that Jiaxing Ocean Shipping Agency revoked the first set of Jiangsu Petrochemical bill of lading according to the instructions of Tongli Company. Evidence 5, on January 19, 2015, Jiaxing Ocean Shipping Agency’s external letter to Tongli Company’s e-mail and its accompanying card-issuing letter and invalid bill of lading provided by Chem-Together Company, to prove that Jiaxing Ocean Shipping Agency provided the first set of Jiangsu Petrochemical bill of lading in accordance with the instructions of Tongli Company, the scanned copy of the letter of guarantee signed by Chem-Together Company, and the scanned copy of the bill of lading. Evidence 6, on January 19, 2015, Jiaxing Ocean Shipping Agency’s external letter to Tongli Company’s email and the second set of bills of lading signed by Jiaxing Ocean Shipping Agency, to prove that Jiaxing Ocean Shipping Agency provided a second set of bills of lading (Chem-Together Company was the shipper) to Tongli Company; Jiaxing Ocean Shipping Agency waited for the order of Tongli Company, instead of waiting for the Transportation Company’s instructions; freight at destination; details of the port of discharge agent. Evidence 7, an email from Tongli Company to Jiaxing Ocean Shipping Agency on January 19, 2015, to prove that Tongli Company notified Jiaxing Ocean Shipping Agency, received a letter of guarantee from Chem-Together Company, confirmed and instructed Jiaxing Ocean Shipping Agency to release the second set of bills of lading to Chem-Together Company; and instructed to keep the first set of cancelled bills of lading. Evidence 8, an email from Tongli Company to Jiaxing Ocean Shipping Agency on January 20, 2015, to prove that Tongli Company notified Jiaxing Ocean Shipping Agency that it cancelled and abolished the second set of bills of lading (Chem-Together Company was the shipper); after receiving the second set of bills of lading, Tongli Company would have an updated bill of lading issuing instructions; Tongli Company, not Transportation Company, instructed and controlled the issuance of the bill of lading related to Jiaxing Ocean Shipping Agency. Evidence 9, an email from Jiaxing Ocean Shipping Agency to Tongli Company on January 20, 2015, to prove that Jiaxing Ocean Shipping Agency received instructions from Tongli Company to inform the recipients of SF to return the second set of bills of lading (Chem-Together Company was the shipper). Evidence 10, on January 21, 2015, email from Jiaxing Ocean Shipping Agency to Tongli Company and accompanying freight prepaid bill of lading (Chem-Together Company was the shipper), to prove that Jiaxing Ocean Shipping Agency sent an updated bill of lading (Chem-Together Company was the shipper’s freight prepaid bill of lading) to Tongli Company,

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requested Tongli Company and the recipient of the bill of lading to carefully verify and reply; Jiaxing Ocean Shipping Agency had not received the instructions from Transportation Company to sign the bill of lading and not provided to Transportation Company and required it to verify and confirm. Evidence 11, an email from Jiaxing Ocean Shipping Agency to Chem-Together Company on January 21, 2015, to prove that Jiaxing Ocean Shipping Agency first provided the scanned copy of the freight prepaid bill of lading to Chem-Together Company (Chem-Together Company was the shipper), and the exchange and prior agreement between Chem-Together Company and Tongli Company; Chem-Together Company and Transportation Company had no liaison and agreement on the exchange of bills and bills of lading; Chem-Together Company Corporation knew that the bill of lading involved was issued by Jiaxing Ocean Shipping Agency which instructed by Tongli Company. Evidence 12, on January 21, 2015, Jiaxing Ocean Shipping Agency’s external letter to Tongli Company’s email and the third set of bills of lading signed by Jiaxing Ocean Shipping Agency, to prove Jiaxing Ocean Shipping Agency (first to send a scanned copy of the freight forward bill of lading to the Chem-Together Company), and then provided the scanned copy of the bill of lading to Tongli Company; Jiaxing Ocean Shipping Agency waited for the order of Tongli Company, not waited for Transportation Company. Evidence 13, an email from Tongli Company to Jiaxing Ocean Shipping Agency on January 21, 2015, to prove that Tongli Company notified Jiaxing Ocean Shipping Agency that the bill of lading involved was freight prepaid bill of lading, and Tongli Company had not received the freight, and did not put the bill of lading, when to put the order and other follow-up instructions of the company. Evidence 14, on January 21, 2015, Jiaxing Ocean Shipping Agency’s e-mail to Tongli Company and Tongli Company’s shipping fee for the shipper, to prove that Jiaxing Ocean Shipping Agency provided a second set of bills of lading (Chem-Together Company was the shipper, freight at destination) scanned by Tongli Company, waiting for the follow-up (release order) instructions of Tongli Company. Evidence 15, on January 26, 2015, Tongli Company sent an email to Jiaxing Ocean Shipping Agency, to prove that Tongli Company had confirmed and instructed Jiaxing Ocean Shipping Agency to place a third set of bills of lading (freight prepaid) to the shipper Chem-Together Company; Tongli Company controlled the whole process of issuing and placing bills of lading. At the same time, the court applied for the above 15 emails to Jiaxing Ocean Shipping Agency. Chem-Together Company cross-examined that: Except evidence 11, the sender and recipient of the mail were all Jiaxing Ocean Shipping Agency and Tongli Company. Chem-Together Company was not the party of the mail, and the mail was not notarized, so the authenticity of the mail cannot be confirmed. The Chinese translation of the above evidence was all translated by the Transportation Company itself, not by the professional translation agency, and did not meet the requirements of the evidence rules. Judging from the contents of the above-mentioned mails, most of them were drafts, written-offs, manuscripts, originals, copies, Chinese and English of the bill of lading. They were not substantially related to the focus of the dispute in this case. Tongli Company and Jiaxing Ocean Shipping Agency were on

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the bill of lading. The amendments, confirmations, cancellations, and withdrawals can only indicate that Tongli Company was in contact with Jiaxing Ocean Shipping Agency on behalf of the shipowner/carrier. All of its actions were derived from the authorization of the shipowner in the time charter party. It was equal to the carrier. The identification carrier shall be identified by receiving the goods, issuing the first receipt, lading and unloading the cargo, issuing the bill of lading, etc., relevant written documents and the signature and seal of the documentary. Therefore, the above evidence cannot get the purpose that identify the carrier which claimed by the Transportation Company. The authenticity and legality of evidence 11 are confirmed. However, the relevance was not recognized. The evidence only confirmed the contents of the bill of lading. It cannot be proved that Chem-Together Company knew that Jiaxing Ocean Shipping Agency had issued a bill of lading on behalf of Tongli Company. Jiaxing Ocean Shipping Agency cross-examined that, there were mail exchanges between Jiaxing Ocean Shipping Agency and Tongli Company. These emails should be one of them, but it was not sure whether the translation was correct or not. Even if the content was true, Jiaxing Ocean Shipping Agency on behalf of carrier contacted the shipper and related personnel in the process of issuing the bill of lading, and Jiaxing Ocean Shipping Agency issued the bill of lading according to the authorization of the captain. The above evidence was reviewed by the court: as Jiaxing Ocean Shipping Agency believed that the English e-mail provided by the Transportation Company was the e-mail of it and Tongli Company, the application of Transportation Company to request evidence was rejected. The evidence provided by Transportation Company was the e-mail between Tongli Company and Jiaxing Ocean Shipping Agency, except for evidence 11. According to the contents of the e-mail, it can only prove that Tongli Company communicated with Jiaxing Ocean Shipping Agency on the issuance of the bill of lading involved. In the absence of other evidence, the above evidence alone was not sufficient to prove that Chem-Together Company knew or should have known the relationship between Tongli Company and Jiaxing Ocean Shipping Agency. Evidence 11 was that Jiaxing Ocean Shipping Agency sent the original bill of lading to Chem-Together Company, which only proved that Chem-Together Company confirmed the bill of lading issued by Jiaxing Ocean Shipping Agency and cannot prove the purpose of Transportation Company. Therefore, the evidence submitted by Transportation Company was not recognized. After trial, the facts as examined are supported by relevant evidence, and the court confirms the facts ascertained. The court holds that the party involved was Chem-Together Company registered in the Hong Kong Special Administrative Region and Transportation Company was the Socialist Republic of Vietnam. Therefore, this case was a foreign-related case. The parties concerned chose to apply the laws of the People’s Republic of China in the first instance. Therefore, it was correct for the court of first instance to apply the laws of the People’s Republic of China to hear the case in accordance with Article 3

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of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China. According to the pleading opinions of the parties, the issue of the second-instance dispute in this case is that: the identification of the carrier involved and the civil liability of Transportation Company. The parties concerned have no objection to the issue summarized by the court. The analysis of the court is as follows: According to Article 72 of the Maritime Code of People’s Republic of China: a bill of lading signed by the Master of the ship carrying the goods was deemed to have been signed on behalf of the carrier. In this case, the bill of lading involved was issued by Jiaxing Ocean Shipping Agency which authorized by the captain of M.V. “TRANSCOSTAR”. For the behavior of the captain, Transportation Company considered that the captain’s behavior was on behalf of the term renter Tongli Company. Chem-Together Company believed that the captain’s behavior was on behalf of the shipowner Transportation Company. In this regard, the court holds that, based on the facts ascertained and the available evidence, Chem-Together Company was the legal original bill of lading holder, although the foreign buyer CUU and Tongli Company had a voyage charter party, and on the right of the bill of lading contained the content of “use with the charter party”, but Chem-Together Company was not the party of the voyage charter party, and according to the contents stated in the bill of lading, the bill of lading did not clarify that the aforementioned charter party referred to CUU and Tongli Company. The signed voyage charter party had no evidence that Chem-Together Company knew or should know that there was a voyage charter party between CUU and Tongli Company. Therefore, the voyage charter party signed between CUU and Tongli Company did not binding Chem-Together Company, and Chem-Together Company as the holder of the legal original bill of lading had the right to file a lawsuit on the basis of the bill of lading. According to the contents of the authorization issued by the captain of the ship involved, it can only indicate that the captain of Jiaxing Ocean Shipping Agency was issuing a bill of lading, not Tongli Company. From the seal stamped on the authorization and the seal stamped on the transport documents such as the first receipt received by Chem-Together Company, the name of Transportation Company was on the seal. Chem-Together Company as the shipper involved, after receiving the above-mentioned transport documents, had reason to believe that it has delivered the goods involved in the ship owned by the company indicated by the seal, not Tongli Company that has never appeared in the above documents. The existing evidence also did not prove that Jiaxing Ocean Shipping Agency or other related companies have disclosed Tongli Company to Chem-Together Company during the transportation of the goods involved. Although Transportation Company provided its time charter party with Tongli Company in the first instance to prove that the captain was an employee of Tongli Company and was instructed by Tongli Company. However, in Article 17 Paragraph AA), the bill of lading stipulates: the bill of lading or Congenbill of lading in the renter format was used under the current charter; the renter or its agent was authorized by the shipowner to represent the master and/or the owner, Under

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the conditions of this charter, the bill of lading was issued strictly in accordance with the chief receipt. However, the charterer accepted and compensated the shipowner for all consequences, liabilities, losses or damages that may result from the issue of the bill of lading by the charterer and/or his agent in accordance with the approval of the chief receipt. If the renter requested, after the tenant providing the guarantee and the license of the shipowner, the second set of bills of lading can be issued. The first set of bills of lading was only used for bank settlement, and only the second set of bills of lading was used for picking up the goods. All documents should be returned to the owner within 45 days. It can be seen that Tongli Company or its agent issued as a time charter was issued a bill of lading on behalf of the shipowner Transportation Company under the authorization of the shipowner Transportation Company, instead of the Transportation Company’s claim that the captain issued bill of lading was authorized by the Tongli Company or issued a bill of lading on behalf of Tongli company. In addition, the article BB) stipulates release goods without original bill of lading: If the original bill of lading does not arrive at the port of discharge in time, the renter can ask the shipowner to release all of the goods according to concessionaire’s bank guarantee or the renter’s letter in accordance with the format of the Shipowner’s P&I Association. The renter will try his best to return the original bill of lading returned to the shipowner’s office no later than 45 calendar days after the voyage was completed and cancelled guarantee according to this. The agreement indicated that Transportation Company has control and determine right over the delivery of the goods at the unloading port. Tongli Company shall follow the instructions of the Transportation Company and be responsible for recovering the corresponding original bill of lading. As regards Article 27 of the time charter party: others are in accordance with the 1993 NYPE time charter party. This was the end of the terms that was the matters not agreed by the parties shall be fulfilled in accordance with the provisions of the Article, and the matters agreed by the parties shall be agreed upon by both parties. In summary, the bill of lading was issued by the captain of the representative of Jiaxing Ocean Shipping Agency, and the captain involved was employed by the shipowner Transportation Company and performed his functions on his behalf. Therefore, Transportation Company should be identified as the carrier of the cargo involved. Although Transportation Company claimed that Tongli Company was the carrier of the goods involved, the evidence provided by it was insufficient to prove it and will not be supported. The determination made in the first instance is not inappropriate. According to the existing evidence and the statement of Transportation Company at the trial of the first instance, the fact that the goods involved have been released without a bill at the port of destination was legally recognized. Transportation Company as the carrier involved shall bear corresponding civil liability. According to Article 6 of the Supreme People’s Court's Provisions on Several Issues concerning the Application of Laws in the Case of Delivering Goods without Original Bills of Lading: the first-instance judgment supported the amount of losses claimed by Chem-Together Company is correct. As for whether Chem-Together Company was doing its duty to reduce losses, according to the existing evidence, it is difficult to determine the reasons for the loss that can be

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attributed to Chem-Together Company, and the reasons for the appeal of Transportation Company cannot be established. According to the foregoing analysis, there was a causal relationship between Transportation Company released goods without bill of lading and the loss of Chem-Together Company. Therefore, it is not inappropriate to support the interest claimed by Chem-Together Company in the judgment of first instance. In summary, the contractual relationship between Chem-Together Company and Transportation Company for the carriage of goods by sea was legally established and valid. Transportation Company, as the carrier of the goods involved, was in fault of releasing the goods without bill of lading in the performance of the contract, so the loss of Chem-Together Company shall be borne by Transportation Company. The first-instance judgment found that the facts were clear and the application of law was correct. The reasons for the appeal of Transportation Company cannot be established, and the court does not support it. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 45,170 yuan, shall be borne by Transportation and Trading Services Joint Stock Company. The judgment is final. Presiding Judge: HUANG Qing Judge: WANG Jianfang Judge: WU Yunhui May 24, 2017 Clerk: DING Lin

Wuhan Maritime Court Civil Judgment CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2016) E 72 Min Chu No.84 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 109. Cause of Action 207. Dispute over shipbuilding contract. Headnote Plaintiff electrician partially successful in claim for payment for work done during ship construction; defendant had paid plaintiff’s employer, which had assigned creditor’s rights to the plaintiff. Summary The Plaintiff sued for non-payment of RMB 374,438.46 in project fees, allegedly incurred for electrical work done as part of a newbuild construction. The Defendant asserted that it had already settled its account with Plaintiff’s employer, and that as Plaintiff was not a party to the contract, he had no right to bring suit. The court held that, as Plaintiff’s employer had assigned creditor’s rights to Plaintiff, Plaintiff was a proper party to this action. The court further held that Plaintiff could only establish part of his financial claims against the Defendant, and directed the Defendant to pay RMB 7,938.04 in project fees to Plaintiff.

Judgment The Plaintiff: CHEN Hongbing, male, born on November 21, 1979, Han, living in Rugao City, Jiangsu. Agent ad litem: SHA Tiexiang, legal server of Wu Yao Legal Services of Rugao. The Defendant: Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. Domicile: Qidong, Jiangsu. Organization code: 66760136-5. Legal representative: DAI Wenkai, chairman.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_6

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Agent ad litem: FENG Dongmei, female, Han, born on December 4, 1981, staff, living in Muyang, Jiangsu. Agent ad litem: ZHU Honglian, female, Han, born on November 4, 1983, staff, living in Haimen, Jiangsu. With respect to the case arising from dispute over shipbuilding contract, a lawsuit of Plaintiff CHEN Hongbing against the Defendant Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (hereinafter referred to as “Zhenhua Company”) was brought to the court on January 11, 2016. The Defendant raised an objection to the jurisdiction of the court within reply time limit. After review, the court made (2016) E 72 Min Chu No.84-1 Civil Ruling on February 20, 2016 to reject the objection to the jurisdiction raised by the Defendant. The Defendant appealed the Ruling to the Hubei High People’s Court. Hubei High People’s Court made (2016) E Min Xia Zhong No.98 Civil Ruling on June 20, 2016 to dismiss the appeal. The domicile of the Defendant located in Nantong and the project was also at Nantong port, which were under jurisdiction of the court. In accordance with Article 13 of the Civil Procedure Law of the People’s Republic of China, the court had jurisdiction. After acceptance, collegiate panel composed of Judge WU Hao as Presiding Judge, Judge DENG Yi and Acting Judge FENG Xingyuan held hearings in public on August 10, 2016, December 21, 2016 and March 8, 2017. The Plaintiff, the Defendant and their agents ad litem attended the hearings. This case could not come to agreement after mediation, now the case has been concluded. The Plaintiff claimed that: 1. the Defendant should pay RMB374,438.46 yuan of project payments; 2. litigation fee should be paid by the Defendant. Facts and reasons: the Plaintiff was subordinate to Weiye Shipbuilding Co., Ltd. Qidong Branch (hereinafter referred to as “Weiye Qidong Branch”) set up by Nantong Weiye Shipbuilding Co., Ltd. (hereinafter referred to as “Weiye Company”) on December 1, 2011. The Plaintiff invested in undertaking Weiye Company’s installation projects of electrical parts in “Haigong DD101” dredger given out by the Defendant. After the project, the Defendant did not pay RMB555,000 yuan of project funds. Later, the Defendant paid RMB180,551.54 yuan of project funds and the rest RMB374,438.46 yuan had not been paid yet. The Defendant argued that: 1. the subject of the Plaintiff did not apply. Monomer Engineering Contract provided by the Plaintiff was between the Defendant and Weiye Company. It was clearly stated in the contract that Weiye Company could not subcontract in any way, or the Defendant had right not to settle accounts of project funds. The Plaintiff broke the contract, had no forwarders qualification but illegally subcontracted and could not provide the subletting contract between him and Weiye Company. Weiye Company unilaterally sublet the project to the Plaintiff, which broke the law. 2. The Defendant had settled accounts with Weiye Company and project funds had been paid. When the project was finished, the Plaintiff on behalf of Weiye Company checked the amount of works that exceeded contract with the Defendant, signed to confirm RMB211,257 yuan of exceeded project funds on September 4, 2014 and paid. The request of the Plaintiff to request the Defendant to pay RMB 374,438.46 yuan of project funds had no basis.

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The parties submitted evidence around claims. The court organized the parties to exchange evidence. For evidence that the parties had no objection, the court confirmed. As for disputed evidence, the court holds as follows: 1. Directions issued by Weiye Company submitted by the Plaintiff is the original, the Defendant does not confirm the authenticity of it but does not submit evidence to the contrary, this evidence is taken by the court. 2. The certification list issued by foreign merchants submitted by the Plaintiff can not prove relevancy to this case and is not taken by the court. 3. The application submitted by the Plaintiff is a copy, the Defendant does not confirm the authenticity, legality or relevancy of it, this evidence is not taken by the court. 4. Electrical modify situation description of DD101 submitted by the Plaintiff is the original but is lack of drawing said in the description to prove and can not confirm the signer’s identity, the Defendant does not confirm the authenticity, legality or relevancy of it, this evidence is not taken by the court. 5. Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner submitted by the Plaintiff is the original, the Defendant does not confirm the authenticity, legality or relevancy of it but does not submit evidence to the contrary, this evidence is taken by the court. 6. The two receipts of which the total amount is RMB211,257 yuan submitted by the Plaintiff is copies and have no other evidence to prove, the Defendant does not confirm the authenticity, legality or relevancy of it, this evidence is not taken by the court. 7. Amendment Fee Declaration of Copper Fitting, M/V DD101’s Declaration Form of Increasing the Cost of Cable Shield and M/V DD101’s Acknowledgement Slip of the Ship Stuffing Holes for Electrical Equipment Costs submitted by the Plaintiff are copies, the Defendant does not confirm the authenticity, legality or relevancy of it, this evidence is not taken by the court. 8. No.08540615, No.08540616, No.08540617, No.08540618, No.12644951, No.12644952, No.08540623, No.14211311, No.08540622 and No.08540621 Jiangsu VAT special invoice issued by Weiye Company to the Defendant submitted by the Plaintiff and proof of bank transactions or accounting voucher to prove that the Defendant paid to Weiye Qidong Branch 17 times are copies, the Defendant has no objection to its authenticity and this evidence is taken by the court. 9. Though the project statement between the Defendant and An Taide is the original, it has no relevancy to this case and is not taken by the court. The facts has been examined by the court as follows: Weiye Company was established on February 27, 2006 and registered to set up Weiye Qidong Branch on December 1, 2011. The original name the Defendant was Qidong Daoda Heavy Industry Co., Ltd., and was set up on September 21, 2007. On November 12, 2011, because of the Defendant’s need of building Haigong DD101-12000m3 suction hopper dredger, Weiye Company signed No. JKB-SP-DD101-005 Monomer Engineering Contract with the Defendant, in which the main agreements are as follows: I. time limit for the project named electric installation engineering of Haigong DD101-12000m3 suction hopper dredger is from the start of the project to the date of ship delivery, the location of the project is the Defendant’s designated operations areas. II. Scope and Content of the project: 1. Laying and fastening of the whole ship cable trays, pass cabin parts and electric

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cable; installing, inspecting, debugging of electrical installations and other related works, and specific arrangements is arranged by Haigong Branch. 2. Other works arranged by Haigong Branch (including non-ship product construction projects). III. Engineering pricing and settlement (including 17% of tax): 1. total contract price of a ship is RMB1,305,000 yuan (90KM), including 10% of additional and modifications. The cost beyond the 10% will be settled after the project and examine and approve. The project fee of Weiye Company will be calculated by denso section of Haigong Branch by the actual completion of project and inspection situation according to related formalities. The Defendant has the right to adjust the project and settle account according to the adjusted project with Weiye Company. 2. Sporadic ship project arranged by the Defendant, working hours is subject to check and ratify of denso section of Haigong Branch, unit price follows company standards. IV. Payment of project fee: 1. way of payment: after inspection, pay 85% of project fee after settlement approval and pay 10% in the year-end settlement, and make the rest 5% as quality bond of the project and pay that 12 months after ship delivery. 2. Weiye Company should submit 17% VAT invoice when clearing each phase of the project fee and the Defendant should pay after receiving the invoices. V. Responsibilities of Weiye Company: 1. Weiye Company appoints CHEN Hongbing as project director to be responsible for site management and daily management and follow the Defendant Haigong Branch’s production management and unified arrangements; 2. Weiye Company should not subcontract the project in any way, or Weiye Company will take legal responsibility and the Defendant will have right not to settle accounts. The contract also agreed on duration of examination, the Defendant’s responsibility, safety, quality, security, sanctions and incentives, liability for breach of contract and so on. After signed the contract, Weiye Company fulfilled contractual obligations and settled account with the Defendant. The Defendant constantly pay most project fee of Monomer Engineering Contract to Weiye Company. But there was some modifications and additions in project, Weiye Company applied to increase the cost many times. On March 7, 2013, Weiye Qidong Branch submitted Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner to the Defendant, in which the increased costs were as follows: 1. segmented pre-modified (signed by HUANG Jun), category was inconformity of the owner’s drawing, working hours were 1844, price was RMB16 yuan per hour, totally RMB29,054 yuan excluding tax; 2. help GS to polish (signed by LIU Yunyu), category was tasking, working hours were 35, price was RMB16 yuan per hour, totally RMB560 yuan excluding tax; 3. the increased ship outfitting modified, category was inconformity with the shipowner’s drawing, working hours were 32,258, price was RMB16 yuan per hour, totally RMB516,128 yuan excluding tax; 4. the increased ship cables (23.47KM), category was outside the scope of the contract, price was RMB14.5 yuan per meter, totally RMB340,315 yuan, tax included; 5. modify of copper fitting, category was inconformity of specifications, working hours were 250, price was RMB16 yuan per hour, totally RMB4,000 yuan excluding tax; 6. the increased cables of the whole ship equipment (increased account of shipowner), category was increased by

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the shipowner, working hours were 475, price was RMB16 yuan per hour, totally RMB7,600 yuan excluding tax; 7. the increased cable protection cover (increased account of shipowner) category was request of the shipowner, working hours were 120, price was RMB16 yuan per hour, totally RMB1,920 yuan excluding tax; 8. hole stuffing of the whole ship equipment (increased account of shipowner), category was that the equipments delivered without stuffing, working hours were 112.5, price was RMB16 yuan per hour, totally RMB1,800 yuan excluding tax. The part including tax was RMB340,315 yuan of increased cables (23.47KM), the rest of RMB561,562 yuan was tax excluded. The Defendant’s staff GONG Wenwei calculated that summary sheet on April 10, and marked out “accounting RMB555,000 yuan excluding tax”. On August 27, 2013, the Defendant made Project Details of Outsourcing Team from May 2013 to September 2013, in which the contents were as follows: team is Weiye, the name of project is denso update, work number is DD101, settlement rate is 100%, amount is 23,473, unit price is 7.69, payment is RMB180,561.54 yuan excluding tax and RMB211,257 yuan including tax. On September 4, 2014, the Defendant submitted an Audit Report, stated: now make statement to audit results on adding and modifying application report of DD101 dredger submitted by Weiye Qidong Branch: 1. Weiye Qidong Branch mentioned to modify and increase account many times, through various verification, the information in chart supplied by Weiye Qidong Branch was a reference diagram submitted by Design House to decrease differences between No.1 ship, most of which was distributed before construction, and there was not any things about modification mentioned in the information, a few generated amendment fee but did not exceed 10% agreed in contract, so the modification should not be account; 2. application of increasing account on increasing cables submitted by Weiye Qidong Branch, as the amount agreed in contract were 90,000 meters cables, the amount were actually 113,473 meters confirmed by Design House, the exceed 23,473 meters were beyond the contract, after discussion and decisions of the leader, the exceed party calculated as RMB9 yuan per meter; 3. the accounting amount of those two application report above were RMB23,473 * 9 = 211,257 (tax included); 4. thus far, all cost of M/V DD101’s electric installation engineering had been accounted. The Plaintiff and the Defendant signed in this Audit Report. On the same day, the Defendant paid RMB100,000 yuan to Weiye Qidong Branch, and paid RMB114,424.23 yuan on September 25, 2014. The parties confirmed that RMB211,257 yuan of increasing account in Audit Report had been accounted. On November 25, 2015, Weiye Company issued Specification, claimed that: Weiye Qidong Branch was set up by Weiye Company on December 1, 2011 and was wrote off on February 10, 2011. During the establishment of this branch, CHEN Hongbing was subordinated to that branch to be in charge of the project. The project of M/V DD101’s electric parts are contracted by the Defendant and undertaken by CHEN Hongbing. All the external claims and debts would be undertaken by CHEN Hongbing, and the company would not claim compensation of those claims.

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After that, the Plaintiff brought an action to the court as the Defendant did not pay the project fee. On October 20, 2016, Weiye Company sent Notice of Assignment of Debt, stated: the project under Monomer Engineering Contract was completed and acceptance, after accounting of the parties, the Defendant owed RMB374,438.46 yuan of project fee excluding part of paid project fee. As the actual investor of this project was the Plaintiff and the Plaintiff was the leader of the project accepted by the parties, the final payment owed by the Defendant was actually belong to the Plaintiff. To simplify delivery procedures of payments, assigned the Defendant’s claims to the Plaintiff, and the Plaintiff could claim RMB374,438.46 yuan of compensation from the Defendant. Since Notice of Assignment of Debt has been receipted, there was no obligatory relationships between the Defendant and Weiye Company. The Defendant received Notice of Assignment of Debt on the next day and sent Response to the Notice of Assignment of Debt to Weiye Company on December 15, 2016. After verification, when the project was finished there was no deduction of Weiye Company since December 2013. The Defendant had calculated the increased accounting and the account showed that the Defendant owed Weiye Company RMB7,938.04 yuan of payment. Accordingly, there was no factual basis on Weiye Company assigning RMB374,438.46 yuan claim, and assignment of the exceed payment was not confirmed. The court holds that this case is disputes over marine engineering management contract about ship building. In accordance with opinions of the Plaintiff and the Defendant, the issues of this case are as follows: I. is the Plaintiff a proper subjects of litigation? II. Does the Plaintiff’s claim of increasing RMB555,000 yuan of project fee hold? I. Is the Plaintiff a proper subjects of litigation? The court holds, Monomer Engineering Contract was signed by Weiye Company and the Defendant, though the Plaintiff is the leader of the project on Weiye Company’s side agreed in Monomer Engineering Contract, the Plaintiff is not a party of the contract and does not have contractual rights and undertake contractual obligations. When the case was brought to the court, though the Plaintiff had Specification issued by Weiye Company, there was no evidence to prove that Weiye Company has sent Specification to the Defendant. In accordance with Article 80 of the Contract Law of the People’s Republic of China, Weiye Company’s declaration of intention in Specification to assign creditor’s rights under Monomer Engineering Contract to the Plaintiff has no effect to the Defendant, the Plaintiff has no right to claim this creditor’s rights from the Defendant. But Weiye Company sent Notice of Assignment of Debt to the Defendant since then, and definitely expressed that he assigned RMB374,438.46 yuan of creditor’s rights under Monomer Engineering Contract to the Plaintiff and the Plaintiff should claim the project fee directly from the Defendant within the scope above. The declaration of intention about assigning creditor’s rights in Notice of Assignment of Debt is specific and has been served to the Defendant, in accordance with Article 80 of the Contract Law of the People’s Republic of China, since the date that Notice of Assignment of Debt is served to the Defendant which is October 21, 2016, the Plaintiff has Weiye Company’s rights

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under Monomer Engineering Contract and has right to claim project fee from the Defendant. The Plaintiff bringing this case to the court is in accordance with Article 119 of the Civil Procedure Law of the People’s Republic of China. So the proposition raised by the Defendant that the Plaintiff is not a proper subjects of litigation has no basis in law, and is not taken by the court. The Defendant applied for adding Weiye Company to litigation as the third party. The court holds, as Weiye Company has assigned creditor’s rights involved to the Plaintiff and the notification has been served to the Defendant, Weiye Company has no independent claim to the subject of this case, also the result of this case has no interest in law with Weiye Company. Moreover, as the Plaintiff is the leader of the project and is clear about the facts of this case, there is no sense to add Weiye Company as the third party. So the court do not add Weiye Company as the third party. II. Does the Plaintiff’s claim of increasing RMB555,000 yuan of project fee hold? The Plaintiff claimed, as there were adding, modifying and increased account of shipowner, after accounting of the stuff GONG Wenwei, pay RMB555,000 yuan (tax excluded) of project fee beyond contract price. The Defendant did not approve the accounting result of GONG Wenwei, and thought he had accounted all the project with the representative of Weiye Company the Plaintiff of this case in September 2014 and paid the exceed payment beyond contract. The court holds, Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner submitted by the Plaintiff can prove that the Plaintiff brought out the application of increasing account to the Defendant and GONG Wenwei the staff of the Defendant responded and gave feedback to the part of application of increasing account. But since then, the Plaintiff on behalf of Weiye Qidong Branch accounted the project with the Defendant and signed the Audit Report, which was created after GONG Wenwei auditing Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner and the effectiveness was prior than accounting result of GONG Wenwei. The Plaintiff claimed, Audit Report only audited adding and modifying of cables and did not audit other parts. The court holds: firstly, application of increasing account in Audit Report is calculated as the shortfall between the actual construction volume 113,473 meters and 90,000 meters agreed in Monomer Engineering Contract, does not take 10% of additional modifications agreed in Monomer Engineering Contract into account, which corroborate Article 1 of Audit Report that a very small number of increasing account submitted by the Plaintiff is modification fee and does not exceed 10% of additional modifications agreed in Monomer Engineering Contract; secondly, combining with that Weiye Qidong Branch mentioned to increase accounting many times said in Audit Report, and the fact that GONG Wenwei audited Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner before, we can know that the application of adding, modifying and increased account of shipowner raised by Weiye Qidong Branch would not be less than items listed in Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner when signing Audit Report, so, Article 4 of the Audit Report said that payments of M/V DD101 electric installation engineering has

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been accounted means that all the project done by Weiye Company has been accounted, or there is no way for the Plaintiff to sign on the report under the condition that Audit Report clearly stated this accounting is the final accounting; thirdly, the name of the project undertaken by Weiye Company agreed in Monomer Engineering Contract is electric installation engineering, and Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner made by Weiye Qidong Branch is also named as “electric part”, according to the documents above, electric installation engineering in the Audit Report should include all the construction of Weiye Company. So, the Plaintiff’s claims are lack of factual basis and inconsistent with the logic to establish, the claim that the Plaintiff ask the Defendant to pay RMB374,438.46 yuan of project fee can not be sustained by the court. The Defendant confesses that there RMB7,938.04 yuan of payment that he has not pay, which is confirmed by the court. As Weiye Company has paid the project fee to the Plaintiff, the Defendant should pay RMB7,938.04 that he owed. All that said, some of the Plaintiff’s claims is legal and reasonable, and should be sustained by the court. In accordance with Article 107 and Article 251 Paragraph 1 of the Contract Law of the People’s Republic of China, and Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. shall pay RMB7,938.04 yuan of project fee to the Plaintiff CHEN Hongbing within 10 days after the day that this judgment comes into force. 2. Reject other claims of the Plaintiff CHEN Hongbing. If pecuniary obligations are not fulfilled in the specified period according to this judgment, the Defendant should give a double payment of debt interest during the delayed period of performance according to Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB6,917 yuan, RMB6,770 yuan should be paid by the Plaintiff CHEN Hongbing, and RMB147 yuan should be paid by the Defendant Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. In case of dissatisfaction with this Judgment, the parties may within 15 days upon the service of this judgment submit a statement of appeal to the court, together with copies in accordance with the number of the opposite parties, so as to lodge appeal with Hubei High People’s Court. Presiding Judge: WU Hao Judge: DENG Yi Acting Judge: FENG Xingyuan March 20, 2017 Clerk: QIU Xuemei

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Hubei High People’s Court Civil Judgment CHEN Hongbing v. Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (2017) E Min Zhong No.2790 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 101. Cause of Action 207. Dispute over shipbuilding contract. Headnote Affirming first instance Court’s decision holding Plaintiff electrician partially successful in claim for payment for work done during ship construction; defendant had paid plaintiff’s employer, which had assigned creditor’s rights to the plaintiff. Summary The Plaintiff sued for non-payment of RMB 374,438.46 in project fees, allegedly incurred for electrical work done as part of a newbuild construction. The Defendant asserted that it had already settled its account with Plaintiff’s employer, and that as Plaintiff was not a party to the contract, he had no right to bring suit. The court held that, as Plaintiff’s employer had assigned creditor’s rights to Plaintiff, Plaintiff was a proper party to this action. The court further held that Plaintiff could only establish part of his financial claims against the Defendant, and directed the Defendant to pay RMB 7,938.04 in project fees to Plaintiff. Plaintiff appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

Judgment The Appellant (the Plaintiff of first instance): CHEN Hongbing, male, born on November 21, 1979, Han, living in Rugao City, Jiangsu. Agent ad litem: SHA Tiexiang, legal server of Wu Yao Legal Services of Rugao. The Respondent (the Defendant of first instance): Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. Domicile: Qidong, Jiangsu. Organization code: 66760136-5. Legal representative: DAI Wenkai, chairman.

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Agent ad litem: ZHANG Mi, lawyer of Zhong Lun Law Firm Shanghai Office. Agent ad litem: LIANG Jian, lawyer of Zhong Lun Law Firm Shanghai Office. With respect to the case arising from dispute over shipbuilding contract between the Appellant CHEN Hongbing and the Respondent Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. (hereinafter referred to as “Zhenhua Company”), the Appellant did not satisfy with (2016) E 72 Min Chu No.84 Civil Judgment made by Wuhan Maritime Court, and appealed to the court. The court formed a collegiate panel after filing of the case on September 5, 2017, and held a hearing on October 25, 2017. CHEN Hongbing and his agent ad litem SHA Tiexiang, Zhenhua Company and the agent ad litem LIANG Jian attended the hearing. Now the case has been concluded. CHEN Hongbing appealed to request: 1. revoke judgement of first instance, change the original judgment or remand; 2. litigation fee of the first instance and the second instance should be undertaken by Zhenhua Company. Facts and reasons: there is Zhenhua Company’s signature on evidence 2 provided by CHEN Hongbing, evidence 3 and evidence 6 was made by Zhenhua Company, evidence 4 and evidence 7 was original, payment recorded on evidence 5 was confirmed by Zhenhua Company, all the evidence above was not taken by judgement of first instance, which caused the fact was not clear. Zhenhua Company argued that: 1. CHEN Hongbing was not a proper subjects of litigation when sued; 2. Zhenhua Company had settled most account with Nantong Weiye Shipbuilding Co., Ltd. (hereinafter referred to as “Weiye Company”) person other than involved in the case, only RMB7,938.04 yuan of the payment had not been paid, the claims of CHEN Hongbing had no basis. CHEN Hongbing sued to the court of first instance to request: Zhenhua Company should pay RMB374,438.46 yuan of project fee and litigation fee. The court of first instance confirmed the facts as: Weiye Company was established on February 27, 2006 and registered to set up Weiye Qidong Branch on December 1, 2011. The original name of Zhenhua Company was Qidong Daoda Heavy Industry Co., Ltd, and was set up on September 21, 2007. On November 12, 2011, Weiye Company signed Monomer Engineering Contract with Zhenhua Company, in which the main agreements were as follows: 1. the name of the project is electric installation engineering of Haigong DD101-12000m3 suction hopper dredger. Time limit for the project is from the start of the project to the date of ship delivery. The location of the project is Zhenhua Company’s designated operations areas. 2. Scope and Content of the project: a. laying and fastening of the whole ship cable trays, pass cabin parts and electric cable; installing, inspecting, debugging of electrical installations and other related works, and specific arrangements is arranged by Haigong Branch. b. Other works arranged by Haigong Branch (including non-ship product construction projects). 3. Engineering pricing and settlement (including 17% of tax): a. Total contract price of a ship is RMB1,305,000 yuan (90KM), including 10% of additional and modifications. The cost beyond the 10% will be settled after the project and examine and approve. The project fee of Weiye Company will be calculated by denso section of

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Haigong Branch by the actual completion of project and inspection situation according to related formalities. Haigong Branch has the right to adjust the project and settle account according to the adjusted project with Weiye Company. b. Sporadic ship project arranged by Haigong Branch, working hours is subject to check and ratify of denso section of Haigong Branch, unit price follows company standards. 4. Payment of project fee: a. way of payment: after inspection, pay 85% of project fee after settlement approval and pay 10% in the year-end settlement, and make the rest 5% as quality bond of the project and pay that 12 months after ship delivery. b. Weiye Company should submit 17% VAT invoice when clearing each phase of the project fee and Zhenhua Company should pay after receiving the invoices. 5. Weiye Company should not subcontract the project in any way, or Weiye Company will take legal responsibility and Zhenhua Company will have right not to settle accounts. After signed the contract, Weiye company fulfilled contractual obligations and settled account with Zhenhua Company. Zhenhua Company constantly pay most project fee of Monomer Engineering Contract to Weiye Company. But there was some modifications and additions in project, Weiye Company applied to increase the cost many times. On March 7, 2013, Weiye Qidong Branch submitted Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner to Zhenhua Company, in which the increased costs were as follows: 1. segmented pre-modified (signed by HUANG Jun), category was inconformity of the owner`s drawing, working hours were 1844, price was RMB16 yuan per hour, totally RMB29,054 yuan excluding tax; 2. help GS to polish (signed by LIU Yunyu), category was tasking, working hours were 35, price was RMB16 yuan per hour, totally RMB560 yuan excluding tax; 3. the increased ship outfitting modified, category was inconformity with the shipowner’s drawing, working hours were 32,258, price was RMB16 yuan per hour, totally RMB516,128 yuan excluding tax; 4. the increased ship cables (23.47KM), category was outside the scope of the contract, price was RMB14.5 yuan per meter, totally RMB340,315 yuan, tax included; 5. modify of copper fitting, category was inconformity of specifications, working hours were 250, price was RMB16 yuan per hour, totally RMB4,000 yuan excluding tax; 6. the increased cables of the whole ship equipment (increased account of shipowner), category was increased by the shipowner, working hours were 475, price was RMB16 yuan per hour, totally RMB7,600 yuan excluding tax; 7. the increased cable protection cover (increased account of shipowner) category was request of the shipowner, working hours were 120, price was RMB16 yuan per hour, totally RMB1,920 yuan excluding tax; 8. hole stuffing of the whole ship equipment (increased account of shipowner), category was that the equipment delivered without stuffing, working hours were 112.5, price was RMB16 yuan per hour, totally RMB1,800 yuan excluding tax. The part including tax was RMB340,315 yuan of increased cables (23.47KM), the rest of RMB561,562 yuan was tax excluded. Zhenhua Company’s staff GONG Wenwei calculated that summary sheet on April 10, and marked out “accounting RMB555,000 yuan excluding tax”. On August 27, 2013, Zhenhua Company made Project Details of Outsourcing Team from May 2013 to September 2013, in which the contents were

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as follows: team is Weiye, the name of project is denso update, work number is DD101, settlement rate is 100%, amount is 23,473, unit price is 7.69, payment is RMB180,561.54 yuan excluding tax and RMB211,257 yuan including tax. On September 4, 2014, Zhenhua Company submitted an Audit Report, stated: now make statement to audit results on adding and modifying application report of DD101 dredger submitted by Weiye Qidong Branch: 1. Weiye Qidong Branch mentioned to modify and increase account many times, through various verification, the information in chart supplied by Weiye Qidong Branch was a reference diagram submitted by Design House to decrease differences between No.1 ship, most of which was distributed before construction, and there was not any things about modification mentioned in the information, a few generated amendment fee but did not exceed 10% agreed in contract, so the modification should not be account; 2. application of increasing account on increasing cables submitted by Weiye Qidong Branch, as the amount agreed in contract were 90,000 meters cables, the amount were actually 113,473 meters confirmed by Design House, the exceed 23,473 meters were beyond the contract, after discussion and decisions of the leader, the exceed party calculated as RMB9 yuan per meter; 3. the accounting amount of those two application report above were RMB23,473 yuan * 9 = 211,257 (tax included); 4. thus far, all cost of M/V DD101’s electric installation engineering had been accounted. CHEN Hongbing and Zhenhua Company signed in this Audit Report. On the same day, Zhenhua Company paid RMB100,000 yuan to Weiye Qidong Branch, and paid RMB114,424.23 yuan on September 25, 2014. The parties confirmed that RMB211,257 yuan of increasing account in Audit Report had been accounted. On November 25, 2015, Weiye Company issued Specification, claimed that: Weiye Qidong Branch was set up by Weiye Company on December 1, 2011 and was wrote off on February 10, 2011. During the establishment of this branch, CHEN Hongbing was subordinated to that branch to be in charge of the project. The project of M/V DD101’s electric parts are contracted by Zhenhua Company and undertaken by CHEN Hongbing. All the external claims and debts would be undertaken by CHEN Hongbing, and the company would not claim compensation of those claims. After that, CHEN Hongbing brought an action to the court as Zhenhua Company did not pay the project fee. On 20 October 2016, Weiye Company sent Notice of Assignment of Debt, stated: the project under Monomer Engineering Contract was completed and acceptance, after accounting of the parties, Zhenhua Company owed RMB374,438.46 yuan of project fee excluding part of paid project fee. As the actual investor of this project was CHEN Hongbing and CHEN Hongbing was the leader of the project accepted by the parties, the final payment owed by Zhenhua Company was actually belong to CHEN Hongbing. To simplify delivery procedures of payments, assigned Zhenhua Company’s claims to CHEN Hongbing, and CHEN Hongbing could claim RMB374,438.46 yuan of compensation from Zhenhua Company. Since Notice of Assignment of Debt has been receipted, there was no obligatory relationships between Zhenhua Company and Weiye Company. Zhenhua Company received Notice of Assignment of Debt on the next day and sent Response to the Notice of Assignment of Debt to Weiye

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Company on December 15, 2016. After verification, when the project was finished there was no deduction of Weiye Company since December 2013. Zhenhua Company had calculated the increased accounting and the account showed that Zhenhua Company owed Weiye Company RMB7,938.04 yuan of payment. Accordingly, there was no factual basis on Weiye Company assigning RMB374,438.46 yuan claim, and assignment of the exceed payment was not confirmed. The court of first instance held that this case was disputes over marine engineering management contract about ship building. In accordance with opinions of CHEN Hongbing and Zhenhua Company, the issues are as follows: I. was CHEN Hongbing a proper subjects of litigation? II. Did CHEN Hongbing’s claim of increasing RMB555,000 yuan of project fee hold? Comments were as follows: I. Is CHEN Hongbing a proper subjects of litigation? The court of first instance held, Monomer Engineering Contract was signed by Weiye Company and Zhenhua Company, though CHEN Hongbing is the leader of the project on Weiye Company’s side agreed in Monomer Engineering Contract, CHEN Hongbing is not a party of the contract and does not have contractual rights and undertake contractual obligations. When the case was brought to the court, though CHEN Hongbing had Specification issued by Weiye Company, there was no evidence to prove that Weiye Company has sent Specification to Zhenhua Company. In accordance with Article 80 of the Contract Law of the People’s Republic of China, Weiye Company’s declaration of intention in Specification to assign creditor’s rights under Monomer Engineering Contract to CHEN Hongbing has no effect to Zhenhua Company, CHEN Hongbing has no right to claim this creditor’s rights from Zhenhua Company. But Weiye Company sent Notice of Assignment of Debt to Zhenhua Company since then, and definitely expressed that he assigned RMB374,438.46 yuan of creditor’s rights under Monomer Engineering Contract to CHEN Hongbing and CHEN Hongbing should claim the project fee directly from Zhenhua Company within the scope above. The declaration of intention about assigning creditor’s rights in Notice of Assignment of Debt is specific and has been served to Zhenhua Company, in accordance with Article 80 of the Contract Law of the People’s Republic of China, since the date that Notice of Assignment of Debt is served to Zhenhua Company which is October 21, 2016, CHEN Hongbing has Weiye Company’s rights under Monomer Engineering Contract and has right to claim project fee from Zhenhua Company. CHEN Hongbing bringing this case to the court is in accordance with Article 119 of the Civil Procedure Law of the People’s Republic of China. So the proposition raised by Zhenhua Company that CHEN Hongbing is not a proper subjects of litigation has no basis in law, and is not taken by the court of first instance. Zhenhua Company applied for adding Weiye Company to litigation as the third party. The court holds, as Weiye Company has assigned creditor’s rights involved to CHEN Hongbing and the notification has been served to Zhenhua Company, Weiye Company has no independent claim to the subject of this case, also the result of this case has no interest in law with Weiye Company. Moreover, as CHEN Hongbing is the leader of the project and is clear

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about the facts of this case, there is no sense to add Weiye Company as the third party. So the court of first instance did not add Weiye Company as the third party. II. Did CHEN Hongbing’s claim of increasing RMB555,000 yuan of project fee hold? CHEN Hongbing claimed, as there were adding, modifying and increased account of shipowner, after accounting of the stuff GONG Wenwei, pay RMB 555000 (tax excluded) of project fee beyond contract price. Zhenhua Company did not approve the accounting result of GONG Wenwei, and thought he had accounted all the project with the representative of Weiye Company CHEN Hongbing of this case in September 2014 and paid the exceed payment beyond contract. The court of first instance held, Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of adding, Modifying and Increased Account of Shipowner submitted by CHEN Hongbing can prove that CHEN Hongbing brought out the application of increasing account to Zhenhua Company and GONG Wenwei the staff of Zhenhua Company responded and gave feedback to the part of application of increasing account. But since then, CHEN Hongbing on behalf of Weiye Qidong Branch accounted the project with Zhenhua Company and signed Audit Report, which was created after GONG Wenwei auditing Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner and the effectiveness was prior than accounting result of GONG Wenwei. CHEN Hongbing claimed, Audit Report only audited adding and modifying of cables and did not audit other parts. The court of first instance held: firstly, application of increasing account in Audit Report is calculated as the shortfall between the actual construction volume 113,473 meters and 90,000 meters agreed in Monomer Engineering Contract, does not take 10% of additional modifications agreed in Monomer Engineering Contract into account, which corroborate Article 1 of Audit Report that a very small number of increasing account submitted by CHEN Hongbing is modification fee and does not exceed 10% of additional modifications agreed in Monomer Engineering Contract; secondly, combining with that Weiye Qidong Branch mentioned to increase accounting many times said in Audit Report, and the fact that GONG Wenwei audited Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner before, we can know that the application of adding, modifying and increased account of shipowner raised by Weiye Qidong Branch would not be less than items listed in Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner when signing Audit Report, so, Article 4 of Audit Report said that payments of M/V DD101 electric installation engineering has been accounted means that all the project done by Weiye Company has been accounted, or there is no way for CHEN Hongbing to sign on the report under the condition that Audit Report clearly stated this accounting is the final accounting; thirdly, the name of the project undertaken by Weiye Company agreed in Monomer Engineering Contract is electric installation engineering, and Nantong Weiye M/V DD101’s Electric Part’s Summary Sheet of Adding, Modifying and Increased Account of Shipowner made by Weiye Qidong Branch is also named as “electric part”, according to the documents above, electric installation engineering in Audit Report should include all the construction of Weiye Company. So, CHEN

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Hongbing’s claims were lack of factual basis and inconsistent with the logic to establish, the claim that CHEN Hongbing asked Zhenhua Company to pay RMB374,438.46 yuan of project fee cannot be sustained by the court of first instance. Zhenhua Company confesses that there RMB7,938.04 yuan of payment that he has not pay, which is confirmed by the court. As Weiye Company has paid the project fee to CHEN Hongbing, Zhenhua Company should pay RMB7,938.04 yuan that he owed. Summing up the above, some of the CHEN Hongbing’s claims is legal and reasonable, and should be sustained by the court of first instance. In accordance with Article 107 and Article 251 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: I. Zhenhua Company Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. should pay RMB7,938.04 yuan of project fee to CHEN Hongbing CHEN Hongbing within 10 days after the day of this judgment come into force; II. Dismiss other claims of CHEN Hongbing. If pecuniary obligations are not fulfilled in the specified period according to this judgment, Zhenhua Company should give a double payment of debt interest during the performance according to Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB6,917 yuan, RMB6,770 yuan should be paid by CHEN Hongbing CHEN Hongbing, and RMB147 yuan should be paid by Zhenhua Company Shanghai Zhenhua Heavy Industries Qidong Marine Engineering Co., Ltd. During the second instance, the parties does not submit new evidence. After hearing of the second instance, the court confirms that the facts found out by the first instance are real. The court holds, issue of this case is: the claims of CHEN Hongbing that evidence is wrongly admissible in the first instance and the increasing payment of the project is RMB555,000 yuan can be held or not. Comments are as follows: About admissible evidence in the first instance. Through ascertaining, evidence 2, 3, 4, 6 and 7 submitted by CHEN Hongbing are all documentary evidence, among which evidence 3, 6, and 7 are copies, and do not correspond with “documentary evidence must be the original” in Article 70 of the Civil Procedure Law of the People’s Republic of China; Evidence 2 and 4 was English documents and untranslated, which do not correspond with “if a document in a foreign language is submitted as evidence, a Chinese translation must be appended” in Article 70 of the Civil Procedure Law of the People’s Republic of China and the contents of those two evidence are in complete that can not confirm related facts from them. Summing up the above, the court holds, affirmation of the first instance towards those evidence correspond with provision and has no improper. About increasing payment of the project. CHEN Hongbing thought, evidence 5 submitted in the first instance could prove the increasing payment of the project was RMB555,000 yuan. the court notices that evidence 5 was formed on 7 March 2013, though there was signature of Zhenhua Company’s stuff GONG Wenwei, the report made by CHEN Hongbing should be examined by Zhenhua Company according to

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his statement in the second instance and CHEN Hongbing did not receive related materials of Zhenhua Company’s confirmation, so the facts proved by that evidence was doubtful; And according to the contents of the September 4, 2014 Audit Report, the report was formed later than evidence 5, and the report was the final confirmation of increasing amount of adding and modifying, there were signatures of CHEN Hongbing and other stuffs of Zhenhua Company, which showed the result of accounting was approved by CHEN Hongbing and Zhenhua Company, the probative force of the report was higher than that of evidence 5, affirmation of the first instance towards the Audit Report and regarding it as evidence of increasing project has no improper. Though CHEN Hongbing claimed that he had no right to represent Weiye Company to sign on the report, the claim was inconsistent with “the actual investor is CHEN Hongbing and this actual investor is the leader of the project appointed by the parties of the contract” in Notice of Assignment of Debt submitted by him as evidence in the first instance, so the claim could not be held. According to Article 4 of Audit Report, all the payments of the project had been accounted. Zhenhua Company admitted to owe Weiye Company RMB7,938.04 yuan, and related creditor’s rights were assigned to CHEN Hongbing and informed Zhenhua Company, so Zhenhua Company should pay that unpaid amount to CHEN Hongbing. In conclusion, the claims of CHEN Hongbing above cannot be supported, and should be dismissed. The judgement of first instance is clear in finding of facts and the law applied is right, which should be sustained. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB6,917 yuan, should be undertaken by the Appellant CHEN Hongbing. The judgement is final. Presiding Judge: LU Yang Judge: LIN Xianghui Judge: YU Jun November 29, 2017 Clerk: CHEN Jianxiao

Guangzhou Maritime Court Civil Judgment CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2016) Yue 72 Min Chu No.93 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 131. Cause of Action 200. Dispute over liability for personal injury at sea. Headnote Awarding the dependents of a seafarer damages for his death by drowning, holding the drowned seafarer’s employer 80% responsible, the seafarer himself 20% responsible, and three other defendants (including the owner and charterer of the ship) not liable. Summary HUANG Hefa chartered a fishing vessel to CAI Wenzhun. CAI Wenzhun controlled, used and managed the fishing boat for oyster fishing. He hired LIN Ronglin, CHEN Mou 5, CHEN Yongshen and others for fishing and cleaning vessel. LIN Ronglin did not drive the vessel because of his physical discomfort. CHEN Mou 5 then helped stopping the vessel based on the wave height and started swimming back to the shore. CHEN Mou 5 died in the middle of the sea. On behalf of CHEN Mou 5, 7 Plaintiffs sued the Defendant company, CAI Wenzhun, CHEN Jinrong and HUANG Hefa for death compensation. The court found CAI Wenzhun, as the employer, should be responsible for employee CHEN Mou 5’s death because CAI Wenzhun lacked the employer’s duty of care. But CHEN Mou 5 should take 20% responsibility because he assumed the risk of swimming on the sea.

Judgment The Plaintiff: CHEN Minsheng, male, born on October 21, 1956, Han, peasant, living in Lufeng City, Guangdong, the father of CHEN Mou 5. The Plaintiff: HE Xiao, female, born on September 18, 1958, Han, peasant, living in Lufeng City, Guangdong, the mother of CHEN Mou 5.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_7

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The Plaintiff: XIE Mou, female, born on May 5, 1983, Han, peasant, living in Lufeng City, Guangdong, the wife of CHEN Mou 5. The Plaintiff: CHEN Mou 1, male, born on July 1, 2007, Han, peasant, living in Lufeng City, Guangdong, the son of CHEN Mou 5. The Plaintiff: CHEN Mou 4, male, born on December 19, 2008, Han, peasant, living in Lufeng City, Guangdong, the son of CHEN Mou 5. The Plaintiff: CHEN Mou 2, female, born on July 25, 2004, Han, peasant, living in Lufeng City, Guangdong, the daughter of CHEN Mou 5. The Plaintiff: CHEN Mou 3, female, born on October 24, 2005, Han, peasant, living in Lufeng City, Guangdong, the daughter of CHEN Mou 5. Legal agent: XIE Mou, female, born on May 5, 1983, Han, peasant, living in Lufeng City, Guangdong, the mother of CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, CHEN Mou 3. Agent ad litem of the seven Plaintiffs: LIU Haiyun, lawyer of Guangdong Renhao Law Firm. Agent ad litem of the seven Plaintiffs: XIE Xinzhi, lawyer of Guangdong Renhao Law Firm. The Defendant: Shenzhen Daxin Industrial Co., Ltd. Domicile: No.223, West Taoyuan Road, Nanshan District, Shenzhen, Guangdong. Legal representative: YAO Limei, chairman of the company. Agent ad litem: LIN Xiaoti, lawyer of Guangdong Jindi Law Firm. Agent ad litem: LI Yanfen, lawyer of Guangdong Jindi Law Firm. The Defendant: CAI Wenzhun, male, born on February 16, 1979, Han, living in Lufeng City, Guangdong. Agent ad litem: LI Yaohui, lawyer of Beijing C&I Partners Shenzhen Branch. Agent ad litem: LIU Huajun, lawyer of Beijing C&I Partners Shenzhen Branch. The Defendant: CHEN Jinrong, male, born on March 13, 1986, Han, living in Nanshan District, Shenzhen, Guangdong. Agent ad litem: XIE Shuzhan, lawyer of Guangdong Senchuan Law Firm. The Defendant: HUANG Hefa, male, born on January 2, 1970, Han, living in Raoping County, Shantou, Guangdong. With respect to the case arising from the dispute over personal injury at sea, the seven Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2 and CHEN Mou 3 filed an action against the Defendants Shenzhen Daxin Industrial Co., Ltd. (hereinafter referred to as “Daxin Company”), CAI

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Wenzhun, and CHEN Jinrong, before Shenzhen Nanshan District People’s Court. That court transferred the case to the court. The court entertained the case and heard it by using the ordinary procedure. The seven Plaintiffs applied for HUANG Hefa as the additional Defendant on March 31, 2016. The court approved it. The court held hearings in public on March 31 and May 27, 2016. Legal agent XIE Mou of the 4 Plaintiffs CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, CHEN Mou 3, XIE Xinzhi, and agent ad litem of the seven Plaintiffs appeared in the first hearing. HUANG Hefa, the Defendant appeared in the second hearing. LIU Haiyun, agent ad litem of the seven Plaintiffs, LIN Xiaoti and LI Yanfen, agents ad litem of Daxin Company, LI Yaohui, agent ad litem of the Defendant CAI Wenzhun, and XIE Shuzhan, agent ad litem of the Defendant CHEN Jinrong, appeared in court and participated in two hearings. Now the case has been concluded. The seven Plaintiffs filed a lawsuit with the court: the four Defendants jointly compensated the seven Plaintiffs for the death of Chen compensation of 893,062 yuan (the per capita disposable income of urban residents in Shenzhen in 2014 was 40,948 multiplied by 20 years) and the funeral expenses of 36,325 (the average social wage in Shenzhen in 2014 was 6,054.25 multiplied by 6 months), the living expenses for a person receiving maintenance and support was 413,556.37 (according to the annual per capita consumption expenditure standard of urban residents in Shenzhen in 2014), and the mental damage solatium was 100,000. The entire total amount was 144,294.37, according to this 80% of the total number of requests which was 1,154,354.7, and the four Defendants should be responsible of litigation in this case. On December 1, 2016, the seven Plaintiffs requested that the relevant compensation standards should be applied to the calculation standard for personal damage compensation in Guangdong Province in 2016. According to this, the request for the change of the lawsuit was for the four Defendants to jointly compensate the seven Plaintiffs for 1,289,818, of which the death compensation was 892,666 and the funeral expenses 58,714, the living expenses of the Dependents was 560,892.9, the mental damage solatium was 100,000, and the total loss was 1,612,272.9. The compensation calculated 80% of the total compensation of the four Defendants was 1,289,818. Facts and reasons: the victim CHEN Mou 5 was employed by CHEN Jinrong and CAI Wenzhun on March 24, 2015. HUANG Hefa was the actual user of the fishing boat. The Daxin Company applied for the boatman card for CHEN Mou 5; he worked on the boat of M.V. “Yuenan Mountain Fishing 22,107.” HUANG Hefa is the actual user of the fishing boat. On June 18, 2015, Chen died in the process of working as the owner and lessor of the fishing boat. HUANG Hefa was the charterer and actual user of the fishing boat; CAI Wenzhun was the employer of CHEN Mou 5. The actual user of the fishing boat shall take responsibility for the death of CHEN Mou 5, and Daxin Company bear the corresponding legal responsibility as this company was the supervisor for applying the boatman card for CHEN Mou 5. Daxin Company argued that: 1. Daxin Company was not the eligible Defendant of this case. Daxin Company does not have supervision of the fishing vessel involved in the case, or an employment relationship with Chen. The seven Plaintiffs have no right to require Daxin Company to bear responsibility. 2. The amount of the seven

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Plaintiffs indictment is too high. The amount should be based on the standard calculation of rural residents. The living expenses for a person receiving maintenance and support is without factual and legal basis. 3. CHEN Mou 5 did not obtain the boatman card in accordance with the law and went to the sea without authorization, and there was no fault and no legal basis for the damage of mental distress. CHEN Jinrong argued that CHEN Mou 5 and CHEN Jinrong did not have an employment relationship. CHEN Jinrong did not jointly run the fishing boat with other Defendants. CHEN Mou 5 was killed by drowning, and the death result did not have a causal relationship with CHEN Jinrong. The fishing boat was qualified and CHEN Jinrong was not at fault. The compensation standard for CHEN Mou 5 should be calculated according to rural standards. HUANG Hefa argued that the fishing vessel involved was leased to CHEN Jinrong, but CAI Wenzhun took the fishing boat without HUANG Hefa’s consent. HUANG Hefa was unaware of the use of the fishing boat by CAI Wenzhun. He was not at fault for the death of CHEN Mou 5 and should not bear legal responsibility. CAI Wenzhun confirmed that he had not been agreed to use the fishing boat by HUANG Hefa and temporarily hired CHEN Mou 5. However, it is argued that the death of CHEN Mou 5 was caused by improper operation and failure to fulfill his safety obligations. He should bear the main responsibility for the accident. The Plaintiff’s compensation standard was wrong. Seven Plaintiffs, Daxin Company, CHEN Jinrong, and CAI Wenzhun submitted evidence in accordance with the lawsuit, and HUANG Hefa did not submit evidence. After the application of the seven Plaintiffs and the permission of the court, Chen Qingzhen, Wu Maowen, CHEN Yongshen, and CHEN Hanqiong appeared in court to testify. After the application of the seven Plaintiffs, the court obtained relevant evidence from the Daxin Frontier Workstation of Guangdong Provincial Public Security Frontier Defense Corps (hereinafter referred to as “Daxin Frontier Workstation”), the Nanshan Police Station of Shenzhen Public Security Bureau, and the Nanshan Brigade of Guangdong Provincial Fishery Administration Corps. The parties involved in the organization conducted evidence exchange and cross-examination. The authenticity of evidence can be admitted by the parties and related to the dispute in the case, and the subject, source and form of the collection are in compliance with the law. The court will confirm admissibility of the evidence. The evidence and facts that are disputed by the parties are as follows: The fact was that the operation right of M.V. “Yuenan Mountain Fishing 22,107” and CHEN Mou 5 were employed by which one. The seven Plaintiffs claimed that CHEN Jinrong was the owner and lessor of the vessel of M.V. “Yuenan Mountain Fishing 22,107”, which chartered the fishing vessel to HUANG Hefa. HUANG Hefa was the charterer and actual user of the fishing vessel. CAI Wenzhun was also the actual user of the fishing boat. CHEN Mou 5 was the laborer who was directly employed by CAI Wenzhun and had an employment relationship with him; Daxin Company is the supervisor of the fishing boat, and Chen’s

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boatman card was employed by Daxin Company. The evidence submitted by the seven Plaintiffs was CHEN Mou 5’s Application for the Registration Form of the Boatman Card and the information collection form for fishing vessels in Guangdong Province. Daxin Company’s claim was that CHEN Jinrong took the registration form of CHEN Mou 5’s Application for Registration Form of the Boatman Card, which was approved by the Daxin Frontier Workstation, to find the seal of Daxin Company, because CHEN Jinrong was a villager and so Daxin Company stamped. Daxin Company was neither an auditing and approving unit for the certificate of going out to sea, and Chen had never actually obtained a certificate of seafarers. Daxin Company submitted a copy of the registration form with the official seal of Daxin Frontier Workstation but had not been stamped with the official seal of Daxin Company. CHEN Jinrong said that he had no employment relationship with Chen and did not run fishing boats with other Defendants. CHEN Jinrong submitted his lease agreement signed with HUANG Hefa on November 10, 2014, and the Guangdong Province Fishery Corps Baoan Brigade made the Guangdong Prison Fishery Penalty (2015) No.0010 administrative penalty decision to prove that CHEN Jinrong had rented the fishing boat actually operated by HUANG Hefa. HUANG Hefa claimed that the fishing boat in this case was rented to CHEN Jinrong, and CAI Wenzhun used the fishing boat without his agreement. CAI Wenzhun confirmed that he had not agreed to use the fishing boat by HUANG Hefa, and confirmed the fact that he hired Chen. In combination with the above evidence and the witness testimony of CHEN Yongshen and CHEN Hanqiong confirmed by all parties, the court confirmed that CHEN Jinrong was the owner and lessor of the vessel of M.V. “Yuenan Mountain Fishing 22107”, which leased the fishing boat to HUANG Hefa. After M.V. “Yuenan Mountain Fishing 22107” was used by CAI Wenzhun, CHEN Mou 5 was hired by CAI Wenzhun to work on the ship from the end of February to the beginning of April and the end of May to the day of the accident. Only in 2015, CAI Wenzhun used the fishing boat for several months, and in March applied boatman card for CHEN Mou 5 through the Daxin Frontier Workstation and Daxin Company. HUANG Hefa advocated that CAI Wenzhun used the ship without his consent, which was inconsistent with common sense, and he did not submit evidence to prove this so the facts claimed by HUANG Hefa were not confirmed by the court. Plaintiffs claimed that HUANG Hefa handed the ship to CAI Wenzhun for actual use which was confirmed by the court. As the grassroots organization of CHEN Jinrong’s location, Daxin Company stamped the company's seal after the seal of the “Application for the Registration Form for the Seafarers’ Pass,” and the seven Plaintiffs’ claim that Daxin Company should be the supervisor of the fishing vessel has insufficient factual basis, and this fact was not confirmed by the court for the facts claimed by the seven Plaintiffs. Regarding whether CHEN Mou 5 was a rural resident and usually lived in Shenzhen city or not, in order to prove that CHEN Mou 5 belongs to the peasant who was often living in Shenzhen, the seven Plaintiffs submitted Chen’s acceptance receipt of the residence permit, and the witness testimony Wu Maowen and Chen

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Qingzhen on March 30, 2015 to the Shekou Police Station. The four Defendants all believed that the witness testimony of Wu Maowen and Chen Qingzhen was inconsistent and could not prove the facts to be proved. The receipt of the Shenzhen residence permit confirmed that CHEN Mou 5 did not live in Shenzhen for more than one year. CAI Wenzhun submitted the inquiry record of Shenzhen City Residence Permit Information Management System, which proves that there was only one record under the name of Chen, that is, the temporary residence permit of Shenzhen City was handled on March 30, 2015, and he was not a permanent resident in Shenzhen. The court holds that as a farmer, CHEN Mou 5 needed to live in a city for more than one year and had a regular income in the town and then can be recognized as a rural resident who lives in the town. The evidence submitted by the seven Plaintiffs cannot prove that CHEN Mou 5 was living in Shenzhen City  for more than one year and had a regular income. Therefore, the court holds that CHEN Mou 5 was not a rural resident who lived in Shenzhen. The facts about the guardians of CHEN Minsheng and HE Xiao. In order to prove that CHEN Minsheng and HE Xiao’s guardian were only CHEN Mou 5 and his brother CHEN Hangui, the seven Plaintiffs provided marriage certificate, household registration certificate and household registration book of CHEN Mou 5, and the first successor certificate issued by Xinzhou Villagers Committee of Hudong Town, Lufeng City, Guangdong Province (hereinafter referred to as “Xinzhou Village Committee”) and other proof and the certificate issued by Xinzhou Village Committee and issued by the Lufeng Municipal Public Security Bureau Hudong Police Station with the official seal of the disability certificate of younger brother CHEN Hancai and digital radiology diagnosis report of CHEN Laizhuang. The four Defendants did not raise objections to CHEN Mou 5’s marriage certificate, household registration certificate, household registration, and CHEN Hancai’s disability certificate but the certificate issued by Xinzhou Village Committee and CHEN Laizhuang’s digital radiological diagnosis report were not confirmed. The court accepted the evidence that the four Defendants had no objection and confirmed the fact that CHEN Hancai had a disability level one and no ability of labor. Regarding the evidence that was objected by the four Defendants, the court holds that CHEN Minsheng and HE Xiao were nearly 60 years old when CHEN Mou 5 died. Xinzhou Village Committee as the village collective organization that seven Plaintiffs and victims CHEN Mou 5 reside is familiar to the family situation of CHEN Mou 5, and the proof of CHEN Minsheng and HE Xiaonian’s weak and sick disease has preliminary proof. In the case, the four Defendants failed to submit the evidence of rebuttal. CHEN Minsheng and HE Xiao were ill and weak which was advocated by the seven Plaintiffs and was confirmed by the court. The reports that the household registration of CHEN Chengzhi, CHEN XX, and CHEN Yinxi were migrated and the so-called succession certificate and CHEN Laizhuang’s digital radio diagnosis report which supported by the seven Plaintiffs were not enough to prove that CHEN Chengzhi, CHEN XX, CHEN Yinxi, and CHEN Laixian can be exempted from statutory

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support obligation of CHEN Minsheng and HE Xiao. The fact that the guardians were only CHEN Mou 5 and his brother CHEN Hangui that advocated by the seven Plaintiffs were not confirmed by the court. Based on the evidence that has been confirmed, the court determined that the guardians of the Plaintiffs CHEN Minsheng and HE Xiao were Chen Mou, CHEN Chengzhi, CHEN XX, CHEN Hangui, CHEN Yinxi, CHEN Laizhuang, Chen Mou, and Xie’s children including CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3. Based on the statement of the parties and the evidence confirmed by the court, the court found the facts of the case as follows: M.V. “Guangdong Shenzhen 2107” was a small-scale fishing vessel. The ship type was a breeding work boat. The date of completion was February 5, 1999, and the owner of the ship was CHEN Jinrong. In July 2012, CHEN Jinrong submitted an application form for the fishery vessel change project to the Nanshan Brigade of the Guangdong Provincial Fishery Corps, stating that because M.V. “Shenzhen Shenzhen 2107” was old and unusable, he purchased a new ship. Daxin Company stamped in the table of “Opinions of the Village (Resident) Committee” which proved that the situation was true. The new ship was registered as M.V. “Yuenan Mountain Fishing 22107”. The fishery vessel ownership registration certificate issued by the Guangdong Provincial Fishery Corps Nanshan Brigade in August 2012 recorded that M.V. “Yuenan Mountain Fishing 22107” was a fishing auxiliary vessel. The production method is the fresh-keeping vessel. The hull is made of wood, the length is 10.8 meters, the width is 2.3 meters, the depth is 0.96 meters, the total tons and net tons are both 1.0, and ownership creation time was August 3, 2012. According to the Guangdong Province fishing vessel information collection form, the registered owner of M.V. “Yuenan Mountain Fishing 22107” was CHEN Jinrong, and the shares are 100%. The actual user is HUANG Hefa. HUANG Hefa had been the captain of the ship since September 12, 2013. The above information was reported on September 12, 2014. On November 10, 2014, CHEN Jinrong and HUANG Hefa signed a lease agreement. The agreement recorded as follows. CHEN Jinrong chartered M.V. “Yuenan Mountain Fishing 22107,” ship certificate and navigation visa book to HUANG Hefa for sea production and aquaculture use. The lease term is 10 years (“December 2010–2020”). HUANG Hefa cannot sublease the ship to others during the charter period. The victim CHEN Mou 5, male, Han nationality, was born on February 6, 1980. He lived in the  town  X , peasant, XX City, Guangdong Province. At the end of February 2015, CHEN Mou 5 was introduced by his relative, CHEN Hanqiong, and was hired by CAI Wenzhun to work on M.V. “Yuenan Mountain Fishing 22107”. The work was to clean the divers from fishing on the boat. The salary was calculated at 300 a day. On March 24, CAI Wenzhun went to the Daxin Frontier Defense Workstation for applying the “Registration Form for Boatman” for CHEN Mou 5. The service ship column of the form was filled in as M.V. “Yuenan Mountain Fishing 22107”, Daxin Frontier Workstation signed the opinion “Agree” on the registration form and stamped it. As the owner of the ship, CHEN Jinrong, was a Daxin villager; Daxin Company shall confirm the seal of the application at the “Operation at Sea” section of the application form. Until the accident occurred,

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Chen did not actually obtain the boatman card. At the beginning of April, CHEN Mou 5 left the ship. In May, CHEN Mou 5 went to the Shekou Industrial Eight Road Greening Project site to work as a muddy water worker. In late May, CHEN Mou 5 left the Shekou construction site and returned to M.V. “Yuenan Mountain Fishing 22107.” In June, LIN Ronglin came to work as a driver in M.V. “Yuenan Mountain Fishing 22107,” he was responsible for driving the ship, diving and fishing, and stopping the boat. CHEN Mou 5 and CHEN Yongshen were responsible for cleaning the ship. On May 8, M.V. “Yuenan Mountain Fishing 22107” was arbitrarily carried out by the Guangdong Provincial Fishery Corps Baoan Brigade in the waters south of Xiaoshao Island in Bao’an District, Shenzhen. The evidence extracted by the brigade on May 11 included a full set of information such as the HUANG Hefa resident ID card, the vessel’s navigational visa book and the inspection certificate. The Brigade's decision on the administrative penalty of Yuebao Fishery Offence (2015) No. 0010 made on August 5th: The situation of the parties: M.V. “Yunnan Mountain Fishing 22107”, legal representative was HUANG Hefa, on May 8, 2015, M.V. “Yuenan Mountain Fishing 22107”, the ship was fined 5,000 for carrying out fishing operations in the waters south of Xiaoshao Island in Bao’an District, Shenzhen, due to failure to obtain fishing licenses according to law. On the morning of June 18, 2015, LIN Ronglin drove M.V. “Yuenan Mountain Fishing 22107” boat to the sea for fishing. CHEN Mou 5 was responsible for cleaning up the boat. CHEN Yongshen did not go out to sea. At around 2 pm, M.V. “Yuenan Mountain Fishing 22107” boat was driven back to the shore. The driver LIN Ronglin left the boat for rest due to physical discomfort, and CHEN Mou 5 completed the boat stop work. Taking into account the low tide in the afternoon, CHEN Mou 5 parked the fishing boat in the sea far from the shore, and then swam back to the shore, and died in the middle (about 10 to 20 meters from the shore). The registration form for the acceptance of the police issued by the Nanshan Police Station of the Shenzhen Public Security Bureau records: “at 16:23 on June 18, 2015, Mr. CHEN Hanqiong (1393817), which I received at 110, reported that: on June 18, 2015 at around 14:40, in the Nanshan District Qianhai Free Trade Zone Border Defense Office (third police districts, Qianhai New District), his cousin CHEN Mou 5 (Han, 35 years old, ID number, household registration address: Guangdong Province  , lived in Nanshan) and colleague LIN Ronglin left the boat to fish in the seaside. Today, the work was completed earlier. Because LIN Ronglin caught a cold, LIN Ronglin called CHEN Mou 5 sailed out, parked the boat outside the beach, and then let CHEN Mou 5 swim back to the shore. CHEN Mou 5 stopped the boat and then swam back. Later, because Chen could not swim well, he died on the shore of the sea. The family of the deceased had no objection to the death of Chen. We have already filed for my record. Police number: S2015061811159.” On June 29, the Fourth Squadron of the Criminal Police Brigade of the Nanshan Branch of the Shenzhen Public Security Bureau issued a certificate of death in forensic medicine, proving that CHEN Mou 5 died on June 18, 2015, and the cause of death was “sudden death”.

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On May 20, 2016, Xinzhou Village Committee issued a certificate: CHEN Minsheng and HE Xiao were sick and weak, and cannot able to work; CHEN Hancai, a third brother of Chen, was unable to work because of a disability; CHEN Mou 5 brother CHEN Laizhuang suffered from brain tumors and lost his ability to work. On May 23, the Xinzhou Village Committee issued the certificate of the victim Chen’s family members: Chen’s parents were CHEN Minsheng and HE Xiao, the wife was Xie, and the children were CHEN Mou 1, CHEN Mou 4, CHEN Mou 2 (daughter), CHEN Mou 3 (daughter). CHEN Minsheng and HE Xiao’s children include CHEN Mou 5 (ID Number:), CHEN Chengzhi (ID Number:), CHEN Hancai (ID Number:), CHEN XX (ID Number:), CHEN Hangui (ID Number:), CHEN Yinxi (ID Number:), CHEN Laizhuang (ID Number:), among which CHEN Zhicheng and CHEN XX column have “exit others, the household registration has been moved out.” CHEN Yinxi’s column notes “has been married, the household registration has been moved out”. The certificate is marked in the column of the opinion of the police station, and is stamped with the seal of “Lufeng City Public Security Bureau Hudong Police Station Account,” dated on May 24. The household registration which issued on March 9, 2000, in which CHEN Minsheng was the household head, and recorded the resident registration card of CHEN Chengzhi and CHEN XX. The registration card is stamped with the “Household registration exit” seal. The Disabled Person’s Pass No.71 issued by the China Disabled Persons’ Federation on January 11, 2016 record: CHEN Hancai is a person with a disability class of intelligence and limbs and a disability level one. The calculation standard for personal injury compensation in Guangdong Province in 2016 stipulates that the per capita disposable income of urban residents in the general area of Guangdong Province in 2015 is 34,757.20 yuan per year, the per capita net income of rural residents in the province is 13,360.40 yuan, and the per capita annual living expenditure of rural residents in the province is 11,103.00 yuan. The average annual salary of employees in state-owned units is 72,659 yuan. The court holds that this case is a dispute over compensation for personal injury at sea. According to the claim and disclaim of parties and hearing research, the issues of this case were as follows: 1. whether the four Defendants take responsibly for the death of CHEN Mou 5. 2 If the Defendants need to take responsibly, what is the responsibility. Whether the four Defendants should take responsibly for the death of CHEN Mou 5 or not. The case has been found out that during the period of providing personal services for CAI Wenzhun, CHEN Mou 5 was killed by drowning when he returned to the shore after berthing in the sea. Whether the Defendants should bear tort liability should examine whether the Defendants have a fault in Chen’s death and whether there is a direct causal relationship between the results of Chen’s death and the behavior of the Defendants. Daxin Company is the grassroots organization where the owner of the vessel involved in the case is located. Based on the request of CHEN Jinrong, the resident of the village, he stamped the seal when CAI Wenzhun applied boatman card for

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CHEN Mou 5. There is no evidence in this case that there was employment or other legal relationship between the company and CHEN Mou 5, or the company was the main business entity of the fishing vessel involved in the case. Daxin Company is not at fault in the death of CHEN Mou 5 and did not have to bear the relevant laws responsibility for CHEN Mou 5. CHEN Jinrong, as the owner and the lessor of the vessel involved in the investigation of the vessel, leased the vessel involved in the case to HUANG Hefa through a lease contract, which was actually controlled and managed by HUANG Hefa. There was no evidence in this case that there is a personal labor relationship between CHEN Jinrong and CHEN Mou 5. CHEN Jinrong is not at fault for CHEN Mou 5’s death. CHEN Jinrong does not have to bear the liability for infringement. The fishing vessel involved in the case was actually controlled and used by CAI Wenzhun, but there is no evidence proved that HUANG Hefa and CAI Wenzhun jointly operated the fishing oysters. There is no evidence proved that HUANG Hefa and CHEN Mou 5 have established a personal labor relationship, or CHEN Mou 5 obeyed HUANG Hefa’s instructions were engaged in fishing operations. The existing evidence can only confirm that HUANG Hefa knew the fact that CAI Wenzhun used fishing vessels. Even if HUANG Hefa knew that CAI Wenzhun used the fishing vessel for illegal fishing operations, HUANG Hefa only needed to bear the responsibility that should be borne by the lender which regulated by the provisions of administrative laws and regulations when HUANG Hefa did not prove that he was involved in fishing operations. In this case, there was no evidence proved that HUANG Hefa’s lending behavior had a direct causal relationship with CHEN Mou 5’s swimming and drowning death after leaving the ship. It is also impossible to prove that HUANG Hefa’s drowning death of CHEN Mou 5 is at fault. Therefore, the seven Plaintiffs demanded that HUANG Hefa bear the liability for infringement compensation which lack of legal and factual basis, the court does not support. CAI Wenzhun obtained the fishing vessel involved in the case from HUANG Hefa, actually controlled, used and managed the fishing boat, engaged in oyster fishing and profit, and hired LIN Ronglin, CHEN Mou 5, CHEN Yongshen and others to engage in diving fishing, ship cleaning, etc., there was a direct employment relationship was established between CAI Wenzhun and CHEN Mou 5, CHEN Mou 5 was the labor service provider, and CAI Wenzhun was the labor party. According to Article 35 of the Tort Liability Law of the People’s Republic of China, where, in a labor relationship formed between individuals, the party providing labor services causes any harm to another person as the result of the labor services, the party receiving labor services shall assume the tort liability. If the party providing labor services causes any harm to himself as the result of the labor services, both parties shall assume corresponding liabilities according to their respective faults. As the actual user of M.V. “Yuenan Mountain Fishing 22107” and the employer of the labor contract, CAI Wenzhun actually managed and controlled the ship. He had the responsibility of commanding, supervising and managing CHEN Mou 5, and also guaranteed the safety of the ship. And to provide the crew with full labor protection obligations, but from the facts ascertained, CAI Wenzhun

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had never conducted any training on CHEN Mou 5, who had no qualifications for sea-going operations, and his management of the fishing boat during the illegal fishing operations resulted in the death of CHEN Mou 5. It should be recognized that CAI Wenzhun had violated the above-mentioned safety and security obligations and is at fault, and thus infringes upon the personal rights of CHEN Mou 5 and shall be liable for damages according to law. As a participant in fishing operations, CHEN Mou 5 should be aware of the risk of swimming and landing after berthing a fishing boat. However, he is too confident and has a certain fault in his drowning. The seven Plaintiffs voluntarily assume 20% responsibility from CHEN Mou 5 and do not violate by law. Based on the fault performance of CAI Wenzhun and Chen Mou 5, the court found that CAI Wenzhun assumed 80% responsibility for Chen’s death, and CHEN Mou 5 assumed 20% responsibility. Regarding CAI Wenzhun’s compensation liability. According to the Article 16 of the Tort Liability Law of the People’s Republic of China, “where a tort causes any personal injury to another person, the tortfeasor shall compensate the victim for the reasonable costs and expenses for treatment and rehabilitation, such as medical treatment expenses, nursing fees and travel expenses, as well as the lost wages. If the victim suffers any disability, the tortfeasor shall also pay the costs of disability assistance equipment for the living of the victim and the disability indemnity. If it causes the death of the victim, the tortfeasor shall also pay the funeral service fees and the death compensation” and Paragraph 3 of Article 17, Paragraph 1 of Article 18, Articles 27, 28, 29 of the Interpretation of the Supreme People’s Court on Certain Issues Concerning the Application of Law in Trying Cases Involving Compensation for Personal Damage (hereinafter referred to as the Interpretation of Personal Damage), the four Defendants should compensate the seven Plaintiffs death compensation. The victim CHEN Mou 5 was a rural household registration and does not belong to the rural residents who often live in the town. Therefore, the seven Plaintiffs’ requests for death compensation should be calculated according to the rural standards of Guangzhou, where the court is located. According to this standard, the court holds that CAI Wenzhun’s liability for compensation was as follows: 1. Death compensation. According to Article 29 of the Interpretation of Personal Damage, the compensation for death shall be calculated for a period of 20 years based on the per capita disposable income of the urban residents or the per capita net income of the rural residents at the place where the court accepting the case was located during the previous year. However, if the victim is of or above the age of 60, one year shall be deducted from the period for each year of increase in age. If the victim is of the age of 75 or above, the period shall be calculated for a period of five years. Chen died at the age of 60 when he died. According to CAI Wenzhun’s proportion of fault, CAI Wenzhun should pay CHEN Mou 5’s death compensation of 213,766.40 to the seven Plaintiffs (calculation method: 13,360.40  20  0.8 = 213,766.40). According to Article 4 of the Announcements of the Supreme People’s Court about Application of Some Problems and Article 28 of the Interpretation of Personal

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Damage, “the living expenses for a person receiving maintenance and support shall be calculated based on the degree of the loss of ability to work on the part of the maintenance and support and according to the per capita consumption-type expenditures of the urban residents and the per capita annual living expenditures of the rural residents at the place where the court accepting the case was located during the previous year. If the person receiving maintenance and support is a minor, such living expenses shall be calculated for a period up to the age of 18. If the person receiving maintenance and support has neither the ability to work nor other source of income, the period shall be 20 years. However, if the person receiving maintenance and support is of or above the age of 60, one year shall be deducted from the period for each year of increase in age. If the person receiving maintenance and support is of age of 75 or above, the period shall be calculated for a period of five years. A person receiving maintenance and support means a minor for whom the victim is obligated to maintenance and support in accordance with the law, or a victim adult close relative who has lost the ability to work and has no other source of income. If the victim shares the maintenance and support with any other person, the person obligated to compensate shall only compensate he portion for which the victim is liable in accordance with the law. In the event of multiple persons receiving maintenance and support, the cumulative amount of annual compensation in total shall not exceed the amount of per capita consumption-type expenditures of urban residents or the amount of per capita annual living expenditures of rural residents for the previous year.” The Plaintiffs CHEN Minsheng and HE Xiao’s guardians were CHEN Mou 5, CHEN Chengzhi, CHEN XX, CHEN Hangui, CHEN Yinxi, CHEN Laixian, CHEN Minsheng and HE Xiao’s Dependent’s living expenses should be shared equally by six people. According to the 2016 Guangdong rural residents, the per capita annual living consumption expenditure standard is calculated for 20 years. CHEN Mou 5 needed to pay the living expenses to CHEN Minsheng and HE Xiao respectively according to 1/6 of the above-mentioned standards. CHEN Mou 1, CHEN Mou 4, CHEN Mou 2 and CHEN Mou 3 are minors. The victims CHEN Mou 5 and XIE Mou are both responsible for the maintenance. The living expense should be calculated according to the 2016 annual per capita annual living expenditure standard of rural residents in Guangdong Province until the adult date of the above-mentioned 4 Plaintiffs. CHEN Mou 5 was required to pay the living expenses according to 1/2 of the aforementioned standard. The four Plaintiffs become adults respectively have 9 years and 346 days, 11 years and 182 days, 7 years and 5 days, and 8 years and 126 days since the next day of the accident. According to the second paragraph of Article 28 of the Interpretation of Personal Damage Compensation, the calculation of the living expenses of the Dependent’s included in the death compensation paid by CAI Wenzhun to the seven Plaintiffs shall be calculated in three paragraphs: the first paragraph is the next day of the accident that is the day from June 19, 2015 to June 1, 2025, CHEN Mou 1 year becomes 18 years old (excluding), that is, 110,452.64 [calculation method: 11,103  (9 + 346/365) = 110,452.64];

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The second paragraph is from June 1, 2025 to December 19, 2026, when CHEN Mou 4 is 18 years old (excluding), multiplied by 1/3 according to the above criteria (CHEN Mou 5 pairs CHEN Minsheng and HE Xiao The share of the maintenance obligation) plus the above-mentioned standard multiplied by 1/2 (CHEN Mou 5’s share of the support obligation of CHEN Mou 4) is multiplied by 80% of the proportion of CAI Wenzhun, which is 11,502.71 [calculation method: 11,103  (1 + 202)/365)  (1/3 + 1/2)  0.8 = 11,502.71]; the third paragraph is December 192,026 when CHEN Mou 4 at the age of 18 to June 182,035, multiplied by the above criteria 1/3 is multiplied by 80% of the proportion of CAI Wenzhun negative calculation (CHEN Mou 5’s share of CHEN Minsheng and HE Xiao's support obligations), that is 25,163.84 [calculation method: 11103  (8 + 182/365)  1/3  0.8 = 26,163.84]. The aforementioned death compensation amounted to 360,885.59. 2. Funeral expenses. According to Article 27 of the Interpretation of the Personal Damage Compensation, “the funeral expenses shall be calculated based on the monthly average wage of the workers at the place where the court accepting the case was located during the previous year, and shall be the total amount of such wages for six months,” according to the fault proportion of CAI Wenzhun, he should pay the funeral expense 29,063.60 [calculation method: 72,659/ 2  0.8 = 29,063.60]. 3. Mental damage indemnity money. According to the first paragraph of Article 18 of the Interpretation of the Personal Damage Compensation, “where a victim or a close relative of the deceased suffers mental distress, and the compensation claimant files an action with a people’s court claiming solatium for mental distress. Such solatium shall be determined by applying the Interpretation of the Supreme People’s Court on Certain Issues concerning the Determination of Compensation Liability for Mental Distress in Civil Torts” and the second paragraph of Article 9, first paragraph of Article 10 of the Interpretation of the Supreme People's Court on Certain Issues Concerning the Determination of Compensation Liability for Mental Distress in Civil Torts, the death of CHEN Mou 5 in this accident, the seven Plaintiffs got mental damage as wife, parents and children of CHEN Mou 5. In combination with the economic ability of the indemnity obligor to bear the responsibility, the average living standard of the location of the court where the case is filed, etc., as appropriate, the mental damage expense is 80,000. In summary, some of the requests from the seven Plaintiffs should be supported. According to the Article 16, Article 35 of the Tort Liability Law of the People’s Republic of China, and Article 17 Paragraph 3, Article 19 Paragraph 1, Article 27, Article 28, Article 29, Article 35 Paragraph 2 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Application of Law in Trying Cases Involving Compensation for Personal Damage, and Article 9, Article 10 Paragraph 1 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Determination of Compensation Liability for Mental Distress in Civil Torts, the judgment is as follows:

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1. The Defendant CAI Wenzhun should pay the death penalty, funeral expenses, and mental damages to the Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3 for a total sum of 469,949.19 yuan; 2. Reject all other claims from the Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3. All above payment should be fulfilled within 10 days from the date of delivery of the judgment. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 16,408.36 yuan, the seven Plaintiffs shall bear 10,429.92 yuan, and the Defendant CAI Wenzhun shall bear 5,974.44 yuan. If any party disagrees with this judgment, it can submit within 15 days from the date of delivery of the judgment, together with copies the petition according to the number of the other parties, appeal to the Guangdong High People’s Court. Presiding Judge: CAHNG Weiping Judge: ZHAI Xin Judge: XU Chunlong April 28, 2017 Clerk: ZHOU Qian

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Guangdong High People’s Court Civil Judgment CHEN Minsheng et al. v. Shenzhen Daxin Industrial Co., Ltd. et al. (2017) Yue Min Zhong No.2329 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 117. Cause of Action 200. Dispute over liability for personal injury at sea. Headnote Affirming lower court decision awarding damages for the death by drowning of a seafarer, and rejecting arguments of appellants (seafarer’s dependents) that three defendants other than the seafarer's employer should be held jointly responsible as they had created the conditions for the employer’s illegal use of the fishing vessel from which seafarer drowned. Summary HUANG Hefa chartered a fishing vessel to CAI Wenzhun. CAI Wenzhun controlled, used and managed the fishing boat for oyster fishing. He hired LIN Ronglin, CHEN Mou 5, CHEN Yongshen and others for fishing and cleaning vessel. LIN Ronglin did not drive the vessel because of his physical discomfort. CHEN Mou 5 then helped stopping the vessel based on the wave height and started swimming back to the shore. CHEN Mou 5 died in the middle of the sea. On behalf of CHEN Mou 5, 7 Plaintiffs sued the Defendant company, CAI Wenzhun, CHEN Jinrong and HUANG Hefa for death compensation. The court found CAI Wenzhun, as the employer, should be responsible for employee CHEN Mou 5’s death because CAI Wenzhun lacked the employer’s duty of care. But CHEN Mou 5 should take 20% responsibility because he assumed the risk of swimming on the sea. The 7 Plaintiffs appealed the case, alleging that the court of first instance wrongfully applying the causation and torts liability. The court found no error of judgment and dismissed the appeal.

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Judgment The Appellant (the Plaintiff of first instance): CHEN Minsheng, male, born on October 21, 1956, Han, peasant, living in Lufeng City, Guangdong, the father of CHEN Mou 5. The Appellant (the Plaintiff of first instance): HE Xiao, female, born on September 18, 1958, Han, peasant, living in Lufeng City, Guangdong, the mother of CHEN Mou 5. The Appellant (the Plaintiff of first instance): XIE Mou, female, born on May 5, 1983, Han, peasant, living in Lufeng City, Guangdong, the wife of CHEN Mou 5. The Appellant (the Plaintiff of first instance): CHEN Mou 1, male, born on July 1, 2007, Han, peasant, living in Lufeng City, Guangdong, the son of CHEN Mou 5. The Appellant (the Plaintiff of first instance): CHEN Mou 4, male, born on December 19, 2008, Han, peasant, living in Lufeng City, Guangdong, the son of CHEN Mou 5. The Appellant (the Plaintiff of first instance): CHEN Mou 2, female, born on July 25, 2004, Han, peasant, living in Lufeng City, Guangdong, the daughter of CHEN Mou 5. The Appellant (the Plaintiff of first instance): CHEN Mou 3, female, born on October 24, 2005, Han, peasant, living in Lufeng City, Guangdong, the daughter of CHEN Mou 5. Legal agent: XIE Mou, female, born on May 5, 1983, Han, peasant, living in Lufeng City, Guangdong, the mother of CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, CHEN Mou 3. Agent ad litem of the seven Plaintiffs: LIU Haiyun, lawyer of Guangdong Renhao Law Firm. Agent ad litem of the seven Plaintiffs: XIE Xinzhi, lawyer of Guangdong Renhao Law Firm. The Respondent (the Defendant of first instance): Shenzhen Daxin Industrial Co., Ltd. Domicile: No.223, West Taoyuan Road, Nanshan District, Shenzhen, Guangdong. Legal representative: YAO Limei, chairman of the company. Agent ad litem: LIN Xiaoti, lawyer of Guangdong Jindi Law Firm. Agent ad litem: LI Yanfen, lawyer of Guangdong Jindi Law Firm.

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The Respondent (the Defendant of first instance): CAI Wenzhun, male, born on February 16, 1979, Han, living in Lufeng City, Guangdong. The Respondent (the Defendant of first instance): CHEN Jinrong, male, born on March 13, 1986, Han, living in Nanshan District, Shenzhen, Guangdong. Agent ad litem: XIE Shuzhan, lawyer of Guangdong Senchuan Law Firm. The Respondent (the Defendant of first instance): HUANG Hefa, male, born on January 2, 1970, Han, living in Raoping County, Shantou, Guangdong. Dissatisfied with the Civil Judgment (2016) Yue 72 Min Chu No.93 rendered by Guangzhou Maritime Court in respect of the case of dispute over personal damage on sea, the Appellants CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3 (hereinafter referred to as “CHEN Minsheng 7 Appellants”) filed an appeal against the Respondents Shenzhen Daxin Industrial Co., Ltd. (hereinafter referred to as “Daxin Company”), CAI Wenzhun, CHEN Jinrong, and HUANG Hefa before the court. The court entertained the case on September 1, 2017, and the court formed a collegiate bench and heard this case. LIU Haiyun, agent ad litem of CHEN Minsheng 7 Appellants, LIN Xiaoti and LI Yanfen, agents ad litem of the Respondent Daxin Company, and XIE Shuzhan, agent ad litem of the Respondents CHEN Jinrong and HUANG Hefa appeared in court and participated in the action. Now the case has been concluded. CHEN Minsheng 7 Appellants appealed that: the second item of the first-instance judgment should be revoked according to law. Daxin Company, CHEN Jinrong, HUANG Hefa, and CAI Wenzhun should be jointly and severally liable to CHEN Minsheng 7 Appellants for death compensation, funeral expenses, and mental damages of 469,949, of which Daxin Company and CHEN Jinrong each bear the responsibility according to the proportion of 16%. HUANG Hefa and CAI Wenzhun each should bear the 24% responsibility. The total litigation costs of the first and second trials of this case are borne by the four Respondents. Facts and reasons: the behavior of the first and fourth Respondents has constituted an infringement of “multiple causation of death” and shall be liable for the death of CHEN Mou 5. According to the understanding of the “indirect combination” stipulated in Article 3 Paragraph 2 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Application of Law in Trying Cases Involving Compensation for Personal Damage, reference shall be made according to the Understanding and Application of the Judicial Interpretation of Personal Injury Compensation of the Supreme People’s Court. In this case, HUANG Hefa chartered the fishing vessel in the case and related documents were illegal and indirectly combined with CAI Wenzhun’s behavior, resulting in the death of CHEN Mou 5. Daxin Company and CHEN Jinrong knew that CAI Wenzhun illegally used the fishing vessel involved in the case. Instead of stopping it, they created conditions for CAI Wenzhun to produce sea operations resulting in CHEN Mou 5’s death. Therefore, the four Respondents should bear the corresponding liability for compensation. Secondly, the applicable law of the first-instance judgment was

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incorrect. The premise of the first-instance judgment to bear the tort liability is that the Respondents were at fault, and the result of the damage has a direct causal relationship with the Respondents’ behavior, which is obviously indirectly combined with the “indirect combination” of Article 3 Paragraph 2 of the above judicial interpretation. Daxin Company argued that: the first-instance judgment found that the facts were clear, the applicable law was correct, and it should be maintained according to law. 1. Daxin Company, as the grassroots organization where CHEN Jinrong, the ship owner of the case involved, applied for the registration of the Boatman Card at the Daxin Frontier Workstation, and the act of stamping the official seal of Daxin Company was to apply for the Boatman Card. There is no fault in the normal procedure of handling the boatman card. 2. There is no causal relationship between Daxin Company and the death result of CHEN Mou 5. According to Article 5 of the Regulations on Coastal Ships’ Prevention and Control of Borders, the border defense department is the issuing unit of the Boatman Card. Even if the applicant has obtained the seal of Daxin Company, it is still unable to go to sea, and CHEN Mou 5 has not yet obtained the boatman card in accordance with the law. 3. The case was not the result of multiple causations. There is no other legal relationship between Daxin Company and CHEN Mou 5, so there is no need to bear any legal responsibility for the death of CHEN Mou 5. CHEN Jinrong defended that this case is a personal damage dispute caused by CAI Wenzhun’s employment of CHEN Mou 5. CHEN Mou 5 and CHEN Jinrong do not have an employment relationship. CHEN Jinrong only leased the fishing boat to HUANG Hefa for use. He did not cooperate with others and did not have any management responsibility. He was not at fault in Chen’s death and should not bear tort liability. HUANG Hefa argued that the fishing vessel involved was rented to CHEN Jinrong, but CAI Wenzhun took the fishing boat without his consent. HUANG Hefa was unaware of the use of the fishing boat by CAI Wenzhun. He was not at fault for the death of CHEN Mou 5 and should not bear legal responsibility. CAI Wenzhun confirmed that he had not been agreed to use the fishing boat by HUANG Hefa and temporarily hired CHEN Mou 5. However, it is argued that the death of CHEN Mou 5 was caused by improper operation and failure to fulfill his safety obligations. He should bear the main responsibility for the accident. The Plaintiff’s standard of death compensation was incorrect. CHEN Minsheng 7 Appellants claimed to the court of first instance that: Daxin Company, CAI Wenzhun, CHEN Jinrong, and HUANG Hefa jointly compensated the CHEN Minsheng 7 Appellants for the personal damage compensation of 1,154,354.70 yuan as well as the court costs of this case. The compensation included: death compensation 818,960 yuan (the per capita disposable income of urban residents in Shenzhen in 2014 was 40,948 yuan multiplied by 20 years) and the funeral expenses of 36,325 yuan (the average social wage in Shenzhen in 2014 was 6,054.25 yuan multiplied by 6 months), the living expenses for a person receiving maintenance and support was 413,556.37 yuan (according to the annual per capita consumption expenditure standard of urban residents in Shenzhen in

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2014), and the mental damage solatium was 100,000 yuan. The entire total amount was 144,294.37 yuan. According to their claim, 80% of the total number of requests was 1,154,354.7 yuan. The four Defendants should bear the costs of litigation in this case. On December 1, 2016, the seven Plaintiffs requested that the relevant compensation standards should be based on the calculation standard for personal damage compensation in Guangdong Province in 2016. According to this, the request for the change of the lawsuit was for the four Defendants jointly and severally compensated the seven Plaintiffs for 1,289,818 yuan, of which the death compensation was 892,666 yuan and the funeral expenses 58,714 yuan, the living expenses of the Dependents was 560,892.90 yuan, the mental damage solatium was 100,000 yuan, and the total loss was 1,612,272.9 yuan. The compensation calculated 80% of the total compensation of the four Defendants was 1,289,818 yuan. Facts and reasons: the victim CHEN Mou 5 was employed by CHEN Jinrong and CAI Wenzhun on March 24, 2015. HUANG Hefa was the actual user of the fishing boat. The Daxin Company applied for the boatman card for CHEN Mou 5, where he worked on the boat of M.V. “Yuenan Mountain Fishing 22107.” HUANG Hefa is the actual user of the fishing boat. On June 18, 2015, Chen died in the process of working. As the owner and lessor of the fishing boat, HUANG Hefa as the charterer and actual user of the fishing boat, CAI Wenzhun as the employer of CHEN Mou 5 and the actual controller of the fishing boat shall bear the main responsibility for the death of CHEN Mou 5, and Daxin Company should be responsible as a supervisor for applying boatman card for CHEN Mou 5. The court of first-instance found the facts of the case as follows: M.V. “Guangdong Shenzhen 2107” was a small-scale fishing vessel. The ship type was a breeding work boat. The date of completion was February 5, 1999, and the owner of the ship was CHEN Jinrong. In July 2012, CHEN Jinrong submitted an application form for the fishery vessel change project to the Nanshan Brigade of the Guangdong Provincial Fishery Corps, stating that because M.V. “Shenzhen 2107” was old and unusable, he purchased a new ship. Daxin Company stamped in the table of Opinions of the Village (Resident) Committee proving that the situation was true. The new ship was registered as M.V. “Yuenan Mountain Fishing 22107”. The fishery vessel ownership registration certificate issued by the Guangdong Provincial Fishery Corps Nanshan Brigade in August 2012 recorded that M.V. “Yuenan Mountain Fishing 22107” was a fishing auxiliary vessel. The production method is the fresh-keeping vessel. The hull is made of wood, the length is 10.8 meters, the width is 2.3 meters, the depth is 0.96 meters, the total tons and net tons are both 1.0. The ownership established time was August 3, 2012. According to the Guangdong Province fishing vessel information collection form, the registered owner of M.V. “Yuenan Mountain Fishing 22107” was CHEN Jinrong, and the shares are 100%. The actual user is HUANG Hefa. HUANG Hefa had been the captain of the ship since September 12, 2013. The above information was reported on September 12, 2014. On November 10, 2014, CHEN Jinrong and HUANG Hefa signed a charter party. The agreement recorded: CHEN Jinrong chartered M.V. “Yuenan Mountain Fishing 22107”, ship certificate and navigation visa book to HUANG Hefa for sea production and aquaculture use. The charter term is 10 years

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(December 2010–2020), annual rent was 2,000 per year. HUANG Hefa cannot sublease others during the agreement period. The victim CHEN Mou 5, male, Han, was born on February 6, 1980. He lived in the  town X, peasant, XX City, Guangdong Province. At the end of February 2015, CHEN Mou 5 was introduced by his relative, CHEN Hanqiong, and was hired by CAI Wenzhun to work on M.V. “Yuenan Mountain Fishing 22107”. The work was to clean the divers from fishing on the boat. The salary was calculated at 300 RMB a day. On March 24, CAI Wenzhun went to the Daxin Frontier Defense Workstation for applying the “Registration Form for Boatman” for CHEN Mou 5. The service ship column of the form was filled in as M.V. “Yuenan Mountain Fishing 22107”. Daxin Frontier Workstation signed the opinion “Agree” on the registration form and stamped it. As the owner of the ship, CHEN Jinrong, was a Daxin villager, so Daxin Company shall confirm the seal of the application at the “Operation at Sea” section of the application form. Until the accident occurred, Chen did not actually obtain the boatman card. At the beginning of April, CHEN Mou 5 left the ship. In May, CHEN Mou 5 went to the Shekou Industrial Eight Road Greening Project site to work as a muddy water worker. In late May, CHEN Mou 5 left the Shekou construction site and returned to M.V. “Yuenan Mountain Fishing 22107”. In June, LIN Ronglin came to work as a driver in M.V. “Yuenan Mountain Fishing 22107”, where he was responsible for driving the ship, diving and fishing, and stopping the boat. CHEN Mou 5 and CHEN Yongshen were responsible for cleaning the ship. On May 8, M.V. “Yuenan Mountain Fishing 22107” was arbitrarily carried out by the Guangdong Provincial Fishery Corps Baoan Brigade in the waters south of Xiaoshao Island in Bao’an District, Shenzhen. The evidence extracted by the brigade on May 11 included a full set of information such as HUANG Hefa resident ID card, the vessel’s navigational visa book, and the inspection certificate. The Brigade’s decision on the administrative penalty of Yuebao Fishery Offence (2015) No.0010 made on August 5th stated: the situation of the parties: M.V. “Yunnan Mountain Fishing 22107”, legal representative was HUANG Hefa; on May 8, 2015, M.V. “Yuenan Mountain Fishing 22107”, the ship was fined 5,000 for carrying out fishing operations in the waters south of Xiaoshao Island in Bao’an District, Shenzhen, due to failure to obtain fishing licenses according to law. On the morning of June 18, 2015, LIN Ronglin drove M.V. “Yuenan Mountain Fishing 22107” boat to the sea to fish, and CHEN Mou 5 was responsible for cleaning up the boat. CHEN Yongshen did not go out to sea. At around 2 pm, M.V. “Yuenan Mountain Fishing 22107” boat was driven back to the shore. The driver LIN Ronglin left the boat for rest due to physical discomfort, and CHEN Mou 5 completed the boat stop work. Taking into account the low tide in the afternoon, CHEN Mou 5 parked the fishing boat in the sea farther from the shore, and then swam back to the shore, and died in the middle (about 10 to 20 meters from the shore). The registration form for the acceptance of the police issued by the Nanshan Police Station of the Shenzhen Public Security Bureau records states: “at 16:23 on June 18, 2015, Mr. CHEN Hanqiong (1393817), which I received at 110, reported that: on June 18, 2015 at around 14:40, in the Nanshan District Qianhai

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Free Trade Zone Border Defense Office (third police districts, Qianhai New District), his cousin CHEN Mou 5 (Han, 35 years old, ID number, household registration address: Guangdong Province  , lived in Nanshan) and colleague LIN Ronglin left the boat to fish in the seaside. Today, the work was finished earlier. Because LIN Ronglin had a cold, LIN Ronglin called CHEN Mou 5 sailed out, parked the boat outside the beach, and then let CHEN Mou 5 swim back to the shore. CHEN Mou 5 stopped the boat and then swam back. Later, because CHEN Mou 5’s swimming technique was not good, he died on the shore of the sea. The family of the deceased had no objection to the death of Chen. Police number: S2015061811159.” On June 29, the Fourth Squadron of the Criminal Police Brigade of the Nanshan Branch of the Shenzhen Public Security Bureau issued a certificate of death in forensic medicine, proving that CHEN Mou 5 died on June 18, 2015, and the cause of death was “sudden death”. On May 20, 2016, Xinzhou Village Committee issued a certificate: CHEN Minsheng and HE Xiao were sick and weak, and were not able to work; CHEN Hancai, a third brother of CHEN Mou 5, was unable to work because of a disability; CHEN Mou 5, brother CHEN Laizhuang, suffered from brain tumors and lost his ability to work. On May 23, the Xinzhou Village Committee issued the certificate of the victim CHEN Mou 5’s family members: Chen’s parents were CHEN Minsheng and HE Xiao; the wife was Xie, and the children were CHEN Mou 1, CHEN Mou 4, CHEN Mou 2 (daughter), CHEN Mou 3 (daughter). CHEN Minsheng and HE Xiao’s children include CHEN Mou 5 (ID Number:), CHEN Chengzhi (ID Number:), CHEN Hancai (ID Number:), CHEN XX (ID Number:), CHEN Hangui (ID Number:), CHEN Yinxi (ID Number:), and CHEN Laizhuang (ID Number:), among which CHEN Zhicheng and CHEN XX column have “exit others, the household registration has been moved out,” and CHEN Yinxi’s column notes “has been married, the household registration has been moved out.” The certificate is marked in the column of the opinion of the police station, and is stamped with the seal of “Lufeng City Public Security Bureau Hudong Police Station Account”, dated on May 24. The household registration which issued on March 9, 2000, in which CHEN Minsheng was the household head, and recorded the resident registration card of CHEN Chengzhi and CHEN XX. The registration card is stamped with the “Household registration exit” seal. The Disabled Person’s Pass No.71 issued by the China Disabled Persons’ Federation on January 11, 2016 records: CHEN Hancai is a multi-disabled person with a disability class of intelligence and limbs and a disability level of one. The calculation standard for personal injury compensation in Guangdong Province in 2016 stipulates that the per capita disposable income of urban residents in the general area of Guangdong Province in 2015 is 34,757.20 yuan per year. The per capita net income of rural residents in the province is 13,360.40 yuan, and the per capita annual living expenditure of rural residents in the province is 11,103.00 yuan. The average annual salary of employees in state-owned units is 72,659 yuan. The first-instance court held that this case is a dispute over compensation for personal injury at sea. According to the claim and disclaim of parties and hearing

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research, the issues of this case were as follows: 1. whether or not the four Defendants take responsibly for the death of CHEN Mou 5. 2. If Defendants need to take responsibly and what the responsibility is. Whether the four Defendants should take responsibly for the death of CHEN Mou 5 or not. The case has been found out that during the period of providing personal services for CAI Wenzhun, CHEN Mou 5 was killed by drowning when he returned to the shore after berthing in the sea. Whether the Defendants should bear tort liability requires the court to examine whether the Defendants have a fault in CHEN Mou 5’s death and whether there is a direct causal relationship between the results of CHEN Mou 5’s death and the behavior of the Defendants. Daxin Company is the grassroots organization where the owner of the vessel involved in the case is located. Based on the request of CHEN Jinrong, the resident of the village, he stamped the seal when CAI Wenzhun applied boatman card for CHEN Mou 5. There is no evidence in this case that there was employment or other legal relationship between the company and CHEN Mou 5, or the company was the main business entity of the fishing vessel involved in the case. It is not at fault in the death of CHEN Mou 5 and did not have to bear the relevant legal responsibility for CHEN Mou 5. CHEN Jinrong, as the owner and the lessor of the vessel involved in the investigation of the vessel, chartered the vessel involved in the case to HUANG Hefa through a lease contract, which was actually controlled and managed by HUANG Hefa. There was no evidence in this case that there is a personal labor relationship between CHEN Jinrong and CHEN Mou 5, which is not at fault for CHEN Mou 5’s death and does not have to bear the liability for infringement. The case has been determined that the fishing vessel involved in the case was actually controlled and used by CAI Wenzhun, but there is no evidence proving that HUANG Hefa and CAI Wenzhun jointly operated the fishing oysters. There is no evidence proving that HUANG Hefa and Chen have established a personal labor relationship, or CHEN Mou 5 obeyed HUANG Hefa’s instructions to engage in fishing operations. The existing evidence can only confirm that HUANG Hefa knew the fact that CAI Wenzhun used fishing vessels. Even if HUANG Hefa knew that CAI Wenzhun used the fishing vessel for illegal fishing operations, HUANG Hefa only needed to bear the responsibility that should be borne by the lender which regulated by the provisions of administrative laws and regulations when HUANG Hefa did not prove that he was involved in fishing operations. In this case, there was no evidence proving that HUANG Hefa’s lending behavior had a causal relationship with Chen’s swimming and drowning death after leaving the ship. It is also impossible to prove that HUANG Hefa was at fault for the death of CHEN Mou 5. Therefore, the seven Plaintiffs’ demand that HUANG Hefa bear the liability for infringement compensation lacks legal and factual basis, so the court does not support it. CAI Wenzhun obtained the fishing vessel involved in the case from HUANG Hefa, actually controlled, used, and managed the fishing boat. He engaged in oyster fishing, and hired LIN Ronglin, CHEN Mou 5, CHEN Yongshen, and others to engage in fishing, ship cleaning, etc. An employment relationship was established

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between CAI Wenzhun and CHEN Mou 5. CHEN Mou 5 was the labor service provider, and CAI Wenzhun was the labor party. According to Article 35 of the Tort Liability Law of the People’s Republic of China, where, in a labor relationship formed between individuals, the party providing labor services causes any harm to another person as the result of the labor services, the party receiving labor services shall assume the tort liability. If the party providing labor services caused any harm to himself as the result of the labor services, both parties shall assume corresponding liabilities according to their respective faults. As the actual user of M.V. “Yuenan Mountain Fishing 22107” and the employer of the labor contract, CAI Wenzhun actually managed and controlled the ship. He had the responsibility of commanding, supervising, and managing Chen, and also guaranteed the safety of the ship. And to provide the crew with full labor protection obligations, but from the facts ascertained, CAI Wenzhun had never conducted any training on CHEN Mou 5, who had no qualifications for sea-going operations, and his management of the fishing boat during the illegal fishing operations resulted in the death of CHEN Mou 5. It should be recognized that CAI Wenzhun had violated the above-mentioned safety and security obligations and is at fault, and thus infringes upon the personal rights of CHEN Mou 5 and shall be liable for damages according to law. As a participant in fishing operations, CHEN Mou 5 should be aware of the risk of swimming and landing after berthing a fishing boat. However, he was too confident and was at fault in his drowning to a certain degree. The seven Plaintiffs assumed 20% responsibility from CHEN Mou 5 and do not violate by law. Based on the fault performance of CAI Wenzhun and CHEN Mou 5, the court found that CAI Wenzhun assumed 80% responsibility for CHEN Mou 5’s death, and CHEN Mou 5 assumed 20% responsibility. Regarding CAI Wenzhun’s compensation liability. According to the Article 16 of the Tort Liability Law of the People’s Republic of China, “where a tort causes any personal injury to another person, the tortfeasor shall compensate the victim for the reasonable costs and expenses for treatment and rehabilitation, such as medical treatment expenses, nursing fees and travel expenses, as well as the lost wages. If the victim suffers any disability, the tortfeasor shall also pay the costs of disability assistance equipment for the living of the victim and the disability indemnity. If it causes the death of the victim, the tortfeasor shall also pay the funeral service fees and the death compensation” and Paragraph 3 of Article 17, Paragraph 1 of Article 18, Articles 27, 28, 29 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Application of Law in Trying Cases Involving Compensation for Personal Damage (hereinafter referred to as Interpretation of Personal Damage), the four Defendants should compensate the seven Plaintiffs’ death compensation. The victim CHEN Mou 5 was a rural household registration and does not belong to the rural residents who often live in the town. Therefore, the seven Plaintiffs’ requests for death compensation should be calculated according to the rural standards of Guangzhou, where the court is located. According to this standard, the court of the first-instance holds that CAI Wenzhun’s liability for compensation was as follows:

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1. Death compensation. According to Article 29 of the Interpretation of Personal Damage, the compensation for death shall be calculated for a period of 20 years based on the per capita disposable income of the urban residents or the per capita net income of the rural residents at the place where the court accepting the case was located during the previous year. However, if the victim is of or above the age of 60, one year shall be deducted from the period for each year of increase in age. If the victim is of the age of 75 or above, the period shall be calculated for a period of five years. Chen died at the age of 60. According to CAI Wenzhun’s proportion of fault, CAI Wenzhun should pay CHEN Mou 5’s death compensation of 213,766.40 yuan to the seven Plaintiffs (calculation method: 13,360.40  20  0.8 = 213,766.40). According to Article 4 of the Announcements of the Supreme People’s Court about Application of Some Problems and Article 28 of the Interpretation of Personal Damage, “the living expenses for a person receiving maintenance and support shall be calculated based on the degree of the loss of ability to work on the part of the maintenance and support and according to the per capita consumption-type expenditures of the urban residents and the per capita annual living expenditures of the rural residents at the place where the court accepting the case was located during the previous year. If the person receiving maintenance and support is a minor, such living expenses shall be calculated for a period up to the age of 18. If the person receiving maintenance and support has neither the ability to work nor other source of income, the period shall be 20 years. However, if the person receiving maintenance and support is of or above the age of 60, one year shall be deducted from the period for each year of increase in age. If the person receiving maintenance and support is of age of 75 or above, the period shall be calculated for a period of five years. A person receiving maintenance and support means a minor for whom the victim is obligated to maintenance and support in accordance with the law, or a victim adult close relative who has lost the ability to work and has no other source of income. If the victim shares the maintenance and support with any other person, the person obligated to compensate shall only compensate he portion for which the victim is liable in accordance with the law. In the event of multiple persons receiving maintenance and support, the cumulative amount of annual compensation in total shall not exceed the amount of per capita consumption-type expenditures of urban residents or the amount of per capita annual living expenditures of rural residents for the previous year.” The Plaintiffs CHEN Minsheng and HE Xiao’s guardians were CHEN Mou 5, CHEN Chengzhi, CHEN XX, CHEN Hangui, CHEN Yinqi, CHEN Laixian, CHEN Minsheng and HE Xiao’s Dependent’s living expenses should be shared equally by six people. According to the 2016 Guangdong rural residents, the per capita annual living consumption expenditure standard is calculated for 20 years. CHEN Mou 5 needed to pay the living expenses to CHEN Minsheng and HE Xiao respectively according to 1/6 of the above-mentioned standards. CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3 are minors. The victims CHEN Mou 5 and XIE Mou are both responsible for the maintenance. The living expense should be calculated according to the 2016 annual per capita

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annual living expenditure standard of rural residents in Guangdong Province until the adult date of the above-mentioned 4 Plaintiffs. CHEN Mou 5 was required to pay the living expenses according to 1/2 of the aforementioned standard. The four Plaintiffs will become adults in 9 years and 346 days, 11 years and 182 days, 7 years and 5 days, and 8 years and 126 days after the accident. According to Article 28 Paragraph 2 of the Interpretation of Personal Damage Compensation, the calculation of the living expenses of the Dependent’s included in the death compensation paid by CAI Wenzhun to the seven Plaintiffs shall be calculated in three paragraphs: the first paragraph is the next day of the accident that is the day from June 19, 2015 to June 1, 2025, CHEN Mou 1 year becomes 18 years old (excluding), that is, 110,452.64 [calculation method: 11,103  (9 + 346/365) = 110,452.64]; the second paragraph is from June 1st, 2025 to December 19th, 2026, when CHEN Mou 4 is 18 years old (excluding), multiplied by 1/3 according to the above criteria (CHEN Mou 5 pairs CHEN Minsheng and HE Xiao the share of the maintenance obligation) plus the above-mentioned standard multiplied by 1/2 (CHEN Mou 5’s share of the support obligation of CHEN Mou 4) is multiplied by 80% of the proportion of CAI Wenzhun, which is 11,502.71 [calculation method: 11,103  (1 + 202)/365)  (1/3 + 1/2)  0.8 = 11,502.71]; the third paragraph is December 192,026 when CHEN Mou 4 at the age of 18 to June 182,035, multiplied by the above criteria 1/3 is multiplied by 80% of the proportion of CAI Wenzhun negative calculation (CHEN Mou 5's share of CHEN Minsheng and HE Xiao's support obligations), that is 25,163.84 [calculation method: 11,103  (8 + 182/365)  1/3  0.8 = 26,163.84]. The aforementioned death compensation amounted to 360,885.59. 2. Funeral expenses. According to Article 27 of the Interpretation of the Personal Damage Compensation, “the funeral expenses shall be calculated based on the monthly average wage of the workers at the place where the court accepting the case was located during the previous year and shall be the total amount of such wages for six months,” according to the fault proportion of CAI Wenzhun, he should pay the funeral expense 29,063.60 [calculation method: 72,659/ 2  0.8 = 29,063.60]. 3. Mental damage indemnity money. According to Article 18 Paragraph 1 of the Interpretation of the Personal Damage Compensation, “where a victim or a close relative of the deceased suffers mental distress, and the compensation claimant files an action with a people’s court claiming solatium for mental distress. Such solatium shall be determined by applying the Interpretation of the Supreme People’s Court on Certain Issues concerning the Determination of Compensation Liability for Mental Distress in Civil Torts” and Article 9 Paragraph 2, Article 10 Paragraph 1 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Determination of Compensation Liability for Mental Distress in Civil Torts, the death of CHEN Mou 5 in this accident, the seven Plaintiffs got mental damage as wife, parents and children of CHEN Mou 5. In combination with the economic ability of the

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indemnity obligor to bear the responsibility, the average living standard of the location of the court where the case is filed, etc., as appropriate, the mental damage expense is 80,000. In summary, the court of first instance held that some of the requests from the seven Plaintiffs should be supported. According to the Article 16 and Article 35 of the Tort Liability Law of the People’s Republic of China, and Article 17 Paragraph 3, Article 19 Paragraph 1, Article 27, Article 28, Article 29, and Article 35 Paragraph 2 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Application of Law in Trying Cases Involving Compensation for Personal Damage, and Article 9 and Article 10 Paragraph 1 of the Interpretation of the Supreme People’s Court on Certain Issues concerning the Determination of Compensation Liability for Mental Distress in Civil Torts, the judgment was as follows: 1. the Defendant CAI Wenzhun shall pay the death penalty, funeral expenses and mental damages to the Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3 for a total of 469,949.19 yuan; 2. reject other claims from the Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3. During the second instance, the two parties did not submit any new evidence and had no objection of the facts that founded by the first instance, so the court confirmed the facts that founded by the first instance. The court holds that this case is a dispute over the personal damage compensation at sea. The issue of the second instance was: if Daxin Company, CHEN Jinrong, and HUANG Hefa should bear the personal damage compensation liabilities in this case. According to the facts that found by the court of first instance, the case has been found that during the period of providing personal services for CAI Wenzhun, CHEN Mou 5 was killed by drowning when he returned to the shore after berthing in the sea. According to Article 35 of the Tort Liability Law of the People’s Republic of China, CAI Wenzhun, as the party receiving labor services, shall assume the tort liability for CHEN Mou 5. CHEN Minsheng 7 Appellants did not provide any evidence to prove that there was a legal relationship among Daxin Company, HUANG Hefa, and CHEN Jinrong. Furthermore, CHEN Jinrong rental of the vessel and HUANG Hefa lending of the vessel to others only proved objectively that CAI Wenzhun used this vessel. There was no evidence to prove that there was any seaworthy problems of this vessel. The death cause of CHEN Mou 5 is also not related to the fishing boat involved. Therefore, the actions of HUANG Hefa and CHEN Jinrong are not the cause of Chen’s death. At the same time, Daxin Company was not the supervisory department of the fishing vessel involved in the case. There was no substantive supervision and management function for the use of the vessel involved in the case and the qualification of the person in the vessel, and Daxin Company sealed on the boatman card application form for, but CHEN Mou 5 did not obtain the boatman card, so Daxin Company’s action did not cause the death of CHEN Mou 5. Therefore, CHEN Jinrong, HUANG Hefa, and Daxin Company’ actions have no direct causal relationship with Chen’s death. CHEN

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Minsheng and the other six people argued that HUANG Hefa, CHEN Jinrong, and Daxin Company have no liability in this case. The first instance court did not support such arguments, and that finding was not improper, so the court will maintain its judgement. In addition, the premise of Article 3 Paragraph 3 of the Interpretation of Personal Damage Compensation is that several acts performed by two or more persons are the cause of the same damage. CHEN Jinrong, HUANG Hefa, and Daxin Company’s actions in this case were not the reason for the death of CHEN Mou 5, so the above provisions are not applicable in this case. The application law of the first-instance judgment is not improper and should be maintained. In summary, claims of appeal from the Plaintiffs CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3 cannot be supported and should be rejected. The application law and facts founded by the first-instance judgment were not improper and should be maintained. According to Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 8,349.23 yuan, shall be borne by CHEN Minsheng, HE Xiao, XIE Mou, CHEN Mou 1, CHEN Mou 4, CHEN Mou 2, and CHEN Mou 3. In view of the difficulty of the Appellants’ life, the above-mentioned second-instance court acceptance fee is exempted according to law. The judgment is final. Presiding Judge: HOU Xianglei Judge: WANG Fang Judge: ZHANG Yiyin December 6, 2017 Judge Assistant: LIU Xiaoming Clerk: LAI Hong

Ningbo Maritime Court Civil Judgment China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Yong Hai Fa Zhou Shang Chu Zi No.1 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 158 and page 172 respectively. Cause of Action 211. Dispute over ship mortgage contract. Headnote Guarantor of borrower’s debt held to be obliged to perform guarantee obligation, despite the fact that lending bank also had a mortgage over borrower’s ships; guarantor's obligation was not subordinate to mortgages. Summary Plaintiff bank loaned money to Defendant borrower for ship construction and purchase. Defendant’s debt was secured by a mortgage over Defendant’s ships, and was also guaranteed by three guarantors. Defendant borrower failed to repay the debt according to the parties’ agreed payment plan. Plaintiff mortgagee applied to the Court for seizure of Defendant’s ships and requested Defendant to repay the money owed. Defendant and two of the three guarantors did not enter an appearance. The Court held the Plaintiff was entitled to seize Defendant’s ships and to enforce the guarantee against the guarantors.

Judgment The Plaintiff: China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch. Domicile: No. 215, Changguo Road, Dinghai District, Zhoushan, Zhejiang. Legal representative: LIN Zhonghai, president of the branch. Agent ad litem: LI Wei, law of Zhejiang Liuhe (Zhoushan) Law Firm. Agent ad litem: SUN Jingxiong, law of Zhejiang Liuhe (Zhoushan) Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_8

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The Defendant: Zhejiang Xingguo Shipping Co., Ltd. Domicile: Room 102, No. 263, Bei’an Road, Shenjiamen, Putuo District, Zhoushan, Zhejiang. Agent ad litem: WANG Jianlie. The Defendant: Zhenjiang Xinxing Shipbuilding Co., Ltd. Domicile: Dongjiang, Jiangxin Town, Dantu District, Zhejiang, Jiangsu. Legal representative: ZHU Xingguo, general manager of the company. Agent ad litem: WANG Kun, law of Jiangsu Hengiang Law Firm. Agent ad litem: TANG Jie, law of Jiangsu Hengiang Law Firm. The Defendant: GUO Bin, male, born on January 9, 1996, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant: YE Yashu, female, born on November 7, 1942, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant: GUO Jie, male, born on April 9, 1961, Han, living in Putuo District, Zhoushan, Zhejiang. This case concerns a ship mortgage contract dispute between the Plaintiff China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch (hereinafter referred to as “CCB Zhoushan Chengguan Sub-branch”) and the Defendants Zhejiang Xingguo Shipping Co., Ltd. (hereinafter referred to as “Xingguo Company”), Zhenjiang Dantu District Emerging Ship Repair Co., Ltd. (hereinafter referred to as “Emerging Company”), GUO Xianwu, and GUO Bin. On December 26, 2014, the Plaintiff submitted the case. After the court entertained the case on the same day, it formed a collegiate bench to conduct the general procedure for trial. During the trial of the case, due to the death of the Defendant GUO Xianwu and the change of the name of Emerging Company, the Plaintiff applied for the addition and change of the Defendants. The court allowed its request, notifying GUO Xianwu’s legal heirs YE Yashu and GUO Jie to join in the lawsuit. The case was changed to have the Defendants as Zhejiang Xingguo Shipping Co., Ltd., Zhenjiang Xinxing Shipbuilding Co., Ltd., YE Yashu, Guo Jie and GUO Bin. The Plaintiff filed a property preservation application on March 15, 2015, seeking the seizure of the property and equity registered under the names of GUO Xianwu and GUO Bin. The court ruled on March 19, 2015. The hearing was held on April 2, 2015. The Plaintiff, agents ad litem of CCB Zhoushan Chengguan Sub-branch, LI Wei and SUN Jingxiong, agents ad litem of the Defendant Xinxing Company, WANG Kun and TANG Jie, appeared in court to attend the hearing. The Defendants Xingguo Company, GUO Bin and YE Yashu and GUO Jie refused the court without justified reasons after they were legally summoned, and the court conducted a trial by default according to law. Now the case has been concluded. The Plaintiff, CCB Zhoushan Chengguan Sub-branch, brought lawsuit to the court alleging that Xingguo Company applied for a loan to the Plaintiff at the beginning of March 2011 for the purchase and construction of the ship. The two

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parties signed a fixed-asset loan contract on March 15 of the same year. The contract stipulated that Xingguo Company loaned RMB 45 million yuan to the Plaintiff for 49 months. The contract also stipulated the loan interest rate, repayment plan, overdue penalty interest, and liability for default repayment and other items. On the same day, Xinxing Company, GUO Xianwu, and GUO Bin signed a guarantee contract with the Plaintiff respectively, and voluntarily paid the principal amount and interest (including compound interest and penalty interest) under the above loan contract of Xingguo Company. The Plaintiff shall bear the joint guarantee responsibility for the costs of litigation, lawyers’ fees, and other expenses incurred in realizing the creditor's rights. The guarantee period is two years. On July 30, 2012, Xingguo Company signed a mortgage contract with the Plaintiff, and provided all of M.V. “Xingguo 66” with collateral guarantee for the debts under the above loan contract. Both parties handled the mortgage registration procedures. After the parties signed the loan contract, the Plaintiff issued a loan of 45 million yuan to Xingguo Company in 7 payments from March 15, 2011 to August 1, 2011 and fulfilled the loan contract obligation. Thereafter, according to the requirements of Xingguo Company, the Plaintiff and Xingguo Company adjusted the repayment plan. However, after the company obtained the loan, the company did not repay the loan as scheduled. As of November 16, 2014, Xingguo Company accumulatively defaulted on the Plaintiff’s maturity and unexpired principal (36.5 million yuan) with interest, penalty interest, etc. RMB 37,274,372.7 yuan in total. After repeatedly suing the Plaintiff to no avail, the Plaintiff applied to the Shanghai Maritime Court for detaining the ship before the litigation in December 2014. The Shanghai Maritime Court granted the Plaintiff’s application and detained all M.V. “Xingguo 66” of Xingguo Company in Lusigang, Qidong, Jiangsu. The Plaintiff spent a pre-litigation fee of 5,000 yuan. The Plaintiff believed that Xingguo Company did not return the principal amount and interest according to the contract, and announced that the loan immediately expired and claimed to the court, requesting the court to order: 1. the Defendant Xingguo Company return the loan principal of 36.5 million yuan with interest of 768,300.87 yuan (including penalty interest), compound interest 60,71.83 yuan (counted until November 16, 2014), indemnify the Plaintiff for the agency fee of 99,000 yuan for the realization of the creditor's rights, and the property preservation fee of 5,000 yuan before the lawsuit, and pay the principal and interest of the loan (including penalty interest and compound interest calculated according to the contractual agreement from the date of November 17, 2014 until the date of the loan repayment). 2. Confirm that the Plaintiff has the right to mortgage M.V. “Xingguo 66” for the above-mentioned loan principal and interest (including penalty interest and compound interest) and the lawyer’s litigation fee incurred by the Plaintiff for the realization of the creditor’s right, and is preferentially compensated in the auction of vessel. 3. The Defendant Emerging Company, GUO Bin, assumed the joint guarantee responsibility for Xingguo Company’s first debt (including the lawyer’s agency fee incurred by the Plaintiff to realize the creditor’s rights). The Defendants GUO Jie and YE Yashu assumed joint responsibility for the above-mentioned first debt of Xingguo Company (including the lawyer’s agency fee incurred by the Plaintiff to realize the

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debt) within the scope of his inheritance of GUO Xianwu. 4. The litigation cost shall be borne by the Defendant. The Defendants Xingguo Company, GUO Bin, GUO Jie, and YE Yashu did not provide written defense to the court. The Defendant Xinxing Company argued in the trial that the Plaintiff had dishonest behavior in the process of signing the guarantee contract with him, and he refused to approve the guarantee contract signed by both parties, requesting the court to reject the Plaintiff’s claim that Emerging Company should assume the guarantee responsibility. The Plaintiff CCB Zhoushan Chengguan Sub-branch submitted the following evidence to the court within the time limit for proof in order to support the litigation request. Evidence 1. Fixed assets loan contract, to prove that the Plaintiff and Xingguo Company signed a fixed asset loan contract on March 15, 2011, and the fact that Xingguo Company loaned 45 million yuan to the Plaintiff. Evidence 2, Resolution of the shareholders’ council and the guarantee of three contracts, to prove that Xinxing Company, GUO Xianwu, and GUO Bin signed separately a guarantee contract with the Plaintiff on March 15, 2011, and assumed the joint guarantee responsibility for the loan of Xingguo Company. Evidence 3. Mortgage contract and ship mortgage registration certificate, to prove that the Plaintiff and Xingguo Company signed a mortgage contract on July 30, 2012. Xingguo Company provided mortgage guarantee for all M.V. “Xingguo 66”, and both parties handled the mortgage registration. Evidence 4. Borrowing documents (7 copies), to prove that the Plaintiff issued a loan of 45 million yuan to Xingguo Company seven times from March 15, 2011 to August 1, 2011, and fulfilled the contractual obligations. Evidence 5. Three supplementary agreements, to prove that the Plaintiff, according to the requirements of Xingguo Company, finalized the repayment plan on March 11, 2014 after consultation. Evidence 6. Notice of acceptance and the civil ruling by Shanghai Maritime Court, to prove that the Plaintiff applied to the Shanghai Maritime Court for detaining the ship before the appeal on December 2, 2014. For this reason, the pre-litigation preservation fee was 5,000 yuan; Evidence 7. List of principal and interest, to prove that the company’s principal and interest was due to the Plaintiff as of November 16, 2014. Evidence 8. Entrusted agency contract, lawyer’s fee invoice, and bank remittance voucher, to prove the fact that the Plaintiff incurred the lawyer’s fee for the realization of the creditor’s rights. The Defendants Xingguo Company, Xinxing Company, GUO Bin, YE Yashu, and GUO Jie did not submit any evidence to the court. The Defendants Xingguo Company, GUO Bin, GUO Jie, and YE Yashu did not appear in court and were deemed to forfeit the right to cross-examination. After the court testified, the Defendant Xinxing Company issued the following cross-examination opinions about the Plaintiff’s evidence. The Defendant Xinxing

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Company had no objection to the authenticity of the loan contract of evidence 1, but Xinxing Company considered that construction contract, the entrusted payment, the basic conditions of the project, and the financial constraints related to its guaranteed responsibility. Xinxing Company had no objection to the official seal of Xinxing Company in the resolution of the shareholders’ meeting of the second party and the signature of the member ZHU Xingguo. But Xinxing Company claimed that the shareholder TIAN Rongfen’s signature is not signed by himself. Xinxing Company had no objection to the authenticity of the guarantee contract signed between the Emerging Company and the Plaintiff. But Xinxing Company cannot confirm the other two guarantee contracts. Xinxing Company had no objection to the authenticity of the certificate. Xinxing Company had no objection to the authenticity of the certificate. But Xinxing Company asserted that the Plaintiff and the company are not entrusted by the contract. Xinxing Company had no objection to the authenticity of the certificate. But Xinxing Company claimed that the Plaintiff and Xingguo Company’s adjustment of the repayment plan has not been approved by the guarantor. Xinxing Company had no objection to the authenticity and relevance of the certificate. Xinxing Company had no objection to the certificate. But Xinxing Company claimed that the relevant interest or penalty compound interest cannot be proved. Xinxing Company objected to the relevance of the certificate, and the case number indicated in the invoice. The case number is inconsistent with that of the court. After reviewing the court record, the Defendant believes that Emerging Company has no objection to the authenticity of the Plaintiff certificate 1. the certificate three, the card four, the card five, the card six, and the card seven, has all confirmed the ship’s purchase, construction contract, and commissioned payment. Whether or not the implementation of the terms of the project, the financial constraints, and other provisions affecting the commitment of the guarantee will be reviewed is the subject of this dispute. After reviewing the court record, the Defendant believes that the Defendant Xinxing Company has no objection to the authenticity of the Plaintiff’s evidence 1, evidence 3, evidence 4, evidence 5, evidence 6, and evidence 7. The court has confirmed the ship’s purchase, construction contract, and commissioned payment. Whether the implementation of the terms of the project, the financial constraints, and other provisions affecting the commitment of the guarantee will be reviewed is the subject of this dispute. The resolution of the shareholders’ meeting in the second notice of the Plaintiff is issued by Xinxing Company, and it is responsible for the authenticity of the documents issued by itself. The three guarantee contracts are the Plaintiff’s. Therefore, the resolutions and guarantee contracts of the shareholders’ meeting of the second party are confirmed. The invoice amount of the agent contract and the lawyer’s fee are the same, and the invoice shows that the lawyer’s fee is paid by the Plaintiff, so the court will determine the evidence. During the trial of the case, the court retrieved the approval for the debt and reply form of public credit business issued by the China Construction Bank according to the application of the Defendant Xinxing Company. The content of the form and approval are the opinion of CCB Zhoushan Chengguan Sub-branch on the application of the 45 million yuan loan provided by Xingguo Company to CCB Zhoushan

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Chengguan Sub-branch. CCB Zhoushan Chengguan Sub-branch has agreed that Zhejiang Xingguo Shipping Company debt 45 million yuan was used for tech improvement as well as for building one cutter suction dredger vessel measuring 3,200 cubic meters. The debt period was 49 months. And during the construction, Xingxing Company bore a joint liability guarantee. The new vessel, when it was finished, would have a mortgage to exchange guarantee, and the additional price shall be paid, and the shareholders would bear liability of the individual unlimited joint guarantee. The other items were carried out pursuant to the application scheme……. the aforesaid credit business entity was XU Meng. After the cross-examination, the Plaintiff and the Defendant have no objection to the authenticity of the two documents. The Plaintiff disagreed with its relevance, and considered that the two documents were internal approval documents of the Plaintiff that did not impose any binding force. Xinxing Company believed that the two documents constituted the contents of the guarantee contract between the two parties. The court will comprehensively identify the relevance of the two pieces of evidence. The Plaintiff and the Defendants, in the trial, had a greater controversy over the commitment of Xinxing Company. In order to ascertain the status of the contractual guarantee between the two parties, the court requested that the Plaintiff and Xinxing Company submit the contact details of the handling personnel at the time of the signing of the guarantee contract for verification. In the written explanation submitted later, CCB Zhoushan Chengguan Sub-branch provided LI Yu, the president of the sub-branch, XU Meng, the assistant to the branch, and JIANG Lun, the business manager of the sub-branch, and then the account manager of the sub-branch LI Yu’s contact information. Xinxing Company only stated that JIANG Lun participated in the guarantee contract, but Xinxing Company did not provide his contact information. After contacting the four managers provided by the Plaintiff, JIANG Lun and YAN Yi refused to cooperate with the investigation. The investigation of LI Yu and XU Meng produced transcripts. LI Yu stated in the transcript: China Construction Bank’s guarantee scheme in the approval and approval of the public credit business is only the minimum guarantee requirement. In actual operation, the risk of preventing the behavior of CCB Zhoushan’s customs support requires the borrower to provide a higher guarantee or mortgage than the approval, and the loan involved cannot be replaced nor the guarantee reduced. XU Meng stated in the transcript: In the preliminary investigation of the loan involved, Xinxing Company agreed to provide joint liability guarantee for the loan, and did not discuss with Xinxing Company the ship mortgage replacement guarantee after the completion of the ship construction. Later, the Plaintiff and the Defendant submitted written verdicts to LI Yu and XU Meng’s transcripts. The two sides had no objection to the authenticity and legitimacy of the two transcripts. Therefore, the court has confirmed the authenticity and legitimacy of these two transcripts. However, the Defendant disagreed with the validity of the certificate. He believed that LI Yu and XU Meng were the Plaintiff’s staff members and had a stake in the Plaintiff’s affairs. LI Yu had a false statement in the transcript. In this regard, the court will combine its other evidences to comprehensively identify its effectiveness and content.

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Based on the parties’ statements, defenses, and valid evidence of confirmation, the court has determined the following facts: Xingguo Company and CCB Zhoushan Chengguan Sub-branch signed a fixed asset loan contract numbered X70627012712011027 on March 15, 2011. The contract stipulated that Xingguo Company loaned 45 million yuan to CCB Zhoushan Chengguan Sub-branch for the purchase and construction of a 3,200 m3/ n cutter suction dredger. The loan period is from March 15, 2011 to April 14, 2015, for 49 months. The loan interest rate is the floating annual interest rate, which is adjusted every 12 months from the interest rate to the benchmark interest rate on the day of interest rate is adjusted from the date of full settlement of the principal and interest under the contract. The interest rate adjustment date is the corresponding date of the adjustment month for the value date, and there is no corresponding date for the value date in the current month. The last day of the month is the interest rate adjustment date. The penalty interest rate for overdue loans is 50% higher than the loan interest rate, and it is adjusted according to the adjustment of the loan interest rate. The loan interest is calculated from the date when the loan is transferred to the loan issuance account; the loan is settled on a monthly basis, and the settlement date is the 20th day of the month. If the borrower defaults, CCB Zhoushan Chengguan Sub-branch can stop issuing loans, and can announce that the loan will expire immediately, requiring Xingguo Company to immediately repay the principal, interest, and expenses of all the expired and unexpired debts under the contract. If the loan is overdue, the principal and interest of the loan will not be paid off on time from the date of overdue to the date of full settlement of the principal and interest, and the interest and compound interest shall be calculated according to the penalty interest rate and the settlement method agreed upon in the contract. All expenses incurred by CCB Zhoushan Chengguan Sub-branch to realize creditor’s rights (including but not limited to litigation fees, property preservation fees, auction fees, announcement fees, lawyer fees, etc.) are borne by Xingguo Company. On the same day, Xinxing Company signed a guarantee contract with CCB Zhoushan Chengguan Sub-branch, and Xinxing Company provided joint liability guarantee for the debts under the fixed assets loan contract number X70627012712011027 signed by Xingguo Company and CCB Zhoushan Chengguan Sub-branch. The guarantee period is two years from the effective date of the contract to the expiration of the debt performance period under the main contract. Xinxing Company agrees to the debt extension period, and the guarantee period is two years after the expiration of the debt performance period re-arranged by the extension agreement. CCB Zhoushan Chengguan Sub-branch declares that the debt is due in advance according to the main contract, and the guarantee period is two years after the expiration date of the announced debt. The guarantee period is two years from the effective date of the contract to the expiration of the debt performance period under the main contract. Xinxing Company agrees to the debt extension period, and the guarantee period is two years after the expiration of the debt performance period re-arranged by the extension agreement. CCB Zhoushan Chengguan Sub-branch announces the early maturity of the debt according to the main contract, and the guarantee period is two

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years after the announced debt early maturity date. If the debts under the main contract are performed in installments, the debts for each period will be held for two years after the date of performance of the final period of debts. The validity of the contract is independent of the main contract. The main contract is not established, does not take effect, is invalid, partially invalid or is revoked, and is released without affecting the validity of the guarantee contract. The main contract is confirmed as unfounded, ineffective, invalid, partially invalid or revoked, and is released. Xinxing Company also bears joint and several liability for the debts formed by the debtor due to the return of property or compensation for losses. The terms of the main contract of CCB Zhoushan Chengguan Sub-branch and the debtor agreement change (including but not limited to the change of repayment method, repayment plan, change of the start date or deadline of the debt performance period without extension of the debt performance period, etc.). Xinxing Company agreed to assume joint and several liability for the debt under the changed main contract. Without the consent of Xinxing Company, CCB Zhoushan Chengguan Sub-branch and the debtor agreed to extend the debt performance period or increase the principal amount of the debt. Xinxing Company only undertakes joint and several liability for the debts under the main contract before the change in accordance with the contract. The debt under the main contract expires or CCB Zhoushan Chengguan Sub-branch declares the debt to expire in advance according to the contractual agreement or the law, the debtor fails to perform in full and on time, or the debtor violates the main contract. Xinxing Company shall immediately assume the warranty responsibility within the scope of the warranty. On the same day, GUO Xianwu and GUO Bin signed a personal guarantee contract with CCB Zhoushan Chengguan Sub-branch to provide joint liability guarantee for the above-mentioned RMB 45 million loan of Xingguo Company in CCB Zhoushan Chengguan Sub-branch. The scope of guarantee is 45 million yuan with interest under the main contract (including repayment and penalty interest), liquidated damages, compensation, and expenses incurred by CCB Zhoushan Chengguan Sub-branch to realize creditor’s rights and security rights (including but not limited to litigation fees, property preservation fees, auction fees, announcement fees, legal fees, etc.). From March 15, 2011 to August 1, 2011, CCB Zhoushan Chengguan Sub-branch issued a loan of 45 million yuan to Xingguo Company. On July 30, 2012, CCB Zhoushan Chengguan Sub-branch signed a mortgage contract with Xingguo Company. Xingguo Company provided a mortgage guarantee for its above-mentioned 45 million yuan loan with all M.V. “Xingguo 66”. The guarantee covers the entire debt under the fixed assets loan contract number X70627012712011027, including but not limited to the full principal, interest (including compound interest and penalty interest), liquidated damages, compensation, and the realization of claims and security rights. On the same day, the two sides handled the registration of the mortgage of M.V. “Xingguo 66”. During the performance of the loan contract, CCB Zhoushan Chengguan Sub-branch and Xingguo Company respectively signed three supplementary agreements for fixed-asset loan contracts on September 14, 2012, March 8, 2013, and March 11, 2014. The two parties finally determined that Xingguo Company

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refinanced the repayment plan determined by the supplementary agreement of March 11, 2014, and agreed that the matters not covered by the supplementary agreement were still fulfilled in accordance with the loan contract. After the repayment period, the company repaid the loan principal of 8.5 million yuan to CCB Zhoushan Chengguan Sub-branch. On June 14, 2014, the repayment was breached. CCB Zhoushan Chengguan Sub-branch announced that the loan had expired in advance. As of November 16, 2014, the total loan amount of the construction bank Zhoushan Chengguan Sub-branch was 36.5 million yuan, interest (including penalty interest) 768,300.87 yuan, and compound interest 6,071.83 yuan. In order to deal with the litigation matters related to this case, CCB Zhoushan Chengguan Sub-branch signed an agency agreement with Zhejiang Liuhe (Zhoushan) Law Firm on December 10, 2014 and paid a lawyer fee of 99,000 yuan. CCB Zhoushan Chengguan Sub-branch applied to the Shanghai Maritime Court for detaining the ship before the appeal in December 2014. The Shanghai Maritime Court granted its application to detain all M.V. “Xingguo 66” of Xingguo Company in Lusigang, Qidong, and Jiangsu. CCB Zhoushan Chengguan Sub-branch paid 5,000 yuan for pre-litigation. It was also found out that GUO Xianwu died on December 16, 2014, and his wife YE Yashu, ZI Guobin, and GUO Jie were their legal heirs. The court believes that whether Xinxing Company should assume joint guarantee responsibility for the 45 million yuan loan of Xingguo Company based on its guarantee contract signed with CCB Zhoushan Chengguan Sub-branch is the focus of the dispute in this case. In the trial certificate, Xinxing Company had no objection to the authenticity of the guarantee contract signed with CCB Zhoushan Chengguan Sub-branch. The contract was expressed by both parties and should be considered valid. The contract has clearly stipulated that the period during which Xinxing Company assumes the guarantee responsibility is from the effective date of the contract to two years after the expiration of the debt performance period under the main contract. If CCB Zhoushan Chengguan Sub-branch declares the debt to expire in advance according to the main contract, the guarantee period shall be two years after the expiration date of the declared debt. For example, the terms of the main contract of CCB Zhoushan Chengguan Sub-branch and the debtor agreement change (including but not limited to the change of repayment method, repayment plan, change of the start date or deadline of the debt performance period without extension of the debt performance period, etc.). Xinxing Company agrees to assume joint and several liability for the debt under the changed main contract. After Xingguo Company and CCB Zhoushan Chengguan Sub-branch changed the repayment plan without extending the period of debt performance, Xinxing Company shall assume joint and several liability according to the above-mentioned terms stipulated in the contract. Xinxing Company did not establish a defense claim with a repayment plan without its consent, and the court did not accept the letter. The provisions of the fixed assets loan contract numbered X70627012712011027 regarding the provision of shipbuilding and construction contracts, the entrusted payment, the basic conditions of the project, and the financial constraint indicators are the rights and obligations of both parties determined by CCB Zhoushan Chengguan Sub-branch and Xingguo

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Company in the loan contract. The warranty contract between CCB Zhoushan Chengguan Sub-branch and Xinxing Company did not stipulate the content and performance of the above terms. Xinxing Company did not assume the guarantee responsibility for the defense of the content and performance of these terms. Such claim has factual and legal basis. The court refused to accept the letter. The approval of China Construction Bank’s debts approved by the Institute, and the approval of China Construction Bank’s approval of the public credit business are internal bank documents. The contents of these documents cannot prove that CCB Zhoushan Chengguan Sub-branch and Xinxing Company have reached a contract before the contract is signed. The ship mortgage replacement guarantee was agreed, and the contents of the guarantee contract were formed. XU Meng, as the owner of the credit business operation at the time, also said that the two parties had not discussed the replacement guarantee. And the approval time is in the front, after CCB Zhoushan Chengguan Sub-branch signed a guarantee contract with Xinxing Company, and there is no evidence to prove that the Zhoushan Chengguan Sub-branch and Xinxing Company have changed or revoked the guarantee contract after M.V. “Xingguo 66” mortgage. Therefore, Xinxing Company believes that the content of the approval constitutes a guarantee contract, and Xinxing Company does not assume the guarantee responsibility. There is no factual and legal basis for such a defense, and the court will not accept the letter. The loan contract, repayment agreement, and mortgage contract signed by the Plaintiff and Xingguo Company shall be deemed to be valid by the parties, and the parties shall perform the contractual obligations according to the contract. If Xingguo Company fails to repay the principal and interest of the loan in accordance with the agreed time, such default should be regarded as a breach of contract, and the company shall bear the liability for breach of contract of the principal and interest. Xingguo Company provided a mortgage guarantee for M.V. “Xingguo 66”, and both parties handled the ship mortgage registration, which is in compliance with the law. Therefore, the Plaintiff has the right to mortgage M.V. “Xingguo 66” and has the right to receive priority from the auction and the sale price of the ship. The guarantee contract signed by the Plaintiff with Xinxing Company, GUO Xianwu, and GUO Bin is also expressed by the parties in the true meaning, and shall be deemed to be valid. The third guarantor shall bear the guarantee responsibility according to the agreement of the guarantee contract. After GUO Xianwu’s death, his legal heirs, YE Yashu, GUO Bin, and GUO Jie, should pay off GUO Xianwu’s debt when inheriting their inheritance, but only to the actual value of the inheritance. The Plaintiff pays the lawyer’s agency fee and the preservation fee for the realization of the creditor’s rights. The contract shall be borne by Xingguo Company and within the scope of the guarantees agreed in the three guarantee contract. In summary, the Plaintiff’s petition is reasonable, and the court supports it. In accordance with Article 107, Article 206, Article 207 of the Contract Law of the People’s Republic of China, Article 11 of the Maritime Code of the People’s Republic of China, Article 33 of the Succession Law of the People’s Republic of China, Article 64 Paragraph 1 and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows.

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1. The Defendant Zhejiang Xingguo Shipping Co., Ltd. shall return the loan of 36.5 million yuan and pay interest to China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch within 10 days after the effective date of this judgment (including interest of 768,300.87 yuan, pay compound interest of 6,071.83 yuan and penalty interest and compound interest calculated from the contractual interest rate from the date of November 17, 2014 to the date of payment of the loan) and reimburse the Plaintiff China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch of the occurrence of creditor’s agent fee of 99,000 yuan and pre-litigation property preservation fee of 5,000 yuan. 2. The Plaintiff China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch has the right of mortgage over the ship M.V. “Xingguo 66” owned by the Defendant Zhejiang Xingguo Shipping Co., Ltd., and has the right to receive in priority from the auction or the sale price of the ship. 3. The Defendant Zhenjiang Xinxing Shipbuilding Co., Ltd. and GUO Bin assumed joint and several liability towards the Plaintiff China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch. The Defendants YE Yashu and GUO Jie took the joint guarantee responsibility to the Plaintiff China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch regarding the above-mentioned judgment debts by the actual value of inheriting GUO Xianwu’s estate. If the obligation to pay money is not fulfilled within the time limit specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 228,692 yuan is jointly borne by the Defendants Zhejiang Xingguo Shipping Co., Ltd., Zhenjiang Xinxing Shipbuilding Co., Ltd., GUO Bin, GUO Jie, and YE Yashu. If any party disagrees with this judgment, the party can submit an appeal to the court within 15 days from the date of delivery of the judgment and provide copies of appeal according to the number of other parties to the Zhejiang High People’s Court. [Appeal case acceptance fee of 228,692 yuan (specific amount). The Zhejiang High People’s Court determines that the excess will be refunded later but the whole amount should be submitted in advance when the appeal is filed. If the application has not been paid within seven days after the expiration of the appeal period, the appeal shall be automatically withdrawn. Remittance Department of Zhejiang Provincial Department of Finance’s non-tax revenue settlement household account number: 19000101040006575401001; the bank: Agricultural Bank of Hangzhou West Lake Branch.] Presiding Judge: WANG Lingyun Acting Judge: LI Gang Acting Judge: TAN Yong July 13, 2015 Acting Clerk: WANG Jiaofen

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Appendix: Relevant Laws 1. Contract law of the People’s Republic of China Article 107 Types of Liabilities for Breach - If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. Article 205 Time of Interest Payment - The borrower shall pay the interest at the prescribed time. Where the time of interest payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, if the loan term is less than one year, the interest shall be paid together with the principal at the time of repayment; if the loan term is one year or longer, the interest shall be paid at the end of each annual period, and where the remaining period is less than one year, the interest shall be paid together with the principal at the time of repayment. Article 206 Time of Principal Repayment - The borrower shall repay the principal at the prescribed time. Where the time of repayment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time. Article 207 Delayed Repayment Interest - Where the borrower failed to repay the loan at the prescribed time, it shall pay delayed repayment interest in accordance with the contract or the relevant stipulations of the state. 2. Property Law of the People’s Republic of China Article 179 In order to ensure the payment of debts, an obligor or a third party mortgages his/its properties to the obligee without transferring the possession of such properties, and when the obligor fails to pay due debts or any circumstance as stipulated by the parties concerned for realizing the mortgage right happens, the obligee has the right to seek preferred payments from such properties. 3. Maritime Code of the People’s Republic of China Article 11 The right of mortgage with respect to a ship is the right of preferred compensation enjoyed by the mortgagee of that ship from the proceeds of the auction sale made in accordance with law where and when the mortgagor fails to pay his debt to the mortgagee secured by the mortgage of that ship. 4. Succession Law of the People’s Republic of China Article 33 The successor to an estate shall pay all taxes and debts payable by the decedent according to law, up to the actual value of such estate, unless the successor pays voluntarily in excess of the limit.

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5. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the responsibility to provide evidence in support of its own propositions. Article 144 Article 144 In trying a simple civil case, the basic people’s court or the tribunal dispatched by it may use simplified methods to summon at any time the parties and witnesses.

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Zhejiang High People’s Court Civil Judgment China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No.243 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 145 and page 172 respectively. Cause of Action 211. Dispute over ship mortgage contract. Headnote Affirming lower court decision that guarantor of borrower’s debt was obliged to perform guarantee obligation, despite the fact that lending bank also had a mortgage over borrower’s ships; guarantor’s obligation was not subordinate to mortgages. Summary Plaintiff bank loaned money to Defendant borrower for ship construction and purchase. Defendant’s debt was secured by a mortgage over Defendant’s ships, and was also guaranteed by three guarantors. Defendant borrower failed to repay the debt according to the parties’ agreed payment plan. Plaintiff mortgagee applied to the Court for seizure of Defendant’s ships and requested Defendant to repay the money owed. Defendant and two of the three guarantors did not enter an appearance. The first instance Court held the Plaintiff was entitled to seize Defendant’s ships and to enforce the guarantee against the guarantors. The third guarantor, which had appeared before the first instance Court, appealed, claiming that it was not a guarantor of Defendant’s debt, and alternatively, that any obligation it had as guarantor was only effective if the debt could not be satisfied from the mortgage over Defendant’s ships. The appeal Court held that the Appellant had failed to provide sufficient evidence, and that the first instance Court had applied the law correctly to hold Appellant liable on the guarantee, which by its terms was not secondary to the Plaintiff’s rights to foreclose on the mortgage.

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Judgment The Appellant (the Defendant of first instance): Zhenjiang Xinxing Shipbuilding Co., Ltd. Domicile: Dongjiang, Jiangxin Town, Dantu District, Zhenjiang, Jiangsu. Legal representative: ZHU Xingguo, general manager of the company. Agent ad litem: WANG Kun, lawyer of Jiangsu Hengqiang Law Firm. The Respondent (the Plaintiff of first instance): China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch. Domicile: No.215, Changguo Road, Dinghai District, Zhoushan, Zhejiang. Representative: LIN Zhonghai, president of the branch. Agent ad litem: LI Wei, lawyer of Zhejiang Liuhe (Zhoushan) Law Firm. Agent ad litem: SUN Jingxiong, lawyer of Zhejiang Liuhe (Zhoushan) Law Firm. The Defendant of first instance: Zhejiang Xingguo Shipping Co., Ltd. Domicile: Room 102, No.263, Bei’an Road, Shenjiamen, Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: GUO Bin, male, born on January 9, 1966, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: YE Yashu, female, born on November 7, 1942, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: GUO Jie, male, born on April 9, 1967, Han, living in Putuo District, Zhoushan, Zhejiang. With respect to the case arising from dispute over ship mortgage contract between the Appellant Zhenjiang Xinxing Shipbuilding Co., Ltd. (hereinafter referred to as “Xinxing Company”) and the Respondent China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch (hereinafter referred to as “CCB Zhoushan Chengguan Sub-branch”), the Defendants of first instance, Zhejiang Xingguo Shipping Co., Ltd. (hereinafter referred to as “Xingguo Company”), GUO Bin, YE Yashu, and GUO Jie, the Appellant refused to accept the Ningbo Maritime Court (2015) Yong Hai Fa Zhou Shang Chu Zi No.1 Civil Judgment, and filed an appeal. After the court entertained the case on October 14, 2015, it formed a collegiate panel according to law, and on November 24 of the same year, the parties convened to conduct cross-examination. WANG Kun, agent ad litem of the Appellant Xinxing Company, LI Wei and SUN Jingxiong, agents ad litem of the Respondent CCB Zhoushan Chengguan Sub-branch, participated in the investigation. Now the case has been concluded. CCB Zhoushan Chengguan Sub-branch filed lawsuit to the court of first instance on December 26, 2014 that: In early March 2011, Xingguo Company applied for a loan from CCB Zhoushan Chengguan Sub-branch for the purchase and construction of the ship. The two

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parties signed a fixed-asset loan contract on March 15 of the same year, and agreed that Xingguo Company will borrow 45 million yuan from CCB Zhoushan Chengguan Sub-branch. The contract also stipulated the interest rate of borrowing, the repayment plan, the overdue penalty interest, and the liability for default repayment. On the same day, Xinxing Company, GUO Xianwu, and GUO Bin signed a guarantee contract with CCB Zhoushan Chengguan Sub-branch and voluntarily incurred the loan principal and interest (including compound interest and penalty interest) under the above loan contract of Xingguo Company, and realized the creditor’s rights of CCB Zhoushan Chengguan Sub-branch. The cost of litigation, lawyer’s fees, and other fees are borne by the parties under joint and several liability, and the guaranteed period is two years. On July 30, 2012, Xingguo Company signed a mortgage contract with CCB Zhoushan Chengguan Sub-branch to provide a mortgage loan for M.V. “Xingguo 66” under the above loan contract, and both parties handled the ship mortgage registration procedures. After the loan contract was signed, CCB Zhoushan Chengguan Sub-branch issued a loan of 45 million yuan to Xingguo Company from March 15, 2011 to August 1, 2011, and fulfilled the loan contract obligation. Thereafter, according to the requirements of Xingguo Company, CCB Zhoushan Chengguan Sub-branch and Xingguo Company adjusted the repayment plan. However, after the company obtained the loan, the company did not repay the loan as scheduled. As of November 16, 2014, Xingguo Company had a total of 3,727,437.27 yuan in arrears due to the maturity and unexpired principal (36.5 million yuan) with interest and penalty interest of CCB Zhoushan Chengguan Sub-branch. After repeatedly arresting CCB Zhoushan Chengguan Sub-branch applied to the Shanghai Maritime Court for detaining the ship before the appeal in December 2014. The Shanghai Maritime Court granted the application to CCB Zhoushan Chengguan Sub-branch to detain M.V. “Xingguo 66” of Xingguo Company in Jiangsu. In Ludong, Qidong, the construction location was Zhoushan City, and the construction of the branch and pre-litigation preservation fees were 5,000 yuan. CCB Zhoushan Chengguan Sub-branch believed that Xingguo Company did not return the loan principal with interest according to the contract, and announced that the loan immediately expired. It then claimed to the court, requesting that: 1. Xingguo Company should return the loan of CCB Zhoushan Chengguan Sub-branch with a principal of 36.5 million yuan with interest of 768,300.87 yuan. (including penalty interest), compound interest of 6,081.83 yuan (counted until November 16, 2014), compensation for the behavior of CCB Zhoushan Chengguan Sub-branch to achieve the creditor’s rights of the lawyer’s agency fee of 99,000 yuan, pre-litigation property preservation fee of 5,000 yuan, and pay the loan principal Interest (including the penalty interest and compound interest calculated from the contractual interest rate from the date of November 17, 2014 until the date of the loan repayment). 2. Confirm that CCB Zhoushan Chengguan Sub-branch has the right to mortgage M.V. “Xingguo 66” for the above-mentioned loan principal, interest (including penalty interest and compound interest), and the lawyer’s agency fee for the realization of creditor’s rights of CCB Zhoushan Chengguan Sub-branch. It has priority in compensation for auctions and sales. 3. Xinxing Company and GUO Bin should bear joint and

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several liability for the above-mentioned first debt of Xingguo Company (including the lawyer’s agency fee incurred in the realization of the creditor’s rights of CCB Zhoushan Chengguan Sub-branch). In the scope of his inheritance of GUO Xianwu, GUO Jie and YE Yashu shall bear joint and several liability for the above-mentioned first debt of Xingguo Company (including the lawyer’s agency fee incurred in the realization of the debts of CCB Zhoushan Chengguan Sub-branch). 4. The litigation fee in this case was undertaken by Xinxing Company, GUO Bin, GUO Jie and YE Yashu. Xingguo Company, GUO Bin, GUO Jie, and YE Yashu did not submit their opinions in the first instance. Xinxing Company argued in the first instance that CCB Zhoushan Chengguan Sub-branch was dishonest in the process of signing a guarantee contract with it, and it did not recognize the guarantee contract signed by both parties. It requested the court to dismiss the claim that CCB Zhoushan Chengguan Sub-branch required Xinxing Company to assume the guarantee responsibility. The court of first instance found the following facts: Xingguo Company and CCB Zhoushan Chengguan Sub-branch signed a fixed asset loan contract numbered X70627012712011027 on March 15, 2011. The contract stipulated: Xingguo Company loaned 45 million yuan to CCB Zhoushan Chengguan Sub-branch for the purchase and construction of a 3,200 m3/n cutter suction dredger; the loan period was from March 15, 2011 to April 14, 2015. The loan interest rate is the floating annual interest rate, which is adjusted every 12 months from the interest rate to the benchmark interest rate on the day of interest rate adjustment from the date of full settlement of the principal and interest under the contract. The loan interest rate is the floating annual interest rate, which is adjusted every 12 months from the interest rate to the benchmark interest rate on the day of interest rate adjustment from the date of full settlement of the principal and interest under the contract. The interest rate adjustment date is the corresponding date of the adjustment month for the value date, and there is no corresponding date for the value date in the current month. The last day of the month is the interest rate adjustment date. The penalty interest rate for overdue loans is 50% higher than the loan interest rate, and it is adjusted accordingly based on the adjustment of the loan interest rate. On the same day, Xinxing Company signed a guarantee contract with CCB Zhoushan Chengguan Sub-branch, and Xinxing Company provided a joint liability guarantee for the debts under the fixed assets loan contract number X70627012712011027 signed by Xingguo Company and CCB Zhoushan Chengguan Sub-branch. The two parties agreed in the guarantee contract, including the principal amount of 45 million yuan with interest (including interest and penalty interest), liquidated damages, compensation, and the expenses incurred when CCB Zhoushan Chengguan Sub-branch exercises creditor’s rights and security rights under the main contract. On the same day, Xinxing Company signed a guarantee contract with CCB Zhoushan Chengguan Sub-branch, and Xinxing Company provided joint liability guarantee for the debts under the fixed assets loan contract number X70627012712011027 signed by Xingguo Company and CCB Zhoushan Chengguan Sub-branch. The two parties agreed in the guarantee contract including the principal amount of 45 million yuan with interest

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(including interest and penalty interest), liquidated damages, compensation, and the expenses incurred by CCB Zhoushan Chengguan Sub-branch to realize creditor’s rights and security rights under the main contract (including but not limited to litigation fees, property preservation fees, auction fees, announcement fees, legal fees, etc.). The guaranteed liability is joint and several liability. The guaranteed period is from the effective date of the contract until two years after the expiration of the debt performance period under the main contract. If Xinxing Company agrees to the debt extension period, the guarantee period shall be two years after the expiration of the debt performance period re-arranged by the extension agreement. CCB Zhoushan Chengguan Sub-branch declares that the debt is due in advance according to the main contract, and the guarantee period is two years after the expiration date of the announced debt. The validity of the contract is independent of the main contract. The main contract is not established, does not take effect, is invalid, partially invalid or is revoked, and is released without affecting the validity of the guarantee contract. The main contract is confirmed as not established, ineffective, invalid, partially invalid or revoked, and is released. Xinxing Company also bears joint and several liability for the debts formed by the debtor due to the return of property or compensation for losses. CCB Zhoushan Chengguan Sub-branch and Debtor Agreement Change Main Contract Terms (including but not limited to change of repayment method, repayment plan, change of the start date or deadline of the debt performance period without extension of the debt performance period, etc.). Xinxing Company agrees to assume joint and several liability for the debt under the changed main contract. Without the consent of Xinxing Company, if CCB Zhoushan Chengguan Sub-branch and the debtor agree to extend the debt performance period or increase the principal amount of the debt, Xinxing Company will only assume joint and several liability for the debt under the main contract before an alterations in accordance with the contract (including but not limited to change of repayment method, repayment plan, change of the start date or deadline of the debt performance period without extension of the debt performance period, etc.). Xinxing Company agrees to assume joint and several liability for the debt under the altered main contract. Without the consent of Xinxing Company, if CCB Zhoushan Chengguan Sub-branch and the debtor agree to extend the debt performance period or increase the principal amount of the debt, Xinxing Company will only assume joint and several liability for the debt under the main contract before the change in accordance with the contract. If the debt under the main contract expires or CCB Zhoushan Chengguan Sub-branch declares the debt to expire in advance according to the contractual agreement or the law, the debtor fails to perform in full and on time, or the debtor violates the main contract, Xinxing Company shall immediately assume the guarantee responsibility within the scope of the guarantee. On the same day, GUO Xianwu and GUO Bin signed a personal guarantee contract with CCB Zhoushan Chengguan Sub-branch to provide joint liability guarantee for the above-mentioned 45 million yuan loan of Xingguo Company in CCB Zhoushan Chengguan Sub-branch. The scope of the guarantee is the principal amount of 45 million yuan with interest (including interest and penalty interest), liquidated damages, compensation, and the expenses incurred by

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CCB Zhoushan Chengguan Sub-branch to realize creditor’s rights and security rights (including but not limited to litigation fees, property preservation fees, auction fees, announcement fees, legal fees, etc.). From March 15, 2011 to August 1, 2011, CCB Zhoushan Chengguan Sub-branch issued a loan of 45 million yuan to Xingguo Company. On July 30, 2012, CCB Zhoushan Chengguan Sub-branch signed a mortgage contract with Xingguo Company. Xingguo Company provided a mortgage guarantee for its above-mentioned 45 million yuan loan with M.V. “Xingguo 66”. The guarantee scope is delineated in the fixed assets loan contract numbered X70627012712011027. All debts under the item, including but not limited to all principal, interest (including compound interest and penalty interest), liquidated damages, compensation, and the costs incurred by CCB Zhoushan Chengguan Sub-branch to realize creditor's rights and security rights (including but not limited to legal fees, property Security fees, lawyer fees, etc.). On the same day, the two sides handled the registration of the mortgage of M.V. “Xingguo 66”. During the performance of the loan contract, CCB Zhoushan Chengguan Sub-branch and Xingguo Company signed three supplementary agreements for fixed-asset loan contracts on September 14, 2012, March 8, 2013, and March 11, 2014, respectively. Xingguo Company refinanced the repayment plan determined by the supplementary agreement of March 11, 2014, and agreed that the matters not covered by the supplementary agreement are still fulfilled in accordance with the loan contract. After the repayment period, the company repaid the loan principal of 8.5 million yuan to CCB Zhoushan Chengguan Sub-branch. On June 14, 2014, the repayment was breached. CCB Zhoushan Chengguan Sub-branch announced that the loan had expired in advance. As of November 16, 2014, the total loan amount of CCB Zhoushan Chengguan Sub-branch was 36.5 million yuan, interest (including penalty interest) 768,300.87 yuan, and compound interest 6,071.83 yuan. In order to deal with the litigation matters related to this case, CCB Zhoushan Chengguan Sub-branch signed an agency agreement with Zhejiang Liuhe (Zhoushan) Law Firm on December 10, 2014, and paid a lawyer fee of 99,000 yuan. CCB Zhoushan Chengguan Sub-branch applied to the Shanghai Maritime Court to detain the ship before the appeal in December 2014. The Shanghai Maritime Court granted its application to detain M.V. “Xingguo 66” of Xingguo Company in Lusigang, Qidong, Jiangsu. The behavior of this payment is 5,000 yuan. It was also found out that GUO Xianwu died on December 16, 2014, and his wife YE Yashu, ZI Guobin, and GUO Jie were his legal heirs. The court of first instance held that whether Xinxing Company should assume joint guarantee responsibility for the 45 million yuan loan of Xingguo Company according to its guarantee contract signed with CCB Zhoushan Chengguan Sub-branch is the focus of the dispute in this case. In the court trial certificate, Xinxing Company has no objection to the authenticity of the guarantee contract signed with CCB Zhoushan Chengguan Sub-branch. The contract is true to both parties and should be considered valid. The contract has clearly stipulated that the period during which Xinxing Company assumes the guarantee responsibility is from the effective date of the contract to two years after the expiration of the debt

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performance period under the main contract. If CCB Zhoushan Chengguan Sub-branch declares the debt to expire earlier according to the main contract, the guarantee period is two years after the expiration date of the announced debt. If CCB Zhoushan Chengguan Sub-branch and the debtor agreement change the main contract terms (including but not limited to the change repayment method, the repayment plan, the start date or the deadline change of the debt performance period without extending the debt performance period, etc.). The company agrees to assume joint and several liability for the debts under the changed main contract. After the Xingguo Company and CCB Zhoushan Chengguan Sub-branch changed the repayment plan without extending the period of debt performance, Xinxing Company shall bear the joint guarantee responsibility according to the above-mentioned terms stipulated in the contract, and Xinxing Company shall change the defense without the consent of the repayment plan. The reason is not established and the court of first instance does not accept the letter. The provisions of the fixed assets loan contract numbered X70627012712011027 regarding the provision of shipbuilding and construction contracts, the entrusted payment, the basic conditions of the project, and the financial constraint indicators are the rights and obligations of both parties established by CCB Zhoushan Chengguan Sub-branch and Xingguo Company in the loan contract. The guarantee contract of CCB Zhoushan Chengguan Sub-branch and Xinxing Company did not stipulate the content and performance of the above clauses. Xinxing Company shall not assume the guarantee responsibility for the defense claims based on the content and performance of these clauses. There is no factual and legal basis to adopt the letter. The approval of China Construction Bank’s debts approved by the court of first instance and the approval of China Construction Bank’s approval of the public credit business are internal bank documents. The contents of this document cannot prove that Zhoushan Chengguan Sub-branch and Xinxing Company has reached “by ship” before the contract is signed. The mortgage replacement guarantee was agreed and the contents of the guarantee contract were formed. XU Meng, as the main responsible person of the credit business at the time, also said that the two parties had not discussed the replacement guarantee, and the approval period was before CCB Zhoushan Chengguan Sub-branch signed a guarantee contract with Xinxing Company. There is no evidence to prove that the Zhoushan Chengguan Sub-branch and Xinxing Company have changed or revoked the guarantee contract after M.V. “Xingguo 66” was mortgaged. Therefore, Xinxing Company believes that the content of the approval constitutes a guarantee contract and does not assume the guaranteed liability is without legal basis. The court denied this claim. The loan contract, repayment agreement, and mortgage contract signed by CCB Zhoushan Chengguan Sub-branch and Xingguo Company shall be deemed to be valid by the parties, and both parties shall perform the contractual obligations according to the contract. If Xingguo Company fails to repay the principal and interest of the loan in accordance with the agreed time, it shall be liable for breach of contract, and it shall bear the liability for breach of contract for the repayment of principal and interest to CCB Zhoushan Chengguan Sub-branch. Xingguo Company provided a mortgage guarantee for M.V. “Xingguo 66”, and both parties

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handled the ship mortgage registration. The mortgage is in compliance with the law. Therefore, CCB Zhoushan Chengguan Sub-branch has the right to mortgage M.V. “Xingguo 66”. The ship will be given priority in the auction and the sale price. The guarantee contract signed by CCB Zhoushan Chengguan Sub-branch and Xinxing Company, GUO Xianwu and GUO Bin is also expressed by the parties in the true meaning of the contract and should be deemed valid. The three guarantors should assume the guarantee responsibility according to the agreement of the guarantee contract. After GUO Xianwu’s death, his legal heirs, YE Yashu, GUO Bin and GUO Jie, should pay off GUO Xianwu’s debt when inheriting his inheritance, but only to the actual value of the inheritance. The agency fees and security fees paid by the CCB Zhoushan City Guanzhi Action Litigation are realized by Xingguo Company, and they are also covered by the guarantees agreed in the three guarantee contracts. In summary, the complaints of CCB Zhoushan Chengguan Sub-branch are reasonable and supportive. In accordance with Article 107, Article 206, Article 207 of the Contract Law of the People’s Republic of China, Article 11 of the Maritime Code of the People’s Republic of China, and Article 33 of the Succession Law of the People’s Republic of China, Article 64 Paragraph 1, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the first-instance court ruled on July 13, 2015: 1. Xingguo Company shall, within 10 days, the return CCB Zhoushan Chengguan Sub-branch 36.5 million yuan, and the interest will be paid (including interest of 768,300.87 yuan, compound interest of 60,78.83 yuan, and penalty interest calculated from the contractual interest rate from the date of November 17, 2014 to the date of the loan settlement), reimbursing CCB Zhoushan Chengguan Sub-branch, the behavior of the lawyer to achieve the realization of the creditor’s agent fee of 99,000 yuan, and the pre-litigation property preservation fee of 5,000 yuan. 2. CCB Zhoushan Chengguan Sub-branch on the first paragraph of the above-mentioned judgment on Xingguo Company’s M.V. “Xingguo 66”, with the mortgage right of the ship, has the right to be paid preferentially from the auction or the sale price of the ship. 3. Xinxing Company and GUO Bin shall bear the joint responsibility for the first item of the above judgment to CCB Zhoushan Chengguan Sub-branch. YE Yashu and GUO Jie took the joint guarantee responsibility to CCB Zhoushan Chengguan Sub-branch within the actual value of the inheritance of GUO Xianwu’s estate in the first paragraph of the above judgment. If the money obligation was not fulfilled within the time limit specified in the judgment, it shall be in accordance with the Civil Procedure Law of the People’s Republic of China Article 253, double the payment of interest on debts during the period of delay in performance. The first-instance case acceptance fee of this case was 228,692 yuan, which was jointly paid by Xingguo Company, Xinxing Company, GUO Bin, GUO Jie and YE Yashu. Xinxing Company refused to accept the first-instance civil judgment and appealed to the court that: firstly, the court of first instance wrongly held for Xinxing Company on CCB Zhoushan Chengguan Sub-branch on Xingguo Company’s borrowing commitment to joint and several liability. The court of first instance did not find relevant facts. 1. The approval and approval comments of the superior bank, although they are internal documents of the bank, which have no directly legal effect,

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are systematic and representative of the business management. CCB Zhoushan Chengguan Sub-branch approves the higher-level bank before the actual loan business of the case occurs, and upon approval, CCB Zhoushan Chengguan Sub-branch will operate in accordance with the approval in the actual operation. CCB Zhoushan Chengguan Sub-branch will inevitably present and provide the above-mentioned approval to Xinxing Company. Therefore, the content of the phased guarantee in the reply constitutes the content of the guarantee contract relationship between the two parties. 2. The court of first instance has already realized that the commitment of Xinxing Company to assume the guarantee responsibility is the focus of the dispute in this case. After asking the two parties to submit written explanations from their respective managers, the court of first instance made a remark on LI Yu and XU Meng of CCB Zhoushan Chengguan Sub-branch. In the cross-examination, Xinxing Company only recognizes the authenticity of the transcript itself, and it does not confirm the authenticity of the transcript, and it requires the witness to testify in court. The court of first instance did not respond, and it also violated the law to testify. 3. The guarantee contract is from the contract, and the loan contract is its main contract. The content of the main contract must be related to the guarantor’s risk responsibility. The shipbuilding contract of this case is signed by Xinxing Company and Xingguo Company. Therefore, whether the contract is provided and the version provided is correct, Xinxing Company can be controlled, the basic conditions of the project, the financial constraint indicators, and the requirements and conditions of the entrusted payment are all related to the guarantor’s responsibility and risk. 2. The court of first instance did not consider the order of responsibility of “guarantor” and “mortgagee,” and directly placed the mortgagee and guarantor in the same position, which is a violation of the law. The mortgage ship in this case is provided by the debtor Xingguo Company itself, and the guarantee of the “People’s Insurance” and “Property Insurance” in the contract is “not agreed;” at least “the agreement is not clear.” Therefore, even if Xinxing Company has to bear the guarantee responsibility, Article 176 of the Property Law of the People’s Republic of China stipulates that the guarantee responsibility should also be the responsibility after the realization of the security interest in the collateral, rather than the parallel responsibility. The applicant requests this court to reverse the first-instance judgment, send back for a retrial or dismiss all CCB Zhoushan Chengguan Sub-branch’s claim to Xinxing Company. CCB Zhoushan Chengguan Sub-branch replied that: firstly, the approval of the superior bank and the performance of the loan contract terms do not constitute an agreement between Xinxing Company and CCB Zhoushan Chengguan Sub-branch. The first-instance judgment is clear and the procedure is legal. 1. The approval of the superior bank is only part of the internal documents of the bank. In actual operation, the risk of preventing the behavior of CCB Zhoushan City is subject to the specific circumstances requiring the borrower to provide higher guaranteed measures than the approval. Therefore, the contents of this document cannot prove that Xinxing Company and CCB Zhoushan Chengguan Sub-branch have reached the agreement of “guaranteed ship mortgage replacement” before signing the contract. 2. The performance of the terms of the loan contract is not stipulated in the

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guarantee contract and does not constitute an agreement on the rights and obligations between the parties. The guarantee provided by Xinxing Company to the debtor is based on the voluntary burden obligation, and the loan has been issued in this case, and the corresponding ship has also been completed. Xinxing Company should assume the guarantee responsibility according to the agreement. 3. After the first-instance court investigates the loan handling personnel, it will promptly report the investigation to the party’s cross-examination, and the procedure is legal. In their written cross-examination opinions, the relevant parties have no objection to the authenticity of the above-mentioned investigation transcripts. 2. In this case, the order of the guarantee contract for the realization of the security right is clearly defined, and the law applicable to the court of first instance is correct. The case involved in the guarantee contract stipulates that “whether the creditor’s right under the main contract has other guarantees or whether the other guarantees are provided by the debtor itself, the guarantor’s guarantee liability under this contract is not reduced, and CCB Zhoushan Chengguan Sub-branch can directly realize guarantor responsibility within the scope of the contract.” The judgment of the first instance is clear, the applicable law is correct, and the procedure is legal. CCB, therefore, requests to dismiss the appeal and maintain the original judgment. Xingguo Company, GUO Bin, YE Yashu, and GUO Jie did submit replies. In the second instance, Xinxing Company submitted three new pieces of evidence: evidence 1, Application Request for the Investigation of China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch, to prove that Xinxing Company has filed an investigation with the bank’s two-tier regulatory agency; evidence 2 Construction Contract for Ships, to prove that the contract cost is 13.25 million yuan, but the bank has loaned 45 million yuan; evidence 3, the former CCB Zhoushan Chengguan Sub-branch customer manager JIANG Lun’s recording, to prove that JIANG Lun, as a client manager, will only be based on the approval of the bank, and the approval was to be a phased guarantee. The evidence submitted by Xinxing Company was described by CCB Zhoushan Chengguan Sub-branch as follows: The authenticity, legality and relevance of evidence 1 are objectionable and can only reflect Xinxing Company’s partial opinion to the relevant departments, and cannot prove that it is necessarily true. The application was not relevant to the case before the relevant department gave a corresponding opinion. CCB Zhoushan Chengguan Sub-branch objected to the authenticity, legitimacy and relevance of the evidence. On evidence 2, when Xingguo Company applied for a loan to the Bank, the price agreed in the shipbuilding contract was 88 million yuan, and the contract was signed 10 days earlier. The contract was stamped with the official seal of Xinxing Company and Xingguo Company, as well as the signatures of the legal representatives of the two companies. The company also provided the investment project record notice stamped by the Development and Reform Commission of Putuo District of Zhoushan. The total investment of the project recorded in the notice was also 88 million yuan. The two materials were checked and archived after checking the original. The loan amount in this case was determined based on 88 million yuan. The Bank granted a project loan equivalent to 50% of the project

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cost, and the 45 million yuan was paid to the bank account of Xingguo Company according to the project construction period. The shipbuilding contract provided by the second instance of Xinxing Company is false and cannot be used as final evidence. CCB Zhoushan Chengguan Sub-branch objected the authenticity, legitimacy, and relevance of the evidence. On evidence 3, the sound of JIANG Lun cannot be determined in the recording. Even if it is the voice of JIANG Lun, it is obviously illegal to record others for use as impeachment testimony in court. In addition, even if the recorded content is true, the relevant content of the staged guarantee in the recording cannot prove the officially signed written materials. The staged guarantee in the recording is not consistent with the contents of the Guaranty Contract. The recording cannot be used as final evidence. CCB Zhoushan Chengguan Sub-branch submitted a new piece of evidence: Construction Contract for Ships, to prove that the contract cost submitted by Xingguo Company was 88 million yuan. Concerning the evidence submitted by CCB Zhoushan Chengguan Sub-branch, Xinxing Company believes that the authenticity of the contract will not be recognized, and the bank may be involved in the forgery. Xingguo Company, GUO Bin, YE Yashu, and GUO Jie did not submit new evidence materials. The evidence submitted by the court for the second instance of Xinxing Company and CCB Zhoushan Chengguan Sub-branch is as follows: the evidence submitted by Xinxing Company is applied for investigation, and the content is that Xinxing Company believes that CCB Zhoushan Chengguan Sub-branch violates the Commercial Bank Law and the Banking Supervision and Administration Law on “Honest Credit”. The provisions of “prudent management” shall be requested to be investigated and punished by the competent department. Since Xinxing Company and CCB Zhoushan Chengguan Sub-branch have signed a written guarantee contract, Xinxing Company has no objection to the authenticity of the guarantee contract. If CCB Zhoushan Chengguan Sub-branch violates the relevant banking regulations in the process of handling the loan business, such violation should be investigated by the competent department of the bank. Such violation does not affect the determination of the validity of the contract, so the application is not related to the handling of the entity of the case. Evidence 2 Shipbuilding contract, although the contract is in an original form, Xinxing Company failed to prove that the contract is the loan contract involved in the case of the “purchasing and constructing 3,200 m3/ n cutter suction dredger” as stated in the clause. The relationship between the contract and the case is not confirmed. The third evidence the conversation was recorded, and the identity of the interviewer could not be verified, so the authenticity could not be confirmed. In summary, the court did not recognize the three pieces of evidence submitted by Xinxing Company and others. The shipbuilding contract submitted by CCB Zhoushan Chengguan Sub-branch is not recognized because it is a copy, and Xinxing Company does not recognize its authenticity. The facts ascertained by the first-instance judgment are supported by corresponding evidence. Although Xinxing Company did not find that the guarantee provided by the first-instance judgment was a staged guarantee, the facts were

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unclear, but it could not provide evidence to prove that the guarantee period was carried out after the parties signed the guarantee contract. The court confirmed the first-instance’s fact-finding. The court believes that, according to the appeals of Xinxing Company and others and the defence opinions of CCB Zhoushan Chengguan Sub-branch, the focus of the dispute in this case is whether or not Xinxing Company should bear the joint guarantor responsibility and what the order of realization of the security interest in the loan debts of this case is. Both parties have no objection to the focus of the controversy that the Court has summarized, and the analysis of this case by the court is as follows: 1. Shall Xinxing Company bear joint and several liability Xinxing Company appealed that the guarantee provided by it was a phased guarantee. After the mortgage was established in this case, the guaranteed responsibility of Xinxing Company was waived. The court believes that the guarantee contract signed between Xinxing Company and CCB Zhoushan Chengguan Sub-branch clearly stipulates that the period during which Xinxing Company assumes the guarantee responsibility is “from the date of the contract’s effective date to two years after the expiration of the debt performance period under the main contract, such as CCB. Zhoushan Chengguan Sub-branch declares that the debt is due in advance according to the main contract, and the guarantee period is two years after the expiration date of the announced debt. If CCB Zhoushan Chengguan Sub-branch and the debtor agreement change the main contract terms (including but not limited to the change repayment method, the repayment plan, the change of the start date, or the deadline of the debt performance period in the case of no extension of the debt performance period, etc.), Xinxing Company agrees to assume joint and several liability for the debt under the changed main contract.” Houxingguo Company and CCB The Zhoushan Chengguan Sub-branch changed the repayment plan without extending the period of debt performance, and Xinxing Company should assume joint and several liability as agreed. Although the approval of China Construction Bank’s debt approval and China Construction Bank’s approval letter for the approval of the public credit business contains the content of “guarantee replacement by the new ship after the ship is completed”, the document is an internal bank document. The time is in the front, and after the guarantee contract is signed, the above content is not recorded in the guarantee contract that reflects the mutual agreement. In addition, Xinxing Company has no evidence to prove that CCB Zhoushan Chengguan Sub-branch and Xinxing Company, after M.V. “Xingguo 66” mortgage, the company has changed or revoked the guarantee contract. Therefore, Xinxing Company believes that the content of the approval constitutes a guarantee contractual relationship without factual and legal basis, and the court does not accept the such a claim. The court of first instance found out that CCB Zhoushan Chengguan Sub-branch signed a guarantee contract with Xinxing Company, and asked the two parties to submit the specific contact information of the handling personnel at the time of signing the contract for verification. CCB Zhoushan Chengguan Sub-branch

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provided contact information for LI Yu, XU Meng, JIANG Lun, and YI Yi. Xinxing Company only indicated that JIANG Lun was involved in the contract signing. The court of first instance contacted the four people. JIANG Lun and YI Yi refused to cooperate with the investigation. The court of first instance investigated LI Yu and XU Meng and handed the transcript to both parties for verification. The procedure was not wrong. Xinxing Company appealed that it had applied for witnesses to testify during the cross-examination process, and the court of first instance did not reply and the procedure was improper. Since the act of applying for witnesses to testify in court is the same in nature as the evidence-providing act, it should comply with the requirements of the time limit for proof. Therefore, Article 117 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China clearly stipulates that the application for witnesses to appear in court to testify shall be made before the expiration of the period of proof. In this case, Xinxing Company did not file an application within the time limit for proof, and the first-instance court did not reply without obviousness. As for the validity of the proofs of LI Yu and XU Meng’s investigations, it is not inappropriate for the court of first instance to comprehensively determine the performance of the loan contract, guarantee contract, and payment of the case. 2. On the order of realization of security interests Xinxing Company appealed that even if it had to assume the guarantee responsibility, it should be the responsibility after the realization of the security interest in the collateral, rather than the parallel, responsibility. Article 176 of the Property Law of the People’s Republic of China stipulates that “when the guarantee of the secured creditor’s right is secured by another person, if the debtor fails to perform the debt due or the circumstances of the realization of the security interest agreed by the parties, the creditor shall comply with it. The agreement to realize the creditor’s rights; if there is no agreement or the agreement is not clear, and the debtor provides the guarantee of the property itself, the creditor shall first realize the creditor’s right in respect of the guarantee of the property.” In this case, the guarantee contract signed between Xinxing Company and CCB Zhoushan Chengguan Sub-branch agreed that “regardless of whether CCB Zhoushan Chengguan Sub-branch has other guarantees for the creditor’s rights under the main contract (including but not limited to guarantees, mortgages, pledges, guarantees, standby letters of credit, etc.), the method, and whether or not other guarantees are provided by the debtor itself, the guarantee liability of Xinxing Company under this contract is not reduced. CCB Zhoushan Chengguan Sub-branch can directly request Xinxing Company to undertake the guarantee within its guarantee scope in accordance with this contract. ‘Responsibility,’ the above agreement indicates that Xinxing Company explicitly waives the existence of other guarantees in the creditor’s rights, including the debtor’s own provision of collateral, requiring the creditor to first realize the guarantee provided by the debtor’s own property. The agreement does not belong to the provisions of the above property law.” Therefore, after Xingguo Company cannot return the loan,

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CCB Zhoushan Chengguan Sub-branch can “directly” require Xinxing Company to assume the guarantee responsibility according to the agreement of the guarantee contract with Xinxing Company. There was nothing wrong with the judgment of the court of first instance. In summary, the arguments on appeal for Xinxing Company cannot be established and will not be supported. The first-instance judgment found that the facts were clear and the application of law was correct. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 228,692 yuan, shall be borne by Zhenjiang Xinxing Shipbuilding Co., Ltd. The judgment is final. Presiding Judge: KONG Fanhong Acting Judge: CHEN Wei Acting Judge: HUO Tong December 31, 2015 Clerk: DING Lin

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The Supreme People’s Court of the People’s Republic of China Civil Ruling China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch v. Zhenjiang Xinxing Shipbuilding Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No.3547 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 145 and page 158 respectively. Cause of Action 211. Dispute over ship mortgage contract. Headnote Affirming lower court decisions holding guarantor of borrower’s debt to be obliged to perform guarantee obligation, despite the fact that lending bank also had a mortgage over borrower’s ships; guarantor’s obligation was not subordinate to mortgages. Summary Plaintiff bank loaned money to Defendant borrower for ship construction and purchase. Defendant’s debt was secured by a mortgage over Defendant’s ships, and was also guaranteed by three guarantors. Defendant borrower failed to repay the debt according to the parties’ agreed payment plan. Plaintiff mortgagee applied to the Court for seizure of Defendant’s ships and requested Defendant to repay the money owed. Defendant and two of the three guarantors did not enter an appearance. The first instance Court held the Plaintiff was entitled to seize Defendant’s ships and to enforce the guarantee against the guarantors. The third guarantor, which had appeared before the first instance Court, appealed, claiming that it was not a guarantor of Defendant’s debt, and alternatively, that any obligation it had as guarantor was only effective if the debt could not be satisfied from the mortgage over Defendant’s ships. The appeal Court held that the Appellant had failed to provide sufficient evidence, and that the first instance Court had applied the law correctly to hold Appellant liable on the guarantee. The third guarantor applied to the Supreme People’s Court for a retrial, arguing that the intermediate Court of appeal applied the law incorrectly. The Supreme People’s Court rejected the retrial since the applicant’s claims are unsubstantiated,

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and both lower courts applied the law correctly in holding that, by the terms of the guarantee contract, the guarantor’s obligation was not secondary to Plaintiff’s rights to foreclose on the mortgage.

Ruling The Claimant of Retrial (the Defendant of first instance, the Appellant of second instance): Zhenjiang Xinxing Shipbuilding Co., Ltd. Domicile: Dongjiang, Jiangxin Town, Dantu District, Zhenjiang, Jiangsu. Legal representative: ZHU Xingguo, general manager of the company. Agent ad litem: WANG Kun, lawyer of Jiangsu Hengqiang Law Firm. Agent ad litem: WU Chao, lawyer of Jiangsu Hengqiang Law Firm. The Respondent of Retrial (the Plaintiff of first instance, the Respondent of second instance): China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch. Domicile: No.215, Changguo Road, Dinghai District, Zhoushan, Zhejiang. Representative: LIN Zhonghai, president of the branch. The Defendant of first instance: Zhejiang Xingguo Shipping Co., Ltd. Domicile: Room 102, No.263, Beian Road, Shenjiamen, Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: YE Yashu, female, born on November 7, 1942, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: GUO Bin, male, born on January 9, 1966, Han, living in Putuo District, Zhoushan, Zhejiang. The Defendant of first instance: GUO Jie, male, born on April 9, 1967, Han, living in Putuo District, Zhoushan, Zhejiang. The Claimant of Retrial Zhenjiang Xinxing Shipbuilding Co., Ltd. (hereinafter referred to as “Xinxing Company”), the Respondent of Retrial China Construction Bank Co., Ltd. Zhoushan Chengguan Sub-branch (hereinafter referred to as “CCB Zhoushan Chengguan Sub-branch”), the Defendants of first instance, Zhejiang Xingguo Shipping Co., Ltd. (hereinafter referred to as “Xingguo Company”), YE Yashu, GUO Bin, and GUO Jie, are all parties in this case of a ship mortgage contract dispute. The Claimant of Retrial refused to accept the Civil Judgment of Zhejiang High People’s Court (2015) Zhe Hai Zhong Zi No.243 and applied for retrial to this court. The court formed a collegiate panel to conduct a review. Now the case has been concluded.

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Xinxing Company applied for retrial that: (1) the court of first instance ascertained that China Construction Bank Co., Ltd. Zhoushan Branch gave CCB Zhoushan Chengguan Sub-branch’s debt approval, and the approval of the public credit business approval form belongs to the guarantee contract between Xinxing Company and CCB Zhoushan Chengguan Sub-branch. Although the above-mentioned approval and approval comments are internal documents of the bank, CCB Zhoushan Chengguan Sub-branch presented and provided the above documents to Xinxing Company during the operation. CCB Zhoushan Chengguan Sub-branch promised that Xinxing Company would no longer assume the guarantee responsibility after CCB Zhoushan Chengguan Sub-branch obtains the mortgage of the ship. The court of second instance found that the above-mentioned documents did not constitute the contents of the guarantee contract. The judgment of second instance ascertain facts incorrectly. (2) The court of first instance has investigated and produced a record of LI Yu, the president of CCB Zhoushan Chengguan Sub-branch, and XU Meng, the assistant to the president. Therefore, Xinxing Company applied for the two witnesses to testify in court instead of submitting evidence. The court of second instance found that Xinxing Company’s petition was beyond its discovery period. So the court of second instance applied the law incorrectly. Even if it is beyond the discovery period, the people’s court should explain why they denied Xinxing Company’s petition instead of not addressing it in the judgment. (3) Shipbuilding Contract provided by Xinxing Company during the second instance is the original. The judgment of second instance determined that the evidence was not related to the case. The court of second instance applied the law incorrectly in adjudicating the evidentiary value of the contract. (4) Even if Xinxing Company needs to assume the guarantee responsibility, it should also assume responsibility after CCB Zhoushan Chengguan Sub-branch realizes the security interest in the mortgage. In the case of the guarantee contract, “whether the other guarantees are provided by the debtor itself or not, the guarantee liability of Xinxing Company under this contract is not reduced.” It means that the guarantee scope or amount of Xinxing Company is not reduced by the existence of other guarantees. Such exemptions do not relate to a security interest realization order of Xingguo Company’s mortgage liability and merging companies’ guarantor liability. The court of second instance held that Xinxing Company should bear the guarantee responsibility as first priority. The court applied the law incorrectly. In summary, in accordance with Article 200 Sub-paragraph 2 and Sub-paragraph 6 of the Civil Procedure Law of the People’s Republic of China, Xinxing Company applies for a retrial of the case. The court holds that the case shall be reexamined and reviewed in accordance with Article 200 of the Civil Procedure Law of the People’s Republic of China. First of all, the issue of the approval of the debts issued by the China Construction Bank Corporation Zhoushan Branch to CCB Zhoushan Chengguan Sub-branch and the approval of the public credit grant business constitute a guarantee contract. Article 10 of the Contract Law of the People’s Republic of China stipulates: “the parties shall conclude a contract in written form, oral form and other forms. Where the law or administrative regulations stipulate that the written form

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shall be in written, …” Article 13 of the Law stipulates: “the guarantor and the creditor shall conclude the guarantee contract in written.” Accordingly, the guarantee contract shall be in the form of a written contract and shall not be made verbally or in other forms. The above-mentioned approval document is a document formed by the bank's internal loan approval process. The contents of the document “the replacement of the new ship after the ship is completed” are not recorded in written and signed into the guarantee contract signed by Xinxing Company and CCB Zhoushan Chengguan Sub-branch. However, it does not constitute a commitment made by CCB Zhoushan Chengguan Sub-branch to Xinxing Company regarding the guarantees. The court of first instance found that the above-mentioned approval documents were not part of the guarantee contract. The guarantee contract signed in written should determine the agreement between the creditor and the guarantor, and the facts and applicable laws were not improper. In the case that the guarantor and the creditor have signed the terms of the written guarantee contract, the guarantee contract concluding process would not affect the determination of the contents of the guarantee contract. Whether or not the witness appears in court or not has nothing to do with the outcome of the case. The court of first-instance did not reply to the application for witnesses from Xinxing Company to testify in court, and this was not enough to constitute an incorrect application of the law. In summary, the reasons for retrial applications by Xinxing Company regarding the content of the original judgment and the contents of the guarantee contract and the evidence of the parties cannot be substantiated. Secondly, whether or not the first instance’s denial Xinxing Company’s Shipbuilding Contract as evidence constitutes procedure error. Although Xinxing Company submitted the Shipbuilding Contract. Such evidence could not prove that the contract was the shipbuilding contract referred to in the loan contract involved. The court of second instance found that the evidence submitted by Xinxing Company was not related to the case. So the evidence was not allowed by the court. There is nothing wrong about it. The reason for the retrial application of Xinxing Company cannot be substantiated. Thirdly, whether or not the first instance judgment applied the law incorrectly in determining the scope of the guarantor responsibility of Xinxing Company. The case involved in the guarantor contract is the true intent of CCB Zhoushan Chengguan Sub-branch and Xinxing Company. The contract is legal and valid. The guarantor contract stipulates: “Regardless of whether CCB Zhoushan Chengguan Sub-branch has other guarantees (including but not limited to guarantees, mortgages, pledges, guarantees, standby letters of credit, etc.) on the creditor’s rights under the main contract, and regardless guarantees are owned by the debtor itself, Xinxing Company’s guarantor obligations under this contract are not reduced. CCB Zhoushan Chengguan Sub-branch can directly request Xinxing Company to assume the guarantee responsibility within the scope of its guarantees in accordance with this contract. The agreement on the scope of the above guarantees is clear. It is clear that regardless there is a guarantor of the debtor’s own property, Xinxing Company must bear the guarantee responsibility within the agreed guarantee. Article 176 of the Property Law of the People’s Republic of China stipulates: “where the secured

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property of the secured creditor is secured by another person, if the debtor fails to perform the debt due or the circumstances of the realization of the security interest agreed by the parties, the creditor shall In accordance with the agreement to realize the creditor’s rights; if there is no agreement or the agreement is not clear, and the debtor provides the guarantee of the property itself, the creditor shall first realize the creditor’s right in respect of the guarantee of the property; ….” According to the provision, in the case of the coexistence of the property insurance and the personal insurance, if there is an agreement on the realization of the creditor’s rights, it shall be agreed upon from it. Therefore, the original judgment ordered Xinxing Company to assume joint and several liability as promised, and the application of law was correct. Xinxing Company advocates that the creditor’s rights should be realized first for the guarantee of the debtor. It only assumes the guarantee liability for the part of the creditor’s right that cannot be settled by the property right guarantee. There is no contractual or legal basis for this, and the reason for the retrial application cannot be substantiated. In summary, the retrial application of Xinxing Company does not comply with Article 200 of the Civil Procedure Law of the People’s Republic of China. In accordance with Article 204 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, and Article 395 Paragraph 2 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the ruling is as follows. Dismiss the application for retrial of Zhenjiang Xinxing Shipbuilding Co., Ltd. Presiding Judge: GAO Xiaoli Judge: SHEN Hongyu Judge: YANG Honglei September 12, 2017 Clerk: DING Yi

Guangzhou Maritime Court Civil Judgment China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2016) Yue 72 Min Chu No.600 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the judgment of retrial are on page 183 and page 191 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant carrier held not liable for cargo lost when carrying ship sank after alliding with an unidentified underwater object, as the loss was caused by unavoidable force majeure. Summary The Plaintiff, China Pacific Property Insurance Co., Ltd. Shenzhen Branch (China Pacific), filed suit as subrogated cargo insurer against Lin Jinsheng and Guangdong Huitong Shipping Co., Ltd (Guangdong) for the loss of 918.176 tons of red sorghum. The cargo sank with the “Jiatong 138” after the vessel allided with an unidentified object underwater and subsequently sank. After trial, the Court held that the Defendants were not liable because the accident was caused by an unavoidable force majeure.

Judgment The Plaintiff: China Pacific Property Insurance Co., Ltd. Shenzhen Branch. Address: 20th Floor, News Building, No.2, Middle Shennan Road, Futian District, Shenzhen, Guangdong. Person in charge: GUO Zhenxiong, general manager of the branch. Agent ad litem: ZHUANG Dongxiao, lawyer of Guangdong Hengfu (Shanghai) Law Firm. Agent ad litem: YANG Fan, intern lawyer of Guangdong Hengfu Law Firm. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_9

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The Defendant: LIN Jinsheng, male, born on March 1, 1958, Han, living in No.160, Water Street, Meibei Community Neighborhood Committee, Meilu Street, Wuchuan, Guangdong. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. The Defendant: Guangdong Huitong Shipping Co., Ltd. (formerly known as Wuchuan Huitong Shipping Co., Ltd.) Domicile: 2nd Floor, Block 2, North Exit, Wuchuan City Center, Zhanjiang, Guangdong. Legal representative: CHEN Wenyu, executive director of the company. Agent ad litem: RUAN Weizhou, manager of the company. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, China Pacific Property Insurance Co., Ltd. Shenzhen Branch, and the Defendants, LIN Jinsheng and Guangdong Huitong Shipping Co., Ltd. (hereinafter referred to as Huitong), after entertaining the case on June 21, 2016, the court applied general procedure and held a hearing in public. Agents ad litem of the Plaintiff, ZHUANG Dongxiao and YANG Fan, agent ad litem of the two Defendants, LIN Puzhou, and agent ad litem of the Defendant Huitong, RUAN Weizhou, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff claimed to the court that: 1. the two Defendants should jointly compensate the Plaintiff for the loss of 1,927,664.60 yuan and interest (of which 1 million yuan should be calculated from August 6, 2015 to January 21, 2016, and 1,927,664.60 yuan from January 2016. Calculated from the 21st to the date of actual payment, calculated according to the same period of the People’s Bank of China loan interest rate); 2. the two Defendants should jointly compensate the Plaintiff for the assessment cost of the case of 23,824 yuan and interest (calculated from January 21, 2016) until the date of actual payment, according to the People’s Bank of China loan interest rate for the same period); 3. the two Defendants should bear the litigation costs of the case. Facts and reasons: on October 17, 2014, Xiamen Jianfa Raw Materials Trading Co., Ltd. (hereinafter referred to as Jianfa) and Zhanjiang Guoxiong Feed Co., Ltd. (hereinafter referred to as Guoxiong) concluded the Product Purchases and Sales Contract, Guoxiong purchase 1,000 tons of red sorghum from Jianfa at 2,110 yuan per ton. On May 31, 2015, M.V. HUI TONG 138 was loaded with 918.176 tons of red sorghum in the Nansha Port of Guangzhou and sank on the way to Zhanjiang Port. The Defendant LIN Jinsheng was the owner of the ship, and the Defendant Huitong was the carrier of the goods involved. On September 30, 2015, the Zhuhai Maritime Safety Administration issued the Conclusion of Traffic Accident Investigation, which determined that the accident in this case was a single-party liability accident of M.V. HUI TONG 138. On May 30, 2015, the Plaintiff underwrote the domestic waterway and land cargo transportation insurance for the goods involved. The insured was Guoxiong, and the insurance amount was 2,046,000 yuan. On August 6, 2015 and January 21, 2016,

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the Plaintiff paid insurance compensation of 1 million yuan and 927,664.60 yuan to the insured Guoxiong for a total of 1,927,664.60 yuan, and obtained subrogation rights according to law. The two Defendants should be jointly and severally liable for the loss of goods caused by the accident in this case. The two Defendants argued that: firstly, the Defendant Huitong was not the carrier of the goods involved and the person responsible for the insurance accident; secondly, the sinking of M.V. HUI TONG 138 was caused by force majeure, and the two Defendants was not at fault; thirdly, the Defendant LIN Jinsheng was a shipowner and actual operator, even if someone needed to take responsibility, which should be LIN Jinsheng, and the case had nothing to do with Huitong. The parties submitted evidence in accordance with the law, and the parties involved in the organization conducted evidence exchange and cross-examination. The evidence of no objection to the parties shall be confirmed by the court and supported in the volume. The court finds out the facts as follows: Firstly, sale of goods involved On October 17, 2014, Guoxiong concluded a product purchases and sales contract with Jianfa as the supplier, and purchased the US No.2 red sorghum, the quantity was 1,000 tons, allowing a short rate of 10%, the unit price was 2,110 yuan per ton, delivery at the supplier terminal or warehouse vehicle (ship) board. On June 11, 2015, Guoxiong paid the payment of 918.176 tons of red sorghum to Jianfa for 1,937,351.30 yuan. Jianfa issued the certificate of the right to prove that the owner of the goods involved was Guoxiong. Secondly, ship affiliation and transportation The Defendant LIN Jinsheng provided the cargo ship entrusted operation management agreement, to prove that the Defendant LIN Jinsheng was the owner and operator of M.V. HUI TONG 138, and the ship was affiliated with the company. On May 29, 2015, the Defendant LIN Jinsheng concluded a contract for cargo transportation with Shenzhen Maritime Logistics Co., Ltd. (hereinafter referred to as Shipping Company). Shipping Company entrusted the Defendant LIN Jinsheng to carry the goods involved. On May 30, 2015, the goods involved were loaded onto M.V. HUI TONG 138 at the Nansha Grain Terminal, and the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal was installed at the waterway cargo transport carrier. The port of departure was Nansha, the port of discharge was Zhanjiang, the number was 920 tons of red sorghum. According to the Nansha Grain General Terminal Branch of Guangzhou Port Co., Ltd., the over-weighted record shows that the actual weight of the goods involved was 918.176 tons. Thirdly, maritime accident involving the goods involved On May 31, 2015, the sinking accident happened when M.V. HUI TONG 138 sailed to the east waters of the main channel of Zhuhai Gaolan Port. After the investigation, the Zhuhai Maritime Safety Administration made Conclusion of Traffic Accident Investigation on September 30, 2015. It was found that M.V. HUI TONG 138 loaded 918.176 tons of red sorghum from the Guangzhou Nansha to Zhanjiang Port, and when sailing to the eastern waters of the main channel of Zhuhai Gaolan Port, the hull touched an unknown object, causing a large amount of

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water in the ship’s cabin. The steering gear failed, and the ship floated after the crew abandoned the ship. At about 1530, it sank in the waters about 0.9 nautical miles east of the 5# buoy on the main channel of Zhuhai Port. The accident caused the total loss of the goods, causing no casualties or water pollution. The Zhuhai Maritime Safety Administration analyzed the cause of the accident: when M.V. HUI TONG 138 normally sailed in the waters east of the main channel of Gaolan Port in Zhuhai, the crew clearly felt the abnormal hull of the hull and the sound of the bottom of the ship rubbing against other objects; then the ship’s cabin was flooded with water. And tail tilting and losing power in a short time. The above facts indicated that the ship encountered damage to the ship during normal navigation, causing the ship to be damaged, and the ship sank after losing its buoyancy. This was the main cause of the accident and it was determined that the accident was a unilateral accident. After the accident, Guoxiong issued a letter of explanation to the Zhuhai Maritime Safety Administration on June 11, 2015, confirming that Guoxiong concluded a transportation contract with Shipping Company, and Shipping Company arranged for M.V. HUI TONG 138 to carry the goods involved. The Plaintiff was entrusted to represent Guoxiong for the loss of goods caused by the sinking accident on May 31, 2015. The Plaintiff affixed the official seal to the explanatory letter, and at the same time endorsed that “our company gave up the salvage of the damaged goods, such as the salvage of the goods due to the salvage of the sunken ship, all the expenses incurred, the cargo owner no longer bears, and ask the ship to give advice. If you agree to give up salvage, please confirm and stamp the ship.” The ship’s endorsement “consent the Zhanjiang Guoxiong Feed Co., Ltd. and its entrusted agency to abandon the handling of the salvage of the damaged goods”, and stamped the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal. Fourthly, insurance and claims of the goods involved On May 30, 2015, the Plaintiff issued an electronic insurance certificate for domestic waterway and land cargo transportation to the insured maritime transport company to cover the cargo transportation insurance involved. The insured was Guoxiong with an insurance amount of 2,046,000 yuan. After the insurance accident, the Plaintiff paid insurance compensation of 1 million yuan to Guoxiong on August 6, 2015, and paid another 927,664.60 yuan on January 21, 2016, totaling 1,927,664.60 yuan. On April 27, 2016, Guoxiong issued a claim receipt and equity transfer to the Plaintiff, confirming that it received insurance compensation. In addition, Wuchuan Huitong Shipping Co., Ltd. was approved by Wuchuan Administration for Industry and Commerce on June 17, 2016, and the company name was changed to Guangdong Huitong Shipping Co., Ltd. The court holds that the Plaintiff is the insured cargo involved. After the insurance accident happened on the way of M.V. HUI TONG 138 of carriage of goods, the Plaintiff fulfilled the indemnity obligations under the insurance contract. According to Article 252 of the Maritime Code of the People’s Republic of China, the loss of the insurance coverage of the insurance subject is caused by a third party, and the insured resources compensation from the third party for compensation.

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From the date of the transfer to the insurer, the Plaintiff, after paying the insured in accordance with the law, obtained the right of the subrogation to claim compensation from the third party. Guoxiong, as the consignee and insured of the goods in this case, according to the explanation letter issued to the Zhuhai Maritime Safety Administration after the accident, Guoxiong and Shipping Company concluded a contract of carriage of goods, and Shipping Company carried the goods involved. Therefore, the carrier of the cargo in this case is Shipping Company. LIN Jinsheng is the owner of M.V. HUI TONG 138, and actually undertook the transportation of the goods involved, which is the actual carrier. As the insurer, the Plaintiff not only issued an opinion in the explanatory letter, but also knew that the insured Guoxiong and Shipping Company had concluded a contract of carriage of goods. Therefore, in the case where the parties concluded a contract of carriage of goods, the Plaintiff, as the insurer’s subrogation insured (consignee) Guoxiong, should claim against the party that has a contractual relationship with Guoxiong. The Plaintiff did not sue the carrier Shipping Company under the contract of carriage of goods, but filed an action with Huitong on the waybill as a transport carrier, which does not comply with the Supreme People’s Court’s Guiding Opinions on Legal Issues concerning Domestic Waterway Freight Dispute Cases, Article 11, the court should reject the Plaintiff’s claims against Huitong. After the ship sank, both the ship and the cargo parties abandoned the salvage of the goods, and it can be determined that the goods involved were lost. According to the evidence provided by the Plaintiff, such as the product purchases and sales contract, the VAT ordinary invoice and the overweight record, the loss of the goods involved can be determined to be 1,937,351.30 yuan. The Plaintiff compensated the insured Guoxiong for 1,927,664.60 yuan, which is less than the actual loss of the goods. The Plaintiff claimed that the assessment cost was 23,824 yuan. There is no evidence to prove that the fee is not within the scope of subrogation, and the court will not confirm it. Regarding whether the maritime accident in this case is caused by force majeure, whether LIN Jinsheng, as the actual carrier, can be exempted from liability. Article 117 Paragraph 2 of the Contract Law of the People’s Republic of China stipulates that force majeure refers to an objective situation that cannot be foreseen, cannot be avoided, and cannot be overcome. In this case, there is no evidence that the maritime authorities restricted navigation in the accident area. Conclusion of Traffic Accident Investigation proves that M.V. HUI TONG 138 was sunk when the hull touched an unidentified object underwater during the normal navigation of the channel. For the actual carrier LIN Jinsheng, it was normally sailing in the waterway according to the regulations. It is impossible to foresee the unidentified objects under the water, and the consequences of the intrusion of the underwater occupants caused by unidentified underwater objects. The on-site crew can still take measures to save themselves. To prevent the ship from sinking, the accident should be an objective situation that cannot be foreseen, cannot be avoided, and cannot be overcome. It is a force majeure. According to Article 311 of the Contract Law of the People’s Republic of China, the carrier shall be liable for damages caused by the

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damage or loss of the goods during the transportation process, but the carrier proves that the damage or loss of the goods is due to force majeure, the nature of the goods themselves. The nature of the property or the reasonable loss and the shipper’s or the consignee’s fault, and the liability for damages shall not be born. The Defendant LIN Jinsheng shall be exempt from liability for the loss of the goods caused by the accident of the case. The Plaintiff’s claim that the Defendant’s ship is equipped with the latest maximum scale chart can avoid the accident in this case, which lacks sufficient and effective evidence to support it. Pulling the threads together, in accordance with Article 311 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claims of the Plaintiff, China Pacific Property Insurance Co., Ltd. Shenzhen Branch. Court acceptance fee in amount of 22,803 yuan, shall be born by the Plaintiff. If not satisfied with this judgment, the parties can submit an appeal, within 15 days from the date of service of the judgment and together with copies of petition according to the number of the other parties, to the Guangdong High People’s Court. Presiding Judge: ZHANG Kexiong Acting Judge: YANG Yaxiao Acting Judge: KANG Siying December 13, 2016 Clerk: QIU Lihong

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Guangdong High People’s Court Civil Judgment China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2017) Yue Min Zhong No.389 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the judgment of retrial are on page 177 and page 191 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming the first instance Court’s decision holding Defendant carrier not liable for cargo lost when carrying ship sank after alliding with an unidentified underwater object, as the loss was caused by unavoidable force majeure. Summary The Plaintiff, China Pacific Property Insurance Co., Ltd. Shenzhen Branch (China Pacific), filed suit as subrogated cargo insurer against Lin Jinsheng and Guangdong Huitong Shipping Co., Ltd (Guangdong) for the loss of 918.176 tons of red sorghum. The cargo sank with the “Jiatong 138” after the vessel allided with an unidentified object underwater and subsequently sank. After trial, the Court held that the Defendants were not liable because the accident was caused by an unavoidable force majeure. Plaintiff lodged appeal which was rejected. Court of appeal affirmed the first instance judgment that Defendants were not liable because the accident was caused by force majeure.

Judgment The Appellant (the Plaintiff of first instance): China Pacific Property Insurance Co., Ltd. Shenzhen Branch. Address: 20th Floor, News Building, No.2, Middle Shennan Road, Futian District, Shenzhen, Guangdong. Person in charge: GUO Zhenxiong, general manager of the branch.

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Agent ad litem: ZHUANG Dongxiao, lawyer of Guangdong Hengfu (Shanghai) Law Firm. Agent ad litem: YANG Fan, lawyer of Guangdong Hengfu Law Firm. The Respondent (the Defendant of first instance): LIN Jinsheng, male, born on March 1, 1958, Han, living in No.160, Water Street, Meibei Community Neighborhood Committee, Meilu Street, Wuchuan, Guangdong. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. The Respondent (the Defendant of first instance): Guangdong Huitong Shipping Co., Ltd. (formerly known as Wuchuan Huitong Shipping Co., Ltd.) Domicile: 2nd Floor, Block 2, North Exit, Wuchuan City Center, Zhanjiang, Guangdong. Legal representative: RUAN Weizhou, manager of the company. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant, China Pacific Property Insurance Co., Ltd. Shenzhen Branch (hereinafter referred to as CPIC Shenzhen), and the Respondents, LIN Jinsheng and Guangdong Huitong Shipping Co., Ltd. (hereinafter referred to as Huitong), the Appellant disagreed with the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.600 Civil Judgment and appealed to the court. After entertaining the case on March 6, 2017, the court formed a collegiate panel and held a hearing in public. Agent ad litem of CPIC Shenzhen, YANG Fan, agent ad litem of the Respondent LIN Jinsheng, LIN Puzhou, and legal representative of Huitong, RUAN Weizhou, agent ad litem of Huitong, RUAN Weizhou, appeared in court to attend the hearing. Now the case has been concluded. CPIC Shenzhen appealed that: revoke the judgment of first instance, change to judge that LIN Jinsheng and Huitong should be jointly and severally compensate CPIC Shenzhen for all the losses, and bear litigation fees of first and second instances. Facts and reasons: firstly, LIN Jinsheng was the actual carrier, and the cargo damage occurred within his liability period. Secondly, the court of first instance confirmed that the accident involved was caused by force majeure, which had no factual basis. Traffic Accident Investigation Conclusions and LIN Jinsheng and Huitong could not prove that the crew took self-rescue or external help measures, and the ship could float after abandoning the ship, indicating that the crew were fully conditional for self-rescue. So the accident involved was predictable and avoidable. LIN Jinsheng argued that: firstly, CPIC Shenzhen was not eligible, in fact, the carrier of the goods involved was Shenzhen Maritime Logistics Co., Ltd. (hereinafter referred to as Shipping Company). Huitong was affiliated with LIN Jinsheng, and had no contractual relationship with CPIC Shenzhen, nor was it the actual carrier. Secondly, the sinking of M.V. HUI TONG 138 was force majeure. The ship had no fault in the accident, and LIN Jinsheng was not responsible for the

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insurance accident. In conclusion, he require to dismiss the appeal and affirm the original judgment. Huitong argued that: the facts confirmed by the court of first instance were clear, and the application of law was correct. The appeal of CPIC Shenzhen had no factual or legal basis, which should be dismissed. CPIC Shenzhen claimed to the court of first instance that: 1. LIN Jinsheng and Huitong should jointly compensate CPIC Shenzhen for the loss of 1,927,664.60 yuan and interest (of which 1 million yuan should be calculated from August 6, 2015 to January 21, 2016, and 1,927,664.60 yuan from January 2016. Calculated from the 21st to the date of actual payment, calculated according to the same period of the People’s Bank of China loan interest rate); 2. LIN Jinsheng and Huitong should jointly compensate CPIC Shenzhen for the assessment cost of the case of 23,824 yuan and interest (calculated from January 21, 2016) until the date of actual payment, according to the People’s Bank of China loan interest rate for the same period); 3. LIN Jinsheng and Huitong should bear the litigation costs of the case. The court of first instance found out the facts as follows: Firstly, sale of goods involved On October 17, 2014, Guoxiong concluded a product purchases and sales contract with Xiamen Jianfa Raw Materials Trading Co., Ltd. (hereinafter referred to as Jianfa) as the supplier, and purchased the US No.2 red sorghum, the quantity was 1,000 tons, allowing a short rate of 10%, the unit price was 2,110 yuan per ton, delivery at the supplier terminal or warehouse vehicle (ship) board. On June 11, 2015, Guoxiong paid the payment of 918.176 tons of red sorghum to Jianfa for 1,937,351.30 yuan. Jianfa issued the certificate of the right to prove that the owner of the goods involved was Guoxiong. Secondly, ship affiliation and transportation LIN Jinsheng provided the cargo ship entrusted operation management agreement, to prove that LIN Jinsheng was the owner and operator of M.V. HUI TONG 138, and the ship was affiliated with the company. On May 29, 2015, LIN Jinsheng concluded a contract for cargo transportation with Shipping Company. Shipping Company entrusted LIN Jinsheng to carry the goods involved. On May 30, 2015, the goods involved were loaded onto M.V. HUI TONG 138 at the Nansha Grain Terminal, and the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal was installed at the waterway cargo transport carrier. The port of departure was Nansha, the port of discharge was Zhanjiang, the number was 920 tons of red sorghum. According to the Nansha Grain General Terminal Branch of Guangzhou Port Co., Ltd., the over-weighted record shows that the actual weight of the goods involved was 918.176 tons. Thirdly, maritime accident involving the goods involved On May 31, 2015, the sinking accident happened when M.V. HUI TONG 138 sailed to the east waters of the main channel of Zhuhai Gaolan Port. After the investigation, the Zhuhai Maritime Safety Administration made Conclusion of Traffic Accident Investigation on September 30, 2015. It was found that M.V. HUI TONG 138 loaded 918.176 tons of red sorghum from the Guangzhou Nansha

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to Zhanjiang Port, and when sailing to the eastern waters of the main channel of Zhuhai Gaolan Port, the hull touched an unknown object, causing a large amount of water in the ship’s cabin. The steering gear failed, and the ship floated after the crew abandoned the ship. At about 1530, it sank in the waters about 0.9 nautical miles east of the 5# buoy on the main channel of Zhuhai Port. The accident caused the total loss of the goods, causing no casualties or water pollution. The Zhuhai Maritime Safety Administration analyzed the cause of the accident: when M.V. HUI TONG 138 normally sailed in the waters east of the main channel of Gaolan Port in Zhuhai, the crew clearly felt the abnormal hull of the hull and the sound of the bottom of the ship rubbing against other objects; then the ship’s cabin was flooded with water. And tail tilting and losing power in a short time. The above facts indicated that the ship encountered damage to the ship during normal navigation, causing the ship to be damaged, and the ship sank after losing its buoyancy. This was the main cause of the accident and it was determined that the accident was a unilateral accident. After the accident, Guoxiong issued a letter of explanation to the Zhuhai Maritime Safety Administration on June 11, 2015, confirming that Guoxiong concluded a transportation contract with Shipping Company, and Shipping Company arranged for M.V. HUI TONG 138 to carry the goods involved. CPIC Shenzhen was entrusted to represent Guoxiong for the loss of goods caused by the sinking accident on May 31, 2015. CPIC Shenzhen affixed the official seal to the explanatory letter, and at the same time endorsed that “our company gave up the salvage of the damaged goods, such as the salvage of the goods due to the salvage of the sunken ship, all the expenses incurred, the cargo owner no longer bears, and ask the ship to give advice. If you agree to give up salvage, please confirm and stamp the ship.” The ship’s endorsement “consent the Zhanjiang Guoxiong Feed Co., Ltd. and its entrusted agency to abandon the handling of the salvage of the damaged goods”, and stamped the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal. Fourthly, insurance and claims of the goods involved On May 30, 2015, CPIC Shenzhen issued an electronic insurance certificate for domestic waterway and land cargo transportation to the insured maritime transport company to cover the cargo transportation insurance involved. The insured was Guoxiong with an insurance amount of 2,046,000 yuan. After the insurance accident, CPIC Shenzhen paid insurance compensation of 1 million yuan to Guoxiong on August 6, 2015, and paid another 927,664.60 yuan on January 21, 2016, totaling 1,927,664.60 yuan. On April 27, 2016, Guoxiong issued a claim receipt and equity transfer to CPIC Shenzhen, confirming that it received insurance compensation. In addition, Wuchuan Huitong Shipping Co., Ltd. was approved by Wuchuan Administration for Industry and Commerce on June 17, 2016, and the company name was changed to Guangdong Huitong Shipping Co., Ltd. The court of first instance held that CPIC Shenzhen was the insured cargo involved. After the insurance accident happened on the way of M.V. HUI TONG 138 of carriage of goods, CPIC Shenzhen fulfilled the indemnity obligations under the insurance contract. According to Article 252 of the Maritime Code of the

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People’s Republic of China, the loss of the insurance coverage of the insurance subject was caused by a third party, and the insured resourced compensation from the third party for compensation. From the date of the transfer to the insurer, CPIC Shenzhen, after paying the insured in accordance with the law, obtained the right of the subrogation to claim compensation from the third party. Guoxiong, as the consignee and insured of the goods in this case, according to the explanation letter issued to the Zhuhai Maritime Safety Administration after the accident, Guoxiong and Shipping Company concluded a contract of carriage of goods, and Shipping Company carried the goods involved. Therefore, the carrier of the cargo in this case was Shipping Company. LIN Jinsheng was the owner of M.V. HUI TONG 138, and actually undertook the transportation of the goods involved, which was the actual carrier. As the insurer, CPIC Shenzhen not only issued an opinion in the explanatory letter, but also knew that the insured Guoxiong and Shipping Company had concluded a contract of carriage of goods. Therefore, in the case where the parties concluded a contract of carriage of goods, CPIC Shenzhen, as the insurer’s subrogation insured (consignee) Guoxiong, should claim against the party that had a contractual relationship with Guoxiong. CPIC Shenzhen did not sue the carrier Shipping Company under the contract of carriage of goods, but filed an action with Huitong on the waybill as a transport carrier, which did not comply with the Supreme People’s Court’s Guiding Opinions on Legal Issues concerning Domestic Waterway Freight Dispute Cases, Article 11, the court of first instance should reject CPIC Shenzhen’s claims against Huitong. After the ship sank, both the ship and the cargo parties abandoned the salvage of the goods, and it could be determined that the goods involved were lost. According to the evidence provided by CPIC Shenzhen, such as the product purchases and sales contract, the VAT ordinary invoice and the overweight record, the loss of the goods involved could be determined to be 1,937,351.30 yuan. CPIC Shenzhen compensated the insured Guoxiong for 1,927,664.60 yuan, which was less than the actual loss of the goods. CPIC Shenzhen claimed that the assessment cost was 23,824 yuan. There was no evidence to prove that the fee was not within the scope of subrogation, and the court of first instance would not confirm it. Regarding whether the maritime accident in this case was caused by force majeure, whether LIN Jinsheng, as the actual carrier, could be exempted from liability. Article 117 Paragraph 2 of the Contract Law of the People’s Republic of China stipulated that force majeure referred to an objective situation that could not be foreseen, could not be avoided, and could not be overcome. In this case, there was no evidence that the maritime authorities restricted navigation in the accident area. Conclusion of Traffic Accident Investigation proved that M.V. HUI TONG 138 was sunk when the hull touched an unidentified object underwater during the normal navigation of the channel. For the actual carrier LIN Jinsheng, it was normally sailing in the waterway according to the regulations. It was impossible to foresee the unidentified objects under the water, and the consequences of the intrusion of the underwater occupants caused by unidentified underwater objects. The on-site crew could still take measures to save themselves. To prevent the ship from sinking, the accident should be an objective situation that could not be

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foreseen, could not be avoided, and could not be overcome. It was a force majeure. According to Article 311 of the Contract Law of the People’s Republic of China, the carrier should be liable for damages caused by the damage or loss of the goods during the transportation process, but the carrier proved that the damage or loss of the goods was due to force majeure, the nature of the goods themselves. The nature of the property or the reasonable loss and the shipper’s or the consignee’s fault, and the liability for damages should not be born. LIN Jinsheng should be exempt from liability for the loss of the goods caused by the accident of the case. CPIC Shenzhen’s claim that LIN Jinsheng’s ship was equipped with the latest maximum scale chart could avoid the accident in this case, which lacked sufficient and effective evidence to support it. Pulling the threads together, in accordance with Article 311 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: reject the claims of CPIC Shenzhen. Court acceptance fee of first instance in amount of 22,803 yuan, should be born by CPIC Shenzhen. During the second instance of the court, the parties submitted evidence in accordance with the law regarding the appeal. The court organized the parties to conduct evidence exchange and cross-examination. The court confirms the facts as follows: Firstly, case submitted by CPIC Shenzhen in second instance In second instance, CPIC Shenzhen submitted the Supreme People’s Court (2014) Min Shen Zi No.1041 Civil Ruling, to prove that a ship touching an unknown underwater object was not a force majeure. LIN Jinsheng and Huitong held that, the ship involved submitted by CPIC Shenzhen did not sail on the normal channel, so the case had no relevancy to this case and had no reference value. The court holds that, whether the accident in this case was force majeure should be governed by Article 117 of the Contract Law of the People’s Republic of China, and should be examined in terms of whether the accident can be foreseen, avoided and overcome. The facts of the Supreme People’s Court (2014) Min Shen Zi No.1041 are different from those of this case, the conclusion in that case that a ship touched an unknown underwater object was not force majeure does not of course apply to this case, so the court does not support the claim of CPIC Shenzhen that the accident in this case could be considered as force majeure with reference to the ruling of that case. Secondly, Sea Goods Waybill Sea Goods Waybill involved shows that “the relevant rights and obligations of the carrier, shipper, and consignee recorded in the waybill apply to Domestic Waterway Cargo Transportation Rules.” During the second instance, LIN Jinsheng, Huitong and CPIC Shenzhen recognized the following facts in court: the original Sea Goods Waybill involved was lost, and there was no seal of Guoxiong on the original. Sea Goods Waybill submitted by CPIC Shenzhen in first instance was a copy. After affixing the company seal on the copy, Guoxiong requested insurance compensation from CPIC Shenzhen. In conclusion, Guoxiong was not a party to the transportation contract recorded in Sea Goods Waybill.

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The facts confirmed by the court of first instance are basically clear, so the court confirms them. The court holds that, the case is the dispute over contract of carriage of goods by sea. Based on the facts confirmed in this case and the litigation opinions of the parties in second instance, the issue in second instance of this case is whether LIN Jinsheng and Huitong should compensate CPIC Shenzhen for all the losses. Since CPIC Shenzhen made insurance compensation to Guoxiong, enjoyed the subrogation Guoxiong required the carrier to bear the responsibility. Therefore, it should first be examined whether Guoxiong has the right to request Huitong and LIN Jinsheng to compensate the accident-related losses. Judging from the parties to the transportation contract recorded in Contract of Carriage of Goods, the shipper is Shipping Company and the carrier is LIN Jinsheng. When Shipping Company concluded the contract, it did not indicate that it was entrusted by Guoxiong to conclude the contract on behalf of Guoxiong. During the accident investigation by the Zhuhai Maritime Safety Administration, Guoxiong also recognized that it was concluding the transportation contract with Shipping Company, rather than entrusting Shipping Company to conclude the transportation with LIN Jinsheng. During first instance, LIN Jinsheng and Huitong recognized in court that they had not concluded a transportation contract with Guoxiong. Therefore, Guoxiong has no right to require Huitong to bear the liability for compensation of the goods involved in accordance with Contract of Carriage of Goods. The facts found in this case show that Guoxiong is not the shipper or consignee recorded in Sea Goods Waybill, so Guoxiong also has no right to demand Huitong to compensate for the losses based on Sea Goods Waybill. Regarding whether the accident in this case was caused by force majeure, whether LIN Jinsheng as the actual carrier can be exempted. Traffic Accident Investigation Conclusions issued by the Zhuhai Maritime Safety Administration held that M.V. HUI TONG 138 touched an unknown object and caused the hull to break into the water and was the main cause of the accident. The court of first instance based on M.V. HUI TONG 138 sailing in the waters on the east side of the main channel, unpredictable underwater objects, and the crew’s self-rescue after the accident failed to prevent the ship from sinking. The court held that the accident involved was unforeseen, unavoidable and insurmountable of the objective situation, which was force majeure. It is consistent with the facts found out. Therefore, according to Contract Law of the People’s Republic of China Article 311, the carrier shall be liable for damages caused by the damage or loss of the goods during the transportation process, but the carrier proves that the damage or loss of the goods is due to force majeure, the nature of the goods themselves. The nature of the property or the reasonable loss and the shipper’s or the consignee’s fault, and the liability for damages shall not be born, LIN Jinsheng should be exempt from liability for cargo losses caused by the marine damage accident. Pulling the threads together, CPIC Shenzhen’s appeal against LIN Jinsheng and Huitong to bear compensation liability cannot be established, which should be dismissed. The facts confirmed by the court of first instance are clear, and the result thereof is correct, which should be affirmed. According to the Civil Procedure Law

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of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB22.803 yuan, shall be born by CPIC Shenzhen. The judgment is final. Presiding Judge: ZHONG Jianping Judge: WANG Fang Judge: LI Mintao May 27, 2017 Judge Assistant: JIOA Xiaoding Clerk: LIU Bihua Clerk: TIAN Licheng

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The Supreme People’s Court of the People’s Republic of China Civil Judgment China Pacific Property Insurance Co., Ltd. Shenzhen Branch v. LIN Jinsheng et al. (2018) Zui Gao Fa Min Zai No.79 Related Case(s) This is the judgment of retrial, and the judgment of first instance and the judgment of second instance are on page 177 and page 183 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Overturning the lower courts’ decisions, by holding that ship’s alliding with an unidentified underwater object was not due to unavoidable force majeure and the allision was actually caused by the ship crew’s negligent navigation, so Defendants should be liable for compensation to Plaintiff for cargo loss. Summary The Plaintiff, China Pacific Property Insurance Co., Ltd. Shenzhen Branch (China Pacific), filed suit as subrogated cargo insurer against Lin Jinsheng and Guangdong Huitong Shipping Co., Ltd (Guangdong) for the loss of 918.176 tons of red sorghum. The cargo sank with the “Jiatong 138” after the vessel allided with an unidentified object underwater and subsequently sank. After trial, the Court held that the Defendants were not liable because the accident was caused by an unavoidable force majeure. Plaintiff lodged appeal which was rejected. Court of appeal affirmed the first instance judgment that Defendants were not liable because the accident was caused by force majeure. Plaintiff made a petition to the Supreme Court of China for retrial. The Supreme Court overturned the judgments of first instance Court and appeal Court, and held that Defendants should be liable for compensation to Plaintiff for cargo loss. The rationale was that ship’s alliding with an unidentified underwater object was not necessarily an event of unavoidable force majeure. The burden of proof rested on Defendants, who failed to provide material evidence to prove the allision was caused by force majeure. The Supreme Court further held that allision investigation

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report, made by local maritime safety authority and supplied by Defendants, could not discharge their burden of proof regarding the issue of force majeure.

Judgment The Claimant of Retrial (the Plaintiff of first instance, the Appellant of second instance): China Pacific Property Insurance Co., Ltd. Shenzhen Branch. Address: 20th Floor, News Building, No.2, Middle Shennan Road, Futian District, Shenzhen, Guangdong. Person in charge: GUO Zhenxiong, general manager of the branch. Agent ad litem: CHEN Longjie, lawyer of Shanghai Wintell & Co. (Guangzhou). Agent ad litem: TAN Chuanjun, lawyer of Shanghai Wintell & Co. (Guangzhou). The Respondent of Retrial (the Defendant of first instance, the Respondent of second instance): LIN Jinsheng, male, born on March 1, 1958, Han, living in No. 60, Water Street, Meibei Community Neighborhood Committee, Meilu Street, Wuchuan, Guangdong. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. The Respondent of Retrial (the Defendant of first instance, the Respondent of second instance): Guangdong Huitong Shipping Co., Ltd. Domicile: 2nd Floor, Block 2, North Exit, Wuchuan City Center, Zhanjiang, Guangdong. Legal representative: RUAN Weizhou, general manager of the company. Agent ad litem: LIN Puzhou, legal worker of Wuchuan Meilu Law Service Office. With respect to the case arising from dispute over contract of carriage of goods by sea between the Claimant of Retrial, China Pacific Property Insurance Co., Ltd. Shenzhen Branch (hereinafter referred to as CPIC Shenzhen), and the Respondents of retrial, LIN Jinsheng and Guangdong Huitong Shipping Co., Ltd. (hereinafter referred to as Huitong), the Claimant of Retrial disagreed with the Guangdong High People’s Court (2017) Yue Min Zhong No.389 Civil Judgment and applied for retrial to the court. The court made (2017) Zui Gao Fa Min Shen No.3978 Civil Ruling to retry the case on December 6, 2017. The court formed a collegiate panel and held a hearing in public on June 20, 2018. Agent ad litem of CPIC Shenzhen, CHEN Longjie, agent ad litem of LIN Jinsheng and Huitong, LIN Puzhou, appeared in court to attend the hearing. Now the case has been concluded. CPIC Shenzhen claimed to the Guangzhou Maritime Court (hereinafter referred to as the court of first instance) that: 1. LIN Jinsheng and Huitong should jointly compensate CPIC Shenzhen for the loss of 1,927,664.60 yuan and interest (of which 1 million yuan should be calculated from August 6, 2015 to January 21, 2016, and 1,927,664.60 yuan from January 2016. Calculated from the 21st to the

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date of actual payment, calculated according to the same period of the People’s Bank of China loan interest rate); 2. LIN Jinsheng and Huitong should jointly compensate CPIC Shenzhen for the assessment cost of the case of 23,824 yuan and interest (calculated from January 21, 2016 until the date of actual payment), according to the People’s Bank of China loan interest rate for the same period); 3. LIN Jinsheng and Huitong should bear the litigation costs of the case. Facts and reasons: on October 17, 2014, Xiamen Jianfa Raw Materials Trading Co., Ltd. (hereinafter referred to as Jianfa) and Zhanjiang Guoxiong Feed Co., Ltd. (hereinafter referred to as Guoxiong) concluded Product Purchases and Sales Contract, Guoxiong purchase 1,000 tons of red sorghum from Jianfa at 2,110 yuan per ton. On May 31, 2015, M.V. HUI TONG 138 was loaded with 918.176 tons of red sorghum in the Nansha Port of Guangzhou and sank on the way to Zhanjiang Port. LIN Jinsheng was the owner of the ship, and Huitong was the carrier of the goods involved. On September 30, 2015, the Zhuhai Maritime Safety Administration issued Conclusion of Traffic Accident Investigation, which determined that the accident in this case was a single-party liability accident of M.V. HUI TONG 138. On May 30, 2015, CPIC Shenzhen underwrote the domestic waterway and land cargo transportation insurance for the goods involved. The insured was Guoxiong, and the insurance amount was 2,046,000 yuan. On August 6, 2015 and January 21, 2016, CPIC Shenzhen paid insurance compensation of 1 million yuan and 927,664.60 yuan to the insured Guoxiong for a total of 1,927,664.60 yuan, and obtained subrogation rights according to law. LIN Jinsheng and Huitong should be jointly and severally liable for the loss of goods caused by the accident in this case. The court of first instance found out the facts as follows: Firstly, sale of goods involved On October 17, 2014, Guoxiong concluded a product purchases and sales contract with Xiamen Jianfa Raw Materials Trading Co., Ltd. (hereinafter referred to as Jianfa) as the supplier, and purchased the US No.2 red sorghum, the quantity was 1,000 tons, allowing a short rate of 10%, the unit price was 2,110 yuan per ton, delivery at the supplier terminal or warehouse vehicle (ship) board. On June 11, 2015, Guoxiong paid the payment of 918.176 tons of red sorghum to Jianfa for 1,937,351.30 yuan. Jianfa issued the certificate of the right to prove that the owner of the goods involved was Guoxiong. Secondly, ship affiliation and transportation LIN Jinsheng provided the cargo ship entrusted operation management agreement, to prove that LIN Jinsheng was the owner and operator of M.V. HUI TONG 138, and the ship was affiliated with the company. On May 29, 2015, LIN Jinsheng concluded a contract for cargo transportation with Shipping Company. Shipping Company entrusted LIN Jinsheng to carry the goods involved. On May 30, 2015, the goods involved were loaded onto M.V. HUI TONG 138 at the Nansha Grain Terminal, and the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal was installed at the waterway cargo transport carrier. The port of departure was Nansha, the port of discharge was Zhanjiang, the number was 920 tons of red sorghum. According to the Nansha Grain General Terminal Branch of Guangzhou

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Port Co., Ltd., the over-weighted record shows that the actual weight of the goods involved was 918.176 tons. Thirdly, maritime accident involving the goods involved On May 31, 2015, the sinking accident happened when M.V. HUI TONG 138 sailed to the east waters of the main channel of Zhuhai Gaolan Port. After the investigation, the Zhuhai Maritime Safety Administration made the Conclusion of Traffic Accident Investigation on September 30, 2015. It was found that M.V. HUI TONG 138 loaded 918.176 tons of red sorghum from the Guangzhou Nansha to Zhanjiang Port, and when sailing to the eastern waters of the main channel of Zhuhai Gaolan Port, the hull touched an unknown object, causing a large amount of water in the ship’s cabin. The steering gear failed, and the ship floated after the crew abandoned the ship. At about 1530, it sank in the waters about 0.9 nautical miles east of the 5# buoy on the main channel of Zhuhai Port. The accident caused the total loss of the goods, causing no casualties or water pollution. The Zhuhai Maritime Safety Administration analyzed the cause of the accident: when M.V. HUI TONG 138 normally sailed in the waters east of the main channel of Gaolan Port in Zhuhai, the crew clearly felt the abnormal hull of the hull and the sound of the bottom of the ship rubbing against other objects; then the ship’s cabin was flooded with water. And tail tilting and losing power in a short time. The above facts indicated that the ship encountered damage to the ship during normal navigation, causing the ship to be damaged, and the ship sank after losing its buoyancy. This was the main cause of the accident and it was determined that the accident was a unilateral accident. After the accident, Guoxiong issued a letter of explanation to the Zhuhai Maritime Safety Administration on June 11, 2015, confirming that Guoxiong concluded a transportation contract with Shipping Company, and Shipping Company arranged for M.V. HUI TONG 138 to carry the goods involved. CPIC Shenzhen was entrusted to represent Guoxiong for the loss of goods caused by the sinking accident on May 31, 2015. CPIC Shenzhen affixed the official seal to the explanatory letter, and at the same time endorsed that “our company gave up the salvage of the damaged goods, such as the salvage of the goods due to the salvage of the sunken ship, all the expenses incurred, the cargo owner no longer bears, and ask the ship to give advice. If you agree to give up salvage, please confirm and stamp the ship.” The ship’s endorsement “consent the Zhanjiang Guoxiong Feed Co., Ltd. and its entrusted agency to abandon the handling of the salvage of the damaged goods”, and stamped the “Wuchuan Huitong Shipping Co., Ltd. M.V. HUI TONG 138” ship seal. Fourthly, insurance and claims of the goods involved On May 30, 2015, CPIC Shenzhen issued an electronic insurance certificate for domestic waterway and land cargo transportation to the insured maritime transport company to cover the cargo transportation insurance involved. The insured was Guoxiong with an insurance amount of 2,046,000 yuan. After the insurance accident, CPIC Shenzhen paid insurance compensation of 1 million yuan to Guoxiong on August 6, 2015, and paid another 927,664.60 yuan on January 21, 2016, totaling 1,927,664.60 yuan. On April 27, 2016, Guoxiong issued a claim receipt and equity transfer to CPIC Shenzhen, confirming that it received insurance compensation.

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In addition, Wuchuan Huitong Shipping Co., Ltd. was approved by Wuchuan Administration for Industry and Commerce on June 17, 2016, and the company name was changed to Guangdong Huitong Shipping Co., Ltd. The court of first instance held that CPIC Shenzhen was the insured cargo involved. After the insurance accident happened on the way of M.V. HUI TONG 138 of carriage of goods, CPIC Shenzhen fulfilled the indemnity obligations under the insurance contract. According to Article 252 of the Maritime Code of the People’s Republic of China, the loss of the insurance coverage of the insurance subject was caused by a third party, and the insured resourced compensation from the third party for compensation. From the date of the transfer to the insurer, CPIC Shenzhen, after paying the insured in accordance with the law, obtained the right of the subrogation to claim compensation from the third party. Guoxiong, as the consignee and insured of the goods in this case, according to the explanation letter issued to the Zhuhai Maritime Safety Administration after the accident, Guoxiong and Shipping Company concluded a contract of carriage of goods, and Shipping Company carried the goods involved. Therefore, the carrier of the cargo in this case was Shipping Company. LIN Jinsheng was the owner of M.V. HUI TONG 138, and actually undertook the transportation of the goods involved, which was the actual carrier. As the insurer, CPIC Shenzhen not only issued an opinion in the explanatory letter, but also knew that the insured Guoxiong and Shipping Company had concluded a contract of carriage of goods. Therefore, in the case where the parties concluded a contract of carriage of goods, CPIC Shenzhen, as the insurer’s subrogation insured (consignee) Guoxiong, should claim against the party that had a contractual relationship with Guoxiong. CPIC Shenzhen did not sue the carrier Shipping Company under the contract of carriage of goods, but filed an action with Huitong on the waybill as a transport carrier, which did not comply with the Supreme People’s Court’s Guiding Opinions on Legal Issues concerning Domestic Waterway Freight Dispute Cases, Article 11, the court of first instance should reject CPIC Shenzhen’s claims against Huitong. After the ship sank, both the ship and the cargo parties abandoned the salvage of the goods, and it could be determined that the goods involved were lost. According to the evidence provided by CPIC Shenzhen, such as the product purchases and sales contract, the VAT ordinary invoice and the overweight record, the loss of the goods involved could be determined to be 1,937,351.30 yuan. CPIC Shenzhen compensated the insured Guoxiong for 1,927,664.60 yuan, which was less than the actual loss of the goods. CPIC Shenzhen claimed that the assessment cost was 23,824 yuan. There was no evidence to prove that the fee was not within the scope of subrogation, and the court of first instance would not confirm it. Regarding whether the maritime accident in this case was caused by force majeure, whether LIN Jinsheng, as the actual carrier, could be exempted from liability. Article 117 Paragraph 2 of the Contract Law of the People’s Republic of China stipulated that force majeure refered to an objective situation that could not be foreseen, could not be avoided, and could not be overcome. In this case, there was no evidence that the maritime authorities restricted navigation in the accident area. Conclusion of Traffic Accident Investigation proved that M.V. HUI TONG

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138 was sunk when the hull touched an unidentified object underwater during the normal navigation of the channel. For the actual carrier LIN Jinsheng, it was normally sailing in the waterway according to the regulations. It was impossible to foresee the unidentified objects under the water, and the consequences of the intrusion of the underwater occupants caused by unidentified underwater objects. The on-site crew could still take measures to save themselves. To prevent the ship from sinking, the accident should be an objective situation that could not be foreseen, could not be avoided, and could not be overcome. It was a force majeure. According to Article 311 of the Contract Law of the People’s Republic of China, the carrier should be liable for damages caused by the damage or loss of the goods during the transportation process, but the carrier proved that the damage or loss of the goods was due to force majeure, the nature of the goods themselves. The nature of the property or the reasonable loss and the shipper’s or the consignee’s fault, and the liability for damages should not be born. LIN Jinsheng should be exempt from liability for the loss of the goods caused by the accident of the case. CPIC Shenzhen’s claim that LIN Jinsheng’s ship was equipped with the latest maximum scale chart could avoid the accident in this case, which lacked sufficient and effective evidence to support it. Pulling the threads together, in accordance with Article 311 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: reject the claims of CPIC Shenzhen. Court acceptance fee of first instance in amount of 22,803 yuan, should be born by CPIC Shenzhen. CPIC Shenzhen disagreed and appealed that: revoke the judgment of first instance, change to judge that LIN Jinsheng and Huitong should be jointly and severally compensate CPIC Shenzhen for all the losses, and bear litigation fees of first and second instances. Facts and reasons: firstly, LIN Jinsheng was the actual carrier, and the cargo damage occurred within his liability period. Secondly, the court of first instance confirmed that the accident involved was caused by force majeure, which had no factual basis. Traffic Accident Investigation Conclusions and LIN Jinsheng and Huitong could not prove that the crew took self-rescue or external help measures, and the ship could float after abandoning the ship, indicating that the crew were fully conditional for self-rescue. So the accident involved was predictable and avoidable. During the second instance, the parties submitted evidence in accordance with the law regarding the appeal. The court of second instance organized the parties to conduct evidence exchange and cross-examination. The court of second instance confirmed the facts as follows: Firstly, case submitted by CPIC Shenzhen in second instance In second instance, CPIC Shenzhen submitted the Supreme People’s Court (2014) Min Shen Zi No.1041 Civil Ruling, to prove that a ship touching an unknown underwater object was not a force majeure. LIN Jinsheng and Huitong held that, the ship involved submitted by CPIC Shenzhen did not sail on the normal channel, so the case had no relevancy to this case and had no reference value. The court of second instance held that, whether the accident in this case was force

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majeure should be governed by Article 117 of the Contract Law of the People’s Republic of China, and should be examined in terms of whether the accident could be foreseen, avoided and overcome. The facts of the Supreme People’s Court (2014) Min Shen Zi No.1041 were different from those of this case, the conclusion in that case that a ship touched an unknown underwater object was not force majeure did not of course apply to this case, so the court of second instance did not support the claim of CPIC Shenzhen that the accident in this case could be considered as force majeure with reference to the ruling of that case. Secondly, Sea Goods Waybill Sea Goods Waybill involved showed that “the relevant rights and obligations of the carrier, shipper, and consignee recorded in the waybill apply to Domestic Waterway Cargo Transportation Rules.” During the second instance, LIN Jinsheng, Huitong and CPIC Shenzhen recognized the following facts in court of second instance: the original Sea Goods Waybill involved was lost, and there was no seal of Guoxiong on the original. Sea Goods Waybill submitted by CPIC Shenzhen in first instance was a copy. After affixing the company seal on the copy, Guoxiong requested insurance compensation from CPIC Shenzhen. In conclusion, Guoxiong was not a party to the transportation contract recorded in Sea Goods Waybill. The facts confirmed by the court of first instance were basically clear, so the court of second instance confirmed them. The court of second instance held that, the case was the dispute over contract of carriage of goods by sea. Based on the facts confirmed in this case and the litigation opinions of the parties in second instance, the issue in second instance of this case was whether LIN Jinsheng and Huitong should compensate CPIC Shenzhen for all the losses. Since CPIC Shenzhen made insurance compensation to Guoxiong, enjoyed the subrogation Guoxiong required the carrier to bear the responsibility. Therefore, it should first be examined whether Guoxiong had the right to request Huitong and LIN Jinsheng to compensate the accident-related losses. Judging from the parties to the transportation contract recorded in Contract of Carriage of Goods, the shipper was Shipping Company and the carrier was LIN Jinsheng. When Shipping Company concluded the contract, it did not indicate that it was entrusted by Guoxiong to conclude the contract on behalf of Guoxiong. During the accident investigation by the Zhuhai Maritime Safety Administration, Guoxiong also recognized that it was concluding the transportation contract with Shipping Company, rather than entrusting Shipping Company to conclude the transportation with LIN Jinsheng. During first instance, LIN Jinsheng and Huitong recognized in court that they had not concluded a transportation contract with Guoxiong. Therefore, Guoxiong had no right to require Huitong to bear the liability for compensation of the goods involved in accordance with Contract of Carriage of Goods. The facts found in this case showed that Guoxiong was not the shipper or consignee recorded in the Sea Goods Waybill, so Guoxiong also had no right to demand Huitong to compensate for the losses based on Sea Goods Waybill. Regarding whether the accident in this case was caused by force majeure, whether LIN Jinsheng as the actual carrier could be exempted. Traffic Accident

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Investigation Conclusions issued by the Zhuhai Maritime Safety Administration held that M.V. HUI TONG 138 touched an unknown object and caused the hull to break into the water and was the main cause of the accident. The court of first instance based on M.V. HUI TONG 138 sailing in the waters on the east side of the main channel, unpredictable underwater objects, and the crew’s self-rescue after the accident failed to prevent the ship from sinking. The court of second instance held that the accident involved was unforeseen, unavoidable and insurmountable of the objective situation, which was force majeure. It was consistent with the facts found out. Therefore, according to the Contract Law of the People’s Republic of China Article 311, the carrier should be liable for damages caused by the damage or loss of the goods during the transportation process, but the carrier proved that the damage or loss of the goods was due to force majeure, the nature of the goods themselves. The nature of the property or the reasonable loss and the shipper’s or the consignee’s fault, and the liability for damages should not be born, LIN Jinsheng should be exempt from liability for cargo losses caused by the marine damage accident. Pulling the threads together, CPIC Shenzhen’s appeal against LIN Jinsheng and Huitong to bear compensation liability could not be established, which should be dismissed. The facts confirmed by the court of first instance were clear, the result was correct, which should be affirmed. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment was as follows: dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB22.803 yuan, shall be born by CPIC Shenzhen. CPIC Shenzhen applied for retrial that: firstly, the Supreme People’s Court (2014) Min Shen Zi No.1041 Civil Ruling clearly confirmed that ship touching an unknown underwater object causing the ship to sink should be an accident, not force majeure. The judgment of second instance held that the above jurisprudence was different from the facts in this case, but it did not indicate what different circumstances existed, and the judgment of second instance did not identify the facts related to “unforeseeable, inevitable and insurmountable” in this case. The court of second instance confirmed that the ship involved touched an unknown underwater object, which was force majeure. It lacked factual or legal basis. Secondly, LIN Jinsheng did not prove that the ship’s touching accident involved constituted force majeure. LIN Jinsheng advocated that the ship touching accident involved was force majeure, and it should bear the burden of proof. LIN Jinsheng only submitted Traffic Accident Investigation Conclusion, which could only prove that there were two facts that the ship involved in the incident touched an unknown underwater object and sank it. It did not prove that the touching accident had “unforeseeable, inevitable and insurmountable” situation. LIN Jinsheng did not provide the complete Maritime Traffic Accident Investigation Report, crew notes, charts and other materials, and should bear the adverse consequences of the proof. Thirdly, the sinking of M.V. HUI TONG 138 was related to the erroneous deviation of the ship from the route stated in China Route Guide. The accident happened due to human error and could not be considered as force majeure. The draught of the

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ship involved was 3.4 meters. According to the China Route Guide, the route involved in the ship’s navigation area at the time of the touch accident was divided into two routes: southern and northern. The northern route was relatively shallow, with a minimum depth of about 2.4 meters. The vessel involved must choose the southern route. The location of the accident involved deviated from the southern route stated in China Route Guide by 5.1 nautical miles, indicating that the sinking of the ship involved was related to the wrong route selection. The accident involved was not inevitable. Traffic Accident Investigation Conclusion recorded that M.V. HUI TONG 138 sailed to the east of the main waterway of Gaolan Port before the incident and did not sail on the waterway, but the court of first instance presumed that the ship was sailing on the waterway. Traffic Accident Investigation Conclusion stated that the accident happened about 0.9 nautical miles east of No.5 Buoy, which was not the main channel. The direction of the main channel of Gaolan Port was north-south. The planned route of M.V. HUI TONG 138 was to cross the main channel from east to west. It was in distress in the east sea area before it reached the main channel. The Supreme People’s Court (2014) Min Shen Zi No.1041 Civil Ruling was that a shipwreck involving a ship touching an unknown object on a customary route was not a force majeure. The distress of M.V. HUI TONG 138 5 miles away from the route should not be a force majeure. In conclusion, the application of law by the court of second instance was wrong, it required the court to support the claims of CPIC Shenzhen in first instance. LIN Jinsheng and Huitong argued that: firstly, LIN Jinsheng and Huitong were not eligible defendants. The actual carrier of the goods involved was Shipping Company, and CPIC Shenzhen should sue Shipping Company. LIN Jinsheng concluded Cargo Transportation Contract with Shipping Company. LIN Jinsheng shipped the goods according to the arrangement of Shipping Company. LIN Jinsheng’s behavior was the behavior of Shipping Company. The parties to the cargo transportation contract involved were Guoxiong and Shipping Company, and LIN Jinsheng had no contractual relationship with Guoxiong. According to the principle of contract relativity, LIN Jinsheng was only responsible for shipping companies, and LIN Jinsheng was not responsible for the insurance accidents involved. Secondly, the sinking of M.V. HUI TONG 138 was caused by force majeure, and there was no fault in M.V. HUI TONG 138. The route of M.V. HUI TONG 138 was a customary route for decades. The water depth of this route was more than 10 meters, and the draft of M.V. HUI TONG 138 was 3.4 meters. It was impossible for this ship to touch the sea bed. Before M.V. HUI TONG 138 entered this navigation zone, it did not receive any navigation warnings or notices from relevant departments. According to the sailing habits and the objective facts of the water depth, without any warning or notice from the maritime department, it was impossible for the managers of M.V. HUI TONG 138 to foresee the accident. At the time of the accident, M.V. HUI TONG 138 had exhausted all the relief measures, and ship abandonment was the right choice. The setting of the route involved was in line with safety requirements. The accident happened in the deep water area of the route, with a water depth of more than 10 meters. The 1,000 gross tonnage ships on this route were in compliance with safety standards. The incident

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happened at 1334 on May 30, 2015. The incident happened in the deep-water area outside Gaolan Port in Zhuhai, not the 2.4-meter deep-shallow water area of Xiachuan Island mentioned by CPIC Shenzhen. It took at least 6 hours of normal navigation from the place where the accident happened to the shallow water of Xiachuan Island. If the accident involved did not happen, M.V. HUI TONG 138 would pass through the shallow water area of the flight segment at high tide. The charts submitted by CPIC Shenzhen had no reference value. The sea route indicated by the chart was a one-way route made by CPIC Shenzhen which was impossible to pass. In conclusion, the application for retrial of CPIC Shenzhen lacked factual or legal basis, LIN Jinsheng and Huitong required the court to dismiss the application for retrial of CPIC Shenzhen. During the retrial of the court, CPIC Shenzhen provided a screenshot of the ship charter chart. CPIC Shenzhen also applied for the court to obtain relevant evidence from the Zhuhai Maritime Safety Administration to investigate the maritime accident involved. After review and approval, the court approved the application and obtained Zhuhai Maritime Safety Administration’s Zhuhai “5.31” M.V. HUI TONG 138 Touching Accident Investigation report (hereinafter referred to as the accident investigation report) and Water Traffic Accident Report, Traffic Investigation Investigation Record, Ship Planned Route, AIS Record, Navigation Warning, Navigation Warning Release Record, Navigation Warning VTS Broadcast Record. After cross-examination, CPIC Shenzhen recognized the probative force of the above-mentioned evidence materials retrieved by the court. LIN Jinsheng and Huitong had no objection to the probative force of the accident investigation report, Water Traffic Accident Report, Traffic Investigation Record, Ship Planned Route, AIS Record, Navigation Warning VTS Broadcast Record, but had objection to the probative force of Navigation Warning, Navigation Warning Release Record. After review, the screenshots of Ship’s charts cannot reflect that the picture is the real sea area where the accident happened, so the court does not accept it. The evidence materials that the court retrieved from Zhuhai Maritime Safety Administration are the documents formed by this authority’s investigation of the maritime accident involved. Huitong and LIN Jinsheng did not provide sufficient evidence to refute, so the court accepts the above evidence. CPIC Shenzhen had objection to the facts confirmed by the court of first and second instances. It held that it was wrong that LIN Jinsheng was the operator of M. V. HUI TONG 138 and the ship sailed in the main channel when the accident involved. CPIC Shenzhen claimed that the operator of M.V. HUI TONG 138 was Huitong and not LIN Jinsheng; the ship was sailing in the waters east of the main channel at the time of the accident. Except the above facts, the parties had no objection to the facts confirmed by the courts of first and second instances. The court finds out that: the courts of first and second instance confirmed that the sinking accident happened on the east of the main waterway of Zhuhai Gaolan Port on M.V. HUI TONG 138, which is correct. The courts of first and second instance confirmed that LIN Jinsheng was the operator of M.V. HUI TONG 138, but they did not deny the identity and management responsibility of Huitong’s ship operator. The above objection claimed by CPIC Shenzhen cannot be established. The basic

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facts confirmed by the courts of first and second instance can be proved by evidence, so the court confirms them. The court also finds out the following facts: Huitong and LIN Jinsheng concluded Cargo Ship Entrustment Management and Management Agreement on December 15, 2012: LIN Jinsheng entrusted Huitong to manage and manage M.V. HUI TONG 138. According to the ship inspection certificate, the reference cargo capacity was 1.3 yuan per cargo ton, and the ship management fee was collected from LIN Jinsheng. LIN Jinsheng was responsible for manning the crew, taking the risk of ship operation, and implementing the safe production and operation management of the ship. Huitong was responsible for ship safety management, and establishes, guides, inspects, and supervises the implementation of the safety rules and regulations and safety management measures of the ship as required. The ship nationality certificate issued by the Zhanjiang Maritime Safety Administration on December 19, 2012 stated that the owner of the ship was LIN Jinsheng and the ship operator was Huitong. Regarding the sinking accident of M.V. HUI TONG 138, the Zhuhai Maritime Safety Administration made an investigation report on September 28, 2015 and determined that: 10 days before the sinking accident of M.V. HUI TONG 138, on May 21, 2015, M.V. YUEYOULIAN 68 sank in the waters about 0.6 nautical miles northeast of No.7 main channel, and was located in the waters about 1 nautical mile northwest of the sinking position of M.V. HUI TONG 138. There were temporary emergency signs for shipwrecks in the waters at the location of the shipwreck. Zhuhai VTS broadcast the M.V. YUEYOULIAN 68 wreck warning every 1 to 2 hours on Channel 16, reminding passing ships to strengthen the lookout and pay attention to avoiding. The latest navigation warning broadcast time from the accident was around 1200 on May 31. According to the ship’s captain involved, the captain logged in to the websites of the Zhanjiang Maritime Safety Administration and the Guangzhou Maritime Safety Administration via a computer network to receive navigation notices, and did not pay attention to receiving navigation warnings in the waters near Zhuhai Port. The captain did not find the special circumstances of the route waters in the navigation notice, and Huitong did not provide navigation warning information, so the accident voyage route was not adjusted. The unknown object could be M.V. YUEYOULIAN 68 wreck. One of the reasons for the accident was that the crew did not listen to the VHF equipment as required, and one of the reasons for the accident was that the crew did not maintain a regular lookout. Accordingly, the accident liability was determined as M.V. HUI TONG 138 touching accident was a unilateral liability accident, and the ship was fully responsible for the accident. According to the general manager of Huitong, the company received navigation notice information through online query, sent the information to the ship in the form of SMS, and dynamically tracked the company’s ship through the ship’s AIS information query website such as Shipxy.com. At the time of the accident, Huitong was not aware of M.V. YUEYOULIAN 68 accident and did not pay attention to receiving relevant navigation warnings. Huitong had shortcomings in the collection and transmission of safety information.

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The court holds that: According to the facts of this case and the litigation claims of the parties, the issues in retrial are: the legal relationship between CPIC Shenzhen, LIN Jinsheng and Huitong; whether the touching of unknown objects of M.V. HUI TONG 138 is force majeure; whether LIN Jinsheng and Huitong should bear the liability for compensation for cargo damage. Guoxiong and Shipping Company concluded a contract for the transportation of the goods involved. Guoxiong was the shipper and Shipping Company was the carrier. LIN Jinsheng was commissioned by Shipping Company to carry the goods involved. LIN Jinsheng actually transported the goods involved in M.V. HUI TONG 138 owned and operated by him, and LIN Jinsheng was the actual carrier of the goods involved. After the sinking of M.V. HUI TONG 138, CPIC Shenzhen paid insurance compensation to Guoxiong and obtained the right of subrogation. The insurance subrogation right of CPIC Shenzhen is based on the right of the insured Guoxiong to claim compensation from a third party. The basic legal relationship in this case should be determined by the legal relationship between Guoxiong, LIN Jinsheng and Huitong. There is no transportation contract between LIN Jinsheng, Huitong and Guoxiong, but the loss of goods involved can be caused by the faulty behavior in the actual transportation and management of LIN Jinsheng and Huitong. Guoxiong, as the owner of the goods, can report to LIN Jinsheng, Huitong advocated compensation for infringement and damages. The cause of this case should be determined as a dispute over the liability for cargo damage along the coast. The courts of first and second instances confirmed the case as dispute over contract of carriage of goods by sea, and applied the Contract Law of the People’s Republic of China, which should be corrected by the court. The Tort Liability Law of the People’s Republic of China Article 6 stipulates that, the perpetrator infringes upon the civil rights and interests of others due to his fault, and shall bear tort liability. According to the findings of the accident investigation report, M.V. HUI TONG 138 touching accident was a unilateral liability accident. The cause of the accident involved the crew’s failure to listen to VHF equipment in accordance with the regulations during driving, and failure to maintain a regular lookout. LIN Jinsheng, as the owner of the ship equipped with the crew, shall be liable for tort damages for the loss of the accident caused by the crew’s driving fault. As a ship operator, Huitong should be responsible for the safety management of M.V. HUI TONG 138, but failed to timely and effectively query and collect relevant navigation notices and transmit safety information to the ship. It also has faults in the occurrence of the accidents involved and should also bear infringement liability for damages. According to the General Rules of Civil Law of the People’s Republic of China Article 153, force majeure refers to an objective situation that cannot be foreseen, unavoidable and insurmountable. The Zhuhai Maritime Safety Administration made a Traffic Accident Investigation Conclusion on the sinking accident of the ship by analyzing the reflection of the crew of M.V. HUI TONG 138 and the ship’s drifting and sinking, and determined that the ship touched an unknown object and caused the hull to break into the water. It is the main cause of the accident. However, the “unknown object” of the crew was only subjective judgment, or

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unclear whether the crew was subjectively negligent at that time (the crew failed to notice the object due to their own negligence) or whether it was due to objective reasons (the crew did Reasonable duty of care still cannot notice the object), the Traffic Accident Investigation Conclusion did not make a determination. LIN Jinsheng and Huitong cannot provide evidence to prove that the ship involved has unpredictable, inevitable and insurmountable characteristics. On the contrary, the crew of M.V. HUI TONG 138 and Huitong have the above-mentioned faults in the navigation and safety management. From this, it can be concluded that the sinking accident of M.V. HUI TONG 138 is not unforeseeable, unavoidable, and insurmountable, and therefore it is not a force majeure. The courts of first and second instances confirmed that the accident involved was force majeure, which has no factual or legal basis, and should be corrected. Shipowner LIN Jinsheng and the affiliated company Huitong jointly operated and managed M.V. HUI TONG 138, which is at fault for this ship of sinking accidents, comprehensive considerations to promote the effective management of the ship’s docking operation risk and ensure that the injured person is fully compensated, and other factors, CPIC Shenzhen requested LIN Jinsheng and Huitong to bear joint and several liability for the total loss of the goods caused by the accident, which should be supported. Guoxiong paid 1,937,351.30 yuan for the goods involved. CPIC Shenzhen paid a total of 1,927,664.60 yuan in insurance compensation to Guoxiong. Within the amount of loss in the value of the goods involved, CPIC Shenzhen requested LIN Jinsheng and Huitong to compensate for its loss of 1,927,664.60 yuan and interest, which should be supported. CPIC Shenzhen paid the insurance compensation of 1 million yuan to Guoxiong = on August 6, 2015, and paid the insurance compensation of 927,664.60 yuan on January 21, 2016. The above-mentioned loss of 1 million yuan and interest of 927,664.60 yuan can be calculated from August 6, 2015 and January 21, 2016, respectively, according to the benchmark interest rate of the same type of loans announced by the People’s Bank of China for the same period until the payment date determined by this judgment. Pulling the threads together, the view of the courts of first and second instances that ship touching unknown objects was caused by force majeure is due to wrong application of law, and should be corrected. It is reasonable that CPIC Shenzhen requested LIN Jinsheng and Huitong to assume joint liability for compensation, which should be supported. According to the General Rules of Civil Law of the People’s Republic of China Article 153, the Tort Liability Law of the People’s Republic of China Article 6 Paragraph 1, the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 2, and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 407 Paragraph 2, the judgment is as follows: 1. Revoke the Guangdong High People’s Court (2017) Yue Min Zhong No.389 Civil Judgment; 2. Revoke the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.600 Civil Judgment;

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3. LIN Jinsheng and Guangdong Huitong Shipping Co., Ltd. shall jointly and severally compensate China Pacific Property Insurance Co., Ltd. Shenzhen Branch loss of 1,927,664.60 yuan and the interest (the interest of 1 million yuan shall be calculated from August 6, 2015, and the interest of 927,664.60 yuan shall be from January 21, 2016, and based on the benchmark interest rate of the same kind of loan announced by the People’s Bank of China for the same period until the payment date determined by this judgment). If the financial obligation to pay is not fulfilled within the period specified in this judgment, the interest on the debt during the period of late performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fees of first and second instances in amount of 22,803 yuan respectively, in aggregate amount of 45,606 yuan, shall be born by LIN Jinsheng and Guangdong Huitong Shipping Co., Ltd. The judgment is final. Presiding Judge: YU Xiaohan Judge: REN Xuefeng Judge: HUANG Xiwu December 28, 2018 Judge Assistant: ZHAO Ke Clerk: CHEN Hui

Ningbo Maritime Court Civil Judgment China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch v. Ningbo Shanglun Co., Ltd. (2015) Yong Hai Fa Shi Chu Zi No.101 Related Case(s) None. Cause of Action 193. Dispute over liability for ship collision damage. Headnote Defendant shipowner held 80% responsible for collision; plaintiff subrogated hull insurer of the other ship in the collision, which sank, held entitled to recover 80% of the sums that it had paid its assured, which was less than the value of a total loss. Summary Plaintiff, subrogated hull insurer, sued Defendant shipowner, claiming that Defendant was 90% responsible for a collision, which caused the total loss of the ship insured by Plaintiff. Defendant responded that: (1) Plaintiff did not have title to sue because the hull insurance policy was issued by one of its related companies; alternatively, (2) that Defendant should bear only 45% of liability for the collision. The Court held: (1) that Plaintiff had title to sue because it had actually compensated the losses suffered by the owner of the ship that sank; (2) Defendant was 80% responsible for the collision. The Court ordered that Defendant should pay Plaintiff 80% of the sums that it had paid to the owner of the ship that sank, which was less than the value of a total loss.

Judgment The Plaintiff: China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch. Person in charge: OUYANG Jinglin, general manager of the branch. Agent ad litem: CHEN Bo, lawyer of Zhejiang Haitai Law Firm. Agent ad litem: LIN Biao, lawyer of Zhejiang Haitai Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_10

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The Defendant: Ningbo Shanglun Co., Ltd. Legal representative: SUN Yonggen, chairman of the company. Agent ad litem: ZHANG Changtao, lawyer of Shanghai Gelian Law Firm. Agent ad litem: HE Xiong, lawyer of Shanghai Gelian Law Firm. With respect to the case arising from dispute over ship collision damage liability between the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch and the Defendant Ningbo Shanglun Co., Ltd., after the case was entertained by the court on November 4, 2015, the collegiate panel was formed according to law, and two public hearings were held on April 12 and October 25, 2016. Agents ad litem of the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch, CHEN Bo and LIN Biao, and agent ad litem of the Defendant Ningbo Shanglun Co., Ltd., ZHANG Changtao, appeared in court to attend the hearings. The case has now been concluded. The Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch claimed that: 1. the Defendant, Ningbo Shanglun Co., Ltd., should compensate the insured LE Lixin for the payment of 6 million yuan; 2. the pre-litigation fee of 5,000 yuan shall be borne by the Defendant; 3. confirm the Plaintiff’s above-mentioned should enjoy maritime lien on M.V. “Wanli 8” to which the Defendant owned. Facts and reasons: at 0015 hours on July 13, 2015, all the Defendants of the Chinese M.V. “Wanli 8” and LE Lixin’s Sierra Nang M.V. “HENG RUN” were in the waters near the small gate of Zhoushan. M.V. “Wanli 8” suddenly lost power and extinguished the lights. When it was lit again, it formed a collision and the collision situation. The ship did not take any collision avoidance, which caused the collision of the two ships. M.V. “HENG RUN” sank. M.V. “HENG RUN” was insured by the owner, LE Lixin, to the Plaintiff for all risks of the ship. The insurance value was 18 million yuan. The insurance period was from 0000 hours on June 1, 2015 to 2400 hours on May 31, 2016. After the accident, the Plaintiff and the insured LE Lixin compensation agreement, to compensate him 12 million yuan, and paid the first instalment compensation of 6 million yuan. During the trial of the case, the Plaintiff paid 4.8 million yuan and 1.2 million yuan to the insured in two separate cases, that is, a total of 12 million yuan of insurance claims were paid. The Plaintiff believed that the Defendant should bear 90% of the collision responsibility, so he increased the litigation request and requested the court to order the Defendant to compensate the economic loss of 10.8 million yuan (12 million yuan  90%), and to undertake the maritime claim preservation application fee of 5,000 yuan and the credit registration fee of 1,000 yuan, and confirmed that the Plaintiff enjoyed the maritime lien on M.V. “Wanli 8” on the above claims. After the trial, the Plaintiff did not pay the corresponding compensation for the third period of insurance compensation of 1.2 million yuan, and did not pay the corresponding legal fees. The court refunded the part of the claim, and the Plaintiff’s final claim amount was 9.26 million yuan for insurance compensation. (10,800,000 yuan  90%) and maritime claims preservation application fee of 5,000 yuan, creditor registration fee of 1,000 yuan.

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The Defendant Ningbo Shanglun Co., Ltd. argued that: 1. The Plaintiff’s right to claim is not established. According to the issuance of the policy and the payment of insurance claims, the Plaintiff is not the insurer under the policy. 2. M.V. “HENG RUN” has a bareboat charter and is registered, so the subject of the right to claim is not LE Lixin, but a bareboat charterer; and the insured LE Lixin has only 52% of the shares, even if it has the right to claim within 52% of the ratio. 3. Although the Plaintiff paid 12 million yuan of insurance claims, it did not provide specific loss items and amounts and corresponding evidentiary materials, and its claim for losses was insufficient. 4. According to the Maritime Safety Administration Accident Certificate, M.V. “HENG RUN” needs to bear at least 45% of the responsibility, not 90% of the Plaintiff’s claim. 5. The Defendant set up a maritime compensation limit fund in another case, and any ship collision losses claimed to the Defendant shall be compensated within the scope of the fund. The parties submitted evidence in accordance with the law in accordance with the lawsuit, and the parties involved in the organization conducted evidence exchange and cross-examination. The evidence of no objection to the parties, such as the report on water traffic accidents, will be confirmed by the court and supported in the volume. For controversial evidence and facts, the court has determined as follows. 1. About the ownership and bareboat charter of M.V. “HENG RUN”. The Defendant disagreed with the title certificate provided by the Plaintiff; the Plaintiff also objected to the bareboat charter registration certificate provided by the Defendant. The reason for the objection was that the evidence formed outside the territory was not notarized. The court believes that although the ownership certificate and the bareboat charter registration certificate are copies, the two can confirm each other. The original and the Defendant belonged to LE Lixin (52% shares) and CHEN Yayue (48% shares). There is no objection to the fact that the bareboat charter registration is registered. The above facts are recognized by the court. 2. Regarding the Plaintiff's claim amount. The Defendant had no objection to the authenticity of the insurance appraisal report provided by the Plaintiff, but did not recognize the content and purpose of the certificate. He believed that the cost of salvage and repair of M.V. “HENG RUN” of the report was not clear, and the shipowner did not Impairment obligation. The court believes that the public assessment report was made by a qualified public assessment agency, and the assessment process and results were basically reasonable. The Defendant did not have any evidence of any obvious misconduct, and the court confirmed it. 3. The determination of the insurer and the insurance payment paid by the Plaintiff. The Defendant recognized the authenticity of the ship insurance policy, the compensation agreement and the equity transfer book provided by the Plaintiff, but considered that according to the record of the policy and the signature, the insurer of the ship policy of this case should be China Ping An Property Insurance Co., Ltd. The payer of an insurance claim of 6 million yuan is also Ping An Property Insurance Co., Ltd., not the Plaintiff; the second payer of

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4.8 million yuan is Ping An Paying Technology Service Co., Ltd., and it is not the Plaintiff in this case. The court believes that according to the information issued by Ping An Property Insurance Co., Ltd. and Ping An Paying Technology Services Co., Ltd., the Plaintiff is recognized as the main position of the insured unit involved. The two sums of 6 million yuan and 4.8 million yuan are also paid on behalf of the Plaintiff, so the above evidence is related to the case, and the court will determine it. Based on the evidence identified above, combined with the court investigation, the court identified the following facts: M.V. “HENG RUN” is a steel general cargo ship, Sierra Leone, completed on December 1, 2008. It is 2,993 gross tons, 89.8 meters long, 15.8 meters wide and 7.4 meters deep. It belongs to LE Lixin and CHEN Yayue. It is 52% and 48%. On May 26, 2015, LE Lixin, as the insured, insured the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch. The Plaintiff issued the ship insurance policy No.18812241900170950983 on the same day, stating that the insured LE Lixin, the shipowner are LE Lixin, CHEN Yayue, the ship name was M. V. “HENG RUN”, sailing area in China, Japan, South Korea and Southeast Asia, insurance, all insurance, insurance value and insurance amount are 18 million yuan, insurance costs 116,000 yuan, insurance period June 1, 2015 From 0000 pm to 2400 pm on May 31, 2016, the absolute deductible is 50,000 yuan or 10% of the loss, whichever is higher; the first beneficiary is LE Lixin. At 1200 hours on July 3, 2015, M.V. “HENG RUN” loaded 5050 tons of silica sand from Vietnam VUNGANG port to Pyeongtaek, South Korea. When sailing, it ate 5.3 meters and 6.2 meters. At about 2340 hours on July 7, the ship anchored in the waters of Nanri Island, Fujian Province, and anchored at about 0530 hours on July 11. At 2315 hours on July 12, the ship’s position was 30°07′35″N/122°35′13″ E, heading 016, speed was 8.3 knots, and the second officer ZHENG Jun and the duty sailor HUO Feng came to the bridge to take over. When the shift is taken, the bridge radar is turned on (3 nautical miles, eccentric display, northward, real motion), VHF16 channel listening, AIS, electronic chart opening, automatic rudder navigation. At about 2355 hours, M.V. “HENG RUN” entered the Xiaobanmen waterway. The second pair of radars found a ship sailing southward to the small gate near the ship’s bow. The distance was about 4 nautical miles and the electronic chart was verified. The ship AIS information shows the ship name M.V. “Wanli 8” (later confirmed as M.V. “Wanli 8”). At about 2356 hours, the second officer found the red and green sidelights of M.V. “Wanli 8”. He called M.V. “Wanli 8” through VHF16, and both parties agreed to pass the red light. Then the second officer of M. V. “HENG RUN” ordered to turn to the right and change the course to 020. After the turn, the second officer saw M.V. “Wanli 8” on the left side of the ship’s bow line and showed a red sidelight. At about 0005 on July 13, the ship’s position was 30°13′28′′N/122°36′57′′E, heading 022, speed was 7.3 knots, and the second pair suddenly found M.V. “Wanli 8” located about 20° on the port side of the ship and about 1.3 nautical miles away. M.V. “Wanli 8” navigation lights and the lights in the living area were extinguished, that is, through radar verification, it was found

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that the radar echoes of the ships showed normal; then the second pair of telescopes searched for M.V. “Wanli 8” and found that the other party’s navigation lights returned to normal. At about 0009, the second officer discovered the red and green sidelights of M.V. “Wanli 8”, and immediately ordered the sailors to convert the automatic rudder into a hand steer, and ordered the right full rudder. At about 0010, the ship’s position on the port of M.V. “HENG RUN” collided with the bow of M. V. “Wanli 8”. After the collision, the captain went to the bridge and found that the seawater at the collision site was continuously poured into the cargo hold. At about 0017, M.V. “HENG RUN” sank, and the shipwreck position was 30° 13′54′′N/122°37′37′′E, and all the crew fell into the water. M.V. “Wanli 8” is a steel bulk carrier. The ship port is Ningbo, China. It was completed in January 2007. It is 2612 gross tons, 84.8 meters long, 14.2 meters wide and 7.6 meters deep. It is owned by the Defendant Ningbo Shanglun Co., Ltd. At 0900 on July 8, 2015, 3,700 tons of steel was loaded from Zhangjiagang to Kaohsiung, Taiwan region. When sailing, it drove 5.8 meters and drowned 6.45 meters. At about 2250 hours on July 9, the ship anchored in the waters of Zhouding North Dingxing, and anchored at 1930 on July 12. At 2330 on the 12th, the ship’s position was 30°20′21′ ′N/122°37′10′′E, the heading was 176, and the speed was 9.3 knots. The second deputy SUN Youxing and the duty sailor LI Siqi took over on the bridge. When the driver took over, the bridge radar was turned on, VHF16 channel listening, AIS, GPS equipment open, automatic rudder navigation. At this point, the steering point of the planned route is less than 1 nautical mile, and the second pair is commanded to use the automatic rudder to transfer to the planned heading 185. At about 2356 hours, the second pair received a call on the VHF16 channel to go north through the small plate door sailing ship M.V. “HENG RUN”. After radar observation, M.V. “HENG RUN” was located on the port side of the ship, about 4 nautical miles away, and then the two ships agreed. The red light passed. After negotiating with M.V. “HENG RUN” VHF, the sailing ship M.V. “Liaoyou 801”, which is located in the left front of M.V. “HENG RUN” and the small gate in the north, called M.V. “Wanli 8”, and requested M.V. “Wanli 8” turn green light passed. After the green light was agreed with M.V. “Liaoyou 801”, the second officer on duty changed the automatic rudder to the hand steering and turned to the right 2°. On the 13th, about 0004 hours and M.V. “Liaoyou 801” green light drove past. At about 0005, M.V. “Wanli 8” suddenly lost power in the whole ship, the bridge radar, VHF power off, the steering gear failed, and the navigation lights went out. In the second tube wheel on duty in the cabin, the No.1 auxiliary machine was tripped, trying to reset the No.1 auxiliary machine, but failed. Then the operator on duty was called to the chief engineer to report the loss of power of the whole ship. The second officer called the cabin with a sound telephone on the bridge, but was unable to contact the cabin. Then he tried to use the VHF to release the navigation safety information and found that the VHF equipment was powered off, and the last two pairs pulled the clock to the parking. At about 00051/2, M.V. “Wanli 8” emergency power supply was started, the bridge radar and VHF resumed power supply, and the navigation lights returned to normal display. At about 0006,

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the captain arrived at the bridge and found that the radar was in the restart countdown for more than two minutes. The second officer reported to the captain that the entire ship had lost power and the cabin could not be contacted; the sailor reported that the steering gear failed. The captain issued the ship navigation safety information on the VHF16 channel, and at the same time ordered the second pair to open the out of control lights. At about 0007, the third pair of the upper deck, found that the radar is in the restart countdown for a variety of points, there is a jump, the radar has entered the restart state. At this time, the slave 2 has started and powered the slave. The sailor found the steering gear to resume normal work and reported the captain. At about 0008, the captain suddenly saw the xenon lamp and the red sidelight of a ship (later confirmed as M.V. “HENG RUN”) at the right front of the ship’s bow at a distance of about 300 meters, and immediately ordered the right full rudder. At about 0010, M.V. “Wanli 8” slammed into the ship’s port on the port of M.V. “HENG RUN” in the process of deflecting to the left. The collision angle was about 90 degrees. At the time of collision, the ship position was 30°13′54′′N/122° 37ʹ12′′ E. After the collision accident, M.V. “Wanli 8” immediately organized the accident damage verification and released the lifeboat to rescue M.V. “HENG RUN” of the crew. The accident caused M.V. “HENG RUN” to sink, the cargo was lost, one person died on the ship and one person was missing; M.V. “Wanli 8” pulsating nose and the tip chamber were partially damaged. On September 2, 2015, LE Lixin signed the payment agreement and the equity transfer book with the Plaintiff as the insured and the first beneficiary. The two parties agreed that the Plaintiff would pay the insurance compensation of 12 million yuan to LE Lixin at one time. The claim was for the Plaintiff to LE Lixin. In this accident insurance liability, except for the actual liability for all losses except for the collision liability, after receiving the compensation, LE Lixin will not be able to claim the total loss, partial loss, general average and salvage and rescue of the accident to the Plaintiff. The 12 million yuan will be paid in three installments, 50% of the total amount will be paid within 10 days after the agreement is signed, and 40% will be paid within 10 days after LE Lixin provides the maritime liability certificate. LE Lixin will provide the claim materials for the accident and will be approved within 10 days after the Plaintiff approves. Pay the remaining 10%. After signing the contract, the Plaintiff paid LE Lixin 6 million yuan on October 9, 2015 and 4.8 million yuan on February 15, 2016. The court believes that this case is a damage compensation dispute caused by a ship collision. According to the claims and defense of the Plaintiff and the Defendant, the issues between the Plaintiff and the Defendant are as follows: Firstly, the Plaintiff’s main body and claim qualification The Defendant believed that the insurance charter of the ship involved in the case was China Ping An Property Insurance Co., Ltd., and the insurance claims were not paid by the Plaintiff, so the Plaintiff was not the insurer. The court believes that the official seal of the insurance policy involved in the case is “China Ping An Property Insurance Co., Ltd. policy special seal”, but the real insurer should be determined according to the insurance contractor of the ship insurance business, the specific organizer of the insurance claims. The insurance and insurance claims of M.V.

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“HENG RUN” involved in the case were all undertaken by the Plaintiff. According to the information issued by China Ping An Property Insurance Co., Ltd. and the insurance payment unit, Ping An Property Insurance Co., Ltd. also clarified the sponsor of the insurance business. The Plaintiff’s insurer status should be recognized. The Defendant also believed that according to Article 4 of the Supreme People’s Court Regulations on Several Issues concerning the Trial of Ship Collision Disputes, the liability for the collision of the ship shall be borne by the owner of the ship, and the colliding ship shall be registered according to law during the bareboat charter period. Under the responsibility of the bareboat charter, M.V. “HENG RUN” of the case was in the bareboat charter period, so LE Lixin as the owner of the ship could not claim the damage of the ship. Accordingly, the Plaintiff’s subrogation right has no basis for rights; even the shipowner has the right to claim for collision damage. It should also be jointly claimed by the two ship owners, LE Lixin and CHEN Yayue. However, the insured of the ship insurance policy in this case has only one person, only 52% of the shares of the ship, and its rights are incomplete. There is a major flaw in the legality of the Plaintiff’s subrogation rights. The court believes that Article 4 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Ship Collision Disputes stipulates that the liability for collision of ships shall be borne by the bareboat charterer, but the claim for collision of the ship shall not only be stipulated by the light charterer. Exercising, the shipowner has full ownership of his ship, and of course he has the right to claim damages in case of damage or loss; the ship insurance contract in this case is concluded by the shipowner and the insurer, and the legal relationship of the ship insurance contract exists between the shipowner and the insurer. The bareboat charterer is not a party to the insurance contract relationship and has no right to claim against the insurer. In addition, although the insured and the insured of the ship insurance involved only LE Lixin, the ship insurance policy states that the shipowner is LE Lixin and CHEN Yayue, indicating that both parties to the ship insurance know and confirm that the LE Lixin department acts on behalf of all shipowners; moreover, in the process of insurance claims, LE Lixin and CHEN Yayue respectively issued powers of attorney to jointly entrust ZHOU Guohong to handle the follow-up of M.V. “HENG RUN” of marine accidents. The signature of LE Lixin in the payment agreement and the equity transfer can also represent all shipowners. In summary, the Defendant’s defense of the Plaintiff’s main body and the claim qualification in this case is insufficient, and the court will not accept it. Secondly, determination of the responsibility of collision of the ship involved in the case The court believes that according to the process of the collision of the two ships involved, the two ships have the following faults: 1. Both ships have not maintained their regular expectations. After M.V. “Wanli 8” on-duty driver found M.V. “HENG RUN”, he did not maintain continuous effective observation of M.V. “HENG RUN”. Especially after the ship was de-energized, the duty driver hurriedly responded to the sudden loss of the ship and ignored. The observation of the sea surface and the arrival of the ship

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violated the provisions of Article 5 of the 1972 International Regulations for Preventing Collisions at Sea. Although M.V. “HENG RUN” on-duty driver found the abnormal situation of M.V. “Wanli 8” navigation light extinguished in time, he did not maintain the alert, and failed to find the change of the heading deflection and speed of the other ship in time, indicating that “the constant” pilots did not fully use radar and other means to maintain continuous and effective observation of the ship, which violated the provisions of Article 5 of the 1972 International Regulations for Preventing Collisions at Sea. M.V. “Wanli 8” does not travel as far as possible on the right side of the small gate channel. During the process of M.V. “Wanli 8” approaching the Xiaobanmen waterway, the ship apparently did not travel as far as possible on the right side of the waterway and along the main traffic flow southward through the Xiaobanmen waterway. The position of the ship deviated to the north through the small plate. The main traffic flow of the gate channel led to the formation of the confrontation situation with M.V. “Liaoyou 801” and M.V. “HENG RUN” during the incident, which laid a hidden danger for the ship collision accident and seriously violated the 1972 International Regulations for Preventing Collisions at Sea. M.V. “Wanli 8” did not accurately determine the dangerous situation of collision. At about 2356 hours on July 12, after the red light of M.V. “Wanli 8” and M.V. “HENG RUN” was negotiated, it was also with the sailing ship M.V. “Liaoyou 801” located in the left front of M.V. “HENG RUN” and on the north side of the small gate. “The ship of negotiation green light passed, and chose to cross M.V. ‘HENG RUN’ and M.V. ‘Liaoyou 801’ in an attempt to cross the two ships at close range, which directly led to the formation of the ship’s urgent situation”, indicating that M.V. “Wanli 8” was on duty. The driver failed to make an accurate judgment on the dangerous situation at the time of the collision, which violated the provisions of Article 7 Paragraph 1 of the 1972 International Regulations for Preventing Collisions at Sea. M.V. “Wanli 8” was improperly disposed of after power failure. After M.V. “Wanli 8” of power loss of the whole ship, the driver on duty of the ship blindly took parking measures without unidentified reasons for power loss, insufficient consideration of the situation that the ship was meeting with other ships and about to enter the narrow waterway; After the emergency power supply of the ship was started, M.V. “Wanli 8” vehicle and rudder were in a ready state. The ship’s driver did not resume the operation of the ship in time, resulting in the ship losing control and constantly approaching M.V. “HENG RUN” under the action of inertia, wind and current. M.V. “HENG RUN” did not verify the effectiveness of the evasive action. M.V. “HENG RUN” on-duty pilot made a right steering evasive action when he was 4 nautical miles away from M.V. “Wanli 8”. However, he did not maintain continuous and effective observation of M.V. “Wanli 8” that was approaching. The verification of the effectiveness of the evasive action violates Article 8.4 of the International Regulations for Preventing Collisions at Sea, 1972.

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Comparing the degree of negligence between the two sides and the causal relationship between the accidents, M.V. “Wanli 8” did not maintain a regular look, did not accurately determine the collision risk situation, did not travel as far as possible along the right side of the waterway, improper handling measures after the ship lost power was the accident The main reason is to bear 80% of the main responsibility for the accident. M.V. “HENG RUN” did not maintain a formal expectation and did not verify the effectiveness of the evasive action. It was the secondary cause of the accident and assumed a secondary responsibility of 20% for the accident. Thirdly, economic losses caused by collision accidents in this case The Defendant believed that all the salvage and repair expenses claimed by the Plaintiff did not actually occur. The loss items and the amount were not clear. The Plaintiff only entered into a payment agreement with the insured, and the 12 million yuan paid was unsubstantiated. The Defendant refused. Recognition. The court believes that M.V. “HENG RUN” has not been salvage since it collided, and its salvage is indeed difficult. It is basically reasonable for the people of Tai’an Company to make a reasonable estimate of the cost of salvage + repair program through multi-inquiry. The amount is also less than the loss of the presumed total loss. The Defendant also has no evidence to prove the unreasonableness of the loss assessment. Therefore, the court has determined the claimant’s claim amount of 12 million yuan. The Plaintiff has paid 10.8 million yuan, and the Defendant should pay the corresponding compensation of 8.64 million yuan according to the proportion of its 80% collision liability; for the third-phase insurance compensation of 1.2 million yuan that the Plaintiff has not paid, it can be claimed after the actual occurrence. The maritime claim preservation application fee and the credit registration fee paid by the Plaintiff for the claim in this case shall also be borne by the Defendant. The loss caused by the collision of the ship in this case belongs to the property damage caused by the operation of the ship. As the owner of the ship of M. V. “Wanli 8”, the Defendant also has the maritime liability limitation for the maritime claim involved in the case. The maritime claim claimed by the Plaintiff is not It is further determined that the creditor’s rights are distributed in the order specified in Article 210 Sub-paragraph 3 and Sub-paragraph 4 of the Maritime Code. In summary, the rational part of the Plaintiff should be supported by the court. In accordance with Article 165, Article 169, and Article 207 Paragraph 1 Sub-paragraph 1 of the Maritime Code of the People’s Republic of China, and Article 1 Paragraph 1, and Article 3 of the Provisions of the Supreme People’s Court on Compensation for Property Damages in the Trial of Ship Collision and Contact Cases, the judgment is as follows: 1. The Defendant Ningbo Shanglun Co., Ltd. shall pay the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch for the collision loss of 8.64 million yuan and the maritime claim preservation fee of 5,000 yuan and the credit registration application fee 1,000 yuan within 10 days after the effective date of this judgment;

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2. The first item’s amounts due to the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch shall be compensated from the maritime liability limitation fund established by the Defendant in the court; 3. Reject other claims of the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 79,840 yuan, the Plaintiff China Ping An Property Insurance Co., Ltd. Zhoushan Central Branch Company shall pay 8,866 yuan, and the Defendant Ningbo Shanglun Co., Ltd. shall pay 70,974 yuan. If any party disagrees with this judgment, the party can submit within 15 days from the date of delivery of the judgment, together with copies of petition according to the number of the other parties appeal to the Zhejiang High People’s Court. Presiding Judge: CHEN Xiaoming Acting Judge: QIAN Bingbing Acting Judge: XIA Guangen October 28, 2016 Clerk: XU Meina

Appendix: Relevant Laws 1. Maritime Code of the People’s Republic of China Article 165 A collision of a ship refers to an accident in which the ship is in contact with the sea or the navigable waters connected to the sea. The ship referred to in the preceding paragraph includes any other vessel not used for military or government official duties that collides with the ship referred to in Article 3 of this Law. Article 169 If a ship collides and the colliding ships are at fault with each other, each ship shall be liable for compensation according to the proportion of the degree of fault; if the proportion of the degree of negligence or the degree of negligence cannot be determined, the average liability shall be liable. Ships that are at fault with each other shall be liable for the loss of the ship and the cargo and other property on board due to the collision in accordance with the provisions of the preceding paragraph. If a collision causes a third party’s property loss, the liability of each ship shall not exceed the proportion it should bear.

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Ships that are at fault with each other shall be jointly and severally liable for the personal injury or death of the third person. If the compensation paid in conjunction with a ship exceeds the proportion specified in the first paragraph of this Article, it shall be entitled to recover from other faulty ships. Article 207 In the following maritime claims, except as otherwise provided in Articles 208 and 209 of this Law, regardless of the difference in the basis of the liability, the responsible person may limit the liability in accordance with the provisions of this Chapter: (1) Personal injury or death or damage to or damage to the property that occurs on board or directly related to the operation or rescue operation of the ship, including damage to port engineering, harbor basins, navigation channels and navigation aids, and the corresponding losses caused thereby. Claim for compensation; (2) Claims for compensation for delays in the delivery of goods by sea or delays in the arrival of passengers and their baggage; (3) Claims for compensation for other losses caused by violations of non-contractual rights directly related to ship operations or rescue operations; (4) A request for compensation from others other than the responsible person to take measures to avoid or reduce the loss of the liability of the responsible person in accordance with the provisions of this Chapter, and the claim for compensation for further losses caused by the measure. The claim for compensation listed in the preceding paragraph may limit liability irrespective of the manner in which it is submitted. However, item (4) deals with the remuneration paid by the responsible person by contract, and the liability of the responsible person may not invoke the provisions of this article on liability limitation. 2. Provisions of the Supreme People’s Court on Compensation for Property Damages in the Trial of Ship Collision and Contact Cases (1) The requester may request compensation for property damage caused by collision or collision of the ship, related expenses and losses successively after the collision or collision of the ship, reasonable expenses and losses arising from avoiding or reducing damage, and expected Loss of interest. (2) No compensation shall be paid for the loss caused by the requester’s fault or the part that causes the loss to expand. (3) Ship damage compensation is divided into total damage compensation and partial damage compensation.

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1) Compensation for total loss of a ship includes: Loss of ship value; Loss of fuel, materials, spare parts, supplies on ships not included in the value of the ship, fishing equipment, nets, fishing gear, etc. on the fishing vessel; Ship staff, repatriation fees and other reasonable expenses. 2) Compensation for part of the damage of the ship includes: reasonable temporary repair fee, permanent repair fee, auxiliary cost and maintenance cost, but the following conditions shall be met: The ship should be repaired nearby, unless the claimant can prove that repairs elsewhere can reduce losses and save costs, or for other reasonable reasons. If the ship can continue to operate after temporary repairs, the requester is responsible for temporary repairs; The repair of the collision part of the ship shall be limited to the cost of repairing the damaged part of the collision of the ship, together with the requester's assurance that the ship is airworthy, or repaired by another accident, or with the routine maintenance of the ship. And loss. 3) Compensation for damages to ships also includes: Reasonable salvage fees, exploration, salvage and removal costs of the shipwreck, setting the cost of the shipwreck logo; towing expenses, the loss of the voyage or the loss of freight, and the general average; reasonable loss of schedule; other reasonable fees.

Ningbo Maritime Court Civil Judgment China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe 72 Min Chu No.2300 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 224. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Awarding plaintiff shipping company damages for container demurrage but reducing amount claimed (which was for more than a year of demurrage) because plaintiff had failed to mitigate its loss by selling the goods in the containers after 60 days, as it was entitled to do by law. Summary The Plaintiff, China Shipping Container Lines Co., Ltd. (China Shipping) filed the lawsuit against Zhejiang Guangming Paper Co., Ltd. (Guangming) and Five Minerals Stream Zhejiang Co., Ltd. (Minmetals) demanding that the two Defendants jointly bear the fees and expenses related to 12 40-ft. containers which, as of the date of this judgement, have not been extracted from Ningbo Port. The court of first instance held in favor of China Shipping, but it only awarded a portion of the claimed damages, noting that China Shipping failed to adequately mitigate its damages.

Judgment The Plaintiff: China Shipping Container Lines Co., Ltd. Domicile: Room of International Trade Building, China (Shanghai) Pilot Free Trade Zone. Legal representative: ZHANG Guofa, chairman of the company. Agent ad litem: CAO Fang, lawyer of Shanghai Allbright Law Offices. Agent ad litem: SHANG Tao, lawyer of Shanghai Allbright Law Offices.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_11

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The Defendant: Zhejiang Guangming Paper Co., Ltd. Domicile: Chunjiang Street Industrial Park, Fuyang District, Hangzhou, Zhejiang (Shanjian Village). Legal representative: WANG Wenzhong. The Defendant: Five Minerals Stream Zhejiang Co., Ltd. Address: No. ***, Rainbow South Road, Jiangdong District, Ningbo, Zhejiang. Legal representative: MEI Wangnian, chairman of the company. Agent ad litem: LIU Yanan, lawyer of Beijing Huifeng Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff China Shipping Container Lines Co., Ltd. (hereinafter referred to as “China Shipping”) and the Defendant Zhejiang Guangming Paper Co., Ltd. (hereinafter referred to as “Guangming”), and Five Minerals Stream Zhejiang Co., Ltd. (hereinafter referred to as “Minmetals”), the Plaintiff filed a lawsuit to the court on September 19, 2016. After the case was entertained on September 21, 2016, the court formed a collegiate panel in accordance with the law and held a hearing on November 11, 2016. SHANG Tao, agent ad litem of the Plaintiff China Shipping, LIU Yanan, agent ad litem of Minmetals, appeared in court to attend the hearing. The Defendant Guangming was summoned by the subpoena of the court and refused to appear in court without justified reasons. The court heard the case by default according to law. The case has now been concluded. China Shipping filed a lawsuit to the court as follows: 1. the two Defendants were ordered to bear the overdue use fee of RMB10,140,120 yuan. 2. The two Defendants were ordered to bear the expenses related to the storage fee, the transfer fee, the port fee, the port security fee, and the transfer fee, totaling RMB2,839,0.80 yuan. 3. The two Defendants were ordered to return the 12 40-foot containers involved. If they could not be returned, the compensation value of the container was 48,000 US dollars (calculated according to the US dollar against the RMB exchange rate 1:6.6597 on the prosecution date, totaling 319,665.60 yuan). At the trial, China Shipping withdrew the second claim. Facts and reasons: from November 23 to 24, 2015, China Shipping was to ship 12 40-foot ultra-high container cargoes under the bill of lading SEANGB002222, and ship them from the port of loading, Port of Seattle, USA, to the port of unloading in Ningbo, China. The bill of lading involved showed that the consignee was a bright company. On the 26th of the same month, Minmetals agent, Guangming, exchanged the bill of lading and paid the replacement bill, but the goods involved in the case were never extracted. Currently, the container and cargo involved in the case are still stranded in Ningbo Port. The container involved in the case was still occupied, and the container overdue usage fee totals RMB1,014,120 yuan; further, the storage fee, port construction fee, port fee, port security fee, and transfer fee have been incurred. The related expenses totaled RMB2,8390.80 yuan. According to China Shipping, the Defendant Guangming, as the consignee under the bill of lading, shall be liable for damages caused to the carrier due to failure to pick up the goods in time.

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The Defendant, Minmetals, acting as the agent of the consignee, should disclose the true consignee. If it cannot disclose it, it should be recognized as the consignee and bear the responsibility of the consignee. Minmetals verbally defended in the trial that it had no legal relationship with China Shipping. The two parties did not reach any agreement and agreed that Minmetals should bear the responsibility in the prosecution. The bill of lading in this case was a registered bill of lading. China Shipping was aware of the consignee. There was no unknowingness to the consignee. 2. Minmetals exchanged the bill of lading for Guangming and handed the bill of lading to Guangming, which was not the agent of Guangming. It cannot be assumed that the subsequent obligations related to the bill of lading, including the delivery of the goods, should be borne by them, and the Guangming has not entrusted them to pick up the goods. 3. The demurrage expenses claimed by China Shipping are too high, and there is no factual and legal basis for returning the box or compensating the box. In summary, the court was requested to reject all claims of China Shipping. In support of its claims, China Shipping provided the following evidentiary materials to the court. 1. The bill of lading numbered SEANGB002222 is used to prove the contractual relationship of the sea cargo under the bill of lading between the companies; 2. Change of invoice and receipt voucher are used to prove that on November 26, 2015, Minmetals exchanged the bill of lading on behalf of Guangming and paid the replacement fee; 3. Finally, reminder notice to prove that China Shipping fulfilled its notification obligations; 4. The information of the website of Ningbo Far East Terminal Management Co., Ltd. is used to prove that the container in question was unloaded at Ningbo Port on November 23-24, 2015; 5. The container overdue fee and the demurrage calculation table published on the website of China Shipping are used to prove the overdue usage fee of the container that the consignee should pay; 6. The certificate issued by the representative office of the British Blue Sky Intermodal (UK) Co., Ltd. and the industrial and commercial registration materials are used to prove that the price of the container involved is about $4,000 USD each. Guangming and Minmetals did not provide evidence to the court. After the cross-examination, Minmetals had no objection to the authenticity of evidence 1, 2, 4, and 6 of China Shipping, but believes that evidence 6 has nothing to do with the case. Evidence 3 has not been received, and evidence 5 is the unilateral claim of China Shipping. After review, the court held that the price of the new box to be proved by the China Railway Company’s evidence is not related to the price of the old box in this case and will not be confirmed. The price announcement in Evidence 3 is based on the reasonable behavior of the carrier and is recognized. As to whether the amount of container overdue fees is reasonable,

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it will be evaluated in the focus of the dispute. Regarding the authenticity of the other evidence of China Shipping, Minmetals has no objection and is recognized. The court confirmed the facts of this case as follows. From November 23 to 24, 2015, China Shipping shipped 12 40-foot ultra-high container cargoes with the bill of lading number SEANGB002222 from the Port of Seattle to China Ningbo Port and unloaded the goods. The 12 container numbers are BMOU4312061, CCLU6534073, CCLU6638463, etc. The bill of lading states: POTENTIAL INDUSTRIES INC. was the shipper, China Shipping was the carrier, and the consignee and the informant are Guangming. The shipping fee is prepaid, and the name of the goods was waste paper. After the above container was unloaded, it entered the yard of Ningbo Far East Terminal Management Co., Ltd. On the 26th of the same month, Minmetals agent Guangming returned the original bill of lading to China Shipping, in exchange for the bill of lading, and paid the exchange fee of RMB 1,100 to China Shipping. Through its agent, China Shipping sent a fax to the two Defendants on May 5 and 30, 2016 to remind them of the goods and inform them of the consequences. After five rounds of negotiations between Minmetals and China Shipping, the demurrage fee was unsuccessful, resulting in the container and the cargo in the container still remaining in the yard and not being declared. China Shipping has not issued a list of boxes. The court considered that the case was a contract for the carriage of goods by sea. China Shipping was the carrier of the contract of carriage involved in the case. Guangming was the named consignee under the bill of lading involved in the case, and Minmetals was the principal of Guangming. According to the opinions of the parties, the court’s controversy on the case is as follows: 1. The object and amount that the Plaintiff can claim the demurrage fee. After the container under the bill of lading was shipped to Ningbo Port, Minmetals exchanged the bill of lading with China Shipping on behalf of Guangming with the original bill of lading. Therefore, Guangming shall bear the obligations of the consignee as stipulated in the bill of lading. Now that the goods are not extracted, Guangming shall be liable for the losses caused by the detention of the goods involved in Ningbo Port to China Shipping. As an agent of Guangming, Minmetals has disclosed the consignee to China Shipping and does not need to assume liability for compensation to China Shipping. China Shipping claims to charge 40-foot ultra-high container overdue fees as announced on its website. The overdue use fee for the 12 containers involved in the case from November 23 or 24, 2015 to July 28, 2016 was RMB1,014,120 yuan. The court believes that China Shipping publicizes the container overdue charging standard on the website, which is a price announcement for unspecified users. According to the shipping industry's operating practices, it can be used as a charging standard. The two Defendants did not raise any objections to this, and it should be adopted. However, as a professional carrier, China Shipping is obliged to take derogation measures in accordance with relevant regulations when no one picks up the goods, and it cannot allow the loss to expand. The expanded loss shall not be claimed to the consignee. The Maritime Code of China stipulates that no one withdrew from the date of arrival on the 60th day, and

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the carrier may apply to the court for an auction. It can also be seen from the reminder notice issued by China Shipping to the consignee that it knows that China Customs has relevant regulations on how to handle unclaimed goods. Therefore, it is believed that China Shipping should promptly handle the unclaimed cargo after the arrival of Hong Kong and recover the container. With reference to the relevant provisions of Article 88 of the Maritime Code of China, the period during which the container overdue fee can be claimed shall be 60 days (considering the processing period, the free period of use will not be calculated), and in accordance with the standards publicized by China Shipping. The total cost of 12 containers for overdue use is 228,960 yuan (120 * 7 + 240 * 7 + 360 * 46 = 19,080 yuan each). 2. Can the Plaintiff claim to return or compensate the consignee? The 12 containers involved are still stranded in Ningbo Port. No one has declared it. The China Shipping has not issued a list of bills. Although it has not explicitly proposed a lien, in fact, it has always required the consignee to pay the fee first and then the suitcase is no different from the lien. This shows that the container is still under the control of China Shipping. It is not under the control of Guangming. According to the relevant regulations of China Customs, China Shipping, as the carrier, still has the obligation to handle the goods in the case if no one picks up the goods. The goods can be disposed of by the relevant laws or relevant customs regulations, and the containers can be recovered. If a fee occurs during this process, it can be claimed to the consignee. The Plaintiff was told to ask others to compensate for the new box price. The Plaintiff’s claim lacks the necessary facts and legal basis, so the court did not support it. In summary, regarding the reasonable part of the Plaintiff’s request, the court supports it according to law, and regarding the reasonable part of the Defendant’s request, the court will adopt it according to law. According to Article 119 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 78 Paragraph 1, Article 86 and Article 88 of the Maritime Code of the People’s Republic of China, Article 64 Paragraph 1, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant Zhejiang Guangming Paper Co., Ltd. shall pay the container overdue usage fee of RMB228,960 yuan to the Plaintiff China Shipping Container Lines Co., Ltd. within 10 days from the effective date of this judgment. 2. Reject other claims of the Plaintiff China Shipping Container Lines Co., Ltd. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB16,800 yuan, the Plaintiff China Shipping Container Lines Co., Ltd. shall bear 13,916 yuan, and the Defendant Zhejiang Guangming Paper Co., Ltd. shall bear 2,884 yuan.

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If any party disagrees with this judgment, it can submit within 15 days from the date of delivery of the judgment, together with copies of petition according to the number of the other parties, appeal to the Zhejiang High People’s Court. Presiding Judge: HU Liqiang Acting Judge: LV Zhihui Acting Judge: TONG Kai November 18, 2016 Acting Clerk: ZHENG Jing

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 119 Paragraph 1 After a party breaches the contract, the other party shall take appropriate measures to prevent the loss from expanding. If no appropriate measures are taken to cause the loss to expand, no compensation shall be claimed for the expanded loss. 2. Maritime Code of the People’s Republic of China Article 78 Paragraph 1 The rights and obligations between the carrier and the consignee and the holder of the bill of lading are determined in accordance with the provisions of the bill of lading. Article 86 If no one picks up the goods at the port of unloading or the consignee delays or refuses to take the goods, the captain may unload the goods in the warehouse or other appropriate place, and the costs and risks arising there-from shall be borne by the consignee. Article 88 If the carrier retains the goods in accordance with the provisions of Article 87 of this Law and has not been extracted for 60 days from the day after the ship arrives at the port of discharge, the carrier may apply to the court for an auction. If the goods are perishable or the storage cost of the goods may exceed their value, you can apply for an auction in advance. The proceeds from the auction are used to settle the costs and freight charges for the safekeeping and auction of the goods and other related expenses that should be paid to the carrier. Insufficient amount, the carrier has the right to recover from the shipper; the remaining amount is refunded to the shipper. If it is unreturnable and has not been collected for one year from the date of auction, it will be turned over to the state treasury.

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3. Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 The first party has the responsibility to provide evidence for its own claims. Article 144 If the Defendant is summoned by summons and refuses to appear in court without justified reasons, or if he withdraws from the court without the permission of the court, he may be absent from the judgment.

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Zhejiang High People’s Court Civil Judgment China Shipping Container Lines Co., Ltd. v. Zhejiang Guangming Paper Co., Ltd. et al. (2016) Zhe Min Zhong No.905 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 217. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision awarding plaintiff shipping company damages for container demurrage but reducing amount claimed (which was for more than a year of demurrage) because plaintiff had failed to mitigate its loss by selling the goods in the containers after 60 days, as it was entitled to do by law. Summary The Plaintiff, China Shipping Container Lines Co., Ltd. (China Shipping) filed the lawsuit against Zhejiang Guangming Paper Co., Ltd. (Guangming) and Five Minerals Stream Zhejiang Co., Ltd. (Minmetals) demanding that the two Defendants jointly bear the fees and expenses related to 12 40-ft. containers which, as of the date of this judgement, have not been extracted from Ningbo Port. The court of first instance held in favor of China Shipping, but it only awarded a portion of the claimed damages, noting that China Shipping failed to adequately mitigate its damages. On appeal, the court of second instance affirmed the judgment of first instance, dismissing China Shipping’s appeal.

Judgment The Appellant (the Plaintiff of first instance): COSCO Shipping Development Co., Ltd. Domicile: Room of International Trade Building, China (Shanghai) Pilot Free Trade Zone. Legal representative: SUN Yueying, chairman of the company. Agent ad litem: CAO Fang, lawyer of Shanghai Allbright Law Offices.

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Agent ad litem: SHANG Tao, lawyer of Shanghai Allbright Law Offices. The Respondent (the Defendant of first instance): Zhejiang Guangming Paper Co., Ltd. Domicile: Chunjiang Street Industrial Park, Fuyang District, Hangzhou, Zhejiang (Shanjian Village). Legal representative: WANG Wenzhong. The Respondent (the Defendant of first instance): Five Minerals Stream Zhejiang Co., Ltd. Domicile: No. ***, Rainbow South Road, Jiangdong District, Ningbo, Zhejiang. Legal representative: MEI Wangnian, chairman of the company. Agent ad litem: LIU Yanan, lawyer of Beijing Huifeng Law Firm. Agent ad litem: MIAO Jie, lawyer of Beijing Huifeng Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant COSCO Shipping Development Co., Ltd. (hereinafter referred to as “COSCO Shipping”, formerly known as China Shipping Container Lines Co., Ltd.) and the Respondent Zhejiang Guangming Paper Co., Ltd. (hereinafter referred to as “Guangming”) and Five Minerals Stream Zhejiang Co., Ltd. (hereinafter referred to as “Minmetals”), COSCO Shipping refused to accept the Civil Judgment of Ningbo Maritime Court (2016) Zhe 72 Min Chu No.2300, and appealed to the court. After entertaining the case on December 19, 2016, the court formed a collegiate bench in accordance with the law and publicly heard the case on January 13, 2017. Agent ad litem of the Appellant COSCO Shipping, SHANG Tao, and agent ad litem of the Respondent Minmetals, LIU Yanan, attended the lawsuit. The Respondent, Guangming, was summoned by the subpoena of the court and refused to participate in the lawsuit without justifiable reasons. Now the case has been concluded. China Shipping Container Lines Co., Ltd. (hereinafter referred to as “China Shipping”, now renamed as COSCO shipping) filed a lawsuit to the court of first instance that: 1. Guangming and Minmetals should bear the overdue use fee of RMB1,014,120 yuan; 2. Guangming and Minmetals should bear the related expenses of storage fee, port construction fee, port fee, port security fee, and transfer fee, totaling RMB28,390.8 yuan; 3. Guangming and Minmetals should return the 12 40-foot containers involved. If it could not be returned, the compensation value of the container was 48,000 USD (calculated as USD319,665.6 according to the US dollar to RMB exchange rate of 1:6.6597). In the trial of the first instance, China Shipping withdrew the second lawsuit. Facts and reasons: from November 23 to 24, 2015, China Shipping shipped 12 40-foot ultra-high container cargoes under the bill of lading SEANGB002222, which were to be unloaded from the port of loading, Port of Seattle, USA, to the port of unloading in Ningbo, China. The bill of lading shows that the consignee was a bright company. On the 26th of the same month, Minmetals’ agent, Guangming, exchanged the bill of lading and paid the replacement bill, but the goods involved in the case were never extracted.

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Until today, the container and cargo involved in the case are still stranded in Ningbo Port. The container involved in the case was still occupied, and the container overdue usage fee totals RMB1,014,120 yuan. And related expenses such as storage fees, port construction fees, port fees, port security fees, and transfer fees totaled RMB2,839,0.80 yuan. China Shipping held that Guangming, as the consignee under the bill of lading, should be liable for the losses caused to the carrier due to its failure to pick up the goods in time. Minmetals, as the agent of the consignee, should disclose the true consignee. If it could not be disclosed, it shall be deemed as the consignee and bear the responsibility of the consignee. Minmetals verbally defended in the trial of first instance that: firstly, it has no legal relationship with China Shipping. The two parties have not reached any agreement, and Minmetals does not have the responsibility in the complaint. The bill of lading is the registered bill of lading. China Shipping is clearly responsible to the consignee, there is no ignorance of the consignee nor does Minmetals conceal the consignee; secondly, Minmetals only exchanged the bill of lading for Guangming, and has already handed the bill of lading to Guangming, which is not the agent of Guangming. It cannot be assumed that the subsequent obligations related to the bill of lading, including the delivery of the goods, shall be borne by them, and the Guangming shall not entrust the delivery of the goods; thirdly, the demurrage expenses claimed by China Shipping are too high, and there is no factual and legal basis for returning the box or compensating the box. In summary, it requested the court of first instance to reject all claims of China Shipping. The court of first instance found through trial that from November 23 to 24, 2015, China Shipping will deliver 12 40-foot ultra-high container cargoes of the bill of lading number SEANGB002222 from the port of Seattle to China Ningbo Port and unload the goods. The 12 container numbers are BMOU4312061, CCLU6534073, CCLU6638463, etc. The bill of lading states: POTENTIAL INDUSTRIES INC. is the shipper; China Shipping is the carrier; the consignee and the informant are Guangming; the sea freight is prepaid; and the name of the goods is waste paper. After the above container was unloaded, it entered the yard of Ningbo Far East Terminal Management Co., Ltd. On the 26th of the same month, Minmetals’ agent, Guangming, returned the original bill of lading to China Shipping in exchange for the bill of lading, and paid the exchange fee of RMB1,100 yuan to China Shipping. Through its agent, China Shipping sent a fax to the Guangming and Minmetals on May 5 and 30, 2016 to remind them of the goods and inform them of the potential consequences. Minmetals and China Shipping repeatedly negotiated the demurrage fee many times. The containers involved in the case and the goods in the container are still left in the yard, and no customs declaration has been made. China Shipping has not issued a packing list. The court of first instance held that: the case is a contract for the carriage of goods by sea. China Shipping was the carrier of the contract of carriage involved in

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the case, and Guangming is the named consignee under the bill of lading involved in the case, Minmetals is the principal of Guangming. According to the opinions of the parties, the disputes in this case are as follows: 1. The object and amount that China Shipping can claim the demurrage fee. After the container under the bill of lading was shipped to Ningbo Port, Minmetals exchanged the bill of lading with China Shipping on behalf of Guangming with the original bill of lading. Therefore, Guangming shall bear the obligations of the consignee as stipulated in the bill of lading. Now that the goods are not extracted, Guangming shall be liable for the losses caused by the detention of the goods involved in Ningbo Port to China Shipping. As an agent of Guangming, Minmetals has disclosed the consignee to China Shipping and does not need to assume liability for compensation to China Shipping. China Shipping claims to charge 40-foot ultra-high container overdue fees as announced on its website. The overdue use fee for the 12 containers involved in the case from November 23 or 24, 2015 to July 28, 2016 was RMB1,014,120 yuan. The court of first instance held that China Shipping publicizes the container overdue charging standard on the website, which is a price announcement for unspecified users. According to the shipping industry’s operating practices, it can be used as a charging standard. Minmetals and Guangming did not raise any objections to this, and it should be adopted. However, as a professional carrier, China Shipping was obliged to take derogation measures in accordance with relevant regulations when no one picks up the goods, and it cannot allow the loss to expand. The expanded loss shall not be claimed to the consignee. The Maritime Code of China stipulates that no one withdrew from the date of arrival on the 60th day, and the carrier may apply to the court for an auction. It can also be seen from the reminder notice issued by China Shipping to the consignee that it knows that China Customs has relevant regulations on how to handle unclaimed goods. Therefore, it is believed that China Shipping should promptly handle the unclaimed cargo after the arrival of Hong Kong and recover the container. With reference to the relevant provisions of Article 88 of the Maritime Code of China, the period during which the container overdue fee can be claimed shall be 60 days (considering the processing period, the free period of use will not be calculated), and in accordance with the standards publicized by China Shipping. The total cost of 12 containers for overdue use is 228,960 yuan (120 * 7 + 240 * 7 + 360 * 46 = 19,080 yuan each). 2. Can China Shipping claim to return or compensate the consignee? The 12 containers involved are still stranded in Ningbo Port. No one has declared it. The China Shipping has not issued a list of bills. Although it has not explicitly proposed a lien, in fact, it has always required the consignee to pay the fee first and then the suitcase is no different from the lien. This shows that the container is still under the control of China Shipping. It is not under the control of Guangming. According to the relevant regulations of China Customs, China Shipping, as the carrier, still has the obligation to handle the goods in the case if no one picks up the goods. The goods can be disposed of by the relevant laws or relevant customs

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regulations, and the containers can be recovered. If a fee occurs during this process, it can be claimed to the consignee. The Plaintiff was told to ask others to compensate for the new box price. China Shipping’s claim lacks the necessary facts and legal basis, so the court did not support it. In summary, China Shipping appealed to the rational part, and the court of first instance supported it according to law. Guangming and Minmetals defended the rational part and adopted it according to law. In accordance with Article 119 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 78 Paragraph 1, Article 86, and Article 88 of the Maritime Code of the People’s Republic of China, Article 64 Paragraph 1, and Article 144 of the Civil Procedure Law of the Republic, the judgment of the court of first instance on November 18, 2016 was as follows: 1. Guangming should pay the container overdue usage fee of RMB228,960 yuan to China Shipping within 10 days from the effective date of the judgment; 2. reject other claims of China Shipping. If the obligation to pay money is not fulfilled in the period specified in the judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB16,800 yuan, which was paid by China Shipping for 13,916 yuan, and Guangming for 2,884 yuan. COSCO Shipping refused to accept the judgment of first instance and appealed to the court of second instance that: 1. according to the law and the agreement on the bill of lading involved, the withdrawal of the goods and the return of the container are the basic obligations of Guangming and Minmetals under the contract of carriage of goods by sea. Therefore, COSCO Shipping had the right to request Guangming and Minmetals to fulfill their obligations to take out the goods and return the empty containers as soon as possible. 2. The first-instance judgment held that COSCO Shipping had the obligation to dispose of the goods in the absence of pick-up. This is without legal basis. 3. According to judicial practice, the container overdue fee should be calculated at 1.5–2 times the value of the new box in the box type. In summary, COSCO requested the court to revoke the original judgment and change it to support the first-instance litigation requests of COSCO Shipping. During the second instance, Minmetals pleaded that there was no contract between Minmetals and COSCO Shipping in any form, and there was no factual and legal basis for Minmetals to be obligated to COSCO Shipping. In this case, Minmetals only helped Guangming to exchange small bills of lading, which means that Minmetals alleged mandate to take responsibility for picking up the goods, lacks facts and legal basis. And even if there is a principal-agent relationship, the agent’s behavior should be borne by the principal. This case is a bill of lading dispute. The basis for the claim of COSCO Shipping for litigation is based on the dispute under the bill of lading. COSCO Shipping knows who the cargo owner is. There is no case of Minmetals concealing the consignee. COSCO Shipping has no basis for claiming the joint responsibility to Minmetals. In summary, it requested the court to affirm the original judgment. Guangming did not reply during the second trial.

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During the second instance, neither Guangming nor Minmetals submitted new evidence materials. COSCO Shipping submitted the following evidential materials: Evidence 1. A foreign trade import box agreement, to prove that Minmetals is the agent of COSCO Shipping, COSCO Shipping has the right to claim the container overdue fee to Minmetals according to the agreement, and asked it to return the empty container or compensate Box value. Evidence 2, the proof of the residual value of the container, to prove the production age of the container involved and the current residual value. Minmetals said that there is no objection to the authenticity of Evidence 1, but the evidence is not relevant to the case. The evidence is a framework agreement, and it has no relationship with the actual owner of the case, Guangming. There is no agreement in the framework agreement for the subsequent handling of disputes under the bill of lading in this case. And even if the agreement is related to the case, Minmetals did not file an application for the case in this series, and the agreement of the agreement is not applicable. For evidence 2, the evidence is produced by COSCO Shipping itself, so its authenticity is difficult to determine, and its relevance is not recognized. The court has examined and found that for evidence 1, because Minmetals has no objection to the authenticity of the evidence, the authenticity of the evidence is confirmed. Although the agreement was signed between COSCO Shipping and Minmetals, Minmetals did not file a box application in accordance with the agreement. The agreement was not related to the case, so the agreement was not accepted. For evidence 2, the proof of the residual value is produced by a subsidiary company of COSCO Shipping, and its authenticity is difficult to determine, so the evidence is not accepted. The second-instance has tried this case, and the facts as examined by the first-instance are supported by relevant evidence and confirmed by the court. It was also found out that after the judgment of the first instance, the name of China Shipping was changed to COSCO Shipping by industry and commerce, and neither party had any objection to this. The court believes that: according to the arguments of both parties, the focus of the dispute in this case is: firstly, whether Guangming and Minmetals need to return or compensate containers to COSCO Shipping. Secondly, the calculation criteria for container overdue usage fees. The parties have no objection to the focus of the controversy summarized by the court. The analysis is as follows: Regarding the issue one, in this case, COSCO Shipping is the carrier; Guangming is the consignee; and Minmetals is the principal of Guangming. The contractual relationship of sea cargo transportation between COSCO Shipping and Guangming is legally established and valid, and both parties shall perform the contract according to the contract. After investigation, the container involved in the case is still stranded in Ningbo Port, and no one has declared it. The related expenses incurred as a result. The Bright Company, as the consignee, shall bear corresponding responsibilities. Although COSCO Shipping did not explicitly

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propose a lien, the container was not under the box and was not declared. The container was actually under the actual control of COSCO Shipping and not under the control of Guangming. According to the relevant regulations of China's customs, COSCO Shipping, as the carrier, still has the obligation to handle the goods in the absence of picking up the goods. It can handle the goods and recover the containers according to relevant laws or relevant customs regulations. If a fee occurs during this process, it can be claimed to the consignee. Now COSCO Shipping can completely handle the recovery of the goods, instead of claiming compensation from Guangming as the consignee. The bill of lading involved is a registered bill of lading, clearly indicating that the consignee is a bright company. As the agent of Guangming, Minmetals only exchanged the bill of lading in this case. Because the agent’s behavioral consequences should be borne by the agent, the first-instance judgment found that Minmetals had disclosed the consignee to COSCO Shipping. It is not inappropriate to take responsibility for COSCO Shipping. In summary, COSCO Shipping appealed to Guangming and Minmetals to return or compensate for the new box price; this lacked facts and legal basis, and this Court will not accept it. Regarding the issue two, the charging standard published by COSCO Shipping on its website belongs to the price disclosure of unspecified users. According to the practice of the shipping industry, it can be used as the standard for billing. The first-instance also supports the standard. However, according to the provisions of Article 88 of the Maritime Code of the People’s Republic of China, “the goods retained by the carrier in accordance with Article 87 of this Law shall not be withdrawn from the date of arrival of the ship at the date of arrival at the port of discharge for 60 days. A person may apply to the court for an auction.” As a carrier, COSCO Shipping, in the absence of picking up the goods, cannot allow the loss to expand, and is obliged to take derogation measures in accordance with the above provisions. The losses that are extended by laissez-faire practices shall not be claimed to the consignee. According to the facts ascertained and the existing evidence, COSCO Shipping did not take any derogation measures in time, letting the loss expand, and its losses to the expansion should not be claimed to the consignee. Therefore, according to the provisions of Article 88 of the Maritime Code, the court of first instance has determined that the period of overdue use of the container in question is 60 days, and this is not improper. As for COSCO Shipping’s allegation that the container overdue fee should be calculated according to the value of the new box of 1.5–2 times. There is no basis, and it will not be adopted. In summary, the court believes that the reasons for the appeal of COSCO Shipping cannot be established, and the court will not adopt them. The original judgment found that the facts were clear and the applicable law was correct, and the case was handled properly. According to Article 170 Paragraph 1 Sub-paragraph 1 and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 13,916 yuan, shall be borne by the Appellant COSCO Shipping Development Co., Ltd. The judgment is final. Presiding Judge: HUANG Qing Judge: WU Yunhui Acting Judge: TONG Xin February 15, 2017 Clerk: ZHANG Yu

Shanghai Maritime Court Civil Judgment Dalian Deli Shipping Co., Ltd. et al. v. Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. (2016) Hu 72 Min Chu No.2044 Related Case(s) None. Cause of Action 193. Dispute over liability for ship collision damage. Headnote Insolvent defendant shipowner held liable to pay its ship’s proportion (75%) of following items of damage suffered by plaintiff’s ship as a result of collision - loss of use of plaintiff’s ship, cost of crew wages paid by plaintiff while ship laid up, cost of repair, cost of salvage, cargo damage on plaintiff’s ship, clean-up of oil pollution - but third party, defendant’s liability insurer, held directly liable to pay only for repair costs, cargo damage, and salvage costs. Summary Plaintiffs, shipowner and its hull insurer, filed suit against Defendant after Plaintiffs’ vessel, “Haide Oil 9,” collided with Defendant’s vessel, “Zhejiang Sea 156.” The collision caused water to enter “Haide Oil 9,” causing damage to the cargo as well as the vessel itself. Further, some oil on board “Haide Oil 9” leaked from the vessel into the surrounding waters. The Court held that Defendant was 75% liable for the accident and calculated damages for: loss of use of “Haide Oil 9”; cost of wages paid to crew of “Haide Oil 9”; cost of repair of “Haide Oil 9”; salvage charges in relation to “Haide Oil 9”; damage to cargo on “Haide Oil 9”; clean-up of oil pollution. Because Defendant was insolvent, Defendant’s liability insurer was held to be directly liable to compensate Plaintiffs, but only for repair costs, cargo damage and salvage costs, and not for loss of use, crew wages, or pollution liability, which were losses it had not insured against.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_12

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Judgment The Plaintiff: Dalian Deli Shipping Co., Ltd. Domicile: Room XXX, Building XXX, No.XXX, Bayi Road, Xigang District, Dalian, Liaoning. Legal representative: WANG Tieli, general manager. Agent ad litem: WANG Pengnan, lawyer of Liaoning Pengrun Law Firm. Agent ad litem: FANG Liang, lawyer of Liaoning Pengrun Law Firm. The Plaintiff: PICC P&C Dalian Branch Domicile: No.XXX Shiji Street, Zhongshan District, Dalian, Liaoning. Representative: DONG Guang’en, manager. Agent ad litem: ZHANG Zhiyong, lawyer of Liaoning Tianteng Law Firm. Agent ad litem: ZHAO Yuelin, lawyer of Liaoning Tianteng Law Firm. The Defendant: Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. Domicile: XXX Floor, Building XX, Labour Union Building, West Baili Road, Wenzhou, Zhejiang. Legal representative: ZHENG Hetong, chairman. Agent ad litem: CHEN Youmu, lawyer of Shanghai Wintell&Co. Agent ad litem: LI Hongwei, lawyer of Shanghai Wintell&Co. The Third Party: PICC P&C Hangzhou Branch Domicile: No.XXX, Stadium Road, Downtown District, Hangzhou, Zhejiang. Representative: Xu Bin, Manager. Agent ad litem: CHEN Youmu, lawyer of Shanghai Ying Tai Law Firm. Agent ad litem: LI Hongwei, lawyer of Shanghai Ying Tai Law Firm. With respect to the case arising from dispute over the responsibility of ship collision between the Plaintiff Dalian Deli Shipping Co., Ltd. (hereinafter referred to as Deli Company) and the Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. (hereinafter referred to as Wenzhou Company), the Plaintiff filed an action before the court on July 5, 2016. After being entertained on the same day, this case was legally heard in accordance with the general procedure. Wenzhou Company raised an objection to the jurisdiction of the case within the legal period, and the court ruled against it on July 21, 2016. Wenzhou Company refused to accept the ruling and appealed. Shanghai High People’s Court (hereinafter referred to as Shanghai High Court) determined to dismiss the appeal and affirm the original ruling on September 29, 2016. On October 24, 2016, Deli Company applied to add PICC P&C Hangzhou Branch (hereinafter referred to as Hangzhou PICC) to participate in this case as the Third Party, the court approved it and informed Hangzhou PICC to participate in the case on November 6, 2016. On November 8, 2016, PICC P&C Dalian Branch (hereinafter referred to as Dalian PICC) applied to participate in this case as a joint Plaintiff, and the court made a ruling to approve

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Dalian PICC to participate in this case on November 9, 2016. Wenzhou Company refused to accept the ruling and appealed. On December 27, 2016, Shanghai High Court determined to dismiss the appeal and affirm the original ruling. On January 13, 2017, relevant parties conducted evidence exchange of this case. On February 21, 2017, the court held a hearing in public. On March 22, 2017, the court made a pre-judgement that Wenzhou Company shall assume 75% of the liability to the compensation in the involved collision and ruled that the case was suspended. After the pre-judgement on the proportion of liability of the collision, none of the parties appealed. On May 18 and June 8, 2017, relevant parties conducted evidence exchange again after this case resumed. On August 30, 2017, the court held a hearing in public again. Lawyer FANG Liang, agent ad litem of Deli Company, Lawyer ZHANG Zhiyong, agent ad litem of Dalian PICC, Lawyer LI Hongwei, agent ad litem of Wenzhou Company, and Hangzhou PICC, attended the court hearing. Now the case has been concluded. The two Plaintiffs alleged in the statement of claim that M.V. Haide oil 9 of Deli Company collided with M.V. Zhejiang Sea 156 of Wenzhou Company in the waters of estuary of Yangtze River, which lead to the hull damage and the leakage of the ship borne diesel of M.V. Haide oil 9 and cause Deli Company to suffer economic loss. Dalian PICC, as the hull underwriter of M.V. Haide oil 9, acquired the right of subrogation according to law after it compensated the related expenses and losses caused by the accident to Deli Company. And Wenzhou Company, as the ship owner of Zhejiang Sea 156 when the accident happens, shall indemnify the two Plaintiffs for their relevant losses according to the 75% of the liability determined by the effective judgment. Wenzhou Company delayed in claiming indemnity to Hangzhou PICC, the underwriter of M.V. Zhejiang Sea 156 when the accident happens, therefore it shall assume the joint liability for the partial loss in accordance with the insured liability and the corresponding guarantee letter issued. Therefore, Deli Company requested the court that: 1. Wenzhou Company compensates Deli Company RMB3,443,547 yuan for the indirect loss (the loss for detention of RMB4,591,396 yuan) in accordance with the liability of 75%. 2. Wenzhou Company and Hangzhou PICC shall assume the joint liability for the direct loss of Deli Company in accordance with the responsibility ratio of 75%: (a) RMB241,402.50 yuan for the maintenance cost (RMB321,870 yuan for the crew’s wage); (b) RMB37,500 yuan for the clean-up cost (the deductible is RMB50,000 yuan); (c) RMB910,656.30 yuan for other expenses (RMB1,214,208.40 yuan for repair, tank-washing, tugboat, loading and unloading, ship inspection, painting, chartering, Copper aluminum electrode, rudder system equipment, sealing equipment, transmitter, pipeline dredge, travel, etc.); (d) RMB67,878.75 yuan for the loss caused by the devaluation of shipborne goods (the deductible is RMB90,505 yuan). Therefore, Dalian PICC requested the court that Wenzhou Company and Hangzhou PICC shall assume the joint liability for the loss as follows in accordance with the liability of 75%: 1. RMB3,314,230.50 yuan for the loss for the indemnity of all hull insurances (RMB4,418,974 yuan); 2. RMB610,908.75 yuan for the loss for the indemnity of ship cargo insurance (RMB814,545 yuan); 3. RMB105,000 yuan for

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the loss of rescue and salvage expense (RMB140,000 yuan); 4. RMB4,087,500 yuan for the loss of clean-up cost. In addition, for the outstanding clean-up cost caused by the leakage of the ship borne diesel in the involved accident of M.V. Haide oil 9 that the two Plaintiffs requested to confirm in court, Wenzhou Company and Hangzhou PICC shall also assume the joint liability in accordance with the liability of 75%. The Defendant defended that: 1. part of the losses and expenses that Deli Company claimed were lack of evidence, the loss for detention were not calculated in accordance with the judicial interpretation, the specific composition of direct loss were not showed, the compensation for the maintenance cost (crew’s wage) and the loss for detention were double claimed and lacked of calculation basis, the relevant facts and legal basis of the clean-up expenses were insufficient, loss from the devaluation of goods shall be claimed by their owner rather than Deli Company, for the clean-up fee, Deli Company did not bring a clear claim, therefore the right to claim was lost. 2. The cost of the loss appealed by Dalian PICC was unreasonable, the loss of rescue and salvage expense was only supported by the relevant conciliation but no specific evidence, the clean-up fee may be directly claimed by the clean - up party to the two parties involved in this collision, Dalian PICC was not obliged to pay the full amount of the clean-up fee, and the amount is not agreed upon by the Defendant. The Third Party defended that 1. The loss for detention, the maintenance cost (crew’s wage) and other losses were not covered by the Third Party hull insurance; 2. there was no clear evidence for the two Plaintiffs to require the Third Party to assume the joint liability for the clean-up cost caused by the involved accident, which was not supported no matter in accordance with the coverage of the Third Party hull insurance or the corresponding guarantee; 3. before the proportion of responsibility for accident and the amount of loss were confirmed, the Defendant did not constitute a delay claim against a third party, the Defendant bearing the corresponding liability for the accident did not mean that the Third Party, as an insurer, shall bear the insurance liability. Evidence presented by the Plaintiff Deli Company were as follows: I. The loss for detention 1. Confirmation of the 1431st, 1432nd, 1433rd, 1501th and 1502nd voyage of M.V. Haide oil 9, revenue notice, freight invoice, settlement quantity notice were used to prove the operation of this ship in the involved accident and two voyages before and after the accident; 2. vessel visa, crew payroll, labor dispatch agreement and crewman’s salary payment voucher of M.V. Haide oil 9 are used to prove crew wages and cost of this ship in the two voyages before and after the accident; 3. expense vouchers of the ports, material and spare parts of M.V. Haide Oil 9 in the two voyages before and after the accident were used to prove the operation expenditure and the cost of this ship. 4. Fuel charge invoice of M.V. Haide Oil 9 in the two voyages before and after the accident were used to prove the Expenditure and cost of the fuel consumption of this ship. 5. Logbooks of M.V. Haide Oil 9 during the two voyages before and after the accident and the period of repairing were used to prove that the average net profit days of the ship is 21.5 and the period

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of repairing is calculated as the period of detention (from November 26, 2014 to January 22, 2015); 6. engine logbooks of M.V. Haide Oil 9 of the two voyages before and after the accident were used to prove the fuel consumption of this ship; 7. logbooks and engine logbooks of the preliminary voyages of the two voyages before and after the accident were used to prove the operation of this ship. The Defendant and the Third Party had no objection to the above evidence 1, 5, 6, and 7, but they held that the loss for detention of the involved M.V. Haide Oil 9 was not included in the days of preliminary voyage of the returning voyage of this ship, and the repair for the average caused by this accident shall be completed before December 26, 2014, after that, it belonged to period that waiting for intermediate inspection, therefore the period for reasonable repair is from 16:05 of November 27, 2014 to December 26, 2014. They did not recognize the evidence 2 and held that the crew payroll was made by Deli Company, and there were no evidence such as specific crew list, the record of embark and disembark, and it shall subject to the actual paid wages; they did not recognize the evidence 2 and held that there was no original check and the loss for detention was calculated by mistake; to sum up, both the Defendant and the Third Party had objection to the proof of the above evidence and held that Deli Company did not calculate the loss for detention in accordance with the judicial interpretation and lacked of evidence, therefore the loss for detention shall be decided through the compute mode and the amount presented by the Defendant and the Third Party. The Plaintiff Dalian PICC had no objection to the above evidence. The court held that the Defendant and the Third Party had no objection to the above evidence 1, 5, 6, 7, which were confirmed by the court, and the proof was subject to the evidence; the Defendant and the Third Party did not recognize the evidence 2, 3, 4, however, it is true that the involved accident had caused the damage and repair of M.V. Haide Oil 9, and the resulting loss for detention exist objectively. Therefore, the court will combine the above-mentioned evidence form, content, mutual verification, formation of evidence chain, etc., as well as the facts ascertained by the case and the provisions of the law and judicial interpretation, to comprehensively determine the reasonable loss of the ship. II. The maintenance cost, clean-up cost, other cost and the loss caused by the devaluation of shipborne goods. 1. Crew payroll, labor dispatch agreement and crewman’s salary payment voucher, logbook during the period of repair were used to prove that the maintenance cost of this ship was calculated through multiplying daily wage during the period of repair by the days of repair. The Defendant and the Third Party did not recognize the crew payroll and held that the crew payroll was made by Deli Company, and there were no evidence such as specific crew list, the record of embark and disembark, and it shall subject to the actual paid wages; they had no objection to the authenticity and legality of labor dispatch agreement and crewman’s salary payment voucher, logbook during the period of repair, but they held that it is unreasonable for the crews to be paid in accordance with the navigation standard during the period of repairing, and it is of Business needs

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for Deli Company to keep all crew on board; the cost of maintenance shall not be calculated after the permanent repair of M.V. Haide Oil 9, this ship is not explicitly dispatched in the labor dispatch agreement, and the payment voucher has nothing to do with the case. 2. Hull insurance policy, liability insurance policy, list of clean-up cost, dispute settlement of clean-up cost were used to prove that although Dalian PICC had paid the relevant clean-up cost caused by the involved accident in accordance with the insurance coverage, the deductible of 50,000 yuan shall undertook by Deli Company. The Defendant and the Third Party had no objection to the authenticity and legality of the hull insurance policy and liability insurance policy, but they held that they can only prove the ship insurance relationship between the two Plaintiffs and had nothing to do with the Defendant and the Third Party; they had no objection to the list of clean-up cost and the dispute settlement of clean-up cost, but they held that clean - up party has the right to claim the clean-up cost to the two Plaintiffs directly according to the judicial interpretation, therefore there was an objection to the reasonability of the settlement amount of clean-up cost. 3. Ship repair settlement agreement, receipt, accounting voucher and payment TMO of M.V. Haide Oil 9, contract, invoice and payment TMO of tank washing and sludge oil disposal, invoice and accounting voucher of towage fee, invoice, accounting voucher and payment TMO of landing charges, visa, report, invoice and payment TMO of vessel inspection, invoice and payment TMO of paint fee, invoice and payment TMO of charterage, invoice and payment TMO of electrode fee, invoice, accounting voucher and cash expense account of rudder and seal equipment, transmitter and the invoice, accounting voucher, cash expense account of electronic equipment, invoice, accounting voucher and cash expense account of pipe dredge fee, a list of travel expenses and invoices for all travel expenses were used to prove that although the other loss above-mentioned caused by the involved accident were covered by the insurance of Dalian PICC, Deli Company still lost RMB 1214208.40. The Defendant and the Third Party had no objection to the ship repair settlement agreement, accounting voucher and payment TMO, but they held that Deli Company did not provide a integrity repair contract to support specific repair items; they did not recognize the authenticity of the receipt and held that the general and average repair project had been recorded, therefore the general cost item unrelated to the involved accident shall be deducted and average repair fee shall be subject to the assessment report provided by the Third Party. They had no objection to the authenticity and legality of other evidence above-mentioned, but they held that the expenses caused by tank washing, sludge oil disposal and unloading belonged to routine operating expenses but not caused by involved accident, furthermore, There were no specific calculation basis for the composition, therefore it was not approved; tug boat worksheet was not signed by the captain and the amount was not reasonable; items recorded in invoice of involved inspection fee were Intermediate inspection items but not the average inspection caused by involved accident; the supply list stated in the invoice of paint fee was

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not on the record, therefore it is impossible to prove the particularity of the paint involved and its specialties in the average repair of M.V. Haide Oil 9; there was no corresponding waybill or charter party to support the reasonability of charterage, and the expenses caused by business contact between Deli Company and owner of cargo had nothing to do with the case; there were no voucher of purchasing and payment on the record to support the actual occurrence of the expenses on electrode, rudder and seal equipment. transmitter and electronic equipment and pipe dredge, nor other evidence to prove that these were caused by average repair of involved accident of M.V. Haide Oil 9; there were no other evidence to prove the travel expense were caused by the involved accident; to sum up, the Defendant and the Third Party had no objection to the relevance of the other evidence above-mentioned and the reasonability of the expense involved. 4. Confirmation of voyage, freight invoice, settlement quantity notice, stowage plan, damage agreement, payment voucher, confirmation of damage, processing agreement, webpage about the related diesel market price, invoice of diesel of the involved accident of M.V. Haide Oil 9 were used to prove although Dalian PICC had paid the loss caused by the devaluation of shipborne goods caused by the involved accident according to insurance liability agreed in the policy, the deductible of 90,505 yuan shall be borne by Deli Company and the handling of goods in the involved accident was valid. The Defendant and the Third Party all held that confirmation of voyage, freight invoice, settlement quantity notice, stowage plan, damage agreement, webpage about the related diesel market price, invoice of diesel had no original to check, and it was impossible to prove the quantity of goods contained in the above-mentioned evidence was the quantity in the voyage of the involved accident of M.V. Haide Oil 9, furthermore, Deli Company did not provide the original evidence such as list of freight Delivered and received and mate's receipt, therefore they did not recognized these. They had no objection to the authenticity of the payment voucher, but they held that there was a long - term business relationship between the owner of cargo and Deli Company, so that it is impossible to decide that the unit price of the goods agreed equals the sound unit price of the goods, nor it is impossible to decide that the fund that decided to pay equals the loan involved; they had no objection to the authenticity, legality and relevance of the confirmation of damage and processing agreement, but they held that the Defendant and the Third Party’s confirmation of the authenticity does not mean the confirmation to the residual value of the goods nor cannot prove the rationality to deal with them. 5. The hull insurance policy of M.V. Zhejiang Sea 156 and guarantee letter issued by Hangzhou PICC were used to prove that the Defendant and the Third Party shall assume the joint ability for the direct loss of the relevant appeal of Deli Company in accordance with the liability of 75%.

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The Defendant and the Third Party had no objection to the authenticity, legality and relevance, but they held that the insurance liability under the hull insurance policy of the Zhejiang Sea 156 was restricted to the reasonable direct loss caused by the involved accident of Haide Oil 9, however, the guarantee letter was issued to maritime Authorities, and the details it issued were the emergency handle cost and clean-up cost that shall be paid to the maritime Authorities. Deli Company was not the subject that the guarantee letter issued to, so it cannot claim the emergency response cost and clean-up cost by the guarantee letter. The Plaintiff, Dalian PICC had no objection to the evidence above-mentioned. The court held that the evidence 1 above-mentioned were all original, the Defendant and the Third Party had no objection to the labor dispatch agreement, crewman’s salary payment voucher and logbook during the period of repair of evidence 1 and the authenticity and legality to evidence 2, the court confirmed the authenticity and legality of the two evidence; the Defendant and the Third Party had no objection to the receipt in the evidence 3, but they had no objection to the other evidence of evidence 3, and the receipt had its original to check out, the court confirmed the authenticity and legality of these evidence. Evidence 4 can confirm each other the fact that Dalian PICC had repay the paid the loss caused by the devaluation of shipborne goods caused by the involved accident after deducted the deductible according to insurance liability agreed in the policy, the court confirmed these evidence; and the proof of above evidence were subject to the evidence. With regard to the relevance and legality of the maintenance cost (crew wages), clean-up cost, other cost and the loss caused by the devaluation of shipborne goods and the liability of compensation borne by the Defendant and the Third Party, the court would combine the facts of the case and Legal and judicial interpretations to affirm the reasonable loss for detention of this ship synthetically. The Plaintiff Dalian PICC presented following evidence: 1. Copy of protection and indemnity insurance policy of M.V. Haide Oil 9 to prove that Dalian PICC is hull underwriter of this ship; 2. Shanghai Maritime Safety Administration’s Decision Letter on providing financial guarantee, Letter of Guarantee of Dalian PICC, Letter of Guarantee of Hangzhou PICC were used to prove Dalian PICC and Hangzhou PICC had provided corresponding guarantee for the oil pollution caused by the accident at the request of the maritime authority; 3. letter of verification on the pollution incident of the ship, letter of decision on the maritime compulsory corporate actions, final letter of decision of compulsory execution were used to prove that the maritime authority had dispatched Shanghai sunset Environmental Protection Technology Co., Ltd. (hereinafter referred to as Sunset Company), the clean-up company that signed agreement and other related companies to clean up; 4. the claim and the claim form were used to prove that Deli Company had claimed all losses of more than 6,360,000 yuan to Dalian PICC on the losses caused by the accident; 5. adjustment of claims of hull insurance and indemnity payment voucher were used to prove that Dalian PICC had paid the indemnity of 4,418,974 yuan to Deli Company in three times after the claim settlement; 6. goods handling protocol was used to prove that Deli Company had come to an agreement with Sunset Company to convert the damaged goods caused by the

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accident to 1,650,000 yuan; 7. protocol for compensation of goods was used to prove that Deli Company had come to an agreement with the consignee to repay the loss of devaluation of shipborne goods caused by the accident of 2,550,000 yuan; 8. adjustment of claims of goods and indemnity payment voucher in the protection and indemnity insurance were used to prove that Dalian PICC had paid the loss of devaluation of shipborne goods caused by the accident according to the insurance liability stipulated in the policy; 9. adjustment of claims for the oil pollution liability and indemnity payment voucher in the protection and indemnity insurance were used to prove that Dalian PICC had paid the clean-up cost and losses caused by the discount of damaged goods according to the insurance liability stipulated in the policy; 10. dispute settlement of clean-up cost was used to prove that the two Plaintiffs and Sunset Company had reached a package agreement of 5,500,000 yuan on the clean-up cost caused by the involved accident; 11. agreement for the removal of pollution of ships was used to prove the rate and calculation method that the Sunset Company claimed the clean-up cost; 12. environmental claim list was used to prove that Sunset Company had claimed the clean-up cost of 12,560,000 yuan; 13. emails that used to negotiate clean-up cost were used to prove that the two Plaintiffs and Sunset Company had reached a package agreement after several negotiation and the Defendant and the Third Party were aware of relevant matters; 14. pleadings, information note, conciliation agreement, receipt and letter of liability rescission, paper of civil mediation, indemnity payment voucher were used to prove that Shanghai Jingong Salvage Co., Ltd. (hereinafter referred to as Jingong Company) had prosecuted a claim of over 310, yuan to Deli Company on the rescue and salvage expense of M.V. Haide Oil 9 caused by the accident, after mediated by the court, Dalian PICC paid Jingong Company 140,000 yuan according to the insurance liability stipulated in the policy; 15. claim lists of other related clean-up companies were used to prove the clean-up cost that other related parties claimed caused by the leakage of the ship borne diesel in the involved accident of M.V. Haide oil 9; 16. confirmation letter issued by Sunset Company was used to prove that Sunset Company had transferred the right to claim clean-up cost to M.V. Zhejiang Sea 156 according to proportion of collision liability in the case to Dalian PICC, with which and Letter of Guarantee issued by Hangzhou PICC, Dalian PICC had the right to request Sunset Company to assume the joint ability of indemnity. The Defendant and the Third Party had no objection to the authenticity and legality to the evidence 1 above mentioned, but they held that this evidence can only prove that there was an insurance law relation between the two Plaintiffs and had nothing to do with the Defendant and the Third Party, furthermore, the subrogation right of Dalian PICC and rationality of the amount of insurance claims shall be confirmed synthetically by combing with other evidence. They had no objection to the authenticity, legality and relevance of evidence 2– 6, but they held that evidence 2 had specified that the related organizations shall implement compulsory corporate actions and take emergency measures, and the object and subject that guaranteed by Dalian PICC and Hangzhou PICC was maritime authority, therefore only the maritime authority had the right to claim the

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cost caused by emergency measures according to the guarantee; evidence 3 had specified related acting agencies, and the party which the administrative compulsory action served was M.V. Haide oil 9 but not the ship owner, therefore it was not binging on Deli Company; evidence 4 were the files needed in the claims procedures of the two Plaintiffs and had nothing to do with the Third Party, nor they can prove the rationality of claim amount of Deli Company; evidence 5 cannot prove the rationality of the amount of loss that Dalian PICC repaid to Deli Company; evidence 6 did not mean the Defendant and the Third Party recognize the residual value of goods, nor the rationality of disposing it. They did not recognize evidence 7 and held that there was no original to check out so it was impossible to prove the quantity of goods carried equals the quantity of goods carried in the voyage of involved accident, furthermore, there were no list of freight Delivered and received, mate’s receipt, VAT invoice of goods to support, therefore the sound value of goods cannot be proved; they had- no objection to the authenticity, legality and relevance of evidence 8–15,but they held that evidence 8 and 9 cannot prove the rationality of the amount of loss that Dalian PICC repaid to Deli Company; evidence 3 had nothing to do with the Defendant and the Third Party, Sunset Company was not the assigned organization of maritime compulsory corporate actions, so it could claim the clean-up cost to the two Plaintiffs directly according to the judicial interpretation, and the clean-up cost it claimed was caused by other ships operating at the same time, and there were no evidence to support the two Plaintiffs had noticed the Defendant in written form to participate the negotiation of related clean-up cost and reached an agreement, therefore the clean-up cost claimed was not reasonable. Evidence 14 was a mediation reached by the Jingong Company and Dalian PICC in other law case, it did not notices and sought advice from the Defendant, therefore they had objection to the rationality of the amount of mediation; outstanding clean-up cost claimed by the other parties involved in the evidence 15 were not generated actually, and the items and amount of claim shall be settled through lawsuit to determine the rationality; they had no objection to the authenticity of evidence 16, but they held that this evidence can only prove that Dalian PICC had paid the settlement payment to Sunset Company, the Sunset environment itself did not enjoy the obligatory right to the Defendant and it had chosen Deli Company to assume the liability, therefore the obligatory right of Sunset Company extinguished automatically since it received the settlement payment and there is no transfer basis, and the settlement payment in this evidence had the same legal nature with average repair fee of M.V. Haide Oil 9 caused by the accident, both of them were losses of Deli Company caused by the accident but not the obligatory right that Dalian PICC transferred to Sunset Environment. The Plaintiff Deli Company had no objection to the evidence above mentioned. The court held that the Defendant and the Third Party had no objection to the authenticity and legality to evidence 1 above mentioned, the court confirmed the authenticity and legality of the evidence; the Defendant and the Third Party had no objection to the authenticity, legality and relevance to evidence 2–6 above

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mentioned, the court confirmed these evidence; evidence 7 and 8 confirm each other the fact that Dalian PICC had paid the loss of devaluation of shipborne goods caused by the involved accident after deducted the deductible according to insurance liability agreed in the policy, the court confirmed these two evidence; the Defendant and the Third Party had no objection to the authenticity, legality and relevance to evidence 9–15 above mentioned, the court confirmed these evidence; evidence 16 was the original, the Defendant and the Third Party had no objection to the authenticity of it, the court confirmed the authenticity of this evidence; and the proof of above evidence were subject to the evidence. With regard to the relevance and rationality of all losses such as the indemnity of hull insurances, indemnity of ship cargo insurance, rescue and salvage expense, and the assume of ability of indemnity of the Defendant and the Third Party, the court would combine the facts of the case and legal and judicial interpretations to affirm synthetically. The Defendant and the Third Party presented following evidence Assessment report of Shanghai branch of Renxiang (Beijing) Insurance Assessment Co., Ltd. was used to prove that the reasonable average repair fee of Haide Oil 9 caused by the involved accident was RMB 4082753, and in addition to the average repair during the repairing period, the repair of the ship's own items was also included. Deli Company did not recognize this evidence, they held that the assessment report was not proved by corresponding assessment institution and assessor qualification, and no inquiries have been made in court, they held part of the repair items were not reasonable and well grounded, the amount of assessment was judged subjectively and trusted by the Defendant and the Third Party to issue, therefore it cannot be used alone as the basis for determining the losses involved. Dalian PICC had no objection to the authenticity of this evidence, but they held that the time of the assessment report was not real, and the content was not rigorous, scientific and believable, and there was no signature because of the demission of the assessor, the contents were not in conformity with the on-site inspection, the relative conclusion were lack of factual basis because they did not reviewed the conditions such as bill, repair, cost and others fully and seriously, the amount of assessment was judged subjectively, however the amount of loss identified by the report was not far from the amount of loss audited by Dalian PICC, which confirmed the rationality of the claims of Dalian PICC on the other side. The court held that these evidence above mentioned were all original, the court confirmed the authenticity of them, and the proof was subject to the evidence. With regard to the relevance and rationality of all the losses the two Plaintiffs claimed and the assume of ability of indemnity of the Defendant and the Third Party, the court would combine the facts of the case and legal and judicial interpretations to affirm synthetically. The court ascertained that:

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I. The facts about involved ship, insurance, collision accident and responsibility proportion. The home port of M.V. Haide Oil 9, an offshore transport steel tanker, was in Dalian, China. When the involved accident happened, the hull insurance of this ship was Dalian PICC, which underwrote all costal and river hull insurance (add 1/4 collision and touch liability) and applied to costal and river hull insurance clauses 2009 of PICC Property and Casualty Company (hereinafter referred to as PICC), coastal and river ship-owner protection and compensation liability insurance and coastal and river ship-owner protection and compensation liability insurance 2010 of PICC (the deductible of liability for oil pollution, debris removal liability, liability of the damage and loss of goods, liability for casualties, oil pollution liability was 50,000 yuan, the deductible of liability of the damage and loss of goods was 500,000 yuan or 10% of the amount of loss, which one was higher), and the duration of insurance started from March 1, 2014 and ended on February 28, 2015. The owner, operator and the insured of the ship was Deli Company. The home port of M.V. Zhejiang Sea 156, offshore transport steel bulk carrier, was in Wenzhou, China. When the involved accident happened, the hull insurance of this ship was Hangzhou PICC, which underwrote all costal and river hull insurance (add 1/4 collision and touch liability) and applied to costal and river hull insurance clauses 2009 of PICC Property and Casualty Company (the direct losses and expenses of above mentioned object caused by the insured vessel in the collision of other vessels or the wharf, port facilities and navigation marks in navigable waters included the direct losses of the cargo on the struck ship, but not include the losses and expenses of pollution and prevention or removal of pollution, the indirect losses and expenses of the ship and the Third Party due to the insured event and other losses not covered by the insurance liability), and the duration of insurance started from June 15, 2014 and ended on June 15, 2015. The owner and the insured of the ship was Wenzhou Company. At 09:40 of November 22, 2014, in the voyage of loading about 22685 tons of coal from Qinhuangdao, Hebei to Zhangjiagang, Jiangsu, M.V. Zhejiang Sea 156 collided with M.V. Haide Oil 9, in the voyage of loading about 9,123.45 tons of diesel oil from Qingdao, Shang to Jiangyin, Jiangsu in the northeastern waters of D45 buoy light of Yangtze Estuary, causing the leakage from an Oval hole 5.3 meters under the ribbed deck 65–70 of the starboard of M.V. Haide Oil 9 (this was 10.7 meters deep), some of the diesel oil leaked into the river, which constituted water traffic accident of general accident grade. After investigating, Chongming Maritime Safety Administration made a letter of responsibility for water traffic accident, which determined that M.V. Zhejiang Sea 156 shall bear the main responsibility of the incident and the ship Haide Oil shall bear the secondary responsibility. On March 22, 2017, the court made a Civil Judgment of (2016) Hu 72 Min Chu No.2044 on the confirmation of responsibility of the involved collision, which judged Wenzhou Company shall bear 75% of the liability of compensation for the involved collision, all related parties did not appealed to this judgement, therefore this judgement had come into effect.

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II. The facts about the loss for detention of M.V. Haide Oil 9 The involved accident happened at 09:40 of November 22, 2014, on the same day, M.V. Haide oil 9 anchored in the waters near the place of collision; at 15:40 of November 23, this ship weighed anchor, sailed, put in; at 18:24 of November 23, berthed alongside the Waigaoqiao coastal oil depot wharf and unloaded; after unloading at 05:50 of November 25, this ship berthed alongside the wharf again and waited for arranging the repair. At 17:30 of November 27, this ship left the unloading wharf and went to anchor at Wusong Port waiting for the repair and completed the examination of the damaged ship; at 05:24 of December 5th, this ship weighed anchor and sailed to China Shipping Industry (Changxing Island, Shanghai) Co., Ltd. (hereinafter referred to as Changxing Shipyard) to repair the ship; at 07:56 of December 5th, this ship anchored at the wharf of Changxing Shipyard and waited for the dock repair; at 11:30 of December 29, this ship was laid up for repairs; after which, this ship berthed alongside Changxing Shipyard at 00:20 of January 5, 2015; and the examination of this ship after the repair was completed at January 14; at 09:22 of January 22, this ship left Changxing Shipyard and began to sail; it is about 61 days from the time when the accident happened on November 22, 2014 to the time this ship resumed on January 22, 2015. According to the ship examination report and visa of M.V. Haide Oil 9 that issued and signed by the China Classification Society on November 27, 2014, the third oil tank of the starboard dent and draught of 1.4 meter to 6.5 meter, the biggest area of damage was about 15.3 square meter, in this range, the interior components deformed and fractured, causing the inflow of the third ballast tank and oil tank of the starboard, the permanent repair of the damaged shall be finished before December 26, 2014, it is agreed that this ship went to anchored at Wusong port and berthed to have the permanent repair of the damaged parts under certain weather, sea conditions and ship condition for the damage caused by this accident, the inspection report was valid until December 26, 2014. According to the logbook, confirmation of transportation, revenue notice, freight invoice, settlement quantity notice, visa and other evidence of M.V. Haide Oil 9, there was a long-term oil transportation business between Deli Company and Sinopec Sales Co., Ltd. North China (hereinafter referred to as Petrochemical Company), this ship in the voyage of the involved accident and the voyages before and after this voyage of Haide Oil 9 loaded the oil from Qingdao port (Huangdao) and went to the south to the relevant port to discharge and returned the port of Bayuquan Area, Beijing-Tianjin-Tangshan according to the confirmation of transportation issued by Petrochemical Company, and carried out the basically same assignments according to the confirmation of transportation, Deli Company settle corresponding freight by full voyage with Petrochemical Company. In addition, according to the repair bill of M.V. Haide Oil 9 issued by Changxing Shipyard, the duration of this repair started from December 5, 2014 and ended on January 15, 2015 (tentatively fixed at 42 days). In the lawsuit of this case, Deli Company ascertained that the number of days of the loss for detention of M.V. Haide Oil 9 caused by the involved accident was

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58 days, from the day this ship began its repair on November 26, 2014 to the day it finished the repair and resumed the navigation. Wenzhou Company ascertained that the number of days of the loss for detention of M.V. Haide Oil 9 caused by the involved accident was 58 days, from the day this ship finished its unloading and went to Changxing Shipyard on November 27, 2014 to the day the average caused by the accident was finished, and it held that according to the ship examination visa and report of this ship, the average repair projects caused by the accident shall be finished on December 26, 2014, the resume service period from when to January 22, 2015 belonged to the time of repairing and waiting of the projects of the ship itself involved in the intermediate inspection and shall not be included in the loss for detention. With the logbook of related voyages, engine logbooks, confirmation of transportation, revenue notice, freight invoice, settlement quantity notice, visa, Crew payroll, crewman's salary payment voucher, expense voucher of fuel oil, port, material and spare parts and other stuffs and documents, Deli Company had calculated the days of the voyage of this accident (voyage 1433) and the voyages before and after this voyage (the preliminary voyage was not included), the cost (include fuel consumption, crew's wage, expenses of port, material and spare parts), freight revenue, total net profit, average daily net profit, loss for detention were as follows: 1. the 1431st voyage was 6 days long, the cost was 155,062 yuan (include the fuel consumption of 79,097 yuan, crew’s wage of 39,672 yuan, expenses of port, material and spare parts of 36,293 yuan), freight revenue was 648,162 yuan; 2. the 1432st voyage was 7 days long, the cost was 164,087 yuan (include the fuel consumption of 74,727 yuan, crew’s wage of 47,502 yuan, expenses of port, material and spare parts of 41,858 yuan), freight revenue was 600,022 yuan; 3. the 1501st voyage was 5 days long, the cost was 109,731 yuan (include the fuel consumption of 46,550 yuan, crew’s wage of 33,965 yuan, expenses of port, material and spare parts of 29,216 yuan), freight revenue was 623,414 yuan; 4. the 1502st voyage was 3.5 days long, the cost was 55,809 yuan (include the fuel consumption of 13,300 yuan, crew’s wage of 23,776 yuan, expenses of port, material and spare parts of 18,733 yuan), freight revenue was 315,071 yuan; for the four voyages above mentioned, the time was 21.5 days totally, the cost was 484,689 yuan, the revenue was 2,186,669 yuan; combing the above data, the total net profit of M.V. Haide Oil 9 in the voyage the accident happened and two voyages before and after this voyage was 1,701,980 yuan (revenue of 2,186,669 yuan -cost of 484,689 yuan), average daily net profit was 79,162 yuan (total net profit of 1,701,980 yuan/21.50 days), with which the loss for detention, 4,591,396 yuan was calculated (average daily net profit * 58 days). With the above stuffs and documents, Wenzhou Company had calculated the days of the voyage of this accident and the voyages before and after this voyage (include the preliminary voyage), cost (fuel consumption was calculated according to the difference between the initial value and the final value, the crew’s wage was calculated according to the average value, and the expenses of port, material and spare parts were not included), freight revenue, total net profit, average daily net profit, loss for detention were as follows: 1. the 1431st voyage was 15 days long

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(include the preliminary voyage), fuel consumption was 143,773 yuan, crew’s wage was 93,894.15 yuan, freight revenue was 648,162 yuan, the profit was 410,494.79 yuan; 2. the 1432st voyage was 14 days long (include the preliminary voyage), fuel consumption was 136,344 yuan, crew’s wage was 89,969.60 yuan, freight revenue was 648,162 yuan, the profit was 373,708.25 yuan; 3. the 1501st voyage was 11.5 days long (include the preliminary voyage), fuel consumption was 85,050 yuan, crew’s wage was 68,933.19 yuan, freight revenue was 648,162 yuan, the profit was 469,431.18 yuan; 4. the 1502st voyage was 6.5 days long (include the preliminary voyage), fuel consumption was 33,950 yuan, crew’s wage was 42,152.96 yuan, freight revenue was 267,359.88 yuan, the profit was 191,256.93 yuan; for the four voyages above mentioned, the total net profit was 1,444,891.14 yuan, average daily net profit was 30,742.36 yuan (total net profit of 1,444,891.14 yuan/47 days), in addition, Deli Company did not provide expense detail of port, material and spare parts, therefore Deli Company calculated the average daily net profit at 90% as the final average daily net profit, which was 27,668.13 yuan (average daily net profit 30,742.36 yuan * 90%), with which the loss for detention, 860,786.21 yuan was calculated (average daily net profit 27,668.13 yuan * 28 days). III. The facts about maintenance cost (crew wages), rescue and salvage and clean-up cost, repairing cost, other cost, loss of devaluation of shipborne goods 1. The maintenance cost (crew wages). When the accident of M.V. Haide Oil 9 happened, Deli Company signed a Labor dispatching contract with Labor Service Company of Zhongshan District, Dalian (hereafter referred to as Labor Service Company), which stipulated that Labor Service Company shall send crew members to work in the related ships of Deli Company, and Deli Company shall pay corresponding labor fee and service fee monthly. In November 2014, the ship was equipped with 18 crew members, the total wage was 192,792 yuan; in December 2014, the ship was equipped with 18 crew members, the total wage was 181,927 yuan; in January 2015, the ship was equipped with 18 crew members, the total wage was 185,820 yuan. Deli Company had settled the above mentioned wages by remitting them to Labor Service Company according to the expire and amount stipulated by the labor dispatch contract. Crew’s wage of this ship from November 2014 to January 2015 was 560,539 yuan totally, the total time was 92 days, average crew wages per day was 6,092.82 yuan (560,539 yuan/92 days), average wage per crew per day was 338.49 yuan (6,092.82 yuan/18). According to the minimum safety manning certificate, M. V. Haide Oil 9 shall equipped with 15 or 16 all kinds of licensed crew members. 2. The rescue and salvage and clean-up cost. According to investigation report of the involved accident, after the accident, Chongming Maritime Safety Administration promptly connected M.V. Haide oil 9 for the damage and leakage of this ship and launched an emergency response to assigned marine patrol boat to implement the alert in the waters, noticing to the coastal harbor department and reservoirs to strengthen touring and inspection, once the oil

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pollution is found, the water intake shall be closed immediately; they coordinated with salvage ships of Jingong Company to seal the damaged parts simply; at 21:06 of the day the accident happened, more than 600 tons of diesel oil (include the water) of the damaged oil tank of this ship were barged, and the temporary plugging for the damaged parts was finished; at 15:45 of November 23, the ship anchored away from the incident waters under escort of tugboat and maritime patrol boat; at 16:20, the oil spilled was basically cleared; at 18:00 of the same day, this ship anchored at the Waigaoqiao coastal oil depot wharf. On November 22, 2014, Shanghai Maritime Safety Administration made a letter of maritime administrative compulsory corporate actions to M.V. Haide Oil 9, which stated that the involved accident caused the damage of the third oil tank of M.V. Haide Oil 9 and a lot of oil spilled, for the clean-up component of Sunset Company, the protocol clean-up company did not meet the demand of emergency response, so compulsory corporate action shall be implemented, and it would assigned the clean-up ships stand by the incident waters of Shanghai Chenyang Port Services Ltd. (hereafter referred to as Chenyang Company) and Shanghai Shengmin Marine Engineering Co., Ltd. (hereafter referred to as Shengmin Company) to go to the incident waters to clean up until the pollution was basically removed. On the next day, Shanghai Maritime Safety Administration made a final letter of decision of administrative compulsory execution to M.V. Haide oil 9, which stated that the water pollution occurred by the oil spilled of this ship was removed basically, and it decided to end the implementation of above letter of maritime administrative compulsory corporate actions. On November 27, 2014, Shanghai Maritime Safety Administration made Deli Company and Wenzhou Company a decision on providing financial guarantee, which stated that the collision between the ships of the two parties resulted the leakage of the cargo oil carried by M.V. Haide Oil 9, causing environmental pollution of the waters under jurisdiction. Shanghai Maritime Safety Administration entrusted Chenyang Company and Shengmin Company to implement administrative compulsory corporate actions and adopted emergency response measures such as pollution removal, lightering; it entrusted relevant environmental protection agencies to carry out events such as simulation, monitoring, testing and so on, producing relevant expenses; Sunset Company carried out emergency response measures such as pollution removal, lightering according to the Agreement for the removal of pollution of ships; therefore it required both the parties to provide a credit guarantee of 10 million yuan issued by the domestic bank or insurance sectors before the sailing or December 1, 2014 (which one was earlier). On the same day, on behalf all the people in M.V. Zhejiang Sea 156, Hangzhou PICC issued the letter of guarantee to Shanghai Maritime Safety Administration, which stated that Hangzhou PICC guaranteed to pay the emergency response cost and clean-up cost with the guarantee limit of 5.60 million yuan that shall be paid to Shanghai Maritime Safety Administration by the ship owner and agreed by Shanghai Maritime Safety Administration and ship owner and determined by the written agreement recognized by Hangzhou PICC or the effective judgment and

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reconciliation agreement issued by competent court and appeals court. On December 1, 2014, on behalf all the people in M.V. Haide oil 9, Dalian PICC issued the letter of guarantee to Shanghai Maritime Safety Administration, the content of which were the same as the letter of guarantee issued by Hangzhou PICC except for the ship name, guarantor and guaranteed person, and the guarantee limit was 10 million yuan. On November 15, 2016, Deli Company, Dalian PICC and Sunset Company reached a settlement agreement on the clean-up cost caused by the involved accident, which stipulated that Deli Company and Dalian PICC shall jointly and severally pay Sunset Company 5.50 million yuan as a package and final solution for the claim of clean-up cost, among which, 1.65 million yuan shall be deducted directly from the payment for the damaged goods under the goods handling protocol signed by Deli Company and Sunset Company, and the residue 3.85 million yuan shall be paid to Sunset Company 15 days after the protocol signed. On December 12, 2016, Dalian PICC remitted Sunset Company 3.85 million yuan through the bank, and paid Deli Company 1,509,495 yuan (after deducted 16.5 million yuan from the payment for goods, deductibles of goods of 90,505 yuan was deducted and deductibles of clean-up cost of 50,000 yuan was deducted). So far, for the clean-up cost involved in the above settlement agreement of 5.50 million yuan, Dalian PICC shall pay the insurance claim of 3.85 million yuan, the damaged goods shall deduct 1.65 million yuan, Deli Company shall bear 50,000 yuan (deductible) itself. On December 19, 2016, Sunset Company issued confirmation letter to the two Plaintiffs on the settlement and clean-up costs caused by the involved accident, which stated that Wenzhou Company, as the owner of M.V. Zhejiang Sea 156, shall bear the clean-up cost according to proportion of collision liability, therefore Sunset company ascertained that it would transfer all the obligatory right of the settlement and clean-up costs to the two Plaintiffs from December 12, 2016. After the accident happened, Chongming Maritime Safety Administration assigned the salvage ship Jingong that owned by Jingong Company urgently to implement operations such as on-site rescue, reconnaissance of damage, detection under water and others to M.V. Haide Oil 9 according to the requirements of the maritime department, which were finished on November 23, 2014, and according to statistics, all rescue and salvage cost occurred were 317,900 yuan. Deli Company delayed in paying the above cost, therefore Jingong Company filed a lawsuit against Deli Company before the court, the case number was (2016) Hu 72 Min Chu No.3195. In the trial, the two parties made a conciliation on February 24, 2017, which stipulated that Deli Company shall pay Jingong Company 140,000 yuan as the comprehensive and final solution of the rescue and salvage cost above mentioned. Therefore, Deli Company remitted 140,000 yuan to Jingong Company on March 22, 2017, Dalian PICC remitted the same amount of money to Deli Company on April 17, 2017. During the time from November 2014 to January 2015, Chenyang Company, Shengmin Company and Shanghai Hongxing Shipping Engineering Co., Ltd. (hereafter referred to as Hongxing Company) sent the collect or list of clean-up cost

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caused by the accident to the two Plaintiffs respectively, which stated that the total clean-up cost was over 4.9 million yuan. In the trail, the two Plaintiffs ascertained that the above outstanding clean-up cost was not paid actually by the court date, nor the arbitration or lawsuit was formed. 3. Repairing cost and other cost (repair, tank washing, tug, loading and unloading, ship inspection, painting, chartering, copper aluminum electrode, rudder system equipment, sealing equipment, transmitter, pipeline dredge, travel, etc.) (a) The repair. On January 22, 2015, Deli Company signed an average repair settlement agreement on the involved accident of M.V. Haide Oil 9 with Changxing Shipyard, which stated that according to the quote, contract, receiving report that the two parties agreed and friendly negotiation, the total cost of this repair was 4.46 million yuan, among which 1.80 million yuan shall be paid to Changxing Shipyard by Deli Company before ship left shipyard, and the residue shall be paid before March 20, 2015. Deli Company remitted the repair cost of 1.80 million yuan, 310,000 yuan, 2.35 million yuan respectively on January 16, June 26, September 30, 2015, a total of 4.46 million yuan. (b) Tank washing. On November 26, 2014, Deli Company signed tank washing and sludge oil disposal contract of M.V. Haide Oil 9 with Hongxing Company, which stated that Deli Company assigned Hongxing Company to carry out tank washing and sludge oil disposal operation on this ship; the tank washing cost shall be settled as 35 yuan per cubic meter, sludge oil disposal cost shall be settled as 180 yuan per cubic meter, fat lute and garbage disposal cost shall be settled as 17 yuan per kilogram, the materials cost shall be settled according to practical usage. When the engineer was over, Hongxing Company shall issue an invoice to Deli Company; company shall pay the payment within 7 days after acceptance. On December 30, 2014, Deli Company remitted tank washing cost of 123,600 yuan to Hongxing Company. On January 29, 2015, Hongxing Company issued an invoice of ship cleaning service charge for the above amount of money. (c) Tugboat. On November 23, 2014, Shanghai Port Renaissance Shipping Company (here after referred to as Renaissance Company) dispatched the towboat Haigang 10 to escort M.V. Haide Oil 9 to berth alongside Waigaoqiao coastal oil depot wharf from incident waters, Deli Company paid the towage fee of 12,000 yuan to Renaissance Company in cash. On November 27, 2014, Renaissance Company dispatched towboat Haigang 4 to escort M.V. Haide Oil 9 to leave the unloading wharf and go to Wusong port to anchor and wait for being repaired, Deli Company paid the towage fee of 9,000 yuan to Renaissance Company in cash. On January 29, 2015, Renaissance Company issued two towage invoices to Deli Company, on which the amount stated were 12,000 yuan and 9,000 yuan. (d) Loading and unloading. On November 23, 2014, M.V. Haide Oil 9 went from incident waters to berth alongside Waigaoqiao coastal oil depot wharf to discharge shipborne diesel oil. On January 15, 2015, Deli Company remitted China Petroleum & Chemical Corporation Gaoqiao Shanghai Company (hereafter referred to as Gaoqiao Company) loading and unloading expenses of 63,885.40 yuan. In January 2015,

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Gaoqiao Company issued a special VAT invoice of loading and unloading for the above amount of money to Deli Company. (e) Ship inspection. On November 27, 2014, China Classification Society finished the additional examination for the damaged due to collision of this accident of M.V. Haide Oil 9 and finished the intermediate examination after repairing on January 14, 2015, in addition to the examination of permanent repairs of damaged parts, the intermediate examination also included examination to the outside of ship’s bottom, boiler and tail shaft. On January 15, 2015, Deli Company remitted China Classification Society the inspection cost 7,286 yuan, 31,202 yuan, 24,624 yuan, totally 63,109 yuan. After that, China Classification Society issued three special VAT invoices of the inspection cost that specified the amount above. (f) The paint. Deli Company remitted COSCO Jotun Marine Paint (Qingdao) Co., Ltd. (hereafter referred to as Jotun Company) paint fee of 178,892.01 yuan, 21,035.99 yuan, 82,075 yuan, 22,686.20 yuan on November 27, December 5, December 9, December 30 of 2014, the total number was 304,689.20 yuan. On January 28, 2015, Jotun Company issued two special VAT invoices of the paint fee, which stated the amount were 182,588.40 yuan and 122100.80 yuan respectively, the total invoice value was 304,689.20 yuan. (g) Chartering. On January 20, 2015, Leqing Lida Shipping Co., Ltd. (hereafter referred to as Lida Company) issued Deli Company a special invoices for VAT in freight transport industry, which stated that the goods shall be carried from Shanghai to Jiangyin, the content was 7,985.675 tons of diesel, the freight rates was 42.20 yuan per ton, the total freight was 336,995.48 yuan. On January 27, 2015, Deli Company remitted Lida Company the amount of money that stated in the invoice. (k) Copper aluminum electrode, rudder system equipment, sealing equipment, transmitter, pipeline dredge and others. On December 22, 2014, Deli Company paid Shanghai Ship Research Environmental Protection Technology Co., Ltd. (hereafter referred to as Ship Research Company) the Copper aluminum electrode cost of 11,800 yuan, and Ship Research Company issued Deli Company the VAT special invoice that stated the amount. On December 31, 2014, Deli Company settled the rudder system equipment of 3300 yuan, sealing equipment of 4,500 yuan with Shandong Eurasian Marine Engineering Co., Ltd. (hereafter referred to as Eurasian Company) through personal e-bank of its staff, after which, Eurasian Company issued the VAT special invoice for the above amount to Deli Company. On January 12, 2015, Deli Company signed purchases and sales contract with Beijing Senshe Electronics Co., Ltd. (hereafter referred to as Senshe Company), purchasing four pieces of transmitter equipment with a total price of 1,140 yuan; on January 13, 2015, Deli Company settled two pieces of transmitter equipment with Shanghai Rongde Mechanical and electrical Equipment Co., Ltd. (hereafter referred to as Rongde Company) with a total price of 7,000 yuan. Therefore Senshe Company and Rongde Company issued the VAT special invoice of corresponding amount to Deli Company. On January 3, 2015, staff of Deli Company settled the pipe dredge fee of 5,000 yuan with Shanghai Shenqiao Industrial Co., Ltd. (hereafter referred to as Shenqiao Company) in cash, and Shenqiao Company issued the

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VAT special invoice of corresponding amount to Deli Company. (l) Travel expense. According to the list of travel expense and bills of air tickets, accommodation, Deli Company spent 212,509 yuan of the travel expense for the involved accident. In addition, entrusted by Hangzhou PICC, Renxiang Company issued the assessment report on May 18, 2017, which stated that after auditing the repairing cost of M.V. Haide Oil 9, the reasonable average repairing cost occurred by this accident shall be 4,082,753 yuan. 4. Loss of devaluation of goods. According to the confirmation of transportation, freight invoice, settlement quantity notice, stowage plan, investigation report and examination report in the voyage of the accident of M.V. Haide Oil 9, in this voyage, this ship loaded 9,123.448 tons of diesel, and the third oil tank loaded about 1,450 cubic meters. The involved accident caused the damage of the third oil tank in the starboard, which leading to the leakage of some diesel of this oil tank. Sunset Company and other clean-up institutions went to the scene to transfer diesel in the damaged tank, and Jingong Company block the damaged place simply, after which, over 600 tons of diesel (include the water) in the damaged tank was transferred at 21:06 of the day this accident happened and temporary block for the damaged place was finished. Therefore, Deli Company signed cargo handling agreement with Petrochemical Company, the consigner of goods, in which the two parties agreed that 373 tons of diesel in the damaged oil tank as transferred; which been sold to Deli Company at the price of 6,850 yuan per ton by petrochemical Company, the total price was 2,555,050 yuan. During the time from January 2015 to November 2015, for the oil above mentioned, Deli Company remitted Petrochemical Company 200,000 yuan three times, 400,000 yuan two times, 600,000 yuan and 555,050 yuan one time respectively. On February 13, 2015, Deli Company, Dalian PICC and Sunset Company reached a handling agreement on the over 600 tons of transferred damaged diesel that including the water in the damaged tank, Sunset Company confirmed the real situation of the damaged diesel and had no objection to the quality and quantity of the diesel and purchased them at the price of 1.65 million yuan; the payment for the damaged goods of 1.65 million yuan may directly deducted the clean-up cost of 5.50 million yuan that decided by the clean-up cost settlement agreement signed by the Third Party. V. The facts about insurance claims of M.V. Haide Oil 9. On June 9, 2015, Deli Company applied for insurance compensation to Dalia PICC for the losses of M.V. Haide Oil 9 caused by the accident, and the specific items and amounts were as follows: 4.3 million yuan for the repairing fee; 63,109 yuan for the ship inspection; 123,600 yuan for tank washing; 21,000 yuan for towage fee; 63,885.40 for the loading and unloading fee; 336,995.48 yuan for charterage; 176,900 yuan for Guardian fee; 741,000 yuan for explored fee; 5,300 yuan for pipe dredge fee; 304,689.20 yuan for paint fee; 11,800 yuan for copper aluminum

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electrode; 3,300 yuan for rudder system equipment; 4,500 yuan for sealing equipment; 8,140 yuan for transmitter; 212,509 yuan for travel expense; the total number of the claims applied above was 6,376,728.08 yuan. After claim settling of insurance and deducted relevant taxes and deductible, Dalian PICC remitted Deli Company all the items of M.V. Haide Oil 9 under insurance such as repairing fee, ship inspection fee, tank washing fee, towage fee, loading and unloading fee, charterage, pipe dredge fee, paint fee, copper aluminum electrode, transmitter (the cost of rudder system equipment, sealing equipment and travel expense were not included) and other payment of insurance 1.8 million yuan, 1.8 million yuan, 818,974 yuan on January 13, 2015, August 5, 2015 and December 7, 2016. On May 27, 2016, after claim settlement of insurance, Dalian PICC remitted Deli Company 905,050 yuan (10% of the deductible was not deducted) as insurance indemnity of TLO of part goods; on December 12, 2016, after claim settlement of insurance and deducted total loss deductible of the above goods of 90,505 yuan (905,050 yuan * 10%) and clean-up deductible of 50,000 yuan, Dalian PICC remitted M.V. Haide oil 9 1,509,495 yuan as the clean-up cost insurance indemnity under the items of ship-owner guarantee and responsibility of compensation, and remitted clean-up cost of 3.85 million yuan to Sunset Company directly. On April 17, 2017, after claim settlement of insurance, Dalian PICC remitted Jingong Company rescue and salvage cost 140,000 yuan that under the items of insurance of M.V. Haide Oil 9. So far, Dalian PICC remitted Deli Company insurance indemnity of M.V. Haide Oil 9 caused by the involved accident of 10,823,519 yuan under all the items of the insurance and ship-owner guarantee and responsibility of compensation. VI. Other related facts of this case. After Deli Company filed a lawsuit against Wenzhou Company on July 5, 2016, Wenzhou Company applied for bankruptcy liquidation to Wenzhou intermediate people's court of Zhejiang province (hereafter referred to as Wenzhou intermediate court) on August 18, 2016. Wenzhou intermediate court made No.7 Zhe 03 Bankruptcy Liquidation civil ruling and letter of decision, (2016), accepting the bankruptcy liquidation of Wenzhou Company and assigning related organization as bankruptcy administrator. On October 19, 2016, Wenzhou intermediate court made Zhe 03 No.3 Bankruptcy Civil Ruling, announcing the Bankruptcy of Wenzhou Company. As of the date of trial on August 30, 2017, Wenzhou Company did not apply for the insurance claim for loss and compensation caused by the accident, nor did it bring any arbitration or litigation to Hangzhou PICC. The court held that: This case was the dispute over the responsibility of ship collision, the controversy issues of this case: I. the right of claim of the two Plaintiffs and the liability for compensation of the Defendant, Wenzhou Company; II. The reasonable losses of M.V. Haide Oil 9 caused by the involved accident; III. The liability of compensation for the losses of the two Plaintiffs assumed by Hangzhou PICC, the Third Party.

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I. The right of claim of the two Plaintiffs and the liability for compensation of the Defendant, Wenzhou Company Each ship shall be liable in proportion to the extent of its fault. Liability of compensation occurred by collision shall be borne by the ship owner, and the liability generated during the bareboat charter period and registered according to the law shall be borne by bareboat charterer. As the owner of M.V. Haide oil 9, the ship involved when the accident happened, Deli Company was entitled to require M.V. Zhejiang Hai 156, another involved ship to bear corresponding liability of compensation in proportion to the extent of its fault. As the hull underwriter of Haide Oil 9 when the accident happened, Dalian PICC shall, after paid corresponding insurance indemnity to related party who provide the salvation, repair, goods and the owner of ship, exercise the right of subrogation within the range of insurance indemnity in accordance with the law, requiring M.V. Haide Oil to bear corresponding liability of compensation in proportion to the extent of its fault. Now the proportion of liability of indemnity had been decide by the legal instrument of this case, therefore, as the owner of the ship registered of M.V. Zhejiang Hai 156 when the accident happened, Wenzhou Company shall pay the two Plaintiff all losses of M.V. Haide Oil 9 caused by the involved accident in the decided liability proportion of 75%. II. All losses of M.V. Haide Oil 9 caused by the involved accident 1. Loss for detention of ship Haide Oil 9 Compensation for damage arising from ship collision shall include reasonable loss for detention, the period of loss for detention occurred by part damage shall be limited to the reasonable repair period required by the actual repair, which include the reasonable time of contact, accommodation, ship inspection and so on. The involved accident caused the damage of M.V. Haide Oil 9 on November 22, 2014, from when this ship could contact damage repair, but it berthed alongside Changxing Shipyard wharf to wait for dock repair on December 5. During this time, this ship always berthing at the wharf and anchoring to wait for repair, there was no full evidence to support this ship contact the repair actively, therefore it was not reasonable that this period lasted 13 days long, the court held that 6.5 days of this period shall be calculated into the loss for detention; this ship finished ship inspection for the damage on November 27, this time was the reasonable inspection time to guarantee the ship sailed safety to be repaired, therefore it shall be calculated into the loss for detention as 1 day. Combing the facts that the third oil tank of the starboard dent and draught of 1.4 meter to 6.5 meter, the biggest area of damage was about 15.3 square meter, the third ballast tank and oil tank of starboard was took in water, which need to cut and welding repair the damaged place after docking to drainage, the period of dock repair between December 5, when it berthed at Changxing Shipyard and December 29 was not the reasonable period caused by the accident, but combing the above facts, 6.5 days for the reasonable contact and waiting for the dock repair shall be calculated into the loss for detention. This ship went to dock on December 29, 2014 and finished the dock repair on

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January 5, 2015 and finished ship inspection on January 14 and resumed to sail on January 22, combing the facts of deformation and fracture of the interior component in the range of damage caused by this accident, the period above mentioned was the reasonable period for the actual repair of this ship, and there was no evidence to rebut this, therefore it shall be calculated into the loss for detention as 24 days. And combing the tentative repair period stated in repairing bill of Changxing Shipyard, the court determined to calculated 38 days (6.5 days for the contact of ship repair, 1 day for the collision inspection, 24 days for the ship repair) as the reasonable repair period of M.V. Haide Oil 9 into the loss for detention. Furthermore, the expiration date and perpetual repair period stated in the inspection report and visa mean this ship may sailed to the shipyard to be repaired under certain weather, sea state and ship condition, or the inspection report and visa were expired, but not mean this ship shall finish the perpetual repair period of the accident within this period, therefore, for the defense that the reasonable repair period was 28 days calculated thereby claimed by Wenzhou Company, the court shall not uphold the verity. Generally speaking, the loss for detention shall be calculated by the average net profit of the two voyages before and after the collision. The voyage of this accident and two voyages before and after it were all loading the oil from Qingdao port (Huangdao) and unloading at the port of discharge, and then returned empty to carried out the same task, the corresponding freight were settled by full voyage, therefore, time of corresponding preliminary voyage shall be calculated into the average net profit of the voyage. The method and data that Wenzhou Company used to calculated the days of voyages before and after this voyage (include the preliminary voyage), cost (fuel consumption was calculated according to the difference between the initial value and the final value, the crew’s wage was calculated according to the average value, and the expenses of port, material and spare parts were not included), freight revenue, total net profit, average daily net profit according to related material and document were was legal and shall be supported, and were more consistent with shipping practice than the method and data used by Deli Company. In addition, Deli Company did not provide related integrity evidence about the expenses of port, material and spare parts occurred in the above full voyage of M.V. Haide Oil 9, which were inevitable expenses caused by the operation of the ship, through calculation, Deli Company held that this expenses were 7.4% of the total net profit, [(36,293 yuan for the 1431st voyage + 41,858 yuan for the 1432st voyage + 18,733 yuan in the 1502st voyage)/ 1,701,980 yuan for the net profit], Wenzhou Company held that average daily net profit of this ship was 30,742.36 yuan, combing these, Wenzhou Company deducted the average daily net profit of voyages before and after the voyage of collision of 28,467.43 yuan. [Average daily net profit of 30,742.366 yuan * 92.6% (100%–7.4%)]. To sum up, the court ascertained that the reasonable loss for detention caused by this accident of M.V. Haide Oil 9 was 38 days, average daily net profit was 28,467.43 yuan, loss for detention was 1,081,762.34 yuan (27,467.43 yuan * 38 days). Wenzhou Company, the Defendant shall repay Deli Company

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811,321.76 yuan (1,081,762.34 yuan * 75%) in the liability proportion of 75% determined by the effective judgment. 2. Loss for the maintenance cost (crew wages) of M.V. Haide Oil 9. Compensation for part damage of the ship included maintenance cost, reasonable wages of crew arising during the repair period, therefore Deli Company’s appeal of claim this cost was legal and shall be supported. With regard to the reasonable amount of this expense, the court held that it shall take 338.49 yuan, the average wage per crew per day during the time from the month the accident of M.V. Haide Oil 9 happened (November 2014) to the month the ship finished repairing and resumed to sail (January 2015) as the base, and calculate 38 days as the reasonable period of repair determined by the court. And combing the shipping practice that the equipment of crew, work item, content, intension and others during normal navigation operations of ship were different from that during the repair period, the reasonable amount of cost shall be calculated according to the minimum number of safe manning of 16 people. To sum up, the court held that maintenance cost (crew wages) during repair period occurred by the involved accident of M.V. Haide Oil 9 was 205,801.92 yuan (338.49 yuan * 16 people * 38 days). Wenzhou Company, the Defendant shall repay Deli Company, the Plaintiff 154,351.44 yuan (205,801.92 yuan * 75%) in the liability proportion of 75% determined by the effective judgment. 3. Loss for the expenses of repair, tank washing, tugging, loading and unloading, ship inspection, paint, chartering, copper aluminum electrode, rudder system and seal equipment, transmitter, pipe dredge, travel expenses etc. of M.V. Haide Oil 9. Compensation for damages of ship collision included loss of property caused by collision, costs and losses incurred after the collision, reasonable costs and losses incurred to avoid or minimize damage, loss caused by a claimant’s fault or the part that made the loss to be enlarged were not included. Compensation for part damage of the ship collision shall also include reasonable temporary repair cost, perpetual repair cost, auxiliary expenses (include reasonable expenses incurred for repairs, such as necessary dock fee, and towing fee of this ship, clearance cost, oily waste water treatment fee, port charge, pilotage dues, inspection fees and dock living fee, wharfage and other cost arising during the repair period, but not limited to above cost.). Combing with this case, the court confirmed the losses of repair cost and other cost caused by this accident of M.V. Haide Oil 9 were as follows: (a) Loss of repairing fee. Ship repair settlement agreement, receipt, accounting voucher and payment TMO and other valid evidence can corroborate each other and form a chain of evidence, which can prove the fact that ship Haide Oil 9 went to Changxing Shipyard to be repaired after being damaged by the involved accident and paid the repair fee of 4.3 million yuan, and the involved repair project and amount of this cost had communicated and consulted with Changxing Shipyard and audited and determined by Dalian PICC, the

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underwriter of this ship, therefore, it shall be deemed that corresponding impairment obligation was performed fully and reasonably. The Defendant and the Third Party were only supported by the amount stated in the assessment of Renxiang Company, which was not enough to rebut the rationality of the actual repairing fee of this ship, and the amount cannot prove the actual repairing fee of this ship was excessively high, there were no other contrary evidence to rebut, therefore the court confirmed the loss of repairing fee caused by the involved accident of M.V. Haide Oil 9 was 4.3 million yuan. (b) Loss of tank washing. The involved accident of M.V. Haide Oil 9 caused the damage and water inflow of the hull and leakage of some diesel shipborne, which led the diesel in the starboard cargo hold doped with water, therefore the cargo hold and diesel were damaged because of the mixture of oil and water. Combing the shipping practice of ship oil transport, the tank washing fee of Deli Company occurred by cleaning damaged cargo hold to recover normal operation was related cost and loss incurred after the accident and had a causal relationship with the accident involved. Tank washing and sludge oil disposal contract, receipt, payment TMO and other valid evidence provided by Deli Company can corroborate the fact above mentioned, and there were no contrary evidence to support the unit price, area, kg, material and other contents for the settlement of clean-up fee were not reasonable, therefore the court confirmed the loss of tank washing fee was 123,600 yuan. (c) Loss of towage fee, loading and unloading fee. The involved accident of M.V. Haide Oil 9 caused the damage and water inflow of the hull and leakage of some diesel shipborne, towage fee of 21,000 yuan and loading and unloading fee of 63,885.40 yuan caused by going to Changxing Shipyard to be repaired to ensure sail safety and berthed at Waigaoqiao coastal oil depot wharf temporarily to discharge goods after being damaged was related cost and loss incurred after the accident and had a causal relationship with the accident involved. And Deli Company provided invoice of towage fee, invoice of loading and unloading fee, accounting voucher and payment TMO and other valid evidence to support, and there were no contrary evidence to rebut, therefore the court confirmed the loss of these two costs. (d) Loss of ship inspection cost. The inspection cost occurred by receiving the inspection of China Classification Society after the emergency rescue caused by the accident was reasonable cost to ensure this ship reached Waigaoqiao coastal oil depot wharf temporarily to discharge goods and went to Changxing Shipyard to be repaired and had a causal relationship with the accident involved, and there were ship inspection visa, report, invoice, payment TMO and other valid evidence and other valid evidence to support. However, according to the ship inspection visa and report, the ship inspection carried out for M.V. Haide Oil 9 after repairing include the inspection on permanent repair of the damaged part caused by the involved accident, and include intermediate inspection on the outside of ship’s bottom, boiler, tail shaft and other damaged part and items not caused by the involved accident, therefore the cost of intermediate inspection was not caused by the involved accident and shall be

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deducted reasonably. The invoice of inspection fee and payment TMO in this case were not specified clearly the specific items, time and corresponding amount of this inspection, therefore the court held that the reasonable loss of inspection cost of M.V. Haide Oil 9 caused by this accident shall be determined by taking the total amount of inspection of 63,109 yuan as the base and combing factors such as items and time of occasional survey, average survey and intermediate inspection of ship and calculating in 50% proportions, which was 31,554.50 yuan (63,109 yuan * 50%). (e) Loss of paint fee. Corresponding painting engineering after the repairing of damaged part was reasonable repair items caused by this accident and the fact, therefore the cost for paint by Deli Company was necessary component of the reasonable repair cost caused by this accident. However, invoice of paint fee provided by Deli company only stated the amount of the cost, the specific number and unit price of paint were not stated, nor the supply list stated in the invoice was provided, therefore it cannot corroborate with paint consumption stated in the repair bill (painting engineering), and there was no other evidence in this case to prove the specific consumption of the damaged part caused by the accident, therefore, combing the fact that this accident caused the damage of the starboard and water inflow of some holds, the court confirmed the reasonable loss of paint fee of M.V. Haide Oil 9 caused by this accident as 80% of the total amount in the paint fee invoice of 304,689.20 yuan, which was 243,751.36 yuan (304,689.20 yuan * 80%). (f) Loss of charterage. In the voyage of accident, port of destination of M.V. Haide Oil was Jiangyin, Jiangsu, but it berthed at Waigaoqiao coastal oil depot wharf temporarily to discharge goods for the safety of ship and goods on it after the accident happened. After that, Deli Company chartered another ship to transport the discharged diesel to original port of destination, charter transport cost occurred by which was related expenses incurred after the accident and had causal relationship with the accident involved. Deli Company had provide invoice of charterage, payment TMO and other valid evidence to support, and the port of departure of goods (Shanghai to Jiangyin), quantity of goods (7,985.675 tons of diesel) stated in the invoice can basically corroborate with quantity of diesel in the voyage of accident and the quantity of diesel lost in the accident of M.V. Haide Oil 9, there were no other evidence to support the amount of freight unit and total price stated in the invoice were excessively high and unreasonable, therefore the court confirmed the loss of charterage was 336,995.48 yuan. (g) Loss of expense for copper aluminum electrode, rudder system equipment, sealing equipment, transmitter, pipeline dredge and others. Combing the damage of M.V. Haide Oil 9 caused by the accident and the shipping practice of ship oil transportation, the cost of copper aluminum electrode, transmitter, pipeline dredge and others were related expenses and losses incurred after the collision, related invoice, payment TMO, accounting voucher, cash expense account and other evidence had been provided to support, and it was audited and determined by Dalian PICC, the underwriter of the ship, there were no

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contrary evidence to rebut, therefore, the court confirmed that loss of copper aluminium electrode charge was 11,800 yuan, the loss of transmitter fee was 8,140 yuan, loss of pipeline dredge fee was 5,300 yuan. In addition, although Deli Company had provided invoice, accounting voucher, cash expense account and other valid evidence to prove the actual cost of rudder system and seal equipment, the accident involved caused the damage of hold in starboard of M.V. Haide Oil. There were no evidence to prove the relevance between the cost of rudder system and seal equipment and repair of damaged parts caused by the accident, therefore the court did not confirmed the cost of 7,800 yuan for the cost of rudder system and seal equipment. (h) Loss of travel expense. Travel expense that Deli Company claimed was occurred by related survey, assistance, salvation, cleaning up, berthing, discharge and repairing of the involved accident of M.V. Haide Oil 9, which was the reasonable cost to avoid the expansion of loss. However, according to the list of travel expense, ticket, accommodation bills and others, the items and amount of related expense were not reasonable. Combing the fact that Deli Company dealing with the follow-up matters after the accident of M.V. Haide Oil 9, the court confirmed that it was reasonable to calculated the travel expense as 680 yuan, accommodation and transport fee of two people per day per person, and reasonable loss for detention determined by the court as 38 days, which was 51,680 yuan (680 yuan * 2 people * 38 days). In consideration of the difference of geographical location between the domicile of Deli Company (Dalia) and the place where the accident happened (Shanghai), the court calculated 2,000 per person as round-trip tickets fee into reasonable travel expenses, which was 4,000 yuan (2,000 yuan * 2 people). Therefore the court confirmed that reasonable loss of travel expense of M.V. Haide Oil 9 caused by this accident was 55,680 yuan (51,680 yuan + 4,000 yuan). To sum up, the court confirmed reasonable direct property loss as well as cost and loss occurred after the accident of M.V. Haide Oil 9 caused by the involved accident were as follows: 1. 4.30 million yuan for the loss of repairing fee; 2. 123,600 yuan for the loss of tank washing fee; 3. 21,000 yuan for the loss of towage fee; 4. 63,885.40 yuan for the loss of loading and unloading fee; 5. 31,554.50 yuan for the ship inspection fee; 6. 243,751.36 yuan for the loss of paint fee; 7. 336,995.48 yuan for the loss of charterage; 8. 11,800 yuan for the loss of copper aluminum electrode charge; 9. 55,680 yuan for the loss of travel expense. The total amount of losses above was 5,201,706.74 yuan. Dalian PICC, underwriter of M.V. Haide Oil 9 had repaid Deli Company 4,418,974 yuan for the loss, therefore outstanding loss of Deli Company was 782,732.74 yuan. So far, Wenzhou Company, the Defendant had repaid Deli Company, the Plaintiff the loss of goods of 587,049.56 yuan (782,732.74 yuan * 75%) in the liability proportion of 75% determined by the effective judgment and repaid Dalian PICC the loss of goods 3,314,230.50 yuan (4,418,974 yuan * 75%).

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4. Loss of the shipborne goods of M.V. Haide Oil 9 Compensation for damage to the property on ship caused by collision include the loss of property on ship and loss from devaluation occurred by part of damage. It is true that the involved accident caused the water inflow of the third hold in starboard of M.V. Haide Oil 9, which led to the loss of diesel shipborne and the damage because of mixture of oil and water. In view of this, it was reasonable that Deli Company signed cargo handling agreement with Petrochemical Company, the consigner of goods and confirmed the amount of loss of damaged diesel shipborne according to the confirmation of transportation, freight invoice, settlement quantity notice, stowage plan, investigation report and examination report and other valid evidence in the voyage of the accident of M.V. Haide Oil 9 and sold this diesel to Deli Company in accordance with market unit price, there were no other evidence to prove the amount of loss or damaged, the unit price and total price of the diesel above mentioned were excessively high or unreasonable, therefore the court confirmed that loss of the shipborne goods of M.V. Haide Oil 9 caused by this accident was 2,555,050 yuan. Furthermore, with the damage, leakage, water inflow, lightering of the third hold, the two Plaintiffs reached a handling agreement on the damaged diesel (including water) in the damaged hold with Sunset Company, the party who provide the salvation in a direct and convenient way, which shall be taken as the reasonable measure the two Plaintiffs provided to salvage the ship as soon as possible and reduce further losses. There were no other evidence in this case to prove the total price of the damaged goods of 1,65 million yuan was excessively low or unreasonable, this payment had been deducted as clean-up cost in accordance with the settlement agreement, therefore the court confirmed loss of shipborne goods (diesel) of M.V. Haide Oil 9 was 905,050 yuan (2,555,050 yuan– 1,650,000 yuan), Dalian PICC, underwriter of ship had repaid Deli Company 814,545 yuan for the above loss, therefore outstanding loss of Deli Company was 90,500 yuan. So far, Wenzhou Company, the Defendant had repaid Deli Company, the Plaintiff the loss of goods of 67,878.75 yuan (90,505 yuan * 75%) in the liability proportion of 75% determined by the effective judgment and repaid Dalian PICC the loss of goods 610,908.75 yuan (814,545 yuan * 75%). 5. Loss of the rescue and salvage cost of M,V, Haide Oil 9. Compensation for damage arising from ship collision shall include reasonable salvage charge, after the involved accident happened, Chongming Maritime Safety Administration assigned the salvage ship Jingong owned by Jingong Company urgently to implement operations such as on-site guard, reconnaissance of damage, detection under water, easily blocking and others to M.V. Haide Oil 9 according to the requirements of the maritime department, with which this ship left the incident waters, berthed safety to discharge, sailed itself to be repaired, therefore rescue and salvage operation above mentioned were reasonable. Deli Company delayed in paying the rescue and salvage cost, so Jingong Company brought a lawsuit against it, and after mediating by the court, Deli Company paid 140,000 yuan, which can be deemed that the two Plaintiffs had fully negotiated with the salvor and had done

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their duty to reduce their losses, there were no contrary evidence to prove the amount of mediation was excessively high or unreasonable, and Deli Company had paid, therefore the court held that the loss of rescue and salvage cost of M.V. Haide Oil 9 was 140,000 yuan. As the underwriter of the ship, Dalian PICC had repaid Deli Company actually, therefore Wenzhou Company shall repay Dalian PICC, the Plaintiff the rescue and salvage cost of 105,000 yuan in the liability proportion of 75% determined by the effective judgment. 6. Loss of the clean-up cost of M.V. Haide Oil 9. For the oil pollution damage arising from oil leakage in collision caused by mixed faults, the injured person may request the owner of the oil spill to assume full liability. It is true that the involved accident caused the water inflow of the third hold in starboard of M.V. Haide Oil 9, which leading the leakage of diesel and polluted the incident waters, as the protocol cleaning company of maritime authority, Sunset Company, after controlling and removing the water pollution caused by the accident, had the right to request Deli Company, as the owner of M. V. Haide Oli 9 to assume the liability of compensation on the clean-up cost. After Deli Company and Dalian PICC, the underwriter of the ship paid the clean-up cost, it may also claim compensation from the owner of M.V. Zhejiang Sea 156, another party in the collision according to the proportion of collision liability of ship. After consultation, Deli Company, Dalian PICC and Sunset Company confirmed the clean-up cost occurred by this accident was 5.50 million yuan, which was legal and shall be supported, there were no other contrary evidence to prove the cost was excessively high and unreasonable, and Deli Company and Dalian PICC had paid by deducting the damaged goods and remitting through banks, therefore the court confirmed that the loss of clean-up cost of M.V. Haide Oil 9 was 5.50 million yuan, after the discount offsetting of goods, Dalian PICC, the underwriter of ship repaid Deli Company and remitted Sunset Company 5.45 million yuan for the above loss, therefore the outstanding loss of Deli Company was 50,000 yuan. So far, Wenzhou Company, the Defendant had repaid Deli Company the loss of clean-up cost of 37,500 yuan (50,000 yuan * 75%) in the liability proportion of 75% determined by the effective judgment and repaid Dalian PICC, the Plaintiff loss of clean-up cost of 4,087,500 yuan (5.45 million yuan * 75%). With respect to the clean-up cost claimed by other parties caused by the leakage of diesel in the involved accident, although Chenyang Company, Shengmin Company and Hongxing Company had sent the collect or list of clean-up cost occurred by the involved accident to the two Plaintiffs, the two Plaintiffs did not pay actually, and above related clean-up companies did not bring an arbitration or lawsuit to two Plaintiffs on this clean-up cost, there were no effective Arbitral Award, Judgement or Mediation Document to support, therefore the court cannot confirmed. Related parties shall consult about this or claim the right according to the proportion of collision liability of ship after the clean-up cost be paid actually or determined by effective legal documents. So far, Wenzhou Company, the Defendant had repaid Deli Company, the Plaintiff 811,321.76 yuan for the loss for detention, 154,351.44 yuan for the loss of

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maintenance cost (crew wages), 37,500 yuan for the loss of clean-up cost in the liability proportion determined by the effective judgment, the total loss above mentioned was 1,003,173.20 yuan. In addition, Wenzhou Company, the Defendant shall repay Deli Company, the Plaintiff 587,049.56 yuan for the loss of repairing cost and others, 67,878.75 yuan for the loss of goods shipborne in the liability proportion determined by the effective judgment, the total loss above mentioned was 654,928.31 yuan. Wenzhou Company, the Defendant shall repay Dalian PICC, the Plaintiff 3,314,230.50 yuan for the loss of repairing cost and others, 610,908.75 yuan for the loss of goods shipborne, 105,000 yuan for the loss of rescue and salvage cost, 4,087,500 yuan for the loss of clean-up cost in the liability proportion determined by the effective judgment, the total loss above mentioned was 8,117,639.25 yuan. III. Compensation liability of Hangzhou PICC the Third Party to the two Plaintiffs. In case the compensation liability to the Third Party by the insured of liability insurance was determined and the insured delayed in paying the compensation to the claimant, the Third Party had the right to claim directly to the insurer to the compensation it shall obtained. According to the contract, clause, expires and others of the insurance, Hangzhou PICC, the liability insurer of M.V. Zhengjiang Sea 156 shall compensate for the direct property loss or incurred cost of M.V. Haide Oil 9 in the involved accident, including the direct loss of the shipborne goods. As the owner and the insured of M.V. Zhengjiang Sea 156, Wenzhou Company had never applied for insurance claims for Hangzhou PICC after the accident until the court hearing of this accident, and it hadn’t bring an arbitration or lawsuit to Hangzhou PICC in the case of the expiry of the limitation of action, furthermore, it declared bankruptcy after the lawsuit, which constituted the situation of delaying in claiming the insurance compensation, therefore the two Plaintiffs had the right to directly claim the compensation by law for Hangzhou PICC, the Third Party according to the proportion of collision liability of ship. In addition, Wenzhou Company and Hangzhou PICC were liable to two Plaintiffs based on different legal relations. Therefore, if one party actually performs the obligation of compensation, the other party’s obligation of compensation is eliminated. Loss for detention of M. V. Haide Oil 9 was not the direct property loss caused by the accident, nor covered by the insurance of Hangzhou PICC, there was no evidence to prove that Hangzhou PICC guaranteed to assume the corresponding compensation liability to Deli Company for this, therefore Hangzhou PICC did not compensate for this; maintenance cost (crew wages) of this ship was occurred by Deli Company, the ship owner to maintain normal operation during the repairing period, the direct loss of property or cost caused by this accident of this ship itself was not covered by the insurance of Hangzhou PICC, therefore it shall not compensate for this. The loss of repairing fee, tank washing fee, towage fee, loading and unloading fee, ship inspection fee, paint fee, charterage, copper aluminum electrode charge, transmitter cost, pipe dredge cost, travel expenses were direct property loss as well as cost and loss occurred after the accident, which was covered by the insurance of Hangzhou PICC, therefore it shall compensate for this; the loss of diesel shipborne

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was direct loss of shipborne goods caused by this accident, which was which was covered by the insurance of Hangzhou PICC, therefore it shall compensate for this; the loss of rescue and salvage cost was related cost and loss occurred after the accident, which was which was covered by the insurance of Hangzhou PICC, therefore it shall compensate for this. And according to relevant clauses of corresponding hull insurance of PICC, loss of clean-up cost of M.V. Haide Oil 9 caused by involved accident was covered by Ship-owner security and liability insurance (oil pollution liability), but not covered by costal and river hull insurance (add 1/4 collision and touch liability) underwrote by Hangzhou PICC, and were exclusions of clauses of costal and river hull insurance, therefore it shall not compensate for this. Furthermore, the Letter of Guarantee issued by Hangzhou PICC on behalf of Wenzhou Company to Shanghai Maritime Safety Administration had stated that secured creditor was Shanghai Maritime Safety Administration and the type of creditor secured and the scope of guarantee was emergency response cost and clean-up cost that shall be paid to Shanghai Maritime Safety Administration by Wenzhou Company and determined by written agreement reached by Wenzhou Company and Shanghai Maritime Safety Administration and confirmed by Hangzhou PICC or the effective judgement, mediation. Both Deli Company and Dalian PICC were not creditors secured by this Letter of Guarantee, there were no evidence in this case to prove that Hangzhou PICC issued another effective guarantee to Deli Company or Dalian PICC on clean-up cost or that it guarantee to assume corresponding compensation liability, nor there any evidence to prove the existence of emergency response cost and clean-up cost that shall be paid to Shanghai Maritime Safety Administration that is in conformity with the cost determined by the written agreement, effective judgement or mediation stated in the Letter of Guarantee. Although Sunset Company was the protocol institution dispatched by maritime authority to clean up involved oil pollution, it was not the creditor secured by above Letter of Guarantee, and as the actual clean-up institution, it may request M.V. Haide oil 9 in accordance with the law to bear all the compensation liability for all clean-up cost involved in the case as the owner of the ship spilled the diesel. The appeals of the two Plaintiffs to request Hangzhou PICC, the Third Party to assume the joint ability for the loss of clean-up cost occurred by the diesel spilling of M.V. Haide Oil 9 according to the above Letter of Guarantee was lack of facts and legal basis, the court did not support. Furthermore, Dalian PICC and Hangzhou PICC were branches of PICC, the relationship among the three parties was the head office and the branch, as well branch and the branch. As the financial branch established and receive business license lawfully, Dalian PICC and Hangzhou PICC may act as litigants in civil proceedings, but neither of them, as the branches established lawfully by PICC, had legal person qualification, corresponding civil liability shall be borne by the PICC. The subject that enjoyed or assumed the right, obligation, duty between the two parties caused by the involved collision shall be PICC, established the branches by law. After Dalian PICC repaid Deli Company on the cost and loss caused by the involved accident according to the insurance contract, it required Hangzhou PICC,

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which belonged PICC to assume corresponding insurance liability, which was internal affair of PICC and shall be handled according to and Articles of association and regulations of company, but not the scope of the trial in the court and this case. Dalian PICC, the Plaintiff request Hangzhou PICC, the Third Party to assume the joint ability of compensation for the indemnity of hull insurance, indemnity of shipborne goods insurance, indemnity of rescue and salvage cost and indemnity of clean-up cost, which was lack of legal basics and the court did not support. In conclusion, according to Article 36 Paragraph 1 of the General Principles of the Civil Law of the People’s Republic of China, Article 6 of the Guaranty Law of the People’s Republic of China, Article 65 Paragraph 1 and Paragraph 2, Article 74 Paragraph 2 of the Insurance Law of the People’s Republic of China, Article 169 Paragraph 1 and Paragraph 2, Article 252 of the Maritime Code of the People’s Republic of China, Article 4 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Cases of Collision of Ships, Article 1, Article 3 Sub-paragraph 2 and Sub-paragraph 3, Article 10 Paragraph 1 and Paragraph 2, Article 16 Paragraph 6 and Paragraph 7 of the Provisions of the Supreme People’s Court on Compensation for Damages of Property in Collision and Touching Cases, Article 4 of the Provisions of the Supreme People’s Court on a Number of Issues Relating to the Settlement of Oil Pollution Damages, Article 48, Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, and Article 52 Sub-paragraph 6 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. shall compensate the Plaintiff Dalian Deli Shipping Co., Ltd. for the loss of detention, the loss of maintenance cost, and the loss of clean-up cost in a total sum of 1,003,173.20 yuan within ten days as of the effective day of this judgment. 2. The Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. shall compensate the Plaintiff Dalian Deli Shipping Co., Ltd. for the loss of repairing fee and others, and the loss of shipborne goods in a total sum 654,928.31 yuan within ten days as of the effective day of this judgment. 3. The Third Party PICC P&C Hangzhou Branch shall compensate the Plaintiff Dalian Deli Shipping Co., Ltd. for the loss determined by the second term above of 654,928.31 yuan within ten days as of the effective day of this judgment. 4. After the Plaintiff Dalian Deli Shipping Co., Ltd. obtains the loss for compensation determined by the second term above from the Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. or PICC P&C Hangzhou Branch, the corresponding creditor's right to the other party is eliminated.

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5. The Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. shall compensate PICC P&C Dalian Branch for the loss of repairing cost, the loss of shipborne goods, the loss of rescue and salvage cost and the loss of clean-up cost in a total sum of 8,117,639.25 yuan within ten days as of the effective day of this judgment. 6. The court did not support other claims of the Plaintiff Dalian Deli Shipping Co., Ltd. and PICC P&C Dalian Branch. If the Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. or PICC P&C Hangzhou Branch fails to fulfill its obligations within the time limit provided by this judgment, the interest shall be double paid for the period of delay in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 44,408 yuan (the part that claimed by Deli Company), the Plaintiff Dalian Deli Shipping Co., Ltd. shall bear 28,745 yuan, the Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. shall bear 5,904 yuan, and the Defendants Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. and PICC P&C Hangzhou Branch shall jointly bear 9,759 yuan. Court acceptance fee in amount of 68,623 yuan (the part that claimed by Dalian PICC) shall be borne by the Defendant Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. If dissatisfied with this judgment, the Plaintiffs Dalian Deli Shipping Co., Ltd. and PICC P&C Dalian Branch, and the Defendants Zhejiang Shipping Group Wenzhou Shipping Co., Ltd. and PICC P&C Hangzhou Branch shall, within fifteen days as of the service of this judgment, submit a Statement of Appeal to the court, with duplicates in the number of the opposing parties, so as to make an appeal before the Shanghai High People’s Court. Presiding Judge: ZHU Jie Acting Judge: DONG Xiaonan People’s Juror: Song Kai October 13, 2017 Clerk: PAN Cen

Guangzhou Maritime Court Civil Judgment Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2016) Yue 72 Min Chu No.721 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 275 and page 288 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff cargo owner and cargo insurer held entitled to recover from defendant carrier for water damage to cargo of wheat but defendant carrier held to be entitled to limit its liability by reference to the tonnage of the carrying vessel. Summary Plaintiff cargo owner and its cargo insurer filed suit against Defendant carrier alleging that a cargo of wheat was damaged by water during transport. Defendant carrier denied liability, alleging that the wheat was wet before loading. The Court of first instance held in favor of the plaintiffs because the defendant had not provided sufficient evidence that the wheat was wet before loading. However, the Court also held that Defendant carrier was entitled to limit its liability by reference to the tonnage of the carrying vessel.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_13

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Judgment The Plaintiff: Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. Domicile: Xinsha Industrial Park, Mayong Town, Dongguan, Guangdong. Legal representative: CUI Xinyu, chairman of the company. Agent ad litem: FENG Yiming, lawyer of Beijing Tianyuan Law Firm Shanghai Branch. Agent ad litem: SHENG Anyan, lawyer of Beijing Tianyuan Law Firm Shanghai Branch. The Plaintiff: China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center Domicile: No.400, 11-12 Building, Wujing Road, Shanghai. Legal representative: TANG Ruiping, general manager of the center. Agent ad litem: LI Huan, lawyer of Shanghai Huaxia Huihong Law Firm. The Defendant: Guangxi Qinzhou Xinmao Shipping Co., Ltd. Domicile: B-503, Golden Coast, Qinzhou, Guangxi Zhuang Autonomous Region. Legal representative: LIN Yufan, general manager of the company. Agent ad litem: HE Jingsong, lawyer of Guangxi Xige Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiffs, Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. (hereinafter referred to as Dongguan Company), China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center (hereinafter referred to as CPIC Operation Center), and the Defendant, Guangxi Qinzhou Xinmao Shipping Co., Ltd., after entertaining the case on July 14, 2016, the court applied general procedure and held a hearing in public. Agent ad litem of the Plaintiff Dongguan Company, FENG Yiming, agent ad litem of the Plaintiff CPIC Operation Center, LI Huan, agent ad litem of the Defendant, HE Jingsong, appeared in court to attend the hearing. Now the case has been concluded. The two Plaintiffs claimed to the court that: 1. the Defendant should compensate the Plaintiff Dongguan Company for the loss of goods of 2,959,608.83 yuan and the interest at bank loan interest rate announced by the People’s Bank of China as of July 14, 2016 until the date of the actual payment by the Defendant; 2. the Defendant should compensate the Plaintiff CPIC Operation Center for the loss of goods of 792,366.35 yuan; 3. the Defendant should bear all the litigation costs in this case. Facts and reasons: on July 14, 2015, the Defendant was commissioned by Dongguan Company to receive and carry 4,456.79 tons of bulk wheat to Dongguan, Guangdong, in M.V. XIN HUA SHENG. On July 28, 2015, M.V. XIN HUA SHENG arrived at Dongguan Suifeng Wharf. During the unloading process, Dongguan Company found that the goods were wet (wheat, mastic, stinky). After sorting, except the silo receiving 1,115.33 tons and the vehicle

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self-lifting 67.88 tons for the intact goods, Dongguan Company had to sell the wet wheat for the residual value. Although the residual value was recovered at 4,706,184 yuan, it still suffered huge losses. As the cargo insurer, the Plaintiff CPIC Operation Center paid insurance compensation of 792,366.35 yuan to Dongguan Company and obtained the corresponding subrogation right. The two Plaintiffs held that the Defendant, as the carrier, should properly transport and keep the goods transported and transport the goods safely to the destination. The Defendant should be liable for damages caused by the Defendant in violation of the aforementioned obligations. The Defendant argued that the goods involved in the loading port had water wetness, agglomeration, the carrier informed the consignor in time, the consignor stated that it was resolved by negotiation with the consignee, which had nothing to do with the carrier. The cargo damage did not happen within the carrier’s liability period, and the Plaintiffs had no right to require the carrier to bear the liability for compensation. There was a ship affiliation relationship in this case. XIAO Hongyin was the actual owner of the ship. Even if the carrier needed to bear the responsibility, XIAO Hongyin should bear the responsibility. The Defendant was not the responsible subject. The goods in this case were repeatedly insured, and CPIC Operation Center did not submit evidence to prove the proportion of insurance that should be apportioned. In addition, as the owner of the ship registration, the Defendant was entitled to the limitation of maritime liability for the damage caused by the case, and the court was required to make a ruling according to law in accordance with the 264,611.50 SDR. The parties submitted evidence in accordance with the law, and the parties involved in the organization conducted evidence exchange and cross-examination. The evidence of no objection to the parties should be confirmed by the court and supported in the volume. The court confirms the facts as follows: Firstly, the purchases and sales of goods involved On June 5, 2014, Dongguan Company concluded the Purchases and Sales Contract with COFCO Trading Co., Ltd. (hereinafter referred to as COFCO), stipulating that COFCO would sell about 70,000 tons of ordinary wheat produced in Jiangsu and Anhui in 2015 to Dongguan Company. Dongguan Company could request COFCO to send to the designated terminal of Dongguan by means of waterway transportation. The transportation cost should be born by Dongguan Company. COFCO was responsible for the loading of cargo, the connection of small boats and large ships, supervising the quality and guaranteeing the goods, safe delivery to the destination port. Both parties agreed on the price of goods, the payment method of goods and the transfer of ownership of goods. After receiving the wheat buying order from Dongguan Company, COFCO bought wheat from Yixing Xinzhuang Grain and Oil Management Office (hereinafter referred to as Xinzhuang Grain Office) and arranged for the cargo ship to transport wheat from the place of shipment to Dongguan, Guangdong. On November 17, 2015, COFCO issued two invoices to Dongguan Company, which recorded the payment of 11,444,957.24 yuan from Dongguan Company for the payment of 4,551.34 tons of wheat.

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Secondly, the loading and transportation of goods According to Purchases and Sales Contract between Dongguan Company and COFCO, COFCO was responsible for transporting the goods to Dongguan via the waterway. On July 10, 2015, Jingjiang Longsheng Cargo Handling Service Department (hereinafter referred to as Jingjiang Service Department), as Party A, concluded Waterway Agency Transportation Contract with the Defendant as Party B, stipulated that M.V. XIN HUA SHENG of the Defendant should carry 4,500 tons of wheat from Jingjiang to the Danshui River (later changed to Dongguan), the freight rate was 46 yuan per ton. Both parties agreed on other rights and obligations. The Defendant stamped “M.V. XIN HUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” on Waterway Agency Transportation Contract and had the signature of XIAO Hongyin. On July 15, 2015, the waterway cargo waybill recorded that the cargo was loaded on M.V. XIN HUA SHENG. The port of loading was Rugao Port, Nantong, Jiangsu. The port of destination was Dongguan, Guangdong. The shipper and consignee were both Dongguan Company. For the 4,546.79 tons of wheat, the carrier stamped “M.V. XIN HUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” For the specific case of cargo loading at the loading port, according to the interim report of Guangzhou Dingan Insurance Appraisal Co., Ltd. Guangzhou Branch commissioned by China Pacific Property Insurance Co., Ltd. Shanghai Branch: July 14–16, 2015, M.V. XIN HUA SHENG from barge in Nantong, Jiangsu (“WANJINFAN 2068”, “WANQUANJIAOHUO 0827”, “TONGLIAN 2168”, “HAILIAN 518”, “SUSIHONGHUO 1048” and “SUYANHUOHUO 91576”), The total number of bulk wheat loaded on the barge was 4,546.79 tons. The specific situation was that: on July 14, 2015, when the 885.44 tons of wheat of the first barge “WANJINFAN 2068” was loaded, the cargo was normal and the barge cargo was loaded in the front cabin of M.V. XIN HUA SHENG. When the 1,047.47 tons of wheat in the second barge “WANQUANJIAOHUO 0827” was transferred, M.V. XIN HUA SHENG chief mate found that the barge’s wheat was wet and agglomerated, then rejecting the barge’s wheat, “WANQUANHUO 0827” barged beside M.V. XIN HUA SHENG to stand by. The 1,461.65 tons of wheat of the third barge “TONGLIAN 2168” were normal and were loaded in the front and rear compartments. On July 15, when the wheat of the fourth barge “HAILIAN 518” was refuted, M.V. XIN HUA SHENG chief mate found that the barge’s wheat was wet and agglomerated again, then rejecting the wheat of the barge. After consultation, M.V. XIN HUA SHENG shipowner agreed to sort the wheat of the second and fourth barges to receive the unwatered wheat. Due to the shortage of cargo in M.V. XIN HUA SHENG after sorting. On July 16, Xinzhuang Grain Office dispatched 374.48 tons of wheat, the fifth barge “SUSIHONGHUO 1048”. The barge’s wheat was normal. When the 250-ton wheat of the sixth barge “SUYANHUO 91576” was retorted, M.V. XIN HUA SHENG found that the barge’s wheat was wet and agglomerated. According to the previous treatment, M. V. XIN HUA SHENG sorted the cargo. As M.V. XIN HUA SHENG loaded the cargo and exceeded the horizontal position of the hatch, the hatch cover of the front

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and rear cargo compartments was not completely covered, and the Defendant covered a tarpaulin on the hatch. On July 17, 2015, M.V. XIN HUA SHENG was loaded and headed for Dongguan. On July 20, when M.V. XIN HUA SHENG was driven to the north of Fujian Meizhou Bay, the speed was reduced at 0500 due to the wind, and M.V. XIN HUA SHENG captain was prepared to anchor the wind. At 1050 on the same day, M.V. XIN HUA SHENG broke down at the anchorage of Meizhou Bay. In the afternoon of July 22, the wind speed became smaller, and M.V. XIN HUA SHENG continued to sail to the destination at 1640. It arrived in Guangzhou on July 24, due to the lack of berths, the M.V. XIN HUA SHENG anchored at the anchorage and waited for the dock to unload. On August 4, M.V. XIN HUA SHENG was unloaded at the dock of Suifeng Flour Factory Terminal. The dock used the shore crane and grab to unload the front and rear cabins. When unloading about 1,100 tons of cargo, the unloading workers found that the wheat knotted in the front and rear cabins. Then they stopped unloading and notify Dongguan Company. After the damage happened, the Defendant sent a letter of intent to the consignee including Xinzhuang Grains Office by mail to ask them to take responsibility for the damage that happened at the loading port. However, the Defendant did not provide evidence that the loader promised to take responsibility. Thirdly, the situation of the damaged goods involved The goods were tallied by Dongguan Suifeng Food Co., Ltd., and M.V. XIN HUA SHENG unloading situation was that: the silo received 1,115.33 tons and the vehicle self-lifted 67.88 tons, totaling 1,183.21 tons, all of which were intact goods. The wet cargo was 3,361.56 tons, including 453.74 tons of trucks and 2,907.82 tons of boats. In order to avoid further expansion of wet cargo losses, Dongguan Company publicly issued bidding proposals to relevant units by way of bidding, and issued a letter of notification to the Defendant on August 27, 2015, informing them of the damaged wheat carried by M.V. XIN HUA SHENG was subject to bidding. The Defendant recognized that the letter of acceptance was received. Meanwhile, XIAO Hongyin endorsed in the letter of intent that “required to detain some of the goods to offset the operating loss fees that were receivable but not received by us, including all losses of freight, demurrage, and ship staff”. The damaged goods were finally won by Yonghao Cleaning Service Department of Luogang District, Guangzhou, with a tax price of 1,400 yuan per ton, and the total payment was 4,706,184 yuan. Fourthly, the insurance and claims of the goods involved Dongguan Company was insured as an insured to CPIC Operation Center. On April 1, 2015, CPIC Operation Center issued a cargo transportation insurance policy, covering 49,294.737 tons of wheat, and the insurance amount was 124,075,029 yuan, including the goods in this case. After the cargo damage accident was discovered, Dongguan Company notified the insurer to take out the insurance. On November 4, 2016, CPIC Operation Center paid insurance compensation in amount of 792,366.35 yuan to Dongguan Company and received the equity transfer letter issued by Dongguan Company.

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Fifthly, the situation in affiliation operation of ship On January 23, 2015, XIAO Hongyin purchased M.V. XIN HUA SHENG from Gao Qing. On the same day, XIAO Hongyin and the Defendant concluded a ship affiliation agreement, stipulated that M.V. XIN HUA SHENG should be affiliation to the Defendant. The Defendant was registered as the shipowner and the ship operator, but the actual owner of the ship was XIAO Hongyin and operated by himself, and he was responsible for his own profits and losses. The court holds that this case is the dispute over contract of carriage of goods by sea. In Waterway Agency Transportation Contract and the carrier of the waterway cargo waybill, the stamp of “M.V. XIN SHUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” was stamped. Although the Defendant and XIAO Hongyin concluded a ship affiliation agreement, XIAO Hongyin did not disclose the fact of the ship to the third party. The agreement is the internal relationship between XIAO Hongyin and the Defendant and is not binding to the third party. The Defendant, as the owner of the registered ship, should bear the responsibility of the carrier. The Defendant’s liability for damages in this case should be born by XIAO Hongyin, the actual owner of the ship, and the court should not accept the defense. The Defendant is the cargo carrier involved, Dongguan Company is the shipper and consignee recorded in the waterway cargo waybill, and CPIC Operation Center is the cargo insurer involved. After the goods arrived at the destination and the damage was found, Dongguan Company has the right to claim against the Defendant as the carrier. As the insurer of the goods involved, CPIC Operation Center, after making partial compensation to the insured, obtained the right of subrogation and had the right to claim against the Defendant as the responsible person within the scope of compensation. The Defendant claimed that the goods involved had water wetness and agglomeration at the time of loading. As the carrier, the Defendant had the right to refuse to load or invoice the damaged goods in the waterway cargo waybill, and also had the right to request the loader to damage the goods. The confirmation and responsibility for the liability should be taken as evidence that the carrier was not liable, but the Defendant continued to load the goods after taking the sorting measures at the loading site, and the goods were not effectively endorsed or confirmed by the loader. It should be deemed that the goods received after being sorted by the Defendant were in good condition. Although the Defendant repeatedly mentioned in the reminder letter issued to the loader that the goods had been damaged before loading, the shipper did not give confirmation. Therefore, according to the existing evidence, it was not possible to identify the fact that the goods were damaged at the port of loading before loading onto M.V. XIN HUA SHENG. Moreover, during the transportation of the goods, because M.V. XIN HUA SHENG loaded the cargo and exceeded the horizontal position of the hatch, the hatch cover of the front and rear cargo compartments was not completely covered, and the Defendant added a tarpaulin on the hatch, but the measure whether the requirements for cargo safety management were met, the Defendant did not provide valid evidence to confirm this, and the fact that the cargo was wet when unloading at the port of destination. In summary, the Defendant, as the carrier,

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cannot prove that the damage happened before the loading. According to Article 311 of the Contract Law of the People’s Republic of China, the Defendant should be liable for damages incurred during the period of carriage. After the damage happened, Dongguan Company handled the goods in an open bidding manner, effectively reducing the loss. The Defendant’s defense against Dongguan Company’s delay in handling the goods for the loss of losses should be based on a lack of factual basis, and it should not be accepted. The determination of the amount of loss of the goods involved. According to the invoice provided by Dongguan Company, Dongguan Company paid the amount of 4,551.34 tons of wheat for 11,444,957.24 yuan, and the unit price of the goods involved was 2,514.63 yuan per ton. Except the silo receiving 1,115.33 tons and the vehicle self-lifting 67.88 tons, the goods damaged by the goods were auctioned and auctioned, and the purchase price was 4,706,184 yuan. According to this, the loss of the goods involved was 3,751,975.18 yuan. As the insurer, CPIC Operation Center compensated Dongguan Company for 792,366.35 yuan. According to Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, the insurer pays insurance compensation to the insured. After that, within the scope of insurance compensation, the insured may exercise the right to claim compensation from a third party. CPIC Operation Center has the right to require the Defendant to compensate within the scope of 792,366.35 yuan. Dongguan Company did not receive compensation of 2,959,608.83 yuan and has the right to request compensation from the Defendant. Dongguan Company also requested the Defendant to bear the interest calculated from the date of the prosecution (July 14, 2016) to the date of actual payment and the interest rate calculated by the People’s Bank of China for the same period. The request is reasonable and should be supported. Regarding the responsibility for the Defendant. As registered owner of M.V. XIN HUA SHENG, the Defendant was entitled to the limitation of liability for maritime claims in accordance with Article 204 of the Maritime Code of the People’s Republic of China. There is no evidence in this case that the Defendant has the right to enjoy the limitation of liability for maritime claims as stipulated in Article 209 of the Maritime Code of the People’s Republic of China. The request for limitation of liability for maritime claims is in compliance with the law and is supported. M.V. XIN HUA SHENG has a total tonnage of 2,669, according to Article 210 of the Maritime Code of the People’s Republic of China and the Decision on the Maritime Compensation Limit for Ships and Coastal Transportation and Coastal Operation Ships of Less Than 300 Tonnage, the limitation of maritime liability for M.V. XIN HUA SHENG is 264,611.50 SDR, and the calculation formula is [167,000 + (2,669 − 500)  167]  2 = 264,611.50. According to Article 277 of the Maritime Code of the People’s Republic of China, according to the date of this judgment (January 3, 2017), 1 SDR is calculated for RMB 9.296270 yuan, and 264,611.50 SDR corresponds to RMB 2,459,899.95 yuan. Pulling the threads together, in accordance with Article 311 of the Contract Law of the People’s Republic of China, Article 204, Article 210 and Article 277 of the Maritime Code of the People’s Republic of China and Article 93 of the Special

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Maritime Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant, Guangxi Qinzhou Xinmao Shipping Co., Ltd., shall compensate the Plaintiff, Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd., for 2,959,608.83 yuan and interest (calculated from July 14, 2016 to the date of payment determined by this judgment, according to the same period loan interest rate of the People’s Bank of China); 2. The Defendant, Guangxi Qinzhou Xinmao Shipping Co., Ltd., shall compensate the Plaintiff, China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center, for 792,366.35 yuan; 3. The Defendant, Guangxi Qinzhou Xinmao Shipping Co., Ltd., shall enjoy the limitation of maritime liability, limited to 2,459,899.95 yuan, and the two Plaintiffs shall be compensated in proportion from the limitation fund. The above obligation to pay money shall be fulfilled within 10 days after the judgment comes into effect. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with the provisions of Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 42,201 yuan, Dongguan Company shall bear 10,362 yuan, CPIC Operation Center shall bear 4,103 yuan, and the Defendant shall bear 27,736 yuan. Court acceptance fee was paid in advance by Dongguan Company for 36,816 yuan, and CPIC Operation Center advanced 11,724 yuan. The Defendant should pay court acceptance fee of 20,115 yuan to Dongguan Company and 7,621 yuan to CPIC Operation Center. Dongguan Company’s advance payment of the case in amount of 6,339 yuan, shall be returned. If not satisfied with this judgment, the parties can submit within 15 days from the date of service of the judgment, together with copies of petition according to the number of the other parties, appeal to the Guangdong High People’s Court. Presiding Judge: XIONG Shaohui Judge: ZHANG Kexiong Acting Judge: YANG Yaxiao January 3, 2017 Clerk: QIU Lihong

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Guangdong High People’s Court Civil Judgment Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2017) Yue Min Zhong No.583 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 267 and page 288 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming the first instance Court’s decision holding plaintiff cargo owner and cargo insurer to be entitled to recover from defendant carrier for water damage to cargo of wheat but defendant carrier to be entitled to limit its liability by reference to the tonnage of the carrying vessel. Summary Plaintiff cargo owner and its cargo insurer filed suit against Defendant carrier alleging that a cargo of wheat was damaged by water during transport. Defendant carrier denied liability, alleging that the wheat was wet before loading. The Court of first instance held in favor of the plaintiffs because the defendant had not provided sufficient evidence that the wheat was wet before loading. However, the Court also held that Defendant carrier was entitled to limit its liability by reference to the tonnage of the carrying vessel. Defendant appealed. The appeal Court affirmed the judgment of the Court of first instance, by holding that neither party could provide sufficient evidence to support its claim for greater compensation from the other.

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Judgment The Appellant (the Defendant of first instance): Guangxi Qinzhou Xinmao Shipping Co., Ltd. Domicile: B-503, Golden Coast, Qinzhou, Guangxi Zhuang Autonomous Region. Legal representative: LIN Yufan, general manager of the company. Agent ad litem: HE Jingsong, lawyer of Guangxi Xige Law Firm. The Respondent (the Plaintiff of first instance): Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. Domicile: Xinsha Industrial Park, Mayong Town, Dongguan, Guangdong. Legal representative: CUI Xinyu, chairman of the company. Agent ad litem: FENG Yiming, lawyer of Beijing Tianyuan Law Firm Shanghai Branch. Agent ad litem: SHENG Anyan, lawyer of Beijing Tianyuan Law Firm Shanghai Branch. The Respondent (the Plaintiff of first instance): China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center Domicile: No. 400, 11-12 Building, Wujing Road, Shanghai. Legal representative: TANG Ruiping, general manager of the center. Agent ad litem: LI Huan, lawyer of Shanghai Huaxia Huihong Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant, Guangxi Qinzhou Xinmao Shipping Co., Ltd. (hereinafter referred to as Xinmao Shipping), and the Respondents, Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. (hereinafter referred to as Yihai Jiali), and China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center (hereinafter referred to as CPIC), the Appellant disagreed with the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.721 Civil Judgment and appealed to the court. After entertaining the case on March 22, 2017, the court formed a collegiate panel to try the case. Agent ad litem of the Appellant Xinmao Shipping, HE Jingsong, agent ad litem of the Respondent Yihai Jiali, FENG Yiming, agent ad litem of the Respondent CPIC, LI Huan, appeared in court to attend the hearing. Now the case has been concluded. Xinmao Shipping appealed that: revoke the judgment of first instance, change to reject the claims of Yihai Jiali and CPIC, and litigation costs should be born by Yihai Jiali and CPIC. Facts and reasons: firstly, the court of first instance held that there was a contractual relationship between Xinmao Shipping and Yihai Jiali, which was wrong. Xinmao Shipping was entrusted by COFCO Trading Co., Ltd. (hereinafter referred to as COFCO) to transport the goods involved. Yihai Jiali and Xinmao Shipping did not reach an agreement to convey the goods, so there was no transportation contract between Yihai Jiali and Xinmao Shipping. Secondly, the court of first instance confirmed that the goods were intact at the loading port, which

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was inconsistent with the facts. The goods involved in the loading port was transferred from the river ship by floating cranes at the anchorage of the loading port. It had been stored on the river ship for more than 1 month before being transferred to M.V. XIN HUA SHENG. The goods were damaged by moisture before loading. During the loading process, M.V. XIN HUA SHENG chief mate sorted the wet agglomerated goods, but for the wet goods that could not be discerned visually, they would continue to mold and deteriorate during the shipping process. Thirdly, the court of first instance held that Xinmao Shipping put rain cover on the hatch cover, which was inconsistent with the requirements of safe management of goods, and was inconsistent with the fact. After the hatch cover of M.V. XIN HUA SHENG was closed, the surface of the hatch cover was covered with two layers of rainproof cloth and fixed with a rope net. The cargo photos at the unloading port could prove that there was no water in the hatch during the transportation process. The color photos of the damaged cargo submitted by Yihai Jiali also showed that the cargo compartment bulkhead of M.V. XIN HUA SHENG was dry and there were no traces of water stains, which also proved that there was no water in the cargo compartment. If the water cover of the M.V. XIN HUA SHENG hatch entered during transportation, the unloading worker would find the water inflow as soon as the hatch was opened, but the unloading worker did not find that the upper wheat that was in contact with the hatch was wet, which proved that during the transportation of M.V. XIN HUA SHENG, there was no water inflow in the cargo hold. According to the CPIC assessment report, the damaged cargo was agglomerated moldy wheat mixed in the wheat pile, not concentrated together, and mainly located on both sides of the bulkhead and in the middle of the cabin, indicating that the moldy wheat was not caused by water in the cargo compartment. The mildew of wheat inside the cabin was entirely due to the high moisture content of wheat itself. Fourthly, Yihai Jiali and CPIC claimed that the goods were subjected to sea water wetness, but Xinmao Shipping had objection. Even if the cargo was subjected to seawater wetness, it could not be proved that the wetness happened during the transportation of M.V. XIN HUA SHENG. Xinmao Shipping disputed the conclusion that the estimator unilaterally sampled and self-examined the wheat water wetness and seawater. Because the cargo involved was transferred from the river ship to the sea ship at the anchorage of Rugao Port, Jiangsu, and the river ship had been parked at the anchorage of Rugao Port for more than one month, the Rugao Port was located at the junction of sea water and fresh water, and the cargo was damaged on the river ship, which would be related to sea water. Even if the cargo was subjected to seawater wetness, it could not be proved that the wetness happened during the transportation of M.V. XIN HUA SHENG. Fifthly, CPIC did not prove that it actually paid insurance compensation to Yihai Jiali, and had no right to exercise the right of insurance subrogation to Xinmao Shipping. There was double insurance for the goods involved, CPIC did not prove the proportion of insurance that it should share, and Xinmao Shipping did not agree with CPIC’s scope of exercising insurance subrogation rights. Evidence submitted by CPIC, 2 Bank of Communications electronic receipt, was not checked by the original, and it was impossible to prove that it paid insurance compensation of 792,366.35 yuan to

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Yihai Jiali. In addition to the insurance insured by CPIC, the cargo insurance involved also insured cargo insurance in PICC. CPIC did not prove the proportion of insurance it should share. Therefore, Xinmao Shipping had objection whether CPIC should pay 792,366.35 yuan to Yihai Jiali and the scope of CPIC’s exercise of the right of insurance subrogation. The Respondent Yihai Jiali argued that, the facts confirmed by the court of first instance were clear, and the application of law was correct. Facts and reasons: firstly, regarding the main body of the contract, Xinmao Shipping issued the consignment note and affixed the ship’s seal, so Xinmao Shipping was liable for compensation under the transportation contract involved. Secondly, regarding whether the cargo involved was damaged before shipment, the court of first instance made reasonable assumptions based on the assessment report and the evidence of the parties. Xinmao Shipping held that the cargo involved had been floating on the sea for more than a month before shipment, which was inconsistent with the fact. Thirdly, regarding insurance claims, Yihai Jiali and CPIC had a legal insurance relationship. Yihai Jiali claimed and received compensation from CPIC according to law. The facts were clear. CPIC argued that, it agreed with the opinions of Yihai Jiali. Facts and reasons: after the accident, CPIC commissioned a third-party independent inspector to conduct a detailed investigation and investigation of the accident situation, and tried its best to investigate the accident situation. According to the results of the insurance contract and the survey of the valuer, CPIC paid insurance compensation to Yihai Jiali. When M.V. XIN HUA SHENG was loading cargo, the hatch cover was not sealed, only the rain cover was added to the hatch cover, which could not play a waterproof role. And during M.V. XIN HUA SHENG navigation, once encountered special weather at sea and anchored to avoid the wind, only the act of covering with a rain cloth could not prevent such risks. Yihai Jiali and CPIC claimed to the court of first instance that: 1. Xinmao Shipping should compensate Yihai Jiali for the loss of goods of 2,959,608.83 yuan and the interest at bank loan interest rate announced by the People’s Bank of China as of July 14, 2016 until the date of the actual payment by Xinmao Shipping; 2. Xinmao Shipping should compensate CPIC for the loss of goods of 792,366.35 yuan; 3. Xinmao Shipping should bear all the litigation costs in this case. Facts and reasons: on July 14, 2015, Xinmao Shipping was commissioned by Yihai Jiali to receive and carry 4,456.79 tons of bulk wheat to Dongguan, Guangdong, in M.V. XIN HUA SHENG. On July 28, 2015, M.V. XIN HUA SHENG arrived at Dongguan Suifeng Wharf. During the unloading process, Yihai Jiali found that the goods were wet (wheat, mastic, stinky). After sorting, except the silo receiving 1,115.33 tons and the vehicle self-lifting 67.88 tons for the intact goods, Yihai Jiali had to sell the wet wheat for the residual value. Although the residual value was recovered at 4,706,184 yuan, it still suffered huge losses. As the cargo insurer, CPIC paid insurance compensation of 792,366.35 yuan to Yihai Jiali and obtained the corresponding subrogation right. Yihai Jiali and CPIC held that Xinmao Shipping, as the carrier, should properly transport and keep the goods transported and transport the goods safely to the destination. Xinmao Shipping

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should be liable for damages caused by Xinmao Shipping in violation of the aforementioned obligations. Xinmao Shipping argued in first instance that the goods involved in the loading port had water wetness, agglomeration, the carrier informed the consignor in time, the consignor stated that it was resolved by negotiation with the consignee, which had nothing to do with the carrier. The cargo damage did not happen within the carrier’s liability period, and Yihai Jiali and CPIC had no right to require the carrier to bear the liability for compensation. There was a ship affiliation relationship in this case. XIAO Hongyin was the actual owner of the ship. Even if the carrier needed to bear the responsibility, XIAO Hongyin should bear the responsibility. Xinmao Shipping was not the responsible subject. The goods in this case were repeatedly insured, and CPIC did not submit evidence to prove the proportion of insurance that should be apportioned. In addition, as the owner of the ship registration, Xinmao Shipping was entitled to the limitation of maritime liability for the damage caused by the case, and the court was required to make a ruling according to law in accordance with the 264,611.50 SDR. The court of first instance confirmed the facts as follows: Firstly, the purchases and sales of goods involved On June 5, 2014, Yihai Jiali concluded the Purchases and Sales Contract with COFCO, stipulating that COFCO would sell about 70,000 tons of ordinary wheat produced in Jiangsu and Anhui in 2015 to Yihai Jiali. Yihai Jiali could request COFCO to send to the designated terminal of Dongguan by means of waterway transportation. The transportation cost should be born by Yihai Jiali. COFCO was responsible for the loading of cargo, the connection of small boats and large ships, supervising the quality and guaranteeing the goods, safe delivery to the destination port. Both parties agreed on the price of goods, the payment method of goods and the transfer of ownership of goods. After receiving the wheat buying order from Yihai Jiali, COFCO bought wheat from Yixing Xinzhuang Grain and Oil Management Office (hereinafter referred to as Xinzhuang Grain Office) and arranged for the cargo ship to transport wheat from the place of shipment to Dongguan, Guangdong. On November 17, 2015, COFCO issued two invoices to Yihai Jiali, which recorded the payment of 11,444,957.24 yuan from Yihai Jiali for the payment of 4,551.34 tons of wheat. Secondly, the loading and transportation of goods According to Purchases and Sales Contract between Yihai Jiali and COFCO, COFCO was responsible for transporting the goods to Dongguan via the waterway. On July 10, 2015, Jingjiang Longsheng Cargo Handling Service Department (hereinafter referred to as Jingjiang Service Department), as Party A, concluded the Waterway Agency Transportation Contract with Xinmao Shipping as Party B, stipulated that M.V. XIN HUA SHENG of Xinmao Shipping should carry 4,500 tons of wheat from Jingjiang to the Danshui River (later changed to Dongguan), the freight rate was 46 yuan per ton. Both parties agreed on other rights and obligations. Xinmao Shipping stamped “M.V. XIN HUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” on Waterway Agency Transportation Contract and had the signature of XIAO Hongyin. On July 15, 2015, the waterway

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cargo waybill recorded that the cargo was loaded on M.V. XIN HUA SHENG. The port of loading was Rugao Port, Nantong, Jiangsu. The port of destination was Dongguan, Guangdong. The shipper and consignee were both Yihai Jiali. For the 4,546.79 tons of wheat, the carrier stamped “M.V. XIN HUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” For the specific case of cargo loading at the loading port, according to the interim report of Guangzhou Dingan Insurance Appraisal Co., Ltd. Guangzhou Branch commissioned by China Pacific Property Insurance Co., Ltd. Shanghai Branch: July 14–16, 2015, M.V. XIN HUA SHENG from barge in Nantong, Jiangsu (“WANJINFAN 2068”, “WANQUANJIAOHUO 0827”, “TONGLIAN 2168”, “HAILIAN 518”, “SUSIHONGHUO 1048” and “SUYANHUOHUO 91576”), The total number of bulk wheat loaded on the barge was 4,546.79 tons. The specific situation was that: on July 14, 2015, when the 885.44 tons of wheat of the first barge “WANJINFAN 2068” was loaded, the cargo was normal and the barge cargo was loaded in the front cabin of M.V. XIN HUA SHENG. When the 1,047.47 tons of wheat in the second barge “WANQUANJIAOHUO 0827” was transferred, M.V. XIN HUA SHENG chief mate found that the barge’s wheat was wet and agglomerated, then rejecting the barge’s wheat, “WANQUANHUO 0827” barged beside M.V. XIN HUA SHENG to stand by. The 1,461.65 tons of wheat of the third barge “TONGLIAN 2168” were normal and were loaded in the front and rear compartments. On July 15, when the wheat of the fourth barge “HAILIAN 518” was refuted, M.V. XIN HUA SHENG chief mate found that the barge’s wheat was wet and agglomerated again, then rejecting the wheat of the barge. After consultation, M.V. XIN HUA SHENG shipowner agreed to sort the wheat of the second and fourth barges to receive the unwatered wheat. Due to the shortage of cargo in M.V. XIN HUA SHENG after sorting. On July 16, Xinzhuang Grain Office dispatched 374.48 tons of wheat, the fifth barge “SUSIHONGHUO 1048”. The barge’s wheat was normal. When the 250-ton wheat of the sixth barge “SUYANHUO 91576” was retorted, M.V. XIN HUA SHENG found that the barge’s wheat was wet and agglomerated. According to the previous treatment, M. V. XIN HUA SHENG sorted the cargo. As M.V. XIN HUA SHENG loaded the cargo and exceeded the horizontal position of the hatch, the hatch cover of the front and rear cargo compartments was not completely covered, and Xinmao Shipping covered a tarpaulin on the hatch. On July 17, 2015, M.V. XIN HUA SHENG was loaded and headed for Dongguan. On July 20, when M.V. XIN HUA SHENG was driven to the north of Fujian Meizhou Bay, the speed was reduced at 0500 due to the wind, and M.V. XIN HUA SHENG captain was prepared to anchor the wind. At 1050 on the same day, M.V. XIN HUA SHENG broke down at the anchorage of Meizhou Bay. In the afternoon of July 22, the wind speed became smaller, and M.V. XIN HUA SHENG continued to sail to the destination at 1640. It arrived in Guangzhou on July 24, due to the lack of berths, the M.V. XIN HUA SHENG anchored at the anchorage and waited for the dock to unload. On August 4, M.V. XIN HUA SHENG was unloaded at the dock of Suifeng Flour Factory Terminal. The dock used the shore crane and grab to unload the front and rear cabins. When unloading about

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1,100 tons of cargo, the unloading workers found that the wheat knotted in the front and rear cabins. Then they stopped unloading and notify Yihai Jiali. After the damage happened, Xinmao Shipping sent a letter of intent to the consignee including Xinzhuang Grains Office by mail to ask them to take responsibility for the damage that happened at the loading port. However, Xinmao Shipping did not provide evidence that the loader promised to take responsibility. Thirdly, the situation of the damaged goods involved The goods were tallied by Dongguan Suifeng Food Co., Ltd., and M.V. XIN HUA SHENG unloading situation was that: the silo received 1,115.33 tons and the vehicle self-lifted 67.88 tons, totaling 1,183.21 tons, all of which were intact goods. The wet cargo was 3,361.56 tons, including 453.74 tons of trucks and 2,907.82 tons of boats. In order to avoid further expansion of wet cargo losses, Yihai Jiali publicly issued bidding proposals to relevant units by way of bidding, and issued a letter of notification to Xinmao Shipping on August 27, 2015, informing them of the damaged wheat carried by M.V. XIN HUA SHENG was subject to bidding. Xinmao Shipping recognized that the letter of acceptance was received. Meanwhile, XIAO Hongyin endorsed in the letter of intent that “required to detain some of the goods to offset the operating loss fees that were receivable but not received by us, including all losses of freight, demurrage, and ship staff”. The damaged goods were finally won by Yonghao Cleaning Service Department of Luogang District, Guangzhou, with a tax price of 1,400 yuan per ton, and the total payment was 4,706,184 yuan. Fourthly, the insurance and claims of the goods involved Yihai Jiali was insured as an insured to CPIC. On April 1, 2015, CPIC issued a cargo transportation insurance policy, covering 49,294.737 tons of wheat, and the insurance amount was 124,075,029 yuan, including the goods in this case. After the cargo damage accident was discovered, Yihai Jiali notified the insurer to take out the insurance. On November 4, 2016, CPIC paid insurance compensation in amount of 792,366.35 yuan to Yihai Jiali and received the equity transfer letter issued by Yihai Jiali. Fifthly, the situation in affiliation operation of ship On January 23, 2015, XIAO Hongyin purchased M.V. XIN HUA SHENG from Gao Qing. On the same day, XIAO Hongyin and Xinmao Shipping concluded a ship affiliation agreement, stipulated that M.V. XIN HUA SHENG should be affiliation to Xinmao Shipping. Xinmao Shipping was registered as the shipowner and the ship operator, but the actual owner of the ship was XIAO Hongyin and operated by himself, and he was responsible for his own profits and losses. The court of first instance held that this case was the dispute over contract of carriage of goods by sea. In Waterway Agency Transportation Contract and the carrier of the waterway cargo waybill, the stamp of “M.V. XIN SHUA SHENG of Guangxi Qinzhou Xinmao Shipping Co., Ltd.” was stamped. Although Xinmao Shipping and XIAO Hongyin concluded a ship affiliation agreement, XIAO Hongyin did not disclose the fact of the ship to the third party. The agreement was the internal relationship between XIAO Hongyin and Xinmao Shipping and was not binding to the third party. Xinmao Shipping, as the owner of the registered ship,

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should bear the responsibility of the carrier. Xinmao Shipping’s liability for damages in this case should be born by XIAO Hongyin, the actual owner of the ship, and the court of first instance should not accept the defense. Xinmao Shipping was the cargo carrier involved, Yihai Jiali was the shipper and consignee recorded in the waterway cargo waybill, and CPIC was the cargo insurer involved. After the goods arrived at the destination and the damage was found, Yihai Jiali had the right to claim against Xinmao Shipping as the carrier. As the insurer of the goods involved, CPIC, after making partial compensation to the insured, obtained the right of subrogation and had the right to claim against Xinmao Shipping as the responsible person within the scope of compensation. Xinmao Shipping claimed that the goods involved had water wetness and agglomeration at the time of loading. As the carrier, Xinmao Shipping had the right to refuse to load or invoice the damaged goods in the waterway cargo waybill, and also had the right to request the loader to damage the goods. The confirmation and responsibility for the liability should be taken as evidence that the carrier was not liable, but Xinmao Shipping continued to load the goods after taking the sorting measures at the loading site, and the goods were not effectively endorsed or confirmed by the loader. It should be deemed that the goods received after being sorted by Xinmao Shipping were in good condition. Although Xinmao Shipping repeatedly mentioned in the reminder letter issued to the loader that the goods had been damaged before loading, the shipper did not give confirmation. Therefore, according to the existing evidence, it was not possible to identify the fact that the goods were damaged at the port of loading before loading onto M.V. XIN HUA SHENG. Moreover, during the transportation of the goods, because M.V. XIN HUA SHENG loaded the cargo and exceeded the horizontal position of the hatch, the hatch cover of the front and rear cargo compartments was not completely covered, and Xinmao Shipping added a tarpaulin on the hatch, but the measure whether the requirements for cargo safety management were met, Xinmao Shipping did not provide valid evidence to confirm this, and the fact that the cargo was wet when unloading at the port of destination. In summary, Xinmao Shipping, as the carrier, could not prove that the damage happened before the loading. According to Article 311 of Contract Law of the People’s Republic of China, Xinmao Shipping should be liable for damages incurred during the period of carriage. After the damage happened, Yihai Jiali handled the goods in an open bidding manner, effectively reducing the loss. Xinmao Shipping’s defense against Yihai Jiali’s delay in handling the goods for the loss of losses should be based on a lack of factual basis, and it should not be accepted. The determination of the amount of loss of the goods involved. According to the invoice provided by Yihai Jiali, Yihai Jiali paid the amount of 4,551.34 tons of wheat for 11,444,957.24 yuan, and the unit price of the goods involved was 2,514.63 yuan per ton. Except the silo receiving 1,115.33 tons and the vehicle self-lifting 67.88 tons, the goods damaged by the goods were auctioned and auctioned, and the purchase price was 4,706,184 yuan. According to this, the loss of the goods involved was 3,751,975.18 yuan. As the insurer, CPIC compensated Yihai Jiali for 792,366.35 yuan. According to Article 93 of the Special Maritime

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Procedure Law of the People’s Republic of China, the insurer paid insurance compensation to the insured. After that, within the scope of insurance compensation, the insured could exercise the right to claim compensation from a third party. CPIC had the right to require Xinmao Shipping to compensate within the scope of 792,366.35 yuan. Yihai Jiali did not receive compensation of 2,959,608.83 yuan and had the right to request compensation from Xinmao Shipping. Yihai Jiali also requested Xinmao Shipping to bear the interest calculated from the date of the prosecution (July 14, 2016) to the date of actual payment and the interest rate calculated by the People’s Bank of China for the same period. The request was reasonable and should be supported. Regarding the responsibility for Xinmao Shipping. As registered owner of M.V. XIN HUA SHENG, Xinmao Shipping was entitled to the limitation of liability for maritime claims in accordance with Article 204 of the Maritime Code of the People’s Republic of China. There was no evidence in this case that Xinmao Shipping had the right to enjoy the limitation of liability for maritime claims as stipulated in Article 209 of the Maritime Code of the People’s Republic of China. The request for limitation of liability for maritime claims was in compliance with the law and was supported. M.V. XIN HUA SHENG had a total tonnage of 2,669, according to Article 210 of the Maritime Code of the People’s Republic of China and the Decision on the Maritime Compensation Limit for Ships and Coastal Transportation and Coastal Operation Ships of Less Than 300 Tonnage, the limitation of maritime liability for M.V. XIN HUA SHENG was 264,611.50 SDR, and the calculation formula was [167,000 + (2,669 − 500)  167]  2 = 264,611.50. According to Article 277 of the Maritime Code of the People’s Republic of China, according to the date of this judgment (January 3, 2017), 1 SDR was calculated for RMB9.296270 yuan, and 264,611.50 SDR corresponded to RMB2,459,899.95 yuan. Pulling the thread together, in accordance with Article 311 of the Contract Law of the People’s Republic of China, Article 204, Article 210 and Article 277 of the Maritime Code of the People’s Republic of China and Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, the judgment was as follows: 1. Xinmao Shipping should compensate Yihai Jiali for 2,959,608.83 yuan and interest (calculated from July 14, 2016 to the date of payment determined by this judgment, according to the same period of the People’s Bank of China loan interest rate); 2. Xinmao Shipping should compensate CPIC for 792,366.35 yuan; 3. Xinmao Shipping should enjoy the limitation of maritime liability, limited to 2,459,899.95 yuan, and Yihai Jiali and CPIC should be compensated according to the proportion of claims. The above obligation to pay money should be fulfilled within 10 days after the judgment came into effect. Court acceptance fee of first instance in amount of 42,201 yuan, Yihai Jiali should bear 10,362 yuan, CPIC should bear 4,103 yuan, and Xinmao Shipping should bear 27,736 yuan. Among the facts confirmed by the court of first instance, Xinmao Shipping had objection to the facts that whether there was a transportation relationship with Yihai Jiali, whether the goods involved were damaged at the loading port, the reason for the damage, and whether CPIC paid insurance compensation to Yihai Jiali. The

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parties had no objection to other facts found out by the court of first instance, so the court confirms the facts without dispute. In second instance, CPIC submitted an original copy of the remittance receipt that its staff retrieved from Bank of Communications to the court, which was stamped with a black “Bank of Communications Shanghai Branch No.1 Accounting Business Seal”, to prove that it paid 792,366.35 yuan insurance compensation to Yihai Jiali. Xinmao Shipping stated that the bank receipts issued by the bank counter were all affixed with a bank business stamp on the spot. The stamp on the bank receipt was a black printed stamp, which was inconsistent with the facts and could not prove that CPIC paid the insurance compensation of 792,366.35 yuan to Yihai Jiali. Therefore, there were still objection to the scope of CPIC’s exercise of the right of insurance subrogation. The court holds that, the bank remittance receipt is consistent with the evidence “Communication Bank electronic remittance” submitted by CPIC during the first instance. Combined with the fact that Yihai Jiali recognized that CPIC paid 792,366.35 yuan in insurance compensation to it, the court accepted the authenticity of the Bank of Communications remittance and the facts to be proved, namely the court confirms the fact found out by the court of first instance that on November 4, 2016, CPIC paid Yihai Jiali an insurance compensation of 792,366.35 yuan. The court also finds out that, the waterway cargo waybill involved indicated that “this waybill has the validity of the contract after being concluded by the contracting parties. The rights, obligations and limits of responsibility between the carrier and the shipper and consignee are in accordance with Waterway Freight Transport Rules and related regulations for transportation and miscellaneous expenses”. The page 2 of Midterm Report issued by Dingan Insurance Appraisal recorded the “participants” that Mr. Xu Siwen of Yihai Jiali, etc., Mr. Xiao of M.V. XIN HUA SHENG (the report was incorrectly written as M.V. XIN HUA SHUN), etc., Yan Guilin of Shanghai Ejoy Insurance Surveyors and Adjusters Co., Ltd. Guangzhou Branch, etc., shipowner of “WANQUANJIAOHUO 0827”, Guangzhou Haijiang Appraisal Co., Ltd. and Dingan Insurance Appraisal Company. The court holds that, Yihai Jiali and CPIC claimed against the carrier Xinmao Shipping to bear the compensation liability on the ground that the goods were damaged during the coastal transportation. This case is the dispute over contract of carriage of goods by sea. According to the opinions of the parties in second instance, there are three issues in this case: the confirmation of shipper in the contract of carriage relationship involved, whether the loss of goods happened during the carrier’s liability period, and whether CPIC has right to fulfill subrogation. Firstly, the confirmation of shipper in the contract of carriage relationship involved. Xinmao Shipping appealed that it was accepted by COFCO to transport the goods involved. There was no transportation contract between Yihai Jiali and Xinmao Shipping. After investigation, Waterway Freight Waybill involved was stamped with M.V. XIN HUA SHENG ship seal of Xinmao Shipping. Both the shipper and the consignee were identified as Yihai Jiali. Accordingly, when Xinmao

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Shipping received the goods, it recognized Yihai Jiali as the shipper. The waterway cargo waybill involved indicated that “this waybill has the validity of the contract after being concluded by the contracting parties. The rights, obligations and limits of responsibility between the carrier and the shipper and consignee are in accordance with Waterway Freight Transport Rules and related regulations for transportation and miscellaneous expenses”, namely the main body that signed on the waybill agreed to apply Domestic Waterway Cargo Transportation Rules to adjust the legal relationship between them, and the rules are binding on the main body that signed the waybill. Domestic Waterway Cargo Transportation Rules Article 58 stipulates that, the waybill is the proof of the contract of carriage and the receipt that the carrier received the goods. Yihai Jiali is the shipper recorded in the waybill involved. Xinmao Shipping appealed that Yihai Jiali was not the shipper in the carriage contract relationship, which is inconsistent with the waybill. The court of first instance confirmed that Yihai Jiali was the shipper of the transportation contract relationship involved, and it was determined that it had the right to exercise the right to claim cargo damages from the carrier Xinmao Shipping, which is correct, so the court should affirm it. Secondly, whether the loss of goods happened during the carrier’s liability period, and whether Xinmao Shipping should compensate Yihai Jiali and its insurance company for the loss of goods. Yihai Jiali and CPIC sued that the goods involved were intact at the loading port, and then the cargo damage happened during the sea transportation. Accordingly, Xinmao Shipping was required to bear the liability for compensation. Xinmao Shipping argued that the cargo damage did not happen during transportation, and such cargo damage already existed at the loading port, so it did not need to be liable for compensation. The court holds that, 1. according to the rules of distribution of burden of proof, Xinmao Shipping failed to fulfill its burden of proof to prove that the goods involved were damaged by water and moisture before loading. The court of first instance did not accept the statement, which is correct. According to the rules of distribution of burden of proof in the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 91 Paragraph 1, Xinmao Shipping claimed that the goods were damaged by water and moisture before loading, and should submit relevant evidence to prove. But judging from the evidence in this case, the waybill issued by Xinmao Shipping does not have any endorsement that the water and moisture conditions existed before the goods were loaded, nor did the shipper or consignor recognize the fact that the goods were damaged or loaded at the port of loading or evidence such as inspection certificates of port goods. According to the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90 Paragraph 2, before the judgment is made, if the parties fail to provide evidence or the evidence is insufficient to prove their facts, the party with the burden of proof shall bear the adverse consequences, Xinmao Shipping should bear the unfavorable consequences of failure to prove. The court of first instance, according to the rules of evidence, did not confirm that wheat sorted by Xinmao Shipping and shipped on

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board were damaged at the loading port, which is consistent with the rules of evidence, and the court should affirm it. 2. After the goods arrived at the destination port, Dingan Insurance Appraisal Company, commissioned by the shipper Yihai Jiali, went to M.V. XIN HUA SHENG for survey and sampling inspection. As a carrier, Xinmao Shipping has the right to participate in the cargo inspection process at the destination port, and has the right to negotiate with the loader, consignee, and insurance company to jointly take samples and conduct joint inspections on the causes of cargo damage. But in the case where Dingan Insurance Appraisal Company and the consignee both went to the on-site inspection and on-site sampling on the shipping vessel to which Xinmao Shipping owned, Xinmao Shipping still did not actively participate in the inspection process and did not require joint sampling or request. The appraisal company tested whether it had adopted a comprehensive and prudent management obligation. In the lawsuit, Xinmao Shipping again disputed the conclusion of Dingan Insurance Appraisal’s report. Due to the lack of jointly extracted samples and on-site records, it is no longer possible to re-examine the cause of cargo damage and the performance of the management obligation. In the case that Yihai Jiali submitted an assessment report and other evidence to initially prove that the cargo damage occurred during the shipping period of Xinmao Shipping Company, Xinmao Shipping failed to submit the corresponding rebuttal evidence. According to the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90 Paragraph 2, the resulting unfavorable consequences of proof cannot be born by Xinmao Shipping. 3. Xinmao Shipping failed to prove that it carried out the carrier’s cargo control obligations carefully during transportation, or there was a statutory carrier exemption. (1) According to the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the party has the responsibility to provide evidence for the claims, the carrier bears the burden of proof for its positive behavior in fulfilling its cargo control obligations. (2) According to the Contract Law Article 311, the carrier is liable for damages due to damage or loss of the goods in transit, but the carrier proves that the damage or loss of the goods is caused by force majeure, the natural nature or reasonable loss of the goods themselves, and the fault of the shipper or consignee, it should not bear liability for damages, if the carrier claims to be exempted from liability for damage to the goods in transit, the carrier is liable to prove that there is a legal exemption. According to the above two rules for the distribution of burden of proof, Xinmao Shipping Company failed to prove that the act of putting a rain cover on the hatch cover was equivalent to prudently and comprehensively fulfilling its cargo control obligations, and failed to prove the existence of a legal carrier in this case. So the court of first instance judged that carrier Xinmao Shipping should compensate Yihai Jiali for the loss of goods in carriage, which is correct. Thirdly, whether CPIC has right to fulfill subrogation. The Insurance Law of the People’s Republic of China Article 60 stipulates that, if an insurance accident is caused by the damage to the insurance subject by the third party, the insurer shall exercise the right of the insured to claim compensation from the insured within the compensation amount from the date of compensation to the insured. CPIC

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submitted the insurance contract between it and Yihai Jiali, and it paid the insurance payment of 792,366.35 yuan to Yihai Jiali on November 4, 2016. Therefore, CPIC has the right to fulfill against the person in charge of insurance accident Xinmao Shipping for right of subrogation. According to the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Maritime Insurance Disputes Article 14, the people’s court that accepts the case of the insurer exercising the right of subrogation and requesting compensation for compensation shall only try the legal relationship between the third person who caused the insurance accident and the insured, whether CPIC should pay insurance compensation to Yihai Jiali, and whether CPIC should share insurance compensation together with other insurance companies, are not within the scope of the case and will not affect the actual payment by CPIC in its payment within the scope of insurance compensation to subrogate to Xinmao Shipping. The parties did not dispute the amount of damaged goods and the amount of damages determined by the court of first instance, and the amount of maritime compensation liability limit that Xinmao Shipping was entitled to enjoy. So the court confirms them. Pulling the threads together, the facts confirmed by the court of first instance are clear, and the application of law is correct, so the judgment is appropriate, which should be affirmed. The reasons of appeal of Xinmao Shipping are insufficient, which should be dismissed. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB26,479 yuan, shall be born by the Appellant, Guangxi Qinzhou Xinmao Shipping Co., Ltd. Court acceptance fee of second instance 42,201 yuan was prepaid by Guangxi Qinzhou Xinmao Shipping Co., Ltd., and 15,722 yuan shall be returned by the court. The judgment is final. Presiding Judge: HUO Min Judge: GU Enzhen Judge: LI Mintao July 20, 2017 Judge Assistant: WANG Jing Clerk: TIAN Licheng

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The Supreme People’s Court of the People’s Republic of China Civil Ruling Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. et al. v. Guangxi Qinzhou Xinmao Shipping Co., Ltd. (2018) Zui Gao Fa Min Shen No.5830 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 267 and page 275 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming the lower courts’ decisions holding plaintiff cargo owner and cargo insurer to be entitled to recover from defendant carrier for water damage to cargo of wheat but defendant carrier to be entitled to limit its liability by reference to the tonnage of the carrying vessel. Summary Plaintiff cargo owner and its cargo insurer filed suit against Defendant carrier alleging that a cargo of wheat was damaged by water during transport. Defendant carrier denied liability, alleging that the wheat was wet before loading. The Court of first instance held in favor of the plaintiffs because the defendant had not provided sufficient evidence that the wheat was wet before loading. However, the Court also held that Defendant carrier was entitled to limit its liability by reference to the tonnage of the carrying vessel. Defendant appealed. The appeal Court affirmed the judgment of the Court of first instance, holding that neither party could provide sufficient evidence to support its claim for greater compensation from the other. Defendant made petition to the Supreme Court of China for retrial. The Supreme Court affirmed the judgments of the Court of first instance and Court of appeal, by holding that Defendant failed to render solid evidence to prove the lower courts’ decisions to be incorrect.

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Ruling The Claimant of Retrial (the Defendant of first instance, the Appellant of second instance): Guangxi Qinzhou Xinmao Shipping Co., Ltd. Domicile: B-503, Golden Coast, Qinzhou, Guangxi Zhuang Autonomous Region. Legal representative: LIN Yufan, general manager of the company. Agent ad litem: HE Jingsong, lawyer of Guangxi Xige Law Firm. The Respondent of Retrial (the Plaintiff of first instance, the Respondent of second instance): Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. Domicile: Xinshu Industrial Park, Mayong Town, Dongguan, Guangdong. Legal representative: CUI Xinyu, chairman of the company. The Respondent of first instance (the Plaintiff of first instance, the Respondent of second instance): China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center Domicile: No. 400, 11-12 Building, Wujing Road, Shanghai. Person in charge: TANG Ruiping, general manager of the center. With respect to the case arising from dispute over contract of carriage of goods by sea between the Claimant of Retrial, Guangxi Qinzhou Xinmao Shipping Co., Ltd. (hereinafter referred to as Xinmao Shipping), and the Respondents of retrial, Dongguan Yihai Jiali Cereals, Oils and Foodstuffs Industry Co., Ltd. (hereinafter referred to as Yihai Jiali), and China Pacific Property Insurance Co., Ltd. Shipping Insurance Business Operation Center (hereinafter referred to as CPIC), the Claimant of Retrial disagreed with the Guangdong High People’s Court (2017) Yue Min Zhong No.583 Civil Judgment, and applied for retrial to the court. The court formed a collegiate panel according to law. Now the case has been concluded. Xinmao Shipping applied for retrial that: the facts confirmed by the court of second instance are wrong, it did not consider that the wheat involved had been damaged by moisture before loading at the loading port, and the moldy wheat was located in the middle of the cabin, there was no water in the cabin at all, nor did it consider that Xinmao Shipping was under the shipper and consignee’s threaten to carry the wheat which was already wet, so the judgment of second instance was wrong. Specific reasons were as follows: 1. the wheat involved had been stored on the ship for more than a month before it was transferred to M.V. XIN HUA SHENG at the loading port. The goods had been damaged before loading by water. The parties had no dispute about this fact. The Assessment Report submitted by CPIC and the investigation records submitted by Xinmao Shipping could prove it. Yihai Jiali and CPIC also recognized this fact. The court of second instance still required Xinmao Shipping to bear the burden of proof according to the rules of evidence, which was wrong confirmation of facts. 2. During the unloading process, the unloading workers did not find that there was water in the cargo compartment.

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The wheat in the middle of the cargo compartment was agglomerated, and the wheat on the upper and bottom of the cargo compartment was not wet or caking and moldy, which proved that during the transportation of M.V. XIN HUA SHENG, no water entered the cargo hold. Assessment Report submitted by CPIC, Color Photograph of Damaged Goods submitted by Yihai Jiali, M.V. XIN HUA SHENG logbook and the investigation records involved could prove that no water flew into the cabin in carriage. After the goods arrived at the port, the PICC arranged an inspection company to investigate the cause of the accident and stated that there was no water ingress in the cabin. The mildew of wheat was caused by high moisture content, which was the responsibility of the loading port boat, which was not the liability of M.V. XIN HUA SHENG, the accident involved was not covered by insurance. CPIC paid 792,366.35 yuan to Yihai Jiali through negotiation for the purpose of maintaining customer relationship, which was not a compensation based on insurance liability and should not be born by Xinmao Shipping. 3. Xinmao Shipping under the threat of deception by the consignor and consignee carried the wet wheat. Xinmao Shipping repeatedly requested comments on the waybill. The shipper refused to accept the annotated waybill and threatened Xinmao Shipping. Xinmao Shipping desperately asked the consignor to sort the wheat with obvious moisture, but it was impossible for the grab to remove all the wheat with high moisture content. The consignor tricked Xinmao Shipping into saying that it would not be compensated. If the ship’s schedule was delayed at the unloading port, it agreed to pay 10,000 yuan per day. Xinmao Shipping started sailing in desperation. After the goods arrived at the port of unloading, the consignor and Yihai Jiali refused to sign a statement confirming that wheat moisture was the responsibility of the loading port boat. Yihai Jiali did not cooperate with the unloading and verbally deceived Xinmao Shipping that it would not claim in the case of an insurance company’s investigation, it was only when the company’s internal processes were followed that the wheat was unloaded smoothly. 4. The court of second instance held that Xinmao Shipping put a rain cover on the hatch cover, which did not meet the requirements of cargo safety management, which was not consistent with the facts. During the transportation of food on the water, regardless of whether the hatch of the cabin could be closed tightly, a rainproof cloth should be added to ensure that no water entered the cabin during transportation. Xinmao Shipping added two layers of rainproof cloth during transportation and fixed it with a rope net, which fully complied with the requirements for safe food transportation. 5. Wheat mildew was not caused by water in the cargo compartment, but it was caused by the high moisture content of wheat itself. Assessment Report submitted by CPIC and Color Photograph of Damaged Goods submitted by Yihai Jiali were sufficient to prove this fact. The accident was “the natural nature of the goods” in the Contract Law of the People’s Republic of China Article 311, and could be exempted. M.V. XIN HUA SHENG was anchored under the name of Xinmao Shipping, and was actually owned and operated by XIAO Hongyin. XIAO Hongyin’s economic conditions were not good, and the huge debt of 3.75 million yuan would undoubtedly cause XIAO Hongyin to go bankrupt. So Xinmao Shipping required to retry the case.

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Yihai Jiali submitted opinions that: 1. the quantity and quality of the wheat involved in M.V. XIN HUA SHENG’s loading by Xinmao Shipping in Rugao Port were flawless, and Xinmao Shipping had no evidence to prove that the mildew of wheat was caused by its own high moisture content. 2. The evidence in the case was sufficient to prove that M.V. XIN HUA SHENG had wet water during transportation. Xinmao Shipping had no evidence to prove that M.V. XIN HUA SHENG did not enter the water. 3. Xinmao Shipping did not fulfill its reasonable and prudent cargo control obligations. There was no exemption from the law in this case, and Xinmao Shipping should be liable for compensation. Yihai Jiali required to dismiss Xinmao Shipping’s application for retrial. The court holds that, this case is the dispute over contract of carriage of goods by sea, so the issue of review in this case should be around the application for retrial, namely whether the court of second instance judged that Xinmao Shipping had sufficient basis to bear the responsibility for cargo damage is sufficient. Xinmao Shipping claimed that the cargo involved was damaged by water and moisture before being loaded on the ship. M.V. XIN HUA SHENG had no water inflow in the cargo compartment at all during transportation, and Xinmao Shipping should not be held liable. According to the facts found out by the court of second instance, M.V. XIN HUA SHENG was loaded with wheat from a barge at Rugao Port, Nantong, Jiangsu. Although the wheat carried by the second, fourth, and sixth barges had wet and wet agglomeration, M.V. XIN HUA SHENG’s shipowner sorted the wheat of the three barges and passed the unwetted wheat. Xinmao Shipping claimed that the cargo involved had moisture and agglomeration when it was loaded. As a carrier, it had the right to refuse to load and carry the cargo involved or to mark the damaged cargo on the waybill. But the above-mentioned wet goods were loaded after sorting measures were taken. Xinmao Shipping did not effectively mark the damaged cargo or recognized by the consignor, it should be considered that the cargo received after sorting was intact. According to the rules of distribution of burden of proof, the court of second instance judged that Xinmao Shipping failed to fulfill its burden of proof to prove that the goods involved had water and moisture damage before loading, which is not inappropriate. The waybill issued by Xinmao Shipping does not have any comments on the water and moisture conditions before the goods were loaded, nor did the shipper or consignor recognize the fact that the goods were damaged at the loading port or the inspection certificate of the goods at the loading port, it claimed that the damaged goods were due to the natural nature of the goods themselves, and should belong to the exemption grounds stipulated in the Contract Law of the People’s Republic of China, the court does not support it. Xinmao Shipping claimed that it was because the consignor and consignee threatened and deceived to carry the already wet wheat, but there is also no evidence to prove it. Pulling the threads together, the application for retrial of Xinmao Shipping is not consistent with the Civil Procedure Law of the People’s Republic of China Article 200, so according to the Civil Procedure Law of the People’s Republic of China Article 204 Paragraph 1, and the Interpretation of the Supreme People’s Court on

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the Application of the Civil Procedure Law of the People’s Republic of China Article 395 Paragraph 2, the ruling is as follows: Dismiss the application for retrial of Guangxi Qinzhou Xinmao Shipping Co., Ltd. Presiding Judge: WANG Shumei Judge: YU Xiaohan Judge: HUANG Xiwu December 24, 2018 Clerk: XIAO Bolun

Shanghai Maritime Court Civil Judgment ESSAREXPORTS LIMITED v. Shenzhen Ya Dong International Freight Forwarding Co., Ltd. (2016) Hu 72 Min Chu No.2696 Related Case(s) None. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff cargo owner held entitled to default judgment against defendant freight forwarder, which did not appear, for breach of settlement agreement by which defendant undertook to pay compensation for delivering plaintiff's goods without presentation of original bill of lading. Summary Plaintiff cargo owner filed suit against Defendant freight forwarder for its failure to adhere to the terms of the Payment Agreement signed by both parties. The parties signed this agreement after Defendant, without the authorization of Plaintiff, delivered the goods to the consignee of the port of destination in Brazil without presentation of the original bill of lading, causing Plaintiff to be unable to secure payment from the Brazilian buyer. Despite the Payment Agreement, Defendant had not yet paid according to its terms. The Court determined that Defendant, which did not appear in court, waived its right to a defense, and was held liable for the unpaid sum owed to Plaintiff as outlined in the Agreement.

Judgment The Plaintiff: ESSAREXPORTS LIMITED Domicile: Suite1001-2, Albion Plaza, 2-6 Granville Road, Tsim Sha Tsui, Kowloon, Hong Kong Special Administrative Region. Legal representative: Arun Vashdev BAHIRWANI, director of the company. Agent ad litem: LIU Xianmin, lawyer of SLOMA & CO.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_14

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The Defendant: Shenzhen Ya Dong International Freight Forwarding Co., Ltd. Domicile: 1715, Jinlong mansion, Cai Wu Wei, Cai Wu Wei Jingji Financial Center, Luohu District, Shenzhen, Guangdong. Legal representative: YU Jiangfeng. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff ESSAREXPORTS LIMITED and the Defendant Shenzhen Ya Dong International Freight Forwarding Co., Ltd., the Plaintiff filed an action on October 11, 2016. The court entertained the case on the same day and organized a collegiate panel in accordance with law. In the lawsuit of this case, the Plaintiff submitted to the court a property preservation application for freezing the Defendant’s non-vessel carrier business guarantee of 800,000 yuan paid to the Ministry of Communications of the People’s Republic of China or its designated authority or freezing the Defendant’s non-vessel carrier liability insurance of 800,000 yuan. The court made (2016) Hu 72 Min Chu No.2696 Civil Ruling, granted the Plaintiff’s property preservation application on November 21, 2016. The court held a hearing in public on February 21, 2017. LIU Xianmin, agent ad litem of the Plaintiff, appeared in court. The Defendant, upon the legal summon of the court, did not appear in court without justifiable reason. Now the case has been concluded. The Plaintiff alleged that: as a middleman of international trade, the Plaintiff purchased a lot of textiles in the Mainland of China and resold it to the Brazilian buyer and entrusted the Defendant to transport by sea from the port of China to the port of Brazil. The Plaintiff lost control of the goods and was unable to recover the purchase price due to the Defendant’s unauthorized delivery of the goods to the consignee of the port of destination without the consent of the Plaintiff after the goods arrived. A payment agreement was reached on March 18, 2015 through the consultation between the Plaintiff and the Defendant. According to the agreement, the Defendant paid the Plaintiff USD659,990 in installments. The downpayment was USD50,000, and was paid on March 12, 2015, and the remaining was divided into 30 instalment, 20,333 dollars shall be paid on the 25th of each month from April 2015. If there is an overdue, the Plaintiff shall give a 12-day grace period and the Defendant shall pay an interest of 2% on the monthly interest rate. After the agreement of payment had been signed, the Defendant had paid only USD138,999 up to now. Although the Plaintiff has dunned many times, the Defendant has not yet paid up to now. Therefore, the Plaintiff requested the court to order the Defendant to pay the unpaid balance of USD520,991 and its interest (from the date of the last payment of the Defendant on October 1, 2015 to the date when the judgment comes into effect, and it should be calculated at 2% of the monthly interest rate) and undertake the case handling fee and the property preservation application fee in this case. The Defendant did not appear in court and did not submit written briefs.

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In order to prove the facts involved, the Plaintiff provided the following evidence: 1. The agreement of payment between the Plaintiff and the Defendant on March 18, 2015, to prove that the Defendant had agreed to compensate the Plaintiff. 2. 8 copies of the bill of lading issued by the Defendant, to prove that the Defendant is the carrier of the goods involved in the case. 3. E-mails, to prove that the Plaintiff negotiated with the Defendant after they found the goods had been delivered without bill of lading. 4. The 6 payment of bank statements, to prove that the Defendant paid a total of 138,999 dollars in 6 times. 5. Declaration of goods involved, to prove the amount of money of the goods involved in this case. 6. The standard form of the NVOCC bill of lading was put on record by the Defendant in Ministry of Communications of the People’s Republic of China, to prove that the Defendant is the carrier of the goods in this case. The Defendant was summoned according to law and failed to appear in the court without justified reason and did not express his defense, evidence and opinions on cross-examination in writing, and should be deemed to have waived the relevant litigation rights. The court certified that the evidence submitted by the Plaintiff can thoroughly reflect the relationship of the contract of carriage of goods by sea between the Plaintiff and the Defendant and the process of negotiating and reaching an agreement on the loss of the Plaintiff's payment and the process of fulfilling the agreement. The evidence can be mutually corroborated and form an evidence chain, therefore the validity and strength of the evidence are recognized. The Defendant did not submit any evidence. The court finds that: From February to November 2013, the Plaintiff commissioned the Defendant to deliver the goods involved in the case to Brazil, and the Defendant issued the bill of lading for 8 batches of goods which involved in the case to the Plaintiff. The 8 bills of lading stated that the shipper was the Plaintiff, the consignee and the notifying party were KOWARICKINDUSTRIATEXTILEIRELI, the loading port was Shanghai, the discharge port and the delivery place were Rio De Janeiro, Brazil, and the way of payment was freight collect. The goods under the bill of lading involved in the case were all transported in FCL containers. After the goods were shipped, the Plaintiff did not receive the payment, and negotiated with the Defendant through e-mail, asking for the return of the goods involved in this case. The two parties signed a payment agreement on March 18, 2015. The Agreement stated: the Defendant agreed to pay the Plaintiff the unpaid amount which should be paid by the consignee KOWARICKINDUSTRIATEXTILEIRELI with a total amount of USD659,990, of which the down-payment of USD50,000 was paid on March 12, 2015. From April 25, 2015, the Defendant should pay USD20,333 per month for a total of 30 months. If the payment is delayed, a 12-day grace period

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will be given and after which the Defendant will pay the Plaintiff an interest of 2% per month. The Defendant paid USD138,999 to the Plaintiff in March 12, April 15, May 14, June 5, July 25 and September 2, 2015. It has also been found that the Defendant is a NVOCC registered by the traffic administration department of China and the bills of lading involved in this case are consistent with the standard form of the bill of lading registered by the Defendant. The court holds that: This case is a dispute over a contract of carriage of goods by sea. Because the destination port for cargo transportation is in Brazil, it has foreign elements. In the trial, the Plaintiff chose to apply the law of People’s Republic of China, so the court shall use the law of People’s Republic of China as the governing law to hear the dispute in this case. In this case, the Defendant accepted the Plaintiff’s commission to carry out the carriage of goods by sea and issued bills of lading to the Plaintiff as the carrier on its company’s letterhead. The contract of carriage of goods by sea between the Plaintiff and the Defendant was established according to law. Then the Plaintiff negotiated with the Defendant about the loss of the payment of the Plaintiff, and signed Payment Agreement, which was the true meaning of the two parties, and was legally effective and binding on both parties. The Defendant should reimburse the Plaintiff's payment for goods within the agreed period and now the default is not paid, which constitutes a breach of contract. According to the agreement, the amount due to the date of the trail, that is by February 21, 2017, should be USD517,659, but the Defendant had only paid USD138,999, and the outstanding debt which is USD378,660 that had not been returned, which accounts for 57% of the total amount of money in arrears. The act of the Defendant had constituted a clear breach of contract and infringed the interests of the Plaintiff and its behavior is sufficient to show that it will not be able to perform its remaining obligations. In accordance with the law, the Plaintiff has the right to request the Defendant to bear the repayment obligation of all arrears before the part of the debt performance period and requires the Defendant to pay the corresponding overdue interest in accordance with the agreement. The Plaintiff requests that the interest on the due amount should be calculated from October 1, 2015. The court holds that: both parties had a definite agreement on the deadline for each payment and the last day of the Defendant's payment is September 2, 2015 and so the Plaintiff’s request for interest calculation to start from October 1, 2015 does not violate the contractual agreement. In this case, the two parties agreed to perform their debts by installments. Therefore, the interest calculation base for the corresponding period shall be calculated according to the actual amount owed in the different periods of the contract. The monthly interest rate agreed by both parties was 2% which did not violate the prohibition rule of the Supreme People’s Court on the interest rate of private lending therefore the court can support this. The Defendant was legally summoned by the court but did not appear in court to participate in the proceedings which means he voluntarily waived the right of defense, cross-examination and other litigious rights. He should bear all the legal consequences.

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In conclusion, in auordance with Article 60 Paragraph 1, Article 107, Article 108 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1, Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: The Defendant, Shenzhen Ya Dong International Freight Forwarding Co., Ltd., shall pay 520,991 US dollars to the Plaintiff, ESSAREXPORTS LIMITED, and the overdue interest from the date of October 1, 2015 to the date of the effectiveness of this judgment within ten days from the date of the effectiveness of this judgment (according to the date of payment, the amount of debt due and the interest rate interest to be calculated stipulated in the Payment Agreement signed by the parties on March 18, 2015). If the Defendant Shenzhen Ya Dong International Freight Forwarding Co., Ltd. fails to perform the obligation of paying money according to the period specified in this judgment, then in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China, double payment of the debt interest occurred during the period of delay in performance should be paid. Court acceptance fee in amount of 3,589 yuan and the application for preservation of property fee in amount of 4,520 yuan, shall be borne by the Defendant Shenzhen Ya Dong International Freight Forwarding Co., Ltd. In the event of dissatisfaction with this judgment, the Plaintiff, ESSAREXPORTSLIMITED may, within thirty days upon service of this judgment and the Defendant Ya Dong Shenzhen International Freight Forwarding Co., Ltd. may, within fifteen days upon service of this judgment, file appeal, together with copies of petition according to the number of the opposing parties to the Shanghai High People’s Court. Presiding Judge: ZHANG Shanshan Judge: ZHU Jie Judge: XU Zhong February 21, 2017 Clerk: SONG Fei

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 60 Full Performance; Performance in Good Faith the parties shall fully perform their respective obligations in accordance with the contract. …… Article 107 Types of Liabilities for Breach If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.

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Article 108 Anticipatory Breach Where one party expressly states or indicates by its conduct that it will not perform its obligations under a contract, the other party may hold it liable for breach of contract before the time of performance. 2. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the responsibility to provide evidence in support of its own propositions. …… Article 144 If the Defendant, having been served with subpoena, but still refuses to appear in court without legitimate reason, or if he leaves the court session halfway without permission, the court may render a judgment by default.

Beihai Maritime Court Civil Judgment Fangchenggang Beibu Gulf Port Co., Ltd. v. Guangxi Heshun Sanyuan Mining Co., Ltd. (2017) Gui 72 Min Chu No.149 Related Case(s) None. Cause of Action 241. Dispute over port operation. Headnote Plaintiff port operator held to be entitled to recover unpaid balance of fees for handling iron ore for defendant mining company, which did not appear in court. Summary Plaintiff port operator and Defendant mining company signed a contract under which Plaintiff agreed to receive iron ore brought to the port by Defendant, and to load it onto ships for export. Defendant failed to pay Plaintiff in full for all of the iron ore that Plaintiff had handled for Defendant, so Plaintiff sued Defendant. Defendant failed to appear. The Court held that Plaintiff was entitled to recover the unpaid balance that it had claimed.

Judgment The Plaintiff: Fangchenggang Beibu Gulf Port Co., Ltd. Domicile: Youyi Avenue No.22, Gangkou District, Fangchenggang. Legal representative: CHEN Silu, general manager. Agent ad litem: TANG Cheng, lawyer of Guangxi Tang Cheng & Co. Agent ad litem: LI Fahui, lawyer of Guangxi Tang Cheng & Co. The Defendant: Guangxi Heshun Sanyuan Mining Co., Ltd. Domicile: No.302, Unit 1 of Building 1, Dormitory of Department of the City Transportation, Kaile Park Road No.36, Gangkou District, Fangchenggang. Legal representative: GUO Bo. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_15

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With respect to the case arising from dispute over the port operation contract between the Plaintiff, Fangchenggang Beibu Gulf Port Co., Ltd. (hereinafter referred to as Fangchenggang Port Services Company) and the Defendant, Guangxi Heshun Sanyuan Mining Co., Ltd. (hereinafter referred to as Heshun Sanyuan Company), after entertaining the case on April 7, 2017, this court legitimately constituted the collegiate bench consisting of the judge LAO Jianming and the People’s Juror, HUANG Xiuxing and PAN Qian to try the case. For working reasons, the collegiate bench was altered to be made up of the judges, SU Bin and LAO Jianming, and the People’s Juror, WEN Quanlian. This court held a hearing in public on August 21. Agents ad litem of the Plaintiff Fangchenggang Port Services Company, TANG Cheng and LI Fahui, attended the trial. The Defendant, Heshun Sanyuan Company, was subpoenaed by the court but refused to attend the trial and the court tried the case in absentia according to law. After trial, the case has been concluded. The Plaintiff Fangchenggang Port Services Company claimed to the court that: upon the matters starting from January in 2014 of the Defendant, Heshun Sanyuan Company, to operate, warehouse and load the iron ore of domestic trade exports at Fangchenggang Port, the Plaintiff, Fangchenggang Port Services Company, the Defendant, Heshun Sanyuan Company and a person other than involved in the case, Fangchenggang Logistics Co., Ltd. (hereinafter referred to as Fanggang Logistics Company) signed Port Operation Contract numbered as “HS14335”. The contract stipulated that: the Plaintiff, Fangchenggang Port Services Company, and Fanggang Logistics Company should provide services to the goods arrived at port for the Defendant, Heshun Sanyuan Company upon unloading, warehousing, truck loading, weighing and so on, including other items of services which were applied by the Defendant and agreed by the Plaintiff and Fanggang Logistics Company. The contract stipulated in detail about the items and standards of expenses, the settlement and time, methods for payment of the expenses. The Defendant should pay the port operation fee according to the standards as follows: (1) unload from the truck-store - in the warehouse-load - on the domestic ship: the price of powder ore was 21.50 yuan per ton; the price of lump ore was 27.00 yuan per ton; the price of pelletizing was 30 yuan per ton; the price of raw ore was 33.00 yuan per ton. (2) Unload from the truck and directly load on the domestic ship: the price of powder ore was 18.50 yuan per ton; the price of lump ore was 23.50 yuan per ton; the price of pelletizing was 27.00 yuan per ton; the price of raw ore was 30.00 yuan per ton. If the goods were stored to exceed to the time limit, the overdue storage fee from day 1 to day 30 was 0.10 yuan per ton per day; from day 31 to day 60 was 0.15 yuan per ton per day; from day 61 to day 90 was 0.20 yuan per ton per day. The rest could be done in the same manner and the highest price should be 0.50 yuan per ton per day (the basing price of the cargo covered by paulin was 0.25 yuan per ton per day). Since November 11, 2013 to March 15, 2014, the Defendant, Heshun Sanyuan Company transported 32299.3 tons of iron ore in all to the port. On April 30, 2014, M.V. “ZHONG CHANG 168” arrived at the port, and according to the requirements of the Defendant, Heshun Sanyuan Company, the Plaintiff loaded the iron ore on the ship. On May 2, 2014, the shipment of this batch of goods was completed. The Plaintiff, Fangchenggang Port Services Company,

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completely performed its obligation of contract but the Defendant did not timely and fully paid the port service fees such as port charges and storage charges and so on. After the Plaintiff repeatedly urged for the payment, the Defendant, Heshun Sanyuan Company, up to now, still owed the port operation fee and storage fee in amount of 173,351.02 yuan and its interests 21,052.18 yuan (the interests temporarily from May 12, 2014 to February 23, 2017 should be calculated according to the loan interest rate of 4.35% for one year published by the People’s Bank of China, and the rest of the interests should be calculated until date of the actual payment of all the funds). In conclusion, the Defendant, Heshun Sanyuan Company refused to pay the port operation fee and storage fee, which had constituted the fundamental breach of contract and seriously damaged the legitimate interests of the Plaintiff. Request to sentence that: 1. the Defendant, Heshun Sanyuan Company, should pay the Plaintiff port charges and storage charges in amount of 173,351.02 yuan and the interests 21,052.18 yuan (the interests temporarily from May 12, 2014 to February 23, 2017 should be calculated according to the loan interest rate of 4.35% for one year published by the People’s Bank of China, and the rest of the interests should be calculated until date of the actual payment of all the funds); 2. the Defendant should assume all the court acceptance fee of this case. The Defendant, Heshun Sanyuan Company, did not make any defense, nor did it submit any evidence. In order to prove its claims, the Plaintiff provided the following evidence to the court: Evidence 1, port operation contract, to prove the relationship of contract between the two parties and the fact that the two parties had made the agreement on port charges, storage charges, etc. Evidence 2, application form for miscellaneous operation, advice of shipment, proof of compliance with the requirements of shipping, loading/unloading verification record, transfer verification record, list of delivery order and receipt, ledger of the cargo daily in and out of the warehouse, to prove that from April 30, 2014 to May 2, 2014, the Plaintiff, Fangchenggang Port Services Company had completed the work of loading and transfer 32,299.30 tons of the iron ore; Evidence 3, details of port charges and storage charges receivable, to prove that, up to February 23, 2017, the Defendant had owed the port operation fee and storage fee in amount of 173,351.02 yuan and its interests 21,052.18 yuan; Evidence 4, cargo weighing list and warehousing list, to prove the fact that, from November 11, 2013 to March 15, 2014, the Defendant, Heshun Sanyuan Company transported the iron ore in batches to the port and stored it; Evidence 5, application form for miscellaneous operation, to prove the fact that the Defendant applied for handling service to the Plaintiff, Fangchenggang Port Services Company. The court held that, the Defendant Heshun Sanyuan Company was subpoenaed by the court and refused to appear in court without justified reasons, which should be reckoned that it waived its litigious rights to reply, submit evidences and conduct

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the cross-examination. As for the evidences 1–5 submitted by the Plaintiff, they conformed to the elements of the evidence, and could verify each other and formed a complete chain of evidence. The court confirmed their authenticity and regarded them as the bases for confirming the facts of this case. The court ascertained that: The Plaintiff Fangchenggang Port Services Company as party B, the Defendant Heshun Sanyuan Company as party A and Fanggang Logistics Company as party C signed the port operation contract (contract numbered as HS14335), which mainly stipulated that: The Plaintiff Fangchenggang Port Services Company and Fanggang Logistics Company should provide services to the goods arrived at port for the Defendant, Heshun Sanyuan Company upon unloading, warehousing, truck loading, weighing and so on; 1. the Defendant Heshun Sanyuan Company agreed to pay the port operation fee according to the water gauge survey statistics or unloading weight (if the gauge was made and the weight was weighed, the unloading weight should prevail) published by the Merchandise Inspection Department of Fangcheng and the standards as follows: (1) unload from the truck-store - in the warehouse-load - on the domestic ship: the price of powder ore was 21.50 yuan per ton; the price of lump ore was 27 yuan per ton; the price of pelletizing was 30 yuan per ton; the price of raw ore was 33 yuan per ton; (2) unload from the truck and directly load on the domestic ship: the price of powder ore was 18.50 yuan per ton; the price of lump ore was 23.50 yuan per ton; the price of pelletizing was 27 yuan per ton; the price of raw ore was 30 yuan per ton; 2. if the goods needed to be weighed, the Defendant, Heshun Sanyuan Company, should pay the weighing fee: the price of goods by ship was 4 yuan per ton for either loading or unloading; the price of goods loaded on the train was 4 yuan per ton; the price of goods loaded on the truck was 1 yuan per ton; 3. warehousing charges: free for ten days since the date of unloading. If the goods were stored to exceed to the time limit, the overdue storage fee from day 1 to day 30 was 0.10 yuan per ton per day; from day 31 to day 60 was 0.15 yuan per ton per day; from day 61 to day 90 was 0.20 yuan per ton per day. The rest could be done in the same manner and the highest price should be 0.50 yuan per ton per day (the basing price of the cargo covered by paulin was 0.25 yuan per ton per day); 4. as for the goods transported by train, the Defendant should separately pay the fee to the Railway Management Center for the special railway within the port and the taking and sending service; 5. the cost of other items of service applied by the Defendant Heshun Sanyuan Company should be calculated separately, and the calculating standard should be discussed by the Plaintiff Fangchenggang Port Services Company and the Defendant Heshun Sanyuan Company then according to the contents of the items; 6. the port operation fee should be paid off for each shipment. The Defendant, Heshun Sanyuan Company, should, within 5 working days after the arrival and discharge of the ship at the port, prepay all the aforesaid fees as agreed in the contract to the Plaintiff in full; the Defendant, Heshun Sanyuan Company, should, within 5 working days after finishing the unloading, pay the port charges to the Plaintiff in full according to the

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draft survey statistics or unloading weight, actual gross unloading weight published by the Merchandise Inspection Department of Fangcheng (the Defendant Heshun Sanyuan Company should provide the copy of weight verification form written by the Inspection Department of Fangcheng port) and the standards about the cost in contract; 7. the Defendant, Heshun Sanyuan Company, developed the trade relationship at the port with the third party. When the right of the cargo changed, the Defendant Heshun Sanyuan Company agreed that the third party should bear the port operation fee, overdue custody fee and the cost relevant, for which the Plaintiff, Fangchenggang Port Services Company, had no responsibility to urge but should be chased by the Defendant Heshun Sanyuan Company and then paid to the Plaintiff. The Defendant Heshun Sanyuan Company agreed that the Plaintiff Fangchenggang Port Services Company was the only party for calculation and collection of the expenses in the contract; 8. within 7 working days after the goods were fully shipped, the Plaintiff Fangchenggang Port Services Company should issue all the details of the port charges and the relevant receipts to the Defendant Heshun Sanyuan Company. Within 3 working days after the Defendant Heshun Sanyuan Company received the documents mentioned above, the Defendant Heshun Sanyuan Company should pay all of the rest of the fees in the contract to the Plaintiff Fangchenggang Port Services Company; 9. if the Defendant Heshun Sanyuan Company did not pay off the items of payment in the contract like port operation fee and storage fee, the Plaintiff Fangchenggang Port Services Company had the right to detain the goods of corresponding value; 10. if either party broke the contract and caused economic loss to the other party, the breaching party should indemnify the other party for direct economic loss, unless this contract had other obligations. The contract was valid from January 1, 2014 to December 31, 2014. The Plaintiff, Fangchenggang Port Services Company, and Fanggang Logistics Company signed and sealed the contract, and both of the dates of signature were March 12, 2014. The Defendant, Heshun Sanyuan Company, signed and sealed the contract and the date of signature was April 28, 2014. On March 22, the Defendant, Heshun Sanyuan Company, submitted the application form for miscellaneous operation to the Plaintiff Fangchenggang Port Services Company, which specified that: the content of the application of operation and its requirement was loading, unloading and carriage services (carriage service between transfer yard, Yard 1807 to Pan ocean storage yard, Pan ocean storage yard to Yard 1807), the name of the goods was iron ore, standard of payment was 16 yuan per ton, consistent with the contract if existing, the total weight was 4,676 tons. On April 30, the Defendant, Heshun Sanyuan Company, sent to the Plaintiff Fangchenggang Port Services Company advice of shipment No.127591, the ship’s name was M.V. “ZHONG CHANG 168”, the date of arrival was 10:45 on April 30, 2014, the shipper and consignee was the Defendant Heshun Sanyuan Company, the name of the goods was iron ore (powder), the weight was 32,000 tons.

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On May 4, the Plaintiff Fangchenggang Port Services Company issued the ledger of the cargo daily in and out of the warehouse (numbered as FG/QR7508), the ship’s name was M.V. “ZHONG CHANG 168”, the name of the goods was iron ore (powder), the owner of the goods was the Defendant, Heshun Sanyuan Company, the amount of the goods via commercial inspection was 27,623.3 tons, the date of outbound delivery was from April 30, 2014 to May 2, 2014; the name of the goods was iron ore (lump), the owner of the goods was the Defendant, Heshun Sanyuan Company, the amount of the goods via commercial inspection was 4,676 tons, the date of outbound delivery was from April 30, 2014 to May 2, 2014. On May 2, the Plaintiff Fangchenggang Port Services Company issued port cargo delivery list, which specified that: the shipper and consignee was the Defendant, Heshun Sanyuan Company, the name of the goods was iron ore powder, the weight was 32,299.3 tons. Shengsi Zhongchang Marine Co., Ltd sealed on the list to affirm as the ship. Hereafter, the Plaintiff, Fangchenggang Port Services Company, issued form of details of port charges and storage charges receivable. The storage fee settlement form specified that: from November 11, 2013 to April 19, 2014, the tools for in-warehouse was the tuck, the gross tonnage of the iron ore (powder) was 27,561.51 tons, the storage fee was 254,694 yuan; the gross tonnage of the iron ore (lump) was 9352 tons, the storage fee was 48,966.57 yuan. The schedule of port charges receivable specified that: the ship’s name was M.V. “ZHONG CHANG 168”, the voyage was 1401, the receivable storage fee of the iron ore (powder) was 254,694 yuan, the amount received was 205,125.55 yuan, 49,568.45 yuan remaining to be paid; the receivable storage fee of the iron ore (lump) was 48,966.57 yuan, yet 48,966.57 yuan remaining to be paid; the tonnage of the warehouse transferred was 4,676 tons, the fee for transferring was 74,816 yuan, yet 74,816 yuan remaining to be paid. The total arrears of aforesaid fees was 173,351.02 yuan. The court held that: The case was caused by the dispute over the port operation contract. It was the true declaration of detention on the basis of equity and willingness for the Plaintiff Fangchenggang Port Services Company and the Defendant Heshun Sanyuan Company to sign the port operation contract, whose content did not violate the mandatory provisions of the state law, nor did it harm the legitimate rights and interests of the country, the collective or a third party. Therefore, the contract was legal and effective. From November 11, 2013 to April 19, 2014, the Defendant, Heshun Sanyuan Company, transport a total of 32,299.3 tons of iron ore by truck to the Plaintiff Fangchenggang Port Services Company’s bulk cargo operation district. Until May 2, 2014, the Plaintiff Fangchenggang Port Services Company had provided the unloading, storage, warehousing and loading services for the Defendant Heshun Sanyuan Company and completed the cargo transfer service according to the application of the Defendant Heshun Sanyuan Company. The Defendant, Heshun Sanyuan Company should pay the corresponding port operation fee, warehousing fee and transfer fee according to the contract. At the time of filing of this case, of the generated iron ore (powder) storage fee of 254,694 yuan, iron ore

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(lump) storage fee of 489,66.57 yuan, and the transfer fee of 74,816 yuan, totaling 378,476.57 yuan, the Defendant Heshun Sanyuan Company had paid 205,125.55 yuan, yet 173,351.02 yuan remaining to be paid. The behavior of the Defendant Heshun Sanyuan Company not to pay the storage fee and transfer fee in full amount as agreed constituted a breach of contract. According to the Contract Law of the People’s Republic of China Article 107 “if a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses”, the claims of the Plaintiff, Fangchenggang Port Services Company, to require the Defendant, Heshun Sanyuan Company, to pay the port charges and storage fee in amount of 173,351.02 yuan, which complied with provisions of the law and agreement of contract and should be supported. Regarding to the interests, the overdue payment loss of the Plaintiff was loss of the interests. Therefore, the Defendant, Heshun Sanyuan Company, should pay the interests loss to the Plaintiff, Fangchenggang Port Services Company, and the interests should be calculated from the date of filing of this case, April 7, 2017, according to the loan interest rate published by the People’ s Bank of China in the same period. Pulling the threads together, according to the Contract Law of the People’s Republic of China Article 107, Article 109, and the Civil Procedure Law of the People’s Republic of China Article 144 (“where a defendant refuses to appear in court without justifiable reasons after being summonsed or leaves the courtroom during a court session without permission from the court, the court may enter a default judgment”), the judgement is as follows: 1. The Defendant, Guangxi Heshun Sanyuan Mining Co., Ltd., should pay the port operation fee and storage fee in amount of 173,351.02 yuan and its interest (the interest should be based on 173,351.02 yuan and be calculated from May 12, 2014 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period) to the Plaintiff Fangchenggang Beibu Gulf Port Co., Ltd.; 2. Reject the other claims of the Plaintiff, Fangchenggang Beibu Gulf Port Co., Ltd. Court acceptance fee in amount of 4,188 yuan (the Plaintiff has paid in advance), should be borne by the Defendant, Guangxi Heshun Sanyuan Mining Co., Ltd. If the payment obligation was not fulfilled within the period of 10 days since the effective date of this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. The obligee may apply to the court for execution within two years from the last day of performance specified in the effective judgment of this case. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit, together with copies of the original petitions according to the number of other parties, appeal to the Guangxi Zhuang

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Autonomous Region High People’s Court. The fee for appealing should be paid within 7 days after the expiration of the appeal period (collection unit: Guangxi Zhuang Autonomous Region High People’s Court; account number: 2077; bank of deposit: Wanxiang Branch of Agricultural Bank in Nanning City). If the fee is not paid in time and no application for postponement is submitted within the time limit, the appeal should be automatically withdrawn. Presiding Judge: SU Bin Judge: LAO Jianming People’s Juror: WEN Quanlian August 29, 2017 Clerk: XU Chenglun

Guangzhou Maritime Court Civil Judgment FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2016) Yue 72 Min Chu No.1577 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 317. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Dismissing claims for losses allegedly caused during carriage of goods by sea because plaintiff was held to have acted as agent, not shipper, and so lacked standing to sue, and also because in relation to shipments where plaintiff had acted as shipper, he had failed to provide evidence to establish his claim. Summary FANG Hao entrusted Quanzhou Sifang Logistics Co., Ltd. (carrier) to ship a batch of ceramic goods to Quanzhou Sifang Logistics Co., Ltd. from Foshan Jiujiang to Fujian Quanzhou. The carrier delivered to 4 consignees, but FANG Hao asserted that the goods were still under the carrier’s control and not yet delivered. FANG Hao sued the carrier and claimed that the carrier should be responsible for the freight rate and the loss of the goods. The court held that FANG Hao’s claim lacked basis and rejected the claim.

Judgment The Plaintiff: FANG Hao, Male, born in May 25, 1993, Han, living in Huilai County, Guangdong. Agent ad litem: TANG Cuiping, lawyer of Guangdong Reid Law Firm. Agent ad litem: YUAN Jinpeng, trainee lawyer of Guangdong Reid Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_16

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The Defendant: Quanzhou Sifang Logistics Co., Ltd. Domicile: Luojiang District, Quanzhou, Fujian Legal representative: WANG Mada, manager of the company. Agent ad litem: ZHU Lu, lawyer of Shanghai Rolmax (Guangzhou) Law Firm. Agent ad litem: TAN Zhuoran, lawyer of Shanghai Rolmax (Guangzhou) Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff FANG Hao and the Defendant Quanzhou Sifang Logistics Co., Ltd., Guangdong Foshan Nanhai District People’s Court made Civil Ruling (2016) Yue 0605 Min Chu No.12853 to transfer the case to the court on October 25, 2016. After the court entertained the case on November 29, 2016, a summary procedure was applied according to law, and an open hearing was held for the hearing. The Plaintiff FANG Hao and his agents ad litem, TANG Cuiping and YUAN Jinpeng, and agents ad litem of the Defendant, ZHU Lu, attend the hearing. Now the case has been concluded. The Plaintiff filed a lawsuit to the court that: 1. the Defendant should be ordered to compensate the Plaintiff for losses of 489,450 yuan including fees of loss of goods 284,200 yuan, loss of freight 32,750 yuan, and fees of claimant by customer 17,250 yuan. 2. The Defendant shall bear the costs of the case. Facts and reasons: There is a long-term contractual relationship between the Plaintiff and Defendant. From July 7 to July 18, 2016, the Plaintiff sent a total of 15 containers of ceramic goods to its clients WANG Yuding, WANG Hanhe, WANG Chaojing, WANG Qinghai, and LI Zhiqiang. The cargo was shipped from Jiujiang preparation wharf in Foshan to Huajin Wharf in Quanzhou, and the voyage code was Min Heng 3-1628. In addition, the Plaintiff sent his client WU Jinming 2 containers of ceramic goods to the Defendant on July 12. The cargo was shipped from Jiujiang preparation wharf in Foshan to Huajin Wharf in Quanzhou and the voyage was Min Heng 3-1627. For the above 17 containers of goods, the Plaintiffs provided the Defendant with the loading address, the delivery address, and the name and contact information of the consignee. The Defendant appointed truck to the designated address for loading and issued the electronic voyage financial statement/water transport order to the Plaintiff. The freight of the voyage 3-1627 was 3,500 yuan. The Plaintiff paid the Defendant on July 20. The freight for the voyage 3-1628 may be paid after the goods were picked up by the consignee according to the agreement and trading habits of both parties. After the above goods arrived at the port, the Defendant did not notify the consignee designated by the Plaintiff to pick up the goods. When the consignee requested delivery at the port, the Defendant refused to release the goods without any reason. The Plaintiff had consulted with the Defendant several times and proposed that he could pay the freight for the voyage of Min Heng 3-1628 in advance, but the Defendant still refused to release the goods. After the Plaintiff brought suit to the Guangdong Foshan Nanhai District People’s Court, the Defendant had already delivered the goods to some of the Plaintiff’s customers. Among them, the Plaintiff’s customers had received the 12

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containers of goods. However, when the Plaintiff’s customer received the goods, the Defendant requested customs to sign a so-called statement that they agreed to waive the responsibility of the Defendant for delayed delivery. If the third party investigates the Defendant’s liability, the Plaintiff’s customer should bear the Defendant’s losses, and the Plaintiff’s client must bear the responsibility of storage costs caused by Defendant delaying the delivery. The Plaintiff’s customers were dissatisfied with the conditions stated by the Defendant and refused delivery due to the fact that the Defendant had not delivered the goods so far, causing the cargo loss of the Plaintiff’s customer WANG Chaojing 78,120 yuan, the freight loss 3,400 yuan, and claimant to the Plaintiff 41,300 yuan; the cargo loss of the Plaintiff’s customer WANG Qinghai’s was 135,900 yuan, and the freight loss was 15,300 yuan. Yuan claimed 85,600 yuan from the Plaintiff; the cargo loss of the custom LI Zhiqiang of Plaintiff was 70,180 yuan, 3,400 yuan in freight, and claimed 45,600 yuan from the Plaintiff. In addition, due to delay in delivery of the goods, the customer refused to pay the freight to the Plaintiff, of which WU Jinming’s freight was 3,800 yuan, WANG Yuding’s freight was 5,100 yuan, and WANG Hanhe’s freight was 1,750 yuan. The Defendant argued that, firstly, the Plaintiff has no standing of the case, and the Plaintiff claimed that he was the shipper, but the Plaintiff had clearly disclosed in the complaint that the owner of the cargo was another person who actually was the consignor of the contract of carriage. The status of the party, in addition, the relationship between the Plaintiff and Guangzhou Reliance International Logistics Co., Ltd. (hereinafter referred to as “United Company”) is not clear, and it can prove that the Plaintiff’s standing is not proper. The Plaintiff is only the freight forwarder, not the owner of the goods. Secondly, the Plaintiff did not provide evidence of the value of the goods and the ownership of the goods and did not reasonably prove the source of the losses claimed. Thirdly, there were still 5 containers not delivered, which was not the responsibility of the Defendant. But the Plaintiff and the consignee rushed into requiring the Defendant to deliver of the goods, resulting in the Defendant’s inability to confirm the proper delivery of the goods. The Plaintiff and the consignee had to be required to clarify the right-to-delegation relationship between the two parties and confirm the delivery qualification before dispatching the goods. In order to protect the legitimate rights and interests of the carrier and the cargo party, the Defendant has the sole right to sue. In fact, the Defendant suffered loss of long-term occupation of the container; the Defendant incurred the demurrage and storage costs. Fourthly, the disputes between the Plaintiff and the consignee has nothing to do with the Defendant, so the Plaintiff should be responsible for the loss of goods stranded in the dock. The parties submitted evidence in accordance with lawsuit requests according to law. The court organized the parties to conduct evidence exchange and cross-examination. Evidence that the parties have no objections to is confirmed by the court and is corroborated by the volume. For controversial evidence, the court determines as follows:

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1. QQ chat records and attachments between the Plaintiff and the Defendant concerning the shipment of voyage 3-1628. The Defendant objected to its authenticity. The QQ chat records and attachments between the Plaintiff and the Defendant concerning the shipment of voyage 3-1627. The Defendant objected to its relevance. The above two sets of evidence are all electronic data. The Plaintiff handled the notarization formalities, and the evidence content was related to the case. Therefore, the authenticity, relevance, and legitimacy of the evidence were confirmed, and the evidence content could be confirmed with the proven goods. The content of these pieces of evidence are mutually corroborative with packing lists and signing receipts and so on, so their probative power is confirmed. 2. The Plaintiff submitted online banking electronic receipt of 3,500 yuan proving that the Plaintiff paid for the customs WU Jinming to the Defendant. The Defendant objected to his authenticity. The evidence cannot be verified by the original and other evidence. Its probative power is not confirmed. 3. The five certificates issued by WU Jinming, WANG Yuding, WANG Chaojing, WANG Qinghai, and LI Zhiqiang submitted by the Plaintiff concerning the entrusted Plaintiff to transport the goods. The two certificates issued by WANG Chaojing and LI Zhiqiang can be verified by the original proofs. The Defendant did not object to authenticity. But the Defendant objected to the other 3 proofs arguing that these did not have original proof to verify. The five certificates can be mutually corroborated with the QQ chat records and attachments between the original and Defendants, cargo packing lists, and receipt slips, etc., so their probative power was confirmed. 4. The Plaintiff submitted three claims letter and 3 certificates respectively issued by WANG Chaojing, WANG Qinghai, and LI Zhiqiang. The Defendant had no objection to the authenticity of the three claims apart from the relevance. There are objections to the relevance and legality of the claims letter and certificates. The three claims letter have originals for verification, and their authenticity can be confirmed. The three certificates have no original documents for verification, and their authenticity is not confirmed. WANG Chaojing, WANG Qinghai, and LI Zhiqiang did not appear in court to accept the court’s question. The contents of the claims letter and the certificate also had no other evidence or facts that could prove each other. Therefore, their probative power was not confirmed. 5. Copy of the ID card of WANG Yuding, WANG Hanhe, WANG Haiqing, and WU Jinming as well as a copy of the relevant business license submitted by the Defendant. The statement issued by the above-mentioned 4 persons, and the certificate of the ownership of goods and the relevant goods receipt. The original part of the above evidence is available for checking. Some of them do not have originals for verification, but the Plaintiff has no objection to its authenticity, so the authenticity of the Plaintiff is confirmed; the Plaintiff disputed its legitimacy and relevancy, and believed that the statements were all written and compelled by the Defendant. But the Plaintiff did not provide proof. The court does not accept and confirms the proof of the above evidence.

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6. Details of the four-party logistics overdue fees submitted by the Defendant, and the Plaintiff disputed their authenticity, legality and relevance. The evidence is a form produced by the Defendant unilaterally, covered by the Defendant's business seal, and its authenticity is confirmed. Its content is also related to this case. Therefore, its relevance and legality are also confirmed. Whether it can prove the fact claimed by the Defendant, it must be combined with other evidence with probative force and confirmed facts. According to the parties’ statements and the evidence confirmed by the review, the court determined the following facts: From July 7 to July 18, 2016, the Plaintiff accepted the commissions of WANG Chaojing, WANG Hanhe, WANG Yuding, WANG Qinghai, and LI Zhiqiang. The Plaintiff transferred a batch of ceramic goods to the Defendant from Foshan Jiujiang to Fujian Quanzhou with the door-to-door approach. The voyage was Min Heng 3-1628. The starting time was July 21. The Plaintiff was respectively in the name of “Hao Lian Logistics” (that is, Hao Lian Company), WANG Yuding, WANG Qinghai, and LI Zhiqiang. Among them, under the seaway-bill number MH1626NJJQZ466, the container No. is YHLU1394154 and YHLU1394787. The shipper is Hao Lian Company; the consignee is WANG Chaojing; the freight is 1,600 yuan. Under the seaway-bill number YC1601NJJQZ501, the container number is HNSU2086183, and the shipper is Hao Lian Company. The consignee was WANG Hanhe, and the freight was 1,700 yuan. Under the seaway-bill number MH1628NJJQZ520, the container number was HNSU2012719. The shipper and the consignee were WANG Yuding; the freight was 1,725 yuan. Under the seaway-bill number YC1601NJJQZ511, the container number is HNSU2034317, HNSU2019797, YHLU1382831, YHLU1389409, YMLU2716528, LYGU8011405, HNSU2000913, YHLU1370466, and LYGU8005470. The shipper and the consignee are WANG Qinghai. Except for the freight 1,700 yuan of the container number LYGU8005470, the freight rates for the remaining 8 boxes are 1,630 yuan respectively (in total 14,740 yuan). Under the seaway-bill number 1601NJJQZ510, the container number is YHLU1391129 and LYGU8011508. The shipper and consignees are LI Zhiqiang, and the shipping costs are 1,655 yuan and in total is 3,310 yuan. On July 12, the Plaintiff was entrusted by WU Jinming and entrusted the Defendant to transport 2 containers of ceramic goods from Quanzhou, Fujian to Jiujiang, Foshan with door to door. The voyage was Min Heng 3-1627, and the waybill number was MH1627QZJJ504W. The container numbers were YHLU1394494 and YHLU1364150, and the shipper and consignee both were WU Jinming. On July 28, the Plaintiff commissioned Guangdong Red Law Firm to send a lawyer’s letter to the Defendant requesting the Defendant to send the goods to the designated delivery address within 2 days from the date of receipt of the lawyer's letter and notify the designated consignee to pick up the goods. If the Defendant fails to perform the above obligations, it is deemed that all of the above goods have been damaged, and the lawyer will take legal steps including but not limited to

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lawsuits to resolve the dispute in accordance with the Plaintiff’s request. The Defendant received the lawyer’s letter on July 28. After the goods were delivered to the destinations, WANG Hanhe signed the goods with container number HNSU2086183 on August 5. WANG Yuding signed the goods with container number HNSU2012719 on August 9. WU Jinming signed the container numbers YHLU1394494 and YHLU1364150 on August 9. WANG Qinghai signed eight boxes of goods with container numbers HNSU2034317, HNSU2019797, YMLU2716528, HNSU2000913, LYGU8011405, LYGU8005470, YHLU1370466, and YHLU1382831 from August 13 to August 22. All four consignees mentioned above issued statements to the Defendant to ensure that they were the legal owners of the goods received, and the fees of the goods were settled. The ownership had been transferred since the completion of the loading of the goods. It was confirmed that the Defendant had delivered the goods to its designated company. After the delivery, it is deemed that the goods have been delivered under the contract of carriage. If all disputes and disputes arising from the ownership of the goods are not related to the Defendant, they will not claim to the Defendant for any disputes or disputes over the goods. Foshan Xinglong Building Material Firm, Foshan Chancheng Shengtaoju Building Materials Co., Ltd., Fujian Mingsheng Ceramics Development Co., Ltd., and Fujian Honghua Group Co., Ltd. also issued proof of the right of purchase to the Defendant, proving that WANG Hanhe, WANG Qinghai, and WU Jinming have signed the contract. The payment for the goods has been settled, and the ownership of the goods has been transferred to WANG Hanhe, WANG Qinghai, and WU Jinming since the goods were loaded onto the delivery vehicle. The Defendant confirmed that it had received the freight for the above 12 container goods. The Plaintiff admitted that the freight costs of WANG Hanhe, WANG Yuding and WANG Qinghai were not paid by them. The Plaintiff claimed that WU Jinming’s cargo freight was paid by him, but he did not provide proof of proof. Therefore, the fact that he claimed cannot be recognized. On August 25, the Defendant sent an urgent notice to the consignee WANG Chaojing through the EMS postal mail to inform him that the goods with the container numbers YHLU1394154 and YHLU1394787 had already arrived in Hong Kong and had expired since August 1. As of August 22, the cargo has 22 days since expiration. WANG Chaojing must pay a total of 7,800 yuan for freight and extra expenses on August 24, and arrange to receive goods before August 25. In view of the fact that there are more than two shippers applying for pick-up, in order to ensure no harm to the interests of all parties, the shipper shall provide the following documents: goods ownership certificate (such as goods sales contract, etc.), bill of lading, the Defendant disclaimer provided by the Defendant, relevant proofs of the credit freight, and extra fees that has been paid. On the same day, the Defendant sent an urging notice in the same format to the consignee LI Zhiqiang through the EMS postal delivery to inform him that the goods with the container numbers YHLU1391129 and LYGU8011508 had already arrived in Hong Kong and had expired on August 1 and had expired for 22 days. LI Zhiqiang must pay a total of 7,910 yuan for freight and extra expenses on August 24 and arrange for receiving goods before August 25. The Defendant sent an urgent notice

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to WANG Chaojing and LI Zhiqiang passed the SMS on September 1, September 6, September 8, September 13, September 20, September 28, October 14, October 28, and November 3 with the SMS. The Plaintiff and the Defendant both confirmed that the consignees were WANG Chaojing and the container numbers YHLU1394154 and YHLU1394787 and the consignee were LI Zhiqiang with the container numbers YHLU1391129 and LYGU8011508. The consignee was WANG Qinghai, and the container number was YHLU1389409. The delivery of all these goods above have not yet been completed, and the goods still under the control of the Defendant and the freight has not yet been paid. After investigation, Guangzhou Hao Lian International Logistics Co., Ltd. was registered and established on August 4, 2016 in Guangzhou Tianhe Branch of the Administration for Industry and Commerce. The legal representative is the Plaintiff. Regarding the Plaintiff’s claimed freight loss of 32,750 yuan, the freight claimed by the Plaintiff included 3,400 yuan for WANG Chaojing’s freight, 13,300 yuan for WANG Qinghai’s freight, 3,400 yuan for LI Zhiqiang's freight, 3,800 yuan for WU Jinming's freight, and the previous arrears that WANG Yuding and WANG Hanhe refused to pay the Plaintiff, the shipping costs of 5,100 yuan and 1,750 yuan. Regarding the freight charges of WANG Chaojing, WANG Qinghai, and LI Zhiqiang, the case has ascertained that the freight charges for goods have not yet been paid to the Defendant. They also did not yet receive the goods. The freight of goods received by WANG Haiqing has been paid to the Defendant. But the freight was not paid by the Plaintiff. For WU Jinming’s cargo freight, the Plaintiff did not provide sufficient evidence to prove that he had paid the Defendant the freight. The freight charges owed by WANG Yuding and WANG Hanhe to the Plaintiff had nothing to do with the shipment of the goods involved. Therefore, the fact that the Plaintiff claimed that he suffered a loss of 32,750 yuan in freight was not recognized. Regarding the loss of goods claimed by the Plaintiff 284,200 yuan, firstly, the Plaintiff claimed that the goods had been lost, which was inconsistent with the fact that the goods were still under the control of the Defendant identified in the case. Secondly, the Plaintiff did not provide evidence of the value of the goods and evidence that they had compensated the above loss to shipowners; the fact that the Plaintiff claimed that he suffered loss of goods worth 284,200 yuan was not recognized. Regarding the losses claimed by Plaintiff of RMB17,250 yuan claimed by WANG Chaojing, WANG Qinghai, and LI Zhiqiang. The Plaintiff did not provide evidence sufficient to prove the basis of claimant and evidence that the claim was related to the case. Therefore, the fact that the claimant suffered damages of 17,250 yuan was not recognized. The Plaintiff filed an application for property preservation to the Guangdong Foshan Nanhai District People’s Court on September 1, 2016, requesting that deposits of 890,000 yuan of the Defendant and the offender HUANG Dali should be frozen, and the property should be detained. The Plaintiff paid a security fee of 4,970 yuan. The Guangdong Foshan Nanhai People’s Court made a civil ruling

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(2015) Yue 0605 Min Chu No.12853 on September 5, ruling to freeze the Defendant’s and the offender’s HUANG Dali’s bank deposit of 890,000 yuan or detain the assets of their corresponding value. Actually, the Defendant deposited RMB696.61 yuan which was seized by the court, which was deposited in the bank account 14006 of the bank in the Luojiang Branch of the Industrial and Commercial Bank of China in Quanzhou. At the same time, three cars were detained which no. was MIN “C”, “C,” and “C”. The court believes that this case refers to a total of 17 containers involving 2 voyages and 6 waybills shipped between Jiujiang, Foshan, and Quanzhou, Fujian. The Plaintiff claimed that it was the shipper, and the Defendant was the carrier. There is the contract for the carriage of goods by sea. The Defendant has delayed in delivery and refused the delivery of goods, which shall be considered a breach. The Plaintiff requests that the Defendant shall compensate loss caused by breaching the contract. So this case regards disputes over a maritime cargo contract. About consignees WANG Yuding, WANG Qinghai, LI Zhiqiang, and WU Jinming’s cargo transportation, the court has ascertained that the Plaintiff accepted entrustment of WANG Yuding, WANG Qinghai, LI Zhiqiang, and WU Jinming. The Plaintiff transferred goods to the Defendant in the name of the abovementioned 4 persons, and clearly informed that these 4 persons were the shipper. The Defendant accepted consignment. So it should be verified that the involved shipper was WANG Yuding, WANG Qinghai, LI Zhiqiang, and WU Jinming, and the Defendant was the carrier. The claimant of Plaintiff cannot be recognized by the court of the legal relationship of carriage of goods by sea. The reason was that the claimant lacked contractual basis and was not supported by law. About the cargo transportation between WANG Chaojing and WANG Hanhe, the Plaintiff consigned the goods to the Defendant in the name of Hao Lian Company from July 7 to 18, 2016, and clearly stated in the order that the Defendant’s shipper was the company, and the Defendant accepted the commission and completed the cargo transportation. However, Hao Lian Company was registered on August 5. According to Article 62 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, “the actor is the party on the following circumstances, (1) if the legal person or other organization were non-registered, and the perpetrator conduct civil activities in the name of the legal person or other organization….” Hao Lian Company was not legally registered when the Plaintiff consigned the consignee to the goods of WANG Chaojing and WANG Hanhe. It does not have legal personality and cannot be a party. The subject of civil rights and obligations of civil activities should be the Plaintiff who was the actor. Therefore, regarding the consignee’s cargo transportation of WANG Chaojing and WANG Hanhe, the Plaintiff shall be deemed to be the shipper, and the Defendant shall be the carrier. The Plaintiff and Defendant established a contract for the carriage of goods by sea. The contract is a true expression of the parties and does not violate the mandatory provisions of laws and administrative regulations. It is legal and valid and is legally binding on both parties.

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For the goods whose consignee is WANG Chaojing, the Plaintiff claimed that the Defendant refused to deliver the goods to the consignee, which constituted a breach of contract; the Defendant argued that during the delivery of the goods, the Plaintiff and the relevant consignee rushed to request the Defendant to pick up the goods, resulting in the Defendant being unable to confirm the applicable delivery objects. It has to ask to clarify the cargo rights relationship between the Plaintiff and relevant parties and confirm the receipt of the goods before arranging the delivery. However, the Defendant did not provide evidence to prove his claim. Therefore, the Defendant’s defense grounds have no factual basis and cannot be established according to law. The Defendant has not yet delivered it to the consignee and fulfilled the delivery obligation, which constitutes a breach of contract and should bear the corresponding liability for breach of contract. The Plaintiff claimed that the Defendant’s breach of contract caused the loss of the goods of WANG Chaojing, the loss of freight, and the claim for damages to the Plaintiff, but the case has been found that the evidence provided by the Plaintiff is not sufficient to prove that it suffered the above losses. According to the first paragraph of Article 64 of the Civil Procedure Law of the People’s Republic of China, “the parties have the responsibility to provide evidence for their own claims” and the Article 90 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, “the facts on which the parties rely on their own claims or the facts against which the other party’s claims are based shall provide evidence to prove, but except as otherwise provided by law, before the judgment is made. If the party fails to provide evidence or the evidence is insufficient to prove its factual claim, the party with the burden of proof shall bear the unfavorable consequences.” The Plaintiff shall bear the legal consequences of the insufficiency of the evidence, and the claim for compensation for the loss shall be lack of factual basis and shall not be supported according to law. For the goods whose consignee is WANG Hanhe, both the Plaintiff and the Defendant confirmed that the consignee had received the goods. The Plaintiff claimed that the Defendant delayed in delivery, which constituted a breach of contract, but the Plaintiff did not provide evidence to prove the agreement of delivery time between the two parties and the Defendant’s delay in delivery. The Plaintiff claimed that the Defendant breached the contract and requested the Defendant to compensate WANG Hanhe for the loss of freight, which lacked the factual basis and would not be supported. In summary, the Plaintiff’s claim lacks contractual and factual basis and is not supported by law. In accordance with the provisions of Article 64 of the Civil Procedure Law of the People’s Republic of China and Article 90 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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Reject the Plaintiff’s claims. Court acceptance fee in amount of 4,321 yuan, and the preservation fee in amount of 4,970 yuan, shall be borne by the Plaintiff. If parties disagree with this judgment, any party can submit within 15 days from the date of delivery of the judgment, together with copies of petition in accordance with the number of the other parties, appeal to the Guangdong High People’s Court. Acting Judge: ZHOU Tiantian March 9, 2017 Clerk: ZHOU Qian

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Guangdong High People’s Court Civil Judgment FANG Hao v. Quanzhou Sifang Logistics Co., Ltd. (2017) Yue Min Zhong No.955 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 307. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision that dismissed claims for losses allegedly caused during carriage of goods by sea because plaintiff was held to have acted as agent, not shipper, and so lacked standing to sue, and also because in relation to shipments where plaintiff had acted as shipper, he had failed to provide evidence to establish his claim. Summary FANG Hao entrusted Quanzhou Sifang Logistics Co., Ltd. (carrier) to ship a batch of ceramic goods to Quanzhou Sifang Logistics Co., Ltd. from Foshan Jiujiang to Fujian Quanzhou. The carrier delivered to 4 consignees, but FANG Hao asserted that the goods were still under the carrier’s control and not yet delivered. FANG Hao sued the carrier and claimed that the carrier should be responsible for the freight rate and the loss of the goods. The court held that FANG Hao’s claim lacked basis and rejected the claim. FANG Hao appealed, and the court of second instance found no evidence to support his claims. The court also held that the loss of goods claims were out of the scope of the case. Thus, the court dismissed the appeal.

Judgment The Appellant (The Plaintiff of First Instance): FANG Hao, Male, Born on May 25, 1993, Han, Living in Huilai County, Guangdong Agent ad litem: TANG Cuiping, lawyer of Guangdong Reid Law Firm. Agent ad litem: Huang Xiaobin, lawyer of Guangdong Reid Law Firm.

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The Appellant (The Defendant of First Instance): Quanzhou Sifang Logistics Co., Ltd. Domicile: Luojiang District, Quanzhou, Fujian. Legal representative: WANG Mada, manager of the company. Agent ad litem: ZHU Lu, lawyer of Shanghai Rolmax (Guangzhou) Law Firm. Agent ad litem: TAN Zhuoran, lawyer of Shanghai Rolmax (Guangzhou) Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant FANG Hao and the Appellant Quanzhou Sifang Logistics Co., Ltd. (hereinafter referred to as “Sifang Company”), both parties refused to accept the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.1577 Civil Judgment and appealed to the court. After the case was filed on May 5, 2017, the court formed a collegiate bench to conduct trials. FANG Hao and his agent ad litem Huang Xiaobin, and Agent ad litem of Sifang Company, ZHU Lu, appeared in court to attend the trial. Now the case has been concluded. FANG Hao appealed that: the first-instance judgment should be revoked, and all the claims should be supported by the court. Sifang Company should also assume the full litigation costs of the first and second instances of the case. In the course of the investigation of the court of second instance, FANG Hao added an appealing request to order that Sifang Company should fulfill the delivery obligation. Facts and reasons: firstly, the judgment of first instance found the facts incorrectly, and the applicable law was wrong. First instance judged that “WANG Moubin, LI Mouding, WU Moumou were the shipper of the goods involved, and Sifang Company is the carrier.” This is an error in applicable law and facts. After FANG Hao signed a contract of carriage of goods with WANG Moubin, LI Mouding, WU Moumou, the above four people handed over the goods involved in the case to FANG Hao, and FANG Hao and Sifang Company chatted through QQ to reach a contract of transportation. The chat record was notarized by the notary office, which was enough to determine that there was a contract for the carriage of goods between FANG Hao and Sifang Company who were the shipper and carrier respectively. According to the contract, FANG Hao claimed that the loss of goods, freight loss, and loss of customer claims caused by the breach of contract by the company were legal and reasonable. 2. The court of first instance found that “the consignee was WANG Moubin’s cargo. FANG Hao claimed that Sifang Company’s delay in delivery constitutes a breach of contract, but Fang failed to stipulate the delivery time of both parties and provide the evidence that Sifang Company delayed in delivery.” This was an error of fact identification. There are many business cooperation experiences between FANG Hao and Sifang Company, and there are clear agreements on the way of delivery and delivery methods of goods. Sifang Company argued that the reason why the goods were not released was that the consignee and FANG Hao were rushed for requesting delivery of the goods, but in fact admitted the objective fact that Sifang Company did not deliver them on time. Furthermore, if Sifang Company does not delay the normal release of the goods, it does not require the owner to sign a “disclaimer”. If it is true of the claimant of Sifang Company that the parties have not agreed on the delivery method, it is impossible to

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explain the fact that some of the shippers who have signed the “disclaimer” can obtain the goods, and some of the shippers who have not signed have never received the goods. 3. The court of first instance found that the evidence provided by FANG Hao was insufficient to prove that the loss suffered was a factual determination error. FANG Hao presented the claim letter of the company issued by the consignee Wang in the trial of first instance and submitted a request in writing to the owner to testify as a witness after the trial. But the court of first instance did not adopt it on the grounds of there was no evidence. Such a finding is incorrect. In addition, there are still several container shipments from Sifang Company that are not delivered, and the customer will claim to FANG Hao, who will inevitably suffer losses. Sifang Company pleaded that the facts of the first-instance judgment were basically clear, and there were no problems in the application of the law. Sifang Company has supposed another claimant. 1. For the consignee’s goods such as LI Moumou, WU Moumou, WANG Moubin, FANG Hao booked as an agent to Sifang Company. The booking system of Sifang Company clearly shows the true identification of the four people. FANG Hao does not have the qualification of a multimodal transport carrier as an individual. Fang said the claim that he is the carrier of the above four persons and the shipper of Sifang Company cannot be supported. 2. Regarding the goods of the consignee WANG Mouyi, WANG Mouyi has collected the relevant goods, so he no longer disputes. Even if there is, it is a dispute with FANG Hao, which has nothing to do with Sifang Company. 3. Regarding the fact that the consignee of the goods is WANG Moujia, because the freight, storage, and demurrage fees were not paid on time, Sifang Company has retained the relevant goods according to the lien under the transportation contract, and this is cannot be deemed as non-delivery. 4. Regarding the request of FANG Hao for Sifang Company performing the delivery of the goods, the second instance court could not hear this since Fang did not submit such a claim in the first instance. Sifang Company appealed that there was no contract of carriage of goods by sea between FANG Hao and Sifang Company regarding the goods. The contract between FANG Hao and Sifang Company did not establish a contract for the carriage of goods by sea. The court shall change the judgment that Sifang Company has not fulfilled the delivery obligation so far. Sifang Company breached the contract, so it should not bear corresponding liability for breach of contract. FANG Hao shall bear the first and second trial costs of the case. Facts and reasons: 1. FANG Hao is not a suitable shipper for the cargo transportation and did not establish a contract for the carriage of goods by sea with Sifang Company. FANG Hao has clearly disclosed that the owner of the goods was another person in the first-instance. These cargo owners are the shippers. FANG Hao has no standing in the case. The transportation contract of cargo by sea between the four parties and FANG Hao was not be established. FANG Hao and the relevant consignee rushed to request the delivery of goods to Sifang Company, resulting in the fact that Sifang Company has not delivered the goods to the consignee. Sifang Company has fully proved that after the goods arrived in Hong Kong, Sifang Company continuously issued a notice of delivery to consignee in various ways, requesting that it needed to pick up the goods, and also providing relevant documents and cargo ownership

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offered by the other owner to prove the owners had picked up the goods. Therefore, the goods have not been delivered to the consignee until now because the party and the consignee are competing to pick up the goods. Sifang Company temporarily detains the goods involved for the purpose of prudent operation and protection of the property interests of the owner of the goods. There is no breach of contract, and Sifang Company should not bear the responsibility for breach of contract. FANG Hao pleaded that FANG Hao and Sifang Company transported the goods by door-to-door according to the facts ascertained. Now Sifang Company has not delivered the goods involved to FANG Hao’s customers, which constitutes a breach of contract. The first-instance judgment was found to be correct. FANG Hao filed a lawsuit with the court of first instance as follows: 1. the court shall order that Sifang Company shall compensate to FANG Hao 489,450 yuan, including loss of goods of 284,200 yuan, loss of freight of 32,750 yuan, and loss of customer claims of 172,500 yuan. The legal expenses of the case shall be borne by Sifang Company. The court of first instance found the facts as follows: 1. from July 7 to July 18th, 2016, FANG Hao accepted the commission of the consignees. FANG Hao consigned one batch of ceramic goods to Sifang Company with the way of door to door from Foshan Jiujiang to Quanzhou, Fujian in the name of “Hao Lian Company” [i.e., Guangzhou Hao Lian International Logistics Co., Ltd. (hereinafter referred to as “Hao Lian Company”). The voyage is Minhang 3-XXXX; the sailing time is July 21. Among them, the container number of the consignment note MH1626NJJQZ466 is the YHLU1394154 and YHLU1394787; the shipper is Hao Lian Company; and the freight is 1,600 yuan. The container number of the consignment note YC1601NJJQZ501 is the HNSU2086183; the shipper is Hao Lian Company; the freight is 1,700 yuan. The container number of the consignment note MH1628NJJQZ520 is the HNSU2012719. The container number of the consignment note YC1601NJJQZ511 is respectively HNSU2034317, HNSU2019797, YHLU1382831, YHLU1389409, YMLU2716528, LYGU801140, HNSU2000913, YHLU1370466, and LYGU8005470; the freight of the other 8 boxes both are 1,630 yuan; and the total freight is 14,740 yuan. The container number of the consignment note YC1601NJJQZ510 is the YHLU1391129 and LYGU8011508; the freight is 1,655 yuan, a total of 3,310 yuan. On July 12, FANG Hao entrusted Sifang Company to transfer 2 containers of ceramic goods from Quanzhou to Foshan Jiujiang in a door-to-door manner. The voyage was Minhang 3-XXXX; the waybill number is MH1627QZJJ504W; the container numbers are YHLU1394494 and YHLU1364150; the shipper and the consignee are both WU Moumou. On July 28, Guangdong Reid Law Firm, entrusted by FANG Hao, sent a lawyer's letter to Sifang Company, requesting Sifang Company to deliver the goods to the designated receiving address and notify the designated consignee within 2 days from the date of receiving the lawyer’s letter. If Sifang Company fails to fulfill the above obligations, it is then deemed that all the above goods have been damaged, and the lawyer will take the legal means including but not limited to litigation to resolve the dispute according to the Plaintiff's request. Sifang Company received the lawyer’s letter on July 28.

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After the goods were shipped to the destination, consignees had successively signed 8 boxes of cargoes with container numbers HNSU2034317, HNSU2019797, YMLU2716528, HNSU2000913, LYGU8011405, LYGU8025470, YHLU1370466, and YHLU1382831 from August 13 to August 22. The above four consignees issued a statement to Sifang Company to ensure that it is the legal owner of the goods received. The payment has been settled, and the ownership of the goods has been transferred since the completion of the loading of the goods. After Sifang Company delivers the goods to its designated address, it is deemed that the goods have been delivered under the contract of carriage. All disputes or disputes arising from the ownership of the goods are not related to Sifang Company. Consignees will not request Sifang Company be responsible for the loss of goods and damage. Foshan Xinglong Building Materials Firm, Foshan Chancheng Shengtaoju Building Materials Co., Ltd., Fujian Mingsheng Ceramics Development Co., Ltd., and Fujian Honghua Group Co., Ltd. also issued certificates of proof to Sifang Company, which was to prove that consignees have signed the goods and that the fees of goods have been settled and the ownership of the goods has been transferred to consignees when the goods were loaded onto the truck for delivery. Sifang Company confirmed that it has received the freight charges for the above 12 containerized goods. FANG Hao admitted that he did not pay the freight charges of the consignees. On August 25, Sifang Company issued a reminding notice to the consignee WANG Moujia via EMS postal delivery to inform the consignee that the goods with the container numbers YHLU1391454 and YHLU1394787 had arrived. As of August 22, these cargoes have expired and are 22 days overdue from August 1. Consignee LI Moumou should pay the freight and extra cost of 7,910 yuan on August 24 and arrange to receive the goods before August 25. Sifang Company then sent a reminding notice to the consignees WANG Moujia and LI Moumou through the mobile phone on September 1, September 6, September 8, September 13, September 20, September 28, October 14, October 28, and November 3. FANG Hao and Sifang Company both confirmed that the consignee was consignee Wang. The consignee of cargo was consignee LI Moumou with the container number YHLU1394154 and YHLU1394787. The container number was YHLU1391129 and LYGU8011508, and the consignee was consignee WANG Mouding. The cargo with the container number YHLU1389409 has not yet been picked up. It is still under the control of Sifang Company, and the freight has not been paid. Upon investigation, Hao Lian Company was registered and established on August 4, 2016 in Tianhe Branch of Guangzhou Administration for Industry and Commerce. The legal representative is FANG Hao. Regarding the loss of freight of 32,750 yuan claimed by FANG Hao, the freight includes the cargo freight of consignee WANG Moujia in the transportation of the goods involved in 3,400 yuan; the freight of consignee WANG Mouding cargo is 15,300 yuan; the freight of consignee LI Moumou is 3,400 yuan; the freight of consignee WU Moumou is 3,800 yuan; and freight of 5,100 yuan and 1,750 yuan that consignee WANG Moubin and WANG Mouyi refused to pay to FANG Hao in

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the previous arrears. Regarding the freight charges of consignees WANG Moujia, WANG Mouding and LI Moumou, the case has been found that the freight charges of goods that consignees have not received have not yet been paid to Sifang Company. Sifang Company has received the freight of cargo that consignee WANG Mouyi received. But this freight was not paid by FANG Hao. Regarding freight charges of consignee WU Moumou, FANG Hao did not provide sufficient evidence to prove that he had paid the freight to Sifang Company. The freight charges for the consignees’ arrears are not related to the transportation of the goods involved. Therefore, the fact that FANG Hao claimed that it suffered a loss of freight of 32,750 yuan was not recognized in the first-instance court. Regarding the loss of goods claimed by FANG Hao of 284,200 yuan, firstly, FANG Hao claimed that the goods have been lost, which is inconsistent with the fact that the goods identified are still under the control of Sifang Company in this case. Secondly, FANG Hao did not provide evidence of the value of the goods and evidence that he had paid the above losses to the owner. Therefore, the fact that FANG Hao claimed that it had suffered a loss of goods of 284,200 yuan was not recognized in the first-instance court. Regarding the fact claimed by FANG Hao that consignees claimed the loss of 17,250 yuan to him, FANG Hao did not provide sufficient evidence to justify the claim and evidence that the claim was related to the case. Therefore, the fact that he claimed he have suffered a claim loss of 17,250 yuan was not recognized. On September 1, 2016, FANG Hao filed an application for property preservation with the Guangdong Foshan Nanhai District People’s Court, requesting the freezing of deposits of RMB890,000 yuan from the bank of Sifang Company and the non-party, or the seizure and seizure of the property of the corresponding value, and provided guarantees. FANG Hao prepaid the security fee of 4,970 yuan. The Guangdong Foshan Nanhai District People’s Court made a (2016) Yue 0605 Min Chu No.12853 Civil Ruling on September 5, ruling to freeze the bank deposit of RMB890,000 yuan from Sifang Company and the non-party, or to seize and detain the property of its corresponding value. Actually, Nanhai Court froze the bank deposit of RMB696.61 yuan from the account of Sifang Company in the Bank of China Quanzhou Luojiang Sub-branch 1406. And all the license plates with the license number Min C and Min C were seized. The court of first instance held that the case involved a total of 17 containers under two voyages and six waybills which were transported between Foshan Jiujiang and Quanzhou, Fujian. FANG Hao claimed that he was the shipper and Sifang Company was the carrier. The two parties established a contract for the carriage of goods by sea for the above-mentioned transportation. Sifang Company had defaulted delivery and refused delivery in the performance of the contract. FANG Hao requested Sifang Company to compensate for the losses caused by the breach of contract. Therefore, this case is a dispute over the contract of carriage of goods by sea. The case has identified consignees’ status. FANG Hao accepted the entrustment of consignees and transferred the goods involved in the case to Sifang Company in the name of the above four persons, and clearly informed Sifang Company of the

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consignee of the above four people in the order. Sifang Company accepted the commission and completed the transportation of the goods involved. Therefore, consignees should be identified as the shipper of the goods involved, and Sifang Company as the carrier. FANG Hao’s claim that he was a shipper and established a contract for the carriage of goods by sea between the four parties was inconsistent with the facts and could not be established by law. Therefore, the claimant purposed by FANG Hao lacked of contractual basis, and it had no support according to law that due to the breach of contract by Sifang Company, the loss of its goods, the loss of freight, and the loss of customer claims. The cargo transportation with the consignees WANG Moujia and WANG Mouyi are on behalf of Hao Lian Company during July 7–18, 2016. FANG Hao clearly informed Sifang Company that the shipper was the company in the entrusted waybill, and Sifang Company accepted the entrustment and completed the cargo transportation. However, the company was registered and established on August 4, according to Article 62 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China. “in the following cases, the actor is the party: (1) the legal person or other organization shall be registered and not registered, and the actor shall conduct civil activities in the name of the legal person or other organization.” Hao Lian Company has not yet registered when it consigned cargo to Sifang Company with the consignees. So Hao Lian Company does not have legal person status and cannot be a party. FANG Hao should be the subject of civil rights and commitments for civil activities acting as the actor. Therefore, regarding the consignee’s cargo transportation of WANG Moujia and WANG Mouyi, it should be determined that FANG Hao is the shipper; Sifang Company is the carrier; and FANG Hao and Sifang Company have established a contract for the carriage of goods by sea. The contract is a true expression of the parties and does not violate the mandatory provisions of laws and administrative regulations. It is legal and valid and is legally binding on both parties. For the goods whose consignee is WANG Moujia, FANG Hao claimed that Sifang Company’s refusal to deliver the goods to the consignee constitutes a breach of contract. Sifang Company argued that during the delivery of the goods, FANG Hao and the relevant consignee requested the delivery of the goods to Sifang Company too quickly, resulting in Sifang Company being unable to confirm the appropriate delivery subject. Sifang Company had to ask FANG Hao and the relevant consignee to clarify the cargo rights relationship between the two parties and confirm the receipt of the goods before arranging the delivery. However, the Quartet did not provide evidence to prove its claim. Therefore, the defense of Sifang Company has no factual basis and cannot be established according to law. Sifang Company has still not delivered the goods to the consignee and fulfilled the delivery obligation, which constitutes a breach of contract, and Sifang Company should bear the corresponding liability for breach of contract. FANG Hao claimed that consignee Wang’s damage of loss of goods, freight losses, and claims to FANG Hao’s losses were due to the breach of Sifang Company. However, the case has been found to be insufficient to prove that it suffered the above losses. According to the first paragraph of Article 64 of the Civil Procedure Law of the People’s

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Republic of China, the parties have the responsibility to provide evidence for their own claims. According to Article 90 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the parties shall provide evidence to prove the facts on which the claim is based or the facts against which the other party’s claim is based, except as otherwise provided by law. Before the judgment is made, if the party fails to provide evidence or the evidence is insufficient to prove its factual claim, the party with the burden of proof bears the adverse consequences. FANG Hao shall bear the legal consequences of the insufficiency of the evidence. The request for the compensation of the loss by Sifang Company lacks factual basis and will not be supported according to law. For the goods whose consignee is Wang, both FANG Hao and Sifang Company confirmed that the consignee has received the goods. FANG Hao advocates the delayed delivery of the company, which constitutes a breach of contract. However, FANG Hao did not provide evidence to prove the agreement between the two parties on the delivery time and the existence of the delayed delivery of the company. FANG Hao claimed that Sifang Company breached the contract and requested Sifang Company to compensate the consignee Wang for the freight loss, lacked the factual basis and is not supported according to law. In summary, FANG Hao’s claim lacks contract and factual basis, and the court of first instance does not support it according to law. The court of first instance is in accordance with Article 64 of the Civil Procedure Law of the People’s Republic of China and Article 90 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the court of first instance judged to reject claims of FANG Hao. FANG Hao shall bear the court acceptance fee 4,321 yuan and the preservation fee 4,970 yuan of first instance. In the second instance, neither party submitted new evidence. The facts ascertained in the examination are supported by relevant evidence and confirmed by the court according to law. The court of second instance holds that this case is the dispute over contract of contract of carriage of goods by sea. According to the appeals and defense opinions of both parties, combined with the investigation of the court, the court determined the issues of second instance: 1. in the cargo transportation of the consignees, whether FANG Hao is the shipper and has the right to claim the default loss of the transportation involved in the case. 2. In the transportation of the consignee Wang, is there any delay in the delivery of the company and the loss of goods? 3. Whether Sifang Company’s failure to fulfill the delivery obligation constitutes a breach of contract. FANG Hao appealed that he is the shipper in transportation of goods with the consignees. He has the right to claim the loss of goods, freight loss, and loss of customer claims from the company based on the contract of carriage. According to the facts ascertained in this case, FANG Hao accepted the entrustment of consignees, and consigned the goods involved in the case to Sifang Company in the name of the above four persons. The logistics and transportation order clearly shows that consignees are the principals. FANG Hao did not raise an objection.

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Sifang Company accepted the entrustment and completed the transportation of the goods involved. Therefore, the shippers should be identified as consignees involved in the transportation of related goods, and Sifang Company is the carrier. FANG Hao did not consign the goods involved in his own name. He clearly disclosed the principal during the consignment process. Therefore, his claim to establish a contract of carriage of goods with the Quartet Company could not be established according to law, nor did he have the right to claim the relevant losses as the shipper. The judgment of first instance was found to be correct, and the court affirms it. In the cargo transportation of the consignee WANG Moujia and WANG Mouyi, FANG Hao consigned the goods to Sifang Company in the name of Hao Lian Company from July 7 to 18, 2016. The order indicated that the consignor of the cargo transportation was Hao Lian Company. Sifang Company accepted the commission and completed the transportation of the goods. When FANG Hao entrusted transportation in the name of Hao Lian Company, Hao Lian Company had not yet been established. The first-instance judgment was based on Article 62 of the Supreme People’s Court’s Interpretation of the Application of the Civil Procedure Law of the People’s Republic of China, and it was found that the verification that legal consequences of the operation shall attributable to FANG Hao is correct. In Sifang Company’s cargo transportation in which the consignees are WANG Moujia and WANG Mouyi, the claim of the contract between FANG Hao and Sifang Company does not establish a contract of carriage. As the shipper of the two batches of goods, FANG Hao has the right to exercise the rights of the shipper according to law and claim the relevant losses. In the cargo transportation of the consignee WANG Moujia, Sifang Company has not delivered the goods so far. According to Article 309 of the Contract Law of the People’s Republic of China, “after the arrival of the goods, the carrier knows the consignee, it shall promptly notify the consignee, the consignee shall promptly pick up the goods”, the carrier is in the cargo. The goods should be delivered in time after the arrival of the transportation. In this case, Sifang Company also confirmed that the consignee claimed to pick up the goods, but Sifang Company also refused to deliver the goods on the grounds that FANG Hao picked up the goods. Sifang Company did not provide evidence to prove that FANG Hao exercised the shipper’s rights and requested him to return the goods or that the goods to be delivered to other consignees. Therefore, the claim of Sifang Company cannot be accepted. In this case, Sifang Company formed a breach of contract because of a failure to deliver the goods to Wang. In this case, FANG Hao claimed that due to the failure of Sifang Company to deliver the goods in time, WANG Moujia had defaulted and refused to pay the freight. Although Wang sent a claim for the failure to receive the goods to FANG Hao, FANG Hao did not prove that Wang had paid the compensation to FANG Hao, and FANG Hao did not pay the freight to Sifang Company for the goods. The claimed losses have not actually occurred, so it is not inappropriate to reject the party’s petition in the first instance. The appeals of Sifang Company and FANG Hao for the shipment of the goods cannot be established and should be rejected.

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Regarding the consignee’s claim that the consignee was WANG Mouyi’s cargo transportation delay delivery failure, according to the facts ascertained in this case, the shipment was shipped on July 21, 2016, and WANG Mouyi signed the goods on August 5. FANG Hao claimed that the late delivery of the goods caused Wang to refuse to pay the freight and caused losses. From the point of view of the shipment and delivery of the shipment, the delivery time was not excessively delayed, and FANG Hao did not provide evidence of the parties’ agreement on the delivery time and the delay in delivering the breach of contract. FANG Hao did not actually carry the goods in this case. After collecting the freight from the client, he should pay the freight to Sifang Company. In the first instance, FANG Hao admitted that the freight of the goods was not paid by him. Therefore, even if there was a loss, FANG Hao only lost the freight difference of prices, but FANG Hao did not prove the freight difference of prices. It was not improper to dismiss the claim in the first instance. In the second-instance court investigation, FANG Hao added the appeal request to order Sifang Company to fulfill the delivery obligation, which exceeded the scope of the second-instance trial of this case, and the court refused to go through the trial according to law. There are still 5 containers not delivered in the goods involved. According to the above analysis, the consignee is not the container of the three containers of Li and Wang. The delivery disputes concerning these three containers should not be trialed in this case. Moreover, Sifang Company’s appeal to change the judgment that Sifang Company has not delivered the goods to date does not constitute a breach of contract, and should not bear the corresponding liability for breach of contract. Some of them are beyond the scope of the case. For the excess, they will not be tried according to law. In summary, the first-instance judgment found that the facts were clear, the application of law was correct, and the processing results were appropriate, so the court affirms it according to law. Both FANG Hao and Sifang Company’s appeal requests lack factual and legal basis and should be dismissed. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 8,642 yuan, the Appellant FANG Hao shall bear 4,321 yuan, and the Appellant Quanzhou Sifang Logistics Co., Ltd. shall bear 4,321 yuan. The judgment is final. Presiding Judge: DU Yixing Judge: MO Fei Judge: GU Enzhen December 11, 2017 Judge Assistant: GAO Jing Clerk: PAN Wanqin

Shanghai Maritime Court Civil Judgment Far East Horizon Limited v. On Best Shipping Limited

(2017) Hu 72 Min Chu No.526 Related Case(s) None. Cause of Action 233. Dispute over ship operation loan contract. Headnote Plaintiff lender held entitled to recover part of loan from defendant borrower, with remainder to be secured by mortgage over defendant's ship. Summary The Plaintiff filed lawsuit against the Defendant for failure to repay a loan by the stipulated accelerated date. The two parties signed multiple contracts securing two separate loans, totaling USD20,447,000, and the Defendant offered its vessel as security for repayment of the loaned money. The Plaintiff requested a portion of the loaned money as well as a right to the remaining sum from the vessel. After trial, the court held that the Plaintiff was entitled to the money it demanded as well as an interest in the vessel as requested.

Judgment The Plaintiff: Far East Horizon Limited Domicile: Suit 6305, 63/F Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Special Administrative Region. Legal representative: KONG Fanxing, director. Agent ad litem: CHENG Jie, staff. The Defendant: On Best Shipping Limited Domicile: Room 2, 1/F, Kodak House II, 39 Healthy Street East, North Point, Hong Kong Special Administrative Region. Legal representative: TAN Xuegang, director. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_17

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With respect to the case arising from dispute over loan contract secured by ship, between the Plaintiff, Far East Horizon Limited (hereinafter referred to as “Far East Company”) and the Defendant On Best Shipping Limited (hereinafter referred to as “On Best Company”), the Plaintiff filed an action before the court on April 14, 2017. After entertaining the case on the same day, this case was legally heard in accordance with general procedure. On June 12, 2017, the court held a hearing in public. CHENG Jie, agent ad litem of Far East Company, and TAN Xuegang, agent ad litem of On Best Company, attended the court hearing. Now the case has now concluded. The Plaintiff alleged that: As the lender, the Plaintiff signed two copies of the Loan Agreement with the Defendant (the borrower) on July 5, 2012 and March 13, 2013 respectively, which stipulated that the Plaintiff shall make a loan totaling USD20,447,000 to the Defendant for purchase of M.V. Oriental Dragon (hereinafter referred to as “M.V. Oriental Dragon”). The Plaintiff made the loan to the Defendant on July 5, 2012 and March 14, 2013 as stipulated. On January 13, 2016, the Plaintiff and Defendant signed Loan Contract and Supplementary Agreement 1, combining and specifying Loan Contract of 2012 and 2013. Loan Contract stipulated that if the borrower failed to pay the full amount of money on any one of the items, it would constitute default, upon which the lender would declare that all the loans, interest, and other expenses under Loan Contract are due to expire immediately, and the borrower shall pay all the money in advance. On January 13, 2016, the Plaintiff and the Defendant signed Mortgage Contract on M.V. Oriental Dragon (hereinafter referred to as Mortgage Contract). As the guarantee for the mortgage under the repayment obligation of Loan Contract, the Defendant mortgaged M.V. Oriental Dragon, which hung the flag of the Hong Kong Special Administrative Region (hereinafter referred to as “Hong Kong”), to the Plaintiff. On January 26, 2016, the two parties handled “Mortgage Contract of Ships in Hong Kong” (hereinafter referred to as “Mortgage Contract”) at the Hong Kong shipping registration office. The Defendant failed to pay after the rent expired on February 5 and May 5, 2016, prompting the Plaintiff to issue the Notice of Breach of Contract, Letter of Acceleration and Collection (hereinafter referred to as the “Notice of Accelerated expiration”), announcing that Loan Contract was immediately expedited and requiring the Defendant to pay an immediate payment of USD15,433,565.70. In conclusion, Loan Contract has been terminated and Defendant has broken the contract, so the Plaintiff requires Defendant to pay immediate payment for the principal and interest of all the remaining loans under Loan Contract. Also, in accordance with the agreement of Mortgage Contract, the Plaintiff has the right of mortgage to the mortgaged goods under Mortgage Contract and the right to take priority in compensation of the price from the disposal of mortgages of all accounts payable by the Defendant. Therefore the Plaintiff requests the court to order that: 1. the Defendant shall repay the loan principal of USD9,000,000 with interest (which shall be calculated according to the annual interest rate of 4.9738% from the date of May 20, 2016

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until the date of actual discharge); 2. the Plaintiff shall enjoin the right of mortgage to M.V. Oriental Dragon mortgage and could make an agreement with the Defendant to reduce the price of M.V. Oriental Dragon or apply for auction or sale thereof. Further, the Plaintiff shall take priority in compensation with respect to the price in the total range of the first creditor’s rights above mentioned and the realization of the cost of mortgage; 3. the Defendant shall bear all the costs of this case. The Defendant argued that: It is confirmed that Loan Contract was signed with the Plaintiff. The loans were received and the ship’s mortgage was handled; however, the loans cannot be repaid because of the depression of the shipping market. The evidence adduced by the Plaintiff to support its claim, the Defendant’s cross-examination, and the determinations of the court are as follows: 1. Two Loan Agreements, Loan Contract, and Supplementary Agreement 1, to prove that Loan Contract was established in accordance with the law and stipulates the rights and obligations of the two parties as well as the events that trigger default. 2. Two copies of bank slips, to prove that the Plaintiff issued two loans of USD11 million and USD9.447 million to the Defendant. 3. Mortgage Contract, to prove that the Defendant mortgaged M.V. Oriental Dragon, hanging the flag of Hong Kong, to the Plaintiff as the guarantee for the obligation of repayment under Loan Contract. 4. Copy of deed of mortgage and registration of ships, to prove that the Plaintiff and the Defendant handled registration of the ship's mortgage at the Hong Kong ship registration office. 5. Acceleration notice, to prove that the Defendant broke the contract; the Plaintiff announced that Loan Contract accelerated maturity and, therefore, requires Defendant to repay the principal and interest of all the loans immediately. 6. Legal opinions applicable to the law of the United Kingdom of Great Britain and Northern Ireland (hereinafter referred to as Britain) and Hong Kong, Money Lenders Ordinance, and Merchant ship (Registration) Ordinance of Hong Kong, to prove that it is effective according to the British Law, laws of Hong Kong, Loan Contract, and Mortgage Contract. The Defendant had no objection to the above evidence. The court confirmed the effect of the evidence and probative force of the above evidence. The Defendant did not adduce evidence. The court finds that: On July 5, 2012, the Plaintiff, as Party A, and the Defendant, as Party B, signed Loan Agreement, in which the two parties agreed that Party A would provide a loan of USD11 million to Party B. The term of the loan was from July 5, 2012 to July 5, 2017 with an interest rate of 3.4596% and the principal and interest of the loan to be repaid in a single instance on the expiration date. On the same day, the Plaintiff transferred USD11million to the Defendant.

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On March 13, 2013, the Plaintiff, as Party A and the Defendant, as Party B signed Loan Agreement, in which the two parties agreed that Party A would provide a loan of USD9,447,000 to Party B. The term of the loan was from March 14, 2013 to March 14, 2018 with an interest rate of 3.2801% and the principal and interest of the loan to be repaid in a single instance on the expiration date. On the same day, the Plaintiff transferred USD10 million to the Defendant. On January 13, 2016, the Plaintiff, as the lender and the Defendant, as the borrower, signed the Loan Contract, in which the two parties agreed that the lender provide the borrower a term loan of USD20,447,000, which the borrower would use as part of the financing of the purchase price of a ship; the borrower took USD11 million on July 5, 2012 and USD9,447,000 on March 14, 2013. The annual interest rate was set at 4.9738%, and the borrower was to repay the loan at the expiration date (April 5, 2018); any of the following events would constitute a breach of the Loan Contract: the borrower fails to pay any amount of money due in accordance with the manners and time stipulated by any financing documents … If there was any breach of contract, the lender could take all or any of the following remedial measures: announce the loan and all the accrued interest, expense, cost, expenditure, and all other amounts that the borrower owed to the lender under this contract are due and shall be paid immediately, and after the announcement this amount is due and shall be paid … Compensation: upon request, the borrower shall pay compensation to the lender for any loss or expenses (including the legal fee) suffered or undertaken by the lender for the borrower’s failure to perform any obligation under the financing document. This contract and any non-contractual obligations arising from or relating to this contract are governed and shall be interpreted by British law. On the same day, the Plaintiff, as the mortgagee, and the Defendant, as the owner of the ship, signed Mortgage Contract, which stipulated that the mortgagee agreed to lend the ship-owner a loan of no more than USD20,447,000 according to the terms and conditions specified in Loan Contract signed by the ship-owner and the mortgagee on January 13, 2016. The ship-owner would be the legal and beneficial owner of the ship, and the First Priority Hong Kong Statutory Mortgage Agreement (hereinafter referred to as “mortgage agreement”) of a ship had been signed, delivered, and registered by the mortgagee as the beneficiary. The ship referred to is M.V. Oriental Dragon that is registered under the ship-owner and hangs the flag of Hong Kong and has an official number of HK-2852. The ship-owner agreed to pay the mortgagee all the money under the debt and fulfill all other obligations arising from the financing document. In order to ensure the ship-owner repays the debts and fulfills all other obligations under or arising from the financing document, the ship-owner guaranteed and mortgaged the ship as the full ownership to the mortgagee through the Mortgage Agreement and this contract. The guarantee is persistent, and is not deemed to be fulfilled because of any interim payment or repayment until the debt is fully paid off and the mortgagee has no other actual or accidental debt relating to the ship or any other things stated in the financing document to the third party. If there is any event of default, the guarantee constituted by the Mortgage Agreement and this contract shall be enforced immediately.

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This contract and any non-contractual obligations arising from or relating to this contract are governed and shall be interpreted by British law. On January 26, 2016, the Defendant registered the ship mortgage contract at the Hong Kong shipping registration office. The mortgagor is the Defendant, the mortgaged ship is M.V. Oriental Dragon, and the mortgagee is the Plaintiff. The contract guaranteed the obligations within the scope of Loan Contract and Mortgage Contract. According to the register book of the ship, M.V. Oriental Dragon had just one mortgage registration above mentioned by June 12, 2017. After the two parties signed Loan Contract, they signed Supplementary Agreement 1, in which the content under the Loan Contract that the borrower shall repay the loan on the expiration date (April 5, 2018) in one instance was deleted and amended as that the borrower, now, shall pay the remainder of the loan (USD12,818,535.67) by ten installments. The amount and date of the new repayment were stipulated, in which the first repayment date was on February 5, 2016, and the amount of the repayment was USD1,343,839.38 (the principal was USD1,281,853.57 and the interest was USD61,985.81); the second repayment date was on May 5, 2016, and the amount of the repayment was USD1,425,306.44 (the principal was USD1,281,853.57 and the interest was USD143,452.87); …; the last repayment date was on April 5, 2018, and the amount of the repayment was USD3,123,831.97 (the principal was USD1,281,853.57 and the interest was USD1,841,978.43). In this Agreement, both confirmed that Loan Contract, Mortgage Contract, and Supplementary Agreement 1 were all signed in Shanghai. Further, Agreement also stipulated that the obligations and duties of the borrowers and the guarantees under the financing documents would not reduce or disappear, and the life and material guarantee established in these contract documents would continue to guarantee the borrower’s obligations, duties, and debts after this agreement was signed. The applicable laws of this agreement are regulated under British law. In May 2016, the Plaintiff sent the Defendant a notice of acceleration: the Defendant’s failure to pay on the due date for payment of February 5 and May 5, 2016 constitutes a breach of contract. The Plaintiff will claim that the due or overdue loan and other payments under the Loan Contract accelerated maturity, and claim that the Defendant shall pay the Plaintiff a total amount of USD15,433,565.70, including the loan of USD12,818,535.67 and the interest of USD2,615,030.03 on the date due of May 20, 2016. During the trial on June 8, 2017, MICHAEL NOLAN, the lawyer for the British law firm issued Legal Opinion: according to British law, Loan Contract and Mortgage Contract are effective; however, the prerequisite is that the law of the seat of lender and borrower (Hong Kong) shall allow them to sign this agreement, and the signatory is authorized. Regarding the ship mortgage, the British court will refer to the law of Hong Kong for the nationality of the ship and the place of mortgage registration which is Hong Kong. On July 4, 2017, the lawyer ZHANG Jingqi of the Hong Kong Mayer Brown JSM issued Legal Opinion: under the law of Hong Kong, according to the provisions of Money Lenders Ordinance, the law shall be exempted. Therefore, the

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borrower of this kind of loan does not belong to the money lenders stipulated in Money Lenders Ordinance, and to provide a loan, the borrower does not need the license in accordance to Money Lenders Ordinance. The borrower has the right to borrow the loan from the lender, and the borrower's company charter also stipulates that the director of the borrower has the right to borrow loans on behalf of the borrower and mortgage company’s assets of the borrower. The court holds that: This case is a dispute over a loan contract secured by a ship. Both the Plaintiff and the Defendant are companies registered in Hong Kong, and Hong Kong related factors exist in this case. According to Article 41 of the Law of the PRC on Application of Laws to Foreign-related Civil Relations, the parties concerned may choose the laws applicable to contracts by agreement. Both the Plaintiff and the Defendant said in the trial that British law and the laws of Hong Kong were applied in accordance with the contract, which was confirmed by the court. The Defendant had no objection to the legal opinion of the British lawyer, the Hong Kong lawyer, and Money Lenders Ordinance and Merchant Ship (Registration) Ordinance that the legal opinion was based on what was provided by the Plaintiff. According to the principle of autonomy of will of the parties in the British Law and Laws of Hong Kong, it did not go against the law that the Plaintiff provided a loan to the Defendant and the Defendant mortgaged its own ship, M.V. Oriental Dragon, to the Defendant. The loan contractual relationship and mortgage contractual relationship between the two parties was established legally and effectively. The court confirmed it. According to Loan Contract signed by the Plaintiff and the Defendant, the loan contractual relationship between the two parties is established whereby the Plaintiff is the lender and the Defendant is the borrower. The Plaintiff had provided the Defendant a loan as agreed; therefore the Defendant shall repay the loan and pay the interest on the agreed date. Since the Defendant did not repay the loan as agreed, the Plaintiff sent a notice of acceleration to the Defendant according to Loan Contract, announcing that Loan Contract accelerated maturity and requested that the Defendant repay the principal and the interest of the loan of USD15,433,565.70 by May 20, 2016. However, the Defendant did not repay the loan after receiving this notice. The Defendant’s action constituted a breach of contract, so it shall bear the corresponding liability. The Defendant owed USD12,818,535.67 of the principal, but the Plaintiff claims only USD9,000,000, which was its own by right and not in violation of the law. The court supported the Plaintiff’s claim that the Defendant shall repay the principal and interest. The principal of the loan that the Plaintiff appealed was USD9,000,000, and the interest shall be calculated according to the annual interest rate of 4.9738% from the date of May 20, 2016 until the date of actual discharge. This was supported by the court. According to Mortgage Contract signed by the two parties of the Plaintiff and the Defendant, the Defendant mortgaged its own ship, M.V. Oriental Dragon, to the Plaintiff as the guarantee for the repayment obligation under Loan Contract and registered M.V. Mortgage Contract confirmed at Hong Kong shipping registration office. The Defendant mortgaged the debts with its own ship. The scope of the

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mortgage included all the debts under Loan Contract and all the other obligations under or arising from Loan Contract. Now, the Defendant failed to fulfill the obligation of repayment on time, so it shall bear the duty of mortgage. Therefore, the Plaintiff has the right to enjoy and exercise the mortgage of M.V. Oriental Dragon. To sum up, according to Article 10 and Article 41 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, Article 2 of the Money Lenders Ordinance of Hong Kong Special Administrative Region of the People’s Republic of China, Article 44 (1) (3), Article 45 (1) and Article 47 (1) of the Merchant Ship (Registration) Ordinance of Hong Kong Special Administrative Region of the People’s Republic of China, Article 19 of Interpretation of the Supreme People’s Court on Several Issues concerning the Application of Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant, On Best Shipping Limited, shall repay the Plaintiff, Far East Horizon Limited, the principal of USD9,000,000 with interest (which shall be calculated according to the annual interest rate of 4.9738% from the date of May 20, 2016 until the date of actual discharge) within ten days as of the effective day of this judgment. 2. The Plaintiff, Far East Horizon Limited, shall enjoy the mortgage rights over M.V. Orient Dragon. If the Defendant On Best Shipping Limited fails to fulfill its obligation to make said payments within the time limit provided by this Judgment, the interest shall be doubled for the period of deferment in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB3,56,800 yuan, shall be borne by the Defendant, On Best Shipping Limited. If dissatisfied with this judgment, any party shall, within thirty days as of the service of this judgment, submit a Statement of Appeal to the court, with duplicates in the number of the opposing parties, so as to make an appeal to the Shanghai High People’s Court. Presiding Judge: KE Yonghong Judge: CHEN Lei People’s Juror: LI Huina October 10, 2017 Clerk: WANG Kaiyue

Guangzhou Maritime Court Civil Judgment GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2016) Yue 72 Min Chu No.95 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 348 and page 370 respectively. Cause of Action 240. Dispute over liability for major accident of port operation. Headnote Apportioning liability for damages incurred when plaintiffs’ ship overturned and sank while loading at defendant's dock, including damages for salvage, repairs, compensation to deceased workers, and damage to dock. Summary The Plaintiffs’ M.V. Yue Qing Yuan Huo 6229 sank while loading and unloading stone powder in the front of the Defendant’s dock. Two workers on the ship, PAN Yamei and LIU Yubing died in the accident. Their relatives and both parties signed a settlement agreement for the death compensation. The Plaintiffs paid the relatives and sued the Defendant for overpaid proportion. The Defendant refused because it had no fault for the accident. The court favored the Plaintiffs since the Defendant failed to provide reasonable working environment and ignored local safety regulations.

Judgment The Plaintiff (the counterclaim Defendant): GAN Muan, male, born on October 1, 1981, Han, living in Zhaoqing, Guangdong. Agent ad litem: LIN Zhonghua, lawyer of Guangdong Wnagji Law Firm. Agent ad litem: YAN Qing, lawyer of Guangdong Wangji Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_18

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The Plaintiff (the counterclaim Defendant): Qingyuan Anshun Transportation Co., Ltd. Domicile: No. 11, Block 17, Second Yanjiang Road, Qingyuan, Guangdong. Legal representative: HE Jincan, general manager of the company. The Defendant (the counterclaim Plaintiff): Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. Domicile: Latuo Village, Jiushi Town, Deqing County, Zhaoqing, Guangdong. Legal representative: WU Yaye, manager of the company. Agent ad litem: WU Yuanzhong, lawyer of Guangdong Jiajun Law Firm. With respect to the case arising from dispute over port major liability accident between the Plaintiffs GAN Muan, Qingyuan Anshun Transportation Co., Ltd., and the Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd., the plaintiffs filed a lawsuit and the Defendant filed a counterclaim. The court applied the general procedure in accordance with the law and held hearings in public on September 20, 2016 and January 12, 2017 after the case was filed on February 1 and March 25, 2016. LIN Zhonghua, agent ad litem of the Plaintiff GAN Muan, WU Yuanzhong, and agent ad litem of the Defendant, appeared in court to attended the hearings. The Plaintiff Qingyuan Anshun Transportation Co., Ltd. was summoned by the court but did not appear. Now the case has been concluded. The Plaintiff GAN Muan filed a lawsuit to the court as follows: 1. the Defendant should compensate the Plaintiff for the loss of 50% of the ship maintenance fee, namely, 568,958.43 yuan, as well as the compensation for the death of GAN Muan for the Defendant was 164,000 yuan, totally 732,958.43 yuan. 2. The Defendant should bear the cost of litigation. Facts and reasons: on April 3, 2015, M.V. Yue Qing Yuan Huo 6229, which was registered by the Plaintiff GAN Muan under the name of Qingyuan Anshun Transportation Co., Ltd., was overturned during the loading and unloading of stone powder at the dock of the Defendant. The accident caused two deaths. M.V. Yue Qing Yuan Huo 6229 sank. The Zhaoqing Maritime Safety Administration determined that both parties were responsible for the reciprocity. The Plaintiff GAN Muan commissioned Foshan Jianxiong Lifting and Fishing Engineering Co., Ltd. to salvage the shipwreck and incurred a salvage fee of 360,000 yuan. The Plaintiff GAN Muan commissioned YE Di and others to salvage the body and spent 21,000 yuan. The Plaintiff GAN Muan commissioned Liudu ferry to tow the ship to the repair shop Deqing County Rongye Ship Co., Ltd., generating a tugging fee of 3,500 yuan. The cost of ship repair is about 658,055.86 yuan. The Plaintiff GAN Muan paid Deqing County Rongye Ship Co., Ltd. an annual fee of 30,000 yuan and an evaluation fee of 4,500 yuan. The ship had parked at the shipyard for 213 days from May 2, 2015 to November 30, 2015. The levy fee would be waived within 45 days, and the berthing fee would be 50,400 yuan (calculation method: 168 days * 300 yuan). The Plaintiff GAN Muan received the expenses of 9,361 yuan for the family members of the deceased. The Plaintiff’s loss of GAN Muan included the ship maintenance fee of 658,055.86

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yuan, tugboat fee of 3,500 yuan, upper row of 30,000 yuan, assessment fee of 4,500 yuan, salvage fee of 360,000 yuan, and salvage of the deceased, 21,000 yuan, totaling 1,137,18.86 yuan. These fees were calculated according to the equivalent responsibility, and 50% of the losses for both parties was 568,958.43 yuan. As the Plaintiff GAN Muan and the Defendant jointly compensated the family member of the deceased PAN Yamei and LIU Yubing for 2,328,000 yuan, the Defendant paid only 1 million yuan for the lack of funds at that time, and the remaining 164,000 yuan was paid by GAN Muan. GAN Muan paid 1,328,000 yuan to the relatives of the deceased, and the Defendant should reimburse the death compensation of GAN Muan for 164,000 yuan. The Defendant argued that there was no objection to the accident. He could confirm the fee 5,601 yuan for the Plaintiff GAN Muan to arrange the relatives of the deceased, but it would not recognize other losses because they lacked evidence. The maintenance fee did not actually occur. The Defendant did not ask the Plaintiff GAN Muan to pay 164,000 yuan in advanced in death compensation. The Defendant filed a counterclaim to the court that: 1. GAN Muan should compensate the terminal for operating losses of 900,366 yuan and refund 536,000 yuan for the previous period. 2. Qingyuan Anshun Transportation Co., Ltd. should bear the joint liability with GAN Muan for the above debts. 3. The litigation costs should also be born by Qingyuan Anshun Transportation Co., Ltd. and GAN Muan. In the course of the lawsuit, the Defendant added the litigation request and asked GAN Muan to refund the fees paid in advanced of 1,000,000 yuan in the early period. Facts and reasons were as follows: M.V. Yue Qing Yuan Huo 6229 of the Plaintiff turned over when loading the stone, resulting in uneven force on the mooring bollard. The two bollards were broken, the pile foundation was seriously damaged, and the pile retaining project was damaged. The accident caused the terminal to close down. After being accused by the traffic authority department and the port and shipping administration, the Defendant requested the design unit and the professional construction team to repair. The sedimentation caused the water depth in the harbor to be insufficient, and it needed to be cleaned up. The terminal was closed, but the salary of employees was issued as usual in May and June 2015, which was the alleged loss of the Defendant. The government of Jiushi Township of Deqing County required the Defendant to pay the death penalty of 1,000,000 yuan for the Plaintiff. The town government set up a processing center, and incurred 54,378 yuan for meals, transportation, oil, and other miscellaneous expenses. The losses caused by the water traffic accidents include: the loss of operation of the terminal during the period from June to November 2015 which was 1,200,000 yuan, the maintenance and reinforcement costs of the terminal were 412,261 yuan, the cost of cleaning the port pool which was 52,800 yuan, the salary of the staff which was 81,293 yuan, and the miscellaneous expenses which were 54,378 yuan. A total of this expense was 1,800,732 yuan. The Plaintiff should bear half of the above fees, which is 900,366 yuan. GAN Muan did not buy social security for his crew, which lead to increase the loss. The loss should be borne by the Plaintiff. The Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. paid 1 million yuan for GAN Muan, and GAN Muan should be refunded.

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The Plaintiff GAN Muan argued against the Defendant’s counterclaims that the supply of compensation of 1,200,000 yuan claimed by the Defendant had no factual basis. The ship did not collide with the dock, and the repair and reinforcement of the dock was not necessarily related to the accident. The Defendant had no evidence that the repair and reinforcement was caused by the Plaintiff GAN Muan’s ship. According to the conclusion of the Zhaoqing Maritime Safety Administration, the terminal did not have operating conditions and did not generate any loss of personnel. The Plaintiff Qingyuan Anshun Transportation Co., Ltd. did not reply to the Defendant’s counterclaim. The parties submitted evidence in accordance with the law, and the parties involved in the organization conducted evidence exchange and cross-examination. The Zhaoqing Maritime Safety Bureau investigation report, ship certificate, compensation agreement, and other evidence showed no objection to the parties, so these documents shall be confirmed by the court and certified in the volume. The court finds out that: M.V. Yue Qing Yuan Huo 6229 was a steel bulk cargo ship with a total length of 50.47 m, a width of 10 m, a depth of 3 m, and its total tonnage was 534. Its port of registry was Qingyuan. The registered owner of the ship was Qingyuan Anshun Transportation Co., Ltd. and GAN Muan. The shares of the above two were 51 and 49% respectively, and the date of completion was August 1, 1999. In May 2014, Guangdong Qingyuan Maritime Safety Administration conducted an intermediate inspection of the ship in Wuzhou, Guangxi, and found that the ship’s safety equipment, ship structure, mechanical and electrical equipment, and radio communication equipment complied with the corresponding norms and regulations, and were in an seaworthy state. The certificate of seaworthiness for inland vessels was valid until July 31, 2015. On April 3, 2015, M.V. Yue Qing Yuan Huo 6229 sank during the loading and unloading of stone powder in the shores of the dock of Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. According to Inland River Traffic Accident Investigation Conclusions issued by the Zhaoqing Maritime Safety Administration, the ship first loaded the cargo at this terminal. The terminal was loaded for such small tonnage vessels for the first time. Before the loading, the two parties did not establish a way of effective communication contact, and the parties did not agree on precautions and emergency measures for possible risks during the operation process. When the fourth pile of goods was in the tail trim and left heel, due to the poor communication between the ship and the shore, the ship had not yet adjusted the position of the ship and continued to load the fifth pile, and it was leaning on the port side of the cargo hold. As a result, the ship experienced a large left heel, the port side of the deck was flooded, and a large amount of water entered the cabin and lost stability and caused an accident. The accident caused M.V. Yue Qing Yuan Huo 6229 to sink. PAN Yamei and LIU Yubing died on the ship. According to the rescue and salvage contract provided by Plaintiff on April 24, 2015, GAN Muan entrusted Foshan Jianxiong Lifting and Fishing Engineering Co., Ltd. to salvage the sunken ship that was sunk in the waters near the Huaxin stone

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loading dock in Deqing County. The salvage fee was 360,000 yuan. After the contract was signed, it prepaid 50,000 yuan, and the salvage fee was paid on the day of salvage completion; the arrival was made on April 24, 2015; the salvage fee was subject to bank payment. On April 30, 2015, the Plaintiffs and Defendant three parties and LIU Yubing’s relatives YANG Tiantian, LIU Changming, LUO Fanjiao, LIU Kai, and YANG Liuyang reached a compensation agreement, stipulating that: GAN Muan, Qingyuan Anshun Transportation Co., Ltd., and the Defendant Deqing County Huaxin Stone Material Loading and Docking Co., Ltd. compensated LIU Yubing’s relatives for funeral expenses, one-off work death subsidy, dependent relative pension, transportation expenses, lost time, and other compensation funds of 1,418,000 yuan; before the signing of the agreement, the original and Defendant’s three parties had paid LIU Yubing’s relatives 10,000 yuan. The People’s Mediation Committee of Jiushi Town of Deqing County stamped the compensation agreement. The agreement did not mention the expenditure and burden of the relatives receiving the relatives of LIU Yubing. On the same day, the receipts issued by YANG Tiantian and LIU Changming recorded that they received 1,418,000 yuan in compensation. On April 29, GAN Muan paid LIU Yubing’s father LIU Changming a compensation of 10,000 yuan. On May 5, 2015, the Plaintiffs and Defendant three parties and PAN Yamei relatives, RUAN Shuimei, PAN Lixin, PAN Shuxin, and PAN Jinlong reached a compensation agreement, where GAN Muan, Qingyuan Anshun Transportation Co., Ltd., and the Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. would compensate for relatives of PAN Yamei funeral expenses, one-off work and death benefits, transportation expenses, lost time, and other compensation (including insurance) 910,000 yuan. The Plaintiffs and Defendant three parties paid 610,000 yuan, and the balance of 300,000 yuan was directly paid by the China Life Insurance Co., Ltd. Zhaoqing Branch to the relatives of PAN Yamei. If China Life Insurance Co., Ltd. Zhaoqing Branch does not pay the relatives of PAN Yamei within 50 days from the date of acceptance of the claim, the Plaintiffs and Defendant should advance the three parties. The People’s Mediation Committee of Jiushi Town of Deqing County stamped the compensation agreement. The agreement did not mention the expenditure and burden of the Plaintiff’s relatives who received PAN Yamei. On the same day, the receipts issued by RUAN Shuimei, PAN Lixin, PAN Shuxin, and PAN Jinlong recorded that they received compensation of 610,000 yuan. On April 28, 2015, the Plaintiff GAN Muan paid 400,000 yuan in the financial settlement center of Jiushi Town, Deqing County. On April 30, the Plaintiff GAN Muan paid 250,000 yuan to the financial settlement center of Jiushi Town, Deqing County. On May 5, the Plaintiff GAN Muan paid 368,000 yuan to the financial settlement center of Jiushi Town, Deqing County. On May 6 and June 11, 2015, the Defendant remitted 830,000 yuan and 170,000 yuan respectively to the financial settlement center of Jiushi Town, Deqing County, totaling 1,000,000 yuan.

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After the financial settlement center of Jiushi Town of Deqing County received the compensation, it had already paid the above-mentioned compensation amount of 2,018,000 yuan to the relatives of the two deceased. On May 2, 2015, the Plaintiff GAN Muan’s contract with Deqing County Rongye Ship Co., Ltd. for the accident ship construction maintenance record recorded that: the cost of the ship’s landing repair on the ship was 30,000 yuan, which must be paid by GAN Muan Deqing County Rongye Ship Co., Ltd. who could only construct the ship. After the ship was rowed, Deqing County Rongye Ship Co., Ltd., according to the degree of damage to the ship, reasonable budget maintenance construction plan and budget. The budget for the price was 4,500 yuan. After the ship was rowed, if the funds were not paid, it could not be started. The shipyard should not calculate the qualifying fee for 45 days, and calculate the qualifying fee by 300 yuan per day for more than 45 days. The Defendant confirmed that the Plaintiff GAN Muan received the relatives of the deceased for 5,601 yuan. On August 19, 2015, Zhaoqing Maritime Safety Administration investigated and found that the accident was caused by the fact that the terminal did not have working conditions. The goods were improperly loaded; the ship and shore were not signed, and the safety production management agreement was implemented. The ship and shore were not clearly allocated (product) requirements, and the terminal was docked. Failure to obtain Port Operation License and the safety management of the shipping company was not appropriate; according to the size of the fault, both parties were responsible for reciprocity. M.V. Yue Qing Yuan Huo 6229 was now located on the bank near Deqing County Rongye Ship Co., Ltd. On July 6, 2016, according to the application of the Plaintiff GAN Muan, the court entrusted the Guangdong South China Maritime Judicial Appraisal Center for the damage of M.V. Yue Qing Yuan Huo 6229, and it entrusted Guangzhou Haijiang Insurance Co., Ltd. to evaluate the cost for repairing according to the appraisal conclusion. Guangdong South China Maritime Judicial Appraisal Center held that the hull structures showed that 110% of the ship collapsed, cracked, and recessed parts had been identified; internal decoration equipment showed that all wood tools were replaced; navigation equipment showed that navigation electrical equipment was flooded or lost. All equipment needed to be replaced. Signal equipment showed that, due water or loss, all needed to be completely replaced. Radio equipment showed that it all needed to be completely replaced. Fire equipment showed that mechanical equipment repair and electrical equipment repair acceptance was not qualified to be replaced. Life-saving equipment: repair lost equipment was equipped according to the requirements of the certificate. Anti-fouling equipment: mechanical equipment showed that repair was required. Electrical equipment: repair and acceptance was not qualified, needed to be replaced. To sum up, if the vessel needed to maintain seaworthiness operation; it needed to be repaired or renewed according to the above-mentioned identification and repair proposals, and applied for a temporary inspection by the ship issuing certification inspection agency. The court entrusted Guangzhou Haijiang Insurance

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Co., Ltd. to evaluate the repairing cost according to the judicial appraisal report of Guangdong South China Maritime Judicial Appraisal Center, and the repairing cost was estimated to be 586,648.78 yuan. Among them, the maintenance project costs include: the ship entered and exited the dock once; the amount was 4,500 yuan; the ship was at the docking fee for 20 days, and the amount was 10,000 yuan; the ship parking fee was calculated according to 45 days, and the amount was 15,750 yuan. Guangzhou Haijiang Insurance Appraisal Co., Ltd. and Guangdong South China Maritime Judicial Appraisal Center sent appraisers to the court to accept questions from both parties. It is also found out that: In accordance with Article 72 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the court informed Qingyuan Anshun Transportation Co., Ltd. as a joint Plaintiff to participate in the lawsuit. Qingyuan Anshun Transportation Co., Ltd. informed the general Plaintiff of this lawsuit that it had participated in the lawsuit after claiming that M.V. Yue Qing Yuan Huo 6229 was registered under its name, but it was only an affiliation relationship, and the controlling person was GAN Muan. Transportation Co., Ltd. waived all rights to M.V. Yue Qing Yuan Huo 6229, and all the rights of the ship were all exercised by the person GAN Muan. For controversial evidence and facts, the court determines as follows: Firstly, the determination for loss of Plaintiff GAN Muan. 1. Shipwreck salvage fee The Plaintiff GAN Muan advocated the commissioning of Foshan Jianxiong Lifting and Fishing Engineering Co., Ltd. to salvage the shipwreck and generate salvage costs of 360,000 yuan. The Plaintiff provided the salvage and salvage contract and receipt, and it provided the original to check. The Defendant did not propose a counter-insurgency overturn and it should be identified. 2. Ship repair cost According to the project budget of Deqing County Rongye Ship Co., Ltd. provided by the Plaintiff GAN Muan, the maintenance fee including hull and ship’s hull is 563,232.60 yuan; the upper rowing fee is 35,000 yuan, and the management fee is 59,823.26 yuan, totaling 658,055.86 yuan. Because the two identification procedures issued by Guangdong South China Maritime Judicial Appraisal Center and Guangzhou Haijiang Insurance Appraisal Co., Ltd. are legal, the appraiser has the qualification for appraisal, and the court accepts the two appraisals. It is found that the repair cost of M.V. Yue Qing Yuan Huo 6229 is 586,648.78 yuan. 3. Rowing fee and evaluation fee The Plaintiff GAN Muan claimed to pay Deqing County Rongye Ship Co., Ltd. for an upper fee of 30,000 yuan and an evaluation fee of 4,500 yuan. The upper row fee is the docking fee. The fee is the same as the docking fee of 14,500 yuan as determined in the assessment report and should not be double-counted. The evaluation fee of 4,500 yuan is reasonable and will be recognized.

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4. Tugboat fee The Plaintiff GAN Muan advocated entrusting Liudu wharf to tow the ship to the repair shop Deqing County Rongye Ship Co., Ltd. for a tugboat fee of 3,500 yuan. The evidence such as the receipt submitted by the Plaintiff is the original, and the Defendant did not propose a counter-argument to overturn it and the court confirms it. 5. Parking fee The Plaintiff claimed that the parking fee from May 2, 2015 to November 30, 2016 would be 50,400 yuan (calculation method: 168 days  300 yuan). The report of Guangzhou Haijiang Insurance Co., Ltd. has calculated the estimated repair cost, including 45 days of ship berthing, and the estimated value is 15,750 yuan (see page 5 of the report of Guangdong South China Maritime Judicial Appraisal Center). The Plaintiff’s request is a duplicate claim. The number of days it calculates is also beyond the reasonable range and is not recognized. 6. Salvage corpse costs The Plaintiff GAN Muan advocated entrusting YE Di and others to salvage the body for 21,000 yuan. The Plaintiff provided the original receipt, and the Defendant did not file counter-evidence, so the court confirms it. 7. Receiving family expenses of the deceased The Plaintiff GAN Muan advocated receiving the family expenses of the deceased for 9,361 yuan. The receipts provided by the Plaintiff include: accommodation fee of 260 yuan; meals cost 90 yuan, 120 yuan, 290 yuan, 533 yuan, 130 yuan, 220 yuan, 100 yuan, 330 yuan, 50 yuan, 430 yuan; food 178 yuan, drinking water 60 Yuan, totaling 2,791 yuan. The oil costs are 340.08 yuan, 255 yuan, 250.06 yuan, 200 yuan, 275.05 yuan, 100 yuan, 200 yuan, totaling 1,620.19 yuan. Funeral supplies, etc.: 70 yuan for white cloth, 200 yuan for candles, 210 yuan for incense sticks, 200 yuan for clothes, totaling 680 yuan. The undocumented part includes: 220 yuan for cigarettes, 200 yuan for family members, and 90 yuan for meals, totaling 510 yuan. The above fees totaled 5,601.38 yuan. The cash expenditure was 3,760 yuan, no one signed, and the Defendant refused to recognize it. Because the Defendant admitted that the Plaintiff GAN Muan received the family's expenses of 5,601 yuan, it should be recognized. 8. Reimbursement The Plaintiff GAN Muan claimed that the Defendant should pay a death compensation of 164,000 yuan. The Plaintiff, GAN Muan, did not provide evidence to prove that the two parties had agreed to pay 164,000 yuan for the Defendant’s death compensation. According to the evidence provided by the Plaintiff, GAN Muan, the amount actually paid to the relatives of the deceased was 1,028,000 yuan instead of 1,328,000 yuan. The fact that the Plaintiff GAN Muan was the Defendant’s claim for death compensation of 164,000 yuan was not established. However, the

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Plaintiff GAN Muan paid more than 18,000 yuan to the relatives of the deceased, which can be used as the Plaintiff’s loss. Secondly, the Defendant’s loss identification. 1. Stopping operating loss The evidence of the terminal loading and unloading service agreement and the disembarkation settlement statement provided by the Defendant are all copies. It provides 7 stone materials agreements and receipts for Dexing County Dexin Stone Mine Co., Ltd. and Shennan (Macau) Stone Mine Co., Ltd. The above-mentioned receipts were stamped with the seals of overseas companies. They were obtained overseas; they did not go through the formalities of notarization, and did not provide evidence of bank payment. The Defendant is not a party to the contract and the evidence is not relevant to the case. Therefore, no letter is accepted. The supply stone agreement does not stipulate a clear delivery location, and the Defendant may choose to ship at other terminals. In addition, in port operations, the port administrative department shall apply in written to obtain a port operation permit. The Defendant did not state the reason for the suspension. He did not obtain a port operation permit and was unable to operate according to the law. The Defendant claimed that the loss of operating loss of 1,200,000 yuan was not recognized. 2. Terminal maintenance and reinforcement costs The Defendant provided the contract for the reinforcement and maintenance of the bollard with GAO Ruzhang, the settlement statement, two receipts, and the photo of the pile to prove the terminal maintenance fee. According to the contract, the project includes: 2 piles required for the construction of the new ship terminal, and the original dock platform structure and the maintenance of the side pile by the river side. Construction time is from May 16 to May 31, 2015. The total amount of the bill and receipt is 243,209 yuan. The Defendant provided 6 pieces of retaining engineering agreement, acceptance report, and receipt with LIN Shuiyao piling team to prove the reinforcement cost. The agreement did not sign the date. The agreement stated that the two sides agreed to protect the Linxi River bank, ensure the safety of the terminal, and break the embankment with the anti-slip slope. According to the design drawings and the actual site, the agreement was made to strengthen the embankment project. Party A is responsible for the leveling of the site, the power source pick-up point, and the raw materials required for the project (such as steel, cement, sand, and gravel). Party B is responsible for construction machinery and equipment (such as pile driver, mixer, loading forklift, etc.) and entering the site. Party B shall organize the construction workers required for the qualified project progress to enter the site in time, construction safety facilities, labor protection articles for construction workers and construction. Auxiliary material tool. The construction price is 260 yuan per meter (hole depth). At the end of the project, 80% of the project payment will be paid, and 20% of the balance will be paid after one month of acceptance. The acceptance date recorded in the acceptance report is October 13, 2015. The amount

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of receipts issued by LIN Shuiyao is 10,000 yuan, 33,810 yuan, 40,000 yuan, 30,000 yuan, 30,000 yuan, and 25,240 yuan, totaling 169,052 yuan. According to the Zhaoqing Maritime Safety Administration report, the equipment and facilities such as the bollard piles of the Huaxin Stone Wharf in Deqing County do not meet the requirements of the Code for Design of River Port Engineering (GB50192-93) and the Technical Specifications for Terminal Facilities (JTJ297-2001). The Defendant did not provide information before the damage to the pile, did not provide the producer of the pile photo and the shooting time, and the evidence alone could not prove the extent of damage to the pile. The Defendant did not explain the completion date of equipment and facilities such as dock bollards, and did not evaluate or identify the damage degree. The repair losses claimed by the Defendant were redesigned and repaired after approval by the transportation department and the port and shipping department, indicating the loss of repair. It is not limited to the cost of restitution. Therefore, the above-mentioned expenses of 412,261 yuan claimed by the Defendant cannot be considered as losses caused by this accident. 3. Clean up cost of the harbor The Defendant provided the original receipt of PENG Guowen. The receipt recorded 48 ships digging sand but did not record the amount of sand excavation. The Defendant had no evidence that the cleaning cost of the voyage was all caused by the accident. Therefore, the Defendant’s claim to clean up the port pool is 52,800 yuan, which is not recognized. 4. Defendant’s employee salary The salary of the employee claimed by the Defendant was 81,293 yuan. The Defendant did not provide the original evidence and was not related to the accident and was not identified. 5. Miscellaneous fees The fee list listed by the Defendant is 11,599.50 yuan for meals, cup noodles, cigarettes, fruits, mineral water, tea, rolled paper, etc., the meal fee of 437 yuan, 167 yuan on May 14, 2015, and the meal on May 28 Cigarettes 395 yuan, a total of 12,598.50 yuan. The Defendant claimed that the above-mentioned expenses are the expenses incurred by the local government to set up an accident handling leading group to set up a special agency to live at the dock. The Defendant did not clarify the use of the above fees, and the reception fee is not the scope of compensation for tort liability. It should not be considered as the Defendant’s loss. In the list of fees listed by the Defendant, the construction cost of the safety protection facilities for the motor belt of the sea conveyor belt is 5,000 yuan, the cement is 4,865 yuan, the design fee for the pier slope protection is 600 yuan, the insurance fee is 4,229.74 yuan, the terminal is overtime 500 yuan, and other various materials costs, etc. It belongs to the cost of dock repair. The Defendant did not evaluate or identify the damage degree. The repair damage claimed was redesigned and repaired after approval by the transportation department, and the port and

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shipping department, indicating that the repaired damage is not limited to the cost of restoration. Therefore, the above fees claimed by the Defendant cannot be considered as losses caused by this accident. The lawyer’s consulting fee is 600 yuan, which is not an inevitable expense and is not included in the scope of compensation. The travel expenses of 1,140 yuan are the expenses of the Defendant’s own operations and should not be included in the scope of compensation. Thirdly, the nature of the Defendant’s payment of 1,000,000 yuan is whether the Defendant paid the Plaintiff GAN Muan or the compensation directly paid by the subject of the compensation obligation. The Plaintiff GAN Muan believed that the two parties each paid half of the compensation, and the payment was made for the Defendant to pay 164,000 yuan, and the Defendant believed that the 1,000,000 yuan it paid was for the Plaintiff GAN Muan; that is, he was not obliged to pay compensation to the family of the deceased. Although the People’s Mediation Committee of Jiushi Town of Deqing County proved on May 5, 2015 that the Defendant should pay 830,000 yuan, and it said that the Defendant once again paid 170,000 yuan into the town's financial settlement center account on May 5. However, as the party responsible for the accident, the Defendant directly signed an agreement with the relatives of the deceased. The Defendant and the Plaintiff GAN Muan and Qingyuan Anshun Transportation Co., Ltd. directly compensated the relatives of the deceased. At that time, the Defendant did not mean to pay the Plaintiff GAN Muan. Therefore, it was determined that the Defendant voluntarily compensated the relatives of the deceased, not the Plaintiff GAN Muan. The Plaintiff GAN Muan did not purchase social security for the crew. It was the factual state before the accident. The Defendant’s claim that the Plaintiff GAN Muan did not increase the loss of the social security for the crew was not established. The court holds that this case is a major liability accident dispute in the port. Article 6 of the Tort Liability Law of the People’s Republic of China stipulates that: “the perpetrator shall bear the tort liability for infringement of the civil rights and interests of others.” Article 26 stipulates that: “the infringed person also has the occurrence of damage. If the fault is wrong, the liability of the infringer can be alleviated.” Article 22 Paragraph 1 of the Port Law of the People’s Republic of China stipulates that: “if you engage in port operations, you should apply in written to the port administrative department for permission to obtain a port and apply for business registration in accordance with the law.” The Defendant did not obtain a business license to engage in port operations, and it did not have operating conditions, with the Plaintiff’s fault, resulting in a shipwreck accident. Infringement of the Plaintiff’s rights and interests, should bear the tort liability. Regarding infringement liability, both parties are at fault and can reduce the liability of the infringer. The accident was caused by the fact that the Defendant’s terminal did not provide reasonable working environment, the cargo was improperly loaded, the ship’s shore was not signed and the safety production management agreement was executed, the ship’s shore was not clearly allocated (integrated), and the terminal

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did not obtain Port Operation Permit and the shipping company. If the safety management is not in place, the two parties will be responsible for the reciprocity according to the size of the fault. The Defendant shall compensate the losses of the two Plaintiffs. As Qingyuan Anshun Transportation Co., Ltd. has indicated that M. V. Yue Qing Yuan Huo 6229 is actually owned by GAN Muan, GAN Muan has the right to request all the compensation related to M.V. Yue Qing Yuan Huo 6229. The Plaintiff’s losses include 586,648.78 yuan for ship maintenance, 3,500 yuan for tugboat, 4,500 yuan for assessment, 360,000 for salvage, 21,000 for salvage, 5,601 for the family of the deceased, and 28,000 for the family of the deceased. The Defendant should compensate the Plaintiff GAN Muan for loss of 504,624.89 yuan [calculation method: (586,648.78 + 360,000 + 3,500 + 4,500 + 21,000 + 5,601 + 28,000)  50%]. The Defendant did not obtain the port operation permit and did not have the operating conditions, and the suspension of the Huaxin Stone Terminal in Deqing County was not necessarily related to the accident. The Defendant demanded that the two Plaintiffs compensate 50% of the loss of production stoppage of 1,200,000 yuan. According to the facts ascertained by the Zhaoqing Maritime Safety Administration report, the equipment and facilities such as the conveyor belt, ship-shore communication tools and bollards of Huaxin Stone Wharf in Deqing County are not satisfied with the Code for Design of River Port Engineering (GB50192-93), and The Technical Specifications for Facilities (JTJ297-2001) requires that there are no operating conditions. The Defendant claimed that the Plaintiff’s ship turned over when loading the stone, resulting in uneven force on the mooring pile. The two piles were broken, the pile foundation was seriously damaged, and the pile retaining project was damaged, but there was no evidence of a necessary causal relationship between the two. The Defendant did not obtain the port operation permit and carried out the loading and unloading operations without authorization. The equipment, such as the bollards, did not meet the requirements of the national regulations. The two Plaintiffs were required to compensate 50% of the maintenance and reinforcement costs of the terminal at 412,261 yuan. The Defendant asked the two Plaintiffs to compensate the town government for the expenses incurred by the center and the repair materials such as the terminal repair materials and other expenses of 54,378 yuan and personnel wages of 81,293 yuan as well as other losses; there is no legal basis and no support for this. The Defendant requested the two Plaintiffs to compensate 50% of the 52,800 yuan for the clearance of the harbor pool. This had insufficient evidence for this. The Defendant asked the two Plaintiffs to return the death compensation of 1,000,000 yuan, which lacked any factual basis. To conclude, in accordance with Article 6 Paragraph 1 and Article 26 of the Tort Liability Law of the People’s Republic of China, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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1. The Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. shall compensate the Plaintiff GAN Muan for the maintenance cost of the ship and other losses of 504,624.89 yuan; 2. Reject other claims of the Plaintiff GAN Muan; 3. Reject the counterclaims of the Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. The above obligation to pay money shall be fulfilled within 10 days from the date of the effective date of this judgment. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 11,129.58 yuan, and the appraisal fee in amount of 75,500 yuan, the Plaintiff GAN Muan shall bear 3,467.12 yuan and the Defendant shall bear 83,162.46 yuan. The fee for the counterclaim case is 50,951.65 yuan, which is borne by the Defendant. With the consent of the Plaintiff, GAN Muan, the Plaintiff’s prepaid legal fees will not be refunded, and the Defendant will pay the Plaintiff 83,162.46 yuan within 10 days from the effective date of this judgment. If any party disagrees with this judgment, the party can submit within 15 days from the date of service of the judgment, together with copies of petition in accordance with the number of the other parties appeal to the Guangdong High People’s Court. Presiding Judge: HAN Haibin Judge: LUO Chun People’s Juror: LIU Kangkang March 9, 2017 Clerk: YANG Nian

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Guangdong High People’s Court Civil Judgment GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2017) Yue Min Zhong No.1541, No.1542 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 335 and page 370 respectively. Cause of Action 240. Dispute over liability for major accident of port operation. Headnote Affirming lower court decision apportioning liability for damages incurred when plaintiffs’ ship overturned and sank while loading at defendant's dock, including damages for salvage, repairs, compensation to deceased workers, and damage to dock. Summary The Plaintiffs’ ship M.V. Yue Qing Yuan 6229 overturned and sank while loading and unloading stone powder in the front of the Defendant’s dock. Two workers on the ship died in the accident. After an investigation, the Zhaoqing Maritime Safety Administration determined that Plaintiffs and Defendant were equally responsible for the accident. The relatives of the deceased workers made a settlement agreement with the Plaintiff and Defendant. Plaintiffs sued Defendant for the cost of salvage (raising the overturned ship, towing it to a repair yard, repair), the cost of retrieval of the bodies of the deceased workers, and a contribution to the sums that Plaintiff said it had paid to the relatives pursuant to the settlement agreement, on the basis that Plaintiff had paid more than its agreed share. Defendant counterclaimed for operating losses suffered as a result of damage to its terminal when the ship overturned, which caused the port authority to close the terminal down pending repairs, and also the cost of terminal maintenance and reinforcement. The first instance Court held that Plaintiff was entitled to recover its share (50%) of the sums claimed, and rejected Defendant’s counterclaim. Plaintiff and Defendant both appealed. The appeal Court affirmed the judgment of the Court of first instance, holding that neither party could provide sufficient evidence to support its claim for greater compensation from the other.

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Judgment The Appellant (the Plaintiff of first instance, the counterclaim Defendant): GAN Muan, male, born on October 1, 1981, Han, living in Zhaoqing, Guangdong. Agent ad litem: LIN Zhonghua, lawyer of Guangdong Wangji Law Firm. Agent ad litem: YAN Qing, lawyer of Guangdong Wangji Law Firm. The Appellant (the Defendant of first instance, the counterclaim Plaintiff): Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. Domicile: Latou Village, Jiushi Town, Deqing County, Zhaoqing, Guangdong. Legal representative: WU Yaye, general manager of the company. Agent ad litem: WU Yuanzhong, lawyer of Guangdong Jiajun Law Firm. The Respondent (the Plaintiff of first instance, the counterclaim Defendant): Qingyuan Anshun Transportation Co., Ltd. Domicile: No.11, Block 17, Second Yanjiang Road, Qingyuan, Guangdong. Agent ad litem: HE Jincan, general manager of the company. With respect to the case arising from dispute over port major liability accident between the Appellant GAN Muan, the Appellant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (hereinafter referred to as Huaxin) and the Respondent Qingyuan Anshun Transportation Co., Ltd. (hereinafter referred to as Anshun), GAN Muan and Huaxin appealed to the court for dissatisfaction with (2016) Yue 72 Min Chu No.95, No.239 Civil Judgment of Guangzhou Maritime Court. After the case was filed on June 29, 2017, the court formed a collegiate bench to try the case. The Appellant GAN Muan and his agent ad litem, LIN Zhonghua, and agent ad litem of the Appellant Huaxin, WU Yuanzhong, participated in two second-instance court investigation; the Respondent Anshun was summoned by the court and did not participate in the second-instance court investigation. Now the case has been concluded. GAN Muan appealed that on the basis of the first-instance judgment, Huaxin was ordered to pay the upper row fee of 15,500 yuan, the berthing fee of 34,650 yuan, and the arbitrage compensation of 136,000 yuan, totaling 186,150 yuan; the appeal fee should be born by Huaxin. Facts and reasons: 1. about the upper rowing fee. GAN Muan submitted the evidence Accident Ship Landing Repair Construction Contract and receipt in the first instance, which could prove that GAN Muan paid the upper rowing fee of 30,000 yuan to Deqing County Rongye Ship Co., Ltd. (hereinafter referred to as Rongye); Rongye receipt voucher was issued to prove that the fee had actually occurred. Huaxin did not provide evidence to prove that the fee was unreasonable or illegal. The first-instance judgment only used the criteria contained in the assessment report to deny the reasonable expenses incurred. This was inconsistent with the factual and legal basis. 2. About the parking fee, the ship involved had been parked in the terminal of Rongye Shipbuilding Co., Ltd.

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since May 2, 2015. Rongye calculated the parking fee according to the standard of 300 yuan per day. Therefore, GAN Muan claimed to suspend to November 30, 2016 according to the standard. The parking fee of 50,400 yuan, which was in line with objective facts. In the assessment report issued by Guangzhou Haijiang Insurance Appraisal Co., Ltd., the 45-day berthing fee of 15,750 yuan was only an assessment of the berthing fee during the maintenance period, not the total berthing time. The ship involved was still parked at Rongye, and the parking fee was still calculated according to the standard of 300 yuan per day, so the total berthing time had not yet been determined. The first-instance judgment clearly equated the berthing time during ship maintenance with the total berthing time. 3. About the compensation for the mat, GAN Muan’s Death Compensation Agreement, receipts, bank cash payment slips, and bills of submission can prove that the relatives of the two deceased received a total of 2328,000 yuan of compensation, divided according to the same responsibility, GAN Muan and Huaxin should bear 1,164,000 yuan respectively. The compensation paid by Huaxin was only 1,000,000 yuan, and the remaining 164,000 yuan was obviously paid by GAN Muan. GAN Muan had the right to request Huaxin to return it. The first-instance judgment was improperly determined that GAN Muan did not pay the full amount of compensation. If the first-instance judgment determined that the facts were wrong and improperly handled, it should be changed. Huaxin responded to the appeal of GAN Muan that, firstly, regarding the upper row fee and parking fee. GAN Muan claimed the right according to the forged Accident Ship Landing Maintenance Construction Contract and the settlement statement and should not be supported. Secondly, regarding the advance payment, after the accident, the local government convened a three-party advance payment based on the need for stability to solve the possible social problems. The amount specifically advanced by the parties was proposed by the government. The extent to which the parties should assume legal responsibility after the advancement should be determined by the court. In this case, the amount of GAN Muan’s advance payment was determined by the government, and the amount advanced should be proved by legal evidence. In fact, some of the advance payment that GAN Muan advocated did not actually take place, and the first-instance judgment was not confirmed. The liability of the ship for compensation caused by the accident involved should be born by GAN Muan himself and Anshun. Huaxin appealed to revoke the first-instance judgment and reject GAN Muan’s claim and sentenced GAN Muan to Huaxin for compensation of economic losses of 900,366 yuan (including the terminal operation loss of 1,200,000 yuan, terminal repair and reinforcement costs of 412,261 yuan, cleaning of the port pool) 52,800 yuan, miscellaneous fees of 54,378 yuan, employee wages of 81,293 yuan, a total of 1800,732 yuan, according to GAN Muan should bear 50% of the calculation), to Huaxin to refund the previous period of payment of 1 million yuan, a total of 1,900,366 yuan, above-mentioned debt of Anshun’s commitment to GAN Muan joint liability for liquidation. The costs of litigation in the first and second instance should be born by GAN Muan and Anshun. Facts and reasons: 1. regarding the salvage fee for the wreck and the cost of cleaning the harbor, according to Article 7

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of Rescue and Salvage Contract submitted by GAN Muan, the salvage fee was subject to bank payment. GAN Muan failed to submit the bank payment voucher, and the receipt submitted by him did not affix a financial special seal. GAN Muan failed to provide sufficient evidence to prove his claim, so the salvage fee requested should not be recognized. However, Huaxin submitted the original receipt for the expenses incurred in cleaning up the harbor pool. In the case that GAN Muan failed to file the counter-evidence, the first-instance judgment was based on the fact that there was no record of the amount of sand dredging and no evidence to prove that the ship clearance fee for 48 voyages was due to this. The second accident caused the failure to be identified and apparently unfair. 2. Regarding the cost of ship repair, Ship Repair Cost was not the same as “the ship’s loss due to accident”. The loss suffered by the ship due to an accident should be determined according to the situation in which the ship was damaged due to the accident. GAN Muan failed to provide evidence to prove that the accident caused the ship to be damaged due to the accident, it should bear the legal consequences of the inability to provide evidence. The ship repair cost in the first-instance judgment was the appraisal of the object and value that the appraisal institution and the appraisal institution needed to repair after one year of the accident. At this time, the object to be repaired and the accident were damaged due to the accident and needed to be repaired. Objects were not identical. Various factors such as damage to the ship and the ship’s objects, causes of damage, and new and old factors could not be determined. The appraisal was based on seaworthiness and operations, and the corresponding certification results were not related to “ship losses caused by accidents”. Therefore, the conclusion of the appraisal could not be used as the basis for determining the loss of the ship involved. 3. Regarding the advanced payment, after the accident occurred, the local government and the people’s mediation committee confirmed the nature of the payment for Huaxin. In order to solve the aftermath of the casualties first, Huaxin was required to advance the expenses of 1,000,000 yuan. The casualties between the people involved in the accident and GAN Muan were labor relations. Because GAN Muan had not paid social security for his employees according to law, the close relatives of the casualties had not been able to enjoy social insurance benefits according to law. Therefore, the corresponding social insurance benefits should be born by GAN Muan. This belonged to the scope of labor legal relations, had nothing to do with this case, and had nothing to do with Huaxin. Huaxin’s first advance payment of 1 million yuan should be refunded by GAN Muan, Huaxin did not express willingness to bear. 4. GAN Muan also had problems in illegal docking, overloading, crew violations, illegal employment, etc., should be investigated. 5. M. V. Yue Qing Yuan Huo 6229 was operated by GAN Muan and affiliated to Anshun. At the time of the accident, the ship operator was Anshun, not GAN Muan. Since Anshun gave up its exercise of rights, GAN Muan did not have the right to file a claim with Huaxin. The first-instance judgment found that the facts were wrong and the application of law was improper, which should be corrected GAN Muan’s appeal against Huaxin’s appeal stated that, firstly, GAN Muan had submitted sufficient evidence to prove the actual occurrence and specific amount of the wreck salvage expenses. The request was reasonably justified and the

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first-instance judgment was not improper. However, Huaxin’s claim to clear the port pool fee lacked corresponding evidence to prove that Huaxin should bear the unfavorable consequences of the proof. Secondly, regarding the cost of ship repair, the damage status and repair cost of the ship involved had been identified and evaluated. Huaxin could not prove that the relevant appraisal and evaluation could be legally revoked, so the ship repair cost could be determined according to the investigation report. Thirdly, with regard to the payment of the pad, according to the compensation agreement signed by GAN Muan and Huaxin and the relatives of the deceased, combined with the conclusion of the accident investigation made by the maritime administrative department, it was sufficient to prove that both parties should bear the same responsibility for the accident involved. Huaxin did not pay the full compensation fee, and the remaining expenses were advanced by GAN Muan at the time. Now GAN Muan’s claim to return to Huaxin had factual and legal basis. 4. The investigation report of the maritime administrative department stated that GAN Muan was the owner and actual operator of the vessel involved in the accident, so GAN Muan had the right to claim compensation for damages from Huaxin. Anshun did not submit a reply in the second instance. GAN Muan claimed to the court of first instance that: 1. Huaxin should compensate GAN Muan for the loss of 50% of the ship maintenance fee, namely, 568,958.43 yuan, as well as the compensation for the death of GAN Muan for Huaxin was 164,000 yuan, totally 732,958.43 yuan. 2. Huaxin should bear the cost of litigation. Huaxin filed a counterclaim to the court of first instance that: 1. GAN Muan should compensate the terminal for operating losses of 900,366 yuan and refund 1,000,000 yuan for the previous period. 2. Anshun should bear the joint liability with GAN Muan for the above debts. 3. The litigation costs should also be born by Anshun and GAN Muan. The court of first instance found the following facts based on evidence from Inland River Traffic Accident Investigation Conclusions issued by the Zhaoqing Maritime Safety Administration, ship certificate, compensation agreement. M.V. Yue Qing Yuan Huo 6229 was a steel bulk cargo ship with a total length of 50.47 m, a width of 10 m, a depth of 3 m, and its total tonnage was 534. Its port of registry was Qingyuan. The registered owner of the ship was Qingyuan Anshun Transportation Co., Ltd. and GAN Muan. The shares of the above two were 51 and 49% respectively, and the date of completion was August 1, 1999. In May 2014, Guangdong Qingyuan Maritime Safety Administration conducted an intermediate inspection of the ship in Wuzhou, Guangxi, and found that the ship’s safety equipment, ship structure, mechanical and electrical equipment, and radio communication equipment complied with the corresponding norms and regulations, and were in an seaworthy state. The certificate of seaworthiness for inland vessels was valid until July 31, 2015. On April 3, 2015, M.V. Yue Qing Yuan Huo 6229 sank during the loading and unloading of stone powder in the shores of the dock of Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. According to Inland River Traffic

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Accident Investigation Conclusions issued by the Zhaoqing Maritime Safety Administration, the ship first loaded the cargo at this terminal. The terminal was loaded for such small tonnage vessels for the first time. Before the loading, the two parties did not establish a way of effective communication contact, and the parties did not agree on precautions and emergency measures for possible risks during the operation process. When the fourth pile of goods was in the tail trim and left heel, due to the poor communication between the ship and the shore, the ship had not yet adjusted the position of the ship and continued to load the fifth pile, and it was leaning on the port side of the cargo hold. As a result, the ship experienced a large left heel, the port side of the deck was flooded, and a large amount of water entered the cabin and lost stability and caused an accident. The accident caused M.V. Yue Qing Yuan Huo 6229 to sink. PAN Yamei and LIU Yubing died on the ship. According to the rescue and salvage contract provided by Plaintiff on April 24, 2015, GAN Muan entrusted Foshan Jianxiong Lifting and Fishing Engineering Co., Ltd. to salvage the sunken ship that was sunk in the waters near the Huaxin stone loading dock in Deqing County. The salvage fee was 360,000 yuan. After the contract was signed, it prepaid 50,000 yuan, and the salvage fee was paid on the day of salvage completion; the arrival was made on April 24, 2015; the salvage fee was subject to bank payment. On April 30, 2015, GAN Muan and Anshun and Huaxin three parties and LIU Yubing’s relatives YANG Tiantian, LIU Changming, LUO Fanjiao, LIU Kai, and YANG Liuyang reached a compensation agreement, stipulating that: GAN Muan, Qingyuan Anshun Transportation Co., Ltd., and the Defendant Deqing County Huaxin Stone Material Loading and Docking Co., Ltd. compensated LIU Yubing’s relatives for funeral expenses, one-off work death subsidy, dependent relative pension, transportation expenses, lost time, and other compensation funds of 1,418,000 yuan; before the signing of the agreement, the original and Defendant’s three parties had paid LIU Yubing’s relatives 10,000 yuan. The People’s Mediation Committee of Jiushi Town of Deqing County stamped the compensation agreement. The agreement did not mention the expenditure and burden of the relatives receiving the relatives of LIU Yubing. On the same day, the receipts issued by YANG Tiantian and LIU Changming recorded that they received 1,418,000 yuan in compensation. On April 29, GAN Muan paid LIU Yubing’s father LIU Changming a compensation of 10,000 yuan. On May 5, 2015, GAN Muan and Anshun and Huaxin three parties and PAN Yamei relatives, RUAN Shuimei, PAN Lixin, PAN Shuxin, and PAN Jinlong reached a compensation agreement, where GAN Muan, Qingyuan Anshun Transportation Co., Ltd., and the Defendant Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. would compensate for relatives of PAN Yamei funeral expenses, one-off work and death benefits, transportation expenses, lost time, and other compensation (including insurance) 910,000 yuan. GAN Muan and Anshun and Defendant three parties paid 610,000 yuan, and the balance of 300,000 yuan was directly paid by the China Life Insurance Co., Ltd. Zhaoqing Branch to the relatives of PAN Yamei. If China Life Insurance Co., Ltd. Zhaoqing Branch did not pay the relatives of PAN Yamei within 50 days from the date of acceptance of

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the claim, GAN Muan and Anshun and Huaxin should advance the three parties. The People’s Mediation Committee of Jiushi Town of Deqing County stamped the compensation agreement. The agreement did not mention the expenditure and burden of GAN Muan’s relatives who received PAN Yamei. On the same day, the receipts issued by RUAN Shuimei, PAN Lixin, PAN Shuxin, and PAN Jinlong recorded that they received compensation of 610,000 yuan. On April 28, 2015, GAN Muan GAN Muan paid 400,000 yuan in the financial settlement center of Jiushi Town, Deqing County. On April 30, GAN Muan GAN Muan paid 250,000 yuan to the financial settlement center of Jiushi Town, Deqing County. On May 5, GAN Muan GAN Muan paid 368,000 yuan to the financial settlement center of Jiushi Town, Deqing County. On May 6 and June 11, 2015, the Defendant remitted 830,000 yuan and 170,000 yuan respectively to the financial settlement center of Jiushi Town, Deqing County, totaling 1,000,000 yuan. After the financial settlement center of Jiushi Town of Deqing County received the compensation, it had already paid the above-mentioned compensation amount of 2,018,000 yuan to the relatives of the two deceased. On May 2, 2015, GAN Muan’s contract with Deqing County Rongye Ship Co., Ltd. for the accident ship construction maintenance record recorded that: the cost of the ship’s landing repair on the ship was 30,000 yuan, which must be paid by GAN Muan Deqing County Rongye Ship Co., Ltd. who could only construct the ship. After the ship was rowed, Deqing County Rongye Ship Co., Ltd., according to the degree of damage to the ship, reasonable budget maintenance construction plan and budget. The budget for the price was 4,500 yuan. After the ship was rowed, if the funds were not paid, it could not be started. The shipyard should not calculate the qualifying fee for 45 days, and calculate the qualifying fee by 300 yuan per day for more than 45 days. The Defendant confirmed that GAN Muan received the relatives of the deceased for 5,601 yuan. On August 19, 2015, Zhaoqing Maritime Safety Administration investigated and found that the accident was caused by the fact that the terminal did not have working conditions. The goods were improperly loaded; the ship and shore were not signed, and the safety production management agreement was implemented. The ship and shore were not clearly allocated (product) requirements, and the terminal was docked. Failure to obtain Port Operation License and the safety management of the shipping company was not appropriate; according to the size of the fault, both parties were responsible for reciprocity. M.V. Yue Qing Yuan Huo 6229 was now located on the bank near Deqing County Rongye Ship Co., Ltd. On July 6, 2016, according to the application of GAN Muan, the court entrusted the Guangdong South China Maritime Judicial Appraisal Center for the damage of M.V. Yue Qing Yuan Huo 6229, and it entrusted Guangzhou Haijiang Insurance Co., Ltd. to evaluate the cost for repairing according to the appraisal conclusion. Guangdong South China Maritime Judicial Appraisal Center held that the hull structures showed that 110% of the ship collapsed, cracked, and recessed parts had

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been identified; internal decoration equipment showed that all wood tools were replaced; navigation equipment showed that navigation electrical equipment was flooded or lost. All equipment needed to be replaced. Signal equipment showed that, due water or loss, all needed to be completely replaced. Radio equipment showed that it all needed to be completely replaced. Fire equipment showed that mechanical equipment repair and electrical equipment repair acceptance was not qualified to be replaced. Life-saving equipment: repair lost equipment was equipped according to the requirements of the certificate. Anti-fouling equipment: mechanical equipment showed that repair was required. Electrical equipment: repair and acceptance was not qualified, needed to be replaced. To sum up, if the vessel needed to maintain seaworthiness operation; it needed to be repaired or renewed according to the above-mentioned identification and repair proposals, and applied for a temporary inspection by the ship issuing certification inspection agency. The court of first instance entrusted Guangzhou Haijiang Insurance Co., Ltd. to evaluate the repairing cost according to the judicial appraisal report of Guangdong South China Maritime Judicial Appraisal Center, and the repairing cost was estimated to be 586,648.78 yuan. Among them, the maintenance project costs include: the ship entered and exited the dock once; the amount was 4,500 yuan; the ship was at the docking fee for 20 days, and the amount was 10,000 yuan; the ship parking fee was calculated according to 45 days, and the amount was 15,750 yuan. Guangzhou Haijiang Insurance Appraisal Co., Ltd. and Guangdong South China Maritime Judicial Appraisal Center sent appraisers to the court to accept questions from both parties. It was also found out that: In accordance with Article 72 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the court informed Qingyuan Anshun Transportation Co., Ltd. as a joint Plaintiff to participate in the lawsuit. Qingyuan Anshun Transportation Co., Ltd. informed the general Plaintiff of this lawsuit that it had participated in the lawsuit after claiming that M.V. Yue Qing Yuan Huo 6229 was registered under its name, but it was only an affiliation relationship, and the controlling person was GAN Muan. Transportation Co., Ltd. waived all rights to M.V. Yue Qing Yuan Huo 6229, and all the rights of the ship were all exercised by the person GAN Muan. For controversial evidence and facts, the court of first instance determined as follows: Firstly, the determination for loss of Plaintiff GAN Muan. 1. Shipwreck salvage fee GAN Muan advocated the commissioning of Foshan Jianxiong Lifting and Fishing Engineering Co., Ltd. to salvage the shipwreck and generate salvage costs of 360,000 yuan. GAN Muan provided the salvage and salvage contract and receipt, and it provided the original to check. Huaxin did not propose a counter-insurgency overturn and it should be identified.

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2. Ship repair cost According to the project budget of Deqing County Rongye Ship Co., Ltd. provided by GAN Muan, the maintenance fee including hull and ship’s hull was 563,232.60 yuan; the upper rowing fee was 35,000 yuan, and the management fee was 59,823.26 yuan, totaling 658,055.86 yuan. Because the two identification procedures issued by Guangdong South China Maritime Judicial Appraisal Center and Guangzhou Haijiang Insurance Appraisal Co., Ltd. were legal, the appraiser had the qualification for appraisal, and the court of first instance accepted the two appraisals. It was found that the repair cost of M.V. Yue Qing Yuan Huo 6229 was 586,648.78 yuan. 3. Rowing fee and evaluation fee GAN Muan GAN Muan claimed to pay Deqing County Rongye Ship Co., Ltd. for an upper fee of 30,000 yuan and an evaluation fee of 4,500 yuan. The upper row fee was the docking fee. The fee was the same as the docking fee of 14,500 yuan as determined in the assessment report and should not be double-counted. The evaluation fee of 4,500 yuan was reasonable and would be recognized. 4. Tugboat fee GAN Muan advocated entrusting Liudu wharf to tow the ship to the repair shop Deqing County Rongye Ship Co., Ltd. for a tugboat fee of 3,500 yuan. The evidence such as the receipt submitted by GAN Muan was the original, and Huaxin did not propose a counter-argument to overturn it and the court confirms it. 5. Parking fee GAN Muan claimed that the parking fee from May 2, 2015 to November 30, 2016 would be 50,400 yuan (calculation method: 168 days  300 yuan). The report of Guangzhou Haijiang Insurance Co., Ltd. had calculated the estimated repair cost, including 45 days of ship berthing, and the estimated value was 15,750 yuan (see page 5 of the report of Guangdong South China Maritime Judicial Appraisal Center). GAN Muan’s request was a duplicate claim. The number of days it calculates was also beyond the reasonable range and was not recognized. 6. Salvage corpse costs GAN Muan advocated entrusting YE Di and others to salvage the body for 21,000 yuan. GAN Muan provided the original receipt, and Huaxin did not file counter-evidence, so the court confirms it. 7. Receiving family expenses of the deceased GAN Muan GAN Muan advocated receiving the family expenses of the deceased for 9,361 yuan. The receipts provided by GAN Muan include: accommodation fee of 260 yuan; meals cost 90 yuan, 120 yuan, 290 yuan, 533 yuan, 130 yuan, 220 yuan, 100 yuan, 330 yuan, 50 yuan, 430 yuan; food 178 yuan, drinking water 60 Yuan, totaling 2,791 yuan. The oil costs are 340.08 yuan, 255 yuan, 250.06 yuan,

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200 yuan, 275.05 yuan, 100 yuan, 200 yuan, totaling 1,620.19 yuan. Funeral supplies, etc.: 70 yuan for white cloth, 200 yuan for candles, 210 yuan for incense sticks, 200 yuan for clothes, totaling 680 yuan. The undocumented part includes: 220 yuan for cigarettes, 200 yuan for family members, and 90 yuan for meals, totaling 510 yuan. The above fees totaled 5,601.38 yuan. The cash expenditure was 3,760 yuan, no one signed, and Huaxin refused to recognize it. Because Huaxin admitted that GAN Muan GAN Muan received the family’s expenses of 5,601 yuan, it should be recognized. 8. Reimbursement GAN Muan GAN Muan claimed that Huaxin should pay a death compensation of 164,000 yuan. GAN Muan did not provide evidence to prove that the two parties had agreed to pay 164,000 yuan for Huaxin’s death compensation. According to the evidence provided by GAN Muan, the amount actually paid to the relatives of the deceased was 1,028,000 yuan instead of 1,328,000 yuan. The fact that GAN Muan GAN Muan was Huaxin’s claim for death compensation of 164,000 yuan was not established. However, GAN Muan GAN Muan paid more than 18,000 yuan to the relatives of the deceased, which could be used as GAN Muan’s loss. Secondly, Huaxin’s loss identification. 1. Stopping operating loss The evidence of the terminal loading and unloading service agreement and the disembarkation settlement statement provided by Huaxin are all copies. It provided 7 stone materials agreements and receipts for Dexing County Dexin Stone Mine Co., Ltd. and Shennan (Macau) Stone Mine Co., Ltd. The above-mentioned receipts were stamped with the seals of overseas companies. They were obtained overseas; they did not go through the formalities of notarization, and did not provide evidence of bank payment. Huaxin was not a party to the contract and the evidence was not relevant to the case. Therefore, no letter was accepted. The supply stone agreement did not stipulate a clear delivery location, and Huaxin could choose to ship at other terminals. In addition, in port operations, the port administrative department should apply in written to obtain a port operation permit. Huaxin did not state the reason for the suspension. He did not obtain a port operation permit and was unable to operate according to the law. Huaxin claimed that the loss of operating loss of 1,200,000 yuan was not recognized. 2. Terminal maintenance and reinforcement costs Huaxin provided the contract for the reinforcement and maintenance of the bollard with GAO Ruzhang, the settlement statement, two receipts, and the photo of the pile to prove the terminal maintenance fee. According to the contract, the project included: 2 piles required for the construction of the new ship terminal, and the original dock platform structure and the maintenance of the side pile by the river side. Construction time was from May 16 to May 31, 2015. The total amount of the bill and receipt was 243,209 yuan.

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Huaxin provided 6 pieces of retaining engineering agreement, acceptance report, and receipt with LIN Shuiyao piling team to prove the reinforcement cost. The agreement did not sign the date. The agreement stated that the two sides agreed to protect the Linxi River bank, ensure the safety of the terminal, and break the embankment with the anti-slip slope. According to the design drawings and the actual site, the agreement was made to strengthen the embankment project. Party A was responsible for the leveling of the site, the power source pick-up point, and the raw materials required for the project (such as steel, cement, sand, and gravel). Party B was responsible for construction machinery and equipment (such as pile driver, mixer, loading forklift, etc.) and entering the site. Party B should organize the construction workers required for the qualified project progress to enter the site in time, construction safety facilities, labor protection articles for construction workers and construction. Auxiliary material tool. The construction price was 260 yuan per meter (hole depth). At the end of the project, 80% of the project payment would be paid, and 20% of the balance would be paid after one month of acceptance. The acceptance date recorded in the acceptance report was October 13, 2015. The amount of receipts issued by LIN Shuiyao was 10,000 yuan, 33,810 yuan, 40,000 yuan, 30,000 yuan, 30,000 yuan, and 25,240 yuan, totaling 169,052 yuan. According to the Zhaoqing Maritime Safety Administration report, the equipment and facilities such as the bollard piles of the Huaxin Stone Wharf in Deqing County did not meet the requirements of the Code for Design of River Port Engineering (GB50192-93) and the Technical Specifications for Terminal Facilities (JTJ297-2001). Huaxin did not provide information before the damage to the pile, did not provide the producer of the pile photo and the shooting time, and the evidence alone could not prove the extent of damage to the pile. Huaxin did not explain the completion date of equipment and facilities such as dock bollards, and did not evaluate or identify the damage degree. The repair losses claimed by Huaxin were redesigned and repaired after approval by the transportation department and the port and shipping department, indicating the loss of repair. It was not limited to the cost of restitution. Therefore, the above-mentioned expenses of 412,261 yuan claimed by Huaxin could not be considered as losses caused by this accident. 3. Clean up cost of the harbor Huaxin provided the original receipt of PENG Guowen. The receipt recorded 48 ships digging sand but did not record the amount of sand excavation. Huaxin had no evidence that the cleaning cost of the voyage was all caused by the accident. Therefore, Huaxin’s claim to clean up the port pool was 52,800 yuan, which was not recognized. 4. Defendant’s employee salary The salary of the employee claimed by Huaxin was 81,293 yuan. Huaxin did not provide the original evidence and was not related to the accident and was not identified.

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5. Miscellaneous fees The fee list listed by Huaxin was 11,599.50 yuan for meals, cup noodles, cigarettes, fruits, mineral water, tea, rolled paper, etc., the meal fee of 437 yuan, 167 yuan on May 14, 2015, and the meal on May 28 Cigarettes 395 yuan, a total of 12,598.50 yuan. Huaxin claimed that the above-mentioned expenses were the expenses incurred by the local government to set up an accident handling leading group to set up a special agency to live at the dock. Huaxin did not clarify the use of the above fees, and the reception fee was not the scope of compensation for tort liability. It should not be considered as Huaxin’s loss. In the list of fees listed by Huaxin, the construction cost of the safety protection facilities for the motor belt of the sea conveyor belt was 5,000 yuan, the cement was 4,865 yuan, the design fee for the pier slope protection was 600 yuan, the insurance fee was 4,229.74 yuan, the terminal was overtime 500 yuan, and other various materials costs, etc. It belonged to the cost of dock repair. Huaxin did not evaluate or identify the damage degree. The repair damage claimed was redesigned and repaired after approval by the transportation department, and the port and shipping department, indicating that the repaired damage was not limited to the cost of restoration. Therefore, the above fees claimed by Huaxin could not be considered as losses caused by this accident. The lawyer’s consulting fee was 600 yuan, which was not an inevitable expense and was not included in the scope of compensation. The travel expenses of 1,140 yuan were the expenses of Huaxin’s own operations and should not be included in the scope of compensation. Thirdly, the nature of Huaxin’s payment of 1,000,000 yuan was whether Huaxin paid GAN Muan or the compensation directly paid by the subject of the compensation obligation. GAN Muan believed that the two parties each paid half of the compensation, and the payment was made for Huaxin to pay 164,000 yuan, and Huaxin believed that the 1,000,000 yuan it paid was for GAN Muan GAN Muan; namely he was not obliged to pay compensation to the family of the deceased. Although the People’s Mediation Committee of Jiushi Town of Deqing County proved on May 5, 2015 that Huaxin should pay 830,000 yuan, and it said that Huaxin once again paid 170,000 yuan into the town’s financial settlement center account on May 5. However, as the party responsible for the accident, Huaxin directly signed an agreement with the relatives of the deceased. Huaxin and GAN Muan and Qingyuan Anshun Transportation Co., Ltd. directly compensated the relatives of the deceased. At that time, Huaxin did not mean to pay GAN Muan GAN Muan. Therefore, it was determined that Huaxin voluntarily compensated the relatives of the deceased, not GAN Muan. GAN Muan did not purchase social security for the crew. It was the factual state before the accident. Huaxin’s claim that GAN Muan GAN Muan did not increase the loss of the social security for the crew was not established. The court of first instance held that this case was a major liability accident dispute in the port. Article 6 of the Tort Liability Law of the People’s Republic of

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China stipulated that: “the perpetrator shall bear the tort liability for infringement of the civil rights and interests of others.” Article 26 stipulated that: “the infringed person also has the occurrence of damage. If the fault is wrong, the liability of the infringer can be alleviated.” Article 22 Paragraph 1 of the Port Law of the People’s Republic of China stipulated that: “if you engage in port operations, you should apply in written to the port administrative department for permission to obtain a port and apply for business registration in accordance with the law.” Huaxin did not obtain a business license to engage in port operations, and it did not have operating conditions, with GAN Muan’s fault, resulting in a shipwreck accident. Infringement of GAN Muan’s rights and interests, should bear the tort liability. Regarding infringement liability, both parties were at fault and could reduce the liability of the infringer. The accident was caused by the fact that Huaxin’s terminal did not provide reasonable working environment, the cargo was improperly loaded, the ship’s shore was not signed and the safety production management agreement was executed, the ship’s shore was not clearly allocated (integrated), and the terminal did not obtain Port Operation Permit and the shipping company. If the safety management was not in place, the two parties would be responsible for the reciprocity according to the size of the fault. Huaxin should compensate the losses of GAN Muan and Anshun. As Qingyuan Anshun Transportation Co., Ltd. had indicated that M.V. Yue Qing Yuan Huo 6229 was actually owned by GAN Muan, GAN Muan had the right to request all the compensation related to M.V. Yue Qing Yuan Huo 6229. GAN Muan’s losses included 586,648.78 yuan for ship maintenance, 3,500 yuan for tugboat, 4,500 yuan for assessment, 360,000 for salvage, 21,000 for salvage, 5,601 for the family of the deceased, and 28,000 for the family of the deceased. Huaxin should compensate GAN Muan GAN Muan for loss of 504,624.89 yuan [calculation method: (586,648.78 + 360,000 + 3,500 + 4,500 + 21,000 + 5,601 + 28,000)  50%]. Huaxin did not obtain the port operation permit and did not have the operating conditions, and the suspension of the Huaxin Stone Terminal in Deqing County was not necessarily related to the accident. Huaxin demanded that GAN Muan and Anshun compensate 50% of the loss of production stoppage of 1,200,000 yuan. According to the facts ascertained by the Zhaoqing Maritime Safety Administration report, the equipment and facilities such as the conveyor belt, ship-shore communication tools and bollards of Huaxin Stone Wharf in Deqing County were not satisfied with the Code for Design of River Port Engineering (GB50192-93), and the Technical Specifications for Facilities (JTJ297-2001) required that there were no operating conditions. Huaxin claimed that GAN Muan’s ship turned over when loading the stone, resulting in uneven force on the mooring pile. The two piles were broken, the pile foundation was seriously damaged, and the pile retaining project was damaged, but there was no evidence of a necessary causal relationship between the two. Huaxin did not obtain the port operation permit and carried out the loading and unloading operations without authorization. The equipment, such as the bollards, did not meet the requirements of the national regulations. GAN Muan and Anshun were required to compensate 50% of the maintenance and reinforcement costs of the terminal at 412,261 yuan.

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Huaxin asked GAN Muan and Anshun to compensate the town government for the expenses incurred by the center and the repair materials such as the terminal repair materials and other expenses of 54,378 yuan and personnel wages of 81,293 yuan as well as other losses; there was no legal basis and no support for this. Huaxin requested GAN Muan and Anshun to compensate 50% of the 52,800 yuan for the clearance of the harbor pool. This had insufficient evidence for this. Huaxin asked GAN Muan and Anshun to return the death compensation of 1,000,000 yuan, which lacked any factual basis. To conclude, in accordance with Article 6 Paragraph 1, Article 26 of the Tort Liability Law of the People’s Republic of China, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: 1. Huaxin should compensate GAN Muan for the maintenance cost of the ship and other losses of 504,624.89 yuan; 2. reject other claims of GAN Muan; 3. reject the counterclaims of Huaxin. The above obligation to pay money should be fulfilled within 10 days from the date of the effective date of this judgment. If the obligation to pay money was not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance should be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 11,129.58 yuan, and the appraisal fee in amount of 75,500 yuan. GAN Muan shall bear 3,467.12 yuan and Huaxin shall bear 83,162.46 yuan. The fee for the counterclaim case was 50,951.65 yuan, which was born by Huaxin. With the consent of GAN Muan, GAN Muan’s prepaid legal fees would not be refunded, and Huaxin would pay GAN Muan 83,162.46 yuan within 10 days from the effective date of this judgment. The facts as examined are supported by relevant evidence, and the court confirms the facts ascertained. According to the first-instance confirmation of the evidence of the proof of Rescue and Salvage Contract, the receipt, Declaration issued by Anshun, etc., to supplement the following facts. On April 24, 2015, GAN Muan signed Rescue and Salvage Contract with Jianxiong Salvage Company. LIANG Mou signed the contract as a representative of Jianxiong Salvage Company. Subsequently, Jianxiong Salvage Company issued a receipt indicating that the salvage fee of 360,000 yuan was received from GAN Muan’s M.V. Yue Qing Yuan Huo 6229. The receipt was stamped with the business-specific chapter of Jianxiong Salvage Company. As the court of first instance added Anshun as a joint plaintiff to participate in the lawsuit of this case, Anshun issued Declaration to the court of first instance on January 13, 2017, which indicated although M.V. Yue Qing Yuan Huo 6229 was registered under the name of Anshun, it was only a affiliated relationship, and the actual controller of the ship was GAN Muan. Anshun gave up all the rights and obligations of the ship, and all the rights and obligations of the ship were all exercised by the person GAN Muan. During the trial of the second instance, GAN Muan provided the following evidence in order to prove his appeal. 1. Copy of seaworthiness certificate for inland vessel; 2. insurance policy, claim for reconciliation check, details of transfer of

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insurance claims; 3. detailed information of personal currents of LIANG Mou’s account; 4. fact sheet issued by LIANG Mou; 5. Jianxiong Salvage Company fact sheet. Anshun recognizes the above evidence. Huaxin recognizes the above evidence 2 and recognizes the authenticity and legality of evidence 3, but does not recognize its relevance. Huaxin does not recognize the evidence 1, 4 and 5. The court holds that evidence 1 is the relevant certificate of the vessel involved, the contents of the certificate and the judicial appraisal report issued by the Guangdong South China Maritime Judicial Appraisal Center of the first-instance confirmation can confirm each other, so the evidence is confirmed. Evidence 2 is evidence that the parties have no objection, so the proof should be confirmed. Evidence 3 and 5 is the originals, and the contents are related to the case. Although Huaxin raised objection but failed to provide evidence to the contrary, the court also confirms the probative force. In the second instance, GAN Muan applied for LIANG Mou and the legal representative of Jianxiong Salvage Company, LIANG Mou, to testify in court, and the court granted it. LIANG Mou attended the court and signed a letter of truthful statement before the testimony. He answered the inquiry of GAN Muan at the testimony. LIANG Mou failed to testify in court for work reasons. Huaxin held that GAN Muan did not apply for witnesses to appear in court before the expiration of the period of proof, and LIANG Mou had heard the first-instance trial and the second-instance court investigation, so he could not testify as a witness. After verification, LIANG Mou had heard the trial of the first trial of the case and the first court investigation of the second instance. The court holds that: Article 58 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Proceedings stipulates that witnesses may not attend court hearings, and that LIANG Mou’s testimony does not comply with the relevant provisions of the law, so the testimony of LIANG Mou to testify in court and the above Evidence 4 The proof of the fact sheet issued by LIANG Mou is not confirmed. Based on the evidence of the above-mentioned confirmation of the proof and supplement the following facts. China Life Insurance Co., Ltd. Zhaoqing Branch issued a notice of approval for the claim of the National Life Oasis Group Accidental Injury Insurance (Type A) of 20144418XXX1111, which was insured by the GAN Muan Stone Stacking Site, and agreed to be approved on May 28, 2015. The life insurance company agreed to pay the insurance fund 300,000 yuan to the sister of the insured PAN Yamei. The insurance money was transferred to the bank account of RUAN Shuimei. The current bill of the 6277 bank card opened by LIANG Mou in China Construction Bank Co., Ltd. Deqing Branch shows that on May 21, 2015, LIANG Mou transferred the account from Liang Mou 1 to RMB30,000 yuan. On June 12, LLIANG Mou transferred from the account to the account of LIANG Mou and remitted 70,000 yuan. Jianxiu Salvage Company issued a fact sheet on September 20, 2017, indicating the conditions of payment of the 360,000 yuan for the salvage contract signed by GAN Muan, the owner of M.V. Yue Qing Yuan Huo 6229 on April 24, 2015. On April 24, 2015, cash payment was 50,000 yuan; on April 25, cash payment was

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30,000 yuan; on April 28, cash payment was 100,000 yuan; on May 21, bank transfer was paid 30,000 yuan; on June 12, bank transfer payment was made. 70,000 yuan; July 7, cash payment of 80,000 yuan. The fact sheet has the handwritten signature of LIANG Mou and stamped with the official seal of Jianxiong Salvage Company. In the second trial, GAN Muan stated that M.V. Yue Qing Yuan Huo 6229 had not been actually repaired since it was salvaged and towed to Rongye Shipping Company. The reason for the lack of maintenance is that the funds are insufficient and Huaxin does not recognize the maintenance costs. The court holds that both the present and counterclaim cases are disputes concerning major liability accidents in port operations. GAN Muan, Anshun and Huaxin have no objection to the occurrence of the accident involved, and the ship and the docker shall be responsible for the accident. According to the judgment of the first instance and the appeal, defense, court investigation, etc., the court summarizes the issues as follows: 1. whether GAN Muan has the right to claim compensation for the loss of the accident involved; 2. the determination of the loss of GAN Muan; 3. the determination of the loss of Huaxin. Firstly, whether GAN Muan has the right to claim compensation for the loss of the accident involved. According to Article 2 and Article 3 of the Tort Liability Law of the People’s Republic of China. If the infringer has the right to request the infringer to bear the tort liability. GAN Muan was one of the registered owners of M.V. Yue Qing Yuan Huo 6229. The accident involved caused the ship to sink and the two crew members on board died. paid the relevant expenses and personal injury compensation. GAN Muan suffered actual losses and the rights was infringed. According to the accident investigation conclusions of the maritime administrative department, the ship and the terminal have the same responsibility for the accident involved, and the shipowner has the right to file a claim against the terminal Fanghua Company for its losses. As one of the ship registration owners, Anshun has clearly stated to the court that the ship was actually controlled by GAN Muan and agreed that GAN Muan would exercise all the rights of the ship. According to Article 13 Paragraph 2 of the Civil Procedure Law of the People’s Republic of China, the right of the party to dispose of its civil rights within the limits prescribed by law, Anshun’s act of disregarding its rights is not illegal and should be permitted. Therefore, the court of first instance was appropriate to rule that Huaxin compensated GAN Muan for the losses caused by the accident in accordance with the lawsuit of the parties. Huaxin only held that GAN Muan had no right to file a claim with Huaxin because GAN Muan linked M.V. Yue Qing Yuan Huo 6229 to Anshun and Anshun for giving up its rights. This reason is insufficient, and the court does not support it. Secondly, the determination of the loss of GAN Muan. Regarding the issue of the wrecking salvage fee, the accident involved caused M.V. Yue Qing Yuan Huo 6229 to sink. GAN Muan had signed Rescue and Salvage Contract with Jianxiong Salvage Company, which clearly agreed that the salvage fee was 360,000 yuan. If Jianxiong Salvage Company actually completed the salvage work, then GAN Muan should pay the agreed fees. According to the

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evidence of the second instance and the facts confirmed by the supplementary, Jianxiong Salvage Company as the payee, the written payment time, amount and method of the salvage fee involved in the contract are in written, and its legal representative LIANG Mou 1 also signed and showed the approval. LIANG Mou had previously transferred 30,000 yuan and 70,000 yuan to LIANG Mou 1’s personal bank account through his personal bank account. The payment time, amount and method of the two payments and the collection of two of the sums stated by Jianxiu Salvage Company can confirm each other. In the absence of evidence to prove that there is other business dealings or commercial arrangements between LIANG Mou 1 and LIANG Mou, it can be reasonably determined that LIANG Mou’s two payments are based on GAN Muan’s payment of the wreck salvage. According to this, it can be concluded that GAN Muan actually paid the 360,000 yuan for the wrecking of the shipwreck caused by partial bank transfer and partial cash. Although the salvage contract indicated that the salvage fee is subject to the bank payment, the agreement does not explicitly exclude other payment methods. The original payment method was partially changed by actual behavior, and the change was objectively unreasonable. Huaxin’s claim that GAN Muan failed to provide bank transfer vouchers and salvage fees should not be determined is insufficient and cannot be established. Regarding the issue of ship repair costs, M.V. Yue Qing Yuan Huo 6229 was overturned due to the accident involved, and was later salvaged. Although there was no actual maintenance and no actual maintenance costs, the damage of the ship was objective. In the first-instance trial of this case, Huaxin did not recognize the evidence of Accident Ship Landing Maintenance Contract and the settlement statement provided by GAN Muan, and the amount of maintenance fees claimed by GAN Muan. The court of first instance was based on application of GAN Muan, commissioned identification and assessment of the ship’s damage status and corresponding repair costs. M.V. Yue Qing Yuan Huo 6229 holds a valid seaworthiness certificate at the time of the accident, indicating that the ship’s condition at the time of the accident and the ship’s facilities and equipment can meet the normal navigation and operation requirements. The restoration of the original condition is the basic principle of repairing damaged property. As a judicial appraisal in the course of litigation, both parties failed to provide evidence to prove the details of the various facilities and equipment of M.V. Yue Qing Yuan Huo 6229 and the ship at the time of the accident. There is also no evidence that the vessel has been further damaged and its specific extent during the period of salvage and placement on the shore of Rongye Shipping Company. Therefore, based on the damage status of the ship at the time of identification, it can be resumed to normal navigation and operation. The state of the time to determine the corresponding repair cost, this is not obviously unreasonable. The Guangdong South China Maritime Judicial Appraisal Center, which is responsible for the identification of the damaged ship in the case, and the Guangzhou Haijiang Insurance Appraisal Co., Ltd., which evaluates the repair cost according to the ship damage condition, were all institutions with corresponding judicial appraisal and evaluation qualifications, and two appraisal reports were served on the parties and have been cross-examined. The

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relevant appraisers also came to the court for questioning. Although Huaxin had objections but did not provide evidence to prove that the appraisal and evaluation were illegal, the methods used were improper, and the conclusions were insufficient, the first-instance judgment confirmed the probative force of the two reports. According to this, it is concluded that the ship repair cost is 586,648.78 yuan. Although Huaxin held that the ship repair cost was different from the ship’s loss due to the accident, the identification carried out one year after the accident did not reflect the ship’s damage at the time, but it did not provide a more reasonable and legal way to determine the ship’s loss. No valid evidence was provided to prove that the amount of repair expenses determined by the first-instance judgment according to the judicial appraisal and evaluation conclusion was wrong, so the claim that the appraisal conclusion could not be used as the basis for determining the ship loss involved could not be established. Regarding the issue of the upper fee for tugboat, M.V. Yue Qing Yuan Huo 6229 was not actually repaired after the accident was damaged. The repair cost determined by judicial appraisal and evaluation was 586,648.78 yuan, including the docking fee of 14,500 yuan. Although GAN Muan paid a fee of 30,000 yuan to Rongye Shipping Co., Ltd., the receipt issued by Rongye Shipping Co., Ltd. stated it as “upper fee”. However, the maintenance work has not been carried out, and the ship’s status is not clear due to maintenance. In the absence of evidence to prove the exact cause of the cost and the circumstances necessary for the repair of the ship involved, the first-instance judgment found that the specific maintenance items and the corresponding amount of expenses were not improper according to the appraisal conclusion. GAN Muan’s request for increasing the difference between the “upload fee” and the docking fee determined by the appraisal conclusion is lack of factual basis, and this court does not support it. Regarding about parking fees, after the accident, the injured party should take the necessary measures to avoid further expansion of the loss. After M.V. Yue Qing Yuan Huo 6229 was salvaged, it has not been repaired yet, and it has long been stranded in Rongye Shipping Company. The resulting expenses have no necessary causal relationship with the accident involved, and it is an expansion loss. Judicial appraisal and evaluation conclusions have determined that the berthing time required for maintenance is 45 days and the cost is 15,750 yuan. GAN Muan did not provide evidence to prove that the above berthing time and billing standards are unreasonable, and it is beyond the above berthing fee. It is requested to calculate the parking fee from May 2, 2015 to November 30, 2016 at the standard of 300 yuan per day. This lacks legal basis and is not supported by this court. Regarding the issue of compensation for the mat. The accident involved caused Pan Yimei and LIU Yubing to die. GAN Muan and Huaxin acted as responsible persons and signed compensation agreements with the relatives of the two deceased. The compensation amount determined according to this was 1,418,000 yuan and 910,000 yuan respectively, totaling 2,328,000 yuan. After deducting the insurance premium of 300,000 yuan directly paid by the insurance company to the relatives of the deceased according to the insurance contract, GAN Muan and Huaxin still have to pay compensation of 2,028,000 yuan; the families of the two

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deceased also actually received the compensation for the above amount. According to the recognition of the reciprocal responsibility of the two parties involved, the amount of compensation that GAN Muan and Huaxin should bear is 1,014,000 yuan. According to the evidence and facts of the first instance, for the personal injury compensation for the accident involved, GAN Muan delivered a total of 1,018,000 yuan to the financial settlement center of Jiushi Town of Deqing County, and directly paid 10,000 yuan to the relatives of the deceased, the total amount was 1,028,000 yuan; Xin Company has delivered a total of 1 million yuan to the financial settlement center of Jiushi Town, Deqing County. Compared with the amount of compensation payable by itself, GAN Muan pays 14,000 yuan, and Huaxin pays 14,000 yuan less. In the case of more than 14,000 yuan that should be liable for compensation, it can be regarded as the advance of GAN Muan on behalf of Huaxin to the relatives of the deceased, and GAN Muan has the right to request Huaxin to repay it. GAN Muan’s claim that he paid compensation for Huaxin for 164,000 yuan and requested repayment was inconsistent with the facts, and this court does not support it. In summary, the losses caused by GAN Muan accident include 360,000 yuan for shipwreck salvage, 586,648.78 yuan for ship repair, 4,500 yuan for Rongye Shipping Company, 3,500 yuan for tugboat, 21,000 yuan for salvage, and 5,601 yuan for relatives of the deceased. The above total amounted to 981,249.78 yuan. According to the calculation of the 50% responsibility of each party, GAN Muan has the right to claim compensation from Huaxin for the loss of 490,624.89 yuan. In addition, GAN Muan also paid Huaxin 14,000 yuan for personal damages, and he has the right to request repayment. Therefore, the amount that Huaxin should pay to GAN Muan is 504,624.89 yuan, and the judgment of the first instance is not improper. Thirdly, the determination of the loss of Huaxin. Regarding the cost of repairing and strengthening the terminal and cleaning up the cost of the port. The Zhaoqing Maritime Safety Administration Inland River Traffic Accident Investigation Conclusions records the ship’s overturning and death, but there is no damage to the terminal or the harbor. There is no other evidence in this case that the Huaxin Stone Loading and Unloading Terminal was involved in the accident. Damage and damage, specific damage. According to the above investigation conclusions, the cable piles and other facilities of Huaxin Stone Loading and Unloading Terminal do not meet the requirements of relevant design specifications and do not have working conditions. Although Huaxin provided relevant evidence for the maintenance and reinforcement of the terminal and the cleanup of the harbor basin, it is insufficient. In order to prove that the relevant engineering department was damaged due to the accident involved, according to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, “the parties have the responsibility to provide evidence for their own claims” and the Supreme People’s Court. Article 90 of the Interpretation of the Application of the Civil Procedure Law of the People’s Republic of China “the facts on which the parties rely on their own claims or the facts against which the other party’s claims are based shall be supported by evidence, but otherwise provided by law.”

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Except for the provision that the party fails to provide evidence or the evidence is insufficient to prove its factual claim before the judgment is made, Huaxin shall bear the adverse consequences of the provision that the party responsible for the burden of proof bears the unfavorable consequences. Huaxin’s claim that GAN Muan should compensate the terminal for repair and reinforcement costs and clean up the cost of the port pool lacks factual basis, and this court does not support it. Regarding the issue of compensation, the accident involved was caused by the fault between the ship and the terminal. For this reason, GAN Muan and Huaxin jointly acted as responsible parties to make personal damages commitments to relatives of the deceased and have actually fulfill. The occurrence of this liability has nothing to do with GAN Muan’s payment of social insurance for the two deceased. Huaxin did not indicate that it was the compensation for GAN Muan when signing the relevant compensation agreement. GAN Muan also disapproved this. Huaxin’s claim that GAN Muan should return 1 million yuan of compensation to it is unfounded in the law, and this court does not support it. In addition, Huaxin’s first-instance trial of the terminal’s suspension of operational losses, employee wages, miscellaneous fees and other counterclaims lacks factual or legal basis, the first-instance judgment did not support them, and its handling is not inappropriate. Therefore, the reasons for the appeals of GAN Muan and Huaxin are insufficient, and the court does not support them. The facts confirmed by the first-instance judgment are basically clear, the application of law is correct, and the processing results are appropriate, so the court affirms them. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeals, and affirm the original judgment. Court acceptance fee of GAN Muan’s claims of second instance in amount of 4,023 yuan, shall be born by the Appellant GAN Muan; Court acceptance fee of Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd.’s claims of second instance in amount of 21,903.30 yuan, shall be born by Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. The judgment is final. Presiding Judge: ZHONG Jianping Judge: GU Enzhen Judge: MO Fei November 30, 2017 Judge Assistant: HE Wei Clerk: TIAN Licheng

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Appendix: Relevant Laws 1. Tort Liability Law of the People’s Republic of China Article 2 Infringement of civil rights and interests shall be subject to infringement liability in accordance with this Law. The civil rights and interests referred to in this Law include the right to life, health, name, reputation, honor, portrait, privacy, marriage autonomy, custody, ownership, usufructuary, security interest, copyright, patent Personal rights and property rights such as trademark exclusive rights, discovery rights, equity rights, and inheritance rights. Article 3 The infringee has the right to request the infringer to bear the tort liability. 2. Civil Procedure Law of the People's Republic of China Article 13 Civil litigation shall follow the principle of good faith. The parties have the right to dispose of their civil rights and litigation rights within the limits prescribed by law. Article 64 The parties have the responsibility to provide evidence for their own claims. The evidence that the parties and their litigation agents cannot collect on their own for objective reasons, or the evidence that the people’s court considers necessary to hear the case, shall be investigated and collected by the people’s court. The people’s court shall examine and verify the evidence comprehensively and objectively in accordance with legal procedures. Article 170 The people’s courts of the second instance shall, in the case of appeals, be dealt with separately according to the following circumstances: (1) If the original judgment or ruling determines that the facts are clear and the applicable law is correct, the appeal shall be rejected by judgment or ruling, and the original judgment or ruling shall be upheld; (2) Where the original judgment or ruling determines that the facts are wrong or the law is wrong, the judgment, ruling shall be changed, revoked or changed according to law; (3) If the original judgment determines that the basic facts are unclear, the ruling shall be revoked and sent back to the people's court of the original trial for retrial, or the facts shall be found and the judgment shall be changed; (4) If the original judgment omits the party or the illegal default judgment and other serious violations of the legal procedures, the ruling shall be revoked and sent back to the people's court of the original trial for retrial. After the people’s court of the original trial makes a judgment on the case for which the retrial is sent back, if the party appeals, the second-instance people’s court may not send it back for retrial.

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3. Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90 The parties shall provide evidence to prove the facts on which the claim against them is based or the facts against which the other party's claim is based, except as otherwise provided by law. Before the judgment is made, if the party fails to provide evidence or the evidence is insufficient to prove its factual claim, the party with the burden of proof shall bear the unfavorable consequences. 4. Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation Article 58 Judges and parties may inquire about witnesses. Witnesses are not allowed to attend court hearings; other witnesses may not be present when questioning witnesses. If the people’s court deems it necessary, it will allow witnesses to confront each other.

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The Supreme People’s Court of the People’s Republic of China Civil Ruling GAN Muan et al. v. Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (2019) Zui Gao Fa Min Shen No.4600 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 335 and page 348 respectively. Cause of Action 240. Dispute over liability for major accident of port operation. Headnote Affirming the lower courts’ decisions apportioning liability for damages incurred when plaintiffs’ ship overturned and sank while loading at defendant's dock, including damages for salvage, repairs, compensation to deceased workers, and damage to dock. Summary The Plaintiffs’ ship M.V. Yue Qing Yuan 6229 overturned and sank while loading and unloading stone powder in the front of the Defendant’s dock. Two workers on the ship died in the accident. After an investigation, the Zhaoqing Maritime Safety Administration determined that Plaintiffs and Defendant were equally responsible for the accident. The relatives of the deceased workers made a settlement agreement with the Plaintiff and Defendant. Plaintiffs sued Defendant for the cost of salvage (raising the overturned ship, towing it to a repair yard, repair), the cost of retrieval of the bodies of the deceased workers, and a contribution to the sums that Plaintiff said it had paid to the relatives pursuant to the settlement agreement, on the basis that Plaintiff had paid more than its agreed share. Defendant counterclaimed for operating losses suffered as a result of damage to its terminal when the ship overturned, which caused the port authority to close the terminal down pending repairs, and also the cost of terminal maintenance and reinforcement. The Court held that Plaintiff was entitled to recover its share (50%) of the sums claimed, and rejected Defendant’s counterclaim. Plaintiff and Defendant both appealed. The appeal court affirmed the judgment of the Court of first instance, holding that neither party could provide sufficient evidence to support its claim for greater compensation from the other. Defendant made petition to the Supreme Court of China for retrial. The Supreme Court affirmed the judgments of the first instance Court and appeal Court, holding that Defendant failed to render solid evidence to prove the lower courts’ decisions to be incorrect.

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Ruling The Claimant of Retrial (the Defendant of first instance, counter Plaintiff, the Appellant of second instance): Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. Domicile: Latou Village, Jiushi Town, Deqing County, Zhaoqing, Guangdong. Legal representative: WU Yaye, general manager of the company. Agent ad litem: Yu Yun, lawyer of Guangdong Jiajun Law Firm. The Respondent of Retrial (the Plaintiff of first instance, counter Defendant, the Appellant of second instance): GAN Muan, male, born on October 1, 1981, Han, living in Zhaoqing, Guangdong. The Respondent of Retrial (the Plaintiff of first instance, counter Defendant, the Respondent of second instance): Qingyuan Anshun Transportation Co., Ltd. Domicile: No.11, Block 17, Second Yanjiang Road, Qingyuan, Guangdong. Legal representative: HE Jincan, general manager of the company. With respect to the case arising from dispute over port accident between the Claimant of Retrial, Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. (hereinafter referred to as Huaxin), and the Respondents of retrial, GAN Muan and Qingyuan Anshun Transportation Co., Ltd. (hereinafter referred to as Anshun), the Claimant of Retrial disagreed with the Guangdong High People’s Court (2017) Yue Min Zhong No.1541, No.1542 Civil Judgment, and applied for retrial to the court. The court formed a collegiate panel according to law. Now the case has been concluded. Huaxin applied for retrial that: the facts confirmed by the court of second instance were unclear, and the application of law was inappropriate, according to the Civil Procedure Law of the People’s Republic of China Article 200 Sub-paragraph 2 and Sub-paragraph 6, the case should be retried. Facts and reasons: firstly, the court of second instance confirmed the refloatation fee, which lacked evidence to prove. Although GAN Muan provided Salvage Refloatation Contract and the receipt claimed refloatation fee of 360,000 yuan, but did not provide the corresponding amount of bank payment vouchers, the relevant payment situation submitted by Foshan Jianxiong Lifting Refloatation Engineering Co., Ltd. (hereinafter referred to as Refloatation Company) had a contradiction in the description. Secondly, the court of second instance confirmed ship repair fee and assessment fee, which had no evidence to prove. There was no evidence to prove that the repair fee was the same as the repair cost when the ship was just refloated. GAN Muan failed to fulfill the statutory obligation to prevent the damage from expanding without promptly repairing the ship, and should reduce Huaxin’s liability for compensation. The related assessment fee should not be born by Huaxin. Thirdly, GAN Muan failed to submit payment vouchers for the tugboat fees, salvage of the deceased and fees for receiving family members, the receipt of his proof was

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insufficient to prove the actual expenditure. Fourthly, the owner of M.V. “YUEQINGYUANHUO 6229” involved did not purchase social insurance for the two deceased workers and they were unable to obtain compensation for work-related injuries and deaths. The responsibility for this part of the compensation was not for Huaxin. Huaxin only needed to bear reciprocal liability for compensation payments other than work injury compensation. The certificate of the situation issued by the Jiushi Town People’s Mediation Committee also made it clear that Huaxin did not pay the compensation of 1 million yuan, but paid the advance. Fifthly, Huaxin provided evidences such as the receipt for clearing the port and pool charges for the losses it claimed, which was not determined by the Guangdong High Court, which was inconsistent with the facts. Huaxin provided evidence such as the receipt for clearing the port and pool charges for the losses it claimed, which was not determined by the court of second instance, which was inconsistent with the facts. The court of second instance supported the reception fee claimed by GAN Muan, but confirmed that the determination of the reception fee claimed by Huaxin did not fall within the scope of tort liability, which violated the principle of equity. Sixthly, the internal agreement on rights and obligations between Anshun and GAN Muan could not take effect externally, and Anshun should bear joint and several liability for the compensation liability of GAN Muan to Huaxin based on the ship ownership registration information. The court holds that, the case is the application for retrial applied by Huaxin according to the Civil Procedure Law of the People’s Republic of China Article 200 Sub-paragraph 2 and Sub-paragraph 6 because Huaxin disagreed with the judgment of second instance. So the issue of review in this case are whether the basic facts confirmed by the court of second instance lack evidence to prove, whether the application of law by the court of second instance is wrong, and whether the case should be retried. Firstly, confirmation of ship refloatation fee. Based on the fact that the ship involved was salvaged and landed, the court of second instance, in accordance with the agreement on the refloatation fee of 360,000 yuan in the Salvage Refloatation Contract, the bank payment voucher of 100,000 yuan provided by GAN Muan, as well as the receipt and payment of 360,000 yuan issued by the salvage company, the two payment methods of cash payment and bank account and the description of the corresponding time and amount, the court of second instance confirmed the refloatation fee of 360,000 yuan claimed by GAN Muan, factual and legal basis is sufficient. The agreement in Salvage Refloatation Contract that “the salvage fee is subject to bank payment” is not sufficient to negate the fact of payment as proved by the above evidence, the objection about refloatation fee claimed by Huaxin is hard to be established, so the court does not support it. Secondly, confirmation of ship repair fee and assessment fee. Under the objective premise that the ship involved collapsed and was damaged, Huaxin did not approve the amount of repair fee claimed by GAN Muan and Accident Ship Landing Repair and Shipbuilding Contract and settlement statement, so the court

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first instance entrusted the appraisal agency to conduct appraisal and assessment on the damage status and repair fee of the ship according to the application of the parties. The appraisal report was delivered to the parties and cross-examined, and the appraiser appeared in court for question. Huaxin advocated that the assessment result was not equivalent to the losses suffered by the ship at the time of the accident, but did not provide sufficient evidence to prove that there were illegal procedures, improper methods, and insufficient basis for conclusions in the identification and assessment. The objection of ship repair fee and assessment fee claimed by Huaxin has no sufficient basis, so the court does not support it. Thirdly, confirmation of death compensation. The accident involved caused two deaths. In accordance with the accident investigation’s determination that the ship and terminal were equally responsible for the accident involved, GAN Muan and Huaxin should each pay half of the compensation for death. Huaxin advocated that the situation certificate issued by the Jiushi Town People’s Mediation Committee recorded the content of the advance payment of Huaxin, but the situation certificate was issued before the determination of the responsibility for accident investigation was made. At that time, the responsible party had not been clarified, and the situation proved that it did not have the effect of countering the liability determination of the accident. Meanwhile, in the two compensation agreements signed with the relatives of the deceased, GAN Muan and Huaxin, as the responsible persons, both agreed on the amount of compensation without objection. So the objection of death compensation claimed by Huaxin lacks factual or legal basis, and the court does not support it. Fourthly, confirmation of tug fee claimed by GAN Muan and loss of cleaning port claimed by Huaxin. The court of first and second instance made a more adequate and reasonable analysis of the cost issues claimed by the parties. Among them, the tugboat and the salvation of the dead caused by the accident actually happened, and the cost was supported by the receipt provided by GAN Muan, and Huaxin could not provide contrary evidence to deny. GAN Muan claimed 9,361 yuan for the funeral supplies and other expenses incurred in receiving the family of the deceased, and Huaxin approved 5,601 yuan in first instance. The expenses such as the wharf reinforcement fee and the clean-up of the harbor and pool fee advocated by Huaxin could not be proved to be entirely caused by the accident involved. The reception fee advocated by Huaxin could not reflect the inevitable connection with the accident involved, and GAN Muan did not approve it. The other losses claimed by Huaxin also lack sufficient evidence. Huaxin was now applying for retrial on the grounds that the above fees were deemed inappropriate, which lacks factual or legal basis, so the court does not support it. Pulling the threads together, the application for retrial of Huaxin is not consistent with the Civil Procedure Law of the People’s Republic of China Article 200. According to the Civil Procedure Law of the People’s Republic of China Article 204 Paragraph 1, and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 395 Paragraph 2, the ruling is as follows:

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Dismiss the application for retrial of Deqing County Huaxin Stone Loading and Unloading Terminal Co., Ltd. Presiding Judge: LI Guishun Judge: YANG Xingye Judge: WANG Beibei November 17, 2019 Clerk: FANG Jianyi

Beihai Maritime Court Civil Judgment GAO Wenbin v. Agricultural Bank of China LTD. Fangchenggang Branch et al. (2017) Gui 72 Min Chu No.79 Related Case(s) None. Cause of Action 471.(1) Contest to enforcement by an outsider. Headnote True owner of ship held to be not entitled to prevent execution sale of ship requested by mortgagee after loan default by registered owner. Summary Defendant mortgagee bank arrested the ship “Gang Feng” after the registered owner defaulted on loan repayments. Plaintiff moved to stop the execution sale of the ship, on the basis that he was the true owner of “Gang Feng.” In separate proceedings, the Beihai Maritime Court held that Plaintiff was indeed the true owner of “Gang Feng,” but that confirmation was only binding on Plaintiff and the registered owner. In the present proceedings, the Court held that because Plaintiff’s right in the ship was not registered, he could not challenge the legitimate right of Defendant mortgagee to request an execution sale of “Gang Feng.”

Judgment The Plaintiff: GAO Wenbin. Agent ad litem: LIANG Kun, the lawyer of Jiangsu Suyuan Law Firm. The Defendant: Agricultural Bank of China LTD. Fangchenggang Branch. Representative: LI Chunru, president. Agent ad litem: LIANG Tao, a staff of the bank. Agent ad litem: QIN Qing, the lawyer of Guangxi Wan Yi Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_19

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The Defendant: YU Naiquan. The Defendant: YU Naiguang. The Defendant: Guangxi Ruiyuan Shipping Co., Ltd. Legal representative: YU Naiyuan, general manager. With respect of the case arising from dispute over contest to enforcement between the Plaintiff GAO Wenbin, and the Defendants, Agricultural Bank of China LTD. Fangchenggang Branch (hereinafter referred to as Fangchenggang ABC), YU Naiquan, YU Naiguang, and Guangxi Ruiyuan Shipping Co., Ltd. (hereinafter referred to as Ruiyuan), after entertaining the case on February 8, 2017, this court legitimately constituted the collegiate bench to try the case and held a hearing in public on March 22, and agent ad litem of the Plaintiff GAO Wenbin, LIANG Kun, agent ad litem of the Defendants Fangchenggang ABC, LIANG Tao and QIN Qing, appeared in the court to attend the trial. The Defendants, YU Naiquan and YU Naiguang, after legal subpoena, did not appear in the court without any reasons, the court held a default hearing. Now the case has been concluded. The Plaintiff GAO Wenbin alleged that, because of the debtor-creditor relationship between the Defendant Ruiyuan and the Defendant Fangchenggang ABC, Fangchenggang ABC requested Beihai Maritime Court to arrest M.V. “GANG FENG”. M.V. “GANG FENG” involved was confirmed by the court that this vessel was owned by the Plaintiff according to Beihai Maritime Court (2016) Gui 72 Min Chu No.183 Civil Judgment, and the judgment was valid, the fact that GAO Wenbin was the actual shipowner of M.V. “GANG FENG” had been investigated and confirmed. According to official reply, Supreme People’s Court (2015) Min Si Ta Zi No.43, from Supreme People’s Court Executive Board about Hubei High People’s Court [2011] No.384 Request for Instructions on Whether the People’s Court Can Enforce the Execution of a Ship Which Is Attached and Registered under the Name of the Person Subjected to Execution that the registration of the ownership of a ship was not an effective requirement for the acquisition of the ownership of a ship, the ship was movable property, which was occupied, used and profited by GAO Wenbin, the ownership of the ship should belong to the Plaintiff GAO Wenbin. This ship was mortgaged to Fangchenggang ABC, the bank should only be entitled to priority indemnity against M.V. “GANG FENG” for the amount of the loan to which GAO Wenbin received. That Fangchenggang ABC requested to auction M.V. “GANG FENG” and enjoy the priority right for claim against Ruiyuan, YU Naiquan and YU Naiguang was wrong, and had no facts and laws as base. On January 4, 2017, GAO Wenbin presented objection of execution to Beihai Maritime Court, Beihai Maritime Court made (2017) Gui 72 Zhi Yi No.1 Civil Ruling on January 10 that the court rejected the objection of GAO Wenbin. Therefore, GAO Wenbin brought lawsuit of objection of execution to the court that: 1. terminate the execution of M.V. “GANG FENG”, and release all sealing measures of M.V. “GANG FENG”; 2. court acceptance fee should be born by the Defendants.

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The Defendant Fangchenggang ABC argued that, 1. in the dispute over financial loan contract between Fangchenggang ABC, YU Naiquan and YU Naiguang, Fangchenggang ABC, as bona fide third party, right of mortgage enjoyed was legal and valid. Fangchenggang ABC applied to the court that the priority was realized by auction of the object given as a pledge, M.V. “GANG FENG”, during the procedure of execution, which was not inappropriate. 2. Although the Plaintiff GAO Wenbin enjoyed actual ownership of M.V. “GANG FENG”, it was only valid between he and Ruiyuan, without registration, which could not challenge Fangchenggang ABC to the ship to enjoy the mortgage, the right could not exclude the execution of (2016) Gui 72 Zhi No.269. 3. the amount of financing loan in Commission Contract for Financing Loan signed by the Plaintiff GAO Wenbin and Ruiyuan was ambiguous, and the Plaintiff himself had culpable negligence, should bear the corresponding civil liability for the adverse consequences, the reasons of his claim that the priority of Fangchenggang ABC to M.V. “GANG FENG” should be limited to 3,000,000 yuan were not established. There was no factual or legal basis for the lawsuit of the Plaintiff, the court was requested to reject the claims of the Plaintiff. The Defendants, YU Naiquan and YU Naiguang, did not make defense, or submit any evidence. To support his claims, the Plaintiff submitted the following evidence: Evidence 1, Beihai Maritime Court (2016) Gui 72 Min Chu No.183 Civil Judgment, Guangxi Zhuang Autonomous Region High People’s Court (2016) Gui Min Zhong No.350 Civil Judgment, to prove that the Plaintiff was the actual owner of the ship involved, Ruiyuan did have an act of exceeding agency, and that act was null and void for the Plaintiff, the Plaintiff should not be responsible for civil liability; Evidence 2, Beihai Maritime Court (2017) Gui 72 Zhi Yi No.1 Civil Ruling, to prove that the application of objection of execution of the Plaintiff was rejected. The opinions of cross-examination of the Defendant Fangchenggang ABC were that, there was no objection to authenticity of evidence 1, but there was objection to the content, Guangxi Zhuang Autonomous Region High People’s Court (2016) Gui Min Zhong No.350 Civil Judgment pointed out that, GAO Wenbin did not disclose to Fangchenggang ABC the information of real ownership and its agency authority, and did not provide any evidence to prove that the identity of real ownership of him and agency of Ruiyuan in Contract for Entrusted Operation and Management of Ships and Commission Contract for Financing Loan in corresponding maritime sector between GAO Wenbin and Ruiyuan. GAO Wenbin himself had culpable negligence to the execution of auction of M.V. “GANG FENG”, he should bear the consequences. There was no objection to authenticity, legality and relevancy of evidence 2. The Defendants, YU Naiquan and YU Naiguang, did not submit any opinions to the evidence provided by the Plaintiff GAO Wenbin.

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To support it defense, the Defendant Fangchenggang ABC submitted the following evidence: Evidence 1, Guangxi Zhuang Autonomous Region High People’s Court (2016) Gui Min Zhong No.350 Civil Judgment, to prove that it was bona fide third party, the contract for loan mortgage signed with the shipowner, Ruiyuan, was legal and valid. Although the Plaintiff GAO Wenbin had actual ownership to M.V. “GANG FENG”, without registration, which could not challenge bona fide third party, the right could not be excluded. Fangchenggang ABC applied to the court that the priority was realized by auction of the object given as a pledge, M.V. “GANG FENG”, during the procedure of execution, which was not inappropriate; Evidence 2, Commission Contract for Financing Loan, to prove the fact that the amount of financing loan in Commission Contract for Financing Loan signed by the Plaintiff GAO Wenbin and Ruiyuan was ambiguous. The Plaintiff GAO Wenbin cross-examined that, there was no objection to authenticity, legality and relevancy of evidence 1 and 2, but there was objection to the content of proof, though M.V. “GANG FENG” was mortgaged to Fangchenggang ABC, the act of mortgage was the civil act which exceeded right of agency made by Ruiyuan, the legal right of the Plaintiff was infringed, Fangchenggang ABC could only enjoy 3 million yuan of loans corresponding mortgage rights, the excess had nothing to do with the Plaintiff. The Defendants, YU Naiquan and YU Naiguang, did not submit any opinions to the evidence provided by the Defendant Fangchenggang ABC. In order to find out the procedural matters related to this case, the court had obtained the following evidence according to law: Evidence 1, Beihai Maritime Court (2016) Gui 72 Min Chu No.129 Civil Ruling; Evidence 2, Beihai Maritime Court (2016) Gui 72 Min Chu No.129 Civil Judgment; Evidence 3, Beihai Maritime Court (2016) Gui 72 Zhi No.269 Execution Ruling. The Plaintiff GAO Wenbin, and the Defendant Fangchenggang ABC had no objection to the authenticity, legality and relevancy of the above evidence. The Defendants, YU Naiquan and YU Naiguang, did not submit any opinions to the above evidence. The court held that, the evidence submitted by the Plaintiff GAO Wenbin and the Defendant Fangchenggang ABC and the evidence obtained by the court were original documentary evidence and copies that checked with the originals, all parties had no objection to the authenticity, legality and relevancy of the evidence, only some argument on some content of some evidence, the content of the evidence that had disagreement to partial evidence, should combine whole case evidence comprehensive cognizance. The court found out that: The actual shipowner of M.V. “GANG FENG” was GAO Wenbin, registered shipowner was Ruiyuan, registered mortgagee was Fangchenggang ABC. The court

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made order on maritime claim preservation in the procedure of (2016) Gui 72 Min Chu No.129 of dispute over financial loan contract between Fangchenggang ABC, Ruiyuan, YU Naiquan and YU Naiguang on July 8, 2016, and arrest M.V. “GANG FENG”; the court made judgment of first instance on July 18, the judgment was that the Plaintiff Fangchenggang ABC had priority right to be repaid within the scope of loan principal 11,600,000 yuan and corresponding interest against M.V. “GANG FENG” mortgaged in this case of the Defendant Ruiyuan. This judgment had come into effect and entered execution proceeding, the court made (2016) Gui 72 Zhi No.269 Execution Ruling on November 21, 2016, auctioning M.V. “GANG FENG” owned by the person subject to enforcement Ruiyuan. On May 23, 2016, the court accepted the case (2016) Gui 72 Min Chu No.183 of dispute over ship’s ownership between GAO Wenbin, Ruiyuan and Fangchenggang ABC, and the court made a judgment on August 16, 2016, confirming that the Plaintiff had actual ownership of M.V. “GANG FENG”, but this confirmation was only binding with GAO Wenbin and Ruiyuan, because it could not confront bona fide third party without registration; the court rejected the claims of GAO Wenbin that confirmation of mortgage contract partially void between Ruiyuan and Fangchenggang ABC, collateralized debt obligations of M.V. “GANG FENG” should not exceed 3 million yuan, priority right to be repaid of Fangchenggang ABC on M.V. “GANG FENG” should be limited to 3 million yuan, and Ruiyuan and Fangchenggang ABC should jointly made registration of alteration of mortgage of M.V. “GANG FENG”. after the first instance of this case, GAO Wenbin appealed to Guangxi Zhuang Autonomous Region High People’s Court, he requested the court to dismiss the second item of the judgment of first instance and changed the judgment. Guangxi Zhuang Autonomous Region High People’s Court made final judgment (2016) Gui Min Zhong No.350 on December 20, 2016, dismissing the appeal of GAO Wenbin and affirming the judgment of first instance (2016) Gui 72 Min Chu No.183. That final judgment also confirmed that Fangchenggang ABC got right of ship mortgage in good faith, because Fangchenggang ABC was bona fide third party to GAO Wenbin and Ruiyuan. A person other than involved in the case, GAO Wenbin, submitted a written objection to the court, requesting to stop the execution of M.V. “GANG FENG” during the execution proceeding of the case (2016) Gui 72 Zhi No.269 of dispute over financial loan contract between the applicant, Fangchenggang ABC, and the persons subject to enforcement, YU Naiquan, YU Naiguang and Ruiyuan. The court made Execution Ruling (2017) Gui 72 Zhi Yi No.1 on January 10, 2017 that dismissing the objection of GAO Wenbin. On January 24, 2017, the Plaintiff GAO Wenbin filed the lawsuit of execution objection of a person other than involved in the case, the court accepted the case after supplying sue material on February 8, 2017. The court held that: This case was the lawsuit of execution objection of a person other than involved in the case, the issue of this case was whether should stop the execution of M.V. “GANG FENG”, and cancel the mortgage of that ship. The court held that, though the Plaintiff GAO Wenbin was the actual shipowner of M.V. “GANG FENG”, the

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ownership of the vessel was not registered so that the third party who enjoyed legitimate real right could not be challenged. Fangchenggang ABC acquired the right of mortgage of M.V. “GANG FENG” in good faith, Fangchenggang ABC was bona fide third party to GAO Wenbin and Ruiyuan; the loan mortgage contract signed by Fangchenggang ABC, as bona fide third party, and Ruiyuan, as a registered shipowner, was legal and valid. The final judgment made by Guangxi Zhuang Autonomous Region High People’s Court (2016) Gui Min Zhong No.350 Civil Judgment had confirmed this point. According to the Property Law of the People’s Republic of China Article 24 “the creation, alteration, alienation or termination of the real right of any vessel, aircraft or motor vehicle and so on may not challenge any bona fide third party if it is not registered”, the Maritime Code of the People’s Republic of China Article 9 Paragraph 1 “the acquisition, transference or extinction of the ownership of a ship shall be registered at the ship registration authorities; no acquisition, transference or extinction of the ship’s ownership shall not act against a third party unless registered”, GAO Wenbin enjoyed actual ownership of M.V. “GANG FENG”, which could not challenge Fangchenggang ABC, as bona fide third party, enjoyed right of ship mortgage on M.V. “GANG FENG”, so the claims of GAO Wenbin that terminate the execution of M.V. “GANG FENG” and cancel the arrest of the vessel lacked legal basis, reasons were not established, so the court did not support those claims. Pulling the threads together, though GAO Wenbin enjoyed actual ownership of the vessel involved, it was not enough to exclude the compulsory execution of (2016) Gui 72 Zhi No.269. According to the Property Law of the People’s Republic of China Article 24, the Maritime Code of the People’s Republic of China Article 9 Paragraph 1, the Civil Procedure Law of the People’s Republic of China Article 144 (“if a defendant, having been served with a summons, refuses to appear in court without justified reasons, or if he withdraws during a court session without the permission of the court, the court may make a judgment by default”), the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 312 Paragraph 1 Sub-paragraph 2 (“the people’s court shall, after hearing a lawsuit filed by an outsider against execution objection, deal with the case separately according to the following circumstances:……2. If an outsider does not enjoy civil rights and interests sufficient to exclude the compulsory execution of the subject matter, the claim shall be rejected by judgment”), the judgment is as follows: Reject the claims of the Plaintiff GAO Wenbin. Court acceptance fee in amount of 100 yuan, should be born by the Plaintiff GAO Wenbin. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit, together with copies of petition according to the number of the other parties, the fee appeal to Guangxi Zhuang Autonomous Region High People’s Court, and the free should be paid in advance when submitting appeal petition (name of collection organ: Guangxi Zhuang Autonomous

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Region High People’s Court; account: 20xxx77; bank of deposit: Agricultural Bank of China Nanning Wanxiang Branch). If the amount is not paid within seven days after the expiry of the appeal period, the appeal shall be automatically withdrawn. Presiding Judge: QIU Deping Judge: LU Yingtao Acting Judge: CHANG Guohui May 3, 2017 Clerk: ZENG Lili

Wuhan Maritime Court Civil Judgment GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E 72 Min Chu No.150 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 396. Cause of Action 207. Dispute over shipbuilding contract. Headnote One Defendant held liable for indemnifying one Plaintiff of the payments made by that Plaintiff, for the benefit of that Defendant, to the shipyard regarding two newbuildings, as that Defendant was deemed by Court of first instance as the real owner of the ships despite that on the ship registry certificates, the ships’ paper owner was not that Defendant and changed a few times. Summary This case arose from a shipbuilding agreement. One Plaintiff and one Defendant signed the shipbuilding agreement, under which that Plaintiff agreed to procure from a shipyard two newbuildings in compliance with that Defendant’s requirements, while that Defendant agreed to pay the price (other Plaintiffs and Defendants were involved in this case, but Court of first instance held that they were not parties to the agreement so had no rights or obligations thereunder). Though that Defendant did not pay the price in full, that Plaintiff had the two ships constructed in the shipyard and delivered to that Defendant. Post delivery, the ships were initially registered under the names of that Defendant and a third party, and then for operational and financing purpose, that Defendant arranged to change their ownership a few times. Now, that Plaintiff claimed for the unpaid price, and that Defendant raised the defence that the unpaid price should be paid by the current or last owners of the ships. Court of first instance held that the factual background, as reflected by the evidence from all parties, showed that the real owner of the two ships was always that Defendant, no matter who was the paper owner appearing on the registry certificates and no matter whether the paper owner changed a few times, so Defendant should pay the unpaid part of price to Plaintiff under the shipbuilding agreement.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_20

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Judgment The Plaintiff: CAO Xianghu, male, born on January 2, 1964, Han, living in Yiling District, Yichang, Hubei. Agent ad litem: CAO Xiangyu, lawyer of Hubei Three Gorges Law Firm. The Plaintiff: CAO Xianghu, male, born on October 10, 1990, Han, living in Yiling District, Yichang, Hubei. Agent ad litem: CAO Xiangyu, lawyer of Hubei Three Gorges Law Firm. The Defendant: RONG Xiaomao, male, born on July 3, 1963, Han, living in Xiping County, Henan. Agent ad litem: XIAO Dongsheng, lawyer of Beijing Yingke (Wuhan) Law Firm. The Defendant: RONG Linfeng, male, born on June 24, 1990, Han, living in Xiping County, Henan. Agent ad litem: XIAO Dongsheng, lawyer of Beijing Yingke (Wuhan) Law Firm. The Defendant: CHEN Jinfu, male, born on May 15, 1974, Han, living in Xiping County, Zhumadian, Henan. Agent ad litem: XIA Bing, lawyer of Hubei Xingchu Law Firm. With respect to the case arising from dispute over shipbuilding contract between the Plaintiffs GAO Yunhua and GAO Yinan and the Defendants RONG Xiaomao, RONG Linfeng and CHEN Jinfu, the Plaintiffs filed an action on January 18, 2017. After the court entertained the case, the summary procedure was applied according to law. On April 18, 2017, the court held a hearing in public. The witnesses PAN Mou and KOU Mou attended the court to testify. Due to the complicated case, the case was transferred to the general procedure. Judges HOU Zhenkun, ZUO Minghui and YANG Guofeng formed a collegiate bench. On August 29, 2017, the second hearing was held. The Plaintiffs GAO Yunhua, GaoYinan and agent ad litem CAO Xiangyu, the Defendant RONG Xiaomao and his agent ad litem, XIAO Dongsheng, agent ad litem of RONG Linfeng, XIAO Dongsheng, agent ad litem of CHEN Jinfu, XIA Bing, appeared in court to attend the hearing. During the trial of the case, the parties requested the court to conduct mediation. The case was not completed because the settlement agreement could not be reached. Now the case has been concluded. The Plaintiffs filed a lawsuit with the court: the Defendants should immediately pay the Plaintiffs the amount of the shipbuilding (hereinafter all RMB) 9.6 million yuan, and the interest on the advance payment was paid at the monthly interest rate of 1.5% from June 13, 2015 until all the funds are paid. Facts and reasons: on February 13, 2014, the Defendant CHEN Jinfu and the outsider PAN Mou went to Zhijiang Huarui Shipbuilding Co., Ltd. to inspect and decided to build two cargo ships of 89.8 m * 16.6 m * 4.2 m. Due to insufficient funds, the Defendant CHEN Jinfu negotiated with the Plaintiff. In March 2014, the Defendant CHEN Jinfu delivered a bank acceptance bill of 400,000 yuan to the Plaintiff. On April 19 of the

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same year, the outsider PAN Mou, CHANG Chunwei and the Defendant CHEN Jinfu signed Construction Contract for Ship Construction with the Plaintiffs. In June of the same year, the Defendant CHEN Jinfu used four diesel engines to pay the Plaintiffs cash of 640,000 yuan. The outsiders PAN Mou and CHANG Chunwei withdrew their partnership because they had no funds. On July 1, 2014, the Defendant CHEN Jinfu entrusted the partner RONG Xiaomao and the Plaintiffs to sign Shipbuilding Agreement, stipulating that the Plaintiff would fund the construction of the 89.8 m*4.2 m specification for the Defendant in Zhijiang Huarui Shipbuilding Co., Ltd. There are two cargo ships, each costing 6.3 million yuan, and the total cost of the two ships is 12.6 million yuan. It is agreed to pay a deposit of 2 million yuan within 5 days after the signing of the contract, and 1 million yuan after the side cabin is erected. All the final payment will be paid within one month after the delivery of the ship inspection procedures. If the payment is delayed, interest will be paid on the advance payment at a monthly interest rate of 1.5%. On September 9, 2014, the Plaintiff signed Shipbuilding Contract with Zhijiang Huarui Shipbuilding Co., Ltd. On April 27, 2015, the “Yuanjin Xingda” of the ship identification number CN20146903736 passed the inspection and was registered under the name of the Defendant RONG Xiaomao; on May 13, 2015, the ship identification number CN20141235252 was “Source into Shengda”. After passing the inspection, it was registered under the name of the Defendant RONG Linfeng. The Defendant failed to implement the ship’s inspection certificate and did not receive the ship inspection certificate in time. On August 26, 2015, the Defendant RONG Xiaomao signed a ship docking agreement with CHEN Jianjun of Zhoukou Hengchang Shipping Co., Ltd. On September 30 of the same year, CHEN Jianjun received the original certificate of the ship inspection certificate, ship ownership certificate, ship nationality certificate, ship business transport certificate, ship minimum manning certificate, etc. at the Plaintiff’s office. On the same day, the Defendant RONG Xiaomao, on behalf of CHEN Jinfu and ZHAO Aiqin, issued a waiver to the Plaintiffs, acknowledging that the Plaintiffs’ shipbuilding arbitrage was 9.6 million yuan, with a monthly interest rate of 1.5%. On April 14, 2016, the Defendant RONG Xiaomao changed the name of “Yuancheng Xingda” to “Yuanjin Xiangshun” for the loan and changed the owner of the ship to KOU Mou. It was renamed “Yuanjin Hongfa 01” and was affiliated to Xiping County Hongfa Shipping Co., Ltd. As of the end of May 2015, the Plaintiff paid a processing fee of 3.02 million yuan for the Defendant shipbuilding and paid for the construction materials, machinery and equipment, freight, ship inspection fees, port transfer fees, and various ship licenses. The Defendant did not pay the balance after paying only 2 million yuan in deposit and 1 million yuan in progress. The Plaintiffs requested to support the claims. The Defendants RONG Xiaomao and RONG Linfeng argued that the Defendants were seriously breached by the Defendants and failed to perform the contractual obligations. They did not comply with Articles 3 and 4 of the contract, “Party A is responsible for ship inspection and delivers the ship inspection procedures to Party B”. It is agreed that the ship inspection procedure will be delivered

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to the respondent, which will result in the respondent being unable to use the ship certificate to handle the loan mortgage, which will result in the respondent failing to pay the stern; the respondent fails to construct the ship in accordance with the provisions of Article 5 of the contract, and the diesel engine and anchor assembled by the two ships. The machine and the steering gear are not in accordance with the contract, the fire protection system is not installed, and the hull steel plate does not meet the requirements, resulting in major safety hazards in the ship; the two ships involved in the case have been occupied by the Plaintiff and have not been delivered to the respondent; at the same time, the ship involved in the case A ship collision occurred during the possession of the Plaintiffs. For the above reasons, Construction Contract for Ships shall be lifted, and the Defendants shall return to the respondent the amount of 3 million yuan and interest paid for the shipbuilding. In addition, although the Defendant RONG Linfeng participated in some of the procedures involved in the construction of the ship involved in the case, but was not the party involved in the contract, the Plaintiffs sued the Defendant RONG Linfeng for no reason and the Defendants requested the court to reject the claims. The Defendant CHEN Jinfu argued that he did not participate in the signing of the shipbuilding agreement, was not a party to the case, and should not be held liable, requesting the court to reject the Plaintiff’s claims against the Defendant. The Plaintiffs GAO Yunhua and GaoYinan supported the litigation request as follows: Evidence 1. Written testimony of the witness PAN Mou and the witness testimony, to prove that on July 1, 2014, the process and facts of the Defendant CHEN Jinfu and the Defendant RONG Xiaomao and the Plaintiff GAO Yunhua signed Shipbuilding Agreement. Evidence 2. On April 19, 2014, the Plaintiff GAO Yunhua and the Defendant CHEN Jinfu and the outsider PAN Mou and the outsider CHANG Chunwei signed Shipbuilding Sale and Purchase Agreement, to prove that the Defendant CHEN Jinfu and other entrusted GAO Yunhua to build two cargo ships, agreeing on the facts of the ship price and the amount of the deposit delivered. Evidence 3. The Defendant CHEN Jinfu paid the transfer vouchers for the construction of the ship to the Plaintiff GAO Yunhua, to prove that the Defendants CHEN Jinfu, RONG Xiaomao and RONG Linfeng continued to entrust the Plaintiff GAO Yunhua to fund the shipbuilding. Evidence 4. On July 1, 2014, the Defendant RONG Xiaomao and the Defendant RONG Linfeng signed Shipbuilding Agreement with the Plaintiff GAO Yunhua, to prove that on July 1, 2014, after the Defendant RONG Xiaomao replaced the outsiders PAN Mou and CHANG Chunwei, the Defendant CHEN Jinfu entrusted RONG Xiaomao and RONG Linfeng to sign Shipbuilding Agreement with GAO Yunhua, which was built by GAO Yunhua. The fact that the two cargo ships agree on the ship price, the amount of the deposit delivered and the liability for breach of contract.

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Evidence 5. The Defendant RONG Xiaomao entrusted ZHAO Aiqin to pay cash to the Plaintiff GAO Yunhua’s transfer certificate, to prove that RONG Xiaomao, the outsider of RONG Xiaomao, will pay part of the shipbuilding payment to GAO Yunhua. Evidence 6. Witnesses’ testimony and witness testimony. The Defendant RONG Xiaomao was renamed as “Yuanjin Xingshun” for the loan, and the owner of the ship was registered from RONG Xiaomao to the name of the company, and changed its name to “Yuanjin Hongfa 01”, the fact that it is linked to Xiping County Hongfa Shipping Co., Ltd. Evidence 7. “Yuanjin Hongfa 01” (identification number CN20146903736) ship ownership certificate and ship nationality certificate, to prove the fact that the change of the ship owner and the name of the ship has been completed. Evidence 8. Construction Contract for Ships signed by the Plaintiff GAO Yunhua and GaoYinan and Zhijiang Huarui Shipbuilding Co., Ltd., to prove that the Plaintiffs GAO Yunhua and GAO Yinan signed the construction of 89.8 m 16.6 m  4.2 m two cargo ships signed with the Defendants CHEN Jinfu, RONG Xiaomao and RONG Linfeng, and signed the ship with Zhijiang Huarui Shipbuilding Co., Ltd. The construction contract, the fact that the processing fee was 3.02 million yuan. Evidence 9. Inland River Ship Inspection Certificate of YUAN JIN XING DA of CN20146903736, to prove that YUAN JIN XING DA passes the inspection of Yichang City Ship Inspection Bureau and obtains the corresponding certificate, and the ship is registered in the name of the Defendant RONG Xiaomao. Evidence 10. Inland River Ship Inspection Certificate of YUAN JIN SHENG DA of CN20141235252, to prove that YUAN JIN SHENG DA has passed the inspection by Yichang City Ship Inspection Bureau and obtained the corresponding certificate, and the ship is registered under the name of the Defendant RONG Linfeng. Evidence 11. The receipt of the certificate issued by the outsider CHEN Jianjun. CHEN Jianjun, the person in charge of the Defendant RONG Xiaomao, who was in charge of the Defendant RONG Xiaomao, received the ship inspection certificate, ship ownership certificate, ship nationality certificate, ship business transport certificate, ship minimum manning certificate at the Plaintiff GAO Yunhua. The fact that the original certificate of the ship is related. Evidence 12. The Defendant RONG Xiaomao on behalf of the Defendant CHEN Jinfu and the outsider ZHAO Aiqin gave GAO Yunhua an arrears, to prove the fact that the Defendant confirmed that the Plaintiff GAO Yunhua had invested 9.6 million yuan in construction and the monthly interest rate was 1.5%. Evidence 13. Receipt issued by Zhijiang Huarui Shipbuilding Co., Ltd., to prove the fact that the Plaintiff paid the shipbuilding construction fee to Zhijiang Huarui Shipbuilding Co., Ltd. was proposed. Evidence 14, the Defendant RONG Xiaomao, CHEN Jinfu and the outsider ZHAO Aiqin and the Plaintiff GAO Yunhua signed Agreement in Zhoukou City Hengchang Shipping Co., Ltd. on September 29, 2015, to prove that in this agreement, the Defendant CHEN Jinfu and the Defendant RONG Xiaomao are the

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common Party A, jointly entrusting the Plaintiff to handle the change of the name of the two ships, paying the Plaintiff the amount and time of the shipbuilding payment, and the fact that the two have a partner relationship. Evidence 15. Application for verification of the name of the ship, top prove that the ship inspection is to be inspected by the maritime safety administrations of the two provinces and three places where the Defendant himself requested statutory inspection. Evidence 16. A copy of the power of attorney, to prove that RONG Xiaomao entrusted CHEN Jianjun, manager of Zhoukou Hengchang Shipping Co., Ltd., to handle the ship docking and loan procedures. The Defendants RONG Xiaomao and RONG Linfeng gave cross-examination of the evidence given by the Plaintiff that they did not recognize evidence 1 and evidence 2. They believed that the two Defendants did not participate in the agreement and did not have any involvement with the two Defendants; they agreed with the formal requirements of evidence 3 to confirm that the amount was The second Defendant passed the Defendant CHEN Jinfu to transfer money to the Plaintiff instead of the Defendant CHEN Jinfu; Shipbuilding Agreement signed by the Defendant RONG Xiaomao and the Plaintiff GAO Yunhua was recognized. The formal requirements of the Shipbuilding Agreement signed by the Defendant RONG Linfeng and GAO Yunhua are recognized, but the object of the certification is not recognized. The agreement is not the true meaning of the parties, it is made for the registration of the ship; the confirmation of the evidence 5 Authenticity; no opinion on evidence 6; recognition of the authenticity of evidence 7; recognition of the authenticity of evidence 8, but lack of support for payment vouchers; recognition of the authenticity of evidence 9 and evidence 10; relevancy of evidence 11 could not be recognized that CHEN Jianjun is not a party involved in the case. The act of collecting the relevant certificate cannot represent the two Defendants; the authenticity of the evidence 12 is recognized, but it is not relevant. RONG Xiaomao signed the owed by the Plaintiff GAO Yunhua to prevent the Defendant. RONG Xiaomao signed the loan without receiving the shipbuilding payment; recognized the authenticity of the evidence, but did not recognize the proof, and believed that the receipt did not have a tax seal, did not meet the invoice function and was not supported by the payment certificate; the relevancy of evidence 14 is not recognized. The signatures of CHEN Jinfu and ZHAO Aiqin on the agreement are not signed by himself. The agreement is only commissioned. Army apply for a loan issued; confirmation of the authenticity of the evidence and evidence 15 and evidence 16. The Defendant CHEN Jinfu gave cross-examination of the evidence given by the Plaintiff that he believed that the authenticity of the evidence 2 was recognized. At the same time, he believed that Construction Contract for Ship Construction signed on April 19, 2014 was not fulfilled, and it was not related to the dispute involved; the fact of transfer of evidence 3 to be recognized, the transfer was made on behalf of the Defendant RONG Xiaomao; evidence 14 was not recognized, and CHEN Jinfu’s signature was RONG Xiaomao’s signature, not signed by himself. Without

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knowing this, this agreement cannot prove that CHEN Jinfu is one party of shipbuilding contract. As the contract involved did not participate, the other relevant evidence was not cross-examined. The certification of the court is as follows: the Defendant CHEN Jinfu gave evidence to the Plaintiff, evidence 3, the Defendant RONG Xiaomao, RONG Linfeng gave recognition to the Plaintiff’s evidence 4, evidence 5, evidence 7, evidence 8, evidence 9, evidence 10, the authenticity of evidence 12, evidence 13, evidence 14, evidence 15 and evidence 16 was confirmed, and the court confirmed the validity of the evidence; none of the three Defendants expressed their opinions on evidence 1, but did not question the witness PAN Mou, but did not The testimony of the testimony refuted the opinion, and the court confirmed the validity of the evidence; the Defendant CHEN Jinfu issued a cross-examination opinion on evidence 2, evidence 3 and evidence 14 and refused to express opinions on other evidences on the grounds of non-participation, which was a punishment for the right to cross-examination; The Defendants RONG Xiaomao and RONG Linfeng did not express their views on evidence 6. However, they did not question the witness’ testimony, and did not rebut the testimony of KOU Mou’s testimony. At the same time, the authenticity of evidence 7 was confirmed, which was sufficient to determine the truth of the evidence. Sex, the court confirmed the validity of the evidence; the Defendants RONG Xiaomao and RONG Linfeng gave a negative opinion on the evidence 11, but their confirmation of the authenticity of the evidence 15 and the evidence 16 counteracted the objective existence of the evidence 11, the court confirmed evidence of effectiveness. The Defendant RONG Xiaomao and the Defendant RONG Linfeng supported the pleas as follows: Evidence 1. Shipbuilding Agreement, to prove that on July 1, 2014, GAO Yunhua signed Shipbuilding Agreement with RONG Xiaomao and RONG Linfeng. The fourth article stipulated that: ship inspection procedures should be paid to Party B within one month to pay off all the final payment, Article 5 the fact that the model of the diesel engine, anchor chain, anchor machine and steering gear of the ship is agreed; Evidence 2, bank transfer return, to prove that RONG Xiaomao paid the Plaintiff a total of 3 million yuan for the construction of the ship; Evidence 3. A copy of the ship inspection data of the two ships YUAN JIN XIANG SHUN and YUAN JIN XIANG HE, to prove that the diesel engine, the anchoring machine and the steering gear used by the two ships are inconsistent with the contract. Evidence 4. 2 copies of corporate information credit report, to prove that the marine equipment manufacturer Nanjing Aircraft and Marine Equipment Co., Ltd. and Zhangzhou Hufenglin Ship Machinery Parts Factory used by the vessel involved in the case have no corresponding production qualifications; Evidence 5. Photo of YUAN JIN HONG FA 2, to prove the fact that the Defendant had collided with the ship during the operation of the ship caused the hull to rupture.

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The Plaintiffs GAO Yunhua and GAO Yinan questioned the evidence of the Defendants RONG Xiaomao and RONG Linfeng, and recognized the authenticity and relevancy of evidence 1, evidence 2 and evidence 5. They believed that the evidence 3 did not confirm the signature of the relevant inspection department, does not recognize the evidence 4, and believes that there is no correlation with the case. The Defendant CHEN Jinfu recognized the authenticity of the evidences of the Defendants RONG Xiaomao and RONG Linfeng, confirmed the facts of the transfer, and said that they only transferred the funds on behalf of the Defendant RONG Xiaomao and refused to cross-examine the other evidences on the grounds of non-participation. The court believes that the two Plaintiffs recognized the authenticity and relevancy of the evidence, evidence 2 and evidence 5 of the Defendants RONG Xiaomao and RONG Linfeng, and the court confirmed the validity of the evidence; though the evidence of the Plaintiff’s evidence 9 and the evidence 10, which lacked formal requirement, the court confirmed the validity of the evidence; after verification, the evidence 4 of the two Defendant was published by the national enterprise credit information system, and its claim has a proof, the court confirmed it. The Defendant CHEN Jinfu did not give evidence during the period of proof and during the trial. The court found that: on April 19, 2014, the Defendant CHEN Jinfu and the outsiders PAN Mou and CHANG Chunwei signed Construction Sale and Purchase Agreement with the Plaintiff GAO Yunhua, entrusting GAO Yunhua to build two 89.8 m long and 16.6 m wide. For ships with a depth of 4.2 m, the unit price of each ship is 6.3 million yuan, and the total price of the two ships is 12.6 million yuan. The agreement also stipulates the terms of ship construction deposit, construction period, down payment shipbuilding materials, ship inspection certificate handling and handover, payment of late payment and deferred payment, ship mainframe and part of driving equipment. After the signing of the agreement, the Defendant CHEN Jinfu delivered the 400,000 yuan acceptance bill and the X6170ZC580-3 426 kW diesel engine produced by the four Weifang Heavy Machinery Co., Ltd. according to the Plaintiff GAO Yunhua. The agreement was not fulfilled because PAN Mou and CHANG Chunwei withdrew from the partnership with the Defendant CHEN Jinfu for some reason. Subsequently, the Defendant CHEN Jinfu mobilized the Defendant RONG Xiaomao to build the ship. On July 1, 2014, the Plaintiff GAO Yunhua was the party A in the name of the contractor, and the Defendant RONG Xiaomao signed the Shipbuilding Agreement in the name of the entrusting party. The agreement stipulates: Party B entrusts Party A to build a ship with a length of 89.8 m, a width of 16.6 m and a depth of 4.2 m in Zhijiang. The contract price is 6.3 million yuan for each ship, and the total price of the two ships is 12.6 million yuan. Party B pays 2 million yuan for the second phase. The payment shall be paid 1 million yuan after the side tank is erected; Party A shall be responsible for the ship inspection and hand over the ship inspection procedures to Party B; the ship inspection procedures shall be handed over to Party B for payment of all the final payment within one month, and the deferred payment shall be paid at the monthly interest rate of 1.5%. Interest; the

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construction of the ship is a non-standard ship, the specific design and installation to map construction, diesel engine is Zibo 520 horsepower, anchor chain diameter 32, Xinghua steering gear and anchor machine; the deposit is paid within five days after the agreement is signed, the overdue can not be paid As the contract is terminated, Party B’s payment in advance and diesel engine as compensation for Party A’s economic losses; Party A will deliver the ship inspection procedures to Party B. Within 3 months, Party B will not be able to pay the full amount. Party A has the right to auction the ship; In the month, Party B is entitled to receive the ship after all the funds have been settled. On September 9, 2014, the Plaintiffs GAO Yunhua and GaoYinan signed the “89.8 * 16.6 * 4.2 m cargo ship of Zhijiang Huarui Shipbuilding Co., Ltd.” with the outsider Zhijiang Huarui Shipbuilding Co., Ltd. for the performance of the aforementioned contract. The Defendant RONG Xiaomao accepted the 400,000 yuan acceptance bill and four diesel engines delivered by the Defendant CHEN Jinfu after signing the Shipbuilding Sale and Purchase Agreement with the Plaintiff GAO Yunhua on April 19, 2014. The four diesel engines were discounted at a discount of 640,000 yuan. Part of the deposit, and through the Defendant CHEN Jinfu to the Plaintiff GAO Yunhua’s account of the Agricultural Bank of China on July 8, 2014 transfer of 960,000 yuan, on November 12, 2014 transfer 500,000 yuan, January 25, 2015 The transfer was 200,000 yuan. On January 27, 2015, the transfer was 200,000 yuan. On February 7, 2015, the outsider ZHAO Aiqin passed the transfer of 100,000 yuan, totaling 1.96 million yuan. The discount for the acceptance bill and the four diesel engines is 3 million yuan. The two vessels were started on October 1, 2014 and were completed on March 19, 2015 and April 23, the same year. The Plaintiff will install four diesel engines under the jurisdiction of RONG Xiaomao as the main engines on both ships, and at the same time, the CJM-36 anchoring machine produced by Zhangzhou Hurricane Marine Machinery Parts Factory will be equipped for the ship. The Nanjing airborne marine equipment is limited. The company's DYA-100/ 12S tail servo. On April 27, 2015, the ship named CN20146903736 was named “Yuancheng Shengda”. On May 13, 2015, the ship named “Yuancheng Shengda” was registered for the ship identification number CN20141235252. In order to realize the separate registration of the two vessels, the Defendant RONG Xiaomao assigned the Defendant RONG Linfeng and the Plaintiff GAO Yunhua to sign a different number of ships, the content is consistent with the ship construction agreement signed by the Defendant RONG Xiaomao and the Plaintiff GAO Yunhua. The Shipbuilding Agreement, the time of the deposit is also determined as July 1, 2014. Subsequently, YUAN JIN XING DA registered the owner of the ship as RONG Xiaomao, and YUAN JIN SHENG DA registered the ship owner as RONG Linfeng. The two Plaintiffs actually controlled the ship and related certificates. According to the request of the Defendant RONG Xiaomao, they accompanied the ship certificate to go to the relevant city bank of Henan Province to contact the mortgage loan. On August 12, 2015, the Defendant RONG Xiaomao decided to transfer the “Yuanjin Xingda” and “Yuanjin Shengda” to Zhoukou Hengchang Shipping Co., Ltd., and the legal representative of the company. CHEN Jianjun jointly submitted the “Application for Approval of Ship Names” to the

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Local Maritime Safety Administration of Zhoukou City, Henan Province, and changed the name of “Yuancheng Xingda” to “Yuanjin Xiangshun”. The owner of the ship was changed to CHEN Jianjun and RONG Xiaomao. The name of YUAN JIN SHENG DA was changed to YUAN JIN XIANG SHUN, and the owner of the ship was changed to CHEN Jianjun and RONG Linfeng. On September 29, 2015, the Defendant RONG Xiaomao issued Power of Attorney to CHEN Jianjun in the name of the clients CHEN Jinfu, ZHAO Aiqin, RONG Xiaomao and XIAO Wu, and entrusted CHEN Jianjun to handle the loans of the two vessels. On the same day, the Defendant RONG Xiaomao, with RONG Xiaomao, CHEN Jinfu and ZHAO Aiqin as Party A, signed Agreement with the Plaintiff GAO Yunhua as Party B, stipulating that Party A has paid a deposit of 3 million yuan and the balance of 9.6 million yuan. Party B shall pay for the construction. Party A’s bank loan recipient shall be GAO Yunhua; all procedures of the two ships shall be handed over to Party A by Party B. After the change of the ship name and loan procedures are completed, Party A shall return Party B; Party A shall pay the due process Party B has cash of 3.6 million yuan. The Defendant RONG Xiaomao signed the names of the above three people in Party A. The Plaintiff GAO Yunhua signed the signature in Party B. CHEN Jianjun signed the witness. On September 30, 2015, CHEN Jianjun issued a receipt to the Plaintiff GAO Yunhua, stating: “this time I received YUAN JIN XING DA and YUAN JIN SHENG DA. Initial formalities. After the ship is completed, hand it over to the shipyard Gao boss.“ On the same day, the Defendant RONG Xiaomao issued a copy of “Under Article” to the Plaintiff GAO Yunhua, stating: “this is owed to GAO Yunhua as YUAN JIN XING DA and YUAN JIN SHENG DA (now the name of the change is YUAN JIN XIANG SHUN and YUAN JIN XIANG HE) has invested in the construction of RMB9.6 million. At the same time, in the note of the arrears, “the amount required for the shipyard inspection certificate to be completely transferred to the ship when the ship is fully delivered” is calculated separately. As the loan in Zhoukou City was blocked, the Defendant RONG Xiaomao decided to transfer the two ships to Xiping County, Henan Province. On June 6, 2016, the two ships originally registered in Zhoukou Hengchang Shipping Co., Ltd. were transferred to Xiping County Hongfa Shipping Co., Ltd. YUAN JIN XIANG SHUN was renamed YUAN JIN HONG FA 01 again, and the owner changed to KOU Mou; YUAN JIN XIANG HE was renamed YUAN JIN HONG FA 02 again, and the owner changed to RONG Xiaomao, the ship operator who changed the two ships was Xiping County Hongfa Shipping Co., Ltd., and registered in the local maritime safety administration of Zhumadian City, Henan Province. When the Plaintiff filed a lawsuit, the Defendant RONG Xiaomao still owed the construction of the two ships involved in the case of GAO Yunhua, 9.6 million yuan. At the same time, it was found that Weifang Heavy Machinery Co., Ltd. has the qualification to manufacture and sell marine diesel engines; although Nanjing Hanging Marine Equipment Co., Ltd. was cancelled on July 15, 2014, it has the qualification for the sale of marine accessories during its existence. Chuzhou City Langya Fenglin Ship Machinery Parts Factory has the qualification to manufacture and sell marine machinery parts.

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It was also found that the Plaintiff GAO Yunhua had been in charge of the two ships and all the ship certificates involved because the Defendant had not paid the ship construction money. During the period, the Plaintiff used the ship involved in the operation. Among them, YUAN JIN HONG FA 02 had a collision accident, and the ship’s waterline was hit and damaged. The validity of the contract involved and the change of contract and the determination of liability for breach of contract. The shipbuilding agreement signed by the Plaintiff GAO Yunhua and the Defendant RONG Xiaomao is the true meaning of the parties. It is legally established, legal and valid, and binding on both parties. Although the Shipbuilding Agreement signed by both parties stipulated the payment phase and time of the shipbuilding construction, the specifications of the ship equipment and the manufacturer and the ship construction period and delivery method, in the actual implementation process, the Plaintiff GAO Yunhua was honored at the Defendant. In the case that RONG Xiaomao did not complete the ship construction deposit and progress payment according to the agreed time, the shipbuilding contract was signed with the shipyard and construction started. The facts constitute a change of the agreed payment term and the amount clause; the Defendant RONG Xiaomao in the Plaintiff GAO Yunhua did not raise the objection and improvement requirements when configuring the main engine, the anchoring machine and the steering gear according to the ship equipment requirements as stipulated in the contract, and accepted the ship related certificate and changed the ship’s port of registry, the name of the ship and the registered owner for the ship. It is a change to the terms of the agreed ship equipment configuration. The Plaintiff GAO Yunhua was deployed on the vessel involved in the case. The four diesel engines were provided by RONG Xiaomao. The anchors and steering gears were produced and sold by qualified manufacturers and qualified by the ship inspection department, in line with the assembly conditions of the ship construction. The Plaintiff GAO Yunhua fulfilled the Shipbuilding Agreement signed with the Defendant RONG Xiaomao, completed the ship construction agreed upon in the agreement and provided the ship related certificate as required. The Defendant RONG Xiaomao shall, in accordance with the agreement between the parties, within the agreed time limit and conditions, pay the remaining ship construction and the corresponding interest. The Plaintiff GAO Yunhua accepted the debts owed by the Defendant RONG Xiaomao on September 30, 2015. It should be regarded as a change in the payment of the balance of the ship construction and the payment of the interest clause on the shipbuilding agreement. The Defendant RONG Xiaomao should follow its promise. Pay the balance of the ship construction to the Plaintiff GAO Yunhua and bear the corresponding interest. The issue of the ownership of the two vessels involved in the case. In this case, although the parties did not claim the ownership of the two vessels involved, the ownership of the two vessels directly related to the clarification of the facts of the case and the settlement of the dispute. The two vessels involved in the case were commissioned by the Defendant RONG Xiaomao. The ship registration change was carried out several times in order to realize the ship mortgage loan. All of them were based on the will of the Defendant RONG Xiaomao. The physical and related

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certificates of the two ships have been The Plaintiff GAO Yunhua stayed in control. Although the two vessels involved in the case have changed the port of registry and registered the owner several times, they cannot change the true ownership of the two vessels. The Defendant RONG Xiaomao is the last named YUAN JIN HONG FA 01 and YUAN JIN HONG FA 02 the actual owner. The Plaintiff had the right to define the rights of the two vessels involved. The ship’s delivery conditions as stipulated in Shipbuilding Agreement are “when all the money is settled, Party B is entitled to receive the ship”, and the Defendant RONG Xiaomao did not pay the shipbuilding construction fee to the Plaintiff GAO Yunhua. The Plaintiff GAO Yunhua had the right to retain a ship is also in conformity with Article 264 of the Contract Law of the People’s Republic of China. After the Defendant RONG Xiaomao paid the Plaintiff GAO Yunhua the payment of the balance and interest of the ship construction, the Plaintiff GAO Yunhua should deliver the ship in question to the Defendant RONG Xiaomao. Although the Plaintiff GAO Yunhua did not have the right to retain the two vessels, he did not have the right to use the two vessels for profit operation. Although the Defendant RONG Xiaomao pointed out in the defense that the Plaintiff GAO Yunhua would retain the ship for profit, but did not file a counterclaim and provide evidence, its claim is not within the scope of the case, and the case will not be heard. In summary, in accordance with Article 60 Paragraph 1, Article 109 and Article 114 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 119 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. Reject the Plaintiff GAO Yinan’s claims against the Defendant RONG Xiaomao, the Defendant RONG Linfeng and the Defendant CHEN Jinfu; 2. Reject the Plaintiff GAO Yunhua’s claims against the Defendant RONG Linfeng and the Defendant CHEN Jinfu; 3. The Defendant RONG Xiaomao shall pay the Plaintiff GAO Yunhua a balance of 9.6 million yuan for the construction of the ship within 10 days from the effective date of this judgment, and will bear the interest loss of the aforementioned amount at the monthly interest rate of 1.5% from October 1, 2015; 4. Reject other claims of the Plaintiff GAO Yunhua. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with the provisions of Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 95,818 yuan, shall be borne by the Defendant RONG Xiaomao.

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If the parties disagree with this judgment, they may submit the original letter of appeal to the court within 15 days from the date of delivery of the judgment, together with copies of petition in accordance with the number of the other parties, so as to appeal to the Hubei High People’s Court. Presiding Judge: HOU Zhenkun Judge: ZUO Minghui Judge: YANG Guofeng September 8, 2017 Clerk: YU Hui

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Hubei High People’s Court Civil Judgment GAO Yunhua et al. v. RONG Xiaomao et al. (2017) E Min Zhong No.3207 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 383. Cause of Action 207. Dispute over shipbuilding contract. Headnote Affirming the first instance Court’s decision holding one Defendant liable for indemnifying one Plaintiff of the payments made by that Plaintiff, for the benefit of that Defendant, to the shipyard regarding two newbuildings, as that Defendant was the real owner of the ships despite that on the ship registry certificates, the ships’ paper owner was not that Defendant and changed a few times. Summary This case arose from a shipbuilding agreement. One Plaintiff and one Defendant signed the shipbuilding agreement, under which that Plaintiff agreed to procure from a shipyard two newbuildings in compliance with that Defendant’s requirements, while that Defendant agreed to pay the price (other Plaintiffs and Defendants were involved in this case, but Court of first instance held that they were not parties to the agreement so had no rights or obligations thereunder). Though that Defendant did not pay the price in full, that Plaintiff had the two ships constructed in the shipyard and delivered to that Defendant. Post delivery, the ships were initially registered under the names of that Defendant and a third party, and then for operational and financing purpose, that Defendant arranged to change their ownership a few times. Now, that Plaintiff claimed for the unpaid price, and that Defendant raised the defence that the unpaid price should be paid by the current or last owners of the ships. Court of first instance held that the factual background, as reflected by the evidence from all parties, showed that the real owner of the two ships was always that Defendant, no matter who was the paper owner appearing on the registry certificates and no matter whether the paper owner changed a few times, so Defendant should pay the unpaid part of price to Plaintiff under the shipbuilding agreement. That Defendant who was held liable appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

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Judgment The Appellant (the Defendant of first instance): RONG Xiaomao, male, born on July 3, 1963, Han, living in Xiping County, Henan. Agent ad litem: XIAO Dongsheng, lawyer of Beijing Yingke (Wuhan) Law Firm. The Respondent (the Plaintiff of first instance): GAO Yunhua, male, born on January 2, 1964, Han, living in Yiling District, Yichang, Hubei. Agent ad litem: CAO Xiangyu, lawyer of Hubei Three Gorges Law Firm. The Plaintiff of first instance: GAO Yinan, male, born on October 10, 1990, Han, living in Yiling District, Yichang, Hubei. Agent ad litem: CAO Xiangyu, lawyer of Hubei Three Gorges Law Firm. The Defendant of first instance: RONG Linfeng, male, born on June 24, 1990, Han, living in Xiping County, Henan. Agent ad litem: XIAO Dongsheng, lawyer of Beijing Yingke (Wuhan) Law Firm. The Defendant of first instance: CHEN Jinfu, male, born on May 15, 1974, Han, living in Xiping County, Zhumadian, Henan. Agent ad litem: XIA Bing, lawyer of Hubei Xingchu Law Firm. With respect to the case arising from dispute over shipbuilding contract between the Appellant RONG Xiaomao and the Respondent GAO Yunhua, the Plaintiff of first instance GAO Yinan, and the Defendants of first instance RONG Linfeng and CHEN Jinfu, the Appellant dissatisfied with the Wuhan Maritime Court (2017) E 72 Min Chu No.150 Civil Judgmen and and appealed to the court. After the case was entertained on November 7, 2017, the court formed a collegiate bench in accordance with the law and held a hearing in public. The Appellant RONG Xiaomao, the Respondent GAO Yunhua and agent ad litem GAO Yunhua, the Plaintiff GAO Yinan, the Appellant RONG Xiaomao and the Defendant of first instance RONG Linfeng’s agent ad litem XIAO Dongsheng, the Defendant of first instance CHEN Jinfu and his agent ad litem XIA Bing, appeared in court to participate the hearing. Now the case has now been concluded. RONG Xiaomao appealed that: revoke the original judgment and reject GAO Yunhua’s claims against RONG Xiaomao. The first and second trial costs were borne by GAO Yunhua. Facts and reasons: (1) GAO Yunhua did not use the ship’s main engine, steering gear, anchoring machine, etc. in accordance with the contract, which constituted a fundamental breach of contract; the first-instance judgment was wrong in the facts, resulting in a wrong judgment. 1. According to the agreement between the two parties, the main engine of the ship is Zibo 520 horsepower, Xinghua’s anchor machine and steering gear; however, after the ship inspection, the main equipment of the ship involved was replaced by GAO Yunhua privately, using the main engine, anchor machine, steering gear, etc., which met the contract requirements. The court of first instance held that RONG Xiaomao did not raise objection and improvement requirements when he did not configure the main

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engine, the anchoring machine and the steering gear according to the ship equipment requirements stipulated in the contract, and accepted the ship related certificate and changed the port of registry and the name of the ship several times. And the registration of the owner, and the facts constitute a change to the terms of the agreed ship equipment configuration. The fact of the determination is incorrect and conflicts with the legal provisions. RONG Xiaomao did not know about the change behavior, and GAO Yunhua did not inform RONG Xiaomao. RONG Xiaomao was unable to accept the ship and could not relieve his rights. The original certificate of all the ships has been kept in the hands of GAO Yunhua. Under the premise that there is no evidence to prove that GAO Yunhua and RONG Xiaomao have reached a communication and obtained the consent, it is determined that RONG Xiaomao accepts the certificate, which constitutes a lack of legal basis for the factual recognition of the change contract. 2. When the agreement between CHEN Jinfu and GAO Yunhua was signed on April 19, 2014, the 426 kW diesel engine produced by four Weifang Heavy Machinery Co., Ltd. was delivered; the contract involved was signed on July 1, 2014, and was clearly established. The ship is a Zibo 620 horsepower diesel engine. It can be seen that the diesel engine provided by RONG Xiaomao was not used by the ship involved in the construction. 3. Although the ship involved in the case has obtained the ship inspection certificate, it cannot represent that the behavior of GAO Yunhua is in accordance with the contract. Article 5 of Shipbuilding Agreement involved in the case stipulates that the non-standard ship to be constructed shall be constructed in accordance with the drawings, and the standard requirements for the main installation of the ship shall be clearly stipulated. The unilateral change behavior of GAO Yunhua is obviously not in conformity with the contract, and it completely violates his obligations as a contractor. 4. It is determined that Nanjing Aerospace Marine Equipment Co., Ltd. and Zhangzhou Hurricane Marine Machinery Parts Factory have a lack of factual basis for manufacturing sales qualifications, and it cannot indicate that the related products can replace the products agreed by the contract parties. 5. The fire protection system of the ship involved in the case was not installed as required, and the hull steel plate did not meet the requirements, and there were major safety hazards. (2) The behavior of GAO Yunhua has constituted a fundamental breach of contract and the purpose of the contract cannot be achieved. GAO Yunhua has been occupying two ships involved in the case and engaged in transportation for a period of one year. The ship involved in the case had a serious collision accident, and there may already be serious quality problems, which may result in the inability to achieve the contract. (3) GAO Yunhua shall breach the contract at all, and shall be responsible for the performance of the contract, and shall return the RMB (hereinafter all RMB) shipbuilding amount and corresponding interest according to the law. GAO Yunhua and GAO Yinan argued that after the contract was signed, GAO Yunhua informed RONG Xiaomao in the first time and asked him to pay the shipbuilding payment in accordance with the contract. However, RONG Xiaomao was unable to obtain a bank loan due to his own reasons and was unable to pay the loan. On April 27, 2015, the two ships involved in the construction of GAO

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Yunhua passed the inspection and registered as RONG Xiaomao. They went to various places to assist RONG Xiaomao in handling the bank and bank loans. RONG Xiaomao defaulted on the shipbuilding payment and had no right to terminate the contract. The ship involved in the case has been completed in accordance with the agreement. GAO Yunhua has the right to exercise the right of defense first, and RONG Xiaomao’s request to terminate the contract is unfounded. The court of second instance is requested to dismiss the appeal according to law and affirm the judgment of the first instance. CHEN Jinfu, the Defendant of first instance, agreed with the Appellant's appeal. He said: On June 16, 2014, CHEN Jinfu handed over four X6170 diesel engines purchased by Hubei Weichai Company to GAO Yunhua for a purchase price of RMB720,000 yuan. Later, due to funds and other reasons, CHEN Jinfu did not continue to participate in the construction of the ship, and the price of the diesel engine was 640,000 yuan. Although the ship involved in the case meets the ship inspection specifications, it does not mean that the ship can be forcibly delivered. It should meet the quality standards stipulated in the contract. RONG Xiaomao has the right to request the appraisal of the ship quality. The vessel involved did not use the diesel engine manufactured by the agreed Zibo diesel engine plant, and RONG Xiaomao had the right to request the cancellation of the contract. During the management period, GAO Yunhua operated the ship privately and left the shipyard that should be retained. The Respondent was unable to exercise the lien according to law. The Defendant RONG Linfeng agreed with the Appellant’s appeal. GAO Yunhua and GAO Yinan claimed: RONG Xiaomao, RONG Linfeng and CHEN Jinfu should immediately pay GAO Yunhua and GaoYinan the amount of the shipbuilding (hereinafter all RMB) 9.6 million yuan, and the interest on the advance payment was paid at the monthly interest rate of 1.5% from June 13, 2015 until all the funds are paid. The court of first instance found the facts: On April 19, 2014, CHEN Jinfu and the outsiders PAN Guangxin, CHANG Chunwei and GAO Yunhua signed Construction Agreement for Ship Construction and entrusted GAO Yunhua to build two 89.8 m long and 16.6 m wide. For ships with a depth of 4.2 m, the unit price of each ship is 6.3 million yuan, and the total price of the two ships is 12.6 million yuan. The agreement also stipulates the terms of ship construction deposit, construction period, down payment shipbuilding materials, ship inspection certificate handling and handover, payment of late payment and deferred payment, ship mainframe and part of driving equipment. After the signing of the agreement, CHEN Jinfu delivered a 400,000 yuan acceptance bill and four X6170ZC580-3 426 kW diesel engines produced by Weifang Heavy Machinery Co., Ltd. according to the agreement. As PAN Guangxin and CHANG Chunwei withdrew their partnership with CHEN Jinfu for some reason, the agreement was not fulfilled. Subsequently, CHEN Jinfu mobilized RONG Xiaomao to build the ship. On July 1, 2014, GAO Yunhua took the name of the contractor as Party A, and RONG Xiaomao signed the Shipbuilding Agreement as Party B in the name of the entrusting party. The agreement stipulates that Party B entrusts Party A

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to build two ships with a length of 89.8 m, a width of 16.6 m and a depth of 4.2 m in Zhijiang. The contract price is 6.3 million yuan for each ship, and the total price of the two ships is 12.6 million yuan. Party B pays 2 million yuan. The second payment shall be paid 1 million yuan after the side tank is set up; Party A shall be responsible for the ship inspection and hand over the ship inspection procedures to Party B; the ship inspection procedures shall be handed over to Party B for payment of all the final payment within one month, and the deferred payment shall be borne by 1.5% per month. The interest of the advance payment; the construction of the ship is a non-standard ship, specifically designed and installed to map construction, the diesel engine is Zibo 520 horsepower, anchor chain diameter 32, Xinghua steering gear and anchor machine; the deposit is paid within five days after the agreement is signed, overdue Cannot pay as the contract termination, Party B's payment in advance and diesel engine as compensation for Party A’s economic losses; Party A will deliver the ship inspection procedures to Party B. Within 3 months, Party B will not be able to pay the full amount. Party A has the right to auction the ship; The construction period is six months, and Party B is entitled to receive the ship after all the funds have been settled. On September 9, 2014, GAO Yunhua and GAO Yinan signed the “89.8 * 16.6 * 4.2 m bulk carrier of Zhijiang Huarui Shipbuilding Co., Ltd.” with the outsider Zhijiang Huarui Shipbuilding Co., Ltd. to perform the aforementioned contract.”. RONG Xiaomao accepted the 400,000 yuan acceptance bill and four diesel engines delivered by CHEN Jinfu after signing Shipbuilding Sale and Purchase Agreement with GAO Yunhua on April 19, 2014. The four diesel engines were discounted at a discount of 640,000 yuan as part of the down payment. CHEN Jinfu transferred the RMB10,000 yuan to the account of China Agricultural Bank of GAO Yunhua on July 8, 2014, and transferred 500,000 yuan on November 12, 2014, and transferred 200,000 yuan on January 25, 2015. On the 27th of the month, the transfer was 200,000 yuan. On February 7, 2015, the outsider ZHAO Aiqin passed the transfer of 100,000 yuan, totaling 1.96 million yuan. The discount for the acceptance bill and the four diesel engines is 3 million yuan. The two vessels were started on October 1, 2014 and were completed on March 19, 2015 and April 23, the same year. GAO Yunhua and GAO Yinan installed four diesel engines under RONG Xiaomao as the main engines on both ships, and equipped the ship with CJM-36 brittle anchor machine produced by Zhangzhou Hurricane Marine Machinery Parts Factory. DYA-1001125 tail steering gear manufactured by Equipment Co., Ltd. On April 27, 2015, the ship named CN20146903736 was named YUAN JIN XING DA. On May 13, 2015, the ship named YUAN JIN SHENG DA was registered for the ship identification number CN20141235252. In order to realize the separate registration of the two vessels, RONG Xiaomao assigned RONG Linfeng and GAO Yunhua to sign a Shipbuilding Agreement in which the number of ships was different, and the contents were in accordance with the shipbuilding agreement signed by RONG Xiaomao and GAO Yunhua. Determined to be July 1, 2014. Subsequently, YUAN JIN XING DA registered the owner of the ship as RONG Xiaomao, and YUAN JIN SHENG DA registered the ship owner as RONG Linfeng. GAO Yunhua and GAO Yinan actually controlled the ship and related certificates, and

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together with the certificate of RONG Xiaomao, they went to the relevant local city banks in Henan Province to contact the mortgage loan. On August 12, 2015, RONG Xiaomao decided to transfer YUAN JIN XING DA and YUAN JIN SHENG DA to Zhoukou Hengchang Shipping Co., Ltd., and the legal representative of the company, CHEN Jianjun, in order to obtain mortgage loans. Jointly submit Application for Approval of Ship Names to the Local Maritime Safety Administration of Zhoukou City, Henan Province, and change the name of YUAN JIN XING DA to YUAN JIN XIANG SHUN. The owner of the ship will be changed to CHEN Jianjun and RONG Xiaomao. The name of the ship YUAN JIN SHENG DA was changed to YUAN JIN XIANG HE, and the owner of the ship was changed to CHEN Jianjun and RONG Linfeng. On September 29, 2015, RONG Xiaomao issued Power of Attorney to CHEN Jianjun under the name of the clients CHEN Jinfu, ZHAO Aiqin, RONG Xiaomao and Xiao Wu, and entrusted CHEN Jianjun to handle the loans of the two vessels. On the same day, RONG Xiaomao took RONG Xiaomao, CHEN Jinfu and ZHAO Aiqin as Party A, and signed Agreement with GAO Yunhua as Party B. It was agreed that Party A had paid a deposit of 3 million yuan and the balance of 9.6 million yuan was built by Party B. Party A’s bank loan recipient is GAO Yunhua; all the procedures of the two ships are handed over to Party A by Party B. After the change of the ship name and loan procedures are completed, Party A shall return Party B; Party A shall pay Party B 3.6 million yuan in cash upon the handover. RONG Xiaomao signed the names of the above three people in Party A. GAO Yunhua signed the signature in Party B and CHEN Jianjun signed the witness. On September 30, 2015, CHEN Jianjun issued a receipt to GAO Yunhua, stating: “The original procedures for the two vessels of YUAN JIN SHENG DA (YUAN JIN XIANG HE) and YUAN JIN XING DA (YUAN JIN XING SHUN) were received. After the ship is completed, it will be handed over to the owner of the shipyard.” On the same day, RONG Xiaomao issued a copy of Arrears to GAO Yunhua, stating: “this is the time to owe GAO Yunhua into YUAN JIN SHENG DA, YUAN JIN XING DA (now the name of the change is YUAN JIN XIANG HE and YUAN JIN XING SHUN) the construction cost is RMB10,000 yuan, and the monthly interest rate is 1.5. According to the “Debt” column, RONG Xiaomao signed and signed CHEN Jinfu, ZHAO Aiqin and XIAO Wu, and the certificate was CHEN Jianjun. At the same time, in the note of the arrears, “the amount required for the shipyard inspection certificate to be completely transferred to the ship when the ship is fully delivered” is calculated separately. Due to the blocked loan in Zhoukou City, RONG Xiaomao decided to transfer the two ships to Xiping County, Henan Province. On June 6, 2016, the two ships originally registered in Zhoukou Hengchang Shipping Co., Ltd. were transferred to Xiping County Hongfa Shipping Co., Ltd. YUAN JIN XIANG SHUN was renamed YUAN JIN HONG FA 01 again, and the owner changed to CHEN Jinfu; YUAN JIN XIANG HE was renamed YUAN JIN HONG FA 02 again, and the owner changed to RONG Xiaomao. The ship operator who changed the two ships was Xiping County Hongfa Shipping Co., Ltd., and was registered at the local maritime safety administration of Zhumadian City, Henan Province. At the time of the lawsuit filed by Yunhua and GAO Yinan, RONG Xiaomao still owed 9.6 million

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yuan to the construction of the two ships involved in Yunhua. The court of first instance also found that Weifang Heavy Machinery Co., Ltd. has the qualification to manufacture and sell marine diesel engines; although Nanjing Hanging Marine Equipment Co., Ltd. was cancelled on July 15, 2014, it has the qualification for the sale of marine accessories during its existence, Zhangzhou City Fengfenglin Ship Machinery Parts Factory has the qualification to manufacture and sell marine machinery parts. The court of first instance also found that because RONG Xiaomao, RONG Linfeng, and CHEN Jinfu had not paid the shipbuilding funds, GAO Yunhua had been in charge of the two ships and all the ship certificates involved. During the period, GAO Yunhua and GAO Yinan used the ship involved in the operation. Among them, YUAN JIN HONG FA 02 had a collision accident, and the waterline of the ship was hit and damaged. The court of first instance held that the case was a commission contract for the construction of a ship. The issues of the case were that: l. the identification of the eligible subject in the case; 2. the validity of the contract involved and the change of the contract and the determination of the liability for breach of contract; 3. the ownership of the two vessels involved; 4. GAO Yunhua and GAO Yinan defined the rights of the two vessels involved. The identification of the eligible subject in this case. Although CHEN Jinfu and other outsiders signed Shipbuilding Sale and Purchase Agreement and delivered some shipbuilding deposits and equipment before July 1, 2014, after the signing of the agreement between RONG Xiaomao and GAO Yunhua, the shipbuilding and trading The Agreement has not been fulfilled, so the agreement does not involve disputes in this case and is not within the scope of the case. GAO Yunhua and GAO Yinan delivered the acceptance bill and diesel engine with CHEN Jinfu, and transferred the construction cost of the ship through their bank account. RONG Xiaomao signed Power of Attorney issued by CHEN Jianjun for the loan and “CHEN Jinfu” In the plot, CHEN Jinfu was identified as the Defendant, but there was no evidence to prove that RONG Xiaomao had the authorization to sign the case, the power of attorney and the arrears of the debts. CHEN Jinfu’s authorization was clearly stated in the case investigation. CHEN Jinfu’s shipbuilding payment was RONG Xiaomao transferred to CHEN Jinfu through others and was transferred to Chen Yunhua by CHEN Jinfu. At the same time, RONG Xiaomao did not record CHEN Jinfu's handling of the ship registration certificate and the procedures for ship transfer. Therefore, in this case, GAO Yunhua and GAO Yinan pointed out that CHEN Jinfu’s claim for the construction of the entrusted partner of the vessel involved in the dispute did not comply with the law, and did not support CHEN Jinfu’s lawsuit requesting the court of first instance. The vessel construction agreement involved was signed by GAO Yunhua and RONG Xiaomao. GAO Yinan did not participate in the signing of the contract. Although he participated in the shipbuilding involved in the two ships involved in the execution of the contract and the Zhijiang Huarui Shipbuilding Co., Ltd. The signing of the contract, the act of signing the contract is the step of GAO Yunhua’s execution of the contract involved in the case, does not involve disputes with RONG Xiaomao, and it has no right to appeal against the interests of the case, not the appropriate Plaintiff in this

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case. Although RONG Linfeng and GAO Yunhua signed Shipbuilding Agreement to achieve the purpose of YUAN JIN XING DA registration, but it is not the main body of the contract involved, nor the real owner of the ship involved, not the eligible Defendant in this case. From RONG Xiaomao in the lawsuit to prove that the composition of the 3 million price paid for the performance of the ship construction contract involved and the successive agreements and arrears can be determined, RONG Xiaomao is the only Defendant in this case, and GAO Yunhua is the only Plaintiff in this case. The validity of the contract involved and the change of contract and the determination of liability for breach of contract. The shipbuilding agreement signed between GAO Yunhua and RONG Xiaomao is the true meaning of the parties. It is legally established and legally valid and binding on both parties. Although the Shipbuilding Agreement signed by both parties stipulated the payment phase and time of the ship construction payment, the specifications of the ship equipment and the manufacturer and the ship construction period and delivery method, in the actual implementation process, GAO Yunhua did not follow the agreement in RONG Xiaomao. In the case of the completion of the ship construction deposit and the payment of the progress payment at the agreed time, the shipbuilding contract is signed with the shipyard and the construction is started. The facts constitute a change in the agreed payment term and the amount clause; RONG Xiaomao’s ship equipment not in accordance with the contract in Jinyunhua It is required to configure the main engine, the anchoring machine and the steering gear, etc. without objection and improvement requirements, and accept the ship-related certificate and the ship change port, the ship name and the registered owner of the ship, and the facts constitute the terms of the agreed ship equipment configuration. change. The four diesel engines that GAO Yunhua deployed on the ship involved were provided by RONG Xiaomao. The anchors and steering gears were produced and sold by qualified manufacturers and qualified by the ship inspection department, which met the assembly conditions for ship construction. GAO Yunhua fulfilled the Shipbuilding Agreement signed with RONG Xiaomao, completed the ship construction agreed upon in the agreement and provided the ship related certificate as required. RONG Xiaomao shall pay the remaining ship within the agreed time limit and conditions according to the agreement between the two parties. Construction funds and corresponding interest. Min Yunhua accepted RONG Xiaomao’s arrears on September 30, 2015. It should be regarded as a change in the payment of the balance of the ship’s construction and the payment of interest on the shipbuilding agreement. RONG Xiaomao shall pay the ship construction to Jinyun in accordance with its commitment. The balance and the corresponding interest. The issue of the ownership of the two vessels involved in the case. In this case, although the parties did not claim the ownership of the two vessels involved, the ownership of the two vessels directly related to the clarification of the facts of the case and the settlement of the dispute. The two vessels involved in the case were commissioned by RONG Xiaomao. The ship registration change was carried out several times in order to realize the ship mortgage loan. All of them were carried out by RONG Xiaomao’s will. The physical and related certificates of the two ships

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have been retained by GAO Yunhua according to the agreement between the two parties. Take control. Although the two vessels involved in the case have changed the port of registry and registered owners several times, they cannot change the true ownership of the two vessels. RONG Xiaomao is the actual owner of YUAN JIN HONG FA 01 and YUAN JIN HONG FA 02. GAO Yunhua has the right to define the rights of the two vessels involved. The ship delivery conditions agreed in Shipbuilding Agreement involved in the case are “Party B is entitled to receive the ship after all the money has been settled”, and RONG Xiaomao has the right to retain the ship in the case of not fully paying the shipbuilding payment to GAO Yunhua. It complies with the provisions of Article 264 of the Contract Law of the People’s Republic of China. After RONG Xiaomao fulfilled the payment of the balance and interest on the construction of the ship, GAO Yunhua should deliver the ship in question to RONG Xiaomao. Although Yunyun Hua has the right to retain the two vessels, he has no right to use the two vessels for profit operation. Although RONG Xiaomao in the defense pointed out that GAO Yunhua would retain the ship for profit, but did not file a counterclaim and provide evidence, its claim is not within the scope of the case, and the court of first instance will not hear it. To sum up, according to Article 60 Paragraph 1, Article 109, and Article 114 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 119 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. reject GAO Yinan’s claims against RONG Xiaomao, RONG Linfeng and CHEN Jinfu; 2. reject GAO Yunhua’s claims against RONG Linfeng and CHEN Jinfu, RONG Xiaomao should pay the remaining amount of 9.6 million yuan for the construction of the ship to GAO Yunhua within 10 days from the date of the first-instance judgment, and will bear the interest loss of the aforementioned amount at the monthly interest rate of 1.5% from October 1, 2015; reject other claims from GAO Yunhua. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 95,818 yuan, shall be borne by RONG Xiaomao. During the second instance, the parties submitted evidence in accordance with the law in response to the appeal. The parties involved in the organization conducted evidence exchange and cross-examination. RONG Xiaomao and RONG Linfeng provided three pieces of evidence: Evidence 1, Photograph of YAUN JIN HONG FA 02, to prove that the ship had been seriously damaged due to a collision accident. Evidence 2, four waterway cargo transport orders, to prove that YUAN JIN HONG FA 02 is controlled by GAO Yunhua and is currently in operation. Evidence 3, testimony of witness LI Mou, to prove that YUAN JIN HONG FA 01 has been transferred to KOU Rongfu’s name, and the relevant certificate has never been delivered to RONG Xiaomao.

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The main content of the witness LI Mou’s testimony is: In June 2016, after the introduction of GUI Wenxue, the ship involved in the case was linked to Xiping County Hongfa Shipping Co., Ltd., according to the requirements of GAO Yunhua, everyone changed to KOU Rongfu, and the relevant ship inspection procedures were handed over to KOU Rongfu, did not hand over to RONG Xiaomao. RONG Xiaomao said that he owed money to the shipyard, but did not say how much he owed, nor did he say that the ship had quality problems. If the ship involved in the case has quality problems, Xiping County Hongfa Shipping Co., Ltd. will not cooperate with the transfer procedures. GAO Yunhua and GAO Yinan issued cross-examination opinion that the authenticity of the evidence 1 was confirmed, but the evidence was submitted in the first instance and therefore is not new evidence. There is objection to the authenticity of evidence 2 because the shipper is a copy. The testimony of evidence 3 is not cross-examined because the evidence does not belong to new evidence. CHEN Jinfu issued a cross-examination opinion that there is no objection to the authenticity of evidence 1, claiming that the evidence can prove that the ship involved in the ship was damaged during the operation of GAO Yunhua; there is no objection to the authenticity of evidence 2, and that the evidence can prove that the ship involved was operated by GAO Yunhua. There is no objection to the third evidence and its purpose of proof. The court believes that GAO Yunhua, GAO Yinan, and CHEN Jinfu both confirm the authenticity of the evidence, and the evidence is mutually confirmed with the facts of a review, which can be used as the basis for the case. Although the evidence is a copy of the second, according to the facts of a review, GAO Yunhua used the ship involved in the operation and the operation time is consistent with the time stated on the relevant waybill. Therefore, the evidence can also be used as the basis for finalization. The witness of the evidence 3, LI Mou, is the legal representative of Xiping County Hongfa Shipping Co., Ltd., and the facts as stated in the review are mutually confirmed, and can be used as the basis for the case according to law. GAO Yunhua and GAO Yinan provided three pieces of evidence: Evidence 1, a photo of the group involved in the commencement of the ship, to prove that RONG Xiaomao, GAO Yunhua, CHEN Jinfu and GAO Yinan all participated in the groundbreaking ceremony of the ship involved. RONG Xiaomao entrusted CHEN Jinfu to hand over the diesel engine involved to GAO Yunhua. Evidence 2, photographs of the registration procedures for the ship involved in the case, to prove that RONG Xiaomao and KOU Rongfu have personally attended the relevant procedures. Evidence 3, photographs of the ship involved, to prove that the ship in question is in good condition and has complete fire protection facilities. RONG Xiaomao and RONG Linfeng issued cross-examination opinion that there is no objection to the authenticity of the three pieces of evidence, but the evidence one has nothing to do with the ship’s main engine, only to prove that RONG Xiaomao participated in the groundbreaking ceremony; the evidence two proved that RONG Xiaomao cooperated with KOU Rongfu There is no irregularity

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in the transfer of the ship; evidence 3 can only prove that the ship involved in the case has installed fire-fighting facilities and cannot prove whether the facility meets the requirements of the state. CHEN Jinfu issued cross-examination opinion that there is no objection to the authenticity of the three pieces of evidence. It is normal for RONG Xiaomao to participate in the commencement ceremony of the ship involved. The quality of the ship involved should be in accordance with the contract. The court believes that RONG Xiaomao, RONG Linfeng and CHEN Jinfu have no objection to the authenticity of the above evidence, and the purpose of the relevant certificates and the facts of a review have been mutually confirmed, and can be used as a basis for finalization according to law. CHEN Jinfu provided two copies of the product order contract of Hubei Weichai Electromechanical Products Sales and Service Co., Ltd., the business license of Hubei Weichai Electromechanical Products Sales and Service Co., Ltd. and the legal representative LIU Guangming’s ID card and a copy of the ID card. It purchased the diesel engine model X6170 for the ship involved in the case and delivered it to GAO Yunhua. RONG Xiaomao and RONG Linfeng issued cross-examination opinion that the authenticity of the above evidence and the purpose of the certification were recognized. GAO Yunhua and GAO Yinan issued cross-examination opinion that recognized the authenticity of the above evidence. The court holds that the parties did not disagree with the authenticity of the evidence, and the evidence was mutually confirmed with the facts as examined, and the law could be the basis for determining the facts of the case. The facts ascertained in the examination are supported by relevant evidence and confirmed by the court. The court believes that the issues of the case are that: 1. whether GAO Yunhua defaults. 2. Whether RONG Xiaomao has the right to terminate the contract. In this regard, the analyses are as follows: (1) Whether GAO Yunhua is in breach of contract. Article 77 of the Contract Law of the People’s Republic of China stipulates that “the parties may change the contract by consensus.” In this case, Shipbuilding Agreement signed by the two parties stipulated that the construction ship is a non-standard ship, specifically designed and installed to match construction, and the specifications and manufacturer of the ship equipment are agreed. In the actual implementation process, GAO Yunhua did not configure the main engine, the anchoring machine and the steering gear according to the agreed ship equipment requirements, but RONG Xiaomao did not object to the ship design, and did not raise any objection during the construction, but completed the construction of the ship involved. After that, in conjunction with the registration procedures, RONG Linfeng and GAO Yunhua were assigned to sign the shipbuilding agreement, and the ship involved was transferred to other port for loan. The facts constitute a

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change in the terms of the agreed ship equipment configuration. The equipment type of the ship involved in the case is detailed in the relevant certificate. RONG Xiaomao is the registered owner of the ship involved in the case. The situation of the ship-related equipment is known. Until the lawsuit in this case, the equipment is not in conformity with the agreement. In case of breach of contract, the grounds for the appeal cannot be established. The ship involved in the case has passed the inspection of the relevant departments. RONG Xiaomao appealed that his fire-fighting system and steel plate have potential safety hazards, but failed to provide evidence to prove this claim. The law should bear the consequences of the inability to prove. (2) Whether RONG Xiaomao has the right to terminate the contract. Article 264 of the Contract Law of the People’s Republic of China stipulates that if the ordering party fails to pay the contractor the remuneration or the material fee, the contractor shall have a lien on the completed work, unless otherwise agreed by the parties. In this case, the ship involved in the case has been completed, RONG Xiaomao has not fully paid for the construction of the ship, and violated the payment obligations stipulated in the contract. GAO Yunhua has the right to retain the ship in question according to law. Article 94 of the Contract Law of the People’s Republic of China stipulates that if a party delays the performance of its debts or has other breach of contract, the parties may not be able to achieve the purpose of the contract, and the parties may terminate the contract. As mentioned above, RONG Xiaomao’s claim that GAO Yunhua’s breach of contract was not established, the ship involved in the case has been completed, and there is no situation that cannot be achieved by the purpose of the contract. RONG Xiaomao’s relevant appeal grounds are not established and there is no right to cancel the contract involved. In summary, RONG Xiaomao’s appeal request cannot be established and should be dismissed. The first-instance judgment found that the facts were clear and the application of law was correct, which should be affirmed. According to Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 95,818 yuan, shall be borne by RONG Xiaomao. The judgment is final. Presiding Judge: LIU Jianxin Judge: OU Haiyan Judge: ZENG Cheng December 22, 2017 Clerk: WU Di

Tianjin Maritime Court Civil Judgment Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2016) Jin 72 Min Chu No.491 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 415. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Shipper of containerized goods held not liable for container demurrage when consignee failed to return containers, because contract provided that demurrage would only be payable if consignee failed to pick up goods. Summary Chen Zhiyou (Shipper) entrusted Great Xinhua Steamer (Carrier) to carry container cargoes from Tianjin Port to coastal ports of Guangdong province. After arrival, the Carrier notified the consignees to pick up the goods in accordance with the Shipper’s instructions. But the consignee did not return the containers to the Carrier after receiving the goods. The Carrier sued Chen Zhiyou and Tianjin Youzhong Transportation for container demurrage because Chen Zhiyou represented Tianjin Youzhong Transportation. The Court held that the Shipper and Carrier had agreed that demurrage would only be incurred if the consignee did not pick up the goods. So, the Shipper was not liable for container demurrage in this case because the consignee had picked up the containers but had not returned them. Additionally, the Shipper signed the letter of instructions as a natural person instead of Tianjin Youzhong Transportation’s legal representative, so Tianjin Youzhong Transportation would not have been jointly and severally liable for the demurrage.

Judgment The Plaintiff: Great Xinhua Steamer (Yantai) Co., Ltd. Domicile: Zhifu District, Yantai, Shandong. Legal representative: WANG Shisen, chairman of the company. Agent ad litem: SHAN Lihui, staff of the company. Agent ad litem: LIU Dong, lawyer of Beijing Weiheng (Shanghai) Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_21

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The Defendant: Tianjin Youzhong Transportation Co., Ltd. Domicile: Wuqing District, Tianjin. Legal representative: QIAN Guanghui, chairman of the company. The Defendant: CHEN Zhiyou, male, born on October 29, 1973, Han, living in Binhai New Area, Tianjin. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff Great Xinhua Steamer (Yantai) Co., Ltd. and the Defendants Tianjin Youzhong Transportation Co., Ltd. (hereinafter referred to as “Youzhong Company”) and CHEN Zhiyou, after being transferred by Guangzhou Maritime Court, this case was registered and filed on May 6, 2016 by the court. Then the court duly applied the general procedure and held a hearing in public on September 26, 2016. LIU Dong, agent ad litem of the Plaintiff, and the Defendant CHEN Zhiyou, appeared in court to attend the hearing. The Defendant. Youzhong Company, was summoned in accordance with the law and did not attend the court. Now the case has been concluded by default. The Plaintiff claimed that the two Defendants shall pay the container demurrage of RMB903,412 yuan and bank loan interest for the corresponding period from August 24, 2012 to the date of actual payment. In addition, the two Defendants shall cover the legal costs of this case. Facts and reasons: from March to July 2012, as a shipper, CHEN Zhiyou, the Defendant, commissioned the Plaintiff to carry container cargoes from Tianjin Port to the coastal ports of Guangdong for several times. After the arrival of the goods, the Plaintiff notified the consignees to pick up goods in accordance with CHEN Zhiyou’s instructions. However, the consignee failed to return the containers after receiving the goods, which has arisen the container demurrage of RMB1,622,960 yuan. On August 24, 2012, the Defendant CHEN Zhiyou agreed to pay the Plaintiff the container demurrage of RM 903,412 yuan, which remained unpaid till now. CHEN Zhiyou alleged that the freight involved in this case had been paid off. As the container demurrage was generated by the consignee, he shall not be responsible to it. Besides, he just actively coordinated the issue on container demurrage between the Plaintiff and the consignee and did not promise to make the payment. In addition, the amount of the container demurrage claimed by the Plaintiff lacked legal basis. Youzhong Company, the Defendant, did not appear at the court for defense nor submitted written pleadings. The Plaintiff provided the following proofs to support its allegations: 1. the come-and-go E-mails and notarial deeds between the Plaintiff and CHEN Zhiyou, which prove that CHEN Zhiyou and the Plaintiff reached an agreement on the amount of container demurrage after consultation; 2. the civil ruling of Tianjin Maritime Court; 3. the notice of case accepted and heard by Guangzhou Maritime Court; the above two evidence proved that the claims proposed by the Plaintiff did not miss the period of the validity of lawsuit. 4. 47 copies of shipper’s letter of instruction and waybills, which prove that the Plaintiff has accepted the commission and procured the performance of carriage.

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Youzhong Company, the Defendant, did not submit the evidence nor request for cross-examining the evidence collected by the Plaintiff. The Defendant CHEN Zhiyou did not submit the evidence and put forward the cross-examination views: there is no objection to the authenticity of the evidence provided by the Plaintiff. However, he did not accept the purpose of proof 1. Besides, there is no evidence to prove that he agrees to pay the container demurrage. In terms of the evidence put forward by the Plaintiff, the court hereby decide as follows: the court confirmed the authenticity of the proof 1–4. Proof 1, which could prove the negotiation process regarding the container demurrage between the Plaintiff and CHEN Zhiyou, could not prove that CHEN Zhiyou accepted to make the payment. Proof 2–4 could prove that the Plaintiff accomplished the carriage and has brought action in court. It has been ascertained by trial that during March and May 2012, CHEN Zhiyou, as a shipper, commissioned the Plaintiff to carry the coals from Tianjin Port to coastal ports of Guangdong by more than one vessel and one voyage. These coals were all loaded by TEUs. After the arrival of the goods at the destination ports, the consignee has failed to return the containers after picking up the goods, which has generated the container demurrage. In the 47 copies of shipper’s letter of instruction involved in the case, 13 copies were signed between CHEN Zhiyou and the Plaintiff, 31 copies were signed between CHEN Zhiyou and the Plaintiff, and the other 3 copies were blurry and unidentified in the signature boxes of trustee. The format of the 47 waybills involved in the case is consistent. At the head of the waybills, there is Waterway Container Cargo Waybill of Great Xinhua Steamer (Yantai) Co., Ltd. The items of waybill number, vessel name, shipper, consignee, etc. are all listed on the waybills. It is also written on the waybills that “the waybill bears validity of contract after the signature and acknowledgement of carrier and shipper. The rights, obligations and limits of responsibility among carrier, shipper and consignee shall be complied with Transportation Rules of Waterway Container Goods, Transportation Rules of Waterway Goods and relevant provisions in terms of freight and charges”. In the “Representations and Warranties” of the shipper’s letter of instruction signed between CHEN Zhiyou and the Plaintiff, Article 1 provides that “the rights, obligations and limits of responsibility among carrier, shipper and consignee shall be complied with Transportation Rules of Domestic Waterway Goods and relevant provisions in terms of freight and charges.” Article 3 provides that “all the shipping expenses and other charges shall be paid in one lump sum to the carrier by the shipper/agent or consignee before the shipment as appointed beforehand. If the above parties fail to pay the shipping expenses and other charges for whatever reasons, the shipper and consignee shall be jointly and severally liable to the carrier for the freight and other charges. In addition, the carrier is entitled to have a lien on the goods and other en route goods. If the consignee doesn’t pick up the goods after the delivery at the destination port, the shipper shall agree the consigner to have the right to handle these goods. The way of handling shall be decided by the carrier according to the specific circumstances, and all expenses and responsibilities arising

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therefrom shall be borne by the shipper and consignee separately or jointly. The expenses include but are not limited to the container demurrage and port storage charges (calculated by the standard set by Great Xinhua Steamer Co., Ltd.).” CHEN Zhiyou conducted negotiations by E-mail with YU Shuangshou, the staff of the Plaintiff company, for several times. On 9 August 2012, an E-mail entitled “The container demurrage by the end of June” was sent by YU Shuangshou to CHEN Zhiyou. The content is listed as follows: “Manager Chen, on the basis of the talk in Shanghai and several negotiations later on and considering the long-term friendly relations of cooperation, we agree to provide preferential treatment on the container demurrage to your company in order to promote the cooperation. The details are as follows: (1) According to the table attached in the end, the total amount of arrears by the end of 30 June arising from demurrage are RMB1,622,960 yuan. After the negotiation between the two parties, we have agreed to cut the arrears to RMB903,412 yuan”. On August 24, 2012, CHEN Zhiyou sent an E-mail to YU Shuangshou, expressing that “Dear manager Yu, please respond to our request.” The mail is attached with 6 tables named as “ZHANG Lan”, “MA Xiaoke”, “MA Xinhui”, “MA Yuxin”, “SUO Jianmin” and “XIE Hongwei” in the form of xlsx. Each table has calculated the amount of container demurrage, which adds up to RMB1,036,694 yuan after discount. At 17:15 on that day, YU Shuangshou replied the mail that “Manager Chen, thank you for your details. We assure you that the amount of container demurrage is accurate. Once our financial department has confirmed the receipt of the money, it means that all the arrears of container demurrage by the end of June, listed in the attachments of the E-mail, have been settled. The difference will be handled by internal coordination of our company.” It is ascertained that the Plaintiff brought an action against the two Defendants in May 2013 to request him to indemnify the container demurrage involved in the case. Then the Plaintiff applied for withdrawal of the action, and the court permitted the application after adjudication. Set up on June 3, 2011, Youzhong Company applied for changing the registration on November 20, 2013. The legal representative was changed from CHEN Zhiyou to QIAN Guanghui, and the shareholders were changed from CHEN Zhiyou and HAN Guozhong to CHEN Zhiyou and LUO Jian. The court holds that this case belongs to contract dispute over the carriage of goods on waters adjacent to sea. The issues are listed as follows: 1. whether the two Defendant should be liable for the container demurrage; 2. is there a basis for the container demurrage and interests proclaimed by the Plaintiff; 1. Whether the two Defendants jointly and severally be liable for the container demurrage (1) Whether the Defendant CHEN Zhiyou should be liable for the container demurrage. There is no objection to the authenticity of 47 copies of the waybill involved in this case. As waybill is an evidence of contract of carriage, CHEN Zhiyou, the shipper

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listed on the waybill, formed a contractual relationship of carriage of waterway goods with the Plaintiff, the company listed at the head of the waybill. Besides, 31 copies of shipper’s letter of instruction have been signed between the Plaintiff and CHEN Zhiyou, which are legal and valid. Therefore, the rights and obligations of the two parties shall be determined in accordance with the shipper’s letter of instruction as well as the applicable laws and regulations agreed by both parties in the waybill. First of all, in accordance with the 31 copies of the shipper’s letter of instruction, CHEN Zhiyou is not liable for the container demurrage. In the Article 3 of “Representations and Warranties”, it provides that “If the consignee fails to pick up the goods after the arrival at the destination port, the shipper shall agree the consigner to have the right to handle these goods. The way of handling shall be decided by the carrier according to the specific circumstances, and all expenses and responsibilities arising therefrom shall be borne by the shipper and consignee separately or jointly. The expenses include but are not limited to the container demurrage and port storage charges (calculated by the standard set by Great Xinhua Steamer Co., Ltd.).” The court holds that in accordance with the provisions, the circumstance of the trustor (the shipper) being liable to the container demurrage shall be limited to the situation that the consignee hasn’t pick up the goods at the destination port. However, the containers involved in this case have been picked up by the consignee provided by the waybill. Therefore, CHEN Zhiyou shall not be liable for the container demurrage. Secondly, In accordance with Article 15 of the Transportation Rules of Domestic Waterway Container Goods and Article 83 of the Transportation Rules of Domestic Waterway Goods, the obligation to pay the container demurrage shall be borne by the consignee. Although the Transportation Rules of Domestic Waterway Goods has been no longer in force, it was still effective at the time of signing the shipper’s letter of instruction, which could determine the rights and obligations between the two parties. The last issue is that whether CHEN Zhiyou has promised to pay the container demurrage to the Plaintiff. The court holds that it cannot be determined that CHEN Zhiyou promised to pay the demurrage to the Plaintiff according to the existing evidence. The Plaintiff’s claims are mainly based on the following two mails: At 15:58, on August 2012 24, a mail is sent by CHEN Zhiyou to the Plaintiff to ask Manager Yu to respond to his request. At 17:15, Manager Yu responded to CHEN Zhiyou’s mail writing that “we have confirmed that the amount of container demurrage is accurate…”. In accordance with the above mails, it can’t be determined that the Plaintiff has reached an agreement with CHEN Zhiyou in terms of the container demurrage, nor has CHEN Zhiyou committed to pay the demurrage to the Plaintiff. To conclude, the court decides that the Defendant shall not be liable for the container demurrage involved in this case. (2) Whether the Defendant Youzhong Company shall be jointly and severally liable to the Plaintiff The court holds that although CHEN Zhiyou was the legal representative of Youzhong Company at the time of signing the shipper’s letter of instruction with

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the Plaintiff, he, as a natural person, booked the shipping space and signed the shipper’s letter of instruction in the contacts with the Plaintiff instead of as a legal representative of Youzhong Company. Therefore, the consequences resulted from CHEN Zhiyou’s actions shall not be undertaken by Youzhong company. In the court trial, the Plaintiff acknowledged that there was contractual relationship of freight transportation with CHEN Zhiyou instead of Youzhong Company. To conclude, the court decides that there lacks facts and legal basis on the Plaintiff’s request to ask Youzhong Company to be jointly and severally liable for the container demurrage. Thus, Youzhong Company shall not be liable to the Plaintiff. 2. The amount of the container demurrage and the calculation basis From the discount price of the container demurrage listed in the tables of the mail sent by YU Shuangshou to CHEN Zhiyou on August 9, 2012, the amount of the demurrage claimed by the Plaintiff is RMB903,412 yuan, which was negotiated between the Plaintiff and CHEN Zhiyou. There is no evidence to prove that CHEN Zhiyou and the consignee accept the contents of the tables. In addition, the Plaintiff hasn’t proved the calculation standard of the container demurrage as well as the specific overdue utility time of the containers. Therefore, the amount of the container demurrage shall not be determined. To conclude, in the absence of facts and legal basis, the action brought by the Plaintiff against the two Defendants shall be rejected. According to Article 60 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1 and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject all claims of Great Xinhua Steamer (Yantai) Co., Ltd. Court acceptance fee in amount of RMB12,834 yuan, and publication fee in amount of RMB260 yuan separately, shall be paid by Great Xinhua Steamer (Yantai) Co., Ltd. Either party that refuses to accept this judgement as final may, within 15 days after service of this judgement, appeal to the Tianjin High People’s Court by submitting an appeal petition to the court together with five copies. Presiding Judge: HU Yingjie Acting Judge: LI Ying Acting Judge: HAN Xiaohui December 5, 2016 Clerk: JU Ping

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Tianjin High People’s Court Civil Judgment Great Xinhua Steamer (Yantai) Co., Ltd. v. Tianjin Youzhong Transportation Co., Ltd. et al. (2017) Jin Min Zhong No.430 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 409. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision that shipper of containerized goods was not liable for container demurrage when consignee failed to return containers, because contract provided that demurrage would only be payable if consignee failed to pick up goods. Summary Chen Zhiyou (Shipper) entrusted Great Xinhua Steamer (Carrier) to carry container cargoes from Tianjin Port to coastal ports of Guangdong province. After arrival, the Carrier notified the consignees to pick up the goods in accordance with the Shipper’s instructions. But the consignee did not return the containers to the Carrier after receiving the goods. The Carrier sued Chen Zhiyou and Tianjin Youzhong Transportation for container demurrage because Chen Zhiyou represented Tianjin Youzhong Transportation. The first instance Court held that the Shipper and Carrier had agreed that demurrage would only be incurred if the consignee did not pick up the goods. So, the Shipper was not liable for container demurrage in this case because the consignee had picked up the containers but had not returned them. Additionally, the Shipper signed the letter of instructions as a natural person instead of Tianjin Youzhong Transportation’s legal representative, so Tianjin Youzhong Transportation would not have been jointly and severally liable for the demurrage. The Carrier appealed. The appeal Court held that there was insufficient evidence to support the claims raised by the Carrier and that the defendants were not liable.

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Judgment The Appellant (the Plaintiff of first instance): Great Xinhua Steamer (Yantai) Co., Ltd. Domicile: Zhifu District, Yantai, Shandong. Legal representative: ZHU Yong, chairman of the company. Agent ad litem: LIU Dong, lawyer of Beijing Weiheng (Shanghai) Law Firm. The Respondent (the Defendant of first instance): Tianjin Youzhong Transportation Co., Ltd. Domicile: Wuqing District, Tianjin. The Respondent (the Defendant of first instance): CHEN Zhiyou, male, born on October 29, 1973, Han, living in Binhai New Area, Tianjin. With respect to the case of dispute over contract of carriage of goods by sea between Great Xinhua Steamer (Yantai) Co., Ltd. (hereinafter referred to as “Great Xinhua Company”), Tianjin Youzhong Transportation Co., Ltd. (hereinafter referred to as “Youzhong Company”) and CHEN Zhiyou, the Appellant disagreed with the Civil Judgment of (2016) Jin 72 Min Chu No.491 rendered by Tianjin Maritime Court (hereinafter referred to as “court of first instance”) and filed an appeal to the court. The court organized a collegiate bench and held the hearing after the registration of the case on August 3, 2017. LIU Dong, agent ad litem of the Appellant, attended the hearing. Youzhong Company, the Respondent, received the court summons through publication and did not attend the hearing. CHEN Zhiyou, the Respondent, refused to appear in the hearing without justified reasons after the summons. Now the case has been concluded. Great Xinhua Company appealed to the court that the first-instance judgement shall be revoked, and CHEN Zhiyou and Youzhong Company shall be jointly and severally liable for RMB903,412 yuan of the container demurrage and the bank loan interest for the corresponding period from August 24, 2012 to the actual payment day, and the legal costs shall be borne by CHEN Zhiyou and Youzhong Company. Facts and reasons: as Great Xinhua Company reached an agreement with CHEN Zhiyou in terms of the amount of the container demurrage and the payer in the come-and-go mails, its claims shall be supported. Pursuant to Article 65 of the Contract Law of the People’s Republic of China, which is applicable to this case, the company has the right to claim the container demurrage against CHEN Zhiyou and Youzhong Company. As CHEN Zhiyou and Youzhong Company abused the legal system of the company and did business with commercial mixture, they shall be jointly and severally liable to Great Xinhua Company. Great Xinhua Company claimed to the court of first instance that CHEN Zhiyou and Youzhong Company shall be jointly and severally liable for RMB903,412 yuan of the container demurrage and the bank loan interest for the corresponding period from August 24, 2012 to the actual payment day, and the legal costs shall be borne by CHEN Zhiyou and Youzhong Company.

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The court of first instance ascertained the facts that during March and May 2012, CHEN Zhiyou, as a shipper, commissioned the Plaintiff to carry the coals from Tianjin Port to coastal ports of Guangdong by more than one vessel and one voyage. These coals were all loaded by TEUs. After the arrival of the goods at the destination ports, the consignee failed to return the containers after picking up the goods, which has generated the container demurrage. In the 47 copies of shipper’s letter of instruction of domestic coastal transportation of Great Xinhua Logistics (hereinafter referred to as “shipper’s letter of instruction”) involved in the case, 13 copies were signed between CHEN Zhiyou and the Plaintiff, 31 copies were signed between CHEN Zhiyou and Great Xinhua Logistics (Tianjin) Co., Ltd., the outsider, and the other 3 copies were blurry and unidentified in the signature boxes of trustee. The format of the 47 waybills involved in the case is consistent. At the head of the waybills, there is Waterway Container Cargo Waybill of Great Xinhua Steamer (Yantai) Co., Ltd. The items of waybill number, vessel name, shipper, consignee, etc. are all listed on the waybills. It is also written on the waybills that “The waybill bears validity of contract after the signature and acknowledgement of carrier and shipper. The rights, obligations and limits of responsibility among carrier, shipper and consignee shall be complied with Transportation Rules of Waterway Container Goods, Transportation Rules of Waterway Goods (Domestic Transportation Rules of Waterway Goods) and relevant provisions in terms of freight and charges”. In the “Representations and Warranties” of the shipper’s letter of instruction, Article 1 provides that “the rights, obligations and limits of responsibility among carrier, shipper and consignee shall be complied with Transportation Rules of Domestic Waterway Goods and relevant provisions in terms of freight and charges.” Article 3 provides that “all the shipping expenses and other charges shall be paid in one lump sum to the carrier by the shipper/agent or consignee before the shipment as appointed beforehand. If the above parties fail to pay the shipping expenses and other charges for whatever reasons, the shipper and consignee shall be jointly and severally liable to the carrier for the freight and other charges. In addition, the carrier is entitled to have a lien on the goods and other en route goods. If the consignee doesn’t pick up the goods after the delivery at the destination port, the shipper shall agree the consigner to have the right to handle these goods. The way of handling shall be decided by the carrier according to the specific circumstances, and all expenses and responsibilities arising therefrom shall be borne by the shipper and consignee separately or jointly. The expenses include but are not limited to the container demurrage and port storage charges (calculated by the standard set by Great Xinhua Steamer Co., Ltd.).” CHEN Zhiyou has conducted negotiations by E-mail with YU Shuangshou, the staff of Great Xinhua Company, for several times. On 9 August 2012, an E-mail entitled “The container demurrage by the end of June” was sent by YU Shuangshou to CHEN Zhiyou. The content is listed as follows: “Manager Chen, on the basis of the talk in Shanghai and several negotiations later on and considering the long-term friendly relations of cooperation, we agree to provide preferential treatment on the container demurrage to your company in order to promote the cooperation. The

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details are as follows: (1) According to the table attached in the end, the total amount of arrears by the end of 30 June arising from demurrage are RMB1,622,960 yuan. After the negotiation between the two parties, we have agreed to cut the arrears to RMB903,412 yuan”. On August 24, 2012, CHEN Zhiyou sent an E-mail to YU Shuangshou, expressing that “Dear manager Yu, please respond to our request.” The mail is attached with 6 tables named as “ZHANG Lan”, “MA Xiaoke”, “MA Xinhui”, “MA Yuxin”, “SUO Jianmin” and “XIE Hongwei” in the form of xlsx. Each table has calculated the amount of container demurrage, which adds up to RMB1,036,694 yuan after discount. At 17:15 on that day, YU Shuangshou replied the mail that “Manager Chen, thank you for your details. We assure you that the amount of container demurrage is accurate. Once our financial department has confirmed the receipt of the money, it means that all the arrears of container demurrage by the end of June, listed in the attachments of the E-mail, have been settled. The difference will be handled by internal coordination of our company.” It is ascertained that Great Xinhua Company brought an action against CHEN Zhiyou and Youzhong Company on May 2013 to request them to indemnify the container demurrage involved in the case. Then the company applied for withdrawal of the action, and the court of first instance permitted the application after adjudication. Set up on June 3, 2011, Youzhong Company applied for changing the registration on November 20, 2013. The legal representative was changed from CHEN Zhiyou to QIAN Guanghui, and the shareholders were changed from CHEN Zhiyou and HAN Guozhong to CHEN Zhiyou and LUO Jian. The court of first instance holds that this case belongs to contract dispute over the carriage of goods on waters adjacent to sea. The issues of controversy are listed as follows: 1. whether the two Defendant should be liable for the container demurrage; 2. is there a basis for the container demurrage and interests proclaimed by the Plaintiff. 1. Whether the two Defendant jointly and severally be liable for the container demurrage (1) Whether CHEN Zhiyou, should be liable for the container demurrage. There is no objection to the authenticity of 47 copies of the waybill involved in this case. As waybill is an evidence of contract of carriage, CHEN Zhiyou, the shipper listed on the waybill, formed a contractual relationship of carriage of waterway goods with the Great Xinhua Company, the company listed at the head of the waybill. Besides, 31 copies of shipper’s letter of instruction have been signed between Great Xinhua Company and CHEN Zhiyou, which are legal and valid. Therefore, the rights and obligations of the two parties shall be determined in accordance with the shipper’s letter of instruction as well as the applicable laws and regulations agreed by both parties in the waybill. First of all, in accordance with the 31 copies of the shipper’s letter of instruction, CHEN Zhiyou is not liable for the container demurrage. In the Article 3 of

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“Representations and Warranties”, it provides that “if the consignee fails to pick up the goods after the arrival at the destination port, the shipper shall agree the consigner to have the right to handle these goods. The way of handling shall be decided by the carrier according to the specific circumstances, and all expenses and responsibilities arising therefrom shall be borne by the shipper and consignee separately or jointly. The expenses include but are not limited to the container demurrage and port storage charges (calculated by the standard set by Great Xinhua Steamer Co., Ltd.).” The court of first instance holds that in accordance with the provisions, the circumstance of the trustor (the shipper) being liable to the container demurrage shall be limited to the situation that the consignee hasn’t pick up the goods at the destination port. However, the containers involved in this case have been picked up by the consignee provided by the waybill. Therefore, CHEN Zhiyou shall not be liable for the container demurrage. Secondly, in accordance with Article 15 of the Transportation Rules of Domestic Waterway Container Goods and Article 83 of the Transportation Rules of Domestic Waterway Goods, the obligation to pay the container demurrage shall be borne by the consignee. Although the Transportation Rules of Domestic Waterway Goods has been no longer in force, it was still effective at the time of signing the shipper’s letter of instruction, which could determine the rights and obligations between the two parties. The last issue is that whether CHEN Zhiyou has promised to pay the container demurrage to the Plaintiff. The court of first instance holds that it can’t be determined that CHEN Zhiyou has promised to pay the demurrage to Great Xinhua Company according to the existing evidence. The company’s claims are mainly based on the following two mails: at 15:58, 24 August 2012, a mail is sent by CHEN Zhiyou to the company to ask Manager Yu to respond to his request. At 17:15, Manager Yu responded to CHEN Zhiyou’s mail writing that “we have confirmed that the amount of container demurrage is accurate …”. In accordance with the above mails, it cannot be determined that Great Xinhua Company has reached an agreement with CHEN Zhiyou in terms of the container demurrage, nor has CHEN Zhiyou committed to pay the demurrage to Great Xinhua Company. To conclude, the court decides that the Defendant shall not be liable for the container demurrage involved in this case. (2) Whether Youzhong Company shall be jointly and severally liable to Great Xinhua Company The court of first instance holds that although CHEN Zhiyou was the legal representative of Youzhong Company at the time of signing the shipper’s letter of instruction with Great Xinhua Company, he, as a natural person, booked the shipping space and signed the shipper’s letter of instruction in the contacts involved in the case instead of as a legal representative of Youzhong Company. Therefore, the consequences resulted from CHEN Zhiyou’s actions shall not be undertaken by Youzhong company. In the court trial of first instance, Great Xinhua Company acknowledged that there was contractual relationship of freight transportation with CHEN Zhiyou instead of Youzhong Company. To conclude, there lacks facts and

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legal basis on the Great Xinhua Company’s request to ask Youzhong Company to be jointly and severally liable for the container demurrage. Thus, Youzhong Company shall not be liable to Great Xinhua Company. 2. The amount of the container demurrage and the calculation basis From the discount price of the container demurrage listed in the tables of the mail sent by YU Shuangshou to CHEN Zhiyou on August 9, 2012, the amount of the demurrage claimed by Great Xinhua Company is RMB903,412 yuan, which was negotiated between Great Xinhua Company and CHEN Zhiyou. There is no evidence to prove that CHEN Zhiyou and the consignee accept the contents of the tables. In addition, Great Xinhua Company has not proved the calculation standard of the container demurrage as well as the specific overdue utility time of the containers. Therefore, the amount of the container demurrage shall not be determined. To conclude, in the absence of facts and legal basis, the action brought by Great Xinhua Company against CHEN Zhiyou and Youzhong Company shall be rejected. According to Article 60 of the Contract Law of the People’s Republic of China and Article 64 Paragraph 1 and Article 140 of the Civil Procedure Law of the People’s Republic of China, the court of first instance judged as follows: all claims of Great Xinhua Company shall be rejected. Court acceptance fee in amount of RMB12,834 yuan, publication fee in amount of RMB260 yuan separately, shall be paid by Great Xinhua Steamer (Yantai) Co., Ltd. During the second instance, the parties did not submit new evidence. The court confirmed that the facts confirmed by the court of first instance are supported by relevant evidence. The court holds that the case belongs to the dispute over contract of carriage of goods by sea. Considering the pleadings of the parties of this case, the court decides that the issues lie in that whether CHEN Zhiyou and Youzhong Company shall be jointly and severally liable for the container demurrage and the interest involved in the case. In this case, although all litigants did not sign the contract of carriage of goods in writing, they have determined the rights and obligations under the contract of carriage in the way of waybill and shipper’s letter of instruction. The rights and obligations listed on the 47 copies of waybill and shipper’s letter of instruction are basically consistent. In addition, Great Xinhua Company and CHEN Zhiyou have confirmed the authenticity of these documents. Therefore, the contract of carriage involved in the case reflects the true intention of the contracting parties, and they shall carry out their duties in accordance with the provisions listed in the contracts. In terms of CHEN Zhiyou’s liabilities of the container demurrage and the interest, it is clear in the waybill and shipper’s letter of instruction that the limits of rights, obligations and responsibilities among carrier, shipper and consignee shall be according to the Transportation Rules of Domestic Waterway Goods. Although the Transportation Rules of Domestic Waterway Goods has been no longer in force since May 30, 2016, it was still effective at the time of choosing the rules which are

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applicable to the settlement of disputes and during the transportation of the goods. Therefore, the parties shall still take this rule as the basis for determining rights and obligations. Article 83 of the Transportation Rules of Domestic Waterway Goods provides that “the consignee shall return the empty container after picking up the goods in accordance with the agreement. If the consignee fails to return the container within the time limit, he or she shall be liable for the container demurrage.” Therefore, the container demurrage shall be borne by the consignee. Meanwhile, in terms of the circumstance that the trustor shall be liable for the container demurrage as provided by in Article 3 of “Representations and Warranties” of shipper’s letter of instruction, the court holds that the above circumstance shall be limited to the circumstance that “the consignee fails to pick up the goods after the delivery at the destination port”. Under the circumstance that the 47 packages of goods have been picked up by the consignee, which couldn’t meet the prerequisite of the provision, CHEN Zhiyou shall not be liable for the container demurrage. In terms of Great Xinhua Company’s claim that it has the right to ask CHEN Zhiyou to pay the container demurrage according to Article 65 of the Contract Law of the People’s Republic of China, the court holds that the waybills and shipper’s letters of instruction involved in the case, which are the standard texts made by Great Xinhua Company unilaterally, were denied by themselves after the generation of the container demurrage on the basis of Article 65 of the Contract Law of the People’s Republic of China, which has increased the Defendants’ responsibilities. As Great Xinhua Company’s claims have no legal basis and have violated the principle of good faith, they shall not be supported by the court. Next issue is that whether the come-and-go mails between Great Xinhua Company and CHEN Zhiyou could illustrate that both parties have reached an agreement on the amount of the container demurrage and the responsibility. From the contents of the mails, both parties have only negotiated the amount of the container demurrage, and there’s no enough evidence to prove that CHEN Zhiyou has confirmed his responsibility to be liable for the container demurrage. Therefore, the contents of the mails are not sufficient enough to prove that CHEN Zhiyou has agreed to change the agreements of the contract and shall be liable for the container demurrage. Next issue is that whether Youzhong Company shall be jointly and severally liable for the container demurrage and the interest involved in the case. As Great Xinhua Company hasn’t furnished the evidence to prove that Youzhong Company, which did not appear in the contract, is one of the litigants of the contract, it shall not be liable to Great Xinhua Company as the litigant of the contract. In terms of Great Xinhua Company’s claim that Youzhong Company shall be liable for the demurrage as its stakeholders did business with commercial mixture, it shall not be supported by the court as Great Xinhua Company lacks evidence. To conclude, Great Xinhua Company’s appeals are untenable and shall be dismissed. As the facts are clearly ascertained and the law and regulations are correctly applied, the first-instance judgment shall be sustained. According to Article 144, Article 170 Paragraph 1 Sub-paragraph 1 and Article 174 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment.

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Court acceptance fee of second instance in amount of RMB12,834 yuan, and publication fee in amount of RMB260 yuan separately, shall be born by Great Xinhua Steamer (Yantai) Co., Ltd. The judgement is final. Presiding Judge: ZHANG Yuemin Judge: ZHAO Qingquan Acting Judge: TANG Na December 27, 2017 Clerk: ZHANG Hongchuan

Beihai Maritime Court Civil Judgment Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2014) Hai Shang Chu Zi No.141 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 436. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff cargo-owner held to be liable to pay freight to Defendant carrier on Defendant's counterclaim; plaintiff held not to be entitled to return of two containers held by defendant carrier's subcontractor by way of lien for unpaid freight. Summary Plaintiff (Guanxi Jufeng) contracted with first Defendant (Tianjin Xianjie) to carry a total of 66 containers of sugar from Guigang to Yingkou. First Defendant entrusted Third Party (Yangpu Logistics) to carry the containers, but it did not do so. Later, first Defendant entrusted second Defendant (Sunny Express) to carry 20 containers of Plaintiff’s sugar from Nanning to Yingkou. Plaintiff paid some freight to Yangpu Logistics and some to Sunny Express. After Plaintiff had paid the freight, first Defendant sent it instructions, entrusting it to make the payments to Yangpu Logistics and Sunny Express. Plaintiff told Sunny Express that the freight it had remitted was paid on behalf of Yangpu Logistics, not first Defendant (Tianjin Xinjie). First Defendant instructed Second Defendant to retain two containers of sugar at the port of discharge on account of non-payment of freight by Plaintiff. Plaintiff sued the two Defendants, seeking return of the two containers of sugar, and damages for losses suffered as a result of their retention. First Defendant counterclaimed for the amount of freight paid by Plaintiff to second Defendant. Third Party (Yangpu Logistics) did not appear and took no part in the proceedings. The Court held: (1) Plaintiff had not complied with first Defendant’s instructions about the freight paid to second Defendant (Sunny Express), but had told second Defendant that the freight was paid on behalf of Yangpu Logistics rather than first Defendant, so in effect, Plaintiff had not paid that amount of freight to first Defendant and for that reason, first Defendant’s counterclaim should succeed; (2) because Plaintiff had not paid freight in full for the carriage, first Defendant was entitled by law to exercise a lien over Plaintiff’s cargo, so Plaintiff was not entitled

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_22

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to the return of the two containers; (3) Plaintiff had not proved the losses it claimed to have suffered as a result of the retention of the two containers. Accordingly the Court held that Plaintiff’s claim failed and Defendant’s counterclaim succeeded.

Judgment The Plaintiff (counterclaim Defendant): Guangxi Jufeng Shipping Co., Ltd. Domicile: No.2, Floor 1, Block 3, Laibin District, Guangxi Zhuang Autonomous Region. Legal representative: ZHANG Zhibin, general manager of the company. Agent ad litem: LIN Zhongquan, manager of the operation department in the company. Agent ad litem: WU Zhirui, lawyer of Guangxi Guohai Law Firm. The Defendant (counterclaim Plaintiff): Tianjin Xinjie Logistics Service Co., Ltd. Domicile: C-3-1202, No.12, Nanhai Road, Tianjing Development Zone. Legal representative: FU Weifeng, general manager of the company. Agent ad litem: LIANG Shuquan, lawyer of Guangxi Qidi Law Firm. The Defendant: Sinotrans Sunny Express Co., Ltd. Domicile: A-541, No.18, Yesheng Road, China (Shanghai) Pilot Free Trade Zone. Legal representative: XU Qiumin, general manager of the company. Agent ad litem: LUO Min, lawyer of Guangxi Chengji Law Firm. Agent ad litem: GUAN Lixia, apprentice lawyer of Guangxi Chengji Law Firm. The Third Party: Yangpu Xinhong Logistics Co., Ltd. Domicile: Room A227, Jinlan, Yangpu Economic Development Zone, Haikou, Hainan. Legal representative: WANG Zhiyuan. With respect of the case arising from dispute over the contract of carriage of goods by sea among the Plaintiff (counterclaim Defendant) Guangxi Jufeng Shipping Co., Ltd. (hereinafter referred to as Guangxi Jufeng), the Defendant (counterclaim Plaintiff) Tianjin Xinjie Logistics Service Co., Ltd. (hereinafter referred to as Tianjin Xinjie), the Defendant Sinotrans Sunny Express Co., Ltd. (hereinafter referred to as Sunny Express) and the Third Party Yangpu Xinhong Logistics Co., Ltd. (hereinafter referred to as Yangpu Logistics), after entertaining the case on August 4, 2014, the court applied the summary procedures in trial. Due to the dispute among the parties over the facts of the case, the court made (2014) Hai Shang Chu Zi No. 141-1 Civil Ruling to change the procedure to general procedure. On March 10, 2015, the court held a hearing in public. Agents ad litem of the Plaintiff (counterclaim Defendant) Guangxi Jufeng, LIN Zhongquan and WU

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Zhirui, agent ad litem of the Defendant (counterclaim Plaintiff) Tianjin Xinjie, LIANG Shuquan, and agents ad litem of the Defendant, LUO Min and GUAN Lixia, appeared in the court to attend the trial. The Third Party Yangpu Logistics, after legal subpoena, did not appear in the court. The court made a judgment by default. This court has concluded the case. The Plaintiff Guangxi Jufeng alleged that, on October 20, 2013, the Plaintiff entrusted the Defendant Tianjin Xinjie to carry 66 containers with Cuirui brand of sugar from the wharf of Guigang Aikaier to the wharf of Dalian Yingkou Port by sea. The freight of each container was 2,900 yuan, total amount of 191,400 yuan. After Tianjin Xinjie accepted the commission and carried the goods from Guigang to Guangzhou, it transferred the commission to the Third Party Yangpu Logistics, asking it to carry the goods to the port of destination. Because Yangpu Logistics was bankrupt, it could not perform the obligation of transporting. So Yangpu Logistics transferred the commission to the Defendant Sunny Express to carry the goods of the Plaintiff to the port of destination by sea. On December 5, 2013, according to the demand of Tianjin Xinjie, the Plaintiff paid 60,000 yuan for 46 containers of the total amount of 133,400 yuan for the freight to Yangpu Logistics through by bank transfer, and another 73,400 yuan was paid to Sunny Express through by bank transfer. Tianjin Xinjie reissued the written Entrusted Payment Letter to confirm the above-mentioned facts on December 7, 2013. After the goods arrived the port of destination, on March 21, 2014, according to the demand of Statement of Tianjin Xinjie Logistics Service Co., Ltd. (Guangzhou Office) sent by Tianjin Xinjie, the Plaintiff paid freight 58,000 yuan for 20 containers to Sunny Express through by bank transfer. So far, the Plaintiff had already paid all freight, but Tianjin Xinjie informed Sunny Express to retain 55 tons Cuirui brand of sugar of the Plaintiff (each ton values 5,260 yuan, totaled two containers, total amount of 289,300 yuan) by the reason that the Plaintiff did not pay any freight. As a result, the Plaintiff could not deliver all the goods to the consignee on time, which caused the Plaintiff 39,322.80 yuan for economic losses, including 11,220 yuan for handling charge, 2,640 yuan for document transfer fee, 5,662.80 yuan for overdue freight interest losses and 19,800 yuan for sugar price difference losses. In order to safeguard the lawful rights and interest of the Plaintiff, the Plaintiff requested the court to judge as follows: 1. the two Defendants returned two containers Cuirui brand of sugar privately held to the Plaintiff; 2. the two Defendants should compensate the Plaintiff 39,322.80 yuan and pay a penalty charge 5,786 yuan according to the loan annual interest rate 6% of the People’ s Bank of China, total amount of 45,108.80 yuan. And the litigation fee should be borne by the two Defendants. The Defendant Tianjin Xinjie argued that, on October 20, 2013, the Plaintiff Guangxi Jufeng entrusted it to carry 66 containers with sugar from Guigang to Yingkou, the total fright was 191,400 yuan. After Tianjin Xinjie carried the above-mentioned goods to Guangzhou, it entrusted the Third Party Yangpu Logistics to be in charge of carrying the goods by sea, namely carring the above mentioned goods from Guangzhou to Yingkou. The freight of each container was 1,200 yuan, totaled 79,200 yuan. Tianjin Xinjie had already paid all freight to Yangpu Logistics. But Yangpu Logistics did not actually take part in transporting,

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but made a contract with Sunny Express to entrusted it to carry the abovementioned goods from Guangzhou to Yingkou. Because Yangpu Logistics did not pay freight to Sunny Express from the freight that was collected from Tianjin Xinjie as agreed, Sunny Express retained 66 containers sugar. After the Plaintiff and Yangpu Logistics had negotiations, they sent letters to Sunny Express separately, claimed that the freight 73,400 yuan paid by the Plaintiff before was the freight it paid on behalf of Yangpu Logistics. During this period, Tianjin Xinjie sent a letter to inform the Plaintiff to directly pay freight 60,000 yuan to Yangpu Logistics. Besides, because Tianjin Xinjie and Sunny Express had other economic exchanges, for the sake of simplicity, Tianjin Xinjie sent two letters to the Plaintiff, informing it to remit 131,400 yuan to the account of Sunny Express at two strokes (one stroke was 73,400 yuan, another was 58,000 yuan) to reverse debt between Tianjin Xinjie and Sunny Express. But the Plaintiff did not remit as the notice of Tianjin Xinjie, the freight 73,400 yuan for 66 containers sugar it remitted to Sunny Express was paid on behalf of Yangpu Logistics, not Tianjin Xinjie. In the case of performing the combined transport contract, Tianjin Xinjie made a contract of carriage with the Plaintiff, but that Plaintiff did not pay all freight was breach of contract, which should be responsibility for the breach of contract. As far as the payment in the case was concerned, Tianjin Xinjie had no disagreement with the behavior that the Plaintiff remitted Yangpu Logistics 60,000 yuan and Sunny Express 58,000 yuan was the behavior for paying the freight in this case. But the Plaintiff remitted 73,400 yuan to the account of Sunny Express on December 5, 2010, which was not the freight paid for the combined transport contract according to the commission of Tianjin Xinjie, reasons: firstly, the Plaintiff remitted 73,400 yuan to the account of Sunny Express on December 5, 2013, but Tianjin Xinjie sent a letter to the Plaintiff to entrust it to remitted the freight 73,400 yuan to the account of Sunny Express on December 7, 2013, on December 11, Yangpu Logistics and the Plaintiff separately sent letters to Sunny Express, clarifying that 73,400 yuan remitted was the freight paid by the Plaintiff on behalf of Yangpu Logistics. The above-mentioned facts could verify that the Plaintiff did not finish the entrusted payment of Tianjin Xinjie according to the content of the letter on December 7, so the above-mentioned money which the Plaintiff remitted was not the money entrusted by Tianjin Xinjie. Secondly, according to Expense Description issued by Yangpu Logistics on December 11, 2013, it could be confirmed 73,392 yuan which Yangpu Logistics entrusted the Plaintiff to pay was an advance or loan-type payment and the repayment responsibility should be borne by Yangpu Logistics. Thirdly, according to the Letter sent from the Plaintiff on December 11, 2013, it could be confirmed that on December 5, 2013, 73,400 yuan remitted by the Plaintiff was not paid for the commission of Tianjin Xinjie, but an advance payment for the commission of Yangpu Logistic. After the Plaintiff paid freight on behalf of Yangpu Logistic, the Plaintiff should claim against Yangpu Logistic for the resulting creditor-debtor relationship. Finally, because the Plaintiff owed Tianjin Xinjie the debt of 73,400 yuan, Tianjin Xinjie sent letters to ask the Plaintiff paid 73,400 yuan to Sunny Express, which was entrusted payment relationship. After the Plaintiff paid the money, it had obligation of issuing letter of authorization for payment, to prove that

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the payment was paid on behalf of Tianjin Xinjie. But after the Plaintiff paid 73,400 yuan, the Letter issued on December 11, 2013 could confirmed that the payment was paid on behalf of Yangpu Logistic, but not paid 73,400 yuan on behalf of Tianjin Xinjie. The Plaintiff claimed that only paid 73,400 yuan equaled to two different parties pay two sums, total amount of 146,792 yuan during the same period was no factual and legal basis. In conclusion, it was not the fact that the Plaintiff claimed that it had already remitted 73,400 yuan to Sunny Express according to the demand of Tianjin Xinjie. The claim that it had already paid the freight 191,400 yuan was lack of factual and legal basis. The claims of the Plaintiff should be rejected. The Defendant Sunny Express argued that, on February 19, 2014, Tianjin Xinjie entrusted it to transfer 20 containers sugar (waybill No. SUNNI14000007) from Nanning to Yingkou. According to the relativity principle of contract, Sunny Express was a carrier, following written instructions of Tianjin Xinjie in the freight contract, and carrying out transportation, delivery, and deduction of goods. Sunny Express did not have a civil relationship with the Plaintiff, so the Plaintiff claimed that Sunny Express illegally retained two containers had no factual basis. Therefore, Sunny Express should not bear any civil liability for the economic losses alleged by the Plaintiff. In conclusion, the Plaintiff’ s claims against Sunny Express had no factual basis. The claims of the Plaintiff against Sunny Express should be rejected. The Third Party Yangpu Logistics did not make any statements, and did not submit any evidence. The Defendant Tianjin Xinjie counterclaimed that: on October 20, 2013, it signed Letter of Authorization for Consignments of Domestic and Coastal Trade Goods with the Plaintiff, appointed that Tianjin Xinjie was entrusted by the Plaintiff to carry 46 containers from Guigang to Yingkou, the Plaintiff should pay the freight 133,400 yuan. But now the Plaintiff only paid the freight 60,000 yuan, owing the freight 73,400 yuan. There was no agreement after the dunning, so the Defendant specially filed a counterclaim to the court and requested the court to judge that: the Plaintiff paid the Defendant the freight 73,400 yuan and the interest 15,800 yuan (based on 73,400 yuan, according to four times than the liquidity loan interest rate in the same period stipulated by People’ s Bank of China, from December 7, 2013 to the last day of performance of the judgment, temporarily counted to October 30, 2014, total amount of 15,800 yuan), and court acceptance fee and court acceptance fee of counterclaim should be borne by the Plaintiff. The Plaintiff Guangxi Jufeng argued that the Plaintiff had already paid all freight involved. The Plaintiff did not owe Tianjin Xinjie any freight. The Plaintiff requested the court to reject the counterclaims of the Defendant Tianjin Xinjie. To support its claims, the Plaintiff submitted the following evidence: Evidence 1, Letter of Authorization for Consignments of Domestic and Coastal Trade Goods of Tianjin Xinjie; Evidence 2, a list of sugar quantities;

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Evidence 1 and 2, to prove the fact that the Plaintiff entrusted Tianjin Xinjie to transfer 66 containers sugar to Dalian Yingkou Wharf. Evidence 3, entrusted payment letter; Evidence 4, 2 electronic return copies of Agricultural Bank of China; Evidence 5, Statement of Tianjin Xinjie Logistics Service Co., Ltd. (Guangzhou Office). Evidence 6, electronic return copies of Agricultural Bank of China. Evidence 3–6, to prove the fact that the Plaintiff had already paid the freight to Tianjin Xinjie. The Defendant Tianjin Xinjie cross-examined that: no objection to the authenticity and legality of evidence 1, but there was objection to the relevancy. This evidence only stated 46 containers, not 66 containers. The contract of other 20 containers was not relevant to the case. Evidence 2 was a form made by the Plaintiff alone, there was no relevant bill check, so the authenticity could not be confirmed. There was no objection to the authenticity of evidence 3, but there was objection to the relevancy. Whether the Plaintiff paid 73,400 yuan to Sunny Express on behalf of Tianjin Xinjie should be confirmed according to the commission certificate. There was no objection to the electronic returns of bank in evidence 4, but the recorded payment in the second electronic return was the freight the Plaintiff paid on behalf of Yangpu Logistics. Evidence 5 and 6 were the proof of payment for another 20 containers sugar. They had no relation with this case, which belonged to another relationship. The Defendant Sunny Express cross-examined that: no objection to the authenticity, legality and relevancy of evidence 1 and 5. Evidence 2 was a form made by the Plaintiff, which should be confirmed by the court. The strength of evidence 3 could not be confirmed, which should be confirmed by the court. The payee of the first electronic return was Yangpu Logistics in evidence 4, the probative force could not be confirmed, and had no relationship with Sunny Express. There was no objection to the authenticity of the second electronic return, but it could not be confirmed whether this payment was relevant to the case because the Plaintiff also had other business dealings with Sunny Express. The time in evidence 5 and 6 did not correspond, which should be confirmed by the court. To support its claims and defense of counterclaims, the Defendant Tianjin Xinjie submitted the following evidence: Evidence 1, Letter of Authorization for Consignments of Domestic and Coastal Trade Goods, to prove the fact that Tianjin Xinjie and the Plaintiff had a relationship of a contract of carriage, Tianjin Xinjie carried 46 containers sugar (from Guigang to Yingkou), the Plaintiff should pay the freight 133,400 yuan; Evidence 2, Xinhong Logistics Booking Power of Attorney, to prove the fact that Tianjin Xinjie entrusted Yangpu Logistics to carry 46 containers sugar (from Guangzhou to Yingkou), Tianjin Xinjie should pay Yangpu Logistics the freight 55,200 yuan;

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Evidence 3, freight waybill, to prove that Yangpu Logistics in the case was the actual carrier; Evidence 4, entrusted payment letter, to prove the fact that Tianjin Xinjie entrusted the Plaintiff to paid the freight 133,400 yuan, including 60,000 yuan was paid to Yangpu Logistics, and 73,400 yuan to Sunny Express, the Plaintiff had paid the freight 60,000 yuan to Yangpu Logistics according to the commission of Tianjin Xinjie; Evidence 5, the letter, to prove the fact that the Plaintiff sent the letter to Sunny Express on December 11, 2013, claimed that it remitted 73,400 yuan on December 5, 2013, which was the two freights paid on behalf of Yangpu Logistics, not Tianjin Xinjie; Evidence 6, Statement of Xinhong, to prove the fact that Tianjin Xinjie should pay Yangpu Logistics the freight of 46 containers 55,200 yuan; Evidence 7, Statement of Tianjin Xinjie (Guangzhou Office), to prove the fact that the Plaintiff should pay Tianjin Xinjie the freight 191,400 yuan; Evidence 8, remission application, to prove the fact that Tianjin Xinjie negotiated with Guigang port for the deposit fee of the Plaintiff’ s goods; Evidence 9, Statement of Tianjin Xinjie (Guangzhou Office), to prove the fact the freight of the Plaintiff’ s 20 containers was 58,000 yuan; Evidence 10, the letter Tianjin Xinjie sent to the Plaintiff, to prove the fact that until March 18, 2014, the Plaintiff still did not pay the freight of 20 containers; Evidence 11, electronic receipt, to prove the fact that the Plaintiff paid the freight for 20 containers 58,000 yuan on March 21, 2014; Evidence 12, the letter Tianjin Xinjie sent to the Plaintiff, to prove the fact that Tianjin Xinjie asked the Plaintiff to pay the owed freight 73,400 yuan; Evidence 13, lawyer’ s letter, to prove that the claim of this lawyer’ s letter was not the fact; Evidence 14, expense description, to prove the fact that Yangpu Logistics entrusted the Plaintiff to pay the freight 73,400 yuan. The Plaintiff cross-examined that: no objection to evidence 1, 4, and 13, which proved that the Plaintiff 134,000 yuan to Yangpu Logistics and Sunny Express was entrusted by Tianjin Xinjie, but not the Plaintiff conducted it privately. The authenticity of evidence 2, 3, and 6 was not confirmed, the evidence was the relationship between Tianjin Xinjie and Yangpu Logistics, but not related to the Plaintiff. There was no objection to the authenticity of evidence 5, the Plaintiff entrusted Tianjin Xinjie to carry 46 containers, and paid the freight of 46 containers according to the commission of Tianjin Xinjie, the Xinfeng Ningbo mentioned-above was not related to the case. There was objection to the authenticity of evidence 7, this evidence was the statement made by Sunny Express alone, which confirmed the relationship between Tianjin Xinjie and Sunny Express, but not related to the Plaintiff. Evidence 8 was not related to the case. There was no objection to the authenticity of evidence 9, the return file wrote “We will release the goods immediately after receiving this freight”. Because the Plaintiff clearly rejected Tianjin Xinjie, it asked Tianjin Xinjie to add this sentence. There was no

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objection to the authenticity of evidence 10, but the Plaintiff had already finished the content of this letter. There was no objection to the authenticity of evidence 11, confirmed that the Plaintiff had paid freight according to the contract. The authenticity, legality and relevancy of evidence 12 could not be confirmed, this evidence was made by Tianjin Xinjie alone. The authenticity, legality and relevancy of evidence 12 could not be confirmed, this evidence was made by Yangpu Logistics alone. The Defendant Sunny Express cross-examined that: no objection to the authenticity of evidence 1, but it happened between the Plaintiff and Tianjin Xinjie, not related to our company. The authenticity, legality and relevancy of evidence 2– 6 and 8–14 should be confirmed by the court, among these, evidence 9 and 11 confirmed that our company had received the payment, but the usage of this payment should be subject to the evidence provided by our company. Evidence 7 should be subject to the evidence provided by our company. To support its defense, the Defendant Sunny Express submitted the following evidence: Evidence 1, inland trade container transport order, to prove the fact that on February 19, 2014, Tianjin Xinjie entrusted Sunny Express to carry 20 containers sugar from Nanning to Yingkou (waybill No. SUNNI14000007); Evidence 2, proof and electronic return copies of Agricultural Bank of China, to prove that when the Plaintiff knew that Tianjin Xinjie entrusted Sunny Express to carry the goods and the Plaintiff paid money on behalf of Sunny Express; Evidence 3, e-mails, to prove the fact that after Sunny Express transferred the goods to the port of destination according to the contract, Tianjin Xinjie did not issue the delivery instruction, for it, the company urged Tianjin Xinjie to take goods on time by e-mail; Evidence 4, e-mails, to prove the content that Tianjin Xinjie answered Sunny Express about urging Tianjin Xinjie to take goods; Evidence 5, QQ dialog screenshot and proof, to prove the fact that Tianjin Xinjie commanded it to retain two containers of goods (CTN. No. TRHU3026796/ UESU2464122) and Tianjin Xinjie explained the usage of the Plaintiff remitted 58,000 yuan to Sunny Express. The Plaintiff cross-examined that: evidence 1 was the contract relationship between Tianjin Xinjie and Sunny Express, so the probative force could not be confirmed; there was no objection to the authenticity, legality and relevancy of evidence 2 that the Plaintiff entrusted Tianjin Xinjie to carry 20 containers, the Plaintiff had already paid the freight; the probative force of evidence 3 and 4 should be confirmed by the court; QQ dialog screenshot in evidence 5 explained that Sunny Express had received the freight of 66 containers, including the freight of 20 containers were paid; the proof was made by Tianjin Xinjie alone so the authenticity could not be confirmed. The Defendant Tianjin Xinjie cross-examined that: no objection to the authenticity, legality and relevancy of evidence 1–5.

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The court holds that: the Third Party Yangpu Logistics after legal subpoena, did not appear in the court without any reasons, which should be deemed to waive the right of statement, submitting evidence and cross-examination. Both parties of the contract had no objection to the authenticity of evidence 1 and 3–5 provided by the Plaintiff, evidence1, 4, 5, 9–11 and 13 provided by the Defendant Tianjin Xinjie and evidence 1–4 provided by Sunny Express, which could be used as basis to confirm the facts of this case. Evidence 2 provided by the Plaintiff was a form made by the Plaintiff alone, the Defendant did not confirm it, so the court did not confirm it. Evidence 6 and evidence 5 provided by the Plaintiff could mutually verify, so the court confirmed these, which should be used as basis to confirm the facts of this case. Evidence 2 and 3 provided by the Defendant Tianjin Xinjie and the statement of the Plaintiff could mutually verify, and evidence 6 and 7 and evidence 2 and could mutually verify, which could be used as basis to confirm the facts of this case. Evidence 8 provided by the Defendant Tianjin Xinjie was not related to the case, so the court did not confirm it. Evidence 12 provided by the Defendant Tianjin Xinjie did not meet the elements of evidence, so the court did not confirm it. Evidence 14 provided by Tianjin Xinjie was a statement made by Yangpu Logistics alone, the Plaintiff and Sunny Express did not confirm it, so the court did not confirm it. Evidence 5 provided by the Defendant Sunny Express, the Defendant Tianjin Xinjie confirmed it, and the contents of the evidence were consistent with the statements of all parties, so the court confirmed it, which could be used as basis to confirm the facts of this case. The court should confirm the facts of the case as proved by the evidence confirmed by the court. Accordingly, the court finds out and confirms the following facts: On October 20, 2013, the Plaintiff and the Defendant Tianjin Xinjie signed two Letter of Authorization for Consignments of Domestic and Coastal Trade Goods (No. SUNWZ0133000858, SUMMMI1400007), appointed that: the Plaintiff entrusted Tianjin Xinjie to carry 46 and 20 totaled 66 containers separately, the freight of each container was 2,900 yuan. The mode of transport was port to port, the port of loading was Guigang Aikaier Port, and unloading port was Yingkou Port. The shipper was the Plaintiff, the consignee was Yingkou North Sugar Co., Ltd. Both parties also had an agreement on other rights and obligations of the contract. On October 14, October 21, November 4, 2013, Tianjin Xinjie and the Third Party Yangpu Logistics separately signed three Xinhong Logistic Booking Power of Attorney, appointed that: Tianjin Xinjie entrusted Yangpu Logistics to separately carry the 12, 34, 20, totaled 66 containers sugar of the Plaintiff, the freight of each container was 1,200 yuan. The port of loading was Guigang Port, and unloading port was Yingkou Port. Billing method was when the voyage was settled (pay off before leaving the yard at the port). Tianjin Xinjie sealed on shipper of the above-mentioned Xinhong Logistic Booking Power of Attorney. After the signature of Booking Power of Attorney, Yangpu Logistics did not actually carry the above-mentioned sugar. On February 19, 2014, Tianjin Xinjie and Sunny Express signed domestic trade container transport order (waybill No. SUNNNI14000007), appointed that: Tianjin

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Xinjie entrusted Sunny Express to carry 20 containers sugar of the Plaintiff, the port of departure was Nanning, the port of destination was Yingkou, the port of transfer was Humen, and the terms of transport were CY, the freight of each container was 930 yuan, payment method was prepaid for freight. Both parties also had an agreement on other rights and obligations of the contract. On December 5, 2013, the Plaintiff remitted 60,000 yuan to Yangpu Logistics, and 73,400 yuan to Sunny Express. On December 7, 2013, Tianjin Xinjie issued the Plaintiff Entrusted Payment Letter, entrusted the Plaintiff to pay separately the freight 133,400 yuan of 46 containers of sugar involved in the case to Yangpu Logistics and Sunny Express, including remitted Yangpu Logistics 60,000 yuan, and Sunny Express 73,400 yuan. On December 11, 2013, the Plaintiff sent a letter to Sunny Express, claimed that 73,400 yuan remitted to the account of Sunny Express was paid for two freights for Yangpu Logistics, including the freight of 46 containers of sugar in the case (waybill No. SUNWZ013000858), another was the freight of totaled 20 containers which waybill No. were SUNWZ01300858Z, SUNWZ013000858Z1. On March 21, 2014, the Plaintiff was entrusted by Tianjin Xinjie, paid the freight of 20 containers 58,000 yuan to reverse the debts between Tianjin Xinjie and Sunny Express. On the same day, Tianjin Xinjie informed Sunny Express to retain two containers of sugar in the above-mentioned 20 containers of sugar, the container of sugar number was TRHU3026796, UESU2464122. The court holds that this case is caused by the dispute over contract of carriage of goods by sea. According to the Contract Law of the People’s Republic of China Article 122 “where a party’ s breach harmed the personal or property interests of the other party, the aggrieved party is entitled to elect to hold the party liable for breach of contract in accordance herewith, or hold the party liable for tort in accordance with any other relevant law”, the Plaintiff has the right to elect to hold the party liable for breach of contract in accordance with the law contract or to hold the party liable for tort in accordance with the tor law. The Plaintiff finally chose to hold the party liable for tort, it has the legal basis. According to the claims and defenses of all parties, the issues of the case are that: 1. whether the Plaintiff should pay the freight 73,400 yuan and the interest 15,800 yuan to the Defendant Tianjin Xinjie; 2. whether the two Defendants should return two containers of sugar to the Plaintiff; 3. whether there is basis that the Plaintiff claimed that the two Defendants should compensate 39,322.80 yuan and pay a penalty charge 5,786 yuan. 1. Whether the Plaintiff should pay the freight 73,400 yuan and the interest 15,800 yuan to the Defendant Tianjin Xinjie. The court holds that Letter of Authorization for Consignments of Domestic and Coastal Trade Goods signed between Tianjin Xinjie and the Plaintiff and Domestic Trade Container Transport Order signed between Sunny Express and the Plaintiff are the true meaning of the parties of the contract. The content do not violate the mandatory provisions of laws and regulations. Therefore, it is legally established and valid, and is legally binding on both parties. In this case, the Plaintiff entrusted Tianjin Xinjie to carry 66 containers of sugar, the freight of each container was

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2,900 yuan, total amount of 191,400 yuan (2,900 yuan/container * 66 container). The Plaintiff remitted 60,000 yuan to Yangpu Logistics on December 5, 2013, 73,400 yuan to Sunny Express. It paid the freight 58,000 yuan to Sunny Express on March 21, 2014. The above-mentioned payments, remitted to Yangpu Logistics 60,000 yuan and to Sunny Express 58,000 yuan, totaled 118,000 yuan, Tianjin Xinjie confirmed it, so the court confirms it. Whether the Plaintiff remitted 73,400 yuan to Sunny Express on December 5, 2013 is considered as the payment of the freight involved in the case, the court holds that, according to the instruction of Entrusted Payment Letter Tianjin Xinjie sent to the Plaintiff on December 7, 2013, after the Plaintiff directly remitted 73,400 yuan to Sunny Express, seemed that the Plaintiff paid 73,400 yuan to Tianjin Xinjie. An entrusted payment relationship was formed between two parties, the Plaintiff should complete the commission to confirm that it had paid the freight to Tianjin Xinjie. The Plaintiff sent a letter to Sunny Express on December 11, 2013, confirmed that remitting 73,400 yuan to the account of Sunny Express was the payment paid on behalf of Yangpu Logistics, not the payment paid on behalf of the Defendant Tianjin Xinjie. According to the Contract Law of the People’s Republic of China Article 406 “Liability of Agent; Unauthorized Act Under an agency appointment contract for value, if the principal sustains any loss due to the fault of the agent, the principal may claim damages. Under a gratuitous agency appointment contract, if the principal sustains any loss due to the agent’ s intentional misconduct or gross negligence, the principal may claim damages”, though it is the fact that the Plaintiff remitted 73,400 yuan to Sunny Express, the Plaintiff did not complete the commission according to the instructions of payment letter of Tianjin Xinjie, so it should bear unfavorable consequences. Therefore, the claim that the Plaintiff had already paid 73,400 yuan to Tianjin Xinjie, the court do not confirm it. The counterclaim that Tianjin Xinjie should pay the freight 73,400 yuan is legal, so the court should support it. According to the Contract Law of the People’s Republic of China Article 107 “Types of Liabilities for Breach If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.”, Tianjin Xinjie carried the goods involved in the case to the port of destination, the Plaintiff still owed the freight 73,400 yuan, which constitutes breach of contract and should bear the corresponding liability for breach of contract. The claim that Tianjin Xinjie asked the Plaintiff to pay the interest is legal, so the court should support it. Tianjin Xinjie sent Entrusted Payment Letter to the Plaintiff on December 7, 2013, asked the Plaintiff to pay the freight according to the commission. The claim that interest calculated from December 7, 2013 is in compliance with the law, so the court should support it. But the claim that the interest should be paid according to four times than the liquidity loan interest rate in the same period stipulated by People’ s Bank of China, because both sides did not have an agreement, so the court do not support it.

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2. Whether the two Defendants should return two containers of sugar to the Plaintiff. According to the Property Law of the People’s Republic of China Article 230 Paragraph 1 “Where an obligor fails to pay off its due debts, the oblige may take lien of the chattels that are owned by the obligor and lawfully occupied by the oblige, and has the right to seek preferred payments from such chattels”, and the Contract Law of the People’s Republic of China Article 315 “Carrier’ s Possessory Lien in Case of Non-payment Where the consignor or consignee fails to pay the freightage, safekeeping fee and other expenses in connection with the carriage of the cargo, the carrier is entitled to a possessory lien on the corresponding portion of the cargo, except otherwise agreed by the parties”. As mentioned above, the Plaintiff entrusted Tianjin Xinjie to carry the sugar in the case, Tianjin Xinjie had already carried the sugar in the case to the port of destination, the Plaintiff owed the freight 73,400 yuan, the Defendant Tianjin Xinjie had the right to retain the sugar involved in the case, its lien of two containers of sugar through the Defendant Sunny Express is in compliance with the law. Therefore, it lacks legal basis that the Plaintiff claimed the two Defendants to return two containers of sugar, and the court will not support it. 3. Whether there is basis that the Plaintiff claimed that the two Defendants to compensate 39,322.80 yuan and a penalty charge 5,786 yuan. According to the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 “a party shall have the responsibility to provide evidence in support of its own propositions” and the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 2 “the parties concerned shall be responsible for producing evidences to prove the facts on which their own allegations are based or the facts on which the allegations of the other party are refuted. Where any party cannot produce evidence or the evidences produced cannot support the facts on which the allegations are based, the party concerned that bears the burden of proof shall undertake unfavorable consequences”, the Plaintiff neither proved that the two Defendants had mis-conduction or improper storage during the retention of the goods, resulting the losses of goods, neither submitted evidence to prove the specific composition of the losses of goods, it should undertake unfavorable consequences. So, the claim that the two Defendants should compensate 39,322.80 yuan will not be supported by the court. The claim that the two Defendants should pay a penalty charge 5,786 yuan has no legal basis, the court do not support it. Pulling the threads together, according to the Property Law of the People’s Republic of China Article 230 Paragraph 1 and the Contract Law of the People’s Republic of China Article 107, Article 292 and Article 315, the judgment is as follows: 1. The Plaintiff (counterclaim Defendant) Guangxi Jufeng Shipping Co., Ltd. should pay freight 73,400 yuan and interest to the Defendant (counterclaim Plaintiff) Tianjin Xinjie Logistics Service Co., Ltd. (interest calculation method: based on 73,400 yuan, according to the loan interest rate in the same period

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stipulated by People’ s Bank of China, from December 7, 2013 to the last day of performance specified in the effective judgment of this case). 2. Reject the claims of the Plaintiff (counterclaim Defendant) Guangxi Jufeng Shipping Co., Ltd. Court acceptance fee in amount of 928 yuan and court acceptance fee of counterclaim in amount of 1,015 yuan, totally 1,943 yuan, shall be born by the Plaintiff (counterclaim Defendant) Guangxi Jufeng Shipping Co., Ltd. The obligation in this case, should be performed within 10 days after the judgment comes into force. If the time is overdue, the obligor shall pay a double charge for the dilatory fulfilment. The obligee may apply to the court for execution within two years from the last day of the performance deadline stipulated in the effective judgment of the case. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit petition and copies according to the number of the other parties so as to appeal to High People’s Court of Guangxi Zhuang Autonomous Region. Within seven days from the date of filing the appeal, the fee of the appeal against the judgment of first instance should be paid (name of collection organ: High People’s Court of Guangxi Zhuang Autonomous Region; account: 20xxx77; bank of deposit: the Agricultural Bank of China Nanning Wanxiang Branch). If the payment of appeal fee is overdue and the application for late payment is not submitted, the appeal should be withdrawn automatically. Presiding Judge: LIU Hai Acting Judge: LAO Jianming People’s Juror: LIANG Xuefen May 20, 2015 Clerk: LI Yuhui

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Guangxi Zhuang Autonomous Region High People’s Court Civil Judgment Guangxi Jufeng Shipping Co., Ltd. v. Tianjin Xinjie Logistics Service Co., Ltd. et al. (2015) Gui Min Si Zhong Zi No.69 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 423. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court judgment holding plaintiff cargo-owner to be liable to pay freight to Defendant carrier on Defendant's counterclaim; plaintiff held not to be entitled to return of two containers held by defendant carrier's subcontractor by way of lien for unpaid freight. Summary Guangxi Jufeng (Guanxi Jufeng) contracted with first Defendant (Tianjin Xianjie) to carry a total of 66 containers of sugar from Guigang to Yingkou. First Defendant entrusted Third Party (Yangpu Logistics) to carry the containers, but it did not do so. Later, first Defendant entrusted second Defendant (Sunny Express) to carry 20 containers of Guangxi Jufeng’s sugar from Nanning to Yingkou. Guangxi Jufeng paid some freight to Yangpu Logistics and some to Sunny Express. After Guangxi Jufeng had paid the freight, first Defendant sent it instructions, entrusting it to make the payments to Yangpu Logistics and Sunny Express. Guangxi Jufeng told Sunny Express that the freight it had remitted was paid on behalf of Yangpu Logistics, not first Defendant (Tianjin Xinjie). First Defendant instructed Second Defendant to retain two containers of sugar at the port of discharge on account of non-payment of freight by Guangxi Jufeng. Guangxi Jufeng sued the two Defendants, seeking return of the two containers of sugar, and damages for losses suffered as a result of their retention. First Defendant counterclaimed for the amount of freight paid by Guangxi Jufeng to second Defendant. Third Party (Yangpu Logistics) did not appear and took no part in the proceedings. The first instance Court held: (1) Guangxi Jufeng had not complied with first Defendant’s instructions about the freight paid to second Defendant (Sunny Express), but had told second Defendant that the freight was paid on behalf of Yangpu Logistics rather than first Defendant, so in effect, Guangxi Jufeng had not paid that amount of freight to first Defendant and for that reason, first Defendant’s

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counterclaim should succeed; (2) because Guangxi Jufeng had not paid freight in full for the carriage, first Defendant was entitled by law to exercise a lien over Guangxi Jufeng’s cargo, so Guangxi Jufeng was not entitled to the return of the two containers; (3) Guangxi Jufeng had not proved the losses it claimed to have suffered as a result of the retention of the two containers. Accordingly the Court held that Guangxi Jufeng’s claim failed and Defendant’s counterclaim succeeded. Guangxi Jufeng (counterclaim Defendant) appealed, claiming that the freight that it had paid to Sunny Express was paid in accordance with Tianjin Xinjie’s instructions. The appeal Court held that the facts did not support that argument, and it affirmed the judgment of first instance that Plaintiff/counterclaim Defendant should pay freight to first Defendant/counterclaim Plaintiff.

Judgment The Appellant (the Plaintiff of first instance, counterclaim Defendant): Guangxi Jufeng Shipping Co., Ltd. Domicile: No.2, Floor 1, Block 3, Laibin District, Guangxi Zhuang Autonomous Region. Legal representative: ZHANG Zhibin, general manager. Agent ad litem: TANG Cheng, lawyer of Guangxi Tangcheng Law Firm. Agent ad litem: CHEN Yuanlian, lawyer of Guangxi Tangcheng Law Firm. The Respondent (the Defendant of first instance, counterclaim Plaintiff): Tianjin Xinjie Logistics Service Co., Ltd. Domicile: C-3–1202, N0.12, Nanhai Road, Tianjin Development Zone. Legal representative: FU Weifeng, general manager. Agent ad litem: LIANG Shuquan, lawyer of Guangxi Qidi Law Firm. Agent ad litem: XIE Caibo, lawyer of Guangxi Qidi Law Firm. The Respondent (the Defendant of first instance): Sinotrans Sunny Express Co., Ltd. Domicile: A-541, No.18, Yesheng Road, China (Shanghai) Pilot Free Trade Zone. Legal representative: XU Qiumin, general manager. Agent ad litem: LUO Min, lawyer of Guangxi Chengji Law Firm. Agent ad litem: GUAN Lixia, lawyer of Guangxi Chengji Law Firm. The Third Party of first instance: Yangpu Xinhong Logistics Co., Ltd. Domicile: Room A227, Jinlan, Yangpu Economic Development Zone, Haikou, Hainan. Legal representative: WANG Zhiyuan, general manager. With respect of the case arising from dispute over contract of carriage of goods by sea among the Appellant, Guangxi Jufeng Shipping Co., Ltd. (hereinafter referred to as Guangxi Jufeng), the Respondents, Tianjin Xinjie Logistics Service Co., Ltd.

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(hereinafter referred to as Tianjin Xinjie) and Sinotrans Sunny Express Co., Ltd. (hereinafter referred to as Sunny Express), and the Third Party of first instance, Yangpu Xinhong Logistics Co., Ltd. (hereinafter referred to as Yangpu Logistics), the Appellant disagreed with the Beihai Maritime Court (2014) Hai Shang Chu Zi No.141 Civil Judgment, and appealed to the court. After entertaining the case it on November 3, 2015, the court formed a collegial panel according to law. On February 14, 2016, the court held a hearing in public. Agents ad litem of the Appellant Guangxi Jufeng, TANG Cheng and CHEN Yuanlian, agents ad litem of the Respondent Tianjin Xinjie, LIANG Shuquan and XIE Caibo, and agent ad litem of the Respondent Sunny Express, LUO Min, appeared in the court to attend the hearing. The Third Party of first instance Yangpu Logistics, after a legal summons, did not appear in the court. The court made a judgment by default. Now the case has been concluded. Guangxi Jufeng alleged in first instance that, on October 20, 2013, Guangxi Jufeng entrusted Tianjin Xinjie to carry 66 containers with Cuirui brand of sugar from the wharf of Guigang Aikaier to the wharf of Dalian Yingkou Port by sea. The freight of each container was 2,900 yuan, total amount of 191,400 yuan. After Tianjin Xinjie accepted the commission and carried the goods from Guigang to Guangzhou, it transferred the commission to Yangpu Logistics, asking it to carry the goods to the port of destination. Because Yangpu Logistics was bankrupt, it could not perform the obligation of transporting. So Yangpu Logistics transferred the commission to Sunny Express to carry the goods of Guangxi Jufeng to the port of destination by sea. On December 5, 2013, according to the demand of Tianjin Xinjie, Guangxi Jufeng paid 60,000 yuan for 46 containers of the total amount of 133,400 yuan for the freight to Yangpu Logistics through by bank transfer, and another 73,400 yuan was paid to Sunny Express through by bank transfer. Tianjin Xinjie reissued the written Entrusted Payment Letter to confirm the above-mentioned facts on December 7, 2013. After the goods arrived the port of destination, on March 21, 2014, according to the demand of Statement of Tianjin Xinjie Logistics Service Co., Ltd. (Guangzhou Office) sent by Tianjin Xinjie, Guangxi Jufeng paid freight 58,000 yuan for 20 containers to Sunny Express through by bank transfer. So far, Guangxi Jufeng had already paid all freight, but Tianjin Xinjie informed Sunny Express to retain 55 tons Cuirui brand of sugar of Guangxi Jufeng (each ton values 5,260 yuan, totaled two containers, total amount of 289,300 yuan) by the reason that Guangxi Jufeng did not pay any freight. As a result, Guangxi Jufeng could not deliver all the goods to the consignee on time, which caused Guangxi Jufeng 39,322.80 yuan for economic losses, including 11,220 yuan for handling charge, 2,640 yuan for document transfer fee, 5,662.80 yuan for overdue freight interest losses and 19,800 yuan for sugar price difference losses. In order to safeguard the lawful rights and interest of Guangxi Jufeng, Guangxi Jufeng requested the court of first instance to judge as follows: 1. Tianjin Xinjie and Sunny Express returned two containers Cuirui brand of sugar privately held to Guangxi Jufeng; 2. Tianjin Xinjie and Sunny Express should compensate Guangxi Jufeng 39,322.80 yuan and pay a penalty charge 5,786 yuan according to the loan annual interest rate 6% of the People’s Bank of China,

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total amount of 45,108.80 yuan. And the litigation fee should be born by Tianjin Xinjie and Sunny Express. Tianjin Xinjie argued in first instance that, on October 20, 2013, Guangxi Jufeng entrusted it to carry 66 containers with sugar from Guigang to Yingkou, the total fright was 191,400 yuan. After Tianjin Xinjie carried the above-mentioned goods to Guangzhou, it entrusted Yangpu Logistics to be in charge of carrying the goods by sea, namely carrying the above mentioned goods from Guangzhou to Yingkou. The freight of each container was 1,200 yuan, totaled 79,200 yuan. Tianjin Xinjie had already paid all freight to Yangpu Logistics. But Yangpu Logistics did not actually take part in transporting, but made a contract with Sunny Express to entrusted it to carry the above-mentioned goods from Guangzhou to Yingkou. Because Yangpu Logistics did not pay freight to Sunny Express from the freight that was collected from Tianjin Xinjie as agreed, Sunny Express retained 66 containers sugar. After Guangxi Jufeng and Yangpu Logistics had negotiations, they sent letters to Sunny Express separately, claimed that the freight 73,400 yuan paid by the Plaintiff before was the freight it paid on behalf of Yangpu Logistics. During this period, Tianjin Xinjie sent a letter to inform Guangxi Jufeng to directly pay freight 60,000 yuan to Yangpu Logistics. Besides, because Tianjin Xinjie and Sunny Express had other economic exchanges, for the sake of simplicity, Tianjin Xinjie sent two letters to Guangxi Jufeng, informing it to remit 131,400 yuan to the account of Sunny Express at two strokes (one stroke was 73,400 yuan, another was 58,000 yuan) to reverse debt between Tianjin Xinjie and Sunny Express. But Guangxi Jufeng did not remit as the notice of Tianjin Xinjie, the freight 73,400 yuan for 66 containers sugar it remitted to Sunny Express was paid on behalf of Yangpu Logistics, not Tianjin Xinjie. In the case of performing the combined transport contract, Tianjin Xinjie made a contract of carriage with Guangxi Jufeng, but that Guangxi Jufeng did not pay all freight was breach of contract, which should be responsibility for the breach of contract. As far as the payment in the case was concerned, Tianjin Xinjie had no disagreement with the behavior that Guangxi Jufeng remitted Yangpu Logistics 60,000 yuan and Sunny Express 58,000 yuan was the behavior for paying the freight in this case. But Guangxi Jufeng remitted 73,400 yuan to the account of Sunny Express on December 5, 2010, which was not the freight paid for the combined transport contract according to the commission of Tianjin Xinjie, reasons: firstly, Guangxi Jufeng remitted 73,400 yuan to the account of Sunny Express on December 5, 2013, but Tianjin Xinjie sent a letter to Guangxi Jufeng to entrust it to remitted the freight 73,400 yuan to the account of Sunny Express on December 7, 2013, on December 11, Yangpu Logistics and Guangxi Jufeng separately sent letters to Sunny Express, clarifying that 73,400 yuan remitted was the freight paid by Guangxi Jufeng on behalf of Yangpu Logistics. The above-mentioned facts could verify that Guangxi Jufeng did not finish the entrusted payment of Tianjin Xinjie according to the content of the letter on December 7, so the above-mentioned money which Guangxi Jufeng remitted was not the money entrusted by Tianjin Xinjie. Secondly, according to Expense Description issued by Yangpu Logistics on December 11, 2013, it could be confirmed 73,392 yuan which Yangpu Logistics entrusted Guangxi Jufeng to pay was an advance or loan-type payment and the

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repayment responsibility should be born by Yangpu Logistics. Thirdly, according to the Letter sent from Guangxi Jufeng on December 11, 2013, it could be confirmed that on December 5, 2013, 73,400 yuan remitted by Guangxi Jufeng was not paid for the commission of Tianjin Xinjie, but an advance payment for the commission of Yangpu Logistic. After Guangxi Jufeng paid freight on behalf of Yangpu Logistic, Guangxi Jufeng should claim against Yangpu Logistic for the resulting creditor-debtor relationship. Finally, because Guangxi Jufeng owed Tianjin Xinjie the debt of 73,400 yuan, Tianjin Xinjie sent letters to ask Guangxi Jufeng paid 73,400 yuan to Sunny Express, which was entrusted payment relationship. After Guangxi Jufeng paid the money, it had obligation of issuing letter of authorization for payment, to prove that the payment was paid on behalf of Tianjin Xinjie. But after the Plaintiff paid 73,400 yuan, the Letter issued on December 11, 2013 could confirmed that the payment was paid on behalf of Yangpu Logistic, but not paid 73,400 yuan on behalf of Tianjin Xinjie. Guangxi Jufeng claimed that only paid 73,400 yuan equaled to two different parties pay two sums, total amount of 146,792 yuan during the same period was no factual and legal basis. In conclusion, it was not the fact that Guangxi Jufeng claimed that it had already remitted 73,400 yuan to Sunny Express according to the demand of Tianjin Xinjie. The claim that it had already paid the freight 191,400 yuan was lack of factual and legal basis. The claims of Guangxi Jufeng should be rejected. Sunny Express argued in first instance that, on February 19, 2014, Tianjin Xinjie entrusted it to transfer 20 containers sugar (waybill No.SUNNI14000007) from Nanning to Yingkou. According to the relativity principle of contract, Sunny Express was a carrier, following written instructions of Tianjin Xinjie in the freight contract, and carrying out transportation, delivery, and deduction of goods. Sunny Express did not have a civil relationship with the Plaintiff, so Guangxi Jufeng claimed that Sunny Express illegally retained two containers had no factual basis. Therefore, Sunny Express should not bear any civil liability for the economic losses alleged by Guangxi Jufeng. In conclusion, Guangxi Jufeng’s claims against Sunny Express had no factual basis. The claims of Guangxi Jufeng against Sunny Express should be rejected. Yangpu Logistics did not make any statements, and did not submit any evidence. Tianjin Xinjie counterclaimed in first instance that: on October 20, 2013, it signed Letter of Authorization for Consignments of Domestic and Coastal Trade Goods with Guangxi Jufeng, appointed that Tianjin Xinjie was entrusted by Guangxi Jufeng to carry 46 containers from Guigang to Yingkou, Guangxi Jufeng should pay the freight 133,400 yuan. But now Guangxi Jufeng only paid the freight 60,000 yuan, owing the freight 73,400 yuan. There was no agreement after the dunning, so Tianjin Xinjie specially filed a counterclaim to the court and requested the court to judge that: Guangxi Jufeng paid Tianjin Xinjie the freight 73,400 yuan and the interest 15,800 yuan (based on 73,400 yuan, according to four times than the liquidity loan interest rate in the same period stipulated by People’ s Bank of China, from December 7, 2013 to the last day of performance of the judgment, temporarily counted to October 30, 2014, total amount of 15,800 yuan), and court acceptance fee and court acceptance fee of counterclaim should be born by Guangxi Jufeng.

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Guangxi Jufeng argued that it had already paid all freight involved. Guangxi Jufeng did not owe Tianjin Xinjie any freight. Guangxi Jufeng requested the court to reject the counterclaims of Tianjin Xinjie. The court of first instance found out and confirmed the following facts: On October 20, 2013, Guangxi Jufeng and Tianjin Xinjie concluded two Letter of Authorization for Consignments of Domestic and Coastal Trade Goods (No. SUNWZ0133000858, No.SUMMMI1400007), appointed that: Guangxi Jufeng entrusted Tianjin Xinjie to carry 46 and 20 totaled 66 containers separately, the freight of each container was 2,900 yuan. The mode of transport was port to port, the port of loading was Guigang Aikaier Port, and unloading port was Yingkou Port. The shipper was Guangxi Jufeng, the consignee was Yingkou North Sugar Co., Ltd. Both parties also had an agreement on other rights and obligations of the contract. On October 14, October 21, November 4, 2013, Tianjin Xinjie and Yangpu Logistics separately concluded three Xinhong Logistic Booking Power of Attorney, appointed that: Tianjin Xinjie entrusted Yangpu Logistics to separately carry the 12, 34, 20, totaled 66 containers sugar of Guangxi Jufeng, the freight of each container was 1,200 yuan. The port of loading was Guigang Port, and unloading port was Yingkou Port. Billing method was when the voyage was settled (pay off before leaving the yard at the port). Tianjin Xinjie sealed on shipper of the abovementioned Xinhong Logistic Booking Power of Attorney. After the signature of Booking Power of Attorney, Yangpu Logistics did not actually carry the above-mentioned sugar. On February 19, 2014, Tianjin Xinjie and Sunny Express concluded domestic trade container transport order (waybill No.SUNNNI14000007), appointed that: Tianjin Xinjie entrusted Sunny Express to carry 20 containers sugar of Guangxi Jufeng, the port of departure was Nanning, the port of destination was Yingkou, the port of transfer was Humen, and the terms of transport were CY, the freight of each container was 930 yuan, payment method was prepaid for freight. Both parties also had an agreement on other rights and obligations of the contract. On December 5, 2013, Guangxi Jufeng remitted 60,000 yuan to Yangpu Logistics, and 73,400 yuan to Sunny Express. On December 7, 2013, Tianjin Xinjie issued Guangxi Jufeng Entrusted Payment Letter, entrusted Guangxi Jufeng to pay separately the freight 133,400 yuan of 46 containers of sugar involved in the case to Yangpu Logistics and Sunny Express, including remitted Yangpu Logistics 60,000 yuan, and Sunny Express 73,400 yuan. On December 11, 2013, Guangxi Jufeng sent a letter to Sunny Express, claimed that 73,400 yuan remitted to the account of Sunny Express was paid for two freights for Yangpu Logistics, including the freight of 46 containers of sugar in the case (waybill No.SUNWZ013000858), another was the freight of totaled 20 containers which waybill No. were SUNWZ01300858Z, SUNWZ013000858Z1. On March 21, 2014, Guangxi Jufeng was entrusted by Tianjin Xinjie, paid the freight of 20 containers 58,000 yuan to reverse the debts between Tianjin Xinjie and Sunny Express. On the same day, Tianjin Xinjie informed Sunny Express to retain

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two containers of sugar in the above-mentioned 20 containers of sugar, the container of sugar number was TRHU3026796, UESU2464122. The court of first instance held that this case was caused by the dispute over contract of carriage of goods by sea. According to the Contract Law of the People’s Republic of China Article 122 “where a party’s breach harmed the personal or property interests of the other party, the aggrieved party is entitled to elect to hold the party liable for breach of contract in accordance herewith, or hold the party liable for tort in accordance with any other relevant law”, Guangxi Jufeng had the right to elect to hold the party liable for breach of contract in accordance with the law contract or to hold the party liable for tort in accordance with the tor law. Guangxi Jufeng finally chose to hold the party liable for tort, it had the legal basis. According to the claims and defenses of all parties, the issues of the case were that: 1. whether Guangxi Jufeng should pay the freight 73,400 yuan and the interest 15,800 yuan to Tianjin Xinjie; 2. whether Tianjin Xinjie and Sunny Express should return two containers of sugar to Guangxi Jufeng; 3. whether there was basis that Guangxi Jufeng claimed that Tianjin Xinjie and Sunny Express should compensate 39,322.80 yuan and pay a penalty charge 5,786 yuan. Firstly, whether Guangxi Jufeng should pay the freight 73,400 yuan and the interest 15,800 yuan to Tianjin Xinjie. The court of first instance held that Letter of Authorization for Consignments of Domestic and Coastal Trade Goods signed between Tianjin Xinjie and Guangxi Jufeng and Domestic Trade Container Transport Order concluded between Sunny Express and Guangxi Jufeng were the true meaning of the parties of the contract. The content did not violate the mandatory provisions of laws and regulations. Therefore, it was legally established and valid, and was legally binding on both parties. In this case, Guangxi Jufeng entrusted Tianjin Xinjie to carry 66 containers of sugar, the freight of each container was 2,900 yuan, total amount of 191,400 yuan (2,900 yuan/container * 66 container). Guangxi Jufeng remitted 60,000 yuan to Yangpu Logistics on December 5, 2013, 73,400 yuan to Sunny Express. It paid the freight 58,000 yuan to Sunny Express on March 21, 2014. The above-mentioned payments, remitted to Yangpu Logistics 60,000 yuan and to Sunny Express 58,000 yuan, totaled 118,000 yuan, Tianjin Xinjie confirmed it, so the court of first instance confirmed it. Whether Guangxi Jufeng remitted 73,400 yuan to Sunny Express on December 5, 2013 was considered as the payment of the freight involved, the court of first instance held that, according to the instruction of Entrusted Payment Letter Tianjin Xinjie sent to Guangxi Jufeng on December 7, 2013, after Guangxi Jufeng directly remitted 73,400 yuan to Sunny Express, seemed that Guangxi Jufeng paid 73,400 yuan to Tianjin Xinjie. An entrusted payment relationship was formed between two parties, Guangxi Jufeng should complete the commission to confirm that it had paid the freight to Tianjin Xinjie. Guangxi Jufeng sent a letter to Sunny Express on December 11, 2013, confirmed that remitting 73,400 yuan to the account of Sunny Express was the payment paid on behalf of Yangpu Logistics, not the payment paid on behalf of Tianjin Xinjie. According to the Contract Law of the People’s Republic of China Article 406 “Liability of Agent; Unauthorized Act Under an agency appointment contract for

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value, if the principal sustains any loss due to the fault of the agent, the principal may claim damages. Under a gratuitous agency appointment contract, if the principal sustains any loss due to the agent’s intentional misconduct or gross negligence, the principal may claim damages”, though it was the fact that Guangxi Jufeng remitted 73,400 yuan to Sunny Express, Guangxi Jufeng did not complete the commission according to the instructions of payment letter of Tianjin Xinjie, so it should bear unfavorable consequences. Therefore, the claim that Guangxi Jufeng had already paid 73,400 yuan to Tianjin Xinjie, the court of first instance did not confirm it. The counterclaim that Tianjin Xinjie should pay the freight 73,400 yuan was legal, so the court of first instance should support it. According to the Contract Law of the People’s Republic of China Article 107 “Types of Liabilities for Breach If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.”, Tianjin Xinjie carried the goods involved to the port of destination, Guangxi Jufeng still owed the freight 73,400 yuan, which constituted breach of contract and should bear the corresponding liability for breach of contract. The claim that Tianjin Xinjie asked Guangxi Jufeng to pay the interest was legal, so the court of first instance should support it. Tianjin Xinjie sent Entrusted Payment Letter to Guangxi Jufeng on December 7, 2013, asked Guangxi Jufeng to pay the freight according to the commission. The claim that calculated from December 7, 2013 was compliance with the law, so the court of first instance should support it. But the claim that the interest should be paid according to four times than the liquidity loan interest rate in the same period stipulated by People’s Bank of China, because both parties did not have an agreement, so the court of first instance did not support it. Secondly, whether Tianjin Xinjie and Sunny Express should return two containers of sugar to Guangxi Jufeng. According to the Property Law of the People’s Republic of China Article 230 Paragraph 1 “where an obligor fails to pay off its due debts, the oblige may take lien of the chattels that are owned by the obligor and lawfully occupied by the oblige, and has the right to seek preferred payments from such chattels”, and the Contract Law of the People’s Republic of China Article 315 “Carrier’s Possessory Lien in Case of Non-payment Where the consignor or consignee fails to pay the freightage, safekeeping fee and other expenses in connection with the carriage of the cargo, the carrier is entitled to a possessory lien on the corresponding portion of the cargo, except otherwise agreed by the parties”. As mentioned above, Guangxi Jufeng entrusted Tianjin Xinjie to carry the sugar in the case, Tianjin Xinjie had already carried the sugar in the case to the port of destination, Guangxi Jufeng owed the freight 73,400 yuan, Tianjin Xinjie had the right to retain the sugar involved, its lien of two containers of sugar through Sunny Express was in compliance with the law. Therefore, it lacked legal basis that Guangxi Jufeng claimed Tianjin Xinjie and Sunny Express to return two containers of sugar, and the court of first instance should not support it. Thirdly, whether there was basis that Guangxi Jufeng claimed that Tianjin Xinjie and Sunny Express to compensate 39,322.80 yuan and a penalty charge 5,786 yuan.

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According to the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 “a party shall have the responsibility to provide evidence in support of its own propositions” and the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 2 “the parties concerned shall be responsible for producing evidences to prove the facts on which their own allegations are based or the facts on which the allegations of the other party are refuted. Where any party cannot produce evidence or the evidences produced cannot support the facts on which the allegations are based, the party concerned that bears the burden of proof shall undertake unfavorable consequences”, Guangxi Jufeng neither proved that Tianjin Xinjie and Sunny Express had mis-conduction or improper storage during the retention of the goods, resulting the losses of goods, neither submitted evidence to prove the specific composition of the losses of goods, it should undertake unfavorable consequences. So, the claim that Tianjin Xinjie and Sunny Express should compensate 39,322.80 yuan would not be supported by the court of first instance. The claim that Tianjin Xinjie and Sunny Express should pay a penalty charge 5,786 yuan had no legal basis, the court of first instance did not support it. Pulling the threads together, according to the Property Law of the People’s Republic of China Article 230 Paragraph 1 and the Contract Law of the People’s Republic of China Article 107, Article 292 and Article 315, the judgment was as follows: 1. Guangxi Jufeng should pay freight 73,400 yuan and its interest to Tianjin Xinjie (interest calculation method: based on 73,400 yuan, according to the liquidity loan interest rate in the same period stipulated by People’s Bank of China, from December 7, 2013 to the last day of performance of specified in the effective judgment of this case). 2. Reject the claims of Guangxi Jufeng. Court acceptance fee of first instance in amount of 928 yuan, court acceptance fee of counterclaim in amount of 1,015 yuan, total amount of 1,943 yuan, should be born by Guangxi Jufeng. The obligation in this case, should be performed within 10 days after the judgment came into force. If the time was overdue, the obligor should pay a double charge for the dilatory fulfillment. The obligee could apply to the court for enforcement within two years from the last day of the performance deadline stipulated in the effective judgment of the case. The Appellant Guangxi Jufeng disagreed with the judgment of first instance and appealed that: the facts confirmed by the court of first instance were unclear, the application of law was wrong. Firstly, the court of first instance confirmed that the Appellant Guangxi Jufeng remitted 73,400 yuan to the Respondent Sunny Express account on December 5, 2013, which was used by the Appellant Guangxi Jufeng to pay the freight of Yangpu Logistics, then confirmed that the Appellant Guangxi Jufeng did not complete the payment obligation, which was inconsistent with the facts. Secondly, the court of first instance held that the Respondent Tianjin Xinjie had the right to retain the Appellant’s two containers of white granulated sugar, which was unclear confirmation of fact and wrong application of law. The Respondent Tianjin Xinjie had no right to retain the two containers of the Appellant. In conclusion, the judgment of first instance lacked factual or legal basis, so the Appellant required the court of second instance to send the case back for retrial or revoke the first and second items of the Beihai Maritime Court (2014) Hai

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Shang Chu Zi No.141 Civil Judgment, change to support the claims of the Appellant, and reject the counterclaims of the Respondent in first instance. Court acceptance fees of first and second instances should be born by the two Respondents. The Respondent Tianjin Xinjie argued that: the facts confirmed by the court of first instance were clear, and the application of law was correct. The appeal of the Appellant had no factual or legal basis. The Respondent Sunny Express argued that: the facts confirmed by the court of first instance were clear. It required the court of second instance to affirm the original judgment, the appeal of the Appellant Guangxi Jufeng that Sunny Express should be liable was inconsistent with the fact, which should be dismissed. The Appellant Guangxi Jufeng submitted letter sent by Tianjin Xinjie to Guangxi Jufeng on December 11, 2013 in second instance, to prove that the subject of payment for SUMWZO13000858Z and SUMWZO13000858Z1 total 20 sugar cabinets was the Respondent Tianjin Xinjie. The Appellant paid the payment on behalf of the Respondent Tianjin Xinjie. The Respondent Tianjin Xinjie cross-examined that, the evidence was formed before the first instance, but it did not submit the evidence in first instance and the proof period had passed, and the evidence was a copy, so it did not recognize the authenticity, legality and relevancy. Meanwhile, it held that there was no such letter. The Respondent Sunny Express could not recognize the legality of the evidence. The Respondent Tianjin Xinjie submitted Notice of Delivery of Goods whose head was Guangxi Jufeng and the time was April 25, 2016, and one domestic express sheet, to prove that it once notified Guangxi Jufeng of delivering a container of sugar but Guangxi Jufeng did not receive the goods, and it once again notice Guangxi Jufeng of receiving the goods in time. The Appellant Guangxi Jufeng cross-examined that, it did not recognize the authenticity, legality and relevancy of Notice of Delivery of Goods and the domestic express sheet, it did not receive the above materials, though the address of consignee in the express sheet was the registered domicile of the company, there was no person working in that address. The actual business address of Guangxi Jufeng was Liuzhou, and Tianjin Xinjie knew that. Moreover, the content of Notice of Delivery of Goods was not true. Guangxi Jufeng did not receive the notice in October 2014, and the two Respondents did not settle the container demurrage fee to Yingkou Port, and Tianjin Xinjie did not perform necessary obligation of delivery of goods, and it could not let Sunny Express make the clear meaning of delivery of goods, so even if Guangxi Jufeng took the goods, it could not success taking the goods. In addition, the goods had been put in CY for more than 28 months and could not be eaten, they had no commercial value. The Respondent Sunny Express cross-examined that, the authenticity of Notice of Delivery of Goods and the express sheet should be determined by the court. In addition, it received the notice of delivery sent by Tianjin Xinjie, and got ready to deliver the goods anytime, but up to now, no one took the goods.

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Sunny Express submitted the Explanation and Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order, to prove that the shipper involved in the 46 boxes of white sugar transported by the company was Yangpu Logistics, and the 73,400 yuan it received was the freight paid by Yangpu Logistics to Guangxi Jufeng. Guangxi Jufeng confirmed the proof of payment of this freight. The Appellant Guangxi Jufeng cross-examined that, it had objection to the authenticity, relevancy and legality of the Explanation, meanwhile it held that the freight of 73,400 yuan should be paid for the company’s 46 boxes of freight, including the freight of another 20 boxes, and the 20 boxes of goods were Tianjin Xinjie. The freight should be paid by Tianjin Xinjie, but also paid by Guangxi Jufeng. It had no objection to the authenticity of Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order, and according to the bill number stated, 46 boxes of white granulated sugar approved by Guangxi Jufeng were included in the 132 boxes contained in the bill. The bill stated that the freight was 1,112 yuan per box, and the freight for 46 boxes was 52,152 yuan. Guangxi Jufeng paid 73,400 yuan, and paid the freight of 46 cases in full. The Respondent Tianjin Xinjie cross-examined that, it had no objection to the authenticity, legality and relevancy of Explanation and Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order, the content shown in the two pieces of evidence was consistent with the facts stated in the first and second instances of Tianjin Xinjie, which was sufficient to prove that Guangxi Jufeng did not perform its responsibility to pay the freight of Tianjin Xinjie in accordance with the letter of entrustment payment from Tianjin Xinjie. The court holds that, as to the evidence submitted by the Appellant Guangxi Jufeng, because it was a copy, there was no original, and the Respondent Tianjin Xinjie and Sunny Express did not recognize the authenticity and legality, so the court does not confirm the authenticity. As to the evidence submitted by the Respondent Tianjin Xinjie, the Appellant Guangxi Jufeng did not recognize the authenticity and legality, but Tianjin Xinjie submitted the original, and Sunny Express recognized that it received the delivery notice and got ready to release, so the court confirms the authenticity of Notice of Delivery of Goods and the express sheet. As for whether it could achieve the effect of Tianjin Xinjie proving the facts it claimed, it will be comprehensively determined in light of the case. As to the evidence submitted by the Respondent Sunny Express, the parties recognized the authenticity, legality and relevancy, so the court confirms it, and used the evidence as the basis to confirm the facts of the case. In hearing, the Appellant had objection to the facts found out by the court of first instance: 1. The judgment of first instance missed the facts on page 13 that 46 of the 66 containers entrusted by Guangxi Jufeng to Tianjin Xinjie were transported by Tianjin Xinjie to Yangpu Logistics, and then transferred from Yangpu Logistics to Sunny Express;

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2. The first paragraph of the judgment of first instance on page 14 is missing the first paragraph to find out the facts that the “another waybill number is SUNWZO13000858Z, SUNWZO13000858Z1 a total of 20 containers of white sugar” contained in the letter sent by Guangxi Jufeng to Sunny Express on December 11, 2013 was not actually entrusted by Guangxi Jufeng for carriage. The letter was issued by Tianjin Xinjie in order to complete the formalities and requested by Guangxi Jufeng. The 20 containers of white sugar contained in the letter had nothing to do with the Appellant Guangxi Jufeng. The Respondent Tianjin Xinjie held that, the facts found in the first paragraph of the judgment of first instance on page 13 of the first paragraph were omitted from the content of the breach of contract clauses as stated in Power of Attorney for Coastal Domestic Trade Goods Consignment on October 20, 2013. Tianjin Xinjie and Guangxi Jufeng agreed a breach of contract clause in the power of attorney, namely the penalty for breach of contract was calculated at five thousandths. The judgment of first instance did not calculate the liquidated damages according to this agreement, but Tianjin Xinjie also recognized that it did not claim liquidated damages according to the standard and did not appeal. The Respondent Sunny Express had no objection to the facts found out by the court of first instance. After investigation, the court holds that, the facts found out by the court of first instance are clear, the evidence is sufficient, so the court confirms them. In addition, the court also finds out that, after receiving 46 containers of white sugar from Guangxi Jufeng from Tianjin Xinjie, Yangpu Logistics did not actually carry it, but instead entrusted it to Sunny Express. Explanation and Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order can prove it. Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order stipulated that, “the waybill number is SUNWZO13000858, the pre-provisioned vessel voyage (the actual voyage is subject to the waybill) Sinotrans Fuzhou 1308, the shipper (full name) Yangpu Xinhong Logistics Co., Ltd., the freight is 1,112 yuan per box, and the box size is 20GP  132, remarks SOC box, can go in batches.” Guangxi Jufeng approved that the 46 boxes were included in the 132 boxes. In the Explanation, Sunny Express also recognized that the shipper of the 46 containers of white sugar involved was Yangpu Logistics, and the freight of 73,400 yuan paid by Guangxi Jufeng was 66 boxes entrusted by Yangpu Logistics to carry it. Freight, which was paid by Yangpu Logistics to Guangxi Jufeng. The 66 containers are Sinotrans Fuzhou/1308, waybill number SUNWZO13000858, 46 * 20GP; Xinfeng Ningbo/1305 N, waybill number SUNWZO13000858Z, 10 * 20GP; Sinotrans Taicang/1344, waybill number SUNWZO13000858Z1, 10 * 20GP. In second instance, the parties recognized that 46 boxes of white sugar were from Guangxi Jufeng, and the remaining 20 boxes were not related to Guangxi Jufeng. Tianjin Xinjie stated in second instance that it only wanted to set aside a container before the hearing of first instance and agreed to unconditionally put another container of white sugar. Guangxi Jufeng explicitly refused to take away one of the

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containers. Notice of Delivery of Goods sent by Tianjin Xinjie to Guangxi Jufeng on April 25, 2016 stated that: “To: Guangxi Jufeng Shipping Co., Ltd.: Our company has agreed to release a container of white sugar in October 2014, and has notified your company and Sinotrans Sunny Express Shipping Co., Ltd., and our agent is also in the process of first instance I have repeatedly informed your company, but your company has not received the goods so far. Now let me tell you again as follows: please ask your company to receive the goods in time, otherwise your company shall bear the responsibility for the damage caused. Sincerely, Tianjin Xinjie Logistics Service Co., Ltd. April 25, 2016”. The domestic standard express delivery sent by Tianjin Xinjie to Guangxi Jufeng on April 26, 2016 stated that “the recipient is ZHANG Zhibin, the company name is Guangxi Jufeng Shipping Co., Ltd., the address is No.2 Floor 1st, Building 3, Brick and Tile Factory, Xingbin District, Laibin, Guangxi. April 27.” Guangxi Jufeng denied that it received Notice of Delivery of Goods and the express sheet. The court holds that, the case is the dispute over contract of carriage of goods by sea, combined with the opinions of the parties, the issues of the case are summarized by the court as follows: firstly, whether Guangxi Jufeng should pay Tianjin Xinjie the freight 73,400 yuan and the interest; secondly, whether Tianjin Xinjie and Sunny Express should return the two containers of white sugar to Guangxi Jufeng; thirdly, whether there is basis that Guangxi Jufeng claimed against Tianjin Xinjie and Sunny Express to compensate for the loss 39,322.8 yuan and the liquidated damages 5,786 yuan. Firstly, whether Guangxi Jufeng should pay Tianjin Xinjie the freight 73,400 yuan and the interest. According to the facts found in the court investigate, after Guangxi Jufeng entrusted Tianjin Xinjie to carry a total of 66 boxes of white sugar, it remitted 60,000 yuan to Yangpu Logistics and 73,400 yuan to Sunny Express on December 5, 2013. On March 21, 2014, 58,000 yuan was remitted to Sunny Express. The parties were now divided on whether the 73,400 yuan that Guangxi Jufeng remitted to Sunny Express on December 5, 2013 was the freight that Guangxi Jufeng should pay to Tianjin Xinjie. Although Guangxi Jufeng remitted 73,400 yuan to Sunny Express on December 5, 2013, there is no evidence to show whether it accepted the instructions of Tianjin Xinjie, and Tianjin Xinjie issued a payment authorization letter on December 7, 2013. Guangxi Jufeng was required to remit 60,000 yuan to Yangpu Logistics and 73,400 yuan to Sunny Express, which could be regarded as Tianjin Xinjie’s recognizing the remittance behavior of Guangxi Jufeng on December 5. However, Guangxi Jufeng sent a letter to Sunny Express on December 11 stating that the 73,400 yuan freight it paid was two freight charges paid by Yangpu Logistics, combining Sinotrans Sunny Express Co., Ltd. Domestic Trade Container Transportation Order between Sunny Express and Yangpu Logistics and the Explanation of Sunny Express, which show that the 73,400 yuan paid by Guangxi Jufeng to Sunny Express is for Yangpu Logistics to fulfill its obligations to Sunny Express. Therefore, the sum of 73,400 yuan cannot be considered as the payment by Guangxi Jufeng in accordance with the instructions of Tianjin Xinjie or the fulfillment of its responsibility to pay freight to Tianjin Xinjie. And Guangxi

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Jufeng should pay the unpaid freight of 73,400 yuan to Tianjin Xinjie. Guangxi Jufeng stated that it had no economic relationship with Yangpu Logistics, and the confirmation letter issued by it was issued in accordance with the instructions of Tianjin Xinjie, to show that the 73,400 yuan it paid was still based on the instructions of Tianjin Xinjie. But it failed to provide valid evidence to prove that Confirmation Letter was indeed issued by Tianjin Xinjie with authorization or instructions. So the court does not accepted the claim. Guangxi Jufeng also stated that according to Sinotrans Sunny Express Shipping Co., Ltd. Domestic Trade Container Transport Order, it was stated that Yangpu Logistics should pay the freight of 46 boxes of Sunny Express to 52,152 yuan, which had already been paid 73,400 yuan, had also paid the freight of 46 boxes of white sugar in full. However, as mentioned above, the letter from Guangxi Jufeng to Sunny Express stated that 73,400 yuan was paid for the freight of 66 boxes entrusted by Yangpu Logistics to Sunny Express, and all parties agreed that 46 of these boxes were from Guangxi Jufeng. And it was the goods that Tianjin Xinjie originally entrusted Yangpu Logistics to transport, but Yangpu Logistics did not actually carry the goods. A series of evidences confirmed that the Yangpu Logistics Company entrusted Yangpu Express to actually carry the freight. Sunny Express also recognized that the freight of 46 boxes was the freight that Yangpu Logistics should pay to it. Although the other 20 boxes had nothing to do with Guangxi Jufeng, there was no evidence that the 20 boxes of white sugar were also the goods that Tianjin Xinjie entrusted Yangpu Logistics to carry and ultimately carried by Sunny Express. And freight should be paid by Tianjin Xinjie but Tianjin Xinjie entrusted Guangxi Jufeng to pay for it. Therefore, the facts and series of evidence in this case show that the freight of 73,400 yuan paid by Guangxi Jufeng to Sunshine Express is the freight that Yangpu Logistics should pay to Sunny Express. So Guangxi Jufeng held that it remitted 73,400 yuan to Sunny Express in accordance with the instructions of Tianjin Xinjie, and fulfilled its obligation to pay the freight in full to Tianjin Xinjie, and did not owe shipping fees to Tianjin Xinjie, which has no sufficient evidence, so the court does not support it. Regarding the calculation of interest on the freight of 73,400 yuan, the Respondent Tianjin Xinjie held that though the contract had a clear agreement on the default interest, it also held that the agreement was too high, so it did not claim interest in accordance with the contract when claiming but at four times the bank’s loan interest during the same period. The claim has no legal basis, and should not be supported. The first-instance judgment calculated the interest based on the bank’s loan interest rate for the same period, the Respondent Tianjin Xinjie did not appeal, which should be deem as no objection, so the court confirms the calculation of interest by the court of first instance, and affirms it. Secondly, whether Tianjin Xinjie and Sunny Express should return the two containers of white sugar to Guangxi Jufeng. Guangxi Jufeng entrusted Tianjin Xinjie to transport the white sugar involved. Tianjin Xinjie shipped the white sugar involved to the destination port, but Guangxi Jufeng did not pay the freight according to the contract. According to the Property Law Article 230 Paragraph 1, if the debtor fails to fulfill the due debts, the creditor

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may retain the debtor’s movable property that has been legally occupied, and has the right to receive priority payment for the movable property, and the Contract Law Article 315, if the shipper or consignee does not pay the freight, storage fee and other transportation costs, the carrier shall have a lien on the corresponding transport goods, unless the parties agree otherwise, and the Property Law Article 233, if the retained property is divisible, the value of the retained property shall be equal to the amount of debt, as a shipper, Tianjin Xinjie has the right to retain the white sugar of Guangxi Jufeng, and the value of the retained white sugar should be equal to the freight amount owed by Guangxi Jufeng. There is no evidence to prove the value of the two boxes of white sugar left in the case, but Guangxi Jufeng claimed in first instance that the two boxes of white sugar amounted to 55 tons, with a value of 5,260 yuan per ton, and the value of one box of white sugar was 144,650 yuan (5,260 yuan * 55 tons/2 boxes), Tianjin Xinjie though did not recognize it, judging from the fact that it agreed to unconditionally release one of the two containers of white sugar detained before the first instance, it also recognized that it was only necessary to keep one container. Therefore, Tianjin Xinjie should only keep one container of white sugar. Although Tianjin Xinjie issued Notice of Delivery of Goods to Guangxi Jufeng on April 25, 2016 stating that it once again informed it of timely delivery, Guangxi Jufeng denied its contents. Tianjin Xinjie also did not have any evidence to prove that it had indeed notified Guangxi Jufeng to remove a box of white granulated sugar or the fact that Guangxi Jufeng clearly disagreed with the removal. So the Notice of Delivery of Goods is not enough to prove that a box of white sugar was released to Guangxi Jufeng. But according to Notice of Delivery of Goods and express sheet, Tianjin Xinjie notified Guangxi Jufeng to take a box of white sugar on April 25, 2016, and Guangxi Jufeng signed the notice on April 27, 2016. Although Guangxi Jufeng denied receiving Notice of Delivery of Goods and held that though the mailing address was the company’s registered address, the address was no longer in office and Tianjin Xinjie clearly knew that its actual office location was in Liuzhou, it did not submit any evidence to prove it. And Sunny Express recognized that it received the delivery notice from Tianjin Xinjie and got ready to release goods at any time. So Tianjin Xinjie actually delivered a box of white sugar to Guangxi Jufeng on April 27, 2016. Sunny Express retained the sugar of Guangxi Jufeng according to the instructions of Tianjin Xinjie, and the consequences of its actions should belong to Tianjin Xinjie. At present, Tianjin Xinjie could only retain one container of white sugar according to law, and Sunny Express could only retain one of the containers accordingly, and the other container should be returned to Guangxi Jufeng. Tianjin Xinjie notified Guangxi Jufeng to take away a container of white sugar, and Sunny Express clearly cooperated. So the court of first instance confirmed that Tianjin Xinjie could retain two containers of white sugar of Guangxi Jufeng through Sunny Express, which is wrong, and the court should correct it. Thirdly, whether there is basis that Guangxi Jufeng claimed against Tianjin Xinjie and Sunny Express to compensate for the loss 39,322.8 yuan and the liquidated damages 5,786 yuan.

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In this case, Guangxi Jufeng sued Tianjin Xinjie and Sunny Express to compensate its economic losses of 39,322.8 yuan, including 11,220 yuan for loading and unloading operations, 2,640 yuan for order replacement fees, 5,662.80 yuan for overdue freight interest losses, and white sugar difference loss of 19,800 yuan, but Guangxi Jufeng failed to provide evidence to prove these losses, and should bear the consequences of failure to prove, so in this case, it claimed that Tianjin Xinjie and Sunny Express should compensate 39,322.8 yuan for damages and 5,786 yuan for liquidated damages, which has no sufficient evidence, and the court does not support it. Pulling the threads together, although Guangxi Jufeng paid a freight of 73,400 yuan to Sunny Express, which is consistent with the amount indicated by the letter of trust issued by Tianjin Xinjie to Guangxi Jufeng, Guangxi Jufeng expressly indicated to Sunny Express 73,400 yuan was to pay the freight of Yangpu Logistics. Sunshine Express also recognized that Yangpu Logistics should indeed pay the freight. The 73,400 yuan was the amount of freight that Yangpu Logistics should pay. So in fact, Guangxi Jufeng did not fulfill its obligation to pay a freight of 73,400 yuan to Tianjin Xinjie. Based on this, Tianjin Xinjie can retain a container of white sugar from Guangxi Jufeng through Sunny Express, which was originally detained. Another container of white sugar should be returned to Guangxi Jufeng. In the second instance stage, it informed Guangxi Jufeng to take away a container of white sugar, and Sunny Express made clear that it was ready to release the goods at any time. Although Guangxi Jufeng claimed that the two Respondents should compensate for the loss of two boxes of white sugar, it did not provide evidence to prove the specific composition of the losses claimed by it, and it is difficult for Guangxi Jufeng to obtain support. So the court of first instance judged that Guangxi Jufeng should pay Tianjin Xinjie freight 73,400 yuan and interest, which is correct, and should be affirmed by the court. It is wrong that Tianjin Xinjie had the right to retain two containers of white sugar of Guangxi Jufeng. In second instance, Tianjin Xinjie shipped a box of white sugar, and Guangxi Jufeng’s claim that both containers of white sugar should be released cannot be supported. So the judgment of first instance is not inappropriate, which should be affirmed. According to the Property Law of the People’s Republic of China Article 233 and the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 1,943 yuan (prepaid by Guangxi Jufeng Shipping Co., Ltd.), shall be born by Guangxi Jufeng Shipping Co., Ltd. The judgment is final. Presiding Judge: TAN Qinghua Acting Judge: HUANG Taotao Acting Judge: LI Pingping May 4, 2016 Clerk: CHEN Yanran

Beihai Maritime Court Civil Judgment Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. v. BOC Insurance Co., Ltd. Guangxi Branch (2017) Gui 72 Min Chu No.341 Related Case(s) None. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Shipowner’s claim against marine insurer under hull insurance policy failed because damage to ship's engine did not result from collision or contact but collision avoidance; furthermore, entries in ship’s log were inconsistent with shipowner's account of why collision avoidance was necessary. Summary Plaintiff insured its ship M.V. “Heng Yuan You 8” with Defendant insurer. Plaintiff claimed that the main engine of “Heng Yuan You 8” suffered damage when the ship’s master undertook emergency collision avoidance measures in foggy conditions while the ship was navigating the Yangtze River. Plaintiff claimed indemnity under the insurance contract for: the cost of a rescue tug; the cost of replacing parts of the main engine; ship repair costs; cargo transshipment. Defendant insurer declined to indemnify for these costs on the ground that there had been no accident, as required by the insurance contract. The Court held that Plaintiff’s claim failed. The damage had not been caused by collision or contact with another vessel or the shore. Furthermore, the entries in the ship’s log were inconsistent with the Plaintiff’s story that the damage had occurred during collision avoidance measures in foggy conditions.

Judgment The Plaintiff: Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. Domicile: Room 2301, Shidaimingcheng South Building, Yongfu West Street No.10, Qinzhou City. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_23

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Legal representative: CHEN Zhongyu, general manager. Agent ad litem: KUANG Lifei, the lawyer of Guangdong Horizon Law Firm. The Defendant: BOC Insurance Co., Ltd. Guangxi Branch. Domicile: 20th Floor, No.4 Building, Xiangjiang Garden, Gucheng Road No.39, Qingxiu District, Nanning City. Director: OU Luqiang, general manager. Agent ad litem: YANG Yunfu, the lawyer of Yang & Lin Co. Law Firm. Agent ad litem: ZHUANG Dongxiao, the lawyer of Yang & Lin Co. (Shanghai) Law Firm. With respect to the case arising from dispute over maritime insurance contract between the Plaintiff, Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. (hereinafter referred to as Hengyuan Company), and the Defendant, BOC Insurance Co., Ltd. Guangxi Branch (hereinafter referred to as BOC Company), after the court entertained the case on September 12, 2017, the case was tried by Judges, SU Bin, LAO Jianming and People’s Juror, ZHAO Yuhong, but for working reasons, the case was changed to be tried by Judges SU Bin, ZHOU Chengmin and People’s Juror, QIN Xiaofei, on October 31, the court held a hearing in public. KUANG Lifei, agent ad litem of the Plaintiff Hengyuan Company ZHUANG Dongxiao, agent ad litem of the Defendant BOC Company appeared in the court. The case has been concluded. The Plaintiff Hengyuan Company alleged that, in December 2014, the Plaintiff Hengyuan Company insured the Defendant BOC Company against all risks on board for its M.V. “HENG YUAN YOU 8”. On October 7, 2015, M.V. “HENG YUAN YOU 8” loaded 1500 tons of gasoline from Qinzhou City, Guangxi Zhuang Autonomous Region to Nanjing City, Jiangsu Province. On October 14, when the ship sailed to Zhangjiagang on the Yangtze River, the visibility of fog on the river was poor, when the Captain found that it was possible to collide with other ships, then immediately took emergency collision avoidance measures such as steering, emergency parking and so on to avoid the possible serious collision accidents. However, because of the above emergency measures, the main engine was out of control, the main engine was seriously damaged and lost its power. Consequently, there were rescue tug fee 470,600 yuan, replacement of main engine accessories fee 514,890 yuan, ship repair fee 431,900 yuan and cargo rush and barge fee 112,500 yuan, totaling 1,529,890 yuan. The Defendant BOC Company should compensate the Plaintiff, Hengyuan Company for 1,429,890 yuan. However, the Defendant BOC Company refused to pay compensation because there was no insurance accident stipulated in the insurance policy. By way of conclusion, it claimed to the court: 1. the Defendant BOC Company should compensate the Plaintiff Hengyuan Company insurance premium 1,429,890 yuan and its interest (interest according to the same period lending rates 4.75% of the financial institutions published by the central bank, provisionally charged from January 19, 2016 to January 19, 2017, and the interest thereafter shall be charged separately); 2. court acceptance fee should be borne by the Defendant BOC Company.

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The Defendant BOC Company argued that: 1. the Defendant BOC Company underwrote all risks of inland waterway ships, the scope of insurance liability should be determined according to the insurance contract agreement; 2. the Plaintiff Hengyuan Company did not complete the burden of proof on the factual basis stated in its complaint, should bear the burden of that could not give evidence; 3. the costs of the so-called M.V. “HENG YUAN YOU 8” requested by the Plaintiff Hengyuan Company did not be proven in accordance with the law, nor did they be proven to be reasonable or to be within the scope of the insurance liability of the Defendant BOC Company and there was no legal or factual basis. The Plaintiff Hengyuan Company submitted the following evidence to the court to support its claims: Evidence 1, Insurance Policy, to prove that the Plaintiff Hengyuan Company insured the Defendant BOC Company against all risks on board for its M.V. “HENG YUAN YOU 8”; Evidence 2, insurance clauses, to prove that collision was an insurance liability; Evidence 3, logbook; Evidence 4, engine logbook; Evidence 5, Captain’ s statement; Evidence 6, chief engineer’s statement; Evidence 7, record of on-the-spot investigation and inquiry; Above evidence 3–7, to prove that when the Plaintiff Hengyuan Company transported gasoline to the waters of Zhangjiagang, the ship was damaged by emergency reversal measures to avoid collision. Evidence 8, mainframe inspection and repair opinions, to prove that the main engine being out of control was due to emergency reversing; Evidence 9, the contract for the sale of industrial products and its receipts and invoices, to prove that the Plaintiff Hengyuan Company lost 514,890 yuan due to the replacement of spare parts; Evidence 10, repair cost quotation 356,000 yuan); Evidence 11, repair cost quotation (328,500 yuan); The above evidence 10–11, to prove that the Plaintiff Hengyuan Company chose to offer a lower price company to repair the ship. Evidence 12, repair increase project and cost list, to prove that the cost of additional repairs was 103,400 yuan; Evidence 13, repair fee receipt, to prove that the Plaintiff Hengyuan Company paid a repair fee 431,900 yuan; Evidence 14, confirmation of tugboat fees and invoices, to prove that the Plaintiff Hengyuan Company paid the tugboat charges 198,600 yuan in Zhangjiagang; Evidence 15, tugboat fee receipt, to prove that the Plaintiff Hengyuan Company paid the tugboat fee 272,000 yuan in Nantong Port; Evidence 16, lightering fee receipt, to prove that the Plaintiff Hengyuan Company paid 110 thousand for the goods’ lightering fee;

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Evidence 17, the correspondence between the Plaintiff Hengyuan Company and the Defendant BOC Company and its attachments, to prove that the Defendant BOC Company intended to compensate the Plaintiff Hengyuan Company; Evidence 18, the correspondence between the Plaintiff Hengyuan Company and the Defendant BOC Company and the refusal opinions of the appraisal company, to prove that the appraisal company, on behalf of the Defendant BOC Company refused compensation because the Plaintiff Hengyuan Company avoided collision and thus did not have an insurance accident, at the same time, it also proved that the appraisal company, through the prospect and investigation of the accident, on the second page of the evaluation report, when the accident occurred, it was clearly confirmed that, due to fog and poor visibility on the river, the Captain immediately took emergency measures such as stopping and turning the rudder in order to avoid the possibility of colliding with the ship in front, thus avoiding serious accidents, but in the course of taking emergency measures, the main engine was out of control, the main engine was seriously damaged and lost its power, and the assessment company entrusted by the Defendant BOC Company ascertained the cause of the accident, the sender of the mail was SUN Chengjian, the business manager of the Defendant BOC Company; Evidence 19, Notice of Rejection of Indemnity, to prove that the Defendant BOC Company refused indemnity because that the Plaintiff Hengyuan Company did not have an insurance accident; Evidence 20, certificate of ownership of ship; Evidence 21, declaration letter; The above evidence 20–21, to prove that Plaintiff Hengyuan Company was the claimant. Evidence 22, seaworthiness certificate of sea going vessel, to prove that the accident ship should be applicable to the Maritime Code; Evidence 23, witness ZHENG’s testimony. The Defendant BOC Company held that: it had no objection to the authenticity, legality and relevancy of the evidence 1–2; it had objection to the three aspects of evidence 3, that there was no signature confirmation in the column of major events recorded in the log, that the handwriting of major events did not belong to the pilot and the Captain, and that the record content of the column of major events were not admissible; it had objection to the three aspects of evidence 4, the content of the record were false, the engine log recorded at 0910 when the main engine governor malfunction was out of control, resulting in the fourth cylinder chain shoe burned out, stayed in Zhangjiakou anchorage to repair, logbook recorded at 0930 when engine was out of control; it had no objection to the authenticity of evidence 5–6, the Captain, the statements of the Captain and the chief engineer were also false and falsified; it had no objection to the authenticity of evidence 7, but it had objection to the legality and relevance of evidence 7, and the statement was false; it had no objection to the authenticity of evidence 8, but the subject who gave the opinion did not have the qualification to identify the fault of the main engine, so its opinion and

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the result of the appraisal could not be used as a basis; the authenticity of the evidence 9 was not confirmed, the invoice value was 514,890 yuan, but the actual amount was 390,000 yuan; the authenticity of evidence 10–13 was not confirmed, repair fee and repair process did not inform the Defendant, BOC Company; it had no objection to the authenticity of evidence 14, the bill was not issued by the Maritime Safety Administration, it had no relevance with the case; it had objection to the authenticity of evidence 15–16, were all receipts and no bank transfer vouchers; the authenticity of evidence 17–19 was confirmed, but evidence 18 was not a final assessment report and should not be taken as evidence without seal confirmation; the authenticity of evidence 20–22 could only be confirmed if the original documents were checked; it had objection to the authenticity of evidence 23, the description of the accident process in the Captain’ s statement was contradicted with the record of visibility. The Defendant BOC Company submitted the following evidence to the court to support its defence: Evidence 1, Coastal Inland Ship Insurance Policy of 2013, to prove that the Plaintiff Hengyuan Company covered all risks of the coastal inland watercraft with the Defendant BOC Company in 2013, and the Plaintiff Hengyuan Company’s insurance on December 27, 2014 was a renewal of the insurance. Evidence 2, Coastal Inland Ship Insurance Slip of 2013, to prove that the Plaintiff Hengyuan Company insured the Defendant BOC Company against all risks on board for its M.V. “HENG YUAN YOU 8”, and the Defendant BOC Company had clearly explained the content of the insurance clauses and additional clauses to the Plaintiff Hengyuan Company. Evidence 3, Coastal Inland River Ship Insurance Policy of 2014 and the invoice, to prove that there was an insurance contract relationship between the Plaintiff and the Defendant. The Plaintiff Hengyuan Company’s insurance on December 27, 2014 was a renewal of the insurance. The Defendant BOC Company fulfilled the corresponding obligation to inform the Plaintiff, Hengyuan Company. Evidence 4, Coastal Inland Ship Insurance Slip of 2014, to prove that the Defendant BOC Company had clearly explained the content of the insurance clauses and additional clauses to him. Evidence 5, maritime logs on October 13 and 14, 2015, to prove that the factual process stated by the Plaintiff Hengyuan Company was false. The Plaintiff Hengyuan Company cross-examined that there was no objection to the authenticity of evidence 1–4 but did not admit that the Defendant BOC Company had fulfilled its obligation to explain. Never received the Defendant BOC Company’s insurance clause, the insurance clause was printed online when prosecuting, the Defendant BOC Company did not submit the insurance clause to the Plaintiff Hengyuan Company. There was no objection to the three natures of evidence 5, but the minor faults recorded in the log were improperly expressed, it was a trial run after oil change and the ship was in normal operation.

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The court holds that: the Defendant BOC Company had no objection to the evidence 1–2 submitted by the Plaintiff Hengyuan Company thus the court confirms its authenticity as the basis for determining the facts of the case; for the evidence 3, the Defendant BOC Company had objection to its authenticity, however, the Defendant BOC Company failed to submit the contrary evidence to support, but there was no signature of the captain or his deputy in the record of material matters of the evidence, and the handwriting was inconsistent with the content and signatures of the rest of the record, thus, the court should confirm the authenticity of the content except those in the record as the basis for determining the facts of the case; for evidence 4, 9, 14, 17–19, though the Defendant BOC Company raised objection, but the Defendant BOC Company failed to submit the contrary evidence to support, thus the court confirms its authenticity, as the evidence of the case to use; for evidence 5–6, the Defendant BOC Company considered it false, and the Plaintiff Hengyuan Company failed to submit other evidence to support, thus the court do not confirm its authenticity; for evidence 7, the Defendant, BOC Company had objection to it, but it was the record made by the appraisal company to ZHENG, thus the court confirms its authenticity and uses it as evidence of this case; for evidence 8, the Defendant BOC Company had objection to its content of proof, thus the court confirms its authenticity, and the content of the divergent proof would be identified combining with the evidence of the whole case; for the evidence 10–13, 15, 16, the Defendant BOC Company refused to confirm its authenticity, and the Plaintiff Hengyuan Company did not have any other evidence to support it, thus the court do not confirm its authenticity; for evidence 20–22, though the Defendant BOC Company raised objection to the evidence, but failed to submit the contrary evidence to support it, thus the court confirms its authenticity; for evidence 23, the Defendant BOC Company had objection to its authenticity, and did not conform to the evidence record, thus the court do not confirm its authenticity. For evidence 1–5 submitted by the Defendant BOC Company the Plaintiff Hengyuan Company had no objection to the authenticity of the evidence. However, there was objection to the content of the proof, thus the court confirms its authenticity, the content of the divergent proof would be identified combining with the evidence of the whole case. The court finds out that: On December 27, 2013, the Plaintiff Hengyuan Company insured the Defendant BOC Company against coastal inland watercraft insurance (All Risks) for its M.V. “HENG YUAN YOU 8”. On December 27, the Defendant BOC Company issued a coastal inland river ship insurance policy to the Plaintiff Hengyuan Company for the period from 0:00 on December 28, 2013 to 24:00 on December 27, 2014. On December 27, 2014, the Plaintiff Hengyuan Company insured the coastal inland waterway ship against the Defendant BOC Company for its M.V. “HENG YUAN YOU 8”, the content was as follows: the insured was the Plaintiff Hengyuan Company the construction time was July 12, 2013, the total ton was 2068 tons, the insurance amount was 37,409,184 yuan, the name of the insurance was All Risks; the deductible (rate) was the insurance was absolutely exempt from all risks,

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collision and collision liabilities of coastal inland watercraft for each accident of 100,000 yuan or 20% of the total loss, the deductible rate of this insurance was 20% of the total or presumed total loss per accident. The premium was 224,455.1 yuan; the insurance type and clauses were CBI’s coastal inland river ship insurance clause (all risks); the insurance period was from 0:00 on December 28, 2014 to 24:00 on December 27, 2015; it was specially agreed that the first beneficiary of this policy was the Qinzhou Branch of Bank of China Limited Company; the applicant’s statement: the insurance policy I filled out had been attached by the insurance clauses corresponding to the insurance policy. This insurance policy and all the contents filled were true and correct, it was agreed that this insurance slip should be used as the basis for the issuance policy by the insurer and as an integral part of the insurance contract. The applicant confirmed that when filling out the insurance slip, the insurer had made clear to the applicant the content of the insurance clauses and additional clauses (including the part of exempting the insurer from liability). The Plaintiff Hengyuan Company confirmed the seal at the signature of the applicant. The Defendant BOC Company issued an insurance policy for coastal inland watercraft as follows: in view of the fact that the applicant had applied to the company for insurance against coastal inland watercraft and had paid the premium as stipulated in this insurance policy, the insurer agreed to assume the insurance liability as stipulated in the clauses of Coastal Inland Watercraft Insurance Clause of Bank of China Insurance Company Limited, this insurance policy was specially established as the basis. Additional clauses, special terms, approval documents and insurance slips relating to this insurance policy were integral parts of this insurance policy. The applicant and the insurer were all the Plaintiff Hengyuan Company the name of the ship was M.V. “HENG YUAN YOU 8”, the type of finished product (original) tanker (class 1), the voyage from cable release / anchor to mooring / anchor stop, the conditions of insurance in the BOC Company coastal inland river ship insurance clauses (all risks); the premium of 224,455.1 yuan for the first term of payment should be paid before January 12, 2015, and the dispute should be settled by way of litigation. The contents of Inland Waterway Insurance Clauses of BOC Insurance Company were as follows: insurance liability. Clauses 1. total damage risk, the insurance was responsible for the totally damaged caused by the following reasons: 1, eight or above (including eight level) gale, flood, earthquake, tsunami, lightning strike, cliff collapse, landslide, mudslide, ice drops; 2, fire, explosion; 3, collision, touch; 4, grounding, rockfall; 5, as a result of the above Paragraph 1–4 disasters or accidents caused capsizing or sinking; 6, the ship was lost. Clauses 2. all risks. This insurance covered the total or partial loss of the insured ship and the following liabilities and expenses arising from the six paragraphs listed in Article 1 of this insurance: 1, collision and touch liability: The Company’s insured ship collided with other ships in navigable waters or touched the wharf, port facilities and navigation marks, causing direct damage and fees to the above-mentioned objects, including the direct loss of the goods on board of the collided ship, should be compensated by the insured according to law. This insurance was only responsible for three-quarters of the amount of compensation for each collision or touch, but the

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maximum amount of compensation for one or more collisions during the period of insurance should not exceed the amount of marine insurance. This insurance was not liable for loss of goods on this ship. The non-motor ship should not be liable for collision or touch, but the insured ship was regarded as a motor ship when towed by a tug insured by the Company. 2, General average, salvage and rescue. This insurance was responsible for compensation for general average damage that should be borne by insurance ship in accordance with relevant laws or regulations. Unless other stipulated in the contract, the general average adjustment should be handled in accordance with the Beijing Adjustment Rules. This insurance was responsible for compensation for the necessary and reasonable expenses or remuneration of rescue or salvage measures taken by the insured to prevent or reduce losses in the event of an insurance accident. However, the cumulative maximum amount of compensation for the sum of general average, salvage and rescue expenses should not exceed the insured amount. On January 12, 2015. The Plaintiff Hengyuan Company paid 224,455.1 yuan insurance premium to the Defendant BOC Company by bank transfer. On October 13, the logbook of M.V. “HENG YUAN YOU 8” recorded at 2330, the main engine had a small fault reported to Wusong traffic management, after 10 min to do well to report to traffic management. On October 14, the logbook of M.V. “HENG YUAN YOU 8” recorded: at 0800, the weather was half sunny, visibility was 6, the temperature was dry 23, the wind direction was northeast wind 4, the cloud was high cumulus cloud, the wave was northeast 2; at 0900 speed was 7.8 knots, at 0930 the main engine lost control and reported to traffic management to anchor. On the same day, the engine log of M.V. “HENG YUAN YOU 8” recorded that the governor of the main engine was out of control at 0910, causing the fourth cylinder connecting rod tile to burn out and stayed at Zhangjiakou anchorage to repair. On September 6, 2016, the Defendant BOC Company issued a notice of refusal to the Plaintiff Hengyuan Company. The content was as follows: the reason for the accident was out of control, the main engine was seriously damaged and lost power, the accident occurred rescue costs, the main engine repair costs. The reason for refusal of indemnity or cancellation was that the insurance accident stipulated in this policy did not occur in this case, but the tugboat fee, replacement parts of diesel engine fee, shipyard maintenance fee and gasoline transportation fee incurred as a result of diesel engine being out of control, which caused damage to the diesel engine itself, loss of power and no normal navigation of the ship, the accident insurance liability was not valid. On August 18, 2017, Fangchenggang city Hongrun Shipping Co., Ltd. (hereinafter referred to as Hongrun Company) issued a declaration letter that: Hongrun Company declared that although the owner of the registration of M.V. “HENG YUAN YOU 8” was the Company and the Plaintiff Hengyuan Company however, in the case of the insurance accident that occurred in October 2015, the Plaintiff

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Hengyuan Company exercised the full rights and interests of the insurance claim in accordance with the case of the Defendant BOC Company. The Company’s seal was confirmed in the letter. In addition, it is found that M.V. “HENG YUAN YOU 8”, the registered port was Fangchenggang, the type was an oil tanker, built on July 12, 2013; with a total length of 78.8 m, a width of 14 m, a depth of 6.8 m, a total tonnage of 2068 tons and a net tonnage of 1,158 tons, the owner of the ship, Hongrun Company and the Plaintiff Hengyuan Company acquired the ownership of the ship on August 12, 2013. The court holds that: The case is an insurance contract dispute in waters. According to the Contract Law of the People’s Republic of China Article 44 Paragraph 1, “effectiveness of contract a lawfully formed contract becomes effective upon its formation”, the insurance contract signed between the Plaintiff Hengyuan Company and the Defendant BOC Company was the true intention of both parties and was lawful and valid. After signing of the insurance contract, the Plaintiff Hengyuan Company also paid the premium according to the contract. The Defendant BOC Company should begin to assume the insurance liability in accordance with the agreed time. Based on the evidence and the facts of the case, the court considers that the Plaintiff Hengyuan Company did not actually have a collision accident, nor did it cause damage to the ship because of avoiding the collision accident. The Plaintiff Hengyuan Company’s claim cannot be supported. The reasons are as follows: The Plaintiff Hengyuan Company’s Insurance Subject M.V. “HENG YUAN YOU 8” did not collide. According to the Maritime Code of the People’s Republic of China (hereinafter referred to as the Maritime Code) Article 237, “the insurer shall indemnify the insured promptly after the loss from a peril insured against has occurred”, the category of insurance involved in the case was all risks of the ship, and the scope of compensation for all risks of the ship in the insurance clauses includes collision or touch. In this case, the insurance subject M.V. “HENG YUAN YOU 8” of the insured contact did not actually collide with any ship or other facilities, and the Plaintiff Hengyuan Company also recognized that there was no actual collision accident, thus M.V. “HENG YUAN YOU 8” did not actually have an insurance contract and legal insurance accident. The key to the case was whether the Plaintiff Hengyuan Company claimed that in order to avoid the collision risk, it caused the situation that the loss of ship was present. According to the Maritime Code Article 240 Paragraph 1, “the insurer 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 instructions of the insurer”, first of all, the Plaintiff Hengyuan Company

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complained when M.V. “HENG YUAN YOU 8” navigated to Zhangjiagang of the Yangtze River, the river was foggy with poor visibility; but it was not recorded in the log of M.V. “HENG YUAN YOU 8”, the log recorded at 0800, the weather was half sunny, visibility was 6, wind direction was northeast 4, and speed was 7.8 knots at 0900. The visibility at the time of the incident was 6, wind directions was northeast 4, to prove that the weather on the day of the incident should be good and the speed could reach 7.8 knots only when the visibility was high, thus the Plaintiff Hengyuan Company said that the evidence of fog at the time of the incident was not consistent with the fact. Secondly, the logbook of M.V. “HENG YUAN YOU 8” recorded that the main engine was out of control at 0930 and reported to the traffic management to anchor, and the logbook recorded that the main engine governor malfunction occurred at 0910, the two most important written materials to restore the situation when the main engine malfunction were inconsistent with the time recorded in the logbook, and the ship’s main engine had also broke down the night before, thus the Plaintiff Hengyuan Company failed to prove that the damage to the main engine was not a fault of its own. Finally, the Plaintiff Hengyuan Company claimed that when the Captain found that he might have collided with another ship, he had taken emergency measures, such as emergency parking, to avoid a possible serious collision. However, the Plaintiff Hengyuan Company said that it did not find any relevant record in the main item of the log, but recorded them in the record of major events in the log, the record did not have the signature of the Captain or chief mate, and the handwriting and color were inconsistent with the rest of the content and signature on the page, the Plaintiff Hengyuan Company failed to submit other evidence to further prove. The Plaintiff Hengyuan Company also failed to provide any materials which declared the accident to the relevant management department. Therefore, the Plaintiff Hengyuan Company’s claim had no factual and legal basis that requested the Defendant BOC Company to compensate the insurance premium, so the court does not support it. Pulling the threads together, according to the Contract Law of the People’ s Republic of China Article 41, Paragraph 1, and the Maritime Code of the People's Republic of China Article 237 and Article 240, and the Civil Procedure Law of the People’ s Republic of China Article 64, Paragraph 1 (“A party shall have the responsibility to provide evidence in support of its own propositions”), the judgment is as follows: Reject the claims of the Plaintiff, Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. Court acceptance fee in amount of 9,140 yuan (the Plaintiff has already paid in advance) should be borne by the Plaintiff, Guangxi Qinzhou Hengyuan Petrochemical Co., Ltd. If the parties do not satisfy with this judgment, within fifteen days of the date of the judgment be delivered, they can submit copies of petition according to the number of the other parties to appeal to the Guangxi Zhuang Autonomous Region High People’s Court, and the appeal fee shall be paid in advance within seven days after the expiry of the appeal period (name of collection organ: Guangxi Zhuang

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Autonomous Region High People’s Court; account: 20xxx77; bank of deposit: the Agricultural Bank of China Nanning Wanxiang Branch). If the amount is not paid after the expiry of the appeal period without application for determent, the appeal shall be automatically withdrawn. Presiding Judge: SU Bin Judge: ZHOU Chengmin People’s Juror: QIN Xiaofei December 20, 2017 Judge assistant: FENG Shanmei Clerk: GE Li

Guangzhou Maritime Court Civil Judgment Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue 72 Min Chu No.5 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 471. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Dismissing plaintiff cargo owner's claim for an indemnity from defendant cargo insurer for water damage to cargo of hemp rope because plaintiff had failed to provide evidence that the water damage was caused by external causes, rather than by inherent vice. Summary The Plaintiff Guangzhou Ansheng Logistics Co., Ltd. (“Ansheng”) filed the lawsuit against the Defendant PICC P&C Dongguan Branch to collect the insurance compensation on nine containers of cargo that were damaged in transit. However, Ansheng was unable to properly prove that the goods were damaged due to water and mildew, so the court rejected Ansheng’s claims.

Judgment The Plaintiff: Guangzhou Ansheng Logistics Co., Ltd. Domicile: Nansha District, Guangzhou, Guangdong. Legal representative: WU Jingping, general manager of the company. Agent ad litem: QI Chengjie, lawyer of Guangdong Guofeng Law Firm. Agent ad litem: NIE Jimou, lawyer of Guangdong Guofeng Law Firm. The Defendant: China People’s Property Insurance Co., Ltd. Dongguan Branch. Domicile: Dongcheng District, Dongguan, Guangdong. Person in charge: WANG Yanhui, manager of the branch. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_24

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Agent ad litem: ZHENG Xiaozhe, lawyer of Beijing Dentons (Guangzhou) Law Firm. This case arose from dispute over marine insurance contract between the Plaintiff Guangzhou Ansheng Logistics Co., Ltd. and the Defendants China People’s Property Insurance Co., Ltd. and China People’s Property Insurance Co., Ltd. Dongguan Branch (hereinafter referred to as PICC P&C Dongguan). After the case was filed on January 3, 2017, the court applied general procedure to try the case, and held a hearing in public on March 1. During the trial, the Plaintiff applied to withdraw the lawsuit against the Defendant PICC P&C, and the court granted the permission. Agent ad litem of the Plaintiff Guangzhou Ansheng Logistics Co., Ltd., NIE Jimou, and agent ad litem of the Defendant PICC P&C Dongguan Branch, ZHENG Xiaozhe, appeared in court to participate in the lawsuit. Now the case has been concluded. The Plaintiff filed a lawsuit with the court to request that the Defendant should pay the insurance compensation of 200,000 yuan with interest (calculated from the day after the date of discovery of the damaged goods, namely, from March 18, 2015 to the date of actual payment, according to the bank’s loan interest rate for the same period) as well as the litigation costs in this case. Facts and reasons: on February 12, 2015, the Defendant issued an insurance policy to the Plaintiff for 9 container cargoes including the cargo in this case. The insurance amount was 440,000 yuan, and the Plaintiff paid the insurance premium. On February 13, 2015, the cargo hemp rope of the case involved in the case was shipped to Rizhao, Shandong Province, from Qinzhou, Guangxi. When the goods were unloaded on March 17, the goods were found to be mildewed, which caused the goods to be wet, but the specific reasons were unclear. The amount of the claim confirmed by the Defendant was only 9,399.50 yuan, but the actual loss of the Plaintiff was 200,000 yuan. The Defendant argued that the Plaintiff was not the eligible subject of the case and did not enjoy insurance benefits for the goods. Secondly, the Plaintiff claimed that the total loss of the goods lacked evidential support and legal basis. Thirdly, the receipt of the goods on the delivery note did not suffer from flooding. The reason for the damage is that the natural attribute of the hemp rope and its own defects lead to damage, which is an excuse covered in the insurance contract. Fourthly, even if the insurance liability is established, the compensation amount should be calculated according to the insurance coverage. Fifthly, the insurance money claimed by the Plaintiff is not deducted value, and no deductible is calculated. The parties submitted evidence in accordance with the law in accordance with the lawsuit, and the parties involved in the organization conducted evidence exchange and cross-examination. The evidence of no objection to the parties shall be confirmed by the court and supported in the volume. The evidence was as follows. 1. The Plaintiff submitted the cargo insurance quick processing order, and the Defendant disagreed with its authenticity, legality, and relevancy. The court believes that the evidence is only a printed copy, and there is no signature or seal confirmation by the insurer and the insured, and the proof is not confirmed.

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2. The photo of the container cargo packing list and the damage of the goods submitted by the Plaintiff. The Defendant has objection to its relevancy. The court held that the Defendant submitted the same evidence, and the evidence was mutually confirmed with other evidence that had been accepted, and its proof was confirmed. 3. The email sent by the employee of the Shenzhen Branch of Shenzhen Dongsheng Insurance Broker Co., Ltd. to the Plaintiff. The Defendant disagreed with its authenticity, legality, and relevancy. The court believes that the evidence is a printed copy of the electronic data content. The Plaintiff did not provide the original data for verification, nor did it apply for notarization or appraisal, lacking the necessary formal requirements, and the Defendant did not confirm its content, so its proof cannot be confirmed by the court. Based on the statement of the parties and the evidence confirmed by the review, the court found the facts as follows: On February 12, 2015, the Plaintiff insured from the Defendant. The Defendant issued the PYII201544190000000164 cargo transportation insurance policy to the Plaintiff. The insured was the Plaintiff. The 9 containerized goods covered include the cargo of the RAMU2063131 container under the ATQZHJT15120653. The origin of the cargo in this case is Qinzhou; the destination is sunshine; the departure date is February 13th; the premium is 80 yuan; the insurance amount is 200,000 yuan; the insurance is the marine transportation cargo insurance clause of China People’s Insurance Co., Ltd. (2009) All risks; the insurance policy specifically stipulates that the insured goods will be damaged by river water and seawater during the normal transportation process (except for rust), and the absolute deductible is 600 yuan per cabinet or 5% of the loss amount. The highest is the standard. The goods in this case are boxed and transported by Quanzhou Antong Logistics Co., Ltd. The container packing list issued by the company records: the waybill number is ATQZHJT15120653; the box number is RARAW2063131; the cargo is hemp rope; the gross weight is 28 tons; and the packing date is On February 9, 2015. The case was in good condition and the consignor/packer was covered with the seal of the Plaintiff. The box number recorded on the ATQZHJT15120653 waybill is consistent with the special agreement list attached to the insurance policy. The billable tonnage is 25 tons; the port of loading is Qinzhou; the transit port is Haikou Huangdao; the port of destination is sunshine; and the transportation term is CY/CY. The shipper is Qinzhou Anzhen Logistics Co., Ltd.; the consignee is Rizhao Haoyuan Logistics Co., Ltd.; and the waybill is stamped with the Plaintiff seal. On March 17, 2015, the goods were found to have been damaged after being delivered to the port of destination. The Plaintiff issued a claim to the Defendant for the risk notice and the loss list. The “Care for Risk, Cause and Rescue” column of the notice of the accident stated that the hemp rope was found to have some water during the unloading at the destination. After discovering this situation, the party immediately began unloading the goods and stacking the damaged goods

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separately, waiting for the insurance company to inspect the personnel to the site to check the quantity and confirm the loss. The “loss estimate” column is recorded as 180,000 yuan. The loss list records that the number of hemp ropes is 15,000 kg; the unit price is 14 yuan/kg; the loss amount is 180,000 yuan, and the remarks record the residual value of 30,000 yuan. On the same day, as commissioned by the Defendant, the staff of Rizhao City Branch of the China People’s Property Insurance Co., Ltd. (hereinafter referred to as “PICC Rizhao Branch”) arrived at the scene for investigation and recorded it in the on-site inspection record that the hemp rope appeared long after unpacking. Hair, mildew, specific damage needs to be confirmed after cleaning. The photos submitted by both parties reflected that the damaged hemp rope had long hair and mildew. The Plaintiff confirmed that the goods in this case have been returned because the consignee refused to accept the goods. For the fact that the parties are in dispute, the court determined the following: Regarding the weight and value of the goods in this case, the Plaintiff claimed that the Defendant had insured a total of 15 tons of hemp rope and submitted a list of losses issued to the Defendant. The Defendant believed that the case of the hemp rope together with the container totaled 28 tons, of which the hemp rope should be 25 tons, and the party submitted the container cargo packing list and the waybill to prove it. The court believes that the container cargo packing list and the waybill are the documents produced during the transportation process, and the authenticity of the documents is confirmed by both the original and the Defendant. The court has confirmed the proof of its strength, and according to this, the weight of the rope is 25 tons. The Plaintiff claimed that the case was 15 tons, but the list of losses provided by him was unilaterally produced, and there was no other evidence to support it. The court did not recognize the facts claimed by the Plaintiff. The Plaintiff claimed that the unit price of hemp rope was 14 yuan per kg. The Defendant had no objection. The unit confirmed the unit price. According to this, the total value of the hemp rope was 350,000 yuan (25,000  14 = 350,000). The insurance amount of the goods in this case is 200,000 yuan, so the insurance is insufficient for insurance. Regarding the amount of loss of the goods in this case, the Plaintiff claimed that the goods in this case could not be used due to the wetness of the goods. The consignee refused to accept the goods and caused the total loss of the goods, and the consignee submitted the insurance notice and the loss list to prove the loss. The Defendant believed that only a small part of the hemp rope in this case had long hair and mildew, and it did not affect its normal use. The consignee returned the goods because the goods do not conform to the contract requirements, and it is not possible to determine that the goods are totally damaged. The consignee returned the goods because the goods do not conform to the contract requirements, and it is not possible to determine that the goods are totally damaged. Even in the list of losses issued by the Plaintiff, the residual value of the goods was recorded as 30,000 yuan. The Plaintiff claimed that the goods were totally damaged based on consignee’s rejection and return, and it lacked basis. It also cannot conform with the investigation for the time of accident. The court held that the Plaintiff’s claim that

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the total loss of the goods occurred was inconsistent with the record of the residual value of the goods in the evidence, and the Defendant did not confirm the amount of losses claimed by the Plaintiff. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, “the parties have the responsibility to provide evidence.” The evidence provided by the Plaintiff is insufficient to prove that the goods in this case have been completely damaged, and the goods cannot be proved. The specific amount of the loss, and there is no evidence in the case that the original and the Defendant reached an agreement on the amount of the loss, so the court did not confirm the facts claimed by the Plaintiff. The court held that according to the cargo transportation insurance policy issued by the Defendant to the Plaintiff, a sea insurance contract was established between the two parties. The Plaintiff was the insured, and the Defendant was the insurer. Therefore, this case is a dispute over a marine insurance contract. The issues of the case are as follows: 1. whether the subject of the Plaintiff is suitable; 2. the reason for the loss of the goods, and whether the Defendant should be liable for compensation. 1. Whether the subject of the Plaintiff is suitable. According to the insurance policy and special agreement list of the cargo transportation insurance issued by the Defendant to the Plaintiff, the cargo in this case is hemp rope. The bill of lading is consistent with the record in the special agreement list. The Plaintiff stamped the seal on the packing list and the bill of lading for confirming. The Plaintiff is responsible for arranging the organization of the transportation of the case and the purchase of insurance, and has insurance benefits for the goods according to law. The Plaintiff has filed a declaration with the Defendant for the case and paid the premium. The Defendant has collected the premium and issued an insurance policy. The Plaintiff is the insured recorded in the insurance policy; the Defendant is the insurer; and the sea insurance contract is established between the two parties. The contract is a true expression of the parties and does not violate the mandatory provisions of laws and administrative regulations, and it is legal and valid. The Defendant’s defense of the Plaintiff’s main body’s dissatisfaction lacked facts and legal basis, so the court did not support it. 2. The reason for the loss of the goods and whether the Defendant should be liable for compensation The Plaintiff claimed that the goods were wet due to external causes, but it was unclear to confirm the specific reasons. The Defendant claimed that the goods on the bill of lading did not suffer from flooding records. It should be caused by the natural nature of the hemp rope and its own defects, and the claim of the Plaintiff would not be confirmed. The court believes that according to Article 22 Paragraph 2 of the Insurance Law of the People’s Republic of China, after an insurance accident occurs, when the insurer is required to pay compensation or pay the insurance premium according to the insurance contract, the insured, the insured, or the beneficiary shall provide certificates and documents related to the nature, reason, and content of loss for confirming insurance accident. The Plaintiff shall provide

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evidence for the amount of damage and the cause of the damage. The case of the goods packing case in this case is recorded as the condition of the box is intact, and there is no water immersion on the waybill when the goods were received. The evidence from the foreigner causes the goods to be damp. The evidence submitted by the Plaintiff is not sufficient to prove that the goods are wet due to external causes. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, “the parties have the responsibility to provide evidence for their own claims” and the Several Provisions of the Supreme People’s Court on Evidence of Civil Proceedings. The facts on which the claim is based or the facts against which the other party’s claim is based are responsible for providing evidence to prove; if there is no evidence or the evidence is insufficient to prove the factual claim of the party, the party with the burden of proof bears the adverse consequences. The Plaintiff shall bear the legal consequences of the inability to provide evidence. In summary, the Plaintiff failed to prove the loss of the goods in this case, and it did not prove the cause of the loss of the goods. The claim that the Defendant paid the insurance money lacked the factual basis and should be rejected. In summary, the Plaintiff’s claims cannot be established. In accordance with Article 22 Paragraph 1 of the Insurance Law of the People’s Republic of China and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claims of the Plaintiff Guangzhou Ansheng Logistics Co., Ltd. Court acceptance fee in amount of 4,600 yuan, shall be borne by the Plaintiff, Guangzhou Ansheng Logistics Co., Ltd. If any party disagrees with this judgment, it can submit an appeal within 15 days from the date of delivery of the judgment, together with copies of petition in accordance with the number of other parties, to the Guangdong High People’s Court. Presiding Judge: CHANG Weiping Judge: SONG Ruiqiu Judge: CHEN Zhenqing June 16, 2017 Judge Assistant: ZHOU Qian Clerk: GUO Haiping

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Guangdong High People’s Court Civil Judgment Guangzhou Ansheng Logistics Co., Ltd. v. China People’s Property Insurance Co., Ltd. Dongguan Branch (2017) Yue Min Zhong No.2219 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 465. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Affirming lower court decision in favor of cargo insurer but for different reasons; lower court had been incorrect to hold that plaintiff assured, rather than defendant cargo insurer, bore the burden of proving the cause of water damage to cargo under an all risks policy, but plaintiff's claim still failed because it had not provided sufficient evidence of the value of its loss as a result of the insured risk. Summary The Plaintiff Guangzhou Ansheng Logistics Co., Ltd. (“Ansheng”) filed the lawsuit against the Defendant PICC P&C Dongguan Branch to collect the insurance compensation on nine containers of cargo that were damaged in transit. However, Ansheng was unable to properly prove that the goods were damaged due to water and mildew, so the court rejected Ansheng’s claims. On appeal, the court of second instance found that the court of first instance used the incorrect law but nonetheless, properly ruled on this case. The court of second instance affirmed the judgment of first instance.

Judgment The Appellant (the Plaintiff of first instance): Guangzhou Ansheng Logistics Co., Ltd. Domicile: Nansha District, Guangzhou, Guangdong. Legal representative: WU Jingping, general manager of the company. Agent ad litem: QI Chengjie, lawyer of Guangdong Guofeng Law Firm. Agent ad litem: NIE Jimou, lawyer of Guangdong Guofeng Law Firm.

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The Respondent (the Defendant of first instance): China People’s Property Insurance Co., Ltd. Dongguan Branch. Domicile: Dongcheng District, Dongguan, Guangdong. Legal representative: WANG Yanhui, manager of the branch. Agent ad litem: ZHENG Xiaozhe, lawyer of Beijing Dentons (Guangzhou) Law Firm. Agent ad litem: ZHONG Heng, intern lawyer of Beijing Dentons (Guangzhou) Law Firm. With respect to the case arising from dispute over marine insurance contract between the Appellant Guangzhou Ansheng Logistics Co., Ltd. (hereinafter referred to as “Ansheng”) and the Respondent China People’s Property Insurance Co., Ltd. Dongguan Branch (hereinafter referred to as “PICC Dongguan”), the case was appealed to the court because of disagreement with (2017) Yue 72 Min Chu No.5 Civil Judgment made by Guangzhou Maritime Court. After the case was filed on August 16, 2016, the court formed a collegiate panel to try the case. Agent ad litem of Ansheng, NIE Jimou, and agents ad litem of PICC Dongguan, ZHENG Xiaozhe and ZHONG Heng, appeared in court to attend the lawsuit. Now the case has been concluded. Ansheng appealed to revoke the first-instance judgment, and change the judgment into which PICC Dongguan shall pay the insurance compensation and its interest of 200,000 yuan according to the insurance contract, and PICC Dongguan shall bear the litigation costs of the case. Facts and reasons: 1. the first-instance judgment was unclear about the details of the goods’ damage. The on-site inspection record, the freight quick processing order, and the cargo damage photo have clearly shown that the cargo damage was caused by water. 2. The first-instance judgment found that there was a serious error in the determination of the amount of damage. The on-site inspection records show that the insurance company believes that the specific damage needs to be confirmed after cleaning, but how the insurance company cleans up and how the clean-up results have not been informed to Ansheng, the responsibility for damage assessment should be attributed to PICC Dongguan. If PICC Dongguan fails to fulfill its fixed loss obligation or fails to produce the relevant loss assessment materials at the time, it should be confirmed according to the insurance amount or the loss assessment of Ansheng. 3. The court should require PICC Dongguan to produce relevant documents related to the case to ascertain the facts and safeguard the lawful rights and interests of the insured. PICC Dongguan verbally replied that the first-instance judgment found the facts clearly, the applicable law was correct, and it requested to dismiss Ansheng’s appeal request in accordance with the law. According to Article 21 of the Insurance Law of the People’s Republic of China and the contract of the insurance contract involved, Ansheng, as the insured, should submit information related to the insurance accident when requesting payment of insurance premium. Ansheng failed to provide relevant evidence to prove its claim and should bear the legal consequences of the inability to provide evidence. Ansheng filed a lawsuit to the court of first instance that: PICC Dongguan should pay the insurance compensation of 200,000 yuan with interest (calculated from the

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day after the discovery of the damaged goods, namely, from March 18, 2015 to the actual payment date, according to the bank’s loan interest rate for the same period) and bear the costs of litigation in this case. The court of first instance found the facts as follows: On February 12, 2015, Ansheng insured PICC Dongguan. PICC Dongguan issued PYII20XXX164 cargo transportation insurance policy to Ansheng. The insured was Ansheng, and the 9 containerized goods covered included ATQZHJT15120653. The cargo hemp rope was loaded under the single item RAWU20XXX31 container. The origin of the cargo in this case is Qinzhou; the destination is sunshine; the departure date is February 13; the premium is 80 yuan; the insurance amount is 200,000 yuan; the insurance is the marine transportation cargo insurance clause of China People’s Insurance Co., Ltd. (2009) All risks. The insurance policy specifically stipulates that the insured goods will be covered if damaged by river water and seawater during the normal transportation process (except for rust), and the absolute deductible is 600 yuan per cabinet or 5% of the loss amount. The highest is the standard. The goods in this case were packed and transported by Quanzhou Antong Logistics Co., Ltd. The container packing list issued by the company records states: the waybill number is ATQZHJT151XXX53; the box number is RAWU20X31; the cargo is hemp rope; the gross weight is 28 tons; the packing date is on February 9, 2015; the case was in good condition; and the shipper/packer was covered with the seal of Ansheng. The box number recorded on the ATQZHJT15XXX53 waybill is consistent with the special agreement list attached to the insurance policy. The billing ton is 25 tons; the loading port is Qinzhou; the transit port is Haikou Huangdao; the destination port is sunshine; and the transportation terms are CY/ CY. The shipper is Qinzhou Anzhen Logistics Co., Ltd.; the consignee is Rizhao Haoyuan Logistics Co., Ltd.; and the shipper is covered with the seal of Ansheng. On March 17, 2015, the goods were found to have been damaged after being delivered to the port of destination. Ansheng issued a claim for loss and a list of losses to PICC Dongguan for the claim, in which the “Care for Risk, Main Cause and Rescue Pass” column of the notice of the accident records: the hemp transported during the unloading at the destination. Some of the ropes were wet and moldy. When this condition was discovered, the goods were immediately unloaded and the damaged goods were piled up separately, waiting for the insurance company to inspect and the personnel to check the quantity and confirm the loss. The “loss estimate” column is recorded as 180,000 yuan. The loss list records that the number of hemp ropes is 15,000 kg; the unit price is 14 yuan/kg; the water made the products wet and mildewed; the loss amount is 180,000 yuan; and the remarks record the residual value of 30,000 yuan. On the same day, as entrusted by PICC Dongguan, the staff of Rizhao City Branch of the People’s Insurance Co., Ltd. (hereinafter referred to as “PICC Rizhao Branch”) arrived at the scene for investigation and recorded in the on-site inspection record that the hemp rope appeared after unpacking. There are long hair and mildew phenomenon, and the specific damage needs to be confirmed after cleaning. The photos submitted by both parties showed that the damaged hemp rope had long hair and mildew.

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Ansheng confirmed that the goods in this case have been returned because the consignee refused to accept the goods. For the fact that the parties have disputes, the court of first instance found as follows: Regarding the weight and value of the goods in this case, Ansheng advocated a total of 15 tons of hemp ropes underwritten by PICC Dongguan, and it submitted a list of losses issued to PICC Dongguan. PICC Dongguan considered that the case of the hemp rope together with the container totaled 28 tons, of which the hemp rope should be 25 tons, and it submitted the container cargo packing list and the waybill to prove this. The court of first instance held that the container cargo packing list and the waybill are the documents produced during the transportation process, and the authenticity of the documents was confirmed by both the Ansheng and PICC Dongguan, and the proof was used to determine the strength of the rope. It is 25 tons. Ansheng claimed that the case was 15 tons of hemp rope, but the list of losses provided by it was unilaterally produced, and there was no other evidence to support it. The facts claimed by Ansheng were not recognized. Ansheng claimed that the unit price of hemp rope was 14 yuan per kg. PICC Dongguan had no objection and confirmed the unit price. According to this, the total value of the hemp rope was 350,000 yuan (25,000  14 = 350,000). The insurance amount of the goods in this case is 200,000 yuan, so the insurance amount is insufficient for insure the goods lost. Regarding the amount of loss of the goods in this case, Ansheng claimed that the goods in this case could not be used due to the water damage. The consignee refused to accept the goods and caused the total loss of the goods. It submitted the insurance notice and the loss list to prove this. PICC Dongguan believes that only a small part of the hemp rope in this case has long hair and mildew which does not affect its normal use. The consignee returned the goods because the goods did not conform to the contract requirements, and it is not possible to determine that the goods are totally damaged. Even if the loss list issued by Ansheng records that the residual value of the goods is 30,000 yuan, Ansheng claims that the goods are totally damaged by the consignee’s rejection and return, and there is no basis for the investigation. This does not match. The court of first instance held that Ansheng’s claim that the total loss of the goods occurred was inconsistent with the record of the residual value of the goods in the evidence. PICC Dongguan did not confirm the amount of losses claimed by Ansheng, according to the Civil Procedure Law of the People’s Republic of China. Article 64 Paragraph 1 state, “the parties have their own responsibility to provide evidence”, so the evidence provided by Ansheng is insufficient to prove that the goods in this case have been completely damaged, and the specific amount of the loss of the goods cannot be proven. There is no evidence in this case that both Ansheng and PICC Dongguan have reached an agreement on the amount of the loss, so the facts claimed by Ansheng are not confirmed. The court of first instance held that, according to the cargo insurance policy issued by PICC Dongguan to Ansheng, the sea insurance contract was established between the two parties. The company was the insured, and PICC Dongguan was the insurer. Therefore, this case is a marine insurance contract. dispute. The issues

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of the dispute in this case is: 1. whether the main body of Ansheng is suitable; 2. the cause of the loss of the goods and whether PICC Dongguan should be liable for compensation. Regarding whether the main body of Ansheng is suitable, according to the insurance policy and special agreement list of the cargo transportation insurance issued by PICC Dongguan to Ansheng, the cargo in this case is hemp rope. The bill of lading number is consistent with the record in the special agreement list, and the Ansheng is on the packing list and the waybill. The shipper shall stamp the seal and confirm that it is responsible for arranging the organization of the cargo transportation and insurance purchase in this case, and it has insurance benefits for the goods according to law. Ansheng has reported and paid the premium to PICC Dongguan for the transportation of the case. PICC Dongguan has collected the premium and issued an insurance policy. The company is the insured of the insurance policy. PICC Dongguan is the insurer, and the sea insurance contract is established between the two parties. The contract is a true expression of the parties and does not violate the mandatory provisions of laws and administrative regulations, and it is legal and valid. PICC Dongguan’s defense of Ansheng’s main body’s dissatisfaction lacked facts and legal basis, and the court of first instance did not support it. Regarding the cause of the loss of the goods in this case and whether PICC Dongguan should be liable for compensation, Ansheng claims that the goods are wet due to external causes, but it is unclear to confirm the specific reasons. PICC Dongguan claimed that the cargo transportation bill was not subject to flooding when it was received. It should be the natural property of the hemp rope and its own defects caused by the tide, which was not confirmed by Ansheng. The court of first instance held that, according to Article 22 Paragraph 2 of the Insurance Law of the People’s Republic of China, after the insurance accident occurs, the insured, the insured or the beneficiary shall be insured when the insurer is required to pay compensation or pay the insurance in accordance with the insurance contract. The person provides the certificate and information related to the nature, cause, and degree of loss of the insurance accident. The company shall provide evidence for the amount of damage and the cause of the damage. The case of the goods packing case in this case is recorded as the condition of the box is intact, and there is no water immersion on the waybill when the goods were received. The external reason causes the goods to be damp. The evidence submitted by Ansheng is not sufficient to prove its claim that the goods are wet due to external causes. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, “the parties have the responsibility to provide evidence for their own claims” and the Several Provisions of the Supreme People's Court on Evidence of Civil Proceedings. The facts on which the claim is based or the facts against which the other party’s claim is based are responsible for providing evidence to prove; if there is no evidence, or the evidence is insufficient to prove the factual claim of the party, the party with the burden of proof bears the adverse consequences. Ansheng shall bear the legal consequences of the inability to provide evidence. In summary, Ansheng failed to prove the loss of the goods in this case,

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and it did not prove the cause of the loss of the goods. The claim that PICC Dongguan paid the insurance money lacked the factual basis and should be rejected. In summary, Ansheng’s claims cannot be established. According to Article 22 Paragraph 2 of the Insurance Law of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the court of first instance dismissed the claim of Ansheng. The first-instance case acceptance fee was 4,600 yuan, which should be paid by Ansheng. In the second trial of this case, neither party submitted new evidence. The facts ascertained in the judgment of the first instance are supported by relevant evidence and are confirmed by the court. The court believes that this case is a marine insurance contract dispute. According to the appeals and defense opinions of both parties, combined with the investigation of the court, the court determined that the focus of the second instance of the case was whether the cargo damage involved was caused by an insurance accident and the amount of damage involved. Regarding whether the cargo damage involved was caused by an insurance accident, the insurer and the insured are involved in the allocation of the burden of proof for the establishment of an insurance accident. According to Article 22 Paragraph 1 of the Insurance Law of the People’s Republic of China, after an insurance accident occurs, the insured or the beneficiary shall provide the insurer with the insurance indemnity. The provisions of the certificate and information that can be provided in relation to the nature, cause, and degree of loss of the insurance accident, and whether the insured, the insured, or the beneficiary bears the burden of the insurance accident is the initial burden of proof and the identification of the accident. The information providing obligation shall confirm the nature, cause, and degree of loss of the insurance accident, and the insurer shall bear the burden of proof. In this case, the goods involved in the port of destination did find water and mildew. After Ansheng reported the insurance to PICC Dongguan, PICC Dongguan should conduct the investigation in time and identify the cause of the accident, and the cause should not be included in the accident. The insurer explains the reasons. The staff of PICC Rizhao Branch arrived at the scene to conduct an investigation and recorded the damage situation, but it did not analyze and identify the cause of the damage. In this case, PICC Dongguan claimed that the cause of the damage was the natural attribute of the hemp rope and its own defects, which was the excuse for the insurance contract. However, it did not provide evidence for this, and the claim was not recognized. The case should be found to be an insurance accident. The first-instance judgment found that the insured Ansheng did not provide the burden of proof according to Article 22 Paragraph 1 of the Insurance Law of the People’s Republic of China, and further determined that the goods involved in the case were not caused by an insurance accident, and the court was correct. However, Ansheng did not promptly determine the extent of the loss by processing the goods nor other means to prove its actual loss after the accident involving the cargo damage, and only based on the consignee’s rejection, it requested to determine the total loss of the goods involved, lacking a legitimate basis. According to Article 64 Paragraph 1 of the Civil Procedure Law of the

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People’s Republic of China, “the parties have the responsibility to provide evidence for their own claims” and the Several Provisions of the Supreme People's Court on Evidence of Civil Proceedings. The facts on which the claim is based or the facts against which the other party’s claim is based are responsible for providing evidence to prove; if there is no evidence or the evidence is insufficient to prove the factual claim of the party, the party with the burden of proof bears the adverse consequences. Ansheng shall bear the legal consequences of the inability to provide evidence. Because the amount of the goods involved in the case cannot be determined, the first-instance judgment dismissed Ansheng’s claim against PICC Dongguan, and the result was not improper and the court affirmed it. In summary, the first-instance judgment found the facts clearly. Although the application of law was incorrect, the result of the adjudication was not improper and should be affirmed. Ansheng’s appeal requests cannot be established and should be rejected. In accordance with Article 117 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China and Article 344 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 4,600 yuan, shall be borne by the Appellant Guangzhou Ansheng Logistics Co., Ltd. The judgment is final. Presiding Judge: DU Yixing Judge: LI Mintao Judge: GU Enzhen November 16, 2017 Judge Assistant: GAO Jing Clerk: PAN Wanqin

Ningbo Maritime Court Civil Judgment Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al.

(2016) Zhe 72 Min Chu No.2793 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 502. Cause of Action 213.(2) Dispute over bareboat charter party. Headnote Bareboat charterers held liable to redeliver chartered ship detained by maritime authorities as agreed in charterparty, and to pay hire until redelivery. Summary The Plaintiff and the two Defendants entered into a bareboat charter party. The vessel was not returned because the maritime authorities boarded the vessel, and it was detained. The court held that the two Defendants should re-deliver the vessel according to the delivery terms in the charter and the two Defendants should pay hire until the date of actual re-delivery.

Judgment The Plaintiff (the counterclaim Defendant): Hefei Gui He Ju Business Co., Ltd. Domicile: No.03, Block 1, Bihulanting, east of Songlin Road, Hefei Economic Development Zone, Anhui. Legal representative: SHI Yulong, general manager of the company. Agent ad litem: ZHANG Yonghai, lawyer of Highchance (Ningbo) Law Firm. Agent ad litem: SHI Chunlei, lawyer of Zhejiang Highchance (Ningbo) Law Firm. The Defendant (the counterclaim Plaintiff): Zhejiang Qinfeng Shipping Co., Ltd. Domicile: Luqiao District, Taizhou, Zhejiang. Legal representative: LIANG Chaqing, chairman of the company. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_25

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Agent ad litem: WANG Honghai, lawyer of Zhejiang Antian Law Firm. Agent ad litem: HE Meifen, lawyer of Zhejiang Antian Law Firm. The Defendant: WU Enhua, male, born on May 12, 1978, Han, live in Wenling Zhejiang. Domicile: Wenling, Zhejiang. Agent ad litem: WANG Qinsheng, lawyer of Zhejiang Antian Law Firm. With respect to the case arising from dispute over bareboat charter party between the Plaintiff, Hefei Gui He Ju Business Co., Ltd. (hereinafter referred to as “Gui He Ju”), the Defendant, Zhejiang Qinfeng Shipping Co., Ltd. (hereinafter referred to as “Qinfeng”) and the Defendant, WU Enhua, the court, after entertaining the case on November 28, 2016, applied summary procedure. During the trial, the Defendant, Qinfeng, instituted a counterclaim. After ascertaining the counterclaim, the court decided to accept it and combine the trial of these cases. On December 22, 2016, the court changed the proceedings into general procedure and assembled a collegiate bench to try the case. The court held two hearings in public, the first on January 6 and the second on February 28, 2017. Agent ad litem of the Plaintiff (the counterclaim Defendant) Gui He Ju, ZHANG Yongmei, agents ad litem of the Defendant (the counterclaim Plaintiff) Qinfeng, WANG Honghai and HE Meifen, agent ad litem of the Defendant WU Enhua, WANG Qinsheng, appeared in the court to attend the hearings. Now the case has been concluded. The Plaintiff claimed to the court that: 1. the bareboat charter party between the Plaintiff and the two Defendants should be terminated; 2. the two Defendants should re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port Ningbo City Zhejiang Province according to the delivery terms in the charter; 3. the two Defendants should pay hire until the date of actual re-delivery (calculate for the time being to December 20, 2016, 316,550 yuan); 4. the two Defendants should pay the interests of the unpaid hire from April 30, 2016 to the date of accomplishment of actual payment, according to the interests of benchmark lending rates for the same period of People’s Bank of China (calculate for the time being to December 20, 2016, 3,650.04 yuan); 5. the two Defendants should pay liquidated damages in the sum of 300,000 yuan to the Plaintiff. Facts and reasons: on March 29, 2016, the Plaintiff entered into a bareboat charter party with the two Defendants, it was agreed that the Plaintiff would bareboat charter M.V. “XIN GUANG JIANG 6” to the two Defendants, leasehold was one year, hire of year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month monthly, the hire should be paid on the first 10 days of each period; if the Defendants re-delivered the ship, the condition that the ship should be re-delivered at Xiangshan Port Ningbo City Zhejiang Province according to the delivery terms in the contract must be satisfied; in case of breach of contract during the lease term, the breaching party should pay the non-breaching party 300,000 yuan as liquidated damages. After contracting, the Plaintiff delivered the ship to the two Defendants, but the two Defendants failed to fulfill the charter and

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pay the hire on time. The Plaintiff had repeatedly demanded hire from the two Defendants and sent letters to their lawyers, the two Defendants did not pay the hire. In conclusion, the bareboat charter between the Plaintiff and the two Defendants was legal and valid, and the Defendants should pay the hire in time as agreed in the charter, the two Defendants’ delay in paying the hire had prevented the Plaintiff from achieving the purpose of the contract, which seriously infringed upon the legitimate rights and interests of the Plaintiff. The suit was hereby brought to the court. The Defendant Qinfeng argued that: 1. it agreed to terminate the bareboat charter signed with the Plaintiff, but the responsibility for rescinding the contract rested with the Plaintiff. 2. After contracting, Qinfeng paid hire 783,450 yuan to the Plaintiff, but the Plaintiff failed to perform the contract as agreed, the Plaintiff did not deliver the ship chartered as agreed in the terms of charter, confirmation of handover of ship was not signed until April 19, 2016, but the actual date of delivery was the end of April, Qinfeng found out that the ship had been refitted without the approval of the relevant authorities and the certificate was incomplete after the delivery. On November 23, 2016, M.V. “XIN GUANG JAING 6” was seized by Dongjiang Maritime Safety Administration because the structure and actual use of the ship were not in conformity with the type of ship indicated in the ship inspection certificate, as a result, Qinfeng could not continue to operate, and Qinfeng had also commissioned a lawyer to write to the Plaintiff to terminate the bareboat charter. After terminating, because the ship involved was seized by the maritime department and the reason for the seizure was that the Plaintiff had privately refitted the ship, the Plaintiff should handle the seizure of the ship involved and recover the ship by itself. 3. The ship was seized by the maritime department and Qinfeng was unable to continue operation because the Plaintiff had chartered M.V. “XIN GUANG JIANG 6”, which had been privately modified for the structure and use of the ship, to Qinfeng, so the hire of charter should be calculated from the date of actual delivery, May 1, 2016, to the date of seizure by maritime department, November 23, 2016, actual rental term was 207 days, actual hire was 691,890 yuan, and Qinfeng had paid 783,450 yuan to the Plaintiff, overpaid 91,560 yuan, so Qinfeng did not pay the hire lately or owe the hire of the Plaintiff, and there was no need to pay the Plaintiff liquidated damages, the default party in this case was the Plaintiff. 4. The Defendant WU Enhua was signatory representative of Qinfeng, WU Enhua was not the charterer. In conclusion, the Plaintiff had no facts or legal basis for the lawsuit filed by Qinfeng, and the request should be rejected according to law. The Defendant WU Enhua argued that in this case, WU Enhua was the signatory representative of Qinfeng. WU Enhua signed his name as representative on page 2 of bareboat charter involved and was not a qualified subject of suit in this case. Therefore, the suit to WU Enhua should be rejected. The other defense opinions were consistent with those of Qinfeng. The counterclaim Plaintiff Qinfeng filed an action to the court that: 1. terminate the bareboat charter between Qinfeng and Gui He Ju, and Gui He Ju should be responsible for seizure of ship by Tianjin Dongjiang Maritime Safety

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Administration, and Gui He Je company should be responsible to take back M.V. “XIN GUANG JIANG 6” by itself; 2. Gui He Ju should immediately refund hire 91,560 yuan to Qinfeng, and should pay the interests of benchmark lending rates for the same period of People’s Bank of China; 3. Gui He Ju paid liquidated damages 300,000 yuan to Qinfeng. Facts and reasons: on March 29, 2016, Qinfeng entered into a bareboat charter with Gui He Ju, it was agreed that Gui He Ju would bareboat charter M.V. “XIN GUANG JIANG 6” to Qinfeng, leasehold was one year, hire of year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month; Gui He Ju should get the certificate of registration of ownership of ship, certificate book for inspection of ships at sea, certificate of ship’s nationality, minimum safe manning certificate for ships and so on, and made sure that the ship was seaworthy; the day of delivery was from March 31 to April 5, 2016; in case of breach of contract within the charter period, the breaching party should notify the other party at least 15 days in advance and paid the other party and pay liquidated damages of 300,000 yuan. After contracting, Qinfeng paid hire 783,450 yuan to Gui He Ju, but Gui He Ju did not sign confirmation of handover of ship as agreed until April 19, 2016, and the actual date of delivery was the end of April 2016, the ship was refitted without the approval of the relevant authorities, and the certificate was not complete, resulting in the inability of Qinfeng to operate normally, and resulting in huge losses. On November 23, 2016, M.V. “XIN GUANG JAING 6” was seized by Dongjiang Maritime Safety Administration because the structure and actual use of the ship chartered were not in conformity with the type of ship indicated in the ship inspection certificate, as a result, Qinfeng could not continue to operate, so Qinfeng commissioned a lawyer of Zhejiang Antian Law Firm to write to the Plaintiff to terminate the bareboat charter on November 23, 2016, and to inform Gui He Ju that it should be responsible for seizure of ship by Tianjin Dongjiang Maritime Safety Administration, and is responsible to take back M.V. “XIN GUANG JIANG 6” by itself. The Law Firm also arranged personnel management and promptly settled the hire and the loss with Qinfeng. In conclusion, Gui He Ju changed the structure and the use of M.V. “XIN GUANG JIANG 6” to meet the bareboat charter requirements of Qinfeng; however, the ship was seized by maritime department, as a result, Qinfeng could not operate the ship, so Gui He Ju had breached charter and it should bear corresponding liability for breach of contract. Now the purpose of the contract with Qinfeng had been lost, so the bareboat charter signed between two parties should be terminated. In order to safeguard lawful rights and interests, the counterclaim was hereby brought to the court. The counterclaim Defendant Gui He Ju argued that: 1. there was no fact that the ship involved was seized by Dongjiang Maritime Safety Administration as what Qinfeng said, Gui He Ju only saw one document, even if the seizure of the ship was true, the liability should be borne by Qinfeng itself, because the ship had been actually delivered to Qinfeng for operation. The assertion that Qinfeng required Gui He Ju to handle the ship seizure on its own was without any facts or legal basis. 2. The amount of hire paid, Gui He Ju had provided the corresponding payment slip,

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the fact was clear, the total paid-in hire was 483,450 yuan. If Qinfeng held that it had paid the hire of 783,450 yuan, it should provide relevant evidence for the difference of 300,000 yuan. 3. The default fact in this case was caused by Qinfeng and WU Enhua, and had no connection with Gui He Ju, the Defendant should pay whole hire to Gui He Ju, and re-deliver the ship as agreed according to re-delivery terms recorded in charter after handling seizure matters. Qinfeng stated that it had sent a letter to Gui He Ju on November 23, 2016 asking for the termination of the charter, but Gui He Ju did not receive the letter. As for the counterclaims filed by the counterclaim Plaintiff Qinfeng, the Defendant WU Enhua said in court that he had nothing to do with himself and that he was not a qualified subject of suit in this case. In order to prove its claims, the Plaintiff Gui He Ju provided the following materials: 1. Original bareboat charter, the inscribe date was March 29, 2016, to prove that the Plaintiff and the two Defendants entered into a bareboat charter for the ship involved, contracting lease period, hire and mode of payment, re-delivery term and liability for breach of contract, charterer was Qinfeng and WU Enhua, these two signed on the charter, so they should bear the responsibility for the performance of the charter, they were qualified Defendants; 2. Two printed copies of Ningbo Bank online banking transaction vouchers, six printed copies of customer service receipt, to prove that the two Defendants paid a total hire of 483,450 yuan to the Plaintiff, and there were cases of overdue payment of hire; 3. Two original copies of lawyer’s letter, four copies of EMS express waybill and mail tracking query information page, to prove that on August 30, 2016 and November 3, 2016, the Plaintiff respectively entrusted lawyers to write letters to the two Defendants to demand hire, and the two Defendants still failed to pay after signing. In order to prove its defense opinions and counterclaim, the Defendant Qinfeng provided the following material: 1. Copy of bareboat charter, the same as evidence 1 provided by the Plaintiff, to prove the fact that Qinfeng and Gui He Ju entered into a bareboat charter for the ship involved and made relevant agreements; 2. Faxed copy original of confirmation of handover of ship, two printed copies of Ningbo Bank online banking transaction vouchers, six printed copies of customer service receipt, Ningbo Bank online banking transaction vouchers were that same as the evidence 2 provide by the Plaintiff, to prove the fact that Qinfeng paid hire 783,450 yuan to Gui He Ju; 3. Copy of the letter about handling M.V. “XIN GUANG JIANG 6”, to prove that on November 23, 2016, M.V. “XIN GUANG JIANG 6” was detained by the Dongjiang Maritime Safety Administration because of the discrepancy between the structure and practical use of the ship and the type of vessel indicated in the ship inspection certificate;

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4. Lawyer’s letter, original copy of EMS express waybill, to prove that Qinfeng entrusted Zhejiang Antian Law Firm to issue a letter to Gui He Ju in this case to claim rights; 5. Original copy of people mediation agreement made by Taizhou XX Jinqing Town people’s mediation committee, to prove that on April 9, 2016, the crew, LI Haihua (the Plaintiff entrusted Qinfeng to hire), died at work on M.V. “XIN GUANG JIANG 6”, then Qinfeng mediated with family members of LI Haihua, compensated 728,000 yuan to family members of LI Haihua, 300,000 yuan of this compensation would be beard by the Plaintiff after Qinfeng negotiated with the Plaintiff, Qingfeng undertook 428,000 yuan, so in the confirmation of the handover of the ship involved, it was confirmed that the Plaintiff had received a deposit of 300,000 yuan, the payment was made on behalf of Qinfeng to offset the hire of the last several ships; 6. A detailed list of current accounts sold of Agricultural Bank of China, original copy of bank card transaction details list, to prove that the above payment of 728,000 yuan of compensation included 100,000 yuan on April 9, 2016 and 628,000 yuan on April 18, 2016. In order to prove its claim and defense opinions, the counterclaim Defendant Gui He Ju provided one CD and three copies of written records, to prove that Qinfeng and WU Enhua still owed the Plaintiff the hire of the ship involved and WU Enhua knew the relevant information, and there was no fact that the ship involved was unable to operate due to incomplete ship certificate or other circumstances, Gui He Ju held that one of the three recorded calls was WU Enhua, in the first recording, dated October 9, 2016, WU Enhua said that a total of 400,000 yuan had been paid in cash, which was in accordance with the hire collected and the documents of payment presented by the Plaintiff, but that Qinfeng contended that it had overpaid the Plaintiff’s hire of 783,450 yuan was not in accordance with the fact; in the second recording, dated November 7, 2016, WU Enhua said that he had received a letter, according to the second lawyer’s letter in the evidence 4 provided by the Plaintiff, it could be confirmed that WU Enhua had received the lawyer’s letter; WU Enhua proposed to replace the ship's propeller, the Plaintiff replied that the ship had been handed over, and that the maintenance of the ship’s equipment during the charter period should be jointly undertaken by the charterer Qinfeng and WU Enhua in accordance with the provisions of the contract and the maritime law, which has nothing to do with the Plaintiff; then WU Enhua said if the propeller was normal, he also intended to use next month, which showed that the ship involved did not have any problems with the ship certificate or was reported to be unable to operate during the lease period, and the ship met operational requirements; regarding to the shipping certificate issues raised by Qinfeng and WU Enhua, the ship involved was acquired by the Plaintiff through a court auction. The ship was qualified and the certificate was available, but because WU Enhua did not have the personnel on board in place and kept them in order to be included in the safety management system, and he did not return the original ship’s certificate to the Plaintiff, so the Plaintiff was unable to obtain the relevant certificate, and the subsequent

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certification matters should be handled by the ship operator. WU Enhua, the Plaintiff cooperated with him, so there was no problem with shipping certificate; the third recording, dated November 9, 2016, which showed that the Plaintiff and the Defendants had held consultations on the matter of returning the ship. WU Enhua offered to sign a written re-delivery agreement, which agreed to re-deliver the ship and terminate the charter, then re-deliver the ship. The Plaintiff requested that the ship should be delivered at Xiangshan Port Ningbo, WU Enhua held that the agreement would come into force only after the Plaintiff saw the ship. The ship would certainly go back; he said that there were no problems with the ship’s equipment, including the propeller; in addition, according to the terms about delivery and re-delivery of ship in the bareboat charter, the Plaintiff had sent to WU Enhua all the originals of the agreed shipping certificate, and Qinfeng also said in court that the ship certificate had been detained by the Dongjiang Maritime Safety Administration. The Defendant, WU Enhua, did not provide evidence. In order to prove its defense opinions and counterclaim, the Defendant (counterclaim Plaintiff) Qinfeng applied for witness LU to testify in court, and the court gave its permission. The statement of LU in court was as follows: LU was a fisherman, engaged in the sand transport ship business in Tianjin who was contacted by WU Enhua and employed by Qinfeng as a crew member on M.V. “XIN GUANG JIANG 6.” There was no Seaman’s Record Book or certificate of seafarer, his salary was 5,000 yuan each month, no seaman service contract had been signed, he boarded on the ship in Tanggu, Tianjin on May 2, 2016 and left the ship and went home in Tanggu, Tianjin on January 14, 2017. During that period on ship, the ship had been engaged in the maritime transport of sand between Caofeidian in Tangshan and Tanggu in Tianjin, the surname of the captain was LIANG, the condition of the ship was not good, there were problems with machines, propellers, etc. The problem with the propeller was discovered in September 2016, but the ship had never been refitted or repaired and had been temporarily repaired by the crew. When there was something wrong with the ship, WU Enhua would take care of it. By late November 2016, the ship was suspended due to suspected propeller problems, then maritime department checked on board, and the crew was orally informed that the ship could not be moved, “boss” (name unknown) was requested to go to the maritime department for processing, details should be communicated to the captain. It was not clear whether the maritime department issued or posted the notice, notification and decision letter at that time. The ship was at anchor waiting for notice when he left the ship. After the second trial of the case, the court went to Ninghai Shengli Ship Repair Factory (General Partnership) field to investigate relevant information of the case according to the application of Qinfeng, and made a conversation record for LIN Dacheng and XUE Jiaoxian who were in charge of the factory. During the conversation, LIN Dacheng and XUE Jiaoxian always stated that in March and April 2016, the container ship involved called M.V. “TU SHUN 2” was repaired and maintained at the shipyard but was not refitted. At that time, one person, whose surname was SHI, who called himself captain of M.V. “TU SHUN 2”, and another

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came to the shipyard to ask for repair and maintenance of the ship, as the owner of the ship, they made an oral agreement with the shipyard about the dock charges (12 yuan/ton), sand blasting fee, rust remover (including paint), welder, propeller and shaft dis-assembly and maintenance, both parties had not signed a written contract. The repair and maintenance of the ship lasted more than twenty days, captain SHI and another entourage and some crews of M.V. “TU SHUN 2” supervise the work in the factory, the construction workers were arranged by the shipyard, wages were paid by captain SHI and other shipowners, the total cost of maintenance and repair of the ship during the period had been paid off by the shipowner in cash or by bank transfer. One day before the departure date after finishing repair and maintenance, a Wenling native place man who chartered the ship called the crew aboard to prepare to sail, one of the crew members was found dead in bed unexpectedly, the police intervened to investigate the matter, the ship failed to leave the shipyard on that day, and left the shipyard after several days. Regarding to repair and maintenance project list, project statement and other materials of M.V. “TU SHUN 2”, his son, LIN Hangsheng, had sold the former materials together with the old books and periodicals as wastepaper, so those could not be offered. In addition, in the morning of May 17, 2016, a person other than those involved in the case, LIU Jialiang, was contacted by Qinfeng to present the case in court, the court made a transcript of his conversation. During the conversation, LIU Jialiang stated that: before or after December 25 to 26, 2015, the hatch of bulk cargo ship M. V. “NING XING 888” was repaired at Ninghai Shengli shipyard dock, and the ship was serviced by way of paint, the ship was then prepared to transport water and sand to Tianjin. M.V. “TU SHUN 2” arrived at Shengli shipyard later than M.V. “NING XING 888”. The two ships stayed together at the shipyard dock for a long time. At that time, there were no crews on M.V. “TU SHUN 2”, only one cook on the ship, and the shipowner whose surname was SHI, LIU Jialiang had never been in contact with anyone. M.V. “NING XING 888” had been repaired in factory for about two months. On January 16, 2016, lunar month, M.V. “NING XING 888” repaired and left the shipyard, but M.V. “TU SHUN 2” did not leave, the shipowner was a man whose surname was SHI from Ningbo (his name unknown). According to his understanding, M.V. “TU SHUN 2” was container ship. Specific maintenance items should be compartments. The cabin of M.V. “TU SHUN 2” was not blocked, there was a beam in the middle place, during maintenance, the shipyard separated the front and rear of the ship’s cabin with steel plates and reinforced bars, which made the whole unblocked cabin small, and the separated cabin had a drainage system at the bottom to ship water and sand. Two front and rear steel plates (cabin partition) were prepared and welded into the front and rear of the cabin. That was what LIU Jialiang saw, he also discussed the matter of transporting water and sand with SHI. SHI planned to ship sand to Tianjin with LIU Jialiang, M.V. “NING XING 888” went to Tianjin to ship sand after leaving, then LIU Jialiang heard SHI talking in phone that he chartered M.V. “TU SHUN 2” to WU X hua from Taizhou, this person went to Tianjin to ship sand with him. After cross-examination, the opinions of Qinfeng on the evidence of this case presented by the Plaintiff were as follows: no objection to evidence 1, WU Enhua

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signed the contract as a representative of Qinfeng, not the charterer; no objection to authenticity of evidence 2, but there was objection to the Plaintiff claimed that Qinfeng paid hire overdue, Qinfeng paid hire 300,000 yuan except for 483,450 yuan mentioned by the Plaintiff; there was objection to the two lawyer’s letters of evidence 3 because Qinfeng did not receive the letters, instead of paying the Plaintiff’s rent, the company paid the Plaintiff’s hire in advance, so there was no breach of contract. The opinions of cross-examination of WU Enhua were as follows: there was no objection to authenticity and legality of evidence 1, but there was objection to relevancy, the position of WU Enhua’s name at the head of the charter was smaller than that of Qinfeng, the signature of WU Enhua was at the representative in the end of the charter, that whether WU Enhua was qualified subject of litigation or not could not be proved, but it could be proved that WU Enhua signed as the representative of Qinfeng; unclear to evidence 2; regarding to evidence 3, WU Enhua did not receive it, the address recorded on the letter was not the place he lived, the address was Qinfeng, the contents of the lawyer’s letter had nothing to do with WU Enhua. The opinions of Plaintiff on the evidence presented by Qinfeng were as follows: no objection to evidence 1, as joint charterers, Qinfeng and WU Enhua should jointly undertake the contractual liability; regarding to evidence 2, the shipping handover confirmation was indeed signed by the Plaintiff and Qinfeng by fax on April 19, 2016, but Qinfeng and WU Enhua’s crew were on board at the beginning of the month and actually managed the ship, as recorded on the handover confirmation, “the current condition of the ship was in conformity with the conditions of delivery and re-delivery as agreed in the charter, both parties had no objection to the performance of Bareboat Charter, the conditions for the handover of the ship should be established, both parties agreed to handover the ship”, the above statement showed that the Plaintiff had no case of late delivery of the ship; the Plaintiff received hire 483,450 yuan, if Qinfeng claimed to have paid the Plaintiff hire of 783,450 yuan, it should provide the corresponding payment voucher for the difference of 300,000 yuan; the authenticity of evidence 3 could not be proved because there was a lack of original copy, the ship type of M.V. “XIN GUANG JIANG 6” was a container ship, which was in conformity with the ship type indicated in the bareboat charter contract and the ship state confirmed in the handover confirmation, the actual purpose of the ship from May to October 2016 was to transport sand and stone, there was the suspicion of altering the structure and use of the ship without permission, the situation with certain safety risks was not in conformity with the agreement of the charterer in the bareboat charter contract that “the charterer should abide by the relevant laws and regulations of the state and operate legally”, if Qinfeng and WU Enhua changed the use of the ship after the handover and acquisition of the ship, the relevant liability should be borne by themselves, and the Plaintiff reserved the right to pursue the liability for breach of contract and claim, the ship involved was still under the control of Qinfeng and WU Enhua up to now, the Plaintiff did not know whether the Defendants changed the structure of ship during operation, the Defendants should bear guarantee liability for lawful operation during the actual operation and management of the ship; the ship

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recall proposal recorded in this letter could not prove the fact that the ship involved was seized by the Dongjiang Maritime Safety Administration, ship’s seizure letter and notice should be sent to shipowners and operators if Dongjiang Maritime Safety seized the ship, but the Plaintiff did not receive that kind of notice; there was objection to authenticity, legality and relevancy of evidence 4, the Plaintiff did not receive lawyer’s letter, and the circumstance in the lawyer’s letter that the ship involved was seized by the Maritime Safety Administration was also inconsistent with the facts, according to the prosecution by the Plaintiff, the lawyer’s letter had been returned; the evidence 5 and 6 had seriously exceeded the period of proof, there was objection to authenticity, legality and relevancy of evidence 4, Qinfeng stated that the Plaintiff entrusted Qinfeng to hire the crew, which was inconsistent with the contract and facts, the bareboat charter involved stipulated that the charterer should be responsible for the safety of the ship and its crew, entered into a legal labor contract with the crew members and undertook to insure them against personal insurance, so it was abnormal that the crew members were employed by Qinfeng, and after the personal injury accident, the Plaintiff entrusted the charterer to sign a people’s mediation agreement with the deceased’s family on behalf of LIANG Jingchun, which was not in accordance with the facts, and in the people’s mediation agreement, only party B’s signature with LI Xuanqi, not party B’s signature with LI Caiyun; it was the accidental death of the crew employed by the charterer on board that delayed the delivery of the ship, the charterer, not the Plaintiff, had no reason to delay the delivery of the ship; evidence 6, a detailed list of current accounts sold of Agricultural Bank of China showed that LI Zhixin transferred 100,000 yuan to LIANG Lingwei, relevancy could not be proved, it was also untrue that the Plaintiff should pay the compensation of 300,000 yuan after consultation as claims of Qinfeng, according to the recording of the call provided by the Plaintiff, WU Enhua said that he had paid 400,000 yuan and confirmed there was 200,000 yuan in rent to be paid, which indeed proved that the claims of Qinfeng above were ungrounded. WU Enhua held that he wasn’t sure of the business regarding evidence 1–4 provided by Qinfeng, he was signatory representative of Qinfeng, not qualified subject of litigation of this case; there was no objection to evidence 5 and 6, because the ship crew died before handover of the ship involved, Qinfeng went to negotiate with the Plaintiff and shared by the Plaintiff 300,000 yuan for compensation, the Plaintiff signed on confirmation of handover of ship involved that the Plaintiff had received deposit 300,000 yuan of the charter. Qinfeng objected to the authenticity of the CD and written records provided by the Plaintiff, it claimed that the CD was not the original recording material, and that it could not fully reflect the original call status. Qinfeng had objection to the legality, SHI Feilong and QIU Caiping, callers of the Plaintiff, were not identified and could not be determined whether they were the employees of the Plaintiff or the actual owners of M.V. “XIN GUANG JIANG 6”, WU Enhua was only an employee of Qinfeng, and the charter of M.V. “XIN GUANG JIANG 6” was handled by him, but he did not know much about the financial aspects of payment of hire and other matters, he did not have the right to approve such financial

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transactions on behalf of the company without the authorization of the company. The relevant payment of hire should be evidenced by other evidence provided by both parties. Similarly, WU Enhua had also mentioned the condition of the ship in the recording of the call, including problems with the propeller and more ship faults. The cross-examination opinions of WU Enhua was consistent with that of Qinfeng, and Qinfeng claimed that in the first recording of the call, SHI Feilong’s statement of the delay in delivery of the vessel and of the cracks in the machinery indicated that it had accepted the delay in delivery of the vessel involved and that the ship was in poor condition. Regarding the testimony stated by LU, Qinfeng believed that the witness testimony was true and objective, which could fully prove the fact that the witness had been working on M.V. “XIN GUANG JIANG 6” since May 2, 2016 to January 14, 2017, during this period, the ship had not been refitted and the ship had not been in good condition, and the ship was seized by maritime department in the last ten-day of November 2016. WU Enhua had no objection, his cross-examination opinion was the same as Qinfeng. The Plaintiff held that Qinfeng applied for the witness to testify in court before the hearing was held, which was beyond the time limit for giving evidence, and the procedure was not legal; this witness did not have a Seaman’s Record Book or certificate of competency, and did not have a service contract, his claim to have been contacted by WU Enhua employed by Qinfeng to work on the ship was not proved by evidence, he had interests with Qinfeng and WU Enhua; the witness alleged that the ship involved was seized by the maritime department because it was used to transport sand and gravel, and according to the maritime administrative law enforcement procedures, the maritime department should issue a notification, notification or written decision on administrative penalty to the person in charge of the ship, the actual operator or the master, there was no such material in this case, so the alleged seizure of the ship involved by the maritime department did not accord with the actual situation; the witness alleged that the ship was in bad condition, which occurred during the charter of the ship, the parties also agreed in the bareboat charter that the charterer should maintain the ship and keep the ship in good condition, this was the contractual obligation and legal obligation of the charterer. Regarding the conversation record for LIN Dacheng and XUE Jiaoxian and the person in charge of Ninghai Shengli Ship Repair Factory (General Partnership), the Plaintiff had no objection to authenticity and legality, but had objection to relevancy. The Plaintiff alleged that the transcript of the conversation failed to achieve Qinfeng’s purpose of proof, according to statement of LIN Dacheng, the charterer (Wenling man, WU Enhua) had summoned the crews to board and prepared to sail in early April 2016, one of the crew members hired died unexpectedly, which meant that WU Enhua was also the charterer of the ship involved, the ship was not delivered at the agreed time because one of the crew members died unexpectedly, there was no case of late delivery of the ship by the Plaintiff resulting in breach of contract, and the aforesaid accidental death of the crew was employed by the charterer and had nothing to do with the Plaintiff. The claim made by Qinfeng in court that the compensation should be used as deposit was not based on facts; the

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conversation record proved that the Plaintiff only carried out necessary repair and maintenance of the ship involved, but did not change the structure and use of the ship, and the ship involved has been operated and managed by Qinfeng and WU Enhua since its delivery, the change in the structure and use of the ship, and the use of container ships as stipulated in the contract and marked in the inspection certificate for ‘transportation of sand and stone’, had been clearly suspected of breach of contract. Qinfeng and WU Enhua had no objection to the authenticity of form, but had objection of content, they did not agree that both parties did not sign a written contract and the shipyard never sign written contracts with customers, related materials are sold by the son of LIN Dacheng as waste paper, the dead crew was employed by charterers and the time of departure of ship from the factory. They viewed that the Plaintiff was a client of the shipyard and the parties had an interest, the statement of LIN Dacheng and XUE Jiaoxian in conversation record dis-accord with the facts, so the statement could not be accepted. After investigating, the court held the following: evidence 1 of this suit provided by the Plaintiff was in fact the original copy, affixed with the official seal of the Plaintiff and Qinfeng and signed by WU Enhua, Qinfeng and WU Enhua had no objection to authenticity and legality, so the court confirmed the authenticity and legality of the evidence. Whether WU Enhua was a qualified subject of litigation for this case would be analyzed and determined in the following text; Qinfeng had no objection to authenticity of evidence 2, WU Enhua said only that he did not know, so the authenticity of this set of evidence materials and the fact that the Plaintiff claimed to have paid a total hire of 483,450 yuan was confirmed, whether or not Qinfeng had paid the hire of the ships involved in the case would be analyzed and confirmed in the following text; two lawyer’s letters and four EMS express waybill in evidence 3 were original copies, could prove the fact with four mail tracking query information page that the Plaintiff sent letters to Qinfeng and WU Enhua respectively on September 2 and November 3, 2016, asking for the hire of the ship involved and informing them to cancel the contract and redeliver the ship and all the letters had arrived, were confirmed, as for whether Qinfeng owed or overpaid the Plaintiff’s hire in advance, as well as WU Enhua’s legal status and liability, the court would make a specific analysis and determination in the following text. Evidence 1 provided by Qinfeng was the same as evidence 1 provided by the Plaintiff, the Plaintiff had no objection, WU Enhua said he had nothing to do with this, so the court confirmed the authenticity and legality of the evidence, whether WU Enhua was a qualified subject of litigation for this case would be analyzed and determined in the following text; two copies of Ningbo Bank online banking transaction vouchers, six copies of customer service receipt in evidence 2 were the same as those provided by the Plaintiff, the Plaintiff had no objection, and WU Enhua said only that he did not know, so the authenticity of this set of evidence materials was confirmed; the ship handover confirmation was an original fax copy, there was no valid evidence to support the signing date of the bareboat charter contract on March 28, 2016, the Plaintiff had no objection to the signing of the confirmation, but disputed the fact that the company claimed to have paid the Plaintiff 783,450 yuan, WU Enhua said only that he did not know, so the content of

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this set of evidence were confirmed except that the signing date of the bareboat charter was March 28, 2016 and the deposit of hire was 300,000, whether Qinfeng had actually paid the Plaintiff the above-mentioned ship rental deposit of 300,000 yuan would be analyzed and confirmed in the following text; although evidence 3 were copies, there was official seal of Dongjiang Maritime Safety Administration, the form was formal and content was clear, which was directly related to the involved ship M.V. “XIN GUANG JIANG 6”, so the court confirmed the authenticity, legality and relevancy, but its contents could not directly reflect the fact on that November 23, 2016, M.V. “XIN GUANG JIANG 6” was seized by the Dongjiang Maritime Safety Administration, which was to be proved by Qinfeng, the Plaintiff had objection, so the fact to be proved could not be confirmed; the lawyer’s letters were original copy in evidence 4, but were not actually sent to the Plaintiff and returned, so the expected legal effect failed to materialize, the Plaintiff had objection to the authenticity, legality and relevancy, as a result, the court did not confirm it; the evidence 5 was original copy, there was official seal of Taizhou XX Jinqing Town people’s mediation committee and signatures of officers, contents were clear, WU Enhua had no objection, so the form of the evidence was confirmed; Qinfeng claimed that on April 9, 2016, LI Haihua, the crew member who died unexpectedly on M.V. “XIN GUANG JIANG 6”, was hired by Qinfeng on behalf of the Plaintiff, after consulting with the Plaintiff about 728,000 yuan in compensation, the Plaintiff should bear 300,000 yuan, so the fact that the Plaintiff had received a deposit of 300,000 yuan for chartering the ship was confirmed in confirmation of handover of ship, this payment was on behalf of Qinfeng to deduct the hire for the last few periods of the ship, the fact to be proved could not be reflected from the evidence, the Plaintiff did not confirm it, according to the conversation record for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership) made by the court, LIN Dacheng said that the dead crew member was one of the crew members called by the charterer of the ship involved to move the ship, hereby, in the absence of other valid evidence to support the case, the above pending facts would not be recognized, the fact that the Plaintiff had delayed the delivery of the ship in breach would be analyzed and confirmed in the following text; the evidence 6 was original copy, there was a seal of managing bank, the form was formal and content was clear, and evidence 5 could prove each other in the amount of payment. The company had made necessary explanations in court, WU Enhua had no objection, combining with the trial survey, the court confirmed the formal authenticity of the evidence materials and did not confirm relevancy to the case. The content of the CD and written records provided by the Plaintiff were clear and coherent, the Plaintiff had also made necessary explanations on the source of the evidence and the identity of the caller in court, both Qinfeng and WU Enhua had quoted the contents in the trial to present relevant opinions, and there was no evidence to refute them, so the formal authenticity of the evidence materials and their relevance to the case were confirmed, as for whether or not the charter of the ship involved had been paid off and whether or not the ship involved had delayed

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delivery, incomplete certificate and propeller failure, etc., the specific analysis and determination would be made in the following text. The content of the statement of witness LU was clear, but the witness had no seaman’s service book and certificate of competency, and did not sign crew’s service contract, it was impossible to determine the identity of the crew and whether they actually worked on the involved M.V. “XIN GUANG JIANG 6”, the Plaintiff disputed the testimony, combining with the trial survey, the content of the witness’ testimony should be determined within the scope that was directly related to the trial of this case and could be mutually verified with other valid evidence, and other contents should not be confirmed. The Plaintiff had no objection to authenticity and legality of the conversation record made by the court for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership), but had objection to relevancy, Qinfeng and WU Enhua had no objection to the authenticity of the form, but had objection to authenticity of the content. The court held that the transcript of the conversation was prepared when the court went to the shipyard to investigate and verify the relevant situation of the case according to the application of Qinfeng, the statements made by LIN Dacheng and XUE Jianxian were not acceptable except for the following matters concerning the dead crew members, the rest was clear and coherent that could preliminarily reflect the basic conditions of repair and maintenance of the ship involved at the shipyard and the fact that one of the crew members on board died unexpectedly, although Qinfeng and WU Enhua disagreed on the authenticity of the content, they had no strong evidence to refute it, so the transcript of this conversation should be confirmed within the scope directly related to the trial of this case as conclusive evidence. Regarding to the transcript of the conversation of LIU Jialiang, a person other than involved in the case, the Plaintiff had no objection to the authenticity and legality of the form, but had objection to authenticity and relevancy of the content, Qinfeng and WU Enhua had no objection. The court held that LIU Jialiang, a person other than involved in the case, contacting by Qinfeng, had a conversation in court, the identity of the person and the source of the information presented were in doubt, the specific content of his statement directly referred to the previous transcript of the conversation made by the court about the unrefitted ship involved, which was purposeful, so the credibility was not high that it could not be used as a basis for ascertaining the facts of a case, and the Plaintiff had objection, combining with the trial survey, the court confirmed the transcript of the conversation within the scope that was directly related to the trial of this case and could be mutually verified with other valid evidence, and did not confirm the rest. According to the statements of the parties and evidence after investigating, combining with the trial survey, the court confirmed the fact as follows: On March 29, 2016, the Plaintiff as shipowner and the Defendants as charterer signed a bareboat charter by fax, it was agreed that the Plaintiff would bareboat charter M.V. “XIN GUANG JIANG 6” to the two Defendants, leasehold was one year, hire of year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the

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deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month monthly, the hire should be paid on the first 10 days of each period, the remaining 100,000 yuan deposit would be deducted from the last hire by 50,000 yuan, the remaining 50,000 yuan would be returned at the time of signing of the return letter, ship insurance premium, handling fee and legal annual inspection fee should be borne by the shipowner; both parties confirmed that the basic conditions for delivery and re-delivery of the ship should be the qualified as specified in the certificate of ship’s inspection of M.V. “XIN GUANG JIANG 6”, the shipowner should ensure that the ship obtained the certificate of registration of ownership of the ship, the certificate book of inspection of the ship at sea, the certificate of nationality of the ship, the certificate of minimum safe manning of the ship, etc., and shipowner should ensure the seaworthiness of the ship, especially agreed to host and clutch, shaft and propeller, vice machine and electricity equipment, windlass and mooring winch, communication navigation equipment for not less than half an hour of continuous use without exception, hull damage had no obvious sag, etc.; during the charter period, the crew insurance premium should be borne by the charterer, the charterer should organize the crew to carry out normal maintenance of the ship at the charterer’s expense, the ship should meet the conditions agreed upon by both parties before re-delivery; the place of delivery and re-delivery was in Xiangshan Port Ningbo Zhejiang, the date of delivery was from March 31 to April 5, 2016, confirmation of handover would be signed after delivering actually, the ship would be formally delivered or re-delivered after both parties signed confirmation of handover; during the charter period, the shipowner guaranteed that the ship would not be able to operate normally due to no debts or disputes between shareholders, the shipowner would bear all the loss against the charterer caused by what mentioned above; in particular, the parties agreed that in case of any breach of contract during the charter period of the ship, the breaching party should notify the other party at least 15 days in advance and pay the other party a penalty of 300,000 yuan; this contract should come into force upon execution of the deposit, etc. The Plaintiff, Qinfeng and WU Enhua respectively signed and sealed at the end of the charter. Meanwhile, the involved M.V. “XIN GUANG JIANG 6” (formerly named M.V. “TU SHUN 2”) was repaired and maintained in Ninghai Shengli Ship Repair Factory (General Partnership). On April 9, 2016, LI Haihua, called by the Defendants, died unexpectedly. On the same day, LIANG Jingchun as M.V. “XIN GUANG JIANG 6” representative of charterer achieved people’s mediation agreement with the dead LI Haihua’s families in Taizhou XX Jinqing Town people’s mediation committee that the charterer indemnified LI Haihua’s families for 728,000 yuan. On April 19, 2016, the Plaintiff and Qinfeng respectively signed the shipping handover confirmation by fax as shipowner and charterer, which states that both parties effectively performed bareboat charter, now the condition of the ship was in conformity with the condition of delivery and re-delivery as the contract agreed, the two parties had no objection to the performance of the bareboat charter, and the conditions for the handover of the ship were established, both parties agreed to the handover of the ship and were willing to bear the risks arising therefrom; the

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M. Davies and J. Lin

handover time of the ship was April 19, 2016, handover place was Xiangshan Port, both parties had completed the handover of the ship at the time and place mentioned above, from the date of handover, management rights of M.V. “XIN GUANG JIANG 6” should be owned by the charterer, all risks, claims and debts incurred in this round before handover should be borne by the shipowner, and those incurred after handover should be borne by the charterer; special agreement: as there were obvious cracks in the host body on the right side of the ship, it could be used normally after repair, if there was still a leakage problem in the repair area during the hire period after handover, the maintenance of the right host machine would be caused, and the maintenance cost would be borne by the shipowner, the charterer would no longer pay the shipowner hire during repair of the right host; faxed copy was valid. Due to the repair of the main engine of M.V. “XIN GUANG JIANG 6”, the charterer paid an advance fee of 33,450 yuan. During the hire period of M.V. “XIN GUANG JIANG 6”, the Plaintiff received 100,000 yuan on April 29, 2016, then received 50,000 yuan respectively on May 1, 9, July 21, September 2, 8, 30, and October 21, 2016. The above sum amounted to 483,450 yuan. On September 2, 2016, the Plaintiff entrusted Zhejiang Highchance (Ningbo) Law Firm to send letters to Qinfeng and WU Enhua respectively to demand the hire of the ship involved. These lawyer’s letters were signed and received by the staff of Qinfeng on September 5, 2016 and by WU Enhua himself on September 3, 2016. On November 3, 2016, the Plaintiff again entrusted Zhejiang Highchance (Ningbo) Law Firm to send letters to Qinfeng and WU Enhua respectively, required the two Defendants to re-deliver M.V. “XIN GUANG JIANG 6” immediately to Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the charter by the reasons that delays in paying hire had constituted a fundamental breach of contract, and seriously infringe upon the legitimate rights and interests of the Plaintiff, payment of hire was calculated to the date of completion of re-delivery of the vessel, meanwhile, and reserved the right to pursue liability for breach of contract. This lawyer’s letters were signed and received by the staff of Qinfeng on November 8, 2016 and by WU Enhua himself on November 6, 2016. On November 23, 2016, the officers of Tianjin Dongjiang Maritime Safety Administration found it during a field inspection that structure and practical use of M.V. “XIN GUANG JIANG 6” (port of registry was Wuhu) were not in conformity with the type of ship indicated in the ship inspection certificate, upon investigation, the type of the ship recorded in ship certificates of inspection was container ship, but he actual purpose of the ship from May to October 2016 was to transport sand and stone, there was suspicion of altering the structure and use of the ship without permission, and certain safety hazards existed. On December 6, 2016, Tianjin Dongjiang Maritime Safety Administration sent a letter (Dong Jiang Hai Han [2016] No.19) to Wuhu Maritime Safety Administration on assisting in the disposal of M.V. “XIN GUANG JIANG 6”, and advised Wuhu to recall the ship and entrust the ship inspection agency with additional inspection according to the Rules for the Legal Inspection of Ships and maritime Facilities of the Maritime Safety

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Administration of the People’s Republic of China Chapter 2 Article 5. Currently, M.V. “XIN GUANG JIANG 6” did not re-deliver to the Plaintiff. The court held that: this case was a bareboat charter dispute. According to the plea opinions and statements of both parties, the issues of this case was that: 1. legal status of WU Enhua; 2. whether each party had facts of breach of contract or not; 3. how to re-deliver M.V. “XIN GUANG JIANG 6” after the termination of bareboat charter involved; 4. whether the hire or liquidated damages claimed by the Plaintiff or Qinfeng respectively were legal or reasonable. Regarding issue 1, the Plaintiff contended that Qinfeng and WU Enhua were joint charterers of the ship involved. Qinfeng and WU Enhua contended that WU Enhua was only a staff member and a contract representative of Qinfeng, not a charterer. The court held that the head part of the bareboat charter involved recorded that Qinfeng and WU Enhua were charterers, and the official seal of Qinfeng and signature of WU Enhua were at the end part of the bareboat charter. The Plaintiff contended that the charter was signed with WU Enhua, and neither Qinfeng nor WU Enhua raised any objection; according to the statement of WU Enhua in call provided by the Plaintiff, WU Enhua had never confirmed that he was a staff member or a contract representative of Qinfeng or mentioned the company, Qinfeng and WU Enhua also made clear in the trial that there was no labor contract or social insurance payment record of WU Enhua; besides, according to the conversation record for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership), he charterer of the ship involved was a man of Wenling native place, and the native place of WU Enhua was Wenling. In conclusion, the court confirmed that Qinfeng and WU Enhua were joint charterers of the ship involved, and the above defense evidence and reasons put forward by Qinfeng and WU Enhua were insufficient and should not be adopted. Regarding issue 2, the Plaintiff contended that Qinfeng and WU Enhua had been delaying the payment of hire for the bareboat charter involved, which was serious breach of contract, Qinfeng and WU Enhua contended that the Plaintiff brook the charter seriously after contracting the bareboat charter involved, including delay in delivery of the ship involved, modification of the ship without approval of relevant departments, so that the ship was seized by the Dongjiang Maritime Safety Administration, incomplete ship certificates, poor ship conditions, etc. The court held that in the case, the company argued that it had paid 783,450 yuan to the Plaintiff or the hire of the ship involved, the Plaintiff confirmed that the hire, 483,450 yuan, was received, but did not confirm the 300,000 yuan, because Qinfeng and WU Enhua failed to provide strong evidence to prove that the 300,000 yuan of deposit agreed in the bareboat charter involved had been actually paid to the Plaintiff or deducted, so the plea of Qinfeng was not accepted. According to the case of the bareboat charter about the ship handover confirmation should formally handed in after the signature and seal of both parties, but also no objection to that the terms of the ship and the ship’s handover confirmation involved in the execution of bareboat charter, the statements of that the conditions for the handover of the ship should be established, and both parties agreed to the handover of the ship and were willing to bear the risks arising therefrom, the date of signing the handover

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confirmation of the ship involved should be deemed as the date of the formal handover of the ship involved on April 19, 2016 without evidence to the contrary, that the beginning of April, 2016, the date of handover of ship contended by the Plaintiff and that the end of April, the date of handover of ship contended by Qinfeng and WU Enhua were not adopted. According to the agreement of ‘within 10 days prior to the month of each cycle” in the bareboat charter, combining with the trial survey, Qinfeng and WU Enhua as joint charterers should officially transfer in ships involved in April 2016 on the day of 19 before 29 per month and paid the Plaintiff before March 1, 2017 monthly hire 100,000 yuan of the ship, until the date on which the charter of the ship expired or actual re-delivered the ship, in terms of the time it had paid the hire of 483,450 yuan, except the 33,450 yuan paid in advance for repairing the ship’s main engine, 100,000 yuan paid on April 29, 2016 and 50,000 yuan paid in May 2016, other hire was obviously overdue, which constituted a breach of contract. Whether the Plaintiff had delayed the delivery of the ship involved, because as agreed in the bareboat charter, the date of delivery was March 31, 2016 to April 5, 2016, the defense used by the Plaintiff that the unexpected death of crew LI Haihua and the mediation of all the parties were on April 9, 2016, which was later than the date of delivery as agreed, so the above defense of the Plaintiff should not be accepted; the Plaintiff contended that the crew employed by the Defendants went aboard the ship and was in charge of the ship in early April 2016 without valid evidence, but the Defendant did not confirm it, combining the record that there were obvious cracks in the right body of the ship’s main engine in the handover confirmation of the ship involved and the statement that machinery crack repair and delay delivery to ship made by SHI Feilong in call provided by the Plaintiff, the Plaintiff should be deemed to have breached the contract for overdue delivery of the ship. However, the handover confirmation of the ship involved clearly stated that the parties had no objection to the performance of the bareboat charter, both parties should be deemed to have jointly confirmed the legitimacy of their previous performance, so the Plaintiff’s claim that the delay in delivery of the ship involved in the case by Qinfeng and WU Enhua constituted a serious breach of contract should not be accepted. As to whether the Plaintiff had altered the ship involved without the approval of the relevant authorities, which resulted to that the ship had been seized by the Dongjiang Maritime Safety Administration and the ship certificate was incomplete, the letter of the Dongjiang Maritime Safety Administration on assisting in the disposal of M.V. “XIN GUANG JIANG 6” mentioned by Qianfeng company only recorded that the ship involved “had the suspicion of changing the structure and uses of the ship privately, the identity of the suspect was not involved, there was also no relevant record of incomplete ship certificate, the conversation record for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership) made by the court showed that the ship involved had only been repaired and maintained at the shipyard and had not been refitted, Qinfeng and WU Enhua did not provide strong evidence to refute, so the claim made by the Plaintiff to modify the ship involved without the approval of the relevant authorities and that the ship certificate did not constitute a serious breach should not be accepted; as to

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whether the ship involved was detained temporarily by the Dongjiang Maritime Safety Administration, the evidence on the record could not be confirmed, and the Plaintiff also had objections and had not received the relevant documents issued by the maritime administration, through investigating, the officers of Dongjiang Maritime Safety Administration said that they did not take provisional measures against the ship involved, and they only transferred and checked the ship’s certificate, so it should be confirmed that the ship involved was not seized by Dongjiang Maritime Safety Administration. As to the fact whether the ship involved was in good condition or not, the statement of the ship recorded in the ship handover confirmation was in conformity with the conditions of delivery and re-delivery as agreed in the contract, in special agreement, it was recorded that the obvious cracks found on the right side of the main body of the ship involved could be used normally after repair, and the statements made by SHI Feilong in the recording of the call provided by the Plaintiff about the repair of the cracks in the machine could mutually confirmed those facts mentioned above, but Qinfeng and WU Enhua had not provided effective evidence to prove the fact that the main engine failure of the ship involved in the charter period affected the delivery and normal operation of the ship, the Plaintiff did not confirmed that, so the court did not confirmed that; as to the problem about ship propeller shaft provided by Qinfeng and WU Enhua, the problem was not mentioned in the handover confirmation of the ship involved, and there was no other valid evidence to prove it, the reasons were unknown, whether was inherent defect could not be confirmed, so the court did not confirm it. Regarding issue 3, the Plaintiff contended that Qinfeng and WU Enhua should re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter, Qinfeng and WU Enhua contended that because the ship was seized by the Dongjiang Maritime Safety Administration because of the Plaintiff’s modification of the ship involved, therefore, the Plaintiff should go to the Dongjiang Maritime Safety Administration to deal with the seizure of the ship involved and recover the ship. The court held that the Plaintiff sent letters to Qinfeng and WU Enhua respectively on September 2, 2016 for not receiving hire in time during performance of bareboat charter involved, then on November 3, 2016, the Plaintiff sent the letters to Qinfeng and WU Enhua once again to ask them to re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter, and to pay the hire calculated to the date of completion of re-delivery of the vessel, the lawyer’s letters had been sent to Qinfeng and WU Enhua respectively on November 8, 2016 and November 6, 2016 as a written notice for the Plaintiff to terminate the charter involved, according to Contract Law Article 96 Paragraph 1 and the Maritime Code Article 152 Paragraph 1, it should be confirmed that the bareboat charter was terminated on November 8, 2016, that was to say, the court did not support that the claims to terminate the bareboat charter provided by the Plaintiff and Qinfeng respectively. According to a letter from the Dongjiang Maritime Safety Administration of Qinfeng regarding assistance in handling M.V. “XIN

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GUANG JIANG 6”, the date that Dongjiang Maritime Safety Administration carried out on-site inspection on the ship and found that the structure and actual use of the ship were not in conformity with the type of ship indicated in the ship inspection certificate was November 23, 2016, which was later than the date of the termination of bareboat charter involved, this matter could not change the conditions of re-delivery agreed by both parties in the bareboat charter, so the claim of Qinfeng and WU Enhua above was not adopted, they should re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter. Regarding issue 4, the Plaintiff demanded that Qinfeng and WU Enhua should pay the hire calculated from the date of actual re-delivery of the ship and the interest of the hire owed, Qinfeng demanded that the Plaintiff returned the overpaid hire of 91,560 yuan and the corresponding interest, and both parties claimed a penalty of 300,000 yuan for the other party’s fundamental breach of contract. The court held that according to the analyses and confirmation of issue 2, the Plaintiff had no fundamental breach of contract, Qinfeng, on the other hand, was in default of paying the hire of the ship involved, which was delay in meeting major debts, the claim provided by Qinfeng in court that Qinfeng had paid hire of the ship involved in advance could not be adopted, accordingly, the court did not support the counterclaim of Qinfeng. The Plaintiff demanded that Qinfeng and WU Enhua should reimburse the hire calculated from the date of actual re-delivery of the ship and the interest loss due to the hire calculated at the same time as the benchmark interest rate for similar loans of People’s Bank of China, which was reasonable, and the court confirmed that, but the amount of 33,450 yuan for repairing the mainframes of the ship involved which the Plaintiff had confirmed to have been paid in advance by the Defendant should be deducted. Of the above interest loss, the interest loss of 100,000 yuan in June 2016 should be calculated from June 30 to the date July 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from July 22, 2016 to the date September 2, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in July 2016 should be calculated from July 30 to the date September 8, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from September 9, 2016 to the date September 30, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in August 2016 should be calculated from August 30 to the date October 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from October 22, 2016 to the date of the accomplishment of payment; the following interest loss of each month should be calculated from 30 of that month (there were 28 days in February, that would be calculated from March 2, 2017) or the date of actual re-delivery (if it was not later than 30 of that month) to the date of the actual accomplishment of payment. The amount of damage caused by the ship’s hire and interest due to the Plaintiff’s complaint was obviously higher than the liquidated damages of 300,000 yuan stipulated in the charter, so the court would not protect the liquidated damages of 300,000 yuan against the Plaintiff.

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To conclude, the claims of the Plaintiff which were reasonable should be supported by the court; the evidence and reasons of the counterclaims provided by Qinfeng were insufficient which should be rejected by the court. According to the Contract Law of the People’s Republic of China Article 96 Paragraph 1 and Article 107, Maritime Code of the People’s Republic of China Article 144 and Article 152 Paragraph 1, and Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. The Defendant (the counterclaim Plaintiff), Zhejiang Qinfeng Shipping Co., Ltd., and the Defendant, WU Enhua, shall re-deliver M.V. “XIN GUANG JIANG 6” to the Plaintiff (the counterclaim Defendant), Hefei Gui He Ju Business Co., Ltd., at Xiangshan Port, Ningbo City, Zhejiang Province according to the delivery terms in the charter, and the Plaintiff (the counterclaim Defendant), Hefei Gui He Ju Business Co., Ltd., shall cooperate with them, within ten days from the effective date of this judgment; 2. The hire should be paid by the Defendant (the counterclaim Plaintiff), Zhejiang Qinfeng Shipping Co., Ltd., and the Defendant, WU Enhua, to the Plaintiff (the counterclaim Defendant), Hefei Gui He Ju Business Co., Ltd., within the ten days after the actual re-delivery of M.V. “XIN GUANG JIANG 6” according to the above decision [calculated as 100,000 yuan per month, temporarily calculated to April 29, 2017, 750,000 yuan (12 months * 100,000 yuan per months − 450,000 yuan)], and the interest of the overdue hire based on the People’s Bank of China’s benchmark lending rate for the same period [the interest loss of 100,000 yuan in June 2016 should be calculated from June 30 to the date July 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from July 22, 2016 to the date September 2, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in July 2016 should be calculated from July 30 to the date September 8, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from September 9, 2016 to the date September 30, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in August 2016 should be calculated from August 30 to the date October 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from October 22, 2016 to the date of the accomplishment of payment; the following interest loss of each month should be calculated from 30th of that month (there were 28 days in February, so for that month to be calculated from March 2, 2017) or the date of actual re-delivery (if it is not later than 30th of that month) to the date of the actual accomplishment of payment], but a deduction of 33,450 yuan should be made for the advanced repair cost of M.V. “XIN GUANG JIANG6”‘main engine; 3. Reject other claims of the Plaintiff (the counterclaim Defendant) Hefei Gui He Ju Business Co., Ltd.; 4. Reject counterclaims of the Defendant (the counterclaim Plaintiff) Zhejiang Qinfeng Shipping Co., Ltd.

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If the payment obligation is not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid in double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in the amount of 9,494 yuan, the Plaintiff (the counterclaim Defendant) Hefei Gui He Ju Business Co., Ltd. shall bear 5,000 yuan, the Defendant (the counterclaim Plaintiff) Zhejiang Qinfeng Shipping Co., Ltd. and the Defendant WU Enhua shall bear 4,440 yuan; counterclaim acceptance fee in the amount of 3,587 yuan, the Defendant (the counterclaim Plaintiff) Zhejiang Qinfeng Shipping Co., Ltd. shall bear that. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit, together with copies of the original petition, appeal to the Zhejiang High People’s Court. Presiding Judge: LIN Shen Acting Judge: LI Shuqin People’s Juror: CHEN Liangzhi May 27, 2017 Acting Clerk: ZHOU Qianqian

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 96 Paragraph 1 Termination Subject to Approval The party availing itself of termination of a contract in accordance with Paragraph 2 of Article 93 and Article 94 hereof shall notify the other party. The contract is terminated when the notice reaches the other party. If the other party objects to the termination, the terminating party may petition the People’s Court or an arbitration institution to affirm the validity of the termination. Article 107 Types of Liabilities for Breach If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. 2. Maritime Code of the People’s Republic of China Article 144 A bareboat charter party is a charter party under which the shipowner provides the charterer with an unmanned ship which the charterer shall possess, employ and operate within an agreed period and for which the charterer shall pay the shipowner the hire.

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Article 152 Paragraph 1 The charterer shall pay the hire as stipulated in the charter. In default of payment by the charterer for seven consecutive days or more after the time as agreed in the charter for such payment, the shipowner is entitled to cancel the charter without prejudice to any claim for the loss arising from the charterer’s default. 3. Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 A party shall have the responsibility to provide evidence in support of its own propositions. Article 253 If the person subjected to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment. If the person subjected to execution fails to fulfil his other obligations within the period specified in the judgment or written order or any other legal document, he shall pay a charge for the dilatory fulfillment.

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Zhejiang High People’s Court Civil Judgment Hefei Gui He Ju Business Co., Ltd. v. Zhejiang Qinfeng Shipping Co., Ltd. et al. (2017) Zhe Min Zhong No.422 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 479. Cause of Action 213.(2) Dispute over bareboat charter party. Headnote Affirming lower court decision holding bareboat charterers liable to redeliver chartered ship detained by maritime authorities as agreed in charterparty, and to pay hire until redelivery. Summary The Plaintiff and the two Defendants entered into a bareboat charter party. The vessel was not returned because the maritime authorities boarded the vessel, and it was detained. The court of first-instance held that the two Defendants should re-deliver the vessel according to the delivery terms in the charter and the two Defendants should pay hire until the date of actual re-delivery. The court affirmed the judgement of first instance in holding that the Defendant WU Enhua, was a party to the charter agreement and that the calculation of the overdue hire payments with interest was correct.

Judgment The Appellant (the Plaintiff and the counterclaim Defendant of first instance): Hefei Gui He Ju Business Co., Ltd. Domicile: No.03, Block 1, Bihulanting, east of Songlin Road, Hefei Economic Development Zone, Anhui. Legal representative: SHI Yulong, general manager of the company. Agent ad litem: ZHANG Yonghai, lawyer of Highchance (Ningbo) Law Firm. Agent ad litem: SHI Chunlei, the lawyer of Zhejiang Highchance (Ningbo) Law Firm.

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The Appellant (the Defendant and the counterclaim Plaintiff of first instance): Zhejiang Qinfeng Shipping Co., Ltd. Domicile: Luqiao District, Taizhou, Zhejiang. Agent ad litem: JIANG Junhua, lawyer of Zhejiang Mingquan Law Firm. Agent ad litem: HU Jingjing, lawyer of Zhejiang Mingquan Law Firm. The Appellant (the Defendant of first instance): WU Enhua, male, born on May 12, 1978, Han. Domicile: Wenling, Zhejiang. Agent ad litem: JIANG Junhua, lawyer of Zhejiang Mingquan Law Firm. Agent ad litem: HU Jingjing, lawyer of Zhejiang Mingquan Law Firm. With respect to the case arising from dispute over bareboat charter party between the Appellant, Hefei Gui He Ju Business Co., Ltd. (hereinafter referred to as “Gui He Ju”), the Appellant, Zhejiang Qinfeng Shipping Co., Ltd. (hereinafter referred to as “Qinfeng”), and WU Enhua, the Appellants disagreed with (2016) Zhe 72 Min Chu No.2793 Civil Judgment made by Ningbo Maritime Court, and an appeal was filed in the court. After registering this case on July 4, 2017, the court legitimately constituted the collegiate bench to try the case, and the court summoned all parties to investigate and cross-exam the case on August 22, 2017. ZHANG Yonghai, agent ad litem of the Appellant Gui He Ju, and JIANG Junhua, agent ad litem of the Appellant Qinfeng, and WU Enhua, appeared in the court to attend the trial. During the proceedings of the second instance, Gui He Ju, Qinfeng, and WU Enhua applied for an out-of-court settlement, and the court approved it. But all parties could not reach an out-of-court settlement, so the trial continued. Now the case has been concluded. Gui He Ju claimed to the court of first instance that: 1. terminate the bareboat charter between Gui He Ju, Qinfeng, and WU Enhua; 2. Qinfeng and WU Enhua should re-deliver M.V. “XIN GUANG JIANG 6” to Xiangshan Port Ningbo City Zhejiang Province according to the delivery terms in the charter; 3. Qinfeng and WU Enhua should pay the hire till the date of actual re-delivery (calculate for the time being to December 20, 2016, 316,550 yuan); 4. Qinfeng and WU Enhua should pay the interests of the unpaid hire from April 30, 2016 to the date of accomplishment of actual payment, according to the interests of benchmark lending rates for the same period of People’s Bank of China (calculate for the time being to December 20, 2016, 3,650.04 yuan); 5. Qinfeng and WU Enhua should pay liquidated damages 300,000 yuan to Gui He Ju. Facts and reasons: on March 29, 2016, Gui He Ju entered into a bareboat charter with Qinfeng and WU Enhua; it was agreed that Gui He Ju would bareboat charter M.V. “XIN GUANG JIANG 6” to Qinfeng and WU Enhua for operation. Leasehold was one year, hire of year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month monthly. The hire should be paid on the first 10 days of each period; if Qinfeng re-delivered the ship, the condition

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that the ship should be re-delivered at Xiangshan Port Ningbo City Zhejiang Province according to the delivery terms in the contract must be satisfied; in case of breach of contract during the lease term, the breaching party should pay the non-breaching party 300,000 yuan as liquidated damages. After contracting, Gui He Ju delivered the ship to Qinfeng and WU Enhua, but Qinfeng and WU Enhua failed to fulfill the charter carefully and to pay the hire on time. Gui He Ju had repeatedly demanded hire from Qinfeng and WU Enhua and sent letters to their lawyers. Qinfeng and WU Enhua did not pay the hire. In conclusion, the bareboat charter between all parties was legal and valid, and Qinfeng and WU Enhua should pay the hire in time as agreed in the charter, Qinfeng and WU Enhua’s delay in paying the hire had prevented Gui He Ju from achieving the purpose of the contract, It seriously infringed upon the legitimate rights and interests of Gui He Ju. The suit was hereby brought to the court. Qinfeng argued in the first instance that: 1. it agreed to terminate the bareboat charter signed with Gui He Ju, but the responsibility for rescinding the contract rested with Gui He Ju. 2. After contracting, Qinfeng paid hire 783,450 yuan to Gui He Ju, but Gui He Ju failed to perform the contract as agreed, Gui He Ju did not deliver the ship chartered as agreed in the terms of charter, confirmation of handover of ship was not signed until April 19, 2016, but the actual date of delivery was the end of April, Qinfeng found out that the ship had been refitted without the approval of the relevant authorities and the certificate was incomplete after delivering. On November 23, 2016, M.V. “XIN GUANG JAING 6” was seized by Dongjiang Maritime Safety Administration because the structure and actual use of the ship chartered were not in conformity with the type of ship indicated in the ship inspection certificate, as a result, Qinfeng could not continue to operate, and Qinfeng had also commissioned a lawyer to write to Gui He Ju to terminate the bareboat charter. After termination, the ship was seized by the Marine department. The reason for the seizure was that Gui He Ju had privately refitted the ship, so Gui He Ju should handle the seizure of the ship involved and recovered the ship by itself. 3. The ship was seized by the maritime department and Qinfeng was unable to continue operation because Gui He Ju had chartered M.V. “XIN GUANG JIANG 6”, which had been privately modified for the structure and use of the ship, to Qinfeng, so the hire of charter should be calculated from the date of actual delivery, May 1, 2016, to the date of seizure by maritime department, November 23, 2016, actual rental term was 207 days, actual hire was 691,890 yuan, and Qinfeng had paid 783,450 yuan to Gui He Ju, overpaid 91,560 yuan, so Qinfeng did not pay the hire lately or owe the hire of Gui He Ju, and there was no need to pay Gui He Ju liquidated damages, the default party in this case was Gui He Ju. 4. The Defendant WU Enhua was signatory representative of Qinfeng, WU Enhua was not the charterer. In conclusion, Gui He Ju had no facts or legal basis for the lawsuit filed by Qinfeng, and the request should be rejected according to law. WU Enhua argued in the first instance that, in this case, WU Enhua was a signatory representative of Qinfeng. WU Enhua signed their name as representative on page 2 of bareboat charter involved, but was not a qualified subject of suit in this

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case, so the suit to WU Enhua should be rejected. The other defense opinions were consistent with those of Qinfeng. Qinfeng filed counterclaims with the court of the first instance that: 1. terminate the bareboat charter between Qinfeng and Gui He Ju, and Gui He Ju should be responsible for seizure of ship by Tianjin Dongjiang Maritime Safety Administration, and took back M.V. “XIN GUANG JIANG 6” by itself; 2. Gui He Ju should immediately refund the hire of 91,560 yuan to Qinfeng, and should pay the interests of benchmark lending rates for the same period of People’s Bank of China; 3. Gui He Ju paid liquidated damages of 300,000 yuan to Qinfeng. Facts and reasons: on March 29, 2016, Qinfeng entered into a bareboat charter with Gui He Ju, it was agreed that Gui He Ju would bareboat charter M.V. “XIN GUANG JIANG 6” to Qinfeng, leasehold was one year, hire of year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month monthly; Gui He Ju should get certificate of registration of ownership of ship, certificate book for inspection of ships at sea, certificate of ship’s nationality, minimum safe manning certificate for ships and so on, and made sure that the ship was sea-worthy; the day of delivery was from March 31 to April 5, 2016; in case of breach of contract within the charter period, the breaching party should notify the other party at least 15 days in advance and paid the other party a liquidated damages of 300,000 yuan. After contracting, Qinfeng paid hire of 783,450 yuan to Gui He Ju, but Gui He Ju did not sign confirmation of handover of ship as agreed until April 19, 2016, and the actual date of delivery was the end of April 2016, the ship was refitted without the approval of the relevant authorities, and the certificate was not complete, resulting in the inability of Qinfeng to operate normally, and resulting in huge losses. On November 23, 2016, M.V. “XIN GUANG JAING 6” was seized by Dongjiang Maritime Safety Administration because the structure and actual use of the ship chartered were not in conformity with the type of ship indicated in the ship inspection certificate, as a result, Qinfeng could not continue to operate, so Qinfeng commissioned a lawyer of Zhejiang Antian Law Firm to write to Gui He Ju to terminate the bareboat charter on November 23, 2016, and Gui He Ju should be responsible for seizure of ship by Tianjin Dongjiang Maritime Safety Administration, and took back M.V. “XIN GUANG JIANG 6” by itself, and arranged personnel management, promptly settled the hire and the loss with Qinfeng. In conclusion, Gui He Ju changed the structure and the use of M.V. “XIN GUANG JIANG 6” to bareboat charter it to Qinfeng, the ship was seized by maritime department, as a result, Qinfeng could not operate the ship, so Gui He Ju had breached the charter and it should bear corresponding liability for breach of contract. Since the purpose of the contract of Qinfeng had been lost, the bareboat charter signed between two parties should be terminated. In order to safeguard lawful rights and interests, the counterclaim was hereby brought to the court. Gui He Ju argued that: 1. there was no facts showing that the ship involved was seized by Dongjiang Maritime Safety Administration as what Qinfeng said. Gui He Ju only saw one document. Even if the seizure of the ship was true, the liability

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should be borne by Qinfeng itself, because the ship had been actually delivered to Qinfeng for operation. That Qinfeng required Gui He Ju to handle the ship seizure on its own was without any facts or legal basis. 2. The amount of hire paid, Gui He Ju had provided the corresponding payment slip, the fact was clear, the total paid-in hire was 483,450 yuan. If Qinfeng held that it had paid the hire of 783,450 yuan, it should provide relevant evidence for the difference of 300,000 yuan. 3. The default fact in this case was caused by Qinfeng and WU Enhua, and had no connection with Gui He Ju, the Defendant should pay whole hire to Gui He Ju, and re-deliver the ship as agreed according to re-delivery terms recorded in charter after handling seizure matters. Qinfeng stated that it had sent a letter to Gui He Ju on November 23, 2016 asking for the termination of the charter, but Gui He Ju did not receive the letter. As for the counterclaims filed by Qinfeng, WU Enhua said in court that he was not a qualified subject of suit in this case. The court of first instance found out that, on March 29, 2016, both parties involved as shipowner and as charterer signed a bareboat charter by fax, it was agreed that the shipowner would bareboat charter M.V. “XIN GUANG JIANG 6” to the two charterers, the leasehold was one year, hire for the year was 1,220,000 yuan, deposit was 300,000 yuan, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, and 100,000 yuan should be paid from the third month monthly, the hire should be paid on the first 10 days of each period, the remaining 100,000 yuan deposit would be deducted from the last hire by 50,000 yuan, the remaining 50,000 yuan would be returned at the time of signing of the return letter, ship insurance premium, handling fee and legal annual inspection fee should be borne by the shipowner; both parties confirmed that the basic conditions for delivery and re-delivery of the ship should be the qualified as specified in the certificate of ship’s inspection of M.V. “XIN GUANG JIANG 6”, the shipowner should ensure that the ship obtained the certificate of registration of ownership of the ship, the certificate book of inspection of the ship at sea, the certificate of nationality of the ship, the certificate of minimum safe manning of the ship, etc., and the shipowner should ensure the seaworthiness of the ship, especially agreed to host and clutch, shaft and propeller, vice machine and electricity equipment, windlass and mooring winch, communication navigation equipment for not less than half an hour of continuous use without exception, hull damage had no obvious sag, etc.; during the charter period, the crew insurance premium should be borne by the charterer, the charterer should organize the crew to carry out normal maintenance of the ship at the charterer’s expense, the ship should meet the conditions agreed upon by both parties before re-delivery; the place of delivery and re-delivery was in Xiangshan Port Ningbo Zhejiang, the date of delivery was from March 31 to April 5, 2016, confirmation of handover would be signed after delivering actually, the ship would be formally delivered or re-delivered after both parties signed confirmation of handover; during the charter period, the shipowner guaranteed that the ship would not be able to operate normally due to no debts or disputes between shareholders, the shipowner would bear all the loss against the charterer caused by what mentioned above; in particular, the

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parties agreed that in case of any breach of contract during the charter period of the ship, the breaching party should notify the other party at least 15 days in advance and pay the other party a penalty of 300,000 yuan; this contract should come into force upon execution of the deposit, etc. Gui He Ju, Qinfeng and WU Enhua respectively signed and sealed at the end of the charter. Meanwhile, the involved M. V. “XIN GUANG JIANG 6” (formerly named M.V. “TU SHUN 2”) was repaired and maintained in Ninghai Shengli Ship Repair Factory (General Partnership). On April 9, 2016, LI Haihua, called by Qinfeng and WU Enhua, died unexpectedly. On the same day, LIANG Jingchun as M.V. “XIN GUANG JIANG 6” representative of charterer achieved people’s mediation agreement with the dead LI Haihua’s families in Taizhou Luqiao District people’s mediation committee that the charterer indemnified LI Haihua’s families for 728,000 yuan. On April 19, 2016, Gui He Ju and Qinfeng respectively signed the shipping handover confirmation by fax as shipowner and as charterer, which states that both parties effectively performed bareboat charter, now the condition of the ship was in conformity with the condition of delivery and re-delivery as the contract agreed, the two parties had no objection to the performance of the bareboat charter, and the conditions for the handover of the ship were established, both parties agreed to the handover of the ship and were willing to bear the risks arising therefrom; the handover time of the ship was April 19, 2016, handover place was Xiangshan Port, both parties had completed the handover of the ship at the time and place mentioned above, from the date of handover, management rights of M.V. “XIN GUANG JIANG 6” should be owned by the charterer, all risks, claims and debts incurred in this round before handover should be borne by the shipowner, and those incurred after handover should be borne by the charterer; special agreement: as there were obvious cracks in the host body on the right side of the ship, it could be used normally after repair, if there was still a leakage problem in the repair area during the hire period after handover, the maintenance of the right host machine would be caused, and the maintenance cost would be borne by the shipowner, the charterer would no longer pay the shipowner hire during repair of the right host; faxed copy was valid. Due to the repair of the main engine of M.V. “XIN GUANG JIANG 6”, the charterer paid an advance fee of 33,450 yuan. During the hire period of M.V. “XIN GUANG JIANG 6”, Gui He Ju received 100,000 yuan on April 29, 2016, then received 50,000 yuan respectively on May 1, 9, July 21, September 2, 8, 30, and October 21, 2016. The above sum amounted to 483,450 yuan. On September 2, 2016, Gui He Ju entrusted Zhejiang Highchance (Ningbo) Law Firm to send letters to Qinfeng and WU Enhua respectively to demand the hire of the ship involved. These lawyer’s letters were signed and received by the staff of Qinfeng on September 5, 2016 and by WU Enhua himself on September 3, 2016. On November 3, 2016, Gui He Ju again entrusted Zhejiang Highchance (Ningbo) Law Firm to send letters to Qinfeng and WU Enhua respectively, required them to re-deliver M.V. “XIN GUANG JIANG 6” immediately to Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the charter by the reasons that delays in paying hire had constituted a fundamental breach of contract,

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and seriously infringe upon the legitimate rights and interests of Gui He Ju, payment of hire was calculated to the date of completion of re-delivery of the vessel, meanwhile, and reserved the right to pursue liability for breach of contract. These lawyer’s letters were signed and received by the staff of Qinfeng on November 8, 2016 and by WU Enhua himself on November 6, 2016. On November 23, 2016, the officers of Tianjin Dongjiang Maritime Safety Administration found during a field inspection that structure and practical use of M. V. “XIN GUANG JIANG 6” (port of registry was Wuhu) were not in conformity with the type of ship indicated in the ship inspection certificate. Upon investigation, the type of the ship recorded in ship certificates of inspection was container ship, but he actual purpose of the ship from May to October 2016 was to transport sand and stone, there was suspicion of altering the structure and use of the ship without permission, and certain safety hazards existed. On December 6, 2016, Tianjin Dongjiang Maritime Safety Administration sent a letter (Dong Jiang Hai Han [2016] No.19) to Wuhu Maritime Safety Administration on assisting in the disposal of M.V. “XIN GUANG JIANG 6”, and advised Wuhu to recall the ship and entrust the ship inspection agency with additional inspection according to the Rules for the Legal Inspection of Ships and maritime Facilities of the Maritime Safety Administration of the People’s Republic of China Chapter 2 Article 5. Currently, M.V. “XIN GUANG JIANG 6” did not re-deliver to Gui He Ju. The court of first instance held that: this case was a bareboat charter dispute. According to the plea opinions and statements of both parties, the issues of this case was that: 1. legal status of WU Enhua; 2. whether each party had facts of breach of contract or not; 3. how to re-deliver M.V. “XIN GUANG JIANG 6” after the termination of bareboat charter involved; 4. whether the hire or liquidated damages claimed by Gui He Ju or Qinfeng respectively were legal or reasonable. Regarding issue 1, Gui He Ju contended that Qinfeng and WU Enhua were joint charterers of the ship involved. Qinfeng and WU Enhua contended that WU Enhua was only a staff member and a contract representative of Qinfeng, not a charterer. The court held that the head part of the bareboat charter involved recorded that Qinfeng and WU Enhua were charterers, and the official seal of Qinfeng and signature of WU Enhua were at the end part of the bareboat charter. Gui He Ju contended that the charter was signed with WU Enhua, and neither Qinfeng nor WU Enhua raised any objection; according to the statement of WU Enhua in call provided by Gui He Ju, WU Enhua had never confirmed that he was a staff member or a contract representative of Qinfeng or mentioned the company, Qinfeng and WU Enhua also made clear in the trial that there was no labor contract or social insurance payment record of WU Enhua; besides, according to the conversation record for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership), the charterer of the ship involved was a man of Wenling native place, and the native place of WU Enhua was Wenling. In conclusion, the court confirmed that Qinfeng and WU Enhua were joint charterers of the ship involved, and the above defense evidence and reasons put forward by Qinfeng and WU Enhua were insufficient and should not be adopted.

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Regarding issue 2, Gui He Ju contended that Qinfeng and WU Enhua had been delaying the payment of hire for the bareboat charter involved, which was serious breach of contract, Qinfeng and WU Enhua contended that Gui He Ju brook the charter seriously after contracting the bareboat charter involved, including delay in delivery of the ship involved, modification of the ship without approval of relevant departments, so that the ship was seized by the Dongjiang Maritime Safety Administration, incomplete ship certificates, poor ship conditions, etc. The court of first instance held that in the case, Qinfeng argued that it had paid 783,450 yuan to Gui He Ju for the hire of the ship involved, Gui He Ju confirmed that the hire, 483,450 yuan, was received, but did not confirm the 300,000 yuan, because Qinfeng and WU Enhua failed to provide strong evidence to prove that the 300,000 yuan of deposit agreed in the bareboat charter involved had been actually paid to Gui He Ju or deducted, so the plea of Qinfeng was not accepted. According to the case of the bareboat charter about the ship handover confirmation should formally handed in after the signature and seal of both parties, but also no objection to that the terms of the ship and the ship’s handover confirmation involved in the execution of bareboat charter, the statements of that the conditions for the handover of the ship should be established, and both parties agreed to the handover of the ship and were willing to bear the risks arising therefrom, the date of signing the handover confirmation of the ship involved should be deemed as the date of the formal handover of the ship involved on April 19, 2016 without evidence to the contrary, that the beginning of April, 2016, the date of handover of ship contended by Gui He Ju and that the end of April, the date of handover of ship contended by Qinfeng and WU Enhua were not adopted. According to the agreement of “within 10 days prior to the month of each cycle” in the bareboat charter, combining with the trial survey, Qinfeng and WU Enhua as joint charterers should officially transfer in ships involved in April 2016 on the day of 19 before 29 per month and paid to Gui He Ju before March 1, 2017 monthly hire 100,000 yuan of the ship, until the date on which the charter of the ship expired or actual re-delivered the ship, in terms of the time it had paid the hire of 483,450 yuan, except the 33,450 yuan paid in advance for repairing the ship’s main engine, 100,000 yuan paid on April 29, 2016 and 50,000 yuan paid in May 2016, other hire was obviously overdue, which constituted a breach of contract. Whether Gui He Ju had delayed the delivery of the ship involved, because as agreed in the bareboat charter, the date of delivery was March 31, 2016 to April 5, 2016, the defense used by Gui He Ju that the unexpected death of crew LI Haihua and the mediation of all the parties were on April 9, 2016, which was later than the date of delivery as agreed, so the above defense of Gui He Ju should not be accepted; Gui He Ju contended that the crew employed by Qinfeng and WU Enhua went aboard the ship and was in charge of the ship in early April 2016 without valid evidence, but Qinfeng did not confirm it, combining the record that there were obvious cracks in the right body of the ship’s main engine in the handover confirmation of the ship involved and the statement that machinery crack repair and delay delivery to ship made by SHI Feilong in call provided by Gui He Ju, Gui He Ju should be deemed to have breached the contract for overdue delivery of the ship. However, the handover confirmation of the ship involved clearly stated

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that both parties had no objection to the performance of the bareboat charter, both parties should be deemed to have jointly confirmed the legitimacy of their previous performance, so Gui He Ju’s claim that the delay in delivery of the ship involved in the case by Qinfeng and WU Enhua constituted a serious breach of contract should not be accepted. As to whether Gui He Ju had altered the ship involved without the approval of the relevant authorities, which resulted to that the ship had been seized by the Dongjiang Maritime Safety Administration and the ship certificate was incomplete, the letter of the Dongjiang Maritime Safety Administration on assisting in the disposal of M.V. “XIN GUANG JIANG 6” mentioned by Qianfeng company only recorded that the ship involved “had the suspicion of changing the structure and uses of the ship privately, the identity of the suspect was not involved, there was also no relevant record of incomplete ship certificate, the conversation record for LIN Dacheng and XUE Jiaoxian, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership) made by the court showed that the ship involved had only been repaired and maintained at the shipyard and had not been refitted, Qinfeng and WU Enhua did not provide strong evidence to refute, so the claim made by Gui He Ju to modify the ship involved without the approval of the relevant authorities and that the ship certificate did not constitute a serious breach should not be accepted; as to whether the ship involved was detained temporarily by the Dongjiang Maritime Safety Administration, the evidence on the record could not be confirmed, and Gui He Ju also had objections and had not received the relevant documents issued by the maritime administration. Through investigating, the officers of Dongjiang Maritime Safety Administration said that they did not take provisional measures against the ship involved, and they only transferred and checked the ship’s certificate, so it should be confirmed that the ship involved was not seized by Dongjiang Maritime Safety Administration. As to the fact whether the ship involved was in good condition or not, the statement of the ship recorded in the ship handover confirmation was in conformity with the conditions of delivery and re-delivery as agreed in the contract, in special agreement, it was recorded that the obvious cracks found on the right side of the main body of the ship involved could be used normally after repair, and the statements made by SHI Feilong in the recording of the call provided by Gui He Ju about the repair of the cracks in the machine could mutually confirmed those facts mentioned above, but Qinfeng and WU Enhua had not provided effective evidence to prove the fact that the main engine failure of the ship involved in the charter period affected the delivery and normal operation of the ship, Gui He Ju did not confirm that, so the court did not confirm that; as to the problem about ship propeller shaft provided by Qinfeng and WU Enhua, the problem was not mentioned in the handover confirmation of the ship involved, and there was no other valid evidence to prove it, the reasons were unknown, whether was inherent defect could not be confirmed, so the court did not confirm it. Regarding issue 3, Gui He Ju contended that Qinfeng and WU Enhua should re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter. Qinfeng and WU Enhua contended that because the ship was seized by the Dongjiang

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Maritime Safety Administration because of Gui He Ju’s modification of the ship involved and therefore, Gui He Ju should go to the Dongjiang Maritime Safety Administration to deal with the seizure of the ship involved and recover the ship. The court held that Gui He Ju sent letters to Qinfeng and WU Enhua respectively on September 2, 2016 for not receiving hire in time during performance of bareboat charter involved, then on November 3, 2016, Gui He Ju sent the letters to Qinfeng and WU Enhua once again to ask them to re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter, and to pay the hire calculated to the date of completion of re-delivery of the vessel, the lawyer’s letters had been sent to Qinfeng and WU Enhua respectively on November 8, 2016 and November 6, 2016 as a written notice for Gui He Ju to terminate the charter involved, according to the Contract Law Article 96 Paragraph 1 and the Maritime Code Article 152 Paragraph 1, it should be confirmed that the bareboat charter was terminated on November 8, 2016, that was to say, the court did not support that the claims to terminate the bareboat charter provided by Gui He Ju and Qinfeng respectively. According to a letter from the Dongjiang Maritime Safety Administration of Qinfeng regarding assistance in handling M.V. “XIN GUANG JIANG 6”, the date that Dongjiang Maritime Safety Administration carried out on-site inspection on the ship and found that the structure and actual use of the ship were not in conformity with the type of ship indicated in the ship inspection certificate was November 23, 2016, which was later than the date of the termination of bareboat charter involved, this matter could not change the conditions of re-delivery agreed by both parties in the bareboat charter, so the claim of Qinfeng and WU Enhua above was not adopted, they should re-deliver M.V. “XIN GUANG JIANG 6” at Xiangshan Port, Ningbo, Zhejiang Province, in accordance with the conditions agreed in the relevant bareboat charter. Regarding issue 4, Gui He Ju demanded that Qinfeng and WU Enhua should pay the hire calculated from the date of actual re-delivery of the ship and the interest of the hire owed, Qinfeng demanded that Gui He Ju returned the overpaid hire of 91,560 yuan and the corresponding interest, and both parties claimed a penalty of 300,000 yuan for the other party’s fundamental breach of contract. The court of first instance held that according to the analyses and confirmation of issue 2, Gui He Ju had no fundamental breach of contract, Qinfeng, on the other hand, was in default of paying the hire of the ship involved, which was delay in meeting major debts. The claim provided by Qinfeng in court that Qinfeng had paid hire of the ship involved in advance could not be adopted. Accordingly, the court did not support the counterclaim of Qinfeng. Gui He Ju demanded that Qinfeng and WU Enhua should reimburse the hire calculated from the date of actual re-delivery of the ship and the interest loss due to the hire calculated at the same time as the benchmark interest rate for similar loans of People’s Bank of China, which was reasonable, and the court confirmed that, but the amount of 33,450 yuan for repairing the mainframes of the ship involved which Gui He Ju had confirmed to have been paid in advance by Qinfeng should be deducted. Of the above interest loss, the interest loss of 100,000 yuan in June 2016 should be calculated from June 30 to the date July 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that

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month should be calculated from July 22, 2016 to the date September 2, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in July 2016 should be calculated from July 30 to the date September 8, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from September 9, 2016 to the date September 30, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in August 2016 should be calculated from August 30 to the date October 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from October 22, 2016 to the date of the accomplishment of payment; the following interest loss of each month should be calculated from 30 of that month (there were 28 days in February, that would be calculated from March 2, 2017) or the date of actual re-delivery (if it was not later than 30 of that month) to the date of the actual accomplishment of payment. The amount of damage caused by the ship’s hire and interest due to Gui He Ju’s complaint was obviously higher than the liquidated damages of 300,000 yuan stipulated in the charter, so the court would not protect the liquidated damages of 300,000 yuan against Gui He Ju. Pulling the threads together, the claims of Gui He Ju which were reasonable should be supported by the court; the evidence and reasons of the counterclaims provided by Qinfeng were insufficient which should be rejected by the court. According to the Contract Law of the People’s Republic of China Article 96 Paragraph 1 and Article 107, the Maritime Code of the People’s Republic of China Article 144 and Article 152 Paragraph 1, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment was as follows: 1. Qinfeng and WU Enhua should re-deliver M.V. “XIN GUANG JIANG 6” to Gui He Ju at Xiangshan Port Ningbo City Zhejiang Province according to the delivery terms in the charter, and Gui He Ju should cooperate with them within ten days from the effective date of this judgment; 2. The hire should be paid by Qinfeng and WU Enhua to Gui He Ju within the ten days after the actual re-delivery of M.V. “XIN GUANG JIANG 6” according to the above decision [calculated as 100,000 yuan per month, temporarily calculated to April 29, 2017, 750,000 yuan (12 months*100,000 yuan per months-450,000 yuan)], and the interest of the payment owed accrued at the People’s Bank of China’s benchmark lending rate for the same period [the interest loss of 100,000 yuan in June 2016 should be calculated from June 30 to the date July 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from July 22, 2016 to the date September 2, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in July 2016 should be calculated from July 30 to the date September 8, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from September 9, 2016 to the date September 30, 2016 of the accomplishment of payment; the interest loss of 100,000 yuan in August 2016 should be calculated from August 30 to the date October 21, 2016 that 50,000 yuan was paid, the interest loss of the rest 50,000 yuan of that month should be calculated from October 22, 2016 to the date of the accomplishment of payment; the following interest loss of each month should be calculated from 30 of that month (there were 28 days in February, that would be calculated from March 2, 2017) or the date of actual re-delivery (if it was

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not later than 30 of that month) to the date of the actual accomplishment of payment], and a deduction of 33,450 yuan should be made for the repair cost of M.V. “XIN GUANG JIANG6” ‘main engine; 3. Reject the rest claims provided by Gui He Ju; 4. Reject the counterclaim provided by Qinfeng. If the payment obligation was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Gui He Ju, Qinfeng and WU Enhua disagreed with the judgment of the first instance and an appeal was filed in the court. Gui He Ju appealed that: 1. Qinfeng and WU Enhua, in violation of the provisions of the bareboat charter, had delayed the payment of hire, which constituted a serious breach of contract. They should pay the liquidated damages to Gui He Ju in accordance with the provisions of the charter. The court of first instance held that it was wrong that the amount of hire loss was obviously higher than the liquidated damages, which would not be protected. The hire of the ship and interest were the reasonable expense and trading on price that should be paid by Qinfeng and WU Enhua for the charter and use of the ship. In the case of delayed payment of hire by Qinfeng and WU Enhua, they should not only pay the hire and interest unpaid according to the charter, but also pay liquidated damages according to the charter. 2. it was wrong about the calculation time of rental interest payment confirmed in the judgment of first instance, so the amount should be changed. According to the agreement on the payment time of hire in the bareboat charter, Qinfeng and WU Enhua should immediately pay 300,000 yuan as deposit to Gui He Ju after contracting, and the payment should be deducted from the hire for the first and second months from the date of delivery. Therefore, the payment time of May and June 2016 should be earlier than April 29, 2016. The judgment of the first instance held that the hire of May 2016 had been paid, that the beginning time of payment of interest should be calculated from June 30, 2016 was not accurate and it should be corrected. In conclusion, the requested the court of second instance to revoke the third item of first instance judgment according to law, and Qinfeng and WU Enhua should pay liquidated damages of 300,000 yuan; and adjust the calculation method of interest payment in the second item of the first instance judgment according to law; they also asserted that the costs of litigation and preservation of the first and second instance of this case should be borne by Qinfeng and WU Enhua. Qinfeng and WU Enhua argued against the appeal of Gui He Ju and asserted that the time of termination of the charter was on October 8, 2016, the rights and obligations of both parties were terminated, Gui He Ju should not advocate continuing to pay hire, but claim compensation of damages. Both parties in this case had breached the contract, both parties should pay liquidated damages to each other. The reasons of Gui He Ju’s appeal could not be established, and the request should be rejected. Qinfeng and WU Enhua appealed that: 1. it was wrong that the judgment of first instance held that Qinfeng and WU Enhua were joint charterers of the ship

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involved, WU Enhua was only the contract representative of Qinfeng, not the joint charterer. (1) Although there was no labor contract between WU Enhua and Qinfeng and there was no social insurance payment record, WU Enhua signed his name at “representative of Qinfeng” but not at “Qinfeng”, which was enough to prove that the signature act of WU Enhua was a representative of Qinfeng. (2) the court of first instance held that WU Enhua was joint charterer of the ship involved by the statement “as the conversation record for LIN Dacheng, the person in charge of Ninghai Shengli Ship Repair Factory (General Partnership) stated that charterer of the ship involved was a man of Wenling native place, and the native place of WU Enhua was Wenling” in the first instance, which was lack of evidence. The transcript of LIN Dacheng’s conversation was testimony of the witness. It had certain subjectivity and one-sidedness, the range of “Wenling native male” was too wide, which could not recognize WU Enhua directly. 2. Qinfeng did not have the fact that regarding delayed hire payment, the default party in this case was Gui He Ju. (1) M.V. “XIN GUANG JIANG 6” delivered by Gui He Ju before and after April 19, 2016 had serious quality problems and safety risks and was not seaworthy. The delivery date agreed upon by the ship involved was on March 31, to April 5, 2016, but the handover was scheduled for April 19, 2016, but after April 19, the ship involved still had quality problems. This fact was evidenced by the recording of a call between SHI Feilong and WU Enhua on October 9, 2016 submitted by Gui He Ju. Meanwhile, the handover procedures for the vessels involved were completed on 19 April 2016. On April 9, after compensation was reached for the death of a member of the ship involved in the case of Qinfeng, personnel from Gui He Ju also went to the ship involved in the investigation, photos taken at the scene showed that at least on April 17, 2016, the ship involved had been altered without permission, combining with Letter of Assistance in Handling M.V. “XIN GUANG JIAGN 6”, which was enough to prove that the ship involved in the case was changed without permission by Gui He Ju, and it was not changed after the ship involved was acquired by Qinfeng. (2) Qinfeng had paid the deposit of 300,000 yuan to Gui He Ju, method of payment was 300,000 yuan in advance to the family of the crew member LI Haihua for Gui He Ju. Firstly, the crew died before the handover of the ship involved, according to “all risks, claims and debts incurred by the ship prior to the handover should be borne by party A” recorded on Bareboat Charter and Ship Handover Confirmation, the death compensation of the crew should not be borne by Qinfeng as agreed, but Qinfeng paid 728,000 yuan, including 300,000 yuan in advance for Gui He Ju. Secondly, Gui He Ju was also authorized to pay an advance of 300,000 yuan to Qinfeng. The way to express recognition was to explicitly acknowledge receipt of the charter hire of 300,000 yuan in the Ship Handover Confirmation. Besides, the recording of a conversation between SHI Feilong and WU Enhua on October 9, 2016, submitted by Gui He Ju could also prove this fact. (3) According to Bareboat Charter, the 200,000 yuan of the deposit 300,000 yuan was deducted from the hire of the first and the second months, combining with the remittance amount of Qinfeng, there was no such thing as the delay payment of hire or interest. 3. Because Gui He Ju was involved in the unauthorized transformation of the ship, which resulted in seizure by the Dongjiang Maritime Safety

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Administration on November 23, 2016, and could not be operated up to now, it brought huge loss to Qinfeng, so the counterclaim filed by Qinfeng at the first instance should be supported. The clause 7 of Bareboat Charter showed that “in case of any breach of contract during the charter period of the ship, the breaching party shall notify the other party at least 15 days in advance and pay the other party a penalty of 300,000 yuan”. Due to the serious breach of contract by Gui He Ju, Qinfeng had the right to terminate the charter between both parties and require Gui He Ju to bear the corresponding liability for compensation. In conclusion, the judgment of first instance was wrong, request to reject the claims in first instance of Gui He Ju, support counterclaims in first instance of Qinfeng. Gui He Ju argued against the appeal of Qinfeng and WU Enhua that: 1. as for the charterer of the ship, the first part of the charter had been made clear that Qinfeng and WU Enhua were charterers, moreover, in the actual performance of the charter, it was also contacted by WU Enhua, who controlled the ship, so WU Enhua was the joint charterer. 2. As for the quality of the ship and the potential safety problems, both parties had made it clear in the handover agreement that there were no potential quality safety problems. 3. As for the so-called refitting of ship, according to the letters and photos of the Maritime Safety Administration alone, the ship could not be identified for refitting, the ship involved in the case did not have any unserviceable condition caused by the seizure by Maritime Safety Administration. 4. As for 300,000 yuan in advance, the ship involved was bareboat chartered, the crew involved were hired by Qinfeng, the settlement was also between Qinfeng and the families of the dead crew, there was no evidence to support the claim of Qinfeng that it should pay 300,000 yuan in advance for Gui He Ju. Neither Qinfeng nor WU Enhua had a basis for appeal and should be rejected. During the second instance, neither Gui He Ju, Qinfeng, nor WU Enhua submitted new evidence materials. After the trial, the court confirmed the facts identified in the judgment of first instance. The court holds that: according to Gui He Ju, Qinfeng, WU Enhua’s appeal request and reasons and their respective defense opinions, the issues of the second instance were so follows: 1. whether WU Enhua was a joint charterer of the ship involved; 2. which party constituted a default in this case. The court analyzed to the above issues as follows: 1. Whether WU Enhua was a joint charterer of the ship involved All the parties involved had no objection to Bareboat Charter, the charter showed that party A (the shipowner) was Gui He Ju, party B (the charterer) were Qinfeng and WU Enhua, their addresses and contact information were stated on the charter. The end of the charter was sealed by Qinfeng and signed by WU Enhua. Moreover, the conversation record made by the application of Qinfeng for LIN Dacheng, person in charge of Ninghai Shengli Ship Repair Factory (General Partnership) the court of first instance, stated that the charterer of the ship involved was a Wenling native man, which was coincident with WU Enhua’s information. It was correct that the court of first instance confirmed that WU Enhua was the joint charterer of the

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ship involved by combining with the statement of LIN Dacheng and the fact that WU Enhua did not work in Qinfeng according to charter. 2. Which party constituted a default in this case Because both parties of bareboat charter were qualified subjects of litigation, the intention expressed was genuine, the content also did not violate the prohibition of laws and regulations, so the charter was confirmed as valid, and both parties should fulfill the charter. As for the performance of the charter, both parties claimed the other party breached the contract in the first instance. The court of first instance, after trial, found that Qinfeng and WU Enhua did not pay the hire in time, which constituted a breach of contract. Qinfeng and WU Enhua were not satisfied with the judgment and filed an appeal, they contended that there was no delay in payment of hire, which did not constituted a default; the ship provided by Gui He Ju had quality problems and had been refitted without permission, leading to the seizure of Maritime Safety Administration, Gui He Ju constituted a default. The court holds that firstly, the date of handover was on April 19, 2016, ship handover confirmation was signed by both parties, which stated that: the conditions of the ship was in conformity with the conditions for delivery and re-delivery of the ship as agreed in the charter, both parties agreed to handover the ship …. Special agreement: as there were obvious cracks in the host body on the right side of the ship, it could be used normally after repair …. Therefore, the reason of Qinfeng and WU Enhua for the unqualified condition at the handover of the ship could not be established. Secondly, as for whether the ship involved was refitted without permission. According to the application of Qinfeng, the court of first instance investigated LIN Dacheng and XUE Jiaoxian, persons in charge of Ninghai Shengli Ship Repair Factory. LIN Dacheng and XUE Jiaoxian stated that the ship involved had been repaired and maintained in factory but not been refitted. The letter made by Dongjiang Maritime Safety Administration about assisting in the disposal of M.V. “XIN GUANG JIANG 6” showed that “there was suspicion of altering the structure and use of the ship without permission” of the ship involved, but no seizure of the ship was mentioned, so it was hard to get the conclusion that The ship involved in the case was detained by the maritime department for unauthorized refitting. Finally, Qinfeng and WU Enhua contended that they had paid a deposit of 300,000 yuan by way of paying to the family members of LI Haihua on behalf of Gui He Ju, there was no fact of delay in payment. After investigating, there was statement in the ship handover confirmation that Gui He Ju received a deposit of 300,000, but according to the bareboat charter of both parties, the hire for the first and second months from the date of delivery should be deducted from the deposit of 200,000 yuan, Qinfeng and WU Enhua paid the hire in the current month and the next month, which could indirectly prove that 300,000 yuan deposit had not been paid. Moreover, on October 9, 2016, WU Enhua said that he had paid hire of 400,000 yuan in the talking on the telephone with the crew of Gui He Ju, this statement of WU Enhua could prove that a deposit of 300,000 yuan did not be paid actually. In conclusion, the claim of Qinfeng and WU Enhua for breach of contract by Gui He Ju could not be approved. The overdue payment of hire by Qinfeng and WU

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Enhua should constitute a breach of contract and should be liable for such breach. However, according to Contract Law, Gui He Ju company could not claim damages and liquidated damages at the same time against Qinfeng and WU Enhua. Now that the judgment of first instance supports the claims of Gui He Ju by way of the hire of ship and overdue interests, Gui He Ju’s claim for additional payment of 300,000 yuan as liquidated damages from Qinfeng and WU Enhua should be rejected. Regarding to calculation of interests, after investigating, Qinfeng and WU Enhua had not paid hire since June 2016, so the judgment of first instance was correct in calculating the interests of overdue hire payment from June 30, 2016. Pulling the threads together, the court will not approve the appeal requests and reasons of Gui He Ju, Qinfeng and WU Enhua. The facts were clearly ascertained, and the application of the law was correct in the judgment of first instance. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in the amount of 13,081 yuan, Gui He Ju shall bear 5,000 yuan, and Qinfeng and WU Enhua shall jointly bear 8,081 yuan. Presiding Judge: WANG Jianfang Judge: KONG Fanhong Judge: QIU Jianfeng October 25, 2017 Clerk: XU Yijing

Guangzhou Maritime Court Civil Judgement HONG KONG KENTOP TRADING LIMITED v. Shenzhen Ruide Global Logistics Co., Ltd. (2016) Yue 72 Min Chu No.312 Related Case(s) None. Cause of Action 223. Dispute over freight forwarding contract on the sea or sea-connected waters. Headnote Defendant freighter forwarder held liable for compensation to its principal, Plaintiff shipper, regarding negligent release of cargo in port of discharge without compliance with shipper’s instructions. Summary Plaintiff shipper engaged Defendant freighter forwarder to transport goods from China to Russia. The goods were sold by shipper to a Russian buyer. When the goods arrived in the port of discharge, Plaintiff instructed Defendant to release the goods only against Plaintiff’s authority. But, Defendant failed to comply with Plaintiff’s instructions and released the goods to the buyer without Plaintiff’s authority. The Court held Defendant liable for compensation of the cargo value to Plaintiff due to breach of freight forwarding contract. But, the Court held that the value of goods should be decided by the Customs’ clearance documents rather than the sale and purchase contract or other documents related thereto.

Judgment The Plaintiff: HONG KONG KENTOP TRADING LIMITED. Domicile: Hongkong Special Administrative Region, Room 701, 582–592 Xin He Center, Mong Kok, Kowloon. Representative: LI Haijian, director of the company. Agent ad litem: HUANG Youqi, lawyer of Guangdong Jiade Law Firm. Agent ad litem: HAN Fei, apprentice lawyer of Guangdong Jiade Law Firm. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_26

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The Defendant: Shenzhen Ruide Global Logistics Co., Ltd. Domicile: Haidian Ge 8A, Hui Jing Area, Yue Hai Street science and Technology Park, Nanshan District, Shenzhen, Guangdong. Legal representative: XIAO Hong, manager of the company. Agent ad litem: HUANG Sufang, lawyer of Beijing Dentons (Shenzhen) Law Firm. Agent ad litem: LI Xinyan, apprentice lawyer of Beijing Dentons (Shenzhen) Law Firm. With respect to the case arising from dispute over freight forwarding contract by sea between the Plaintiff HONG KONG KENTOP TRADING LIMITED and the Defendant Shenzhen Ruide Global Logistics Co., Ltd., after entertaining the case on April 21, 2016, the court held a hearing in public according to the general procedure with law. Agents ad litem of the Plaintiff, HUANG Youqi and HAN Fei, agent ad litem of Defendant, HUANG Sufang, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff claimed that: 1. the Defendant shall compensate the Plaintiff for the loss of USD52,470 and interest (as on the date of delivery of the goods, that is, at the rate of RMB346,302 yuan, on the date of delivery of the goods on the day after the delivery of the goods to the day of the actual payment, according to the benchmark interest rate of the People’s Bank of China). 2. The Defendant shall compensate the Plaintiff for 3,450 yuan and interest (from the date of September 1, 2015 to the date of actual payment, calculated according to the benchmark interest rate of the People’s Bank of China), and bear all the litigation costs of the case. Facts and reasons: on July 1, 2015, the Plaintiff entered into a sales contract with SPRING FILL Company, USA, under which the Plaintiff provided the company with polyethylene gloves valued at USD52,470. Later, the Plaintiff entrusted Guangzhou Zengcheng Baocheng Environmental Protection Plastic Products Factory (hereinafter referred to as Baocheng Plastic Factory) to process and ship the goods in this case to the Defendant. On August 13, the goods were transported to JOVOROSSIYSK from Nova Bay, Shenzhen. The Defendant charged 3,540 yuan of miscellaneous fees to Baocheng Plastic Factory, and agreed to deliver the instructions to the radio. After the goods arrive at the port of destination, the Defendant delivered the goods to others without receiving instructions, causing losses to the Plaintiff. The Defendant argued that: 1. Baocheng Plastic Factory entrusted the Defendant to handle the case of the shipping agent matters, as the principal, and the Defendant as the fiduciary, there is no legal relationship as a freight agent in Baocheng Plastic Factory to handle the case of goods export transportation matters. 2. The Plaintiff has no evidence to prove that it is the owner of the goods and the value of the goods in this case. The 3,540 yuan of THC is the freight agent fee paid to the Defendant by Baocheng Plastic Factory. The Plaintiff has no right to claim the cost. The cost does not belong to the loss of the value of the goods. 3. The Defendant has never delivered the goods to others, nor has it instruct any third party to deliver the goods to others.

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The parties submitted evidence in accordance with the law, and we have conducted evidence exchange and cross examination. The court shall confirm the evidence which has no objection to the parties and make proof in the volume. For the disputed evidence and facts, the court finds that: 1. The Plaintiff, in order to prove that it is the owner of the goods in this case, has submitted a description of the agreement (contract) and Baocheng Plastic Factory signed by Zengcheng Municipal Foreign Processing and Assembly Service Co., Ltd. (hereinafter referred to as Zengcheng Service Company) and Baocheng Plastic Factory. The Defendant has objection to the authenticity, legality and relevancy of the above evidence. The court holds that the above evidence can be checked, the source is legal, and the evidence of the case is confirmed by the evidence in this case. Though the Defendant has objection but does not submit the evidence to confirm its proof. 2. The value of the goods in this case. The Plaintiff claimed that the goods in this case are produced by the enterprises of processing industries and compensation trade. The export declaration form does not contain the value of the imported materials, only the processing fee, the value of the goods is 52,470 dollars, providing the packing list, commercial invoice and trade contract and the import goods declaration form of the new polyethylene micelles and the customs declaration form for the polyethylene gloves. The Defendant has no objection to the authenticity of the two customs declaration forms, but the relevancy of the import declaration form is not confirmed, and the authenticity, legality and relevancy of the packing list, invoice and trade contract are not confirmed. If the Plaintiff fails to prove the relevancy of the declaration form for imported goods to the case, the court will not confirm the validity of the declaration form for imported goods. Packing list, invoice and trade contract are made by the Plaintiff itself without any other evidence, and after the Defendant’s objection, the Plaintiff is not further strengthened, and the court’s proof of the above evidence is not confirmed. The Plaintiff claimed that the total price of the goods recorded in the PE glove export declaration form is only the processing fee, but it does not submit the relevant facts and legal basis, and the annual processing of polyethylene products in the validity period of the agreement is stipulated in the agreement (contract) of the agreement (contract) signed by the Plaintiff and Zengcheng Service Company and Baocheng Plastic Factory. It is about 2,000 tons, and the annual processing cost is about 460 thousand dollars. That is, the processing fee of 1 tons of products is about 230 dollars. The weight of the goods in this case is 18,077 kg and the processing fee should be about USD4,157.71. It is far apart from the 28,200.12 dollars processing fee recorded by the Plaintiff’s export goods declaration form. The evidence submitted by the Plaintiff is not sufficient to support its claim, so the fact that the Plaintiff has advocated is not confirmed. In the absence of any other evidence to the contrary, the court confirms that the total value of the goods recorded in the export declaration form is 28,200.12 dollars, which is the value of the goods in this case.

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According to the statements made by the parties and the evidence verified by the examination, the court finds the facts as follows: On August 16, 2012, Zengcheng Service Company (Party A), Baocheng Plastic Factory (Party A co factory) and the Plaintiff (Party B) signed an agreement (contract) on the processing of polyethylene products from Zeng Wai Fu (2012) Xie Zi No.01. The contract stipulate that the responsibility of the Plaintiff is to provide a sufficient quantity of raw and packaged materials for the processed products (including semi-finished products) to ensure the normal production of the factory. The responsibilities of Zengcheng Service Company and Baocheng Plastic Factory are: 1. responsible for providing and producing the production of factory, equipment, labor, water, electricity and organization, and make finished product or semi-finished product back to the Plaintiff according to the contract requirements, and collect the processing fee; 2. responsible for handling the import and export formalities of the products (or semi-finished products) of the mechanical equipment, raw materials, auxiliary materials and packaging materials needed for the processing of incoming materials; 3. assist in processing other procedures that need to be processed in the domestic processing business. The contract stipulate that the processing of polyethylene products will be about 2,000 tons per year during the effective period of the agreement, and the annual processing cost will be about 460,000 dollars. The validity period of the contract is from August 16, 2012 to August 16, 2027. On July 27, 2015, the Plaintiff’s client SPRING FILL (e-mail: jack@springfill.com.cn) forwarded the email to the Plaintiff’s employee, Maggie, which was linked to the Defendant's employee Kevin ([email protected]), the subject “MIR1544 Russian designated order No.10015”, and asked the Plaintiff to send the reservation to the Defendant. On July 28, the Plaintiff employee Maggie sent the cargo of the case to the Defendant by e-mail ([email protected], the email suffix, the signature file as the English name of the Plaintiff). The booking note record: the shipper is the Plaintiff, the consignee is AMALIS LLC, the goods name is polyethylene gloves, the commodity code is 392620, the gross weight is 20,000 kg, the size is 68.9 cubic. On August 4, the Defendant’s staff April sent the No.2363590270-1 booking confirmation form issued by the Orient Overseas Container Shipping Company (hereinafter referred to as Orient Overseas Company) to the Plaintiff by e-mail ([email protected]). The confirmation record: the booking party is Shenzhen Ham East International Freight Forwarding Co., Ltd., the reservation number is 2563590270, the ship name is ZIM SHEKOU 35 W, the loading port is Shenzhen Dade Shovel Bay, the destination port is Russian Novo Sibi XK, the goods are disposable polyethylene gloves. According to the customs declaration of export goods No.000000001039991565, the name of the case is polyethylene gloves. The transaction method is FOB. The container number of the case is OOLC9471077 and the value of the goods is 28,200.12 dollars. On August 7, the Defendant sent the SZT15080033 bill of lading version to the Plaintiff. The bill of lading document records the shipper to the Plaintiff, the consignee is AMALIS LLC, the ship name is ZIM SHEKOU 35 W, the loading port is

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Shenzhen Datade Bay, the destination port is Nobosier SK in Russia, the container number is OOLC9471077, the goods are named polyethylene gloves, the commodity code is 392,620, the gross weight is 20,920 kg, and the size is 68.9 cubic Freight to pay. The checked draft is printed “on behalf of the carrier, as the agent of Orient Overseas Company”. On the same day, the Plaintiff returned the Defendant by e-mail, confirming the bill of lading check. On August 21, the Defendant sent the charges to the Plaintiff by e-mail about the cost of the shipment at the port of shipment. The bill included the charges of radio, document, dock, EU declaration, bill, seal and operation of 3,540 yuan. On September 1, Baocheng Plastic Factory paid the fee to the Defendant, who had issued a general invoice for the fee to Baocheng Plastic Factory. Baocheng Plastic Factory issued a statement explaining that the ownership of the goods belonged to the Plaintiff, and the Plaintiff had paid the THC of 3,540 yuan. On September 1, the Plaintiff informed the Defendant by e-mail that the goods need to wait for their notification and telex release. On September 15, the Plaintiff asked whether the goods arrived at the port of destination. On the same day, the Defendant replied that the goods had arrived on September 7th, and asked whether to arrange the telex. If the telex was required, it should fill in the radio frequency release guarantee. On October 25, OOLC 9,471,077 container cargo was taken away from Novosibirsk, Russia, and on November 10, the container was reused. During the trial, both the Plaintiff and the Defendant confirmed that the original bill of lading had not been issued. On April 24, 2016, the Plaintiff put forward the application of property preservation to the court, which required the freezing of the deposit of the Defendant bank and the deposit of the non ship carrying business paid by the Defendant to the Ministry of transportation, which was limited to 344,595 yuan and provided a guarantee, the court granted according to law to produce an application fee of 2,242.97 yuan. In litigation, both parties choose to apply the laws of the People’s Republic of China to settle substantive disputes in this case. The court holds that this case is a dispute over freight forwarding contract. The goods was transported from Shenzhen, China through sea road to Novosibirsk, Russia. The Plaintiff and Defendant was disputed because of the wrong delivery of the goods at the port of destination. The case was involved with external factors. In accordance with Article 126 Paragraph 1 of the Contract Law of the People’s Republic of China, the parties involved in a foreign contract may choose to deal with the law applicable to the dispute. The Plaintiff and the Defendant choose to apply the law of the People’s Republic of China to deal with the disputes in litigation, so the case shall be dealt with by the law of the People’s Republic of China. According to the claims and the court trial investigation, the issues are that: firstly, the legal relationship of the case; secondly, whether the Defendant should be responsible for the loss of the Plaintiff; thirdly, the amount and scope of the Plaintiff suffered the loss.

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The legal relationship of the case. Neither the Plaintiff nor the Defendant has submitted the contract of freight forwarding by sea to the court, and there is no clear and written clause of rights and obligations between the two parties. According to the facts that have been identified, the Plaintiff and Baocheng Plastic Factory is a contractual relationship between the processing of materials, the finished product or semi finished product of Baocheng Plastic Factory is given to the Plaintiff, the processing fee is charged, and the import and export procedures of the goods are handled. In this case, although the charge is paid to the Defendant by Baocheng Plastic Factory, Baocheng Plastic Factory has clearly stated that the ownership of the goods in this case belongs to the Plaintiff, and the Plaintiff has paid THC for its replacement. The Plaintiff used an mailbox with the Plaintiff’s English suffix in connection with the cargo transportation to the Defendant. The Plaintiff was clearly recorded as the shipper in the booking form, and the bill of lading issued by the Defendant to the Plaintiff was also recorded by the shipper. So, it can be seen that the Defendant was entrusted by the Plaintiff to arrange the container cargo transportation involved. The email theme of the contact between the Plaintiff and the Defendant was “MIR1544 Russian appointed order No.10015”. The bill of lading written by the Defendant, based on the information he had mastered, clearly recorded “the representative of the carrier, Orient Overseas, as the agency of Orient Overseas Company”. There was no evidence in this case that the Defendant had a carrier. Although the Plaintiff claimed that the Defendant was the carrier of the goods, he did not provide corresponding evidence to support the claim, which lacked factual basis and the court did not support it. After the Defendant has been entrusted with the Plaintiff, the Defendant is responsible for booking the cabin, arranged the goods to be transported to Novosibirsk in Russia, and the radio and other arrangements with the carrier on the instructions of the Plaintiff after the goods are set out. It can be seen that the Defendant, in accordance with the requirements of the Plaintiff, has participated in the booking and delivery of the delivery of the port of destination. The two parties have effectively established the contract relationship which is the main content of the reservation. The Plaintiff is the consigner and the Defendant is the consignee. The contract is the expression of the real meaning of the parties, and does not violate the mandatory provisions of the laws and administrative regulations. It is legal and effective, and is legally binding on both parties. Regarding whether the Defendant should be liable for the Plaintiff’s loss. The Plaintiff, in the correspondence with the Defendant, clearly told the Defendant that it needs to be telex after the notice, and the Defendant also claimed to be required to fill in the telex guarantee and charged from the Plaintiff. In the case of the Plaintiff or Baocheng Plastic Factory not notified, the goods were delivered at the port of destination, and the Defendant as a freight forwarder failed to fulfill the contractual obligation, resulting in the loss of the Plaintiff’s goods. In accordance with Article 10 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Cases of Maritime Freight Forwarding Disputes, if the client claims that the freight forwarding company should bear the corresponding liability for compensation on the grounds that the freight forwarding company’s handling of

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maritime freight forwarding affairs has caused losses to the client, the people’s court shall support it, but the freight forwarder will be supported by the principal of the freight forwarder for the cause of loss caused by the principal’s handling of the agency affairs of the freight forwarder. If the enterprise proves that it has no fault, and Article 406 “paid entrustment contract” of the Contract Law of the People’s Republic of China, the principal may claim compensation for the loss caused by the fault of the consignee, the Plaintiff claims that the Defendant shall compensate for the loss he suffered, and there are facts and laws. According to it, it should be supported. The Plaintiff argued that the value of the goods in this case was 52,470 dollars, but the trade contract, packing list and commercial invoice provided by the Plaintiff did not indicate its source, lacking the effective proof of other evidence and insufficient support for its claim. Therefore, the value of the goods in this case was 28,200.12 dollars recorded in the declaration form. The Plaintiff claimed compensation of 28,200.12 dollars and interest for the loss of the Plaintiff’s goods and should be supported. The Plaintiff claims that the aforementioned US dollars are converted into RMB at the intermediate exchange rate between US dollars and RMB on October 25, 2015, the date of delivery of the goods, and that the interest is calculated at the benchmark interest rate of the People’s Bank of China for the same period from October 26, 2015 to the date of actual payment, and that the Plaintiff, as a domestic legal person, requests that the US dollars be converted into RMB at the intermediate rate of one day’s exchange rate, which is not allowed in violation of the law. The Plaintiff and his client trade in FOB, the relevant THC belonged to the Plaintiff who should bear the cost of goods, and the Plaintiff claimed the Defendant to compensate the THC of 3,450 yuan and interest, lacking of legal basis, the court does not support. In summary, in accordance with Article 406 of the Contract Law of the People’s Republic of China and Article 10 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Cases of Maritime Freight Forwarding Disputes, the judgment is as follows: 1. The Defendant, Shenzhen Ruide Global Logistic Co., Ltd. shall compensate the Plaintiff, HONG KONG KENTOP TRADING LIMITED, for the loss of USD28,200.12 and interest on the goods (the aforementioned US dollars are converted into RMB according to the US dollar to RMB exchange rate intermediate price announced by the People’s Bank of China authorized by the China Foreign Exchange Trading Center on October 25, 2015. RMB interest is calculated according to the benchmark lending rate of the People’s Bank of China for the same period from October 26, 2015 to the date of actual payment); 2. Reject other claims of the Plaintiff, HONG KONG KENTOP TRADING LIMITED. If the payment of money is not fulfilled within the period specified in this judgment, the interest on the debt incurred during the delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China.

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Court acceptance fee in amount of RMB6,667.63 yuan, RMB3,120.36 yuan shall be borne by the Plaintiff, HONG KONG KENTOP TRADING LIMITED and RMB 3,547.27 yuan by the Defendant, Shenzhen Ruide Global Logistics Co., Ltd. The application fee for property preservation in amount of RMB2,242.97 yuan, shall be borne by the Defendant, Shenzhen Ruide Global Logistics Co., Ltd. If the party refuses to accept this judgment, the Plaintiff, HONG KONG KENTOP TRADING LIMITED, may within 30 days from the date of the judgment, and the Defendant, Shenzhen Ruide Global Logistics Co., Ltd., within 15 days from the date of the judgment service, file an appeal, together with copies of the appeal letter in accordance with the number of the other parties, to the Guangdong High People’s Court. Presiding Judge: CHANG Weiping Judge: ZHAI Xin Judge: XU Chunlong February 12, 2018 Clerk: LI Chunyu

Wuhan Maritime Court Civil Judgment Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei

(2015) Wu Hai Fa Shi Zi No.00022 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 534. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Plaintiff owner of a cargo of coal held to be entitled to recover damages from defendant who seized the ship on which the coal was loaded, claiming that the shipowner had not paid him the purchase price for the ship; defendant did not appear. Summary Plaintiff loaded a cargo of coal on the ship M.V. “NAN TONG SAN HE 08”, operated by a company known as Sanhe Co. The following day, Defendant seized the ship and cargo on the ground that Sanhe Co. owed him money for the purchase of the ship. After protracted negotiations, Defendant eventually agreed to release Plaintiff’s cargo. Plaintiff paid Defendant 137,000 RMB to discharge the cargo. Some cargo was lost during the discharging operation. Plaintiff paid for a quality survey after discharge, and claimed that the value of the cargo had been reduced because of a loss of calorific value. Plaintiff sued Defendant, who did not appear and presented no evidence. The Court held that Defendant was liable to repay the discharging fees, and to compensate Plaintiff for the survey fee and the value of the lost cargo. However, the Court also held that Plaintiff could not recover the sum claimed for diminution in quality, as it had failed to prove the market value of the calorific value lost.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_27

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Judgment The Plaintiff: Huainan Junfei Material Trade Co., Ltd. Domicile: Room ***, No. ***, Huaiyu Middle Road, Tianjiatun District, Huainan City, Anhui. Organization Code: 78652824-4. Legal representative: LI Xu, chairman. Agent ad litem: WANG Dingyun, lawyer of Beijing Renren Desai (Wuhan) Law Firm. Agent ad litem: ZHOU Xiongdiao, lawyer of Beijing Renren Desai (Wuhan) Law Firm. The Defendant: BAO Zhenwei With respect to the case arising from dispute over illegal retention of shipborne cargo damage between the Plaintiff Huainan Junfei Material Trade Co., Ltd. (hereinafter referred to as Junfei Company) and the Defendant BAO Zhenwei, the Plaintiff filed a lawsuit to the court on March 5, 2015. After the court entertained the case on March 18, 2015, LI Yan, Acting Judge, was appointed to apply the summary procedure and the court held a hearing in public on April 15, 2015. Agent ad litem of the Plaintiff Junfei Company, ZHOU Xiongdiao, appeared in court to attend the hearing. The Defendant BAO Zhenwei was summoned by the court to refuse the court without justified reasons. The court tried the case by default according to law. Now the case has been concluded. The Plaintiff Junfei Company alleged that: on May 17, 2014, the Plaintiff handed over all of its batch of 8,910.48 tons of coal to M.V. NAN TONG SAN HE 08 under the name of Nantong Sanhe Shipping Co., Ltd. (hereinafter referred to as Sanhe Company) to Wuhan. On the following day, during the transportation, the Defendant BAO Zhenwei forcibly seized the ship and all the cargo on board on the grounds that Sanhe Company owed M.V. NAN TONG SAN HE 08 purchase. During the seizure, the Plaintiff negotiated with the Defendant several times. The Defendant refused to release the goods on the grounds that Sanhe Company and its legal representative LI Shuqing did not negotiate to deal with the debt dispute. After several attempts by the Plaintiff, the Plaintiff and the Defendant reached an agreement on August 21, 2014, stipulating that the Plaintiff had the right to retrieve the goods retained by the Defendant, and the Plaintiff organized the unloading of the goods. From August 23 to 25 of the same year, the Plaintiff paid RMB137,000 yuan (the following are all RMB) for the completion of the parking. The Defendant confirmed this. According to the agreement, the number of goods retained by the Defendant was reduced from 8,910.48 to 8,580.3 tons, and the quality was reduced from 5,100 to 4,899 kcal/kg. The Plaintiff Junfei Company requested that the Defendant BAO Zhenwei should compensate the loss of 1,056,828 yuan and bear all the litigation costs in this case.

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The Defendant BAO Zhenwei did not reply. The Plaintiff Junfei Company submitted the following evidence to the court within the time limit for proof: The first set of evidence: 1. Junfei Company business license, a copy; 2. BAO Zhenwei ID card copy, to prove the Plaintiff and the Defendant’s litigation qualifications. The second set of evidence: 3. on May 29, 2014, Shanmei International Energy Group Datong Co., Ltd. (hereinafter referred to as Datong Company) and Guodian Qingshan Thermal Power Co., Ltd. (hereinafter referred to as Thermal Power Company) signed Coal Supply and Demand Contract Supplement Agreement, photocopying; 4. on July 9, 2014, Thermal Power Company issued Statement on M. V. NAN TONG SAN HE 08 on M.V. NAN TONG SAN HE 08 carrying 8,910.48 tons of coal, the original; 5. June 3, 2014, 2014 Supply and Demand Contract signed by Junfei Company and Wuhan Qingyuan Power Group Co., Ltd. (hereinafter referred to as Qingyuan Company), original; 6. June 11, 2014, the payment notice issued by Junfei Company’s Ministry of Commerce Single, original; 7. ICBC online banking electronic return, original. The above evidence was to prove that Junfei Company completely acquired the ownership of 8,910.48 tons of coal loaded by M.V. NAN TONG SAN HE 08 originally purchased by Thermal Power Company. Junfei Company had the right to investigate the liability of others for damage caused by the goods. The third set of evidence: 8. November 14, 2012, Sanhe Company issued a statement to BAO Zhenwei, a copy; 9. March 22, 2013, Sanhe Company issued a letter to BAO Zhenwei, copy; 10. on October 31, 2013, a copy of the loan slip issued by LI Shuqing from Sanhe Company to BAO Zhenwei; 11. on May 30, 2014, the certificate issued by the Sanjiangying Water Police Station (hereinafter referred to as the police station) of the Yangtze River Shipping Public Security Bureau to Junfei Company, original. The above evidence was to prove that the Defendant BAO Zhenwei personally detained M.V. NAN TONG SAN HE 08 and the ship’s 8,910.48 tons of coal due to the debt and debt dispute between Sanhe Company and its legal representative LI Shuqing. The act was illegal lien and ship cargo. For the infringement, Junfei Company had the right to recover the losses caused by BAO Zhenwei according to law. The fourth set of evidence: 12. Jiangyin Terminal Company issued the 201,405-148 delivery ship port handover list, photocopy; 13. on May 19, 2014, Huangshan Jinyu Logistics Co., Ltd., Thermal Power Company jointly to Jiangyin Terminal Company Shipment confirmation letter issued, original; 14. on June 3, 2014, Junfei Company and Qingyuan Company signed 2014 Coal Supply and Demand Contract, original; 15. on May 22, 2014, Standard Technical Service (Shanghai) Co., Ltd. issued a copy of Coal Weight and Quality Inspection Report No.50078783. The above evidence was to prove that M.V. NAN TONG SAN HE 08 from the start to the illegal detention by BAO Zhenwei, the ship loaded 8,910.48 tons of coal, the quality is 5,100 kcal/kg, the value of 4,444,458 yuan. The fifth group of evidence: 16. on August 21, 2014, Junfei Company and BAO Zhenwei reached Agreement, the original; 17. on August 23, 2014, BAO Zhenwei

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issued to Junfei Company Receipt, the original; 18. on August 23, 2014, the authorized representative of Junfei Company, CHEN Weizhen, paid 137,000 yuan Bank Transaction Voucher to BAO Zhenwei, the original; 19. on August 26, 2014, Jiangsu Shengxing Testing Technology Service Company (hereinafter referred to as SGS Testing Company”) issued Coal Testing Report and invoices of 1401170TC, the original; 20. Qinhuangdao Coal Trading Price Index and coal price on August 27, 2014, printed. The above evidence was to prove that the quality of 4,899 kcal/ kg coal price was 411.516 yuan/ton, and the Defendant BAO Zhenwei illegally retained the 8,910.48 tons of coal owned by Junfei Company, causing at least a total loss of 1,050,528 yuan. The Defendant BAO Zhenwei did not make cross-examination opinion. The court confirms the authenticity of the evidence submitted by the Plaintiff Junfei Company. The Defendant BAO Zhenwei did not submit evidence to the court within the time limit for proof. The court finds out that: On May 29, 2014, Thermal Power Company signed Supplementary Agreement on Coal Supply and Demand Contracts with Datong Company. Article 2 stipulates: 8,910.48 tons of 42,327 tons of coal sold by Datong Company to Thermal Power Company by M.V. NAN TONG SAN HE 08. Coal is sold separately by Datong Company. According to Standard Technical Service (Shanghai) Co., Ltd., the batch of 42,327 tons of coal received a base low calorific value equivalent to 5,100 kcal/kg. On July 9, 2014, Thermal Power Company made Statement on M.V. NAN TONG SAN HE 08 on M.V. NAN TONG SAN HE 08, because M.V. NAN TONG SAN HE 08 (loading of 8910.48 tons) was not able to be shipped normally from the transit port. After consultation with Datong Company, Thermal Power Company and Datong Company canceled the purchase contract for the coal contained in the ship, and Datong Company resold the coal contained in the ship to Qingyuan Company. On June 3, 2014, Junfei Company and Qingyuan Company signed 2014 Coal Supply and Demand Contract, which agreed that Junfei Company purchased 8,910.48 tons of coal involved in Qingyuan Company with a calorific value of 5,100 kcal/kg, and the price was 498.79 yuan/ton, the delivery location was the bilge delivery of CITIC (Jiangyin) Ligang Terminal, and the ownership of the goods will be transferred to Junfei Company from the date of signing the contract. On June 11, 2014 and July 16 of the same year, Junfei Company passed the two batches of ICBC to pay the purchase price of 4,444,458 yuan to Qingyuan Company. On May 17, 2014, 8,910.48 tons of coal involved in the case was reprinted and shipped at Jiangyin Terminal. The CITIC (Jiangyin) terminal confirmed that the coal cargo owner of the “Nantong Sanhe 08” ship was a Thermal Power Company with a coal weight of 8910.48 tons. On May 30, 2014, the police station issued a certificate: As far as I know, Sanhe Company LI Shuqing owes BAO Zhenwei “Nantong Sanhe 08” round-robin ship, BAO Zhenwei took the “Nantong Sanhe 08” on the morning of May 18, 2014. The ship was detained along with more than

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8,900 tons of coal on board. The coal was not transferred to Thermal Power Company. On August 21, 2014, Junfei Company and BAO Zhenwei reached an agreement. The Defendant BAO Zhenwei retained M.V. NAN TONG SAN HE 08 and the more than 8,900 tons of coal owned by the Plaintiff Junfei Company due to the debt dispute. BAO Zhenwei agreed that Junfei Company will organize the unloading, inspection and receiving of goods by itself, and cooperate with them; the quantity and quality of coal unloaded by Junfei Company shall be subject to the inspection and appraisal report issued by the third-party appraisal agency appointed and entrusted by Junfei Company. On August 23, 2014, Junfei Company paid BAO Zhenwei a crane fee of 6,700 yuan during the period of retention; the ship refueling fee was 26,000 yuan; the salary of the ship-watching workers was 44,000 yuan for consultation; the driver and the ship-off worker cost 20,000 yuan. A total of 137,000 yuan, the Defendant BAO Zhenwei confirmed the receipt of the above amount. On August 26, 2014, SGS Inspection Company was commissioned by Junfei Company to conduct “in time, accurate time, meanwhile” on M.V. NAN TONG SAN HE 08 ship-borne coal during the parking period from August 23, 2014 to August 25 of the same year, and made Coal Inspection Report No.1401170TC. The report proved that M.V. NAN TONG SAN HE 08 carried 8,580.3 tons of water gauge and the mass is 4,899 kcal/kg. Junfei Company paid SGS Inspection Company inspection fee of 6,300 yuan. Qinhuangdao Coal Network announced from August 20 to 26, 2014, the heat of 5,500 kcal/kg of thermal coal in Qinhuangdao Port, Caofeidian Port, Guotou Jingtang Port, Jingtang Port, Tianjin Port and Huanghua Port Mainstream Transaction Price Receiving 470–490 yuan/ton; calorific value of 5,000 kcal/kg of thermal coal in Qinhuangdao Port, Caofeidian Port, Guotou Jingtang Port, Jingtang Port, Tianjin Port and Huanghua Port, the mainstream transaction price closed at 415–425 yuan/ton. The court holds that: This case is the dispute over the liability of illegally retaining shipborne cargo damage. Article 106 of the General Principles of the Civil Law of the People’s Republic of China stipulates that “citizens and legal persons shall bear civil liability for infringing on the state’s or collective property and infringing upon the property or person of others.” The Defendant BAO Zhenwei illegally in liable the goods contained in M.V. NAN TONG SAN HE 08 to cause losses to the Plaintiff Junfei Company and shall be liable for compensation. The issue of the dispute in this case is that: the amount of the Defendant BAO Zhenwei causing the loss of the Plaintiff Junfei Company. The Plaintiff Junfei Company owned 8,910.48 tons of coal driven by M.V. NAN TONG SAN HE 08, and the calorific value was 5,100 kcal/kg of coal. The amount of coal decreased to 8,580.3 tons after the detention of the Defendant BAO Zhenwei, and the calorific value was reduced to 4,899 kcal/kg. The loss of coal is reduced to: (8,910.48 − 8,580.3 tons)  498.79 yuan/ton = 164,690.48 yuan. Regarding the loss of coal quality, the Plaintiff Junfei Company proposed that the quality of 8,580.3 tons of coal should be reduced to 4,899 kcal/kg at a price of 411.516 yuan/ton, without sufficient evidence. Article 2 of the Several Provisions of

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the Supreme People’s Court on Evidence in Civil Proceedings stipulates that “the parties shall be responsible for providing evidence to prove the facts on which their claims are based or the facts against which the other party’s claims are based. There is no evidence or insufficient evidence. In order to prove the factual claim of the party, the party with the burden of proof bears the unfavorable consequences. Therefore, the court does not support the claim of the Plaintiff Junfei Company. The Defendant BAO Zhenwei illegally retained all the goods of the Plaintiff Junfei Company and should return the goods and bear the relevant expenses. The fee of 137,000 yuan paid by the Plaintiff Junfei Company for the retrieval of the goods shall be borne by the Defendant BAO Zhenwei. The Plaintiff Junfei Company conducted a quality inspection on the coal retained by the Defendant BAO Zhenwei, and claimed that the Defendant BAO Zhenwei’s request to pay the inspection fee of 6,300 yuan was in compliance with the law and was supported by the court. In summary, the Defendant BAO Zhenwei should compensate the Plaintiff Junfei Company for the loss of the illegally detained M.V. NAN TONG SAN HE 08 cargo: 164,690.48 yuan + 137,000 yuan + 6,300 yuan = 307,990.48 yuan. In accordance with Article 6 and Article 15 of the Tort Liability Law of the People’s Republic of China, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant BAO Zhenwei shall compensate the Plaintiff Huainan Junfei Material Trade Co., Ltd. for losses of 307,990.48 yuan within 10 days from the effective date of this judgment; 2. Reject other claims of the Plaintiff Huainan Junfei Material Trade Co., Ltd. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee originally in amount of 14,311 yuan, as a result of the summary procedure applied in this case, shall be halved to be 7,155.5 yuan. The Plaintiff Huainan Junfei Material Trade Co., Ltd. shall pay 5,070.5 yuan, and the Defendant BAO Zhenwei shall bear 2,085 yuan. The litigation expenses of the Defendant BAO Zhenwei shall be paid to the Plaintiff Huainan Junfei Material Trade Co., Ltd. within 10 days from the effective date of this judgment. If disagree with this judgment, the party may submit three copies of the original appeal to the court within 15 days from the date of delivery of the judgment, together with copies of petiton according to the number of the other parties, so as to appeal to the Hubei High People’s Court. The Appellant shall, in submitting the appeal, pay the appeal court acceptance fee according to Article 13 Paragraph 1 of the Measures for the Payment of Litigation Fees in line with the disputed amount of appeal against the judgment (the payee of the payment: Hubei Finance Office

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non-tax revenue financial account; account number: 0569-1; the bank: Agricultural Bank of China Wuhan East Lake Branch). If the party pays by bank transfer or bank remittance, the “Hubei High People’s Court” with code “103,001” shall be indicated in the bank’s remittance note’s relevant column. If the Appellant has not paid the costs of litigation within seven days after the expiration of the appeal period, the appeal shall be automatically withdrawn. Acting Judge: LI Yan June 7, 2017 Clerk: YUE Juan

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Hubei High People’s Court Civil Judgment Huainan Junfei Material Trade Co., Ltd. v. BAO Zhenwei (2017) E Min Zhong No.1867 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 527. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Affirming lower court decision holding plaintiff owner of a cargo of coal entitled to recover damages from defendant who seized the ship on which the coal was loaded, claiming that the shipowner had not paid him the purchase price for the ship; appeal Court rejected defendant's argument that he failed to appear at trial because he was not properly served with process. Summary Plaintiff loaded a cargo of coal on the ship M.V. NAN TONG SAN HE 08, operated by a company known as Sanhe Co. The following day, Defendant seized the ship and cargo on the ground that Sanhe Co. owed him money for the purchase of the ship. After protracted negotiations, Defendant eventually agreed to release Plaintiff’s cargo. Plaintiff paid Defendant 137,000 RMB to discharge the cargo. Some cargo was lost during the discharging operation. Plaintiff paid for a quality survey after discharge, and claimed that the value of the cargo had been reduced because of a loss of calorific value. Plaintiff sued Defendant, who did not appear and presented no evidence. The first instance Court held that Defendant was liable to repay the discharging fees, and to compensate Plaintiff for the survey fee and the value of the lost cargo. However, the first instance Court also held that Plaintiff could not recover the sum claimed for diminution in quality, as it had failed to prove the market value of the calorific value lost. Plaintiff appealed, arguing that it should recover damages for the loss of calorific value of the coal. Defendant appeared before the appeal court, arguing that he had not been served with process by the first instance Court. The appeal Court dismissed Plaintiff’s appeal on the basis that there was insufficient evidence of the value of the lost calorific quality. The Court rejected Defendant’s argument that he had not attended the first instance trial because he had not been properly served with process.

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Judgment The Appellant (the Plaintiff of first instance): Huainan Junfei Material Trade Co., Ltd. Domicile: Room ***, No. ***, Huaiyu Middle Road, Tianjiatun District, Huainan City, Anhui. Organization code: 78,652,824-4. Legal representative: LI Xu, chairman of the company. Agent ad litem: WANG Dingyun, lawyer of Beijing Renren Desai (Wuhan) Law Firm. Agent ad litem: ZHOU Xiongdiao, lawyer of Beijing Renren Desai (Wuhan) Law Firm. The Respondent (the Defendant of first instance): BAO Zhenwei. Agent ad litem: WANG Liangjun, lawyer of Beijing Jingshi (Wuhan) Law Firm. With respect to the case arising from dispute over illegal retention of shipborne cargo damage between the Appellant Huainan Junfei Material Trade Co., Ltd. (hereinafter referred to as Junfei Company) and BAO Zhenwei, the Appellant was dissatisfied with the Wuhan Maritime Court (2015) Wu Hai Fa Shi Zi No.00022 Civil Judgment, and appealed to the court. After the case was filed on July 27, 2017, the court formed a collegiate bench in accordance with the law and publicly heard the case on September 6, 2017. Agent ad litem of the Appellant Junfei Company, ZHOU Xiongdiao, the Respondent BAO Zhenwei, agent ad litem of the Respondent BAO Zhenwei, WANG Liangjun, appeared in court to participate in the hearing. Now the case has been concluded. Junfei Company appealed that: according to the law, BAO Zhenwei was compensated for the economic loss of Junfei Company (the following are all RMB) 1,056,828 yuan. The first and second instance litigation fees were borne by BAO Zhenwei. Facts and reasons: the court of first instance only determined the damage of the goods. Regarding the quality loss of the coal involved, the first-instance judgment determined that the quality of the coal mentioned above was 4,899 kcal/ kg, and the quality was indeed lost, and the minimum amount of quality loss could be calculated. Next, the court of first instance rejected this part of the loss of Junfei Company on the grounds of insufficient evidence. BAO Zhenwei argued that: 1. the court of first instance and the trial procedure were seriously illegal, depriving BAO Zhenwei of the right to lodge a defense and cross-examination, and the case should be sent back for retrial. The first-instance court’s three postal delivery services were unsuccessful and the announcement was used to deliver the error. Since the announcement is delivered, the summary procedure cannot be applied. 2. In the first instance, the facts were wrong, the law was wrong, and the wrong judgment was made. It should be sent back for retrial. Junfei Company and BAO Zhenwei signed an agreement on the possible disputes over the goods involved in the case. The case should be a contract dispute. According to Article 5 of the agreement signed on August 21, 2014, the cargo dispute had

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nothing to do with BAO Zhenwei. After the two parties signed the agreement, BAO Zhenwei cooperated with the unloading, and Junfei Company disregarded the agreement and filed a lawsuit with the court, violating integrity. The court of first instance did not find out the facts and caused a wrong judgment. Junfei Company claimed to the court of first instance that: 1. BAO Zhenwei should compensate the loss of 1,056,828 yuan, 2. BAO Zhenwei should bear all the litigation costs in this case. The court of first instance found the facts: on May 29, 2014, Thermal Power Company signed Supplementary Agreement on Coal Supply and Demand Contracts with Datong Company. Article 2 stipulates: 8,910.48 tons of 42,327 tons of coal sold by Datong Company to Thermal Power Company by M.V. NAN TONG SAN HE 08. Coal is sold separately by Datong Company. According to Standard Technical Service (Shanghai) Co., Ltd., the batch of 42,327 tons of coal received a base low calorific value equivalent to 5,100 kcal/kg. On July 9, 2014, Thermal Power Company made Statement on M.V. NAN TONG SAN HE 08 on M.V. NAN TONG SAN HE 08, because M.V. NAN TONG SAN HE 08 (loading of 8910.48 tons) was not able to be shipped normally from the transit port. After consultation with Datong Company, Thermal Power Company and Datong Company canceled the purchase contract for the coal contained in the ship, and Datong Company resold the coal contained in the ship to Qingyuan Company. On June 3, 2014, Junfei Company and Qingyuan Company signed 2014 Coal Supply and Demand Contract, which agreed that Junfei Company purchased 8,910.48 tons of coal involved in Qingyuan Company with a calorific value of 5,100 kcal/kg, and the price was 498.79 yuan/ton, the delivery location was the bilge delivery of CITIC (Jiangyin) Ligang Terminal, and the ownership of the goods will be transferred to Junfei Company from the date of signing the contract. On June 11, 2014 and July 16 of the same year, Junfei Company passed the two batches of ICBC to pay the purchase price of 4,444,458 yuan to Qingyuan Company. On May 17, 2014, 8,910.48 tons of coal involved in the case was reprinted and shipped at Jiangyin Terminal. The CITIC (Jiangyin) terminal confirmed that the coal cargo owner of the “Nantong Sanhe 08” ship was a Thermal Power Company with a coal weight of 8910.48 tons. On May 30, 2014, the police station issued a certificate: As far as I know, Sanhe Company LI Shuqing owes BAO Zhenwei “Nantong Sanhe 08” round-robin ship, BAO Zhenwei took the “Nantong Sanhe 08” on the morning of May 18, 2014. The ship was detained along with more than 8,900 tons of coal on board. The coal was not transferred to Thermal Power Company. On August 21, 2014, Junfei Company and BAO Zhenwei reached an agreement. BAO Zhenwei retained M.V. NAN TONG SAN HE 08 and the more than 8,900 tons of coal owned by Junfei Company due to the debt dispute. BAO Zhenwei agreed that Junfei Company will organize the unloading, inspection and receiving of goods by itself, and cooperate with them; the quantity and quality of coal unloaded by Junfei Company shall be subject to the inspection and appraisal report issued by the third-party appraisal agency appointed and entrusted by Junfei

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Company. On August 23, 2014, Junfei Company paid BAO Zhenwei a crane fee of 6,700 yuan during the period of retention; the ship refueling fee was 26,000 yuan; the salary of the ship-watching workers was 44,000 yuan for consultation; the driver and the ship-off worker cost 20,000 yuan. A total of 137,000 yuan, BAO Zhenwei confirmed the receipt of the above amount. On August 26, 2014, SGS Inspection Company was commissioned by Junfei Company to conduct “in time, accurate time, meanwhile” on M.V. NAN TONG SAN HE 08 ship-borne coal during the parking period from August 23, 2014 to August 25 of the same year, and made Coal Inspection Report No.1401170TC. The report proved that M.V. NAN TONG SAN HE 08 carried 8,580.3 tons of water gauge and the mass is 4,899 kcal/kg. Junfei Company paid SGS Inspection Company inspection fee of 6,300 yuan. Qinhuangdao Coal Network announced from August 20 to 26, 2014, the heat of 5,500 kcal/kg of thermal coal in Qinhuangdao Port, Caofeidian Port, Guotou Jingtang Port, Jingtang Port, Tianjin Port and Huanghua Port Mainstream Transaction Price Receiving 470–490 yuan/ton; calorific value of 5,000 kcal/kg of thermal coal in Qinhuangdao Port, Caofeidian Port, Guotou Jingtang Port, Jingtang Port, Tianjin Port and Huanghua Port, the mainstream transaction price closed at 415–425 yuan/ton. The court of first instance held that: This case was the dispute over the liability of illegally retaining shipborne cargo damage. Article 106 of the General Principles of the Civil Law of the People’s Republic of China stipulates that “citizens and legal persons shall bear civil liability for infringing on the state’s or collective property and infringing upon the property or person of others.” BAO Zhenwei illegally in liable the goods contained in M.V. NAN TONG SAN HE 08 to cause losses to Junfei Company and shall be liable for compensation. The issue of first instance was that: the amount of BAO Zhenwei causing the loss of Junfei Company. Junfei Company owned 8,910.48 tons of coal driven by M.V. NAN TONG SAN HE 08, and the calorific value was 5,100 kcal/kg of coal. The amount of coal decreased to 8,580.3 tons after the detention of BAO Zhenwei, and the calorific value was reduced to 4,899 kcal/ kilogram. The loss of coal is reduced to: (8,910.48 tons − 8,580.3 tons)  498.79 yuan/ton = 164,690.48 yuan. Regarding the loss of coal quality, Junfei Company proposed that the quality of 8,580.3 tons of coal should be reduced to 4,899 kcal/kg at a price of 411.516 yuan/ton, without sufficient evidence. Article 2 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Proceedings stipulates that “the parties shall be responsible for providing evidence to prove the facts on which their claims are based or the facts against which the other party’s claims are based. There is no evidence or insufficient evidence. In order to prove the factual claim of the party, the party with the burden of proof bears the unfavorable consequences. Therefore, the court of first instance did not support the claim of Junfei Company. BAO Zhenwei illegally retained all the goods of Junfei Company and should return the goods and bear the relevant expenses. The fee of 137,000 yuan paid by Junfei Company for the retrieval of the goods shall be borne by BAO Zhenwei. Junfei Company conducted a quality inspection on the coal retained by BAO

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Zhenwei, and claimed that BAO Zhenwei’s request to pay the inspection fee of 6,300 yuan was in compliance with the law and was supported by the court of first instance. In summary, BAO Zhenwei should compensate Junfei Company for the loss of the illegally placed M.V. NAN TONG SAN HE 08 cargo: 164,690.48 yuan + 137,000 yuan + 6,300 yuan = 307,990.48 yuan. In accordance with Article 6 and Article 15 of the Tort Liability Law of the People’s Republic of China, Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: 1. BAO Zhenwei should compensate Junfei Company for losses of 307,990.48 yuan within 10 days from the effective date of this judgment; 2. reject other claims of Junfei Company. Court acceptance fee of first instance in amount of 14,311 yuan, as a result of the summary procedure applied in this case, the fee should be 7,155.5 yuan. Junfei Company should pay 5,070.5 yuan, and BAO Zhenwei should bear 2,085 yuan. During the second instance, the parties submitted evidence around the appeal. The parties involved in the organization conducted evidence exchange and cross-examination. Junfei Company submitted two sets of evidence. Evidence 1: Coal Sales Contract signed by Zhejiang Zhentuo Coal Trading Co., Ltd. and Shanghai China Coal East China Co., Ltd. on January 1, 2014. Evidence 2: preparation of materials for the coal price index. Two pieces of evidence are to prove that the price index in the coal industry follows the weighted average formula, which is a single card conversion method. According to the specifications announced by Qinhuangdao Coal Trading Network, it represents the calorie price index, converts the price of a single card, and multiplies it by the actual calorific value. The data obtained is the actual calorific value. BAO Zhenwei’s cross-examined that the authenticity and relevancy of the two pieces of evidence are not recognized. If the evidence is verified without originals, the evidence 2 cannot be confirmed. The two evidence cannot prove the fact that the calorific value of coal is reduced, and it is not proved that the decrease in calorific value has a direct causal relationship with BAO Zhenwei’s arrest behavior. The confirmation opinion of the court: the evidence is not verified by the original, the authenticity cannot be confirmed, and the outsider’s agreement on the coal price in the contract does not apply to the case; the authenticity of the evidence 2 cannot be confirmed, and the coal price index only has a reference meaning, and cannot Represents the actual coal transaction price. The purpose of the proof of the two pieces of evidence is not accepted. BAO Zhenwei submitted two pieces of evidence. Evidence 1: agreement signed on August 21, 2014, to prove that: according to Article 5 of the agreement, the dispute between the two parties may be confirmed and transformed through the form of agreement, and Junfei Company clearly disputed BAO Zhenwei has nothing to do. Evidence 2: original article of borrowing, to prove that BAO Zhenwei has a contractual basis for the arrest of the ship due to the arrears of the ship. The legal provisions of the ship's cargo are presumed to be presumed, and in the absence of sufficient evidence to prove the owner, the goods are Sanhe

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Company’s. BAO Zhenwei only arrested the ship and did not detain the goods. After Junfei Company informed him that it was the owner and presented the evidence, BAO Zhenwei immediately released the goods and should not be liable for compensation. Junfei Company’s cross-examination opinion: there is no objection to the authenticity of evidence 1. Article 5 of Agreement stipulates that the cargo right belongs to Junfei Company. If there is a dispute over the cargo dispute, it has nothing to do with BAO Zhenwei, but it does not mean that the cargo damage has nothing to do with it. There is no objection to the authenticity of evidence 2. LI Shuqing really owed BAO Zhenwei the money. The court confirms that: Junfei Company recognized the authenticity of the evidence, and the court confirms its authenticity. Article 5 of evidence 1 Agreement states that: any dispute over the origin of the cargo of Nantong Sanhe will be borne by Party A (Junfei Company) and has nothing to do with Party B (BAO Zhenwei). Judging from the content agreed in the agreement, the dispute over the ownership of the coal involved in the case has nothing to do with BAO Zhenwei, but does not mention how to deal with the cargo damage. Now Junfei Company claims to BAO Zhenwei that it is a cargo loss rather than a dispute over ownership. Therefore, BAO Zhenwei’s proof purpose cannot be realized and will not be accepted. Junfei Company has no objection to the authenticity of evidence 2, and the court will confirm the incorporation of the volume. BAO Zhenwei submitted three additional documents after the trial. Evidence 1: letter of the lawyer and courier of the mail (original). It is proposed that BAO Zhenwei immediately entrusted a lawyer to send a letter to the ship’s Sanhe Company after the arrest of the ship, asking the ship to send someone to pick up the goods. BAO Zhenwei only detained the ship and did not retain the goods. Evidence 2: Description of the situation (original), evidence 3: screenshot of the scene law enforcement video. It is proposed that the Sanjiangying Water Police Station photographed the cargo on board on May 18, 2014, and there was no change in the surface of the cargo when unloading. Junfei Company’s cross-examination opinion: there is disagreement on the authenticity of evidence 1. It is not clear whether it is delivered to Sanhe Company and LI Shuqing, and there is no receipt certificate. There is no objection to the authenticity and legality of evidence 2, but it has nothing to do with this case, and it cannot be proved that the goods did not change when they were transferred. Evidence 3 is not recognized, whether the original photo can not be confirmed, and the photo does not reflect the actual situation of the goods. Whether the goods change can only be identified by professional testing agencies. The confirmation opinion of the court: the evidence can only prove that BAO Zhenwei sent a letter to Sanhe Company and LI Shuqing through the lawyer after arresting the ship, but could not confirm whether the letter has been delivered; evidence 2, evidence 3 can prove that BAO Zhenwei was arrested after arresting the ship. The police went to the scene to enforce the law, but only from the appearance of the photo and the police station did not receive the stolen, lost alarm description

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of the goods can not prove whether the goods are damaged. The purpose of the proof of the three pieces of evidence is not accepted. The court found through trial that the facts ascertained by the court of first instance are true and will be confirmed by the court. According to the arguments of both parties, the issues of second instance in this case: 1. whether the trial procedure of the first-instance court is illegal; 2. whether BAO Zhenwei constitutes the illegal retention and the loss of coal. Regarding the first issue. In view of BAO Zhenwei’s failure to attend the court in the first instance, the second trial also defended the court’s service procedure, and the court examined the first-instance procedure according to law. After investigation, the court of first instance delivered a copy of the complaint, a notice of appeal, a subpoena and other documents to BAO Zhenwei’s address in Fuyang, Anhui on the first post on March 24, 2015. The post office has “the address of the recipient” The error was returned. On April 3, 2015, the court of first instance delivered the above-mentioned legal documents to the address of BAO Zhenwei’s household registration address in Yangzhou, Jiangsu by postal mail for the second time. The post office returned the mail on the grounds of “rejection and return”. Later, on April 21, 2015, he went to the West Lake Police Station of Yangzhou Public Security Bureau to verify BAO Zhenwei’s household registration information. After verifying that his address is the same as the second delivery address, the telephone number is the same as that provided by Junfei Company. During the trial of the second instance, BAO Zhenwei confirmed that his telephone number had not changed, but denied receiving the phone number from the court of first instance. He also claimed that the address of the household registration was the previous address, but the house was sold in January 2014, and the household registration has not changed. The court held that if BAO Zhenwei’s household registration address and telephone number were correct, he refused to answer the phone and did not prove that the address of the residence had been changed. The service of the court of first instance was deemed to be effective. BAO Zhenwei’s defense of the violation of the first-instance procedure cannot be established. Regarding the second issue. The court believes that BAO Zhenwei retained M.V. NAN TONG SAN HE 08 due to the existence of a creditor-debt relationship with LI Shuqing, and also retained the ship-borne case involving coal. It can be seen from the certificate issued by the Sanjiangying Water Police Station on May 30, 2014 that BAO Zhenwei refused to release the goods when the consignee and the carrier twice requested the delivery of the goods, and used the method of retaining the ship and the cargo on board. LI Shuqing was asked to deal with the debt problems of both parties, and his actions constituted illegal retention of shipborne cargo. Article 6 of the Tort Liability Law of the People’s Republic of China stipulates that “the perpetrator shall bear the tort liability for infringement of the civil rights and interests of others.” Junfei Company submitted Coal Supply and Demand Contract Supplement Agreement, Delivery Ship Port Handover List, Coal Weight and Quality Inspection Report and other evidences prove that M.V. NAN TONG SAN HE 08 in the loading port carried 8,910.48 tons of calorific value to 5,100. Large calories/kg of coal, while the coal inspection report at the time of

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unloading showed: the coal tonnage was 8,580.3 tons, and the calorific value was 4,899 kcal/kg. As BAO Zhenwei illegally retained the coal contained in M.V. NAN TONG SAN HE 08 for three months and caused losses to Junfei Company, BAO Zhenwei should be liable for compensation. BAO Zhenwei defended that it was a legally lien vessel and that there was no illegal lien on board cargo. The court refused to submit sufficient evidence to prove its claim. BAO Zhenwei also argued that it had reached an agreement with Junfei Company on possible disputes over the goods involved. According to the agreement of Article 5 of the agreement signed by the two parties on August 21, 2014, the ship’s coal caused disputes over other cargo rights. The company bears nothing and has nothing to do with BAO Zhenwei. The court believes that Article 5 of the agreement stipulates that the dispute over the cargo rights has nothing to do with BAO Zhenwei, and does not mention how the cargo damage should be handled. According to the agreement of Article 3 of the agreement signed by the two parties, the quantity and quality of coal unloaded by Junfei Company shall be subject to the inspection and appraisal report issued by the third-party appraisal agency appointed or entrusted by the company. Now Junfei Company submitted the coal inspection report of Jiangsu Shengxing Testing Technology Service Co., Ltd., which proves that the weight and quality of the coal involved in the unloading have changed. BAO Zhenwei did not submit a counter-certification to overturn the inspection report, so the court does not support the plea of BAO Zhenwei that the loss of goods had nothing to do with him. The determination of the amount of damages. Article 19 of the Tort Liability Law of the People’s Republic of China stipulates that “in the case of infringement of the property of others, the loss of property shall be calculated according to the market price at the time of the loss or other means”. The price of coal announced by Qinhuangdao Coal Network submitted by Junfei Company only includes the price index of 4,500, 5,000 and 5,500 kcal/kg. There is no price of 4,899 kcal/kg, which cannot be used according to the market price. Junfei Company claims to use the single card folding algorithm or the price index of 5,000 yuan/ton of calorific value of 5,000 kcal/kg thermal coal announced by Qinhuangdao Coal Network (4,444,458 yuan − 8,580.3 tons  415 yuan/ton). The court believes that Junfei Company will recognize the case after the coal is subjected to extraction and other coal mixing treatment in the second trial, and then increase the heat of coal and sell it. Junfei Company actually handled the case involving coal, but failed to prove the actual loss. The claim applied the presumptive single-card folding algorithm to calculate the relevant losses, and did not submit evidence to prove the rationality and universality of the algorithm. The court did not support the calculation method advocated by Junfei Company without the contractual basis and corresponding evidence. It is not unreasonable for the court of first instance to calculate the loss of the goods before and after the goods have been retained. It should be maintained. The reason for the appeal of Junfei Company cannot be established. In summary, the facts confirmed by the first-instance judgment are clear, the application of law is correct, which should be affirmed according to law. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 11,288.38 yuan, shall be born by Junfei Company. The judgment is final. Presiding Judge: LIU Jianxin Judge: OU Haiyan Judge: DAI Qifen November 16, 2017 Clerk: MA Yue

Shanghai Maritime Court Civil Judgment Jiangsu Haichang Construction Engineering Co., Ltd. v. PICC Property & Casualty Co., Ltd. Jianhu Sub-branch (2017) Hu 72 Min Chu No.368 Related Case(s) None. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Court held that the 2-year time-bar for insured to claim insurer for indemnity of compensation paid to third party in a marine liability insurance case started from the date of the occurrence of insured accident and that date was when the insured’s liability to compensate third party was confirmed. Summary In December 2013, Plaintiff insured’s ship hit a wharf belonging to third party. In February 2014, Maritime Safety Authority charged Plaintiff to be 100% liable for the casualty. In November 2015, third party sued Plaintiff in Court for repair costs of the wharf. In December 2016, Plaintiff settled the suit with third party with mediation of Court, and immediately therefore filed a lawsuit to claim against Defendant insurer for indemnity of compensation made to third party. Defendant raised a defence that the 2-year time-bar had lapsed, as 3 years had passed since the time of casualty. Court rejected such time-bar defence, and held that the time-bar to claim indemnity of compensation made to third party in a marine liability insurance case started from the date of occurrence of the insured accident and that date was (i) when the insured’s liability to compensate third party was judicially confirmed or agreed by insured or (ii) when insured made compensation to third party for its liability. Court further held that the starting point (i) was more rationale, while in this case the 2-year time-bar did not lapse no matter which starting point was taken.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_29

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Judgment The Plaintiff: Jiangsu Haichang Construction Engineering Co., Ltd. Domicile: No.60-1/2, Shizi Street, Suzhou, Jiangsu. Legal representative: CHENG Degong, general manager of the company. Agent ad litem: CHEN Zhaoping, employee of the company. Agent ad litem: NI Jun, lawyer of Jiangsu Shengdian Law Firm. The Defendant: PICC Property & Casualty Co., Ltd. Jianhu Sub-branch. Domicile: No.XXX Xiangyang Road, Jianhu County, Yancheng, Jiangsu. Representative: ZHAO Jun, general manager of the company. Agent ad litem: MA Xinyi, lawyer of Grandall Law Firm (Nanjing). With respect to the case arising from dispute over marine insurance contract between the Plaintiff Jiangsu Haichang Construction Engineering Co., Ltd. (hereinafter referred to as Haichang) and the Defendant PICC Property & Casualty Co., Ltd. Jianhu Sub-branch (hereinafter referred to as Jianhu PICC), the Plaintiff filed an action to the court on December 13, 2016. After the Plaintiff completed submission of materials, the court entertained the case on April 5, 2017 and applied the summary procedure to the trial according to law. The court held a hearing in public on May 25, 2017. Agents ad litem of the Plaintiff Haichang, Lawyer CHEN Zhaoping and Lawyer NI Jun, and agent ad litem of the Defendant Jianhu PICC, Lawyer MA Xinyi, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff Haichang claimed that Haichang insured all risks of marine inland vessel to Jianhu PICC for its M.V. HUA YUAN JIAO TONG 6 on November 16, 2013. The period of insurance should be from November 10, 2013 to November 9, 2014. M.V. HUA YUAN JIAO TONG 6 had a traffic accident on sea on December 6, 2013 which caused the loss of the outsider Jiangsu Hongming Shipping Co., Ltd. (hereinafter referred to as Hongming). After the accident, Haichang reported the case to Jianhu PICC, Jianhu PICC entrusted the appraisal agency to evaluate the losses involved. After that, in the case of Hongming against Haichang (hereinafter referred to as 2015 Shang No.71), the amount of loss was RMB855,500 yuan and the assessment fee was RMB110,000 yuan in accordance with the judicial evaluation. The Plaintiff thought that the accident was an insurance accident so required the insurance company to compensate for the above loss. Haichang and Jianhu PICC failed to reach a consensus after negotiations, so Haichang brought this case to the court and requested Jianhu PICC to pay the insurance indemnity of 720,000 yuan and bear the case acceptance fee. The Defendant Jianhu PICC argued that 1. the limitation of action exceeded, the litigation right of Haichang was not protected by law; 2. the ship in this case was a passive non-motor ship, Jianhu PICC would be liable for insurance only when such ships had an accident in case of towing by Jianhu PICC; 3. Haichang could neither prove the amount of losses involved nor prove that it had paid compensation to Hongming, so there was no factual basis for its claims; 4. even if Jianhu PICC

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should liable for insurance, it should bear only three-quarters of the responsibility in accordance with the insurance contract; 5. Haichang failed to prove the seaworthiness of its ships and whether it should bear all responsibilities. The submitted evidence and materials of the Plaintiff Haichang to support its claims, the cross-examination opinions of Jianhu PICC and the confirmation of the court are as follows: 1. Insurance policy and invoice, to prove the relationship of insurance contract between the Plaintiff and the Defendant. The Defendant Jianhu PICC cross-examined that, it could not verify the authenticity of the insurance policy but it had no objection to the relationship of insurance contract and invoice. The court holds that because Jianhu PICC had no objection to relationship of the insurance contract and invoice of Jianhu PICC and the content of the insurance policy is the same as that of the insurance policy submitted by Jianhu PICC, so the court confirms the effect of evidence and probative force. 2. Certificate of liability for maritime traffic accident, to prove that M.V. HUA YUAN JIAO TONG 6, the vessel involved in the accident should bear full responsibility. The Defendant Jianhu PICC had no objection to the authenticity, legality and relevancy of evidence, however, Haichang should further prove whether the ship was seaworthy. The court holds that because it had no objection to this evidence, so the court confirms the effect of evidence and probative force. About the seaworthiness of the ship, it should be distributed in accordance with the principle of who argued, who testified. So Jianhu PICC has the burden of proof to claim of the ship’s unseaworthiness. 3. Appraisal report, to prove the damage caused by the accident involved. The Defendant cross-examined that it did not sea such evaluation company Shanghai Shuangxi Marine Development Co., Ltd. (hereinafter referred to as Shuangxi) had corresponding quality and it had objection to the assessment conclusion. The court holds that in 2015 Shang No.71, Shuangxi received judicial authorization to assess the losses involved, and the qualification of Shuangxi has been reviewed in the above case and in the absence of other evidence to the contrary, the assessment results should be accepted. So the court confirms the effect of evidence and probative force. 4. Mediation and electronic transaction returns, to prove that Haichang paid Hongming 800,000 yuan for compensation in accordance with mediation. The Defendant Jianhu PICC had no objection to mediation and the authenticity of electronic transaction returns but the amount of compensation should be agreed by both parties. The court holds that, because Jianhu PICC had no objection to mediation, the court confirms the effect of evidence and effect of mediation. Because Jianhu PICC had no objection to the authenticity of electronic transaction returns, the court confirms the effect of evidence of electronic transaction returns. Probative force of electronic transaction returns shall be based on the evidence records.

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The submitted evidence and materials of the Defendant Jianhu PICC to support its defense, the cross-examination opinions of Haichang and the confirmation of the court are as follows: 1. Insurance policy and insurance clauses, to prove that the accident was not within the scope of insurance and Jianhu PICC was liable for three-quarters of the compensation. The Plaintiff Haichang had no objection to the authenticity of the evidence but M.V. HUA YUAN JIAO TONG 6 did had an accident during the towing, the Plaintiff failed to fully explain or indicate the exemption in the insurance policy and the insurance clauses. The court holds that, because Haichang had no objection to the authenticity of the evidence, the court confirms the effect of evidence. As to the probative force, the court will confirm it in accordance with other evidence. 2. Records of investigation, to prove that M.V. HUA YUAN JIAO TONG 6 was collided during the mooring, and the subsequent towing was only the rescue. The Plaintiff Haichang had no objection to the authenticity of the evidence but the contents were not recognized. The facts of collision should be subject to the investigation by the maritime safety administration. The court holds that, such evidence is the testimony of the witness, the inquired parties failed to testify in court, and the contents of the evidence contradict the facts identified by the maritime safety administration. The probative force of documents made by state organs within their functions and powers is greater than that of other documents in accordance with the law. So the court does not confirm the probative force of records of investigation. The court finds out that: M.V. HUA YUAN JIAO TONG 6 of Haichang was anchored when anchoring in the frontier waters of the outfitting terminal of Hongming. It failed to control the ship’s position in time, which caused the stern touched the reserved pile in the west side of Hongming Wharf, which resulted in the loss of the reserved pile at 13:35 on December 6, 2013. Lianyungang Maritime Safety Administration issued the certificate of liability for maritime traffic accident on February 20, 2014. Such certificate recorded that the accident involved was a water traffic accident which belonged to a small accident grade. The main cause of such accident was that the captain of M.V. HUA YUAN JIAO TONG 6 did not have strong safety consciousness and failed to do accident prevention measures conscientiously which were normally in three aspects: firstly, the anchoring position was too close to the wharf to allow for enough turning basin; secondly, M.V. HUA YUAN JIAO TONG 6 was passive vessel which should not attached to a power ship when it was anchored, resulting in the failure to control the position of the ship when it was anchored; thirdly, after gauge pile was leaning against M.V. JIANG QUAN 6, the tugboat was still used to pull away forcibly when the ebb was still high, the stern touched the reserved pile during the towing. Besides, the captain’s unfamiliarity with the navigation environment and the great ebb prior and subsequent to the accident were also one of the causes of the accident. Maritime safety administration

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finally confirmed that the accident involved the case was an unilateral liability accident, and M.V. HUA YUAN JIAO TONG 6 was responsible for full liability. On November 18,2015, Hongming claimed against Haichang for compensation for terminal repair expenses. Haichang had applied to the court for Jianhu PICC as the additional defendant, the court rejected it. On June 20, 2016, Shuangxi was entrusted with the evaluation and appraisal of the court, on December 1, 2016, the appraisal report on the damage of the terminal reserved pile of Hongming was issued. Such report recorded that the reasonable repair plan for the reserved pile should in accordance with the engineering expenses which usually refers to 855,500 yuan. 2015 Shang No.71 was closed with mediation on December 13, 2015 and then Haichang brought a lawsuit to the court for this case. On December 29, 2015, Haichang paid 200,000 yuan for Shanghai Wintell & Co. (hereinafter referred to as Wintell). Haichang paid 600,000 yuan for Wintell for balance on January 24, 2017. The court also finds out that: The Plaintiff Haichang insured all risks of marine inland vessel to Jianhu PICC. The name of policy holder was Haichang, the name of insured vessel was M.V. HUA YUAN JIAO TONG 6, the insurance premium was 210,000 yuan and the insured amount and insurance value was XXXXXXXX yuan in accordance with insurance slip and insurance policy. The deductibles of each accident was 80,000 yuan or 10% of the compensation amount, whichever was higher. Particularly agreement, the risk of towing voyage in transfer was not including. The period of insurance should start from 0 o’clock on November 10, 2013 to 24 o’clock on November 9, 2014. Jianhu PICC issued the insurance policy after acceptance of insurance policy and the contents stated on such insurance policy were as same as that of the insurance slip. Haichang paid an insurance premium of 210,000 yuan for Jianhu PICC in order to fulfill the insurance contract involved. The insurance policy was accompanied by the coastal inland waterway insurance clause (2009) of the People’s Insurance Company of China (hereinafter referred to as the 2009 insurance clause). There were 19 articles in this clause, which were printed in song style and bold song style. Among them, the contents of the bold song style were as follows: some contents of second all risks of the insurance liability section: “this insurance is only responsible for three-quarters of the amount of compensation for each collision and touch liability, but the maximum amount of one or aggregate amount of compensation within the period of the insurance period is limited to the amount of the ship’s insurance. The insurance is not liable for the loss of goods on this ship”; excluding the clauses of liability section; the sixth article of the claim and compensation section “when the insurance accident happens, the insured shall not claim the insurance compensation against the insurer if one does not have an insurance interest on the subject matter of the insurance”, the eighth article “when the insured vessel suffered losses in an insurance accident, the insured must agree with the insurer to repair or pay the expenses, otherwise, the insurer shall have the right to reconfirm it and refuse to compensate for the liability that does not belong to the insurer or the unreasonable loss and expense”, the eleventh article “the insurer deducts deductions in accordance with the insurance policy for each claim (except for total loss, collision, liability for touch)”, partial clauses of the thirteenth article

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“the insurer may deduct the indemnity accordingly if the insured gives up its right to claim compensation to the third party without the agreement of the insurer or the insurer’s subrogation rights and interests to be damaged as a result of the negligence of the insured”; partial clauses of the fourteenth part of the insured obligation section “unless otherwise agreed in written in the contract, the insurance contract will take effect after the insured has paid the premium”, partial clauses of the fifteenth article “the insurer shall not be liable for compensation if the insured fails to comply with the above agreement and causes an insurance accident, except with the consent of the insurer and the premium is charged; the insurer shall not be liable for the loss of the expansion if the insured fails to comply with the above agreement and causes the loss to be enlarged”, partial clauses of the eighteenth article “the insurer shall not be liable for compensation for the unverifiable part if the insured fails to fulfill the obligation of providing documents as agreed in the preceding paragraph that causes the insurer unable to verify the loss”. In addition to the above clauses, other clauses did not use bold fonts, including the contents recorded in article two, paragraph one, clause three “non-motor vessels shall not be liable for responsibility of collision and touch, but the insured vessel could be regarded as motor vessels when it was towed by the tugboat underwrote by our company.” The court holds that: This case is a marine insurance contract dispute, Haichang is the policy-holder and insured, Jianhu PICC is the insurer, the insurance contract is the real meaning of the two parties. Therefore, the insurance contract between the Plaintiff and the Defendant is valid and it is legally binding on both parties. The main issues of this case are that: firstly, whether the action of Haichang exceeds the limitation of action; secondly, whether Jianhu PICC should undertake insurance liability; thirdly, whether the compensation for Haichang is reasonable and whether the claim amount has legal basis. With respect to whether the action of Haichang exceeds the limitation of action, the court holds that the limitation of action in a marine insurance contract is two years, counting from the date of the occurrence of an insurance accident in accordance with the law. In accordance with the agreements of insurance contract, the type of insurance that Haichang insured and Jianhu PICC underwrote is all risks, such type of insurance covers not only the total loss of ship, partial loss, but also collision and touch liability insurance. Liability insurance is the insurance that the insured shall in accordance with the law be liable for the third party, the insured is not aware of the loss or the extent of loss prior to the determination of the civil liability of the insured, the requirement of the responsibility of the insurer to be liable for the liability insurance exists objective obstacles, and there is no factual and legal basis for the insurer to undertake the claim obligation under the liability insurance. Therefore, it can be determined that the liability insurance includes two parts: the occurrence of the objective accident and the determination of the civil liability of the insured. Only an objective accident cannot cause the liability insurance accident. The available evidence suggests that the accident involved is caused by the collision of Haichang with the wharf of Hongming which shall belongs to liability insurance. 2015 Shang No.71 was settled by mediation on

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December 13, 2016, which is the date of determining the civil liability of Haichang. On the same day, Haichang submitted the lawsuit to Jianhu PICC, it can be confirmed that the prosecution of Haichang is within the limitation. Even in accordance with the relevant provisions of the liability insurance of the China Insurance Regulatory Commission (hereinafter referred to as CIRC), the date of the occurrence of an insurance accident shall refer to the date a third party requesting the insured to assume legal liability. The date that the insured Hongming claimed against Haichang to undertake its legal liability is November 18, 2015, which is the date that liability insurance accident happened. The date of expiry of the period is from such day to November 17, 2017 which does not exceed the limitation of action. In addition, the establishment of limitation of action system is to urge obligees to exercise their rights actively, and to promote the development of transactions and social and economic development. Haichang has brought up Jianhu PICC as the additional defendant in 2015 Shang No.71. After received the court’s mediation, Haichang submitted a lawsuit to the court. The facts mentioned above indicate that Haichang exercise its rights on time. To sum up, the court does not accept the plea of Jianhu PICC for limitation of action. As for whether Jianhu PICC is liable for insurance liability, the Defendant Jianhu PICC held that there was no compensation for the risk of towing voyage in transfer operation and non-motor vessel was not liable for collision and touch liability. The court holds that the insurer did not make any explanation of the transfer operation in the underwriting or in the insurance contract. While in accordance with the statements of Jianhu PICC, any towing voyage, including the field movement, is also a transfer operation, which is apparently inconsistent with the literal meaning of risk of towing voyage described in the clause, and is also not fair. In accordance with the relevant provisions of the insurance law, any disputes over the standard terms raised by the insurer and the insured shall be interpreted based on usual understanding. Any two or more understandings should be interpreted in favor of the insured. Therefore, the court does not accept the interpretation of the provisions of Jianhu PICC. Besides, Jianhu PICC also failed to give evidence to prove that the vessel involved in the towing voyage of the transfer operation, so it should bear the adverse consequence of failure to provide evidence. In regard to the clauses that non-motor vessel shall not be liable for collision and touch liability, the court holds that Jianhu PICC has factual knowledge that the vessel involved is non-motor vessel when establishing the insurance contract, but the exemption clause of the non-motor vessel is not specially agreed on the insurance slip or insurance policy, and also there is no evidence has been shown to give prompt or explicit explanation in other forms. In the form clause, the 2009 insurance clause attached to the insurance slip, Jianhu PICC had made almost all the exemption clauses in bold in order to attract the insurer’s attention, but the exemption clauses for non-motor vessel had not make a clear indication. In accordance with the law, if the insurer fails to point out or make a clear explanation of the standard terms or exemption clauses, such clauses shall not be effective. So the court does not accept the plea of Jianhu PICC and determines that Jianhu PICC should assume insurance liability.

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As for the dispute over whether the compensation of Haichang is reasonable and whether the amount of claims has legal basis, the court holds that Haichang has fully exercised the right of defense in 2015 Shang No.71, the amount of loss involved in the accident was 855,500 yuan in accordance with judicial evaluation. In accordance with the record of the liability confirmation of the accident, M.V. HUA YUAN JIAO TONG 6 of Haichang is fully responsible for the occurrence of this accident. In order to reduce the loss, Haichang reached a mediation agreement with Hongming, and paid 800,000 yuan for compensation. It has already done the obligation to reduce the loss and the amount of the claim is suitable. The existing evidence shows that Haichang has paid Hongming 800,000 yuan for compensation in two times after mediation, Haichang shall have the right to require Jianhu PICC to claim the corresponding loss in accordance with the insurance contract. In accordance with the insurance contract, touch liability is only responsible for three-quarters of the compensation amount. And the claim amount should be 600,000 yuan through calculation. Therefore, the court supports that Jianhu PICC should pay Haichang 600,000 yuan for compensation. In conclusion, in accordance with the Maritime Code of the People’s Republic of China Article 237, Article 264, the Insurance Law of the People’s Republic of China Article 16 Paragraph 7, Article 17, Article 30, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. The Defendant PICC Property & Casualty Co., Ltd. Jianhu Sub-branch shall pay the Plaintiff Jiangsu Haichang Construction Engineering Co., Ltd. an insurance indemnity of 600,000 yuan within ten days of the date of effectiveness of this judgment. 2. Not support other claims of the Plaintiff Jiangsu Haichang Construction Engineering Co., Ltd. If the Defendant PICC Property & Casualty Co., Ltd. Jianhu Sub-branch fails to perform the obligation of payment within the period specified in the judgment, a double payment of debt interest shall be paid during the period of delay in accordance with the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee originally in amount of 11,000 yuan, half- 5,500 yuan will be charged due to the application of the summary procedure, the Plaintiff Jiangsu Haichang Construction Engineering Co., Ltd. shall bear 916.67 yuan, and the Defendant PICC Property & Casualty Co., Ltd. Jianhu Sub-branch shall bear 4,583.33 yuan. If not satisfied with the judgement, the Plaintiff and the Defendant may within 15 days as of the second day of the receiving the written judgement, together with copies of petition in accordance with the number of the other parties, appeal to the Shanghai High People’s Court. Judge: ZHANG Jianchen June 20, 2017 Clerk: CHEN Mengqi

Beihai Maritime Court Civil Judgment Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2016) Gui 72 Min Chu No.242 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 559. Cause of Action 207. Dispute over shipbuilding contract. (Editor’s Note: This cause of action is closest to the underlying dispute of this case.) Headnote Manufacturer of ship parts (rudder) held to be entitled to recover balance of purchase price from shipbuilder, which had failed to designate delivery place as agreed in the contract; shipbuilder held to be not entitled to terminate the contract for late performance because the contract was one for “hired work” and the rudder manufacturer had completed the work. Summary Plaintiff agreed to manufacture and supply three sets of rudder gear weighing 5,000 tons to Defendant. Defendant paid Plaintiff a deposit after the contract was made. Plaintiff manufactured the rudders but Defendant did not arrange for shipment of them, saying that Plaintiff had failed to complete construction within the agreed period for delivery. Plaintiff sued Defendant, claiming the balance of the purchase price. Defendant counterclaimed against Plaintiff, seeking termination of the contract, return of the deposit that it had paid, and liquidated damages for late performance. The Court held that Plaintiff’s claim succeeded and Defendant’s counterclaim failed. The Court held that the contract stipulated that delivery of the rudders was to be at a place designated by Defendant, but the Defendant had not specified a delivery place, which was a breach of contract. Defendant was not entitled to terminate the contract because it was a contract for “hired work” and Plaintiff had completed the work. Accordingly, the Court ordered: (1) Defendant to pay Plaintiff the balance of the purchase price; (2) Plaintiff to deliver the three sets of rudder gear to Defendant.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_30

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Judgment The Plaintiff (the counterclaim Defendant): Jiangsu Haitun Ship Machinery Co., Ltd. Legal representative: YAO Lijuan, chairman. Agent ad litem: ZHUGE Xinglin, lawyer of Jiangsu Chenaiping Law Firm. Agent ad litem: CUI Jun, general manager of the company. The Defendant (the counterclaim Plaintiff): Guangxi Xijiang Heavy Industry Co., Ltd. Domicile: No.203 Construction Building, Qintang District, Guigang, Guangxi Zhuang Autonomous Region. Legal representative: LU Shengcheng, chairman. Agent ad litem: CHEN Kangzhi, lawyer of Guangxi Zhengdawuxing Law Firm Gangnan Branch. Agent ad litem: CHEN Zhiming, lawyer of Guangxi Zhengdawuxing Law Firm. With respect of the case arising from dispute over contract for sale and purchase of ship key parts and special items between the Plaintiff (counterclaim Defendant), Jiangsu Haitun Ship Machinery Co., Ltd. (hereinafter referred to as Haitun Machinery), and the Defendant (counterclaim Plaintiff), Guangxi Xijiang Heavy Industry Co., Ltd. (hereinafter referred to as Xijiang Heavy), after entertaining the case on June 30, 2016, this court legitimately constituted the collegiate bench to try the case and held a hearing in public on August 9, 2016. Agents ad litem of Haitun Machinery, ZHUGE Xinglin and CUI Jun, and agents ad litem of the Defendant, CHEN Kangzhi and CHEN Zhiming, appeared in the court to attend the trial. This court has concluded the case. The Plaintiff (the counterclaim Defendant) Haitun Machinery claimed that: the Plaintiff and the Defendant were relationship of business cooperation, they signed a contract for 3 sets of 5,000 tons complete set of ship shaft rudder gear on December 18, 2014, marine accessories would be supplied by the Plaintiff to the Defendant. After signing the contract, the Plaintiff prepared for goods as agreed, but the Defendant did not arrange for shipment up to now. Because the goods bought by the Plaintiff were customized, the product contract of more than 1,000,000 yuan did not be fulfilled up to now, which resulted to huge financial stress and economic losses of the Plaintiff, the Plaintiff sent many letters and appointed staff to communicate with the Defendant, but the negotiation was failed. In order to safeguard the lawful rights and interests of the Plaintiff, the Plaintiff requested the court to judge as follows: 1. the Defendant should fulfill the sales and purchases contract signed by both parties, and should pay the amount of 751,800 yuan; 2. court acceptance fee should be borne by the Defendant. The Defendant (the counterclaim Plaintiff) Xijiang Heavy argued that: most part of the statement of the Plaintiff was not consistent with the facts, it was the fact that both parties signed the contract, but the Defendant did not refuse to deliver goods to

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the Plaintiff as agreed, but the Plaintiff did not deliver goods as agreed, the evidence provided by the Plaintiff proved that the issuing date of product certificate was May 2015, which exceeded the delivery deadline, so the Plaintiff had breached a contract. The Plaintiff did not supply goods to the Defendant for a long time, now the contract between the Defendant and other party had been terminated, the goods were of no use to the Defendant, it was not consistent with the contract that the Plaintiff requested the Defendant to fulfill the contract, the claims of the Plaintiff should be rejected. The Defendant (the counterclaim Plaintiff) Xijiang Heavy counterclaimed that: after negotiation between the Defendant and the Plaintiff, they signed Sale and Purchase Contract on December 18, 2014 (contract number: XJZGCG20141218001), agreeing that the Defendant bought 3 sets of 5,000 tons complete set of ship shaft rudder gear from the Plaintiff, the Defendant paid 30% of the total amount of the contract in advance to the Plaintiff namely 322,200 yuan. According to Sale and Purchase Contract, the date of delivery of the goods by the Plaintiff was within 60 days after signing the contract. The Plaintiff did not fulfill its obligation to deliver the goods up to now after exceeding the date of delivery of the goods, which seriously breached the contract; the behaviour of the Plaintiff resulted to the consequence that the purpose of the contract could not be reached by the Defendant, and caused huge losses to the Defendant. There was no agreement on termination of the contract after many times of negotiation. In conclusion, that the Plaintiff claimed against the Defendant requesting to fulfill the contract had no factual or legal basis. According to Clause 11 responsibility for breach of contract in Sale and Purchase Contract, if party B could not deliver the goods within 5 days, party B should compensate 5% of the total amount of the contract to party A, and party A had right to terminate the contract. Therefore, the Defendant requested the court to judge that: 1. terminate Sale and Purchase Contract signed by the Defendant and the Plaintiff on December 18, 2014; 2. the Plaintiff should return the payment 322,200 yuan in advance paid by the Defendant; 3. the Plaintiff should pay liquidated damages 53,700 yuan to the Defendant; 4. court acceptance fee should be borne by the Plaintiff. The Plaintiff (the counterclaim Defendant) Haitun Machinery argued that: the counterclaims of the Defendant had no factual and legal basis, the Plaintiff requested the court to reject the counterclaims. The reasons were as follows: 1. the request of terminating the contract of the Defendant was not in accordance with contract law, the Defendant could not exercise the right of termination according to law. 2. The Plaintiff had fulfilled the contractual obligation that it produced goods, products were customized, the contract should be fulfilled, the Defendant should pay the charge of goods to the Plaintiff, and compensate the losses of the Plaintiff. To support its claims and defense of counterclaims, the Plaintiff submitted the following evidence: Evidence 1, Sale and Purchase Contract, to prove the fact that the Plaintiff and the Defendant signed a contract for 3 sets of 5,000 tons complete set of ship shaft rudder gear;

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Evidence 2, product price details (attachment one), to prove the product price details agreed; Evidence 3, technology agreement (attachment two), to prove the agreement on specific technology of product processing; Evidence 4, review drawings and opinions, to prove that the drawings of 5,000 tons shipbuilding was recognized by review center; Evidence 5, Certificate for Marine Products, to prove that the products had been inspected by CCS; Evidence 6, Lawyer’ s Letter, to prove the fact of delivery and payment negotiated by both parties; Evidence 7, Rules for the Classification of Steel Ships at Sea; Evidence 8, photos of products (18 pieces); Evidence 9, 2 pieces of product inspection invoices and lists, financial statement, to prove the fact that the expenses paid by the Plaintiff to the inspection department after the products had passed the inspection. The Defendant Xijiang Heavy cross-examined that: no objection to the authenticity of evidence 1, 2 and 3; evidence 4 should be confirmed by the court; it could not confirm the authenticity of evidence 5, the issuing date of product certificate was May 2015, which exceeded the delivery deadline, to prove that the Plaintiff had breached a contract; evidence 6 should be confirmed by the court; evidence 7 should be confirmed by the court; evidence 8 were photos, which had nothing to do with this case; it was impossible to see a connection with the defendant in evidence 9, the issuing date of invoice was May 12, 2015, this date had exceeded the performance period agreed in the contract. To support its counterclaims and defense, the Defendant submitted the following evidence: Evidence 1, Sale and Purchase Contract, to prove the fact that the Plaintiff and the Defendant signed a contract for 3 sets of 5,000 tons complete set of ship shaft rudder gear; Evidence 2, bank transfer receipt, to prove the fact that the Defendant paid 322,200 yuan in advance as agreed. The Plaintiff cross-examined that: no objection to the authenticity of evidence 1, but there was objection of purpose of proof, the evidence could not prove that the Defendant fulfilled contractual obligation, the ships of the Defendant were not produced and did not accept the goods supplied by the Plaintiff, the Plaintiff had produced products and the products were inspected by department, the Defendant did not fulfill the following obligation; no objection to the authenticity of evidence 2, the date agreed was December 28, 2014, date of payment was February 5, 2015, the amount was not paid on the date of signing the contract, the amount was paid after negotiating, but the Defendant refused to accept the goods, the reason was that the ship was not built. The Plaintiff did not provide evidence for the counterclaims. The court holds that: both parties had no objection to the authenticity of evidence 1–3, evidence 2, evidence 5, evidence 7, evidence 8 provided by the Plaintiff, and

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evidence 1, evidence 2 provided by the Defendant, which could be used as basis to confirm the facts of this case; evidence 4, evidence 5, evidence 8, evidence 9 and evidence 1–3 formed a complete evidence chain, there was no evidence to the contrary by the Defendant, so the court confirmed those evidence; evidence 6 was checked by the original copy, so the court confirmed it; evidence 7 was a normative document made by CCS, so the court confirmed it. The court should confirm the facts of the case as proved by the evidence confirmed by the court. Accordingly, the court found out and confirmed the following facts: After negotiation, the Defendant was party A, the Plaintiff was party B, they signed Sale and Purchase Contract that the number was XJZGCG20141218001. The contents of contract were that: party B offer party A 3 sets of 5,000 tons complete set of ship shaft rudder gear, amount of the contract was 1,074,000 yuan. Party B promised to deliver the goods to party A, if party A found shortage of quantity of goods when inspecting, it could demand party B to supply without any condition; because party B found shortage of quantity of goods, specification unqualified or quality unqualified, which resulted the losses that party A stop producing or transportation fee, according to actual losses of party A, the losses should be compensated by party B without any condition. The products provided by party B should be in accordance with national standard, the warranty period was 12 months after the completion of the ship. Method of delivery was that: to order of the staff appointed by party A; party A could purchase goods from other factory if delay in using caused by party B, the price difference and the expenses arising therefrom should be borne by party B; any delay in delivery caused by return or exchange of goods should be regarded as overdue. Way of transportation was by automobile transportation, the charge should be borne by party B. After the goods arrived at the place appointed, party A should be responsible for unloading. Party B’ s products should be checked and accepted by the material staff appointed by party A, upon acceptance inspection by party A, the basis of settlement could be confirmed, acceptance and inspection should be confirmed according to technology agreement signed by both parties; the inspection of the sample according to national standard, professional standard and sample provided by party B confirmed by party A, appearance quality could be inspected on the spot, internal quality should be tested by qualified testing institutions, which took the inspection result as the acceptance basis. After signing the contract, party A paid 30% of the total amount, party B offered goods according to the request of party A, the balance should be paid within 15 working days after party B’ s supply to the factory was accepted by party A (party B provided VAT invoice of 17% amount of this order quantity and all CCS certificates). If the quality and time of supply of party B did not conform to the contract, party A had right to terminate the contract, and party A was entitled to hold party B liable for breach of contract. If party B failed to supply the products as agreed in the contract (unless party A agreed or took the initiative to ask party B to delay the delivery), party B should compensate party A at the rate of 0.04% of the amount of products supplied each day; if party B failed to deliver the goods within 5 days, party B should compensate party A at 5% of the total contract price and party A should have the right to terminate the contract. In addition, both parties also

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agreed on the name of supply, specification (figure no.), quantity, unit price, total price and other rights and obligations of the contract. On the same day, the Defendant, as party A, and the Plaintiff, as party B, signed Technology Agreement for Manufacture and Processing of Shafting and Forgings and Technology Agreement for Manufacture and Processing of Rudder Systems, Castings and Forgings. The main contents of the agreements were that: the parts provided by party B must be processed and complete, the materials entrusted by party A to party B should comply with the CCS specifications and drawings, the construction quality should meet the specifications of CCS classification society and the requirements of CCS review drawing and submission for review of party A, and CCS product certificate should be provided. Party B warranted that the products provided to party A were in accordance with the working drawings (namely the CCS review drawing provided by party A including the review opinion), if any change was needed in the production process, party A’ s consent should be obtained and written modification marks and explanations should be given to party A for confirmation. This agreement was an integral part of the contract and takes effect immediately after the contract was signed. In addition, the two parties also agreed on the figure number, quantity, materials, mechanical properties, chemical composition and other indicators of the shaft-rudder castings. After signing the contract and agreements above, on March 4, 2015, the Defendant paid 322,200 yuan to the Plaintiff. On April 15, 2016, the Plaintiff sent Lawyer’ s Letter to the Defendant, requesting that the Defendant should arrange for delivery and pay for the goods at the time agreed in the contract. The court held that, the case was dispute over contract for customization of ship key parts and special items. According to the facts and laws, the legal responsibility and the issues of the dispute were analyzed as follows: 1. The case was sales contract or contract of hired work. According to the Contract Law of the People’ s Republic of China (hereinafter referred to as the Contract Law) Article 130 “a sales contract is a contract whereby the seller transfers title to the subject matter to the buyer, who pays the price”, Article 251 “a contract of hired work is a contract whereby the hiree completes certain work as required by the hirer and delivers the work product, and the hirer pays the remuneration. Hired works include works such as processing, custom-made work, repair, reproduction, testing, and inspection, etc.”, sales contract was a contract whereby the seller transfers title to the subject matter to the buyer, who pays the price, contract of hired work was a contract whereby the hiree completes certain work as required by the hirer and delivers the work product, and the hirer pays the remuneration. In this case, what the Plaintiff and the Defendant signed was Sales and Purchases Contract, which agreed that the Plaintiff should provide the Defendant with the parts of the ship shaft rudder system according to the drawings and technical standards provided by the Defendant, and the Defendant should pay the Plaintiff in installments. So

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the Sale and Purchases Contract was in accordance with constitutive requirement of contract of hired work, which was in the rank of contract of hired work, so the laws of contract of hired work should be applied. 2. Which party was breach of contract in this case. The court holds that, Sales and Purchases Contract and Technology Agreement signed by the Plaintiff and the Defendant were expression of true intention on the basis of equality and free will of both parties, and the contents did not violet mandatory provisions of national laws, and did not prejudice the legitimate rights and interests of the state, the collective or a third party, which was legal and effective, both parties should completely fulfill contractual obligation. After signing contract, the Defendant paid 30% of the amount of charge for goods as agreed, namely 322,200 yuan. The way of delivery in Ship Sales Contract was to be duly delivered to the place designated by the Defendant at the request of the Defendant. Before the Plaintiff sent the goods, the Defendant should designate the place of departure and arrange the Plaintiff to send the goods, but the Defendant did not specify a delivery place for the Plaintiff to deliver the goods. The behavior of the Defendant was breach of contract, and it should bear responsibility for breach of contract. According to the Contract Law Article 107 “if a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.”, the Defendant should bear responsibility for breach of contract by continue to perform, therefore, that the Plaintiff claimed against the Defendant to continue to perform Sales and Purchases Contract was in accordance with laws and regulations, the court should support it. According to the contract, the Plaintiff bear the obligation to deliver the goods involved, VAT invoice and CCS certificate, the Defendant should bear the obligation to pay the charge for goods, therefore, the claim that the Defendant should pay 751,800 yuan was legal, so the court should support it, but the Plaintiff, meanwhile, should deliver 3 sets of 5,000 tons complete set of ship shaft rudder gear to the Defendant. 3. Whether the Defendant had the right to terminate the contract. The court holds that, the relationship between the Plaintiff and the Defendant was contract of hired work, according to the Contract Law Article 268 “the hirer may terminate the contract of hired work at any time, provided that it shall indemnify the hiree for its loss as a result, if any”, the hirer enjoyed right of termination at any time, but performance of this right was not unlimited. The purpose of the legal provision that the hirer had the right of arbitrary termination was to grant the hirer the right to terminate the contract when he no longer needed the work results entrusted by the hiree, the aim was to keep the hiree’ s work from continuing, to avoid the expansion of losses on both sides and to avoid the waste of social resources. Thus it could be seen, in cases where the contractor had completed the work, the hirer could not exercise any termination right even if the work had not

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been delivered, otherwise, the hiree would suffer heavy economic losses. Therefore, after the Plaintiff had produced all the parts of the ship agreed in the contract at the request of the Defendant, and the Plaintiff had no breach of contract, the Defendant could not exercise the right to terminate the contract. Pulling the threads together, according to Contract Law of the People’ s Republic of China Article 107, Article 251 and Article 268, the judgment is as follows: 1. The Defendant (the counterclaim Plaintiff) Guangxi Xijiang Heavy Industry Co., Ltd. should continue to perform Sales and Purchases Contract (number: XJZGCG20141111003, date: December 28, 2014) signed with the Plaintiff (the counterclaim Defendant) Jiangsu Haitun Ship Machinery Co., Ltd.; 2. The Plaintiff (the counterclaim Defendant) Jiangsu Haitun Ship Machinery Co., Ltd. should deliver 3 sets of 5,000 tons complete set of ship shaft rudder gear, VAT invoice and CCS certificate to the Defendant (the counterclaim Plaintiff) Guangxi Xijiang Heavy Industry Co., Ltd. at its domicile within 30 days after the judgment comes into effect; 3. The Defendant (the counterclaim Plaintiff) Guangxi Xijiang Heavy Industry Co., Ltd. should pay the rest price for goods 751,800 yuan to the Plaintiff (the counterclaim Defendant) Jiangsu Haitun Ship Machinery Co., Ltd. within 30 days after the judgment comes into effect; 4. Reject the counterclaims of the Defendant (the counterclaim Plaintiff) Guangxi Xijiang Heavy Industry Co., Ltd. Court acceptance fee in amount of 14,466 yuan, Court acceptance fee of counterclaim in amount of 913 yuan, totally 15,379 yuan, should be borne by the Defendant (the counterclaim Plaintiff) Guangxi Xijiang Heavy Industry Co., Ltd. The obligor shall perform the obligations for such pecuniary payment within the period specified in this judgment and shall pay double interest on the debt for the delayed payment. The obligee may apply to the court for execution within two years from the last day of performance specified in the effective judgment of this case. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit petition together with copies according to the number of the other parties so as to appeal to the Guangxi Zhuang Autonomous Region High People’s Court. Within seven days from the date of filing the appeal petition, the fee of the appeal against the judgment of first instance should be paid (name of collection organ: Guangxi Zhuang Autonomous Region High People’s Court; account: 20xxx77; bank of deposit: the Agricultural Bank of China Nanning Wanxiang Branch). If the payment of appeal fee is overdue, the appeal should be withdrawn automatically. Presiding Judge: LAO Jianming People’s Juror: LIANG Yanbo People’s Juror: QIN Ming December 6, 2016 Clerk: ZENG Weifang

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Guangxi Zhuang Autonomous Region High People’s Court Civil Judgment Jiangsu Haitun Ship Machinery Co., Ltd. v. Guangxi Xijiang Heavy Industry Co., Ltd. (2017) Gui Min Zhong No.93 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 551. Cause of Action 207. Dispute over shipbuilding contract. (Editor’s Note: This cause of action is closest to the underlying dispute of this case.) Headnote Affirming lower court decision holding manufacturer of ship parts (rudders) to be entitled to recover balance of purchase price from shipbuilder, which had failed to designate delivery place as agreed in the contract; shipbuilder held to be not entitled to terminate the contract for late performance because the contract was one for “hired work” and the rudder manufacturer had completed the work. Summary Plaintiff agreed to manufacture and supply three sets of rudder gear weighing 5,000 tons to Defendant. Defendant paid Plaintiff a deposit after the contract was made. Plaintiff manufactured the rudders but Defendant did not arrange for shipment of them, saying that Plaintiff had failed to complete construction within the agreed period for delivery. Plaintiff sued Defendant, claiming the balance of the purchase price. Defendant counterclaimed against Plaintiff, seeking termination of the contract, return of the deposit that it had paid, and liquidated damages for late performance. The first instance Court held that Plaintiff’s claim succeeded and Defendant’s counterclaim failed. The first instance Court held that the contract stipulated that delivery of the rudders was to be at a place designated by Defendant, but the Defendant had not specified a delivery place, which was a breach of contract. Defendant was not entitled to terminate the contract because it was a contract for “hired work” and Plaintiff had completed the work. Accordingly, the first instance Court ordered: (1) Defendant to pay Plaintiff the balance of the purchase price; (2) Plaintiff to deliver the three sets of rudder gear to Defendant. Defendant appealed, arguing: (1) that it had informed Plaintiff of the delivery place, albeit not in writing, and (2) that the contract was a sale and purchase agreement, not a contract for “hired work,” so it was entitled to terminate the contract. The appeal Court dismissed the appeal and affirmed the judgment at first instance. The appeal Court agreed that the contract was one for “hired work” and so Defendant/Appellant was not entitled to terminate the contract.

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Judgment The Appellant (the Defendant of first instance, the counterclaim Plaintiff): Guangxi Xijiang Heavy Industry Co., Ltd. Domicile: No.203 Construction Building, Qintang District, Guigang, Guangxi Zhuang Autonomous Region. Legal representative: LU Shengcheng, chairman. Agent ad litem: LU Yanhai, lawyer of Guangxi Guohai Law Firm. Agent ad litem: XIAO Yan, lawyer of Guangxi Guohai Law Firm. The Respondent (the Plaintiff of first instance, the counterclaim Defendant): Jiangsu Haitun Ship Machinery Co., Ltd. Legal representative: YAO Lijuan, chairman. Agent ad litem: ZHUGE Xinglin, lawyer of Jiangsu Chenaiping Law Firm. Agent ad litem: CUI Jun, general manager of the company. With respect of the case arising from dispute over contract for sale and purchase of ship key parts and special items between the Appellant, Guangxi Xijiang Heavy Industry Co., Ltd. (hereinafter referred to as Xijiang Heavy), and the Respondent, Jiangsu Haitun Ship Machinery Co., Ltd. (hereinafter referred to as Haitun Machinery), the Appellant disagreed with the Beihai Maritime Court (2016) Gui 72 Min Chu No.242 Civil Judgment, and appealed to the court. After entertaining the appeal case it on March 7, 2017, the court legitimately constituted the collegiate bench to try the case and held a hearing in public on April 27, 2017. Agents ad litem of Xijiang Heavy, LU Yanhai and XIAO Yan, agents ad litem of Haitun Machinery, ZHUGE Xinglin and CUI Jun, appeared in the court to attend the hearing. Now the case has been concluded. Xijiang Industry appealed that: 1. revoke the judgment of first instance, change to terminate Purchases and Sales Contract concluded by Xijiang Heavy and Haitun Machinery on December 18, 2014, Haitun Machinery should return to Xijiang Heavy the prepayment of 322,200 yuan paid and paid a penalty of 53,700 yuan; 2. litigation fees of first and second instances should be born by Haitun Machinery. Facts and reasons: 1. the court of first instance confirmed that Purchases and Sales Contract concluded by the parties in this case on December 18, 2014 was a contract of work, which was wrong. The evidence appendix of Purchases and Sales Contract Technical Agreement on Manufacturing and Processing of Shafting Forging and Castings A General Rules first line clearly stipulated that, “the materials entrusted by Party A to purchase by Party B shall comply with CCS regulations”, so Purchases and Sales contract was obviously of the nature of the sales and purchases contract, the confirmation of the court of first instance was inconsistent with the facts. 2. The confirmation of the court of first instance about “which one breached the contract” was wrong. Both parties agreed in of Purchases and Sales Contract 5.1 that “shipped to the designated place of Party A on time as required by Party A”, but did not agree that “the designated place of Party A” must

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be in written form. When the Respondent performed Purchases and Sales Contract as Party B, it indicated that the invoice with the delivery date of December 18, 2014 had been clearly delivered to the Appellant’s production base “Dachongkou, Duyun Village, Qintang District, Guigang, Guangxi”, namely the Respondent knew the place of shipment designated by the Appellant, and the Appellant’s staff also explained the place of shipment by phone, the court of first instance still confirmed that the Appellant “has no designated shipping location” “breach of contract”, which was obvious wrong confirmation of facts. 3. The confirmation of the court of first instance about “whether has the right to terminate the contract” was wrong. Both parties had a clear agreement on the contract cancellation conditions and liability for breach of contract in Purchases and Sales Contract, according to the Contract Law Article 93 Paragraph 2, the parties could agree on the conditions for Party B to terminate the contract. When the conditions for cancellation of the contract were fulfilled, the person with the right of cancellation may cancel the contract. The Appellant can terminate the contract. The court of first instance held that the ordering party had the “right to terminate the contract arbitrarily” in accordance with Article 268 of the Contract Law, but the discussion also held that the contractor could not exercise the right to terminate the contract without the breach of contract. Obviously, it was the wrong analysis and wrong application of the legal provisions. And the case did not exist in Article 95 Paragraph 2 of the Contract Law that “if the law does not stipulate or the parties do not agree on the time limit for lifting the exercise, if the other party does not exercise it within a reasonable time limit after being urged by the other party, the right shall be extinguished.” Namely in this case, there was no case where the Respondent urged “whether to exercise the right of cancellation” after the Respondent had not exercised the right of cancellation and therefore “the right to annihilate”. The confirmation of the court of first instance that “the Defendant cannot terminate the contract” was completely wrong. Therefore, the Respondent failed to fulfill the delivery obligation within the agreed time limit, which constituted a breach of contract. According to the Purchases and Sales Contract Article 10 and Article 11, the termination and payment of liquidated damages claimed by the Appellant had sufficient factual and legal basis. Haitun Machinery argued that: 1. the court of first instance confirmed that the contract involved was “work” but not “sales and purchases”, the facts were clear, and application of law was correct. The subject matter of the contract involved was the matching of the power part of the 5000-ton multi-purpose cargo ship of Xijiang Heavy, including all supporting accessories such as the shafting. Because of this, the two parties concluded a special Technical Agreement in addition to the purchases and sales contract. Haitun Machinery must produce according to the special design provided by Xijiang Heavy. 2. Xijiang Heavy constituted a breach of contract, which was clear. In this case, Haitun Machinery had completed the production in accordance with the requirements of the contract. Xijiang Heavy did not require delivery and did not provide the exact shipping address, and the management personnel changed, etc., resulting in no one to receive the goods. There was

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no production ship. In conclusion, it require the court of second instance reject the appeal and affirm the original judgment. The Plaintiff (counterclaim Defendant) Haitun Machinery claimed to the court of first instance that: 1. Xijiang Heavy should fulfill the sales and purchases contract concluded by both parties, and should pay the amount of 751,800 yuan; 2. court acceptance fee should be born by Xijiang Heavy. The Defendant (counterclaim Plaintiff) Xijiang Heavy counterclaimed that: 1. terminate Purchases and Sales Contract concluded by Xijiang Heavy and Haitun Machinery on December 18, 2014; 2. Haitun Machinery should return the payment 322,200 yuan in advance paid by Xijiang Heavy; 3. Haitun Machinery should pay liquidated damages 53,700 yuan to Xijiang Heavy; 4. court acceptance fee should be born by Haitun Machinery. The court of first instance finds out and confirms the following facts: After negotiation, Xijiang Heavy was Party A, Haitun Machinery was Party B, they concluded Purchases and Sales Contract that the number was XJZGCG20141218001. The contents of contract were that: Party B offer Party A 3 sets of 5,000 tons complete set of ship shaft rudder gear, amount of the contract was 1,074,000 yuan. Party B promised to deliver the goods to Party A, if Party A found shortage of quantity of goods when inspecting, it could demand Party B to supply without any condition; because Party B found shortage of quantity of goods, specification unqualified or quality unqualified, which resulted the losses that Party A stop producing or transportation fee, according to actual losses of Party A, the losses should be compensated by Party B without any condition. The products provided by Party B should be in accordance with national standard, the warranty period was 12 months after the completion of the ship. Method of delivery was that: to order of the staff appointed by Party A; Party A could purchase goods from other factory if delay in using caused by Party B, the price difference and the expenses arising therefrom should be born by Party B; any delay in delivery caused by return or exchange of goods should be regarded as overdue. Way of transportation was by automobile transportation, the charge should be born by Party B. After the goods arrived at the place appointed, Party A should be responsible for unloading. Party B’s products should be checked and accepted by the material staff appointed by Party A, upon acceptance inspection by Party A, the basis of settlement could be confirmed, acceptance and inspection should be confirmed according to technology agreement signed by both parties; the inspection of the sample according to national standard, professional standard and sample provided by Party B confirmed by Party A, appearance quality could be inspected on the spot, internal quality should be tested by qualified testing institutions, which took the inspection result as the acceptance basis. After signing the contract, Party A paid 30% of the total amount, Party B offered goods according to the request of Party A, the balance should be paid within 15 working days after Party B’s supply to the factory was accepted by Party A (Party B provided VAT invoice of 17% amount of this order quantity and all CCS certificates). If the quality and time of supply of Party B did not conform to the contract, Party A had right to terminate the contract, and Party A was entitled to hold Party B liable for breach of contract. If Party B failed to supply the products as

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agreed in the contract (unless Party A agreed or took the initiative to ask Party B to delay the delivery), Party B should compensate Party A at the rate of 0.04% of the amount of products supplied each day; if Party B failed to deliver the goods within 5 days, Party B should compensate Party A at 5% of the total contract price and Party A should have the right to terminate the contract. In addition, both parties also agreed on the name of supply, specification (figure no.), quantity, unit price, total price and other rights and obligations of the contract. On the same day, Xijiang Heavy, as Party A, and Haitun Machinery, as Party B, concluded Technology Agreement for Manufacture and Processing of Shafting and Forgings and Technology Agreement for Manufacture and Processing of Rudder Systems, Castings and Forgings. The main contents of the agreements were that: the parts provided by Party B must be processed and complete, the materials entrusted by Party A to Party B should comply with the CCS specifications and drawings, the construction quality should meet the specifications of CCS classification society and the requirements of CCS review drawing and submission for review of Party A, and CCS product certificate should be provided. Party B warranted that the products provided to Party A were in accordance with the working drawings (namely the CCS review drawing provided by Party A including the review opinion), if any change was needed in the production process, Party A’s consent should be obtained and written modification marks and explanations should be given to Party A for confirmation. This agreement was an integral part of the contract and takes effect immediately after the contract was signed. In addition, the two parties also agreed on the figure number, quantity, materials, mechanical properties, chemical composition and other indicators of the shaft-rudder castings. After concluding the contract and agreements above, on March 4, 2015, Xijiang Heavy paid 322,200 yuan to Haitun Machinery. On April 15, 2016, Haitun Machinery sent a Lawyer’s Letter to Xijiang Heavy, requesting that Xijiang Heavy should arrange for delivery and pay for the goods at the time agreed in the contract. The court of first instance held that, the case was dispute over contract for customization of ship key parts and special items. According to the facts and laws, the legal responsibility and the issues of the dispute were analyzed as follows: 1. The case was sales contract or contract of hired work. According to Contract Law Article 130 “a sales contract is a contract whereby the seller transfers title to the subject matter to the buyer, who pays the price”, Article 251 “a contract of hired work is a contract whereby the hiree completes certain work as required by the hirer and delivers the work product, and the hirer pays the remuneration. Hired works include works such as processing, custom-made work, repair, reproduction, testing, and inspection, etc.”, sales contract was a contract whereby the seller transfers title to the subject matter to the buyer, who pays the price, contract of hired work was a contract whereby the hiree completed certain work as required by the hirer and delivered the work product, and the hirer paid the remuneration. In this case, what Haitun Machinery and Xijiang Heavy concluded was Purchases and Sales Contract, which agreed that Haitun Machinery should

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provide Xijiang Heavy with the parts of the ship shaft rudder system according to the drawings and technical standards provided by Xijiang Heavy, and Xijiang Heavy should pay Haitun Machinery in installments. So Purchases and Sales Contract was in accordance with constitutive requirement of contract of hired work, which was in the rank of contract of hired work, so the laws of contract of hired work should be applied. 2. Which party was breach of contract in this case. The court of first instance held that, Purchases and Sales Contract and Technology Agreement concluded by Haitun Machinery and Xijiang Heavy were expression of true intention on the basis of equality and free will of both parties, and the contents did not violet mandatory provisions of national laws, and did not prejudice the legitimate rights and interests of the state, the collective or a third party, which was legal and effective, both parties should completely fulfill contractual obligation. After signing contract, Xijiang Heavy paid 30% of the amount of charge for goods as agreed, namely 322,200 yuan. The way of delivery in Ship Sales Contract was to be duly delivered to the place designated by Xijiang Heavy at the request of Xijiang Heavy. Before Haitun Machinery sent the goods, Xijiang Heavy should designate the place of departure and arrange Haitun Machinery to send the goods, but Xijiang Heavy did not specify a delivery place for Haitun Machinery to deliver the goods. The behavior of Xijiang Heavy was breach of contract, and it should bear responsibility for breach of contract. According to Contract Law Article 107 “if a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.”, Xijiang Heavy should bear responsibility for breach of contract by continue to perform, therefore, that Haitun Machinery claimed against Xijiang Heavy to continue to perform Sales and Purchases Contract was in accordance with laws and regulations, the court should support it. According to the contract, Haitun Machinery bear the obligation to deliver the goods involved, VAT invoice and CCS certificate, Xijiang Heavy should bear the obligation to pay the charge for goods, therefore, the claim that Xijiang Heavy should pay 751,800 yuan was legal, so the court of first instance should support it, but Haitun Machinery, meanwhile, should deliver 3 sets of 5,000 tons complete set of ship shaft rudder gear to Xijiang Heavy. 3. Whether Xijiang Heavy had the right to terminate the contract. The court of first instance held that, the relationship between Haitun Machinery and Xijiang Heavy was contract of hired work, according to the Contract Law Article 268 “the hirer may terminate the contract of hired work at any time, provided that it shall indemnify the hiree for its loss as a result, if any”, the hirer enjoyed right of termination at any time, but performance of this right was not unlimited. The purpose of the legal provision that the hirer had the right of arbitrary termination was to grant the hirer the right to terminate the contract when he no longer needed the work results entrusted by the hiree, the aim was to keep the hiree’s work from continuing, to avoid the expansion of losses on both sides and to avoid the waste of

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social resources. Thus it could be seen, in cases where the contractor had completed the work, the hirer could not exercise any termination right even if the work had not been delivered, otherwise, the hiree would suffer heavy economic losses. Therefore, after Haitun Machinery had produced all the parts of the ship agreed in the contract at the request of Xijiang Heavy, and Haitun Machinery had no breach of contract, Xijiang Heavy could not exercise the right to terminate the contract. Pulling the threads together, according to the Contract Law of the People’s Republic of China Article 107, Article 251 and Article 268, the judgment was as follows: 1. Xijiang Heavy should continue to perform Purchases and Sales Contract that the number was XJZGCG20141111003 on December 28, 2014 concluded with Haitun Machinery; 2. Haitun Machinery should deliver 3 sets of 5,000 tons complete set of ship shaft rudder gear, VAT invoice and CCS certificate to Xijiang Heavy at its domicile within 30 days after the judgment came into effect; 3. Xijiang Heavy should pay the rest charge for goods 751,800 yuan to Haitun Machinery. within 30 days after the judgment came into effect; 4. reject the counterclaims of Xijiang Heavy. Court acceptance fee of first instance in amount of 14,466 yuan, court acceptance fee of counterclaim in amount of 913 yuan, total amount of 15,379 yuan, should be born by Xijiang Heavy. Haitun Machinery submitted two pieces of evidence in second instance: 1. 5,000 T products photo, to prove that the three ship parts as stipulated in the contract were produced. 2. Forging certificate and ultrasonic inspection report, to prove that the raw materials for the production of 5,000 T ship parts involved were purchased on January 23, 2015, and the parts were produced before March 20, 2015. 3. Xijiang Heavy 5,000 T ship related information, to prove that it completed the contracted product production. Xijiang Heavy cross-examined that: as to evidence 1, Hiatun Machinery provided only some photos of the products. The products with photos could prove that they were produced, but they could not be produced within the contract period. Products without photos could not confirm that production was completed. As to evidence 2, the authenticity could not be recognized, and it held that Haitun Machinery did not submit the material to Xijiang Heavy within the time agreed in the contract. It recognized the authenticity of evidence 3, but held that it could not be recognized that Haitun Machinery completed the manufacture of ship equipment and the CCS certificate within the contracted time limit and completed the delivery obligation. The fact that Haitun Machinery breached the contract was objective. The court confirms the evidence as follows: it confirms the authenticity of evidence 1 and 3, the evidence can prove that Haitun Machinery completed the production of 5,000 T marine parts. As to evidence 2, the forging certificate is checked by the original, so the authenticity is confirmed, and the ultrasonic inspection report is that the copy is not checked by the original, so the authenticity is not confirmed. Combined with evidence 1, two pieces of evidence can prove that Haitun Machinery actually produced 5,000 T ship parts.

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In hearing of second instance, Xijiang had objection to the fact found out by the court of first instance that “after the above contract and agreement were concluded, on March 4, 2015, Xijiang Heavy remitted 322,200 yuan to Haitun Machinery”, it held that the actual remittance time of Xijiang Heavy was February 5, 2015. It had no objection or addition to other facts revealed in the first instance. Haitun Machinery had no objection or addition to the facts revealed in the first instance. Regarding the fact that Xijiang Heavy had objection, after investigation, the court holds that, according to the transfer receipt submitted by Xijiang Heavy in the first instance, the transfer time of Xijiang Heavy to Haitun Machinery was on February 5, 2015, and March 4, 2015 was the printing time for the receipt. Haitun Machinery also recognized in court that Xijiang Heavy’s transfer of 322,200 yuan was made on February 5, 2015. So the confirmation of time of payment of the court of first instance is wrong, which should be corrected. In conclusion, except that the transfer time of Xijiang Heavy to Haitun Machinery of 322,200 yuan was corrected to February 5, 2015, other facts found out by the court of first instance are clear, the evidence is sufficient, which should be confirmed. It is also found out that, Haitun Machinery completed the production tasks of the three 5,000 T ship parts as stipulated in Purchases and Sales Contract, and obtained the CCS certificate. The court holds that, the case is the dispute over contract for customization of ship key parts and special items. Combined with the opinions of the parties, the issues of the case can be summarized as follows: firstly, the nature of the Purchases and Sales Contract concluded on December 18, 2014. Secondly, whether Haitun Machinery breached Purchases and Sales Contract during performance. Thirdly, whether Purchases and Sales Contract should be terminated or continue to perform, and how the deal with the debts of the parties. Firstly, the nature of Purchases and Sales Contract concluded on December 18, 2014. Xijiang Heavy held that, December 18, 2014 Purchases and Sales Contract involved was a sales contract, not the contract of hired work of the first instance identified. According to the Contract Law Article 130 that “a sales contract is a contract in which the seller transfers the ownership of the subject matter to the buyer and the buyer pays the price”, and Article 251 that “a contract of hired work is a contract whereby the hiree completes certain work as required by the hirer and delivers the work product, and the hirer pays the remuneration. Hired works include works such as processing, custom-made work, repair, reproduction, testing, and inspection, etc.”, a sales contract is the transfer of ownership of the subject matter of the sale from the seller to the buyer, while a contract of hired work is a contract where the contractor completes the work according to the requirements of the hirer and delivers the project results to the hirer. Purchases and Sales Contract involved is a purchase contract for the ship’s shaft and rudder system components, but Article 2.3 of the contract clearly stipulated that Party B, Haitun Machinery, should strictly follow the drawings provided by Party A, Xijiang Heavy agreed in Technology Agreement as an attachment to the contract. Although the contracted

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ship shaft rudder system components were provided by Haitun Machinery to Xijiang Heavy, and Xijiang Heavy paid the price, but in essence Haitun Machinery produced the ship shaft rudder system components according to the requirements of Xijiang Heavy, so Purchases and Sales Contract involved meets the requirements of the contract of hired work. The confirmation of the court of first instance is correct, the claim of Xijiang Heavy that Purchases and Sales Contract was sales and purchases contract cannot be established, and the court does not support it. Secondly, whether Haitun Machinery breached Purchases and Sales Contract during performance. Xijiang Heavy held that Haitun Machinery failed to exchange in accordance with the delivery time stipulated in Purchases and Sales Contract, which constituted a breach of contract. The court holds that: Purchases and Sales Contract involved is the true expression of the agreement reached by both parties on an equal and voluntary basis. The content is legal and legally binding on both parties. After the contract was concluded, Xijiang Heavy paid 30% of the total contract value to Dolphin Machinery Company, namely 322,200 yuan. Haitun Machinery also produced the parts of three 5,000 T ship according to the contract requirements. Although the contract stipulated that Haitun Machinery should deliver within 60 days after the conclusion of the contract, namely before February 18, 2014, the specific delivery location is not specified. The contract only indicates that the goods should be shipped according to the requirements of Xijiang Heavy. Before Xijiang Heavy did not submit a delivery request, Haitun Machinery cannot confirm the delivery request. Xijiang Heavy held that the delivery location designated by Xijiang Heavy should be known based on the shipping address of the two 3,000 T ship shaft rudder system components previously issued by Haitun Machinery on December 18, 2014, and Haitun Machinery should directly deliver the goods to the place at the time agreed in the contract, which is inconsistent with the agreements of the contract. So the claim cannot be established. In the case where Xijiang Heavy did not specify the delivery and delivery address, Haitun Machinery did not deliver the goods, which did not constitute a breach of contract. Thirdly, whether Purchases and Sales Contract should be terminated or continue to perform, and how the deal with the debts of the parties. As discussed above, Purchases and Sales Contract involved is a contract of hired work. According to the Contract Law Article 268, the hirer may terminate the contract of hired work at any time, provided that it shall indemnify the hiree for its loss as a result. The law grants the ordering party the right to terminate the contract at any time, but if the contractor’s losses are caused by the termination of the contract, it should still be compensated. In this case, Xijiang Heavy, as the ordering party, has no evidence to prove that Haitun Machinery as the contractor has been notified of the cancellation of the contract before the litigation in this case. In this case, Haitun Machinery actually produced the components of 3 ships. The photos and CCS certificates of the products already produced by Haitun Machinery are proof. If the contractor completes the work, even if the work has not been delivered, the hirer cannot exercise the right of arbitrary cancellation.

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Pulling the threads together, the facts confirmed by the court of first instance are clear, and the application of law is correct, which should be affirmed. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 14,949 yuan, shall be born by Guangxi Xijiang Heavy Industry Co., Ltd. The judgment is final. Presiding Judge: TAN Qinghua Judge: LI Yan Judge: LI Pingping July 25, 2017 Clerk: LI Lei

Wuhan Maritime Court Civil Judgment Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2016) E 72 Min Chu No.157 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 580. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Defendant insurer held liable for indemnifying Plaintiff shipowner regarding collision, as Defendant could not prove that Plaintiff’s undisclosure of defects found in sea trial and in ship operation prior to collision discharged the insurance contract or released Defendant from obligation of indemnification, and in any event, Defendant accepted instalment payment of premiums after the collision occurred and they knew the undisclosure, which affirmed the insurance contract and its obligation of indemnification. Summary Plaintiff shipowner bought marine policy from Defendant insurer, but failed to inform Defendant of the defects found in sea trial of the ship and they remained uncured. Those sea trial defects did not prevent Plaintiff from acquiring the ship registry and inspection documents. A few days after issuance of policy, the ship, upon calling a port, was inspected by maritime safety authority and 4 defects were found, but did not tell Defendant. A few days thereafter, the ship, in navigation, lost main engine and hit another vessel. Plaintiff was held fully liable for the collision. During discussion of indemnification regarding the collision, Defendant found the undisclosed sea trial defects and the defects found by maritime safety authority, however Defendant still accepted the 2nd instalment of premiums. When Plaintiff lodged the lawsuit, Defendant tried to use the undisclosure as defence. Court of first instance held Defendant liable. The rationale had three folds: (i) Defendant failed to prove Plaintiff should disclosure the defects, i.e. the defects were within the scope of Defendant’s enquiry; (ii) the defects were so serious that they had material effects on Defendant’s issuing the policy or charging the premiums; and (iii) Defendant accepted instalment payment of premiums after they knew the undisclosed defects, which affirmed the insurance contract and its obligation of indemnification. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_31

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Judgment The Plaintiff: Jiangsu Oriental Huayuan Shipping Co., Ltd. Domicile: Gaochun District, Nanjing, Jiangsu. Legal representative: ZHANG Zhaolei, executive director. Agent ad litem: CHANG Wen, lawyer of Jiangsu Tianmao Law Firm. Agent ad litem: ZHANG Qian, lawyer of Jiangsu Tianmao Law Firm. The Defendant: China People’s Property Insurance Co., Ltd. Gaochun Sub-branch Domicile: Gaochun District, Jiangsu. Legal representative: CHEN Qingwei, general manager. Agent ad litem: WANG Pengnan, lawyer of Liaoning Pengrun Law Firm. With respect to the case arising from dispute over marine insurance contract between the Plaintiff Jiangsu Oriental Huayuan Shipping Co., Ltd. (hereinafter referred to as “Oriental Huayuan Company”) and the Defendant China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (hereinafter referred to as “PICC Gaochun”), after the case was entertained on January 20, 2016, the general procedure was applied in accordance with the law and the hearing was held in public. Agents ad litem of the Plaintiff Oriental Huayuan Company, CHANG Wen and ZHANG Qian, and agent ad litem of the Defendant PICC Gaochun, WANG Pengnan, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff, Oriental Huayuan Company, filed a lawsuit with the court: 1. the Defendant PICC Gaochun should compensate the Plaintiff Oriental Huayuan Company’s M.V. “Oriental 08” loss of 2,104,700 yuan and interest (according to the same grade loan announced by the People’s Bank of China), the benchmark interest rate is calculated from the date of the accident to the date of payment determined by the court’s effective judgment. 2. The Defendant shall bear the litigation costs of the case. Facts and reasons: on January 12, 2014, the Plaintiff, Oriental Huayuan Company, insured all risks of coastal inland vessels at the Defendant PICC Gaochun. On January 25 of the same year, the Plaintiff Oriental Huayuan Company’s M.V. “Oriental 08” and the outsider Yangpu Hongyang Shipping Co., Ltd.’s M.V. “Hongyang Mountain” collided in the waters of the Yangtze River estuary, and the Plaintiff Oriental Huayuan Company repaired it. M. V. “Oriental 08” cost a total of 2,104,700 yuan. According to the division of accident liability of the Waterborne Accident Responsibility Certificate of the Wusong Maritime Safety Administration of the People’s Republic of China (2014) No.03-02, M.V. “Oriental 08” should bear full responsibility for the accident. The Plaintiff, Oriental Huayuan Company, believed that the ship loss of M.V. “Oriental 08” was caused by a collision accident and was within the scope of insurance compensation. The Defendant PICC Gaochun should perform the compensation obligation according to the insurance contract, but the Defendant PICC Gaochun

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did not pay compensation. The act has seriously infringed on the legitimate rights and interests of the Plaintiff, Oriental Huayuan Company, and therefore filed the above-mentioned lawsuit. The Defendant PICC Gaochun argued that: 1. the Plaintiff, Oriental Huayuan Company, did not provide the Defendant with the Defendant’s obligation to inform the Defendant, and deliberately concealed the existence of the machine failure and was uncomfortable during the trial phase. The circumstances of the flight, and the situation is sufficient to affect the insurer to determine the insurance rate or determine whether to agree to underwrite, so the Defendant PICC Gaochun should not be liable for compensation; 2. the ship collision accident involved is caused by the failure of the ship itself, and is an insurance contract. In the case of the agreed exclusion, the Defendant PICC Gaochun shall not be liable for compensation; 3. the Plaintiff, Oriental Huayuan Company, has not fulfilled its obligation to maintain the safety of the insurance vessel, and has been lucky to sail in the event of a machine failure in the ship, resulting in an accident. According to the insurance contract, the Defendant PICC Gaochun does not have to compensate for the loss; 4. even if the Defendant PICC Gaochun should compensate the Plaintiff Oriental Huayuan Company for losses, it also has the right to deduct the deductible in accordance with the policy. The Plaintiff, Oriental Huayuan Company, submitted the following evidence to the court in support of its claims: 1. Ship ownership certificate, to prove that the Plaintiff, Oriental Huayuan Company, is the owner of M.V. “Oriental 08”, and has the right to appeal according to law. 2. Ship inspection certificate book (copy), to prove that M.V. “Oriental 08” was in an seaworthy state at the time of the accident. 3. Certificate of responsibility for water traffic accidents, to prove that the ship loss of M.V. “Oriental 08” is caused by a collision accident. 4. Insurance policy and invoice, to prove that the insurance contract between the Plaintiff Oriental Huayuan Company and the Defendant PICC Gaochun is legally established. 5. Ship repair list, ship repair contract, repair settlement agreement, receipt, remittance voucher, to prove that after the accident, the Plaintiff Oriental Huayuan Company repaired the ship at the outsider Nantong Ruitai Shipping Engineering Co., Ltd. (hereinafter referred to as “Ruita Shipyard”), resulting in a repair cost of 1.96 million yuan. 6. Receipt, to prove that when the accident occurs, the collision of the anchor is lost, the purchase of the anchor costs 76,700 yuan, and the purchase of paint costs 68,000 yuan. 7. (2014) Wu Hai Fa Shi Zi No.00063 Civil Judgment, (2014) Wu Hai Fa Shi Zi No.00051 Civil Judgment, to prove that the Wuhan Maritime Court ruled that the Defendant PICC Gaochun assumed the liability for insurance compensation in this accident. The cause of the accident is not that M.V. “Oriental 08” is unseaworthy.

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8. Flag state supervision and inspection record book, the ship visa book, M.V. “Oriental 08” logbook, and M.V. “Oriental 08” turbine log, to prove that M.V. “Oriental 08” is in an seaworthy state before sailing, and there are no host equipment defects in the problems before the sailing, and all the rectifications are completed before sailing. The Defendant PICC Gaochun’s cross-examination opinion: no objection to the authenticity, legality and relevance of evidence 1, 3, 4; evidence 2 is a photocopy, its authenticity is not recognized, and the proof purpose cannot be achieved; 6, 7, 8 surface authenticity has no objection, but can not achieve its proof purpose. In order to support the reasons for the rebuttal, the Defendant PICC Gaochun submitted the following evidence to the court: 1. Wusong Maritime Safety Administration’s investigation report on the collision accident of Shanghai “12.19” M.V. “Oriental 08” and M.V. “Hongyang Mountain”, to prove that: 1. the Plaintiff, Oriental Huayuan Company, knew that there was a defect in M.V. “Oriental 08” engine equipment before insuring, but did not inform the Defendant PICC Gaochun that it violated the obligation to inform; 2. the situation that the Plaintiff Oriental Huayuan Company did not inform has an impact on the occurrence of the insurance accident; 3. the accident involved in the case is caused by the failure of the ship’s own machine and belongs to the insurer’s exclusion liability; 4. the insurer has the right to refuse the compensation due to the collision accident caused by the ship’s unseaworthiness. 2. China People’s Property Insurance Co., Ltd. Coastal Inland Ship Insurance Clause (2009 Edition) (hereinafter referred to as “insurance clause”), insurance policy, to prove that: 1. the ship insurance policy involved in the case specifically stipulates that “every accident (including total loss, collision, touch) absolute deductible (rate) is 100,000 yuan or 10% of the loss amount, whichever is higher”; the insurance clause clearly stipulates that the insurer shall not be liable for damages caused by the failure of the ship’s machinery and equipment itself or the insured’s failure to fulfill the obligation to maintain the safety of the ship. 3. M.V. “Oriental 08” loss assessment report issued by Shanghai Fanhua Tianheng Insurance Appraisal Co., Ltd. (hereinafter referred to as “Tianheng Public Estimation Company”), to prove that M.V. “Oriental 08” repair fee should be 163,146.41 yuan. 4. Damaged ship self-repair agreement, to prove that the total amount of ship repair fees involved in the investigation confirmed by the Plaintiff Oriental Huayuan Company is 1,163,614.41 yuan. 5. The insurance policy and accompanying insurance terms, to prove that the Plaintiff, Oriental Huayuan Company, stamped the insurance policy to confirm that the Defendant PICC Gaochun has indicated the insurance clause and the exclusion clause. 6. Notice of risk, to prove that the Plaintiff, Oriental Huayuan Company, filed a claim with the Defendant PICC Gaochun on August 31, 2015.

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The Plaintiff, Oriental Huayuan Company, did not object to the authenticity of the above six pieces of evidence, but believed that it could not achieve its proof purpose. The confirmation opinions of the court: the evidence of no objection to the authenticity of the party, the court will confirm and prove in the volume. As to whether it can achieve its proof purpose, the court will combine the identified facts and other evidence to comprehensively identify it. The Defendant PICC Gaochun did not approve the authenticity of the evidence submitted by the Plaintiff Oriental Huayuan Company, but did not submit the opposite evidence, and the evidence can be mutually verified with the evidence of the Plaintiff Oriental Huayuan Company. The authenticity is recognized and the evidence submitted by both parties can be used as the basis for the facts found in this case. Based on the statement of the parties and the evidence confirmed by the review, the court found the facts as follows: The Plaintiff, Oriental Huayuan Company, registered the owner of M.V. “Oriental 08”. On January 12, 2014, the Plaintiff, Oriental Huayuan Company, insured all insurances of the coastal inland vessels at the Defendant PICC Gaochun. Before the Defendant issued the insurance policy, the Defendant did not investigate the seaworthiness of the ship to the Plaintiff Oriental Huayuan Company. The insurance policy states that the insured vessel is M.V. “Oriental 08”, and the insurance is all risks for coastal inland vessels. The additional insurance includes additional collision, touch liability insurance and individual loss insurance. The insurance amount is 120 million yuan; insurance conditions And the special agreement clause “every accident (including total loss, collision, touch) absolute deductible (rate) is 100,000 yuan or 10% of the loss amount, whichever is higher; special loss is 10%, if agreed inconsistent with the main insurance clause, the special terms shall prevail; the signed premium will be 247,296 yuan, the second premium of 185,472 yuan will be paid before May 20, 2014, and the third premium of 185,472 yuan will be paid before August 20, 2014, according to the China People’s Property Insurance Co., Ltd. Coastal River Trade Insurance Clause (2009) version”, the insurance period starts from 12:00 on January 12, 2014 to 12:00 on January 12, 2015. The total insurance premium is 618,240 yuan. On the next day, the Plaintiff, Oriental Huayuan Company, paid 206,080 yuan to the Defendant PICC Gaochun. On January 25 of the same year, M.V. “Oriental 08” of the Plaintiff Oriental Huayuan Company was in the voyage from Zhoushan to Nantong, in the waters between the D14 lights and the D16 lights in the deep water channel of the Yangtze River estuary and the outsider Hainan Yangpu Hongyang Shipping. M.V. “Hongyang Mountain” belonging to the company has collided. After the accident, the Plaintiff, Oriental Huayuan Company, reported the case to the Defendant PICC Gaochun. On February 26, the Plaintiff, Oriental Huayuan Company entrusted Ruitai Shipyard to repair M.V. “Oriental 08”, and the two parties signed a ship repair contract. On March 25, M.V. “Oriental 08” was repaired. The Plaintiff, Oriental Huayuan Company and Ruitai Shipyard settled the repair fee and signed a settlement agreement. The two parties confirmed that the repair cost was

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2,264,573 yuan. The final repair cost was 1.96 million after friendly negotiation. yuan. The repair fee was paid in full before the ship was shipped from the factory, and Ruitai Shipyard issued a receipt of 1.96 million yuan. In addition, the Plaintiff, Oriental Huayuan Company, purchased a paint worth 68,000 yuan for the repair of the ship, and purchased one for the Hall anchor and the swivel shackle, and paid a fee of 76,700 yuan. On June 30, the Plaintiff, Oriental Huayuan Company, paid the instalment insurance premium of 412,160 yuan to the Defendant PICC Gaochun, and the Defendant PICC Gaochun issued the invoice for the corresponding amount of insurance premium. On August 31, 2015, the Plaintiff, Oriental Huayuan Company, applied for the claim settlement to the Defendant PICC Gaochun, and submitted the ship’s insurance notice, explaining the accident and the loss of M.V. “Oriental 08”, and provided corresponding evidence materials. Due to the objection to the actual loss of the Plaintiff Oriental Huayuan Company and whether it belongs to its exclusion, the Defendant PICC Gaochun has not yet settled the claim, and unilaterally entrusted Tianheng Company to compensate the loss of M.V. “Oriental 08” in this accident. On April 7, 2016, Tianheng Public Assessment Company made M.V. “Oriental 08” loss assessment report, confirming that the Plaintiff Oriental Huayuan Company reported a loss of 2,098,200 yuan and a fixed loss amount of 163,146.41 yuan. In order to carry out the payment accounting smoothly, on August 25 of the same year, the Plaintiff and the Defendant signed Attached Ship Self-study Agreement. The two parties confirmed that M.V. “Oriental 08” of damage repair fee was fixed at 1,631,614.41 yuan, which was self-repaired by the Plaintiff, Oriental Huayuan Company. The amount of compensation is calculated and paid by the Defendant PICC Gaochun in accordance with the relevant provisions of the insurance clause. Subsequently, the Defendant PICC Gaochun did not calculate the claim according to the agreement between the parties. At the same time, it was found that M.V. “Oriental 08” of the Plaintiff Oriental Huayuan Company was completed on December 16, 2013. On the same day, the ship inspection certificate and the sea cargo ship seaworthiness certificate were obtained. After the accident, on March 25, 2014, Wusong Maritime Safety Administration made a report on Responsibility Certificate for Water Traffic Accidents issued by Hu Hai Song Ze Zi (2014) No.03-02, and believed that M.V. “Oriental 08”, when entering the navigable lane, the ship is out of control due to the failure of the main engine. The ship crosses the navigation dividing line. Driving into the adjacent navigation channel and countering the total flow of the ship traffic is the direct cause of the accident. It is also recognized as M.V. “Oriental 08”. In the event of the accident, M.V. “Hongyang Mountain” is not responsible. On April 30, 2014, Wusong Maritime Safety Administration made “Shanghai 1.25” M.V. “Oriental 08” and M.V. “Hongyang Mountain” Collision Accident Investigation Report on the Collision Incident. The main content of the report is: the accident voyage is the first voyage. On the maiden voyage, there were 18 crew members in the crew. The crew’s license and manning status were in line with the requirements contained in the minimum safety certificate. M.V. “Oriental 08” safety management certificate was issued by Jiangsu Maritime Safety Administration on January 10,

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2014 and is valid until 2014. On July 9, at the time of the accident, the safety management certificate and the seaworthiness certificate of the sea cargo ship were all within the validity period; on January 19, 2014, before the accident, the ship carried out a safety inspection in Taizhou, Zhejiang to identify the defects. 4 Items, mainly related to nautical charts, fire extinguishing systems, emergency lighting, etc. (in addition, according to the logbook, the problems discovered by the inspection have been rectified on the same day), and no key equipment defects such as main engines and auxiliary machines were found; the ship was built in the ship. During the seaworthiness phase, there were more than ten equipment defects such as “the host cylinder oil lubricator float switch is not sensitive” and “the electric compass is faulty, the heading is inconsistent”. The above situation has been reported to the Plaintiff Oriental Huayuan Company, but it is not timely arrangements for maintenance personnel. The conclusions of the report on the cause of the accident are consistent with the conclusions of Hu Hai Song Ze Zi (2014) No.03-02 water traffic accident responsibility certificate. It was also found that the China Life Insurance Company Co., Ltd. Suzhou Center Sub-branch v. the Plaintiff Oriental Huayuan Company’s ship collision damage compensation dispute ([2014] Wu Hai Fa Shi Zi No.00063), Yangpu Hongyang Shipping Co., Ltd. v. the Plaintiff Oriental Huayuan Company ship collision damage compensation dispute [(2014) Wu Hai Fa Shi Zi No.00051], the conclusion of the civil judgment of the two cases on the cause of the collision accident and Hu Hai Song Ze Zi (2014) No.03-02 water transportation accident responsibility certificate was unanimous, and neither of M.V. “Oriental 08” were considered to be unseaworthy before the accident. The court believes that this case is a dispute over marine insurance contract. The marine insurance contract between the two parties is legally established and valid. The parties concerned should perform their contractual obligations and assume the liability for breach of contract in strict accordance with the law and the contract. The issue of the dispute in this case is whether the Plaintiff, Oriental Huayuan Company, violated the obligation of truthful disclosure when insured. According to Article 222 of the Maritime Code of the People’s Republic of China and Article 16 of the Insurance Law of the People’s Republic of China, the following three conditions must be met in case of breach of the obligation of truthful disclosure: 1. the content not notified should be important. It is enough to affect the insurer’s decision whether to agree to underwrite or increase the insurance rate; 2. the unannounced situation should be clearly known to the insured, but the insured deliberately concealed or failed to inform; 3. the insurer conducted related tips or inquiries. First of all, after the completion of the construction, M.V. “Oriental 08” was certified by the ship inspection agency and obtained relevant certificates including the ship inspection certificate and the sea cargo ship seaworthiness certificate. Before the maiden flight, the safety management certificate was obtained, that is, the Plaintiff Oriental Huayuan Company defended the Defendant. When PICC Gaochun was insured, it had obtained all the certificates that could prove that the ship was in an seaworthy state. The Defendant PICC Gaochun had more than ten

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equipment defects such as “the host cylinder oil lubricator float switch action is not sensitive” and “the electric compass fault, the heading is inconsistent in the display value”, etc., the Plaintiff Oriental Huayun Company, after the company was informed, it did not arrange for personnel to be repaired in time. It was considered that the Plaintiff, Oriental Huayuan Company, concealed the situation that the insurer could decide whether to agree to underwrite or increase the insurance rate. However, the Defendant PICC Gaochun did not provide evidence that the above is sufficient to influence the insurer’s decision whether to agree to underwrite or increase the premium rate, and the policy clause does not stipulate that the insured conceals the above circumstances, which constitutes a breach of the obligation of truthful disclosure. The Defendant PICC Gaochun accepted the Plaintiff Oriental Huayuan Company to insure and received the corresponding premium, which should be regarded as recognition that the ship is in an seaworthy state. Secondly, on January 19, 2014, before the accident, the ship of safety inspections in Taizhou, Zhejiang identified 4 defects, mainly related to nautical charts, fire extinguishing systems, emergency lighting, etc. (also according to the logbook, the same day has been checked, the problems found were rectified). No key equipment defects such as mainframes and auxiliary machines were found. The maritime department and the court’s effective legal judgments all concluded that the cause of the accident was caused by the host failure, and there was no direct evidence that the key equipment such as the main engine and the auxiliary machine were faulty. It should be determined that there was no major failure during the ship of insurance. There is no the Plaintiff Oriental Huayuan Company deliberately concealing or failing to inform due to negligence. Furthermore, according to Article 6 of the Supreme People’s Court Interpretation of Several Issues concerning the Application of the Insurance Law of the People’s Republic of China (II), the insured’s obligation to inform is limited to the scope and content of the insurer’s inquiry, and the scope and content of the inquiries. Controversial, the insurer bears the burden of proof. Therefore, the provisions of the Chinese law on the manner in which the insured person fulfills the obligation of truthful disclosure are the inquiry notification system, that is, the scope of the matter notified by the insured is limited to the scope and content of the insurer’s inquiry, and otherwise, the insured does not accept other notifications. The insurer shall, before insuring, inquire into the insured in detail, and make a corresponding written record of the material circumstances that the insurer considers to be sufficient to influence the insurer’s decision to agree to insure or increase the premium rate. In this case, the Defendant PICC Gaochun did not provide evidence to prove that it had inquired about the important situation of the Plaintiff Oriental Huayuan Company or the ship involved in the case before the insurance. The Plaintiff Oriental Huayuan Company could not and did not have to bear other obligation to inform, so it should not bear the obligation of breach of disclosure. Finally, even if the Defendant PICC Gaochun believes that the Plaintiff Oriental Huayuan Company violated the obligation of truthful disclosure, according to Article 4 of the Supreme People’s Court on Several Issues concerning the Trial of Maritime Insurance Disputes, the insurer knows that the insured is not Inform the

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important circumstances stipulated in Article 222 Paragraph 1 of the Maritime Code, still collect insurance premiums or pay insurance compensation, and the insurer may request the termination of the contract on the ship that the insured has not truthfully informed the important situation, the people’s court shall not stand by. The Defendant PICC Gaochun still collected the insurance premium of the Plaintiff Oriental Huayuan Company after the collision accident (June 30, 2014), and issued the corresponding invoice, did not issue a notice of refusal or requested to cancel the insurance contract, and could not use the Plaintiff Oriental Huayuan Company did not truthfully inform the important situation that it was requested to terminate the contract. At the same time, according to Article 8 of the Supreme People’s Court Interpretation of Several Issues concerning the Application of the Insurance Law of the People’s Republic of China (II), the Plaintiff, Oriental Huayuan Company, has not exercised the right to terminate the contract and cannot directly refuse to compensate according to Article 16 Paragraph 4 and Paragraph 5 of the Insurance Law. Accordingly, the court did not support the Defendant’s defense opinion that the Defendant PICC Gaochun claimed that the Plaintiff Oriental Huayuan Company violated the obligation of truthful disclosure and refused compensation. The Defendant PICC Gaochun determined that the Plaintiff Oriental Huayuan Company did not fulfill its obligation to maintain the safety of the ship in accordance with the accident investigation report of Wusong Maritime Safety Administration. According to Article 15 of the insurance clause of this case, it has the right to refuse compensation. In fact, Article 15 of the insurance clause of this case is only a principle clause, and it does not specify the specific circumstances that can be refused. The Defendant’s ship safety operation and pollution prevention management regulations issued by the Ministry of Communications of the People’s Republic of China (Trial) and the Regulations on the Administration of Safety and Pollution Prevention of Shipping Companies of the People’s Republic of China are administrative regulations on the safety management of ships. It is not possible to determine that the loss of this collision accident is not within the scope of insurance compensation. Wusong Maritime Safety Administration found that the ship collision accident caused the ship to run out of control due to the failure of the main engine. The ship crossed the navigation dividing line and entered the adjacent navigation channel to reverse the general flow of the ship traffic, instead of the Defendant’s violation of relevant safety regulations advocated by PICC Gaochun. The Defendant PICC Gaochun did not provide evidence that the insurance accident was caused by the Plaintiff Oriental Huayuan Company’s failure to comply with the provisions of Article 15 of the insurance clause, and its defense opinions have no factual and legal basis, and the court does not support it. To confirm whether the Plaintiff Oriental Huayuan Company complies with other relevant laws, regulations and regulations concerning fire protection, safety, production operations, etc., it shall be based on written decisions, conclusions and opinions made by relevant administrative organs. The accident investigation report and the accident responsibility certificate did not clearly determine that the Plaintiff Oriental Huayuan Company violated relevant laws, regulations or penalties. According to the

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descriptive language in the accident investigation report, the Plaintiff Oriental Huayuan Company could not be found to violate the state regarding fire safety, safety, and production operations regulations. Article 3 Sub-paragraph 3 of the insurance clause involved is “normal maintenance of the ship, paint, natural wear and tear of the hull, modification and corrosion, and failure of the machine itself and separate losses such as rudder, propeller, raft, anchor, anchor chain, raft, etc.” The insurer does not pay compensation. This agreement actually means that the ship’s individual loss belongs to the insurer’s exclusion, and the ship’s loss caused by the failure of the machine itself is the insurer’s exclusion, and the Plaintiff’s Oriental Huayuan Company’s insured in this case The risk includes separate loss insurance such as propellers. Therefore, the Defendant PICC Gaochun claimed that the accident was caused by the failure of the ship’s own machine itself, and the defense opinion of the exclusion liability could not be established, and the court did not support it. In summary, the Plaintiff Oriental Huayuan Company paid the ship insurance fee according to the contract. The Defendant PICC Gaochun failed to pay the compensation according to the contract after the insurance accident occurred, which constitutes a breach of contract and should be in accordance with the Contract Law of the People’s Republic of China Article 107, it shall be responsible for the breach of contract for continued performance and compensation for losses. The Plaintiff, Oriental Huayuan Company, requested the Defendant PICC Gaochun to pay the ship insurance compensation and interest loss (according to the benchmark interest rate of the same grade loan announced by the People’s Bank of China), which is in compliance with the law and is protected by the court. The Plaintiff, Oriental Huayuan Company, claimed that the amount of compensation of 2,104,700 yuan was the cost of self-repair. It could not prove the reasonableness and objectivity of the fee, nor was it recognized by the Defendant PICC Gaochun. The court signed the “damaged ship self-repair”, the amount of 163,146.41 yuan confirmed in the agreement is the amount of the ship’s loss. According to the insurance clause of the policy in question, after deducting the absolute deductible (rate) 10%, the Defendant PICC Gaochun shall pay the Plaintiff Oriental Huayuan Company an actual payment of 1,468,315.27 yuan. According to Article 23 of the Insurance Law of the People’s Republic of China, after receiving the claim of the insured or the beneficiary or paying the insurance premium, the insurer shall make a timely verification; if the situation is complicated, it shall be made within 30 days. Unless otherwise agreed in the contract. As the two parties did not agree on the time for paying the insurance, the Defendant PICC Gaochun did not pay the compensation according to the contract, which constituted a breach of contract. It should be undertaken in accordance with Article 107 of the Contract Law of the People’s Republic of China. The Plaintiff Oriental Huayuan Company requested the Defendant PICC Gaochun to pay the interest loss of the above compensation (according to the benchmark interest rate of the same grade loan announced by the People’s Bank of China), which is in compliance with the law and is protected by the court. The Plaintiff Oriental Huayuan Company claimed to have interest from the date of the accident, but the

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Defendant PICC Gaochun should make the approval within 30 days from the date on which the Plaintiff Oriental Huayuan Company filed a claim for compensation (August 31, 2015), fulfill the obligation to pay compensation. Therefore, the interest loss of the insurance compensation claimed by the Plaintiff Oriental Huayuan Company shall begin to be calculated from September 30, 2015. In summary, in accordance with Article 222 of the Maritime Code of the People’s Republic of China, Article 16 of the Insurance Law of the People’s Republic of China, Article 107 of the Contract Law of the People’s Republic of China, and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant China People’s Property Insurance Co., Ltd. Gaochun Sub-branch shall pay the insurance compensation of RMB1,468,315.27 yuan and interest to the Plaintiff Jiangsu Oriental Huayuan Shipping Co., Ltd. within 10 days from the effective date of this judgment. Interest is based on the People’s Bank of China’s announced bank loan interest rate for the relevant period and is calculated from September 30, 2015 to the date of full settlement. 2. Reject other claims of the Plaintiff Jiangsu Oriental Huayuan Shipping Co., Ltd. If the Defendant fails to perform the obligation to pay the money within the period specified in this judgment, it shall double the interest on the debt during the delayed performance period in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 23,638 yuan, shall be born by the Defendant China People’s Property Insurance Co., Ltd. Gaochun Sub-branch. If not satisfied with the judgment, the parties, within 15 days after the judgment is served, can submit appeal, together with copies of petition according to the number of other parties, to Hubei High People’s Court. Presiding Judge: XU Zemin Judge: WAN Yi Acting Judge: ZHENG Wenhui June 20, 2017 Clerk: MA Shuai

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Hubei High People’s Court Civil Judgment Jiangsu Oriental Huayuan Shipping Co., Ltd. v. China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (2017) E Min Zhong No.2776 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 569. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Affirming first instance Court’s decision holding Plaintiff’s undisclosure of defects found in sea trial and in ship operation prior to collision did not discharge the insurance contract or release Defendant from obligation of indemnification, and Defendant’s acceptance of instalment payment of premiums after it knew the undisclosure affirmed the insurance contract and its obligation of indemnification. Summary Plaintiff shipowner bought marine policy from Defendant insurer, but failed to inform Defendant of the defects found in sea trial of the ship and they remained uncured. Those sea trial defects did not prevent Plaintiff from acquiring the ship registry and inspection documents. A few days after issuance of policy, the ship, upon calling a port, was inspected by maritime safety authority and 4 defects were found, but did not tell Defendant. A few days thereafter, the ship, in navigation, lost main engine and hit another vessel. Plaintiff was held fully liable for the collision. During discussion of indemnification regarding the collision, Defendant found the undisclosed sea trial defects and the defects found by maritime safety authority, however Defendant still accepted the 2nd instalment of premiums. When Plaintiff lodged the lawsuit, Defendant tried to use the undisclosure as defence. Court of first instance held Defendant liable. The rationale had three folds: (i) Defendant failed to prove Plaintiff should disclosure the defects, i.e. the defects were within the scope of Defendant’s enquiry; (ii) the defects were so serious that they had material effects on Defendant’s issuing the policy or charging the premiums; and (iii) Defendant accepted instalment payment of premiums after they knew the undisclosed defects, which affirmed the insurance contract and its obligation of indemnification.

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Defendant appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

Judgment The Appellant (the Defendant of first instance): China People’s Property Insurance Co., Ltd. Gaochun Sub-branch Domicile: Gaochun District, Jiangsu. Legal representative: CHEN Qingwei, general manager of the company. Agent ad litem: WANG Pengnan, lawyer of Liaoning Pengrun Law Firm. Agent ad litem: FANG Liang, lawyer of Liaoning Pengrun Law Firm. The Respondent (the Plaintiff of first instance): Jiangsu Oriental Huayuan Shipping Co., Ltd. Domicile: Gaochun District, Nanjing, Jiangsu; actual office address: Room 1311, Block E, Hexi Wanda Plaza, Jianye District, Nanjing, Jiangsu. Legal representative: ZHANG Zhaolei, executive director of the company. Agent ad litem: CHANG Wen, lawyer of Jiangsu Tianmao Law Firm. Agent ad litem: ZHANG Qian, lawyer of Jiangsu Tianmao Law Firm. With respect to the case arising from dispute over marine insurance contract between the Appellant China People’s Property Insurance Co., Ltd. Gaochun Sub-branch and the Respondent Jiangsu Oriental Huayuan Shipping Co., Ltd., the Appellant refused to accept the Wuhan Maritime Court (2016) E 72 Min Chu No.157 Civil Judgment, and appealed to the court. After entertaining the case on September 5, 2017, the court formed a collegiate bench in accordance with the law and held a public hearing on the morning of October 26, 2017. Agent ad litem of the Appellant China People’s Property Insurance Co., Ltd. Gaochun Sub-branch (hereinafter referred to as PICC Gaochun), WANG Pengnan, and legal representative of the Respondent Jiangsu Oriental Huayuan Shipping Co., Ltd. (hereinafter referred to as Oriental Huayuan Company) legal representative ZHANG Zhaolei, and agent ad litem, CHANG Wen, appeared in court to attend the trial. Now the case has been concluded. PICC Gaochun appealed to revoke the first-instance judgment and reject all the claims of Oriental Huayuan Company. The first and second-instance litigation fees were borne by Oriental Huayun Company. Facts and reasons: 1. the court of first instance applies the wrong law, the Maritime Code should be applied instead of the Insurance Law to determine whether Oriental Huayun Company violated the obligation to inform; 2. the court of first instance determines the facts are unclear, according to the investigation report of Wusong Maritime Safety Administration. Oriental Huayuan Company violated the obligation of notification under the Maritime Code.

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Oriental Huayuan Company argued that: 1. the application of law applicable of the court of first instance is correct. Article 182 of the Insurance Law stipulates that the marine insurance shall be governed by the relevant provisions of the Maritime Code of the People’s Republic of China; the relevant provisions of this Law shall apply, and Article 16 of the Insurance Law is basically consistent with Article 222 of the Maritime Code. 2. The court of first instance found the facts clear, and the Respondent did not violate the obligation of truthful disclosure. The problem was found in the trial flight to solve the problem. It could not explain that the navigation was unsuitable in the future. After the trial, the ship was re-examined and verified by the Maritime Safety Administration. PICC Gaochun submitted all relevant certificates when insured, and did not conceal the unsafe factors. The Taizhou Maritime Safety Administration accepted the visa application for the vessel involved and granted the visa to the port, indicating that it had passed the inspection by the maritime administrative organ before sailing, and it was an seaworthy ship. Oriental Huayuan Company’s first-instance claims: 1. PICC Gaochun should compensate Oriental Huayuan Company’s M.V. “Oriental 08” loss of 2,104,700 yuan and interest (according to the same grade loan announced by the People’s Bank of China), the benchmark interest rate is calculated from the date of the accident to the date of payment determined by the court’s effective judgment. 2. PICC Gaochun shall bear the litigation costs of the case. Facts and reasons: on January 12, 2014, Oriental Huayuan Company insured all risks of coastal inland vessels at PICC Gaochun. On January 25 of the same year, Oriental Huayuan Company’s M.V. “Oriental 08” and the outsider Yangpu Hongyang Shipping Co., Ltd.’s M.V. “Hongyang Mountain” collided in the waters of the Yangtze River estuary, and Oriental Huayuan Company repaired it. M.V. “Oriental 08” cost a total of 2,104,700 yuan. According to the division of accident liability of the Waterborne Accident Responsibility Certificate of the Wusong Maritime Safety Administration of the People’s Republic of China (2014) No.03-02, M.V. “Oriental 08” should bear full responsibility for the accident. Oriental Huayuan Company believed that the ship loss of M.V. “Oriental 08” was caused by a collision accident and was within the scope of insurance compensation. PICC Gaochun should perform the compensation obligation according to the insurance contract, but PICC Gaochun did not pay compensation. The act has seriously infringed on the legitimate rights and interests of Oriental Huayuan Company and therefore filed the above-mentioned lawsuit. The court of first instance found that: Oriental Huayuan Company registered the owner of M.V. “Oriental 08”. On January 12, 2014, Oriental Huayuan Company insured all insurances of the coastal inland vessels at PICC Gaochun. Before PICC Gaochun issued the insurance policy, PICC Gaochun did not investigate the seaworthiness of the ship to Oriental Huayuan Company. The insurance policy states that the insured vessel is M.V. “Oriental 08”, and the insurance is all risks for coastal inland vessels. The additional insurance includes additional collision, touch liability insurance and individual loss insurance. The insurance amount is 120 million yuan; insurance conditions And the special agreement clause “every accident (including total loss, collision, touch) absolute deductible (rate) is

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100,000 yuan or 10% of the loss amount, whichever is higher; special loss is 10%, if agreed inconsistent with the main insurance clause, the special terms shall prevail; the signed premium will be 247,296 yuan, the second premium of 185,472 yuan will be paid before May 20, 2014, and the third premium of 185,472 yuan will be paid before August 20, 2014, according to the China People’s Property Insurance Co., Ltd. Coastal River Trade Insurance Clause (2009) version”, the insurance period starts from 12:00 on January 12, 2014 to 12:00 on January 12, 2015. The total insurance premium is 618,240 yuan. On the next day, Oriental Huayuan Company paid 206,080 yuan to PICC Gaochun. On January 25 of the same year, M.V. “Oriental 08” of Oriental Huayuan Company was in the voyage from Zhoushan to Nantong, in the waters between the D14 lights and the D16 lights in the deep water channel of the Yangtze River estuary and the outsider Hainan Yangpu Hongyang Shipping. M.V. “Hongyang Mountain” belonging to the company has collided. After the accident, Oriental Huayuan Company reported the case to PICC Gaochun. On February 26, Oriental Huayuan Company entrusted Ruitai Shipyard to repair M.V. “Oriental 08”, and the two parties signed a ship repair contract. On March 25, M.V. “Oriental 08” was repaired. Oriental Huayuan Company and Ruitai Shipyard settled the repair fee and signed a settlement agreement. The two parties confirmed that the repair cost was 2,264,573 yuan. The final repair cost was 1.96 million after friendly negotiation. yuan. The repair fee was paid in full before the ship was shipped from the factory, and Ruitai Shipyard issued a receipt of 1.96 million yuan. In addition, Oriental Huayuan Company purchased a paint worth 68,000 yuan for the repair of ship, and purchased one for the Hall anchor and the swivel shackle, and paid a fee of 76,700 yuan. On June 30, Oriental Huayuan Company paid the instalment insurance premium of 412,160 yuan to PICC Gaochun, and PICC Gaochun issued the invoice for the corresponding amount of insurance premium. On August 31, 2015, Oriental Huayuan Company applied for the claim settlement to PICC Gaochun, and submitted the ship’s insurance notice, explaining the accident and the loss of M.V. “Oriental 08”, and provided corresponding evidence materials. Due to the objection to the actual loss of Oriental Huayuan Company and whether it belongs to its exclusion, PICC Gaochun has not yet settled the claim, and unilaterally entrusted Tianheng Company to compensate the loss of M.V. “Oriental 08” in this accident. On April 7, 2016, Tianheng Public Assessment Company made M.V. “Oriental 08” loss assessment report, confirming that Oriental Huayuan Company reported a loss of 2,098,200 yuan and a fixed loss amount of 163,146.41 yuan. In order to carry out the payment accounting smoothly, on August 25 of the same year, Oriental Huayuan Company and PICC Gaochun signed Attached Ship Self-study Agreement. The two parties confirmed that M.V. “Oriental 08” of damage repair fee was fixed at 1,631,614.41 yuan, which was self-repaired by Oriental Huayuan Company. The amount of compensation is calculated and paid by PICC Gaochun in accordance with the relevant provisions of the insurance clause. Subsequently, PICC Gaochun did not calculate the claim according to the agreement between the parties.

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At the same time, it was found that M.V. “Oriental 08” of Oriental Huayuan Company was completed on December 16, 2013. On the same day, the ship inspection certificate and the sea cargo ship seaworthiness certificate were obtained. After the accident, on March 25, 2014, Wusong Maritime Safety Administration made a report on Responsibility Certificate for Water Traffic Accidents issued by Hu Hai Song Ze Zi (2014) No.03-02, and believed that M.V. “Oriental 08”, when entering the navigable lane, the ship is out of control due to the failure of the main engine. The ship crosses the navigation dividing line. Driving into the adjacent navigation channel and countering the total flow of the ship traffic is the direct cause of the accident. It is also recognized as M.V. “Oriental 08”. In the event of the accident, M.V. “Hongyang Mountain” is not responsible. On April 30, 2014, Wusong Maritime Safety Administration made “Shanghai 1.25” M.V. “Oriental 08” and M.V. “Hongyang Mountain” Collision Accident Investigation Report on the Collision Incident. The main content of the report is: the accident voyage is the first voyage. On the maiden voyage, there were 18 crew members in the crew. The crew’s license and manning status were in line with the requirements contained in the minimum safety certificate. M.V. “Oriental 08” safety management certificate was issued by Jiangsu Maritime Safety Administration on January 10, 2014 and is valid until 2014. On July 9, at the time of the accident, the safety management certificate and the seaworthiness certificate of the sea cargo ship were all within the validity period; on January 19, 2014, before the accident, the ship carried out a safety inspection in Taizhou, Zhejiang to identify the defects. 4 Items, mainly related to nautical charts, fire extinguishing systems, emergency lighting, etc. (in addition, according to the logbook, the problems discovered by the inspection have been rectified on the same day), and no key equipment defects such as main engines and auxiliary machines were found; the ship was built in the ship. During the seaworthiness phase, there were more than ten equipment defects such as “the host cylinder oil lubricator float switch is not sensitive” and “the electric compass is faulty, the heading is inconsistent”. The above situation has been reported to Oriental Huayuan Company, but it is not timely arrangements for maintenance personnel. The conclusions of the report on the cause of the accident are consistent with the conclusions of Hu Hai Song Ze Zi (2014) No.03-02 water traffic accident responsibility certificate. It was also found that the China Life Insurance Company Co., Ltd. Suzhou Center Sub-branch v. Oriental Huayuan Company ship collision damage compensation dispute ([2014] Wu Hai Fa Shi Zi No.00063), Yangpu Hongyang Shipping Co., Ltd. v. the Plaintiff Oriental Huayuan Company ship collision damage compensation dispute [(2014) Wu Hai Fa Shi Zi No.00051], the conclusion of the civil judgment of the two cases on the cause of the collision accident and Hu Hai Song Ze Zi (2014) No.03-02 water transportation accident responsibility certificate was unanimous, and neither of M.V. “Oriental 08” were considered to be unseaworthy before the accident. The court of first instance believed that this case was a dispute over marine insurance contract. The marine insurance contract between the two parties was

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legally established and valid. The parties concerned should perform their contractual obligations and assume the liability for breach of contract in strict accordance with the law and the contract. The issue of the dispute in this case was whether Oriental Huayuan Company violated the obligation of truthful disclosure when insured. According to Article 222 of the Maritime Code of the People’s Republic of China and Article 16 of the Insurance Law of the People’s Republic of China, the following three conditions must be met in case of breach of the obligation of truthful disclosure: 1. the content not notified should be important. It is enough to affect the insurer’s decision whether to agree to underwrite or increase the insurance rate; 2. the unannounced situation should be clearly known to the insured, but the insured deliberately concealed or failed to inform; 3. the insurer conducted related tips or inquiries. First of all, after the completion of the construction, M.V. “Oriental 08” was certified by the ship inspection agency and obtained relevant certificates including the ship inspection certificate and the sea cargo ship seaworthiness certificate. Before the maiden flight, the safety management certificate was obtained, that is, Oriental Huayuan Company defended PICC Gaochun. When PICC Gaochun was insured, it had obtained all the certificates that could prove that the ship was in an seaworthy state. PICC Gaochun had more than ten equipment defects such as “the host cylinder oil lubricator float switch action is not sensitive” and “the electric compass fault, the heading is inconsistent in the display value”, etc., Oriental Huayun Company, after the company was informed, it did not arrange for personnel to be repaired in time. It was considered that Oriental Huayuan Company concealed the situation that the insurer could decide whether to agree to underwrite or increase the insurance rate. However, PICC Gaochun did not provide evidence that the above is sufficient to influence the insurer’s decision whether to agree to underwrite or increase the premium rate, and the policy clause does not stipulate that the insured conceals the above circumstances, which constitutes a breach of the obligation of truthful disclosure. PICC Gaochun accepted Oriental Huayuan Company to insure and received the corresponding premium, which should be regarded as recognition that the ship is in an seaworthy state. Secondly, on January 19, 2014, before the accident, the ship of safety inspections in Taizhou, Zhejiang identified 4 defects, mainly related to nautical charts, fire extinguishing systems, emergency lighting, etc. (also according to the logbook, the same day has been checked, the problems found were rectified). No key equipment defects such as mainframes and auxiliary machines were found. The maritime department and the court’s effective legal judgments all concluded that the cause of the accident was caused by the host failure, and there was no direct evidence that the key equipment such as the main engine and the auxiliary machine were faulty. It should be determined that there was no major failure during the ship of insurance. There is no Oriental Huayuan Company deliberately concealing or failing to inform due to negligence. Furthermore, according to Article 6 of the Supreme People’s Court Interpretation of Several Issues concerning the Application of the Insurance Law of the People’s

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Republic of China (II), the insured’s obligation to inform is limited to the scope and content of the insurer’s inquiry, and the scope and content of the inquiries. Controversial, the insurer bears the burden of proof. Therefore, the provisions of the Chinese law on the manner in which the insured person fulfills the obligation of truthful disclosure are the inquiry notification system, that is, the scope of the matter notified by the insured is limited to the scope and content of the insurer’s inquiry, and otherwise, the insured does not accept other notifications. The insurer shall, before insuring, inquire into the insured in detail, and make a corresponding written record of the material circumstances that the insurer considers to be sufficient to influence the insurer’s decision to agree to insure or increase the premium rate. In this case, PICC Gaochun did not provide evidence to prove that it had inquired about the important situation of Oriental Huayuan Company or the ship involved in the case before the insurance. Oriental Huayuan Company could not and did not have to bear other obligation to inform, so it should not bear the obligation of breach of disclosure. Finally, even if PICC Gaochun believes that Oriental Huayuan Company violated the obligation of truthful disclosure, according to Article 4 of the Supreme People’s Court on Several Issues concerning the Trial of Maritime Insurance Disputes, the insurer knows that the insured is not Inform the important circumstances stipulated in Article 222 Paragraph 1 of the Maritime Code, still collect insurance premiums or pay insurance compensation, and the insurer may request the termination of the contract on the ship that the insured has not truthfully informed the important situation, the people’s court shall not stand by. PICC Gaochun still collected the insurance premium of Oriental Huayuan Company after the collision accident (June 30, 2014), and issued the corresponding invoice, did not issue a notice of refusal or requested to cancel the insurance contract, and could not use Oriental Huayuan Company did not truthfully inform the important situation that it was requested to terminate the contract. At the same time, according to Article 8 of the Supreme People’s Court Interpretation of Several Issues concerning the Application of the Insurance Law of the People’s Republic of China (II), Oriental Huayuan Company has not exercised the right to terminate the contract and cannot directly refuse to compensate according to Article 16 Paragraph 4 and Paragraph 5 of the Insurance Law. Accordingly, the court of first instance did not support PICC Gaochun’s defense opinion that PICC Gaochun claimed that Oriental Huayuan Company violated the obligation of truthful disclosure and refused compensation. PICC Gaochun determined that Oriental Huayuan Company did not fulfill its obligation to maintain the safety of the ship in accordance with the accident investigation report of Wusong Maritime Safety Administration. According to Article 15 of the insurance clause of this case, it has the right to refuse compensation. In fact, Article 15 of the insurance clause of this case is only a principle clause, and it does not specify the specific circumstances that can be refused. PICC Gaochun’s ship safety operation and pollution prevention management regulations issued by the Ministry of Communications of the People’s Republic of China (Trial) and the Regulations on the Administration of Safety and Pollution

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Prevention of Shipping Companies of the People’s Republic of China are administrative regulations on the safety management of ships. It is not possible to determine that the loss of this collision accident is not within the scope of insurance compensation. Wusong Maritime Safety Administration found that the ship collision accident caused the ship to run out of control due to the failure of the main engine. The ship crossed the navigation dividing line and entered the adjacent navigation channel to reverse the general flow of the ship traffic, instead of PICC Gaochun’s violation of relevant safety regulations advocated by PICC Gaochun. PICC Gaochun did not provide evidence that the insurance accident was caused by Oriental Huayuan Company’s failure to comply with the provisions of Article 15 of the insurance clause, and its defense opinions have no factual and legal basis, and the court of first instance does not support it. To confirm whether Oriental Huayuan Company complies with other relevant laws, regulations and regulations concerning fire protection, safety, production operations, etc., it shall be based on written decisions, conclusions and opinions made by relevant administrative organs. The accident investigation report and the accident responsibility certificate did not clearly determine that Oriental Huayuan Company violated relevant laws, regulations or penalties. According to the descriptive language in the accident investigation report, Oriental Huayuan Company could not be found to violate the state regarding fire safety, safety, and production operations regulations. Article 3 Sub-paragraph 3 of the insurance clause involved is “normal maintenance of the ship, paint, natural wear and tear of the hull, modification and corrosion, and failure of the machine itself and separate losses such as rudder, propeller, raft, anchor, anchor chain, raft, etc. The insurer does not pay compensation. This agreement actually means that the ship’s individual loss belongs to the insurer’s exclusion, and the ship’s loss caused by the failure of the machine itself is the insurer’s exclusion, and Oriental Huayuan Company’s insured in this case The risk includes separate loss insurance such as propellers. Therefore, PICC Gaochun claimed that the accident was caused by the failure of the ship’s own machine itself, and the defense opinion of the exclusion liability could not be established, and the court did not support it. In summary, Oriental Huayuan Company paid the ship insurance fee according to the contract. PICC Gaochun failed to pay the compensation according to the contract after the insurance accident occurred, which constitutes a breach of contract and should be in accordance with the Contract Law of the People’s Republic of China Article 107, it shall be responsible for the breach of contract for continued performance and compensation for losses. Oriental Huayuan Company requested PICC Gaochun to pay the ship insurance compensation and interest loss (according to the benchmark interest rate of the same grade loan announced by the People’s Bank of China), which is in compliance with the law and is protected by the court. Oriental Huayuan Company claimed that the amount of compensation of 2,104,700 yuan was the cost of self-repair. It could not prove the reasonableness and objectivity of the fee, nor was it recognized by PICC Gaochun. The court signed the “damaged ship self-repair”, the amount of 163,146.41 yuan confirmed in the agreement is the amount of the ship’s loss. According to the insurance clause of

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the policy in question, after deducting the absolute deductible (rate) 10%, PICC Gaochun shall pay Oriental Huayuan Company an actual payment of 1,468,315.27 yuan. According to Article 23 of the Insurance Law of the People’s Republic of China, after receiving the claim of the insured or the beneficiary or paying the insurance premium, the insurer shall make a timely verification; if the situation is complicated, it shall be made within 30 days. Unless otherwise agreed in the contract. As the two parties did not agree on the time for paying the insurance, PICC Gaochun did not pay the compensation according to the contract, which constituted a breach of contract. It should be undertaken in accordance with Article 107 of the Contract Law of the People’s Republic of China. Oriental Huayuan Company requested PICC Gaochun to pay the interest loss of the above compensation (according to the benchmark interest rate of the same grade loan announced by the People’s Bank of China), which is in compliance with the law and is protected by the court. Oriental Huayuan Company claimed to have interest from the date of the accident, but PICC Gaochun should make the approval within 30 days from the date on which Oriental Huayuan Company filed a claim for compensation (August 31, 2015), fulfill the obligation to pay compensation. Therefore, the interest loss of the insurance compensation claimed by Oriental Huayuan Company shall begin to be calculated from September 30, 2015. In summary, in accordance with Article 222 of the Maritime Code of the People’s Republic of China, Article 16 of the Insurance Law of the People’s Republic of China, Article 107 of the Contract Law of the People’s Republic of China, Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. PICC Gaochuan should pay the insurance compensation of RMB1,468,315.27 yuan and interest (based on 14,683,215 yuan) to Oriental Huayuan Company within 10 days from the effective date of this judgment. According to the same period bank loan interest rate announced by the People’s Bank of China, from September 30, 2015 to the date when the judgment determines the payment. 2. Reject other claims from Oriental Huayuan Company. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 23,638 yuan, shall be borne by PICC Gaochun. In the second instance, neither party submitted new evidence. The court found through trial that the facts ascertained in the first instance judgment are true and will be confirmed by the court. The issues of second instance are that: (1) whether Oriental Huayuan Company is aware of the ship’s defects when the ship is insured in this case; (2) whether PICC Gaochun should be exempted from liability. The analyses are as follows: (1) Whether Oriental Huayuan Company is aware of the existence of defects in the ship when the ship is insured in this case. The court believes that although the investigation report of Wusong Maritime Safety Administration on April 30,

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2014 stated that the ship involved in the trial was in the process of trial flight, the crew found that there were more than ten items such as “the host cylinder oil lubricator float switch is not sensitive”. The fact that the equipment was defective and “reported to the company, but the company did not arrange for personnel to be repaired in time”, however, was only a statement of the crew after the collision incident, and the ship’s test record book was not recorded. The purpose of the ship trial is to find out the problems that may occur in the ship’s navigation. After the repair, the existing safety hazards will be solved. After the ship’s problems in the sea trial are solved, the ship inspection department can issue the seaworthiness certificate. When the case involved the sea trial, the ship inspection agency and the surveyor participated in the whole process. However, there was no record in the test run that there was a problem that the “host cylinder oil lubricator float switch was not sensitive”. After the trial, the Chinese class seaworthiness Certificate for Marine Cargo Ships contained in the Marine Ship Inspection Certificate issued by the Wenzhou Office on December 16, 2013, which stated that M.V. “Oriental 08” was constructed and inspected at Wenzhou Port to identify safety equipment, ship structure and machinery. And the electrical equipment and wireless equipment comply with the corresponding specifications and regulations, and the ship is in an seaworthy state. Based on this, it can be concluded that the problems that have occurred in the trial of the ship have been resolved. Moreover, the safety inspection of the security inspection department before the voyage did not find any key equipment defects such as the main engine and the auxiliary equipment. Therefore, it is not possible to overturn the seaworthiness certificate issued by the maritime department only by the crew inquiry record in the investigation report. The available evidence does not fully prove that the shipowner knows that the ship has the defect that the “cylinder oil lubricator float switch is not sensitive” when insured. (2) Whether the person in charge of the company is exempt from liability. The court believes that, first of all, the issue of the application of the law. According to Article 182 of the Insurance Law of the People’s Republic of China, the relevant provisions of the Maritime Code of the People’s Republic of China shall apply to marine insurance; if the Maritime Code of the People’s Republic of China does not stipulate, the relevant provisions of this Law shall apply. The Appellant believes that there is no legal basis for the relevant provisions of the Maritime Code of the People’s Republic of China to be applied only in this case. Secondly, the existing evidence does not fully prove that the insured knows that the ship has major defects when insured. Even if the ship is defective, according to Article 222 of the Maritime Code of the People’s Republic of China, before the conclusion of the contract, the insured shall determine the insurance that the insured person knows or should be aware of in the ordinary business. Rate or determine whether you agree to the important situation of underwriting, and inform the insurer truthfully. If the insurer knows or should know in the normal business, the insurer does not need to ask, the insured does not need to inform. The law does not clearly stipulate which

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circumstances are “important circumstances affecting the insurer to determine the insurance premium rate or determine whether to agree to underwrite”, the court of first instance in accordance with the relevant provisions of Article 16 of the Insurance Law of the People’s Republic of China, combined with Article 6 of the Supreme People’s Court Interpretation of Several Issues concerning the Application of the Insurance Law of the People’s Republic of China (II), which determine the circumstances of the insurer’s “influence of the insurer to determine the insurance rate or determine whether to agree to the underwriting the burden of proof is based on the law. However, PICC Gaochun did not provide relevant evidence to prove the matters and scope of its inquiry. Oriental Huayuan Company is not clear about whether the insurer underwrites and affects the rate, and does not know whether its ship has potential safety hazards affecting the rate. After the accident, the insurer did not announce the termination of the insurance contract, so it could not be in accordance with Article 223 Paragraph 2 of the Maritime Code of the People’s Republic of China, if the insurer cancels the contract, the loss caused by the insurance accident before the contract is terminated, the insurer shall be liable for compensation; however, the provisions of the Appellant’s insurance company shall be exempted from the insurance liability of the Appellant’s insurance company if the unimportant or misrepresented important circumstances have an impact on the occurrence of the insured event. The appeal of the Appellant is not established and the court does not support it. In summary, the court believes that the appeal of PICC Gaochun is not established and the court does not support it. The facts confirmed by first-instance judgment are clear, the application of law is correct, and the judgment is made properly, which should be affirmed according to law. According to Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 23,638 yuan, shall be borne by the Appellant PICC Gaochun. The judgment is final. Presiding Judge: SU Jiang Judge: OU Haiyan Judge: DAI Qifen December 1, 2017 Judge Assistant: FAN Sitan Clerk: MA Yue

Shanghai Maritime Court Civil Judgment Jiangsu Province Foreign Trade Corporation et al. v. Hong Union Shipping Limited (2016) Hu 72 Min Chu No.402 Related Case(s) None. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Defendant shipowner held liable for delivery of cargo to Plaintiff cargo receivers, which Defendant detained in port of discharge for outstanding demurrage owed by voyage charterer to Defendant under a chain of charterparties, as Plaintiff was the lawful holder of bill of lading issued by voyage charterer rather than Defendant regarding the cargo. Summary Plaintiff, Chinese importer and buyer, purchased goods from Iran on CIF term. The seller voyage-chartered the vessel from a third party which time-chartered her from Defendant shipowner. Defendant issued the first set of bill of lading, which ‘disappeared’. Voyage charterer issued the second set of bill of lading, which was endorsed to Plaintiff in the normal course of international trade. When the cargo arrived at the port of discharge, in China, Defendant detained the cargo for outstanding demurrage owed by voyage charterer to Defendant under the chain of charterparties. Plaintiff then lodged a lawsuit against Defendant. Court held that as Plaintiff was the lawful holder/endorsee of bill of lading issued by voyage charterer regarding the cargo, to which Defendant did not object, Defendant could not detain Plaintiff’s cargo for voyage charterer’s debts.

Judgment The Plaintiff: Jiangsu Province Foreign Trade Corporation. Domicile: Floor **, Xinhua Building, ** Zhongshan Rood, Nanjing, Jiangsu. Legal representative: ZHANG Yonggui, chairman of the company. Agent ad litem: WANG Guangjun, lawyer of Jiangsu Zhenze Law Firm. Agent ad litem: XU Zhendong, lawyer of Jiangsu Zhenze Law Firm. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_32

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The Plaintiff: Maanshan Runhua Steel Material Co., Ltd. Domicile: No. **, Jiefang Road, Huashan District, Maanshan City, Anhui. Legal representative: WANG Yelong, general manager of the company. Agent ad litem: WANG Guangjun, lawyer of Jiangsu Zhenze Law Firm. Agent ad litem: XU Zhendong, lawyer of Jiangsu Zhenze Law Firm. The Defendant: Hong Union Shipping Limited. Domicile: Room **, Floor **, Harbor City World Business Center, No.**, Guangdong Avenue, Tsim Sha Tsui, Kowloon, Hong Kong Special Administrative Region. Business place of the company: Room 1003-1008, Heyuan Enterprise Square, Gonghe New Road, No. 2993, Shanghai. Legal representative: LI Xuanming, chairman of the company. Agent ad litem: WANG Hua, Shanghai WINTELL & CO. Agent ad litem: ZHANG Jin, Shanghai WINTELL & CO. With respect to the case arising from dispute over illegal lien of cargo between the Plaintiff, Jiangsu Province Foreign Trade Corporation (hereinafter referred to as “Jiangsu Foreign Trade”), and the Defendant, Hong Union Shipping Limited (hereinafter referred to as “HONG UNION SHIPPING”), the Plaintiff claimed to the court on January 1, 2016, and after entertaining the case on February 2, this court legitimately constituted the collegiate bench to try the case and applied for general procedure. On February 24, 2016, the Plaintiff, Maanshan Runhua Steel Material Co., Ltd (hereinafter referred to as “Runhua Steel”), attended to the court applying for being co-plaintiff, and after investigation, the court approved that. On March 22, 2017, the court held a hearing in public. Co-agents ad litem of the Plaintiffs, Jiangsu Foreign Trade and Runhua Steel, WANG Guangjun and XU Zhendong, and agent ad litem of the Defendant Hong Union Shipping, ZHANG Jin, appeared in the court to attend the hearing. Now the case has been concluded. The Plaintiff, Jiangsu Foreign Trade, alleged that: on February 14, 2014, it concluded a contract with a person other than involved in the case, Wide Dragon Overseas Limited (hereinafter referred to as “Wide Dragon”), which was the contract for purchases of 45,000 tons of Iranian iron ore, and issued irrevocable usance L/C to Wide Dragon, on March 3, Jiangsu Foreign Trade obtained original B/L which number was SHP01 from issuing bank after accepting the L/C, on June 3, Jiangsu Foreign Trade paid the price of goods 5,745,123.00 USD; from March 3 to 10, 2014, 8464 tons and 34,471.199 tons of iron ore were unloaded respectively at Beilun Port and Jiangyin Port by M.V. “YUAN XIN” owned by the Defendant, On April 9 and 10, customs clearance was finished after payment of import taxes and fees; 8464 tons of goods unloaded at Beilun Port were delivered successfully by B/ L No. SHP01, but the agent of the Defendant, Jiangyin Ganglian International Shipping Agency Co., Ltd. (hereinafter referred to as “Jiangyin Ganglian”) notified that, the carrier ordered that the goods unloaded at Jiangyin Port could not be delivered, the reason was that it did not receive demurrage of port of discharge.

Jiangsu Province Foreign Trade Corporation Maanshan Runhua …

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Jiangsu Foreign Trade held that, the action that the Defendant refused to deliver the goods at port of discharge was illegal lien of cargo, which infringed its legal rights, not only made it suffer loss of market price of the goods, but also had extra port storage charge thereby. Therefore, the Plaintiff claimed that: 1. 34,471.199 tons of Iranian iron ore unloaded at Jiangyin Port should be delivered immediately; 2. 3,589,957.76 USD of loss of market price should be compensated; 3. RMB 3,036,912.69 yuan of extra port storage charge should be born by Hong Union Shipping (ended on December 8, 2015, calculated as 0.4 yuan/ton from December 9, 2015 to the date of actual delivery). Meanwhile, the court acceptance fee should be born by the Defendant. The Plaintiff, Runhua Steel, alleged that, it was the actual buyer of the goods, Jiangsu Foreign Trade was its import agent, illegal lien of cargo by the Defendant made it suffer huge loss such as no goods or no money, loss of market price. Therefore, the reasons and claims were the same as Jiangsu Foreign Trade mentioned above, and it requested to join in the lawsuit as co-plaintiff, and was willing to undertake the same litigation outcome together with Jiangsu Foreign Trade. On September 27, 2017, the Plaintiffs, Jiangsu Foreign Trade and Runhua Steel, jointly sent an application to the court that withdraw the second and the third claims, reserve the claim that the goods should be delivered by the Defendant. The Defendant, Hong Union Shipping, argued that: it was the carrier of the goods involved, and authorized to issue the B/L No.SHP01 mentioned above, but this original B/L was held by the Plaintiff China Base Ningbo Group (hereinafter referred to as “China Base Ningbo”) of the case (2015) Yong Hai Fa Shang Chu Zi No.235 in Ningbo Maritime Court, the B/L held by the Plaintiff was not issued by it, so the Plaintiff had no right the receive the goods; after the goods involved were unloaded at Jiangyin Port, though there were multiple exhortation, the goods were not received by anyone holding the original B/L authorized to issue by it, which therefore resulted retention of the goods in port area, the Defendant had no fault to that, and should not bear the liability for compensation. In order to prove the claim that the Plaintiff, Jiangsu Foreign Trade, requested to receive the goods, it offered the following evidence to the court: 1. Purchases contract (with Wide Dragon), invoice of goods, L/C, acceptance letter of payment of L/C, evidence of payment, to prove that it had paid payment for goods, and was the seller in trading; 2. Original B/L (the Defendant did not confirm that the B/L was authorized to issue by it), declaration under open policy, policy of goods, goods declaration for importation, duty-paid proof, dispatch bill of iron ore, to prove that the Plaintiff as buyer underwrote insurance for transportation, declared importation and paid taxes, and some goods were actually received after the arrival of the goods; 3. Registration information of Wide Dragon and Fusheng International Industrial Co., Ltd. (hereinafter referred to as “Fusheng”), to prove the backgrounds of the two companies; 4. Interrogation of public security (CHEN An), fixture note, freight receipt, purchases contracts between Wide Dragon and NOVATAL FZC respectively and

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between Wide Dragon and Jiangsu Foreign Trade, to prove that contract chain and trading chain involved; 5. Purchases contract for nickel minerals between China Base Ningbo and Fusheng under the investigation order of Ningbo Maritime Court, to prove that China Base Ningbo did not pay trading price of the goods involved, and illegally held B/L (the Defendant confirmed that the B/L was authorized to issue by it), and the lawsuit in Ningbo Maritime Court brought by China Base Ningbo was false lawsuit; 6. E-mails between the Plaintiff, the Defendant and Jiangyin Ganglian, to prove that the Defendant ordered its agent to lien the goods. The Plaintiff, Runhua Steel, confirmed the evidence provided by Jiangsu Foreign Trade above, and provided the following evidence: 1. Commission contract for importation, to prove that it was the actual buyer, and entrusted Jiangsu Foreign Trade for importation as agent; 2. Agency agreement for goods, to prove that it appointed agents of unloading of goods at two ports of discharge, and arranged unloading of goods; 3. Warehouse and storage agreement, to prove that the goods were directly unloaded to the place appointed by it after the goods reached port of discharge; 4. Invoices and relevant evidence of payment, to prove that it had paid performance bond to Jiangsu Foreign Trade; 5. Goods declaration for importation and duty-paid proof, to prove that the goods had been declared for import and paid taxes; 6. Documents of charges at two ports, to prove that it had paid unloading charge of goods; 7. Notarization, to prove that the specific articles of purchases contract were negotiated directly between it and Wide Dragon. The Plaintiff, Jiangsu Foreign Trade, confirmed the evidence provided by Runhua Steel above. The Defendant had no objection to the authenticity and legality of the evidence provided by the Plaintiffs above, but considered that the evidence were insufficient to prove the facts that the Plaintiff wanted to prove, during cross-examination, it contended that the B/L held by the Plaintiff was not issued by its authorization, the action the receiving some goods was delivery without being presented with B/L, meanwhile, it emphasized that the retention of the goods involved in port area was resulted from that no one held the B/L issued by the Defendant with its authorization, which was not resulted from that it fulfilled lien of cargo. In order to prove that the Plaintiffs had no right to receive the goods, the Defendant provided the following evidence: 1. The evidence provided by China Base Ningbo to Ningbo Maritime Court: (1) Complaint and evidence list, (2) Purchases and sales contract and translated copy, (3) evidence of payment, invoices and translated copy, (4) insurance policy and invoice of insurance, (5) original B/L No. SHP01 and translated copy, (6) the

Jiangsu Province Foreign Trade Corporation Maanshan Runhua …

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People’s Republic of China Customs goods declaration for importation, (7) employment contract for lawyer, invoice of lawyer fee and evidence of payment, (8) Ningbo Maritime Court notice of respondence to action, to prove that China Base Ningbo claimed to Ningbo Maritime Court as the holder of original B/L issued by the authorization of the Defendant to request that the Defendant should bear liability for delivery without being presented with B/L, and Ningbo Maritime Court had accepted this case, the number of case was (2015) Yong Hai Fa Shang Chu Zi No. 235; 2. The evidence provided by the Defendant to Ningbo Maritime Court: (9) Evidence list, (10) fixture note, (11) explanation provided by Jiangyin Ganglian, (12) photos of unloading of goods at Jiangyin Port, (13) copy of B/L, (14) emails on February 26, 2014, (15) Beilun Customs declaration, to prove that the Defendant did not sign voyage C/P with Wide Dragon, and did not authorize RAINBOW SKY SHIPPING LTD. to issue B/L (held by the Plaintiff in this case) on behalf of the master of M.V. “YUAN XIN”, meanwhile, to prove that the actual loading port was Iran BANDAR ABBAS rather than United Arab Emirates JEBEL ALI, and the goods involved were at Jiangyin Port that did not be delivered; 3. Letters sent by the Defendant to relevant parties: (16) Letters, to prove that though the Defendant had exhortation, there was no one that claimed to receive the goods by holding the B/L issued by the authorization of the Defendant, and there were high storage charges and subsequent costs of the goods involved; 4. Supplementary evidence provided by China Base Ningbo to Ningbo Maritime Court: (17) Bank account details, to prove that China Base Ningbo contended that Fusheng paid some charge for goods to Wide Dragon, and China Base Ningbo held B/L legally through Fusheng; 5. Supplementary evidence provided by Jiangsu Foreign Trade to Ningbo Maritime Court: (18) Purchases and sales contract between Wide Dragon and NOVATAL FZC, (19) purchases and sales contract between Wide Dragon and Jiangsu Foreign Trade, (20) fixture note, (21) evidence of payment of Wide Dragon, to prove that Jiangsu Foreign Trade obtained goods by trading, and it was the legal owner; (22) Bank account details of China Base Ningbo, (23) Bank of Ningbo custom payment order, (24) purchases contract for nickel ore of China Base Ningbo and bank bill of payment, (25) customs declaration, (26) invoices of Fusheng, to prove that China base claimed in the lawsuit in Ningbo Maritime Court that charge for goods was paid, but the fact was that the nickel minerals under other trading contract were bought, China Base Ningbo had never paid for the goods involved, Iranian nickel minerals;

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6. Evidence from Jiangyin Customs investigated by Ningbo Maritime Court: (27) Customs goods declaration for importation and customs special payment book, automatic import license, (28) customs clearance scanning copy, D/O, (29) Warehouse and storage agreement, (30) the relevant notice for debt and delivery about M.V. “YUAN XIN”, to prove that the actual loading port was Iran BANDAR ABBAS rather than United Arab Emirates JEBEL ALI, meanwhile, to prove that part area confirmed that the goods involved was under the control of Jiangyin Ganglian, waiting for the order of delivery; 7. Supplementary evidence provided by the Defendant to Ningbo Maritime Court: (31) Relevant emails, to prove that to March 5, 2015, the Defendant had no idea that the Plaintiff held another set of B/L, and urged the consignee to receive the goods as soon as possible through broker and charterer, and the amount of demurrage was 10,000 USD, what the Defendant ordered to its agent was that 1000 tons of goods should be detained when someone came to receive the goods. It was considered by the Plaintiff to the evidence provided by the Defendant above that the Defendant argued that the Plaintiff had no right to receive the goods for the reason that China Base Ningbo held the original B/L, meanwhile, in the case in Ningbo Maritime Court, it argued that based on the evidence from Ningbo Maritime Court investigation order, China Base Ningbo illegally held the B/L issued by the authorization, so it had no right to claim right, which maximized the benefits of litigation. Meanwhile, the Plaintiff contended that regarding to the evidence provided by China Base Ningbo above, because there was special relationship between China Base Ningbo and Fusheng, especially, it could be proved by the evidence under the investigation order of Ningbo Maritime Court that the lawsuit in Ningbo Maritime Court brought by China Base Ningbo was false lawsuit, so the Plaintiff did not confirm all the evidence provided by China Base Ningbo; it confirmed the evidence provided in the lawsuit in Ningbo Maritime Court by itself; which B/L was used when acting customs clearance as agent could not be confirmed, and it indicated that the port of loading stated on the B/L issued by the authorization of the Defendant was not the actual port of loading; the fact that the goods were detained by the Defendant through agent was confirmed. The court has the opinions of confirmation of the evidence provided by both parties as follows: The Defendant had no objection to the authenticity and legality of the evidence provided by the Plaintiff, but only held that probative force was insufficient, the evidence were insufficient to prove the facts that the Plaintiff wanted to prove, however, the Defendant argued against the claims of the Plaintiff in another case by the evidence provided by the Plaintiff, the behavior indicated that the Defendant actually confirmed probative force of the evidence provided by the Plaintiff, accordingly, the court confirmed the effect of the evidence provided by the Plaintiff above. Because the Plaintiff withdraw the claims that loss of market price and harbor storage charge, so the court did not certify website price data statement and relevant collection documents of port area cargo storage charge, which were used to support these two claims provided by the Plaintiff.

Jiangsu Province Foreign Trade Corporation Maanshan Runhua …

597

Regarding to the evidence of both parties in the case in Ningbo Maritime Court provided by the Defendant, except the evidence provided by both parties during the proceedings and through cross-examination mentioned above, the court would not made any certification to other evidence, and only used them as reference when the court confirmed the basic facts of this case. After investigation, the court finds out that: Firstly, about the trading involved and the agency of import of the goods On November 7, 2013, Wide Dragon and NOVATAL FZC signed a purchases contract, number of the contract was WIDO-NVL1106-14, Wide Dragon purchased 50,000 tons of Iranian iron ore by FOB trading term of price, the total price of the contract was 5,350,000 USD. On February 14, 2014, Wide Dragon and Jiangsu Foreign Trade signed a purchases contract, number of the contract was WDRHYR62FE-51 K-RE\14JSFT01D0121, Wide Dragon sold 45,000 tons of Iranian iron ore to Jiangsu Foreign Trade by CFR FO trading term of price. On the same day that Wide Dragon and Jiangsu Foreign Trade signed a contract, Jiangsu Foreign Trade and Runhua Steel signed a commission contract for agency of import, as agreed that Jiangsu Foreign Trade imported 45,000 tons of Iranian iron ore on behalf of Runhua Steel as agent at the basic price 141 USD/dry metric ton CFR FO ONE MAIN PORT CHINA BASIS ON FE 62PCT (10% amount of increase or decrease was decided by Jiangsu Foreign Trade). in addition, the contract also agreed that terms of trading were directly confirmed by Runhua Steel with foreign company, Jiangsu Foreign Trade issued a L/C after Runhua Steel paid amount of cash deposit, charge was paid by irrevocable usance L/C, Jiangsu Foreign Trade would handle procedures such as goods import declaration and inspection declarer with the documents provided by Runhua Steel, freight forwarder was appointed by Runhua Steel. From December 2013 to February 2014, Runhua Steel and Wide Dragon confirmed the final version of the purchases contract mentioned above and the matters that the issuance of L/C, name of the vessel, sail schedule, relevant rates of vessel, port of discharge appointed, notice of the information of ships agent were communicated by sending emails. In these emails, Runhua Steel notified Wide Dragon that the ports of discharge appointed were Beilun Port and Jiangyin Port, the freight forwarder at Beilun Port was Ningbo Xinmeng International Ship Affairs Co., Ltd. (hereinafter referred to as “Ningbo Xinmeng”), the freight forwarder at Jiangyin Port was Jiangyin Ganglian. According to the statement of archives in Hong Kong Special Administrative Region company registration bureau, Wide Dragon registered as limited company on March 5, 2009 according to Hong Kong Companies Ordinance, ZHOU Youfu was chairman. Secondly, about payment of charge for goods and cargo transportation insurance After Jiangsu Foreign Trade received performance bond 5,730,000 yuan from Runhua Steel, it issued a L/C No.LCF06002014500445 through Bank of Communications Jiangsu Branch on February 21, 2014, which stated that applicant was Jiangsu Foreign Trade, beneficiary was Wide Dragon, goods was Iranian iron ore, amount was 45,000 wet metric tons, basic price was 141 USD/dry metric ton

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CFR FO ONE MAIN PORT CHINA BASIS ON FE 62PCT, payment after 90 days for sight. On February 24, Wide Dragon issued a provisional invoice that the amount was 5,745,123.46 USD. On March 3, issuing bank sent the acceptance letter of payment of C/L to Jiangsu Foreign Trade, presented Jiangsu Foreign Trade to accept. Jiangsu Foreign Trade confirmed in the trial that it received No.SHP01 B/L after it accepted L/C, and paid 5,745,123 USD on the date of acceptance, June 3, 2014. On February 27, 2014, Jiangsu Foreign Trade underwrote open insurance for cargo transportation with PICC Jiangsu Branch, number of policy was PYII201432010000000612, which stated that the insurance contract insured 42,935.199 wet metric tons of Iranian iron ore under the contract 14JSFT01D0121 against all risks, the insured was Jiangsu Foreign Trade, transport machine was M.V. “YUAN XIN”. Thirdly, about the conclusion of the charter party and B/L involved On December 6, 2013, the Defendant signed fixture note of M.V. “YUAN XIN” with DRAGON GUIDE LIMITED (hereinafter referred to as Dragon Guide), main articles were that: LAYCAN 15TH/JAN–25TH/JAN 2014, USD24.5 FIOST BSS1/ 1, USD26 FIOST BSS1/2, DEM USD12000. Dragon Guide used the above articles to sign fixture note of M.V. “YUAN XIN” with Wide Dragon. The charter chain involved was that Hong Union Shipping (the Defendant) ! Dragon Guide ! Wide Dragon, broker was OCI Shipping Co., Ltd. On February 14 and 15, 2014, Dragon Guide paid freight 1,060,190.41 and 62,792.73 USD on account to the Defendant for Wide Dragon. On March 4, 2014, Wide Dragon remitted 1,165,091.82 USD to Dragon Guide. The Defendant confirmed in the trial that, the actual port of loading was BANDAR ABBAS, and it was the carrier. Jiangsu Foreign Trade obtained whole set of triplicate B/L No.SHP01 from bank by acceptance of L/C, B/L was CONGENBILL 1994 form, no head or signature of carrier. B/L stated that shipper was Wide Dragon, consignee was to order, name of vessel was M.V. “YUAN XIN”, port of loading was JEBEL ALI, name of cargo was iron ore, total weight was 42,935.199 wet metric tons, place of issuance was JEBEL ALI Port, date of issuance was February 10, 2014, it was recorded at bottom right signature box that RAINBOW SKY SHIPPING LTD issued B/L on behalf of the master of M.V. “YUAN XIN”, CHEN ZI (hereinafter referred to as “Wide Dragon B/L”). The Defendant denied that Wide Dragon B/L was signed by the authorization of the master of M.V. “YUAN XIN”, it confirmed that the B/L held by the Plaintiff, China Base Ningbo, in (2015) Yong Hai Fa Shang Chu Zi No.235 was issued by the master of M.V. “YUAN XIN”. This B/L had the same number SHP01, CONGENBELL 1994 form, no head or signature of carrier. B/L stated that shipper was ZOB AHAN JONOUB SHARGH IRANIAN YAZD-IRAN, consignee was to order, name of vessel was M.V. “YUAN XIN”, port of loading was PERSIAN GULF, name of cargo was iron ore, total weight was 42,935.199 wet metric tons, place of issuance was PERSIAN GULF, date of issuance was February 10, 2014, it was recorded at bottom right signature box that PARSAM GOSTAR

Jiangsu Province Foreign Trade Corporation Maanshan Runhua …

599

DARYA (PGD) SHIPPING CO. Issued B/L as representative of carrier Hong Union Shipping (hereinafter referred to as “Hong Union B/L”). The name of cargo, weight, name of vessel, and date of issuance in the two sets of B/L above were the same, but shipper, port of loading, place of issuance, and statements at bottom right signature box were different. Wide Dragon B/L was triplicate, which had been endorsed by the shipper stated in the B/L, and Jiangsu Foreign Trade eventually paid charge for cargo by acceptance of L/C. The Plaintiff claimed to the court that: one of Wide Dragon B/L was used to receive goods at Beilun Port; one of Wide Dragon B/L was used to exchange D/O by Jiangyin Ganglian, but Jiangyin Ganglian neither delivered D/O nor returned B/L, it was not showed until the Plaintiff borrowed it from Jiangyin Ganglian, from March 22, 2017 to the beginning of the trial; the rest one was in the file of lawsuit in Ningbo Maritime Court. The Defendant stated in the court that, no one requested it or its agent to deliver the goods by holding Hong Union B/L. Fourthly, about clearance of goods and retention of goods involved On February 28, 2014, Jiangsu Foreign Trade signed tripartite Forwarding Agreement with Ningbo Xinmeng/Jiangyin Ganglian, Runhua Steel. During the trial, the two parties unanimously confirmed that, Ningbo Xinmeng/Jiangyin Ganglian was the forwarder of the Plaintiff at Beilun Port/Jiangyin Port, and was the ship’s agent of the Defendant at Beilun Port/Jiangyin Port. The goods involved were investigated by customs, paid import taxes and fees and cash deposit and finished clearance of customs by the relevant documents that Jiangsu Foreign Trade was importer of the goods involved as stated, including the People’s Republic of China automatic import license that Runhua Steel was import client, which were declared by the Plaintiff. After some goods unloaded at Beilun Port were received by Wide Dragon B/L of the Plaintiff, Jiangsu Foreign Trade ordered Ningbo Port Co., Ltd Beilun Second Terminal Branch to send the goods to the relevant clients in July that year. 34,471.199 tons of goods involved at Jiangyin Port were unloaded and stored in the storage place appointed by the Plaintiff, on March 19, 2014, Jiangyin Ganglian made D/O to the goods involved, which stated that Jiangsu Foreign Trade was consignee, name of vessel was M.V. “YUAN XIN”, amount of goods was 34,471.199 tons, it sealed the stamps of customs, inspection and quarantine, port construction fee paid for release and the company. The Defendant contacted with ships agent and Jiangyin Ganglian for the relevant matters about unloading of goods via email that: on March 13, 2014, the staff of the Defendant, XU Xiaoxia, sent attachment of demurrage at port of discharge (amount was 20,221.57 USD) to ships agent, which requested the charterer should pay the money and offer bank account details as soon as possible; on April 21, 2014, XU Xiaoxia sent email to Jiangyin Ganglian that: “we, as shipowner of M.V. YUAN XIN (V. 1401), demand that your dear company should not deliver goods by yourself until you receive notice of delivery of goods in written provided by our company, otherwise, all consequences and liabilities should be born by your dear company. Reason of retention of goods was that: shipowner did not receive unloading port demurrage of the client up to now”. On the same day, Jiangyin Ganglian transponded this email to Jiangsu Foreign Trade; on September 5, 2014,

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XU Xiaoxia sent email to Jiangyin Ganglian that: “please follow the order of shipowner to detain 1000 tons of goods when consignee came to receive the goods, and wait for the notice of our company”. Because there was no result of demurrage, so the Defendant never ordered Jiangyin Ganglian to release the goods, and Jiangyin Ganglian never sent the D/O mentioned above to the Plaintiff, the goods involved were detained in local place from date of unloading to the current day. Fifthly, on March 3, 2015, China Base Ningbo brought a lawsuit [case’s number (2015) Yong Hai Fa Shang Chu Zi No.235] in Ningbo Maritime Court of the dispute over delivery of goods without original bill of lading against Hong Union Shipping, and requested that Hong Union Shipping should bear the loss of delivery of goods without original bill of lading of all the goods involved, 5,676,785.79 USD and loss of interest 401,428.10 USD, and interest calculated from March 3, 2015 to date of payment, according to annual interest rate 6%,, and should bear counsel fee 542,000 yuan. On May 18, 2016, according to the application of China Base Ningbo, Ningbo Maritime Court added Jiangsu Foreign Trade as joint defendant, on November 10 of the same day, Runhua Steel attended to the case as third party. China Base Ningbo alleged that, on November 20, 2013, it signed contract for purchasing Iranian iron ore with Fusheng, and paid 5,676,785.79 USD of charge for goods to Fusheng, Fusheng delivered Hong Union B/L to it. China Base Ningbo presented customer service receipt and customer payment notice that amount was 1,826,278.43 and 3,829,031.53 USD when it filed the lawsuit as the evidence of payment of charge for goods. Because customer service receipt and customer payment notice were only recorded with amount, but not recorded the use of the money or number of the corresponding contract, total amount was different from the statement in complaint that the amount paid by China Base Ningbo to Fusheng, Jiangsu Foreign Trade, Runhua Steel and Hong Union Shipping did not confirm it, and Hong Union B/L held by China Base Ningbo was considered as no legality by the reason that there was no evidence to prove that China Base Ningbo had paid consideration for Hong Union B/L. After Jiangsu Foreign Trade applied for investigation order to Ningbo Maritime Court, the materials provided by Nanjing Public Security Bureau Gulou Branch Economic Investigation Detachment showed that the amounts stated in customer service receipt and customer payment notice above were the amounts that China Base Ningbo signed purchases contract for nickel ore from Indonesia with Fusheng on August 14, October 26, 2013 respectively, were not the amounts that China Base Ningbo fulfilled the payment under the purchases contract involved for Iranian iron ore with Fusheng as stated in the complaint by China Base Ningbo. According to the statement of archives in Hong Kong Special Administrative Region company registration bureau, Fusheng registered as limited company on February 23, 2005 according to Hong Kong Companies Ordinance, all the shares were held by China Base Ningbo, one of chairmen was ZHOU Jule, who was legal representative of China Base Ningbo (broad chairman). The court holds that, in the trial, the Plaintiff claimed that the Defendant should deliver the goods involved by the joint causes of tort and illegal retention of goods

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shipped, according to Supreme People’s Court the Provisions on Cause of Action for Civil Cases, this case was dispute over liability for illegal retention of goods, which was the case of maritime dispute that was specific jurisdiction of Maritime Court. Because the main administrative office of the Defendant, business place of the company, was in jurisdiction of this court, so the court had right of jurisdiction legally. The transportation involved was from Iran to ports of China, which had foreign element, considered that both parties in the trial applied for laws and regulations of China as plea basis, the court legally applied for laws and regulations of China to confirm the rights and obligations of both parties. According to plea opinions of both parties, in the case that the Plaintiff held Wide Dragon B/L but did not hold Hong Union B/L, whether it had right to receive the goods, was the issue. The Maritime Code of the People’s Republic of China Article 42 Item 4 was that, consignee is entitled to take delivery of the goods. Although the definition wordings of “consignee” did not appear in this Article like “carrier” or “shipper”, the Article accurately indicated that taking delivery of goods was the legal right of consignee. Accordingly, whether the Plaintiff had the right to take delivery of goods was determined by the legal definition of identity of the Plaintiff. The Maritime Code of the People’s Republic of China Article 71 is that: a bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. This Article indicated that, a bill of lading has function that receipt of goods, evidence of the contract of carriage of goods by sea and document taking over or loading of the goods by the carrier, which shows that real right nature of bill of lading and creditor’s right nature under relevant contract of carriage, the relevant judicial precedents have analyzed that. In practice of shipping industry, consignee should give B/L to carrier when taking delivery of goods, and carrier should deliver the goods when receiving B/L, which have been custom. However, transportation served trading, bill of lading represent goods, and circulation of bill of lading is symbolic delivery of goods, which base on the occurrence of certain legal facts and existence of certain legal relationship, accordingly, bill of lading is not simply equal to bill, it has no absolute non-causative nature. That obligee has right was not because he holds a bill of lading, it was because the occurrence of certain legal facts and existence of certain legal relationship, then he has legal right to claim right to carrier. the occurrence of certain legal facts and existence of certain legal relationship can be proved by holding of bill of lading, but the evidence were not limited to bill of lading. Holding a bill of lading is not necessarily entitled to delivery of goods, not holding a bill of lading is not necessarily resulted to no right to take delivery of goods. The Plaintiff did not hold B/L issued by the authorization of the Defendant actually, currently, there was other person, a person other than involved in the case, holding B/L issued by the authorization of the Defendant and claiming loss of delivery without being presented with B/L in other case, under such circumstances, right entity who has real legal rights can be identified and the ownership of goods can be identified only by considering the source, namely

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relevant trading circumstances. Integrate the relevant situation of the case, the court holds that the Plaintiff has right to take delivery of goods involved. Firstly, the Plaintiff is the consignee under the trading contract involved According to the facts investigated above, about the trading of Iranian iron ore involved, Wide Dragon signed purchases contract with NOVATAL FZC, then negotiated specific terms of the trading directly with Runhua Steel. The matters such as confirmation of final version of purchases contract, issuance of L/C, name of vessel, date of vessel, price rate of vessel, port of discharge appointed and notice of information of ships agent had reached an agreement via emails sent by staffs of both parties, Jiangsu Foreign Trade signed contract, issued L/C and accepted payment, insured for transportation of goods on behalf of Runhua Steel basing on that circumstance and according to the import commission contract with Runhua Steel. Trading chain involved is that NOVATAL FZC ! Wide Dragon ! Jiangsu Foreign Trade (Runhua Steel), these are the undisputed facts that Wide Dragon is merchant middlemen and supplier of the Plaintiff, the Plaintiff is buyer of trading. In addition, there was no evidence to prove that there was other person as buyer of trading of import of goods like the Plaintiff. The Plaintiff finally paid all charge for goods by acceptance of L/C, Wide Dragon indicated its declaration of intention that it delivered goods to the Plaintiff by endorsing Wide Dragon B/L, after the Plaintiff paid all trading price, it became legal buyer of the goods. During cross-examination, the Defendant had no objection to claim based on real right of all goods including the goods involved by the Plaintiff. Besides, the goods involved were declared to customs and were imported after approval of customs by the People’s Republic of China automatic import license which was stated that Jiangsu Foreign Trade was importer, Runhua Steel was import client, and the Plaintiff had paid all taxes. Accordingly, Iranian iron ore under contract No. WDRHYR62FE-51K-RE\14JSFT01D0121 had been specialized, the consignee was and only could be the Plaintiff, other person had no identity of consignee before the functional organs of country separately approved or changed. In fact, during the trial, there was no evidence to prove that someone or on behalf of other person except the Plaintiff declared to customs and imported the goods involved after approval of customs. Secondly, the Plaintiff is the consignee under contract of carriage involved According to the facts investigated above, charter chain involved is that Hong Union (the Defendant) ! Dragon Guide ! Wide Dragon, the condition term of the contract signed between Wide Dragon and NOVATAL FZC was FOB, and freight should be born by Wide Dragon; the condition term of the contract signed between Wide Dragon and the Plaintiff was CFR FO, freight born by Wide Dragon was transferred to the Plaintiff by charge for goods. Because the costs of the Plaintiff included freight, so the Plaintiff became the relevant party under contract of carriage as the final undertaker for the transportation of the goods involved. The Plaintiff through Wide Dragon appointed Beilun Port and Jiangyin Port as ports of discharge, and confirmed the forwarders and ships agents at the two ports (confirmed by the Defendant), after the goods arrived at port of discharge, the goods

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were directly unloaded and stored at the storage place appointed by the Plaintiff. The behaviors of the Plaintiff above was not only the fulfillment of obligation under the condition term CFR FO in trading contact involved, but also obligation of the Plaintiff in transportation contract involved that appointing port of discharge and receiving and unloading the goods. During the trial, there was no evidence to prove that other person except the Plaintiff fulfilled the obligation under transportation contract above. Besides, as for delivery and sending of the goods unloaded at Beilun Port, the Defendant did not challenge that the Plaintiff held Wide Dragon B/L rather than Hong Union B/L. After the goods were unloaded at Jiangyin Port, Jiangyin Ganglian received Wide Dragon B/L and accordingly made D/O which stated that Jiangsu Foreign Trade was consignee, and fulfilled agency matters including customs, inspection and quarantine and port construction fee paid for release. Over the next year, the Defendant urged to receive demurrage of port of discharge through broker and ships agent, but it did not order agent to withdraw Wide Dragon B/L that was used to take delivery of goods by the Plaintiff by the reason that it was not Hong Union B/L until public session, which indicated that the Defendant actually recognized that the identity of the Plaintiff was consignee. In the trial, the Defendant argued by the reason that the agent at port of discharge was appointed by the Plaintiff, but the agent at port of discharge, as agent of cargo supplier and as agent of ship, was confirmed in advance, the action of agency included agency matters of cargo supplier and agency matters of ship, and the behavior that making and refusing to deliver the goods involved was agency matter of ships agent and was fulfilled according to the order of the Defendant, so the consequence should be born by the Defendant. It is noteworthy in this case that the goods involved came from Iran, because of international sanctions, if the shipper on international trading bills or transportation documents is Iranian shipper, or the places of departure are ports of Iran, It is difficult to carry out international trade settlement smoothly, then international trading and carriage of goods will be effected. The shipper on Hong Union B/L is Iranian shipper, despite technical process is made on the statement of port of loading as “PERSIAN GULF”, to avoid sanction, it seems to be a custom in trading that Wide Dragon B/L was used for circulation instead of Hong Union B/L. The appearance of the two sets of B/L above may cause a dispute easily, other potential disputes risen from the appearance of Wide Dragon B/L rather than Hong Union B/L, the parties should find appropriate ways to handle the matter separately. Currently, the circulation situation is not clear after issuance of Hong Union B/L, the materials in other case have proved that the relevant party’s claim basis are irrelevant to the trading involved for Iranian iron ore. The Plaintiff, as one party of the trading contract involved, paid all trading price, and counter party of the trading contract indicated that it would deliver the goods equally, because of the occurrence of trading behavior of the Plaintiff, and there is corresponding legal relationship of trading involved and carriage under transportation contract, the court confirms that the identity of the Plaintiff in trading of Iranian iron ore and transportation contract is consignee, and the Plaintiff has right to take delivery of goods. According to the

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Contract Law of the People’s Republic of China Article 6, the Maritime Code of the People’s Republic of China Article 42 Sub-paragraph 4, and the Civil Procedure Law of the People’s Republic of China Article 51, the judgment is as follows: The Defendant, Hong Union Shipping Limited, shall deliver 34,471.199 tons of Iranian iron ore stored at Jiangyin Port to the Plaintiff, Jiangsu Province Foreign Trade Corporation and the Plaintiff, Maanshan Runhua Steel Material Co., Ltd after the judgment comes into effect immediately. Court acceptance fee in amount of 173,658 yuan, in consideration that both parties fail to meet the impairment obligations, and in view of complicated situation, the court decided that the Plaintiff Jiangsu Province Foreign Trade Corporation and the Plaintiff Maanshan Runhua Steel Material Co., Ltd. should jointly bear RMB20,000 yuan, and the Defendant Hong Union Shipping Limited should bear RMB10,000 yuan. After deduction of the amounts above, the balance RMB143,658 yuan should be returned to the Plaintiff. The amount born by the Defendant, Hong Union Shipping Limited, should be paid to the court within 10 days after the judgment comes into force. If not satisfied with this judgment, within fifteen days of the date of the judgment be served, the Plaintiff, Jiangsu Province Foreign Trade Corporation, and the Plaintiff, Maanshan Runhua Steel Material Co., Ltd., and within thirty days of the date of the judgment be delivered, the Defendant, Hong Union Shipping Limited, can by submitting copies of the original petitions to this court, appeal to the Shanghai High People’s Court. Presiding Judge: JIA Zhenkun Judge: ZHANG Shanshan Judge: XIN Hai September 30, 2017 Clerk: JIN Jie

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 6 The parties shall abide by the principle of good faith in exercising their rights and performing their obligations. 2. Maritime Code of the People’s Republic of China Article 42 For the purposes of this Chapter: …… “Consignee” means the person who is entitled to take delivery of the goods. ……

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3. Civil Procedure Law of the People’s Republic of China Article 51 The plaintiff may relinquish or modify his claim. The defendant may confirm or repudiate the claim and shall have the right to file a counterclaim.

Wuhan Maritime Court Civil Judgement Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2014) Wu Hai Fa Shang Zi No.01256 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 616 and page 625 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant carrier held liable to pay damages for water damage to corn, rejecting carrier’s objections that the extent of water damage had been increased by Plaintiff’s delay in discharging cargo, and that Plaintiff had colluded with substitute buyer to set a low price for the wet corn. Summary The Plaintiff, a freight forwarder, sued the Defendant for water damage to corn carried on the Defendant’s vessel. (The Plaintiff had compensated the shipper of the corn, which assigned its rights to the Plaintiff). The corn was found to be wet on arrival at the port of discharge, because of water escaping from a valve in the ship’s engine room. Some of the dry corn was discharged immediately, but the receiver rejected the wet corn. The corn remaining on the ship was not discharged for two days, despite the Defendant’s efforts to get the receiver to unload it. Meanwhile, the Plaintiff found a substitute buyer for the wet corn. The Defendant alleged that more corn became wet as a result of the delay in discharge, which was not its fault, and that the Plaintiff and the substitute buyer colluded in setting an artificially low price for the wet corn. The court rejected Defendant’s defence and held that Plaintiff was entitled to recover its loss in full, as the Defendant had failed to provide evidence the Plaintiff had colluded in setting a low salvage price for the wet corn.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_33

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Judgment The Plaintiff: Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. Domicile: Unit 1401, Unit 2, No.9, Qingyuan North Road, Rudong County, Nantong, Jiangsu. Legal representative: WANG Zhengquan, general manager. Agent ad litem: ZHANG Chi, lawyer of Shanghai Zhengyuan Law Firm. The Defendant: Dongtai Donglian Shipping Co., Ltd. Domicile: Jinhai East Road, Dongtai, Yancheng, Jiangsu. Legal representative: SONG Adi, manager. Agent ad litem: SHENG Honghua, lawyer of Jiangsu Chen Aiping Law Firm. The Defendant: RUAN Boqin Agent ad litem: SHENG Honghua, lawyer of Jiangsu Chen Aiping Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea connected waters between the Plaintiff Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. (hereinafter referred to as Xinshengyuan) and the Defendant Dongtai Donglian Shipping Co., Ltd. (hereinafter referred to as Donglian) and the Defendant RUAN Boqin, the Plaintiff Xinshengyuan, on September 24, 2014, a lawsuit was filed to the court. After the court entertained the case, it applied summary procedure and was tried by Acting Judge REN Nina. This case was heard in public on December 16, 2013. Later, the case was transferred to general procedure. Judge ZHANG Yu was appointed as Presiding Judge, and Acting Judge REN Nina and Acting Judge YANG Cheng formed a collegiate panel. On July 29, 2015, the court again held a hearing in public. Agent ad litem of the Plaintiff Xinshengyuan, ZHANG Chi, agent ad litem of the Defendant Donglian and the Defendant RUAN Boqin, SHENG Honghua, and the Defendant RUAN Boqin, appeared in court to attend the hearing. After the hearing, the parties voluntarily conducted mediation under the auspices of the court, but no consensus was reached. Now the case has now been concluded. The Plaintiff Xinshengyuan claimed that: on July 3, 2014, the Plaintiff Xinshengyuan and the Defendant RUAN Boqin concluded a contract of carriage of goods by sea, the contract number was 0000391, and it was agreed that M.V. SU YAN CHENG HUO 099158 that was owned by the Plaintiff Xinshengyuan would carry 477.74 tons of corn from Jingjiang, Jiangsu to Jiashan, Zhejiang. The corn involved did not have any problems during loading and transportation. During the arrival port unloading, the Defendant staggered the valve and caused the corn to become damp. The insurance company refused to claim compensation. The factory only accepted 277.232 tons of corn, and the remaining 200.508 tons of corn were rejected. The damaged corn was sold at RMB 210,550 yuan (hereinafter RMB). The calculation was based on the amount of 2,570 yuan per ton of corn, which should be paid by the Plaintiff Xinshengyuan. The freight of 8,316 yuan actually

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caused the loss of goods of 296,438 yuan. The Plaintiff Xinshengyuan had compensated the outsider Dalian Tianbang Grain Co., Ltd. (owner of goods, hereinafter referred to as Tianbang) for the loss of the goods in this case, and Tianbang transferred the goods loss claims involved to the Plaintiff Xinshengyuan. At the same time, the Defendant Donglian was the registered operator of M.V. SU YAN CHENG HUO 099158, and the Defendant RUAN Boqin was registered as the registered owner of M.V. SU YAN CHENG HUO 099158 and the actual carrier involved in the contract. The two Defendants should bear joint and several liabilities. Therefore, it requested the court to judge that: 1. the Defendant Donglian should compensate the Plaintiff goods loss 296,438 yuan; 2. the Defendant RUAN Boqin should bear the joint liability for the damage to the case; 3. litigation costs should be born by the two Defendants. The Defendant Donglian argued that the Defendant RUAN Boqin’s M.V. SU YAN CHENG HUO 099158 was affiliated with the Defendant Donglian, and the Defendant Donglian was jointly and severally liable for the liability arising from the fault of the Defendant RUAN Boqin. The Defendant RUAN Boqin argued that: 1. he recognized the fact that corn was wet during the transportation process, but the amount of damage caused was only about 7,000 yuan. For this part of the loss, the Defendant RUAN Boqin was willing to bear. 2. The Defendant RUAN Boqin found that the corn was found wet on July 6, 2014, the consignee was notified to receive the goods promptly. However, the consignee began to unload the cargo only after two days of malicious delay. The remaining part of dry corn and damp corn refused to receive the goods. As a result, the Defendant RUAN Boqin should not be responsible for this part of loss. 3. The Plaintiff Xinshengyuan agreed verbally with the purchaser when dealing with damp corn, and the purchase price was 2,000 yuan/ton. When M.V. SU YAN CHENG HUO 099158 transferred wet corn to the buyer’s terminal, the buyer also violated the agreement, only agreed to pay a total of 210,000 yuan acquisition money, because the Plaintiff Xinshengyuan, in dealing with wet corn during the process, had obvious fault, the Plaintiff Xinshengyuan did not collect payment without the Defendant RUAN Boqin hand, the sale price difference was huge, the Plaintiff Xinshengyuan had malicious collusion between the buyer, and the loss of the goods in the case should be born by the Plaintiff Xinshengyuan. So he request the court to make a judgment according to law. The Plaintiff, Xinshengyuan, submitted the following evidence in the hearings in order to support its claims: 1. Contract of carriage of goods by sea, letter of commitment, the Plaintiff Xinshengyuan’s cargo delivery order and ship’s tonnage certificate, to prove the legal relationship between the Plaintiff Xinshengyuan and the Defendant RUAN Boqin and the shipment of the goods. 2. Statement of the circumstances and the acquisition certificate, to prove the process of handling the damaged goods, and the results of the processing, the Defendant RUAN Boqin both signed and approved.

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3. Ship ownership certificate of the People’s Republic of China, to prove that the Defendant, RUAN Boqin, was the registered owner of M.V. SU YAN CHENG HUO 099158. 4. M.V. SU YAN CHENG HUO 099158 corn moisture wet case letter, to prove that the insurance company refused to pay the goods involved. 5. Lawyer’s letter, to prove that the Plaintiff Xinshengyuan entrusted the lawyer to send a letter to inform the Defendant RUAN Boqin to pay compensation for the loss of goods. 6. Proof of the transfer of the debts, to prove that the Plaintiff Xinshengyuan compensated the owner of goods Tianbang, and the company transferred the rights of the goods to the Plaintiff. 7. Corn purchases and sales contract and Dalian VAT ordinary invoices, to prove that the intact unit price of 200.508 tons of damaged cargo involved was 2,570 yuan/ton. 8. Settlement confirmation letter and certificate, to prove that the intact value of 200.508 tons of damaged cargo involved was 515,305.56 yuan, and the Plaintiff Xinshengyuan paid compensation to the owner Tianbang, after deducting 210,550 yuan of damaged corn sales, the Plaintiff Xinshengyuan lost 304,755.56 yuan. The Defendant Donglian and the Defendant RUAN Boqin cross-examined that: there was no objection to the authenticity of the settlement confirmation letter in the evidence 1–6 and evidence 8. However, there was objection to the contents of the evidence 2 that it should be 80 tons of damp corn and 120 tons of dry corn, and the subsequent purchaser breached the agreement because the Plaintiff Xinshengyuan did not sign a written contract with the purchaser when dealing with the damaged corn. There was objection to the relevancy and legality of evidence 4 and it was considered that the court should determine whether it was an insurance accident. Evidence 5, they did not recognize the damaged price of the goods and held that the expanded loss of corn after damp was caused by the recipient rejecting the goods. This part of the losses should be born by the Plaintiff Xinshengyuan. Evidence 7 is a copy and they had objection to the authenticity. Evidence 8 was not clear, the court was required to check the evidence. The court confirms that: the parties had no objection to the authenticity of the settlement confirmation letter in evidence 1– 6 and evidence 8, and the evidence has relevancy with the facts of the case and meets the requirements of legality, and can be used as the basis for determining the facts of the case. Evidence 2 statement and acquisition certificate were signed and approved by the Defendant RUAN Boqin. Although he and the Defendant Donglian objected to the content of the evidence in the group, they did not submit evidence to refute the evidence. Therefore, the evidence can be used as the basis for determining the facts of the case. The corn sales contract and value-added tax invoices in evidence 7 are all copies, but both of the evidence can be mutually corroborated with the settlement confirmation letter in evidence 8. The court confirms the probative force.

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The Defendant RUAN Boqin and the Defendant Donglian, to support their defense opinions, submitted the following evidence in the hearings: 1. Goods delivery order, special bills for the Zhejiang port and shipping business fees, call records, and police records, to prove that M.V. SU YAN CHENG HUO 099158 arrived at the port of discharge on July 6, 2014, and notified the receiving party and the Plaintiff Xinshengyuan received the goods and dialed 110 to request the police station to handle the unmanned discharge. 2. Delivery note and Zhejiang Quanwang Industrial Co., Ltd. (entrance and exit) cargo code list, to prove that the Defendant RUAN Boqin began to unload cargoes on July 8, 2014. 3. Jiaxing ship loading and unloading port report, to prove that M.V. SU YAN CHENG HUO 099158 was carried out at the river port terminal in Jiaxing from July 10 to 13, 2014. 4. Sessel affiliation and operation contract, to prove the affiliation of the Defendant Donglian with the Defendant RUAN Boqin. The Plaintiff cross-examined that: there was no objection to the authenticity of the evidence, there was objection to the relevancy of the call record in evidence 1, and there was no objection to the alarm record. However, according to the contract signed by the Plaintiff and Defendant, the ship should discharge the goods within 8 days after arriving at the dock. The Defendant called the police four hours after the arrival of the ship and was not necessary at all. Evidence 3 could not prove that the terminal had deliberately delayed. The court confirms that: the party had no objection to the authenticity of the above evidence, and the authenticity should be confirmed. The call record in evidence 1 can only be seen as being dialed 110 and the call content cannot be seen, but the facts of the alarm and the Plaintiff Xinshengyuan’s evidence 2 case record the fact that the Defendant RUAN Boqin requested to unload the goods can confirm each other, it can be used as the basis for identifying the facts of the case. According to the trial investigation and the combination of the parties’ statements, the court confirms the following facts: On July 3, 2014, the Plaintiff Xinshengyuan and the Defendant RUAN Boqin signed a contract of carriage of goods by sea, and the Defendant RUAN Boqin agreed to use M.V. SU YAN CHENG HUO 099158 for the Plaintiff Xinshengyuan to transport 477.74 tons of corn from Jingjiang, Jiangsu to Jiashan, Zhejiang. The freight should be 30 yuan per ton, the payment period should be settled after approximately 45 days with the receipt, the delivery method should be pounds to handicap, the lost position should be 2/1000, the unloading time should be 8 days, and the rain should be delayed. The two parties agreed on the division of responsibilities and the methods of dispute resolution. On the same day, the Defendant RUAN Boqin issued Letter of Commitment and promised that the corn loaded by the Plaintiff Xinshengyuan must not be involved in the sundries, and the straw mat distributed by the Plaintiff Xinshengyuan should be covered on the surface of the corn in the cover tarpaulin and not overloaded, and agreed on the

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responsibility for breach of promise. On the same day, the Defendant RUAN Boqin installed 477.740 tons of corn for shipment. The shipment process did not rain, and the Plaintiff Xinshengyuan issued a goods receipt with a single number of 0000378, and the Defendant RUAN Boqin signed it for confirmation. On July 6, 2014, M.V. SU YAN CHENG HUO 099158 arrived at the destination port of Jiashan, Zhejiang. At 06:00 on the same day, the ship cabin of M.V. SU YAN CHENG HUO 099158 was found to be flooded. At 11:00, the ship was docked and received at the terminal. The Zhejiang Quanwang Feed Factory requested to unload the goods, but the consignee responded that there was no storeroom and no notification of the owner and dispatch had been received. At 14:00 of the same day, the Defendant RUAN Boqin asked the Zhejiang Quanwang Feed Factory to unload the goods. The police asked him to call the dispatcher. The Plaintiff Xinshengyuan informed Dalian Tianchang Grain Co., Ltd. (hereinafter referred to as Tianchang) that the company and the consignee Zhejiang Quanwang Feed Factory had notified the influx of water in the cabin of M.V. SU YAN CHENG HUO 099158 after receiving the call from the Defendant RUAN Boqin to contact arrangements for unloading, Tianchang immediately informed the insurance company. On the following day, the Plaintiff Xinshengyuan, Tianchang’s insurer PICC P&C and CCIC all coordinated with the consignee Zhejiang Quanwang Feed Factory and simultaneously investigated M.V. SU YAN CHENG HUO 099158 ship cabins. The cause of water intrusion was found to be due to faulty operation of the valve in the engine room of the Defendant, leading to flooding in the cargo hold. The two insurance companies refused to pay compensation because the accident was not within the insurance coverage. On July 8, 2014, the consignee Zhejiang Quanwang Feed Factory commenced unloading of M.V. SU YAN CHENG HUO 099158 of corn. First of all, unloaded 277.232 tons of undisturbed corn from the top, leaving the remaining damp corn to Zhejiang Quanwang Feed Factory on July 9, 2014. The feed factory decided to return the goods. On the same day, the Plaintiff Xinshengyuan and Defendant RUAN Boqin contacted an acquisition company (Jiashan Rongxin Feed Store), and it agreed to purchase it at a price of 2,000 yuan per ton in the case of bilge-free black corn. On July 10, 2014, the Defendant RUAN Boqin sailed M.V. SU YAN CHENG HUO 099158 to the terminal designated by the purchaser Jiashan Rongxin Feed Store (Zhejiang Yinliang National Reserve Warehouse Co., Ltd.) and unloaded 76.22 tons of dried corn and undiscovered wet black corn. On the next day, the purchaser Jiashan Rongxin Feed Store proposed that the unit price of dry corn be set at 2,500 yuan per ton, and the damp corn should be priced according to the quality after being dried. On July 13, 2014, the purchaser Jiashan Rongxin Feed Store, the Defendant RUAN Boqin and the Plaintiff Xinshengyuan reached an acquisition agreement that: 1. 76.22 tons of dried corn, a unit price of 2,500 yuan per ton, for a total of 190,550 yuan; 2. seriously affected by the tide 125 tons of corn, the total price of 20,000 yuan. The two batches of corn totaled 210,550 yuan and were sold

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to Jiashan Rongxin Feed Store. After the accident was completed, M.V. SU YAN CHENG HUO 099158 left the Zhejiang Yinliang National Reserve Warehouse Co., Ltd. terminal on the same day. On July 15, 2014, the Plaintiff Xinshengyuan entrusted agent ad litem ZHANG Chi to send a lawyer’s letter to the Defendant RUAN Boqin, requesting him to sell 200.508 tons of corn at a unit price of 2,600 yuan per ton, deducting the processing price of 210,550 yuan and the Plaintiff Xinshengyuan should pay the freight 14,332 yuan to the Defendant RUAN Boqin, and the Defendant RUAN Boqin was required to pay 296,438 yuan in damages. On August 14, 2014, the corn involved owner Tianbang issued a certificate of transfer of creditor’s rights, which proved that the Plaintiff Xinshengyuan had paid 296,478 yuan in damages to it. Tianbang transferred the right to recover the damage to the Plaintiff Xinshengyuan. In addition, it is found out that the corn involved was entrusted by Tianbang to sell Tianchang to Zhejiang Quanwang Industrial Co., Ltd., signing the corn sales contract and handling the accident in the name of Tianchang, but the value-added tax invoice was issued in the name of Tianbang. Ownership was Tianbang. Judging from the evidence in this case, the unit price of intact corn in the corn sales contract was 2,570 yuan/ton, the unit price of tax included with Dalian VAT invoice (2,243.35 yuan/ton 113%) and the settlement confirmation letter M.V. SU YAN CHENG HUO 099158 of the amount of fees The unit price of intact goods (515,305.56 yuan, 200,508 tons) contained in each of these products was confirmed by each other. It can be concluded that the unit value of the goods involved was 2,570 yuan/ton. The court holds that: This case is the dispute over contract of carriage of goods by sea. The contract of carriage of goods by sea between the Plaintiff Xinshengyuan and the Defendant RUAN Boqin is legal and effective, and both parties should perform their respective contractual obligations in accordance with the stipulations in the contract. The Plaintiff Xinshengyuan as the shipper shall deliver the agreed goods to the carrier as Defendant RUAN Boqin at the time agreed in the contract and at the port of loading. The Defendant RUAN Boqin shall deliver the goods to the appointed place and deliver it to the consignee in safe and sound condition. The 200.508 tons of the 477.74 tons of corn involved were resulted in damage by water during the carrier’s transportation period. The Defendant RUAN Boqin should bear the corresponding contract responsibility as the carrier. Regarding the damage to goods was caused by the Defendant RUAN Boqin’s fault, he recognized the amount of damage to the goods, but he had objection to the amount of damage to the goods. He held that when the goods involved in the port of discharge arrived at the port of discharge and found moisture damage, they should immediately unload the goods. The malicious delays by the Plaintiff Xinshengyuan and consignee led to increased losses. At the same time, it held that the damaged corn sales money was paid directly by the purchaser to the Plaintiff Xinshengyuan, and the actual amount of money paid was unclear to the Defendant, RUAN Boqin, and the Plaintiff Xinshengyuan and the buyer had the possibility of malicious

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collusion. The court holds that the Plaintiff and the Defendant did not agree in Contract of Transport of Water Cargo signed by both parties that there was a liability clause that caused the cargo loss to be unloaded immediately. In this case, the corn was found damaged on July 6, and the cargo was discharged on July 8. After the unloading was completed on July 10, four days before and after, it is a reasonable period from the discovery of corn damage to the contact person’s handling of the damaged corn. The Defendant RUAN Boqin held that the Plaintiff Xinshengyuan had maliciously delayed the unloading time and caused the loss to increase, he should provide corresponding evidence to prove it, but the Defendant RUAN Boqin did not provide evidence to prove that the Plaintiff Xinshengyuan used two days to contact and dispose of the goods within two days. This had malicious and unreasonable harm to their interests. Therefore, the court does not accept the defense of the Defendant RUAN Boqin. In addition, the Plaintiff Xinshengyuan acknowledged that it received 210,550 yuan of corn sales from the purchaser Jiashan Rongxin Feed Store according to Acquisition Proof. The Defendant RUAN Boqin held that the Plaintiff Xinshengyuan and the buyer Jiashan Rongxin Feed Store had malicious collusion to be harm for the interests of the Defendant RUAN Boqin, he should provide evidence. The Defendant RUAN Boqin did not prove it, so the court does not accept the defense. Regarding the amount of damage to the goods. In this case, 477.74 tons of corn were transported, of which 200.508 tons were damaged by moisture. The unit price of corn involved is 2,570 yuan/ton, so the intact value of wet corn is 515,305.56 yuan (2,570 yuan/ton, 200,508 tons). According to Acquisition Proof singed by the Plaintiff Xinshengyuan, the Defendant RUAN Boqin and the damaged corn acquirer Jiashan Rongxin Feed Store, the 76.22 tons of corn damaged in 200.508 tons of corn was purchased at 2,500 yuan/ton, the total price of 125 tons of damaged corn was 20,000 yuan, a total of 210,550 yuan. Therefore, the loss of the corn involved in the batch was 304,755.56 yuan (515,305.56–210,550 yuan). The Plaintiff only claimed 296,438 yuan and the court supports it. Regarding responsibility of the Defendant Donglian. The Plaintiff Xinshengyuan held that the Defendant Donglian should bear joint liability with the Defendant RUAN Boqin. The court holds that Contract of Transport of Water Cargo in this case was signed by the Defendant RUAN Boqin, and the Defendant RUAN Boqin actually carried the corn involved with M.V. SU YAN CHENG HUO 099158, which is both the contract carrier and the actual carrier of the legal relationship in this case. The Defendant RUAN Boqin’s carrier M.V. SU YAN CHENG HUO 099158 was affiliated with the Defendant Donglian, but the joint liability is a legal responsibility. The law does not provide that the Defendant Donglian should bear the joint and several liability with the Defendant RUAN Boqin in this case, and the Defendant Donglian has no contractual legal relationship or actual de facto transportation behavior in this case. Therefore, the court holds that the Defendant Donglian shall not be liable for joint and several liability for the damages in this case. However, when the Defendant Donglian stated that it was willing to assume joint and several liability in the trial, it

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is the act of joining the debt. It is Donglian’s disciplinary action against its civil rights and obligations within the scope of the law, and the court approves it. In summary, the claims of the Plaintiff have legal basis and should be supported. The Defendant RUAN Boqin’s defence is not established and the court will not accept it. The Defendant Donglian voluntarily assumed joint and several liability and the court approves it. According to the Contract Law of People’s Republic of China Article 107, Article 311, and the Civil Procedure Law of the People’s Republic of China Article 13 Paragraph 2, Article 142, the judgment is as follows: 1. The Defendant RUAN Boqin shall compensate the Plaintiff Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. for a loss of 296,438 yuan in value within ten days after the judgment comes into effect; 2. The Defendant, Dongtai Donglian Shipping Co., Ltd. shall be jointly and severally liable for damages regarding the Defendant RUAN Boqin’s liability within the above-mentioned first item. If the obligation to pay monetary obligations is not fulfilled within the period specified in this judgment, the parties shall double the payment of interest on the debt during the period of delayed performance in accordance with the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 5,747 yuan, shall be born by the Defendant RUAN Boqin and the Defendant Donglian. The fee that the two Defendants shall bear shall be paid to the Plaintiff Xinshengyuan together with the amount of payment determined in the above first item. If not satisfied with this judgment, the parties may submit within 15 days from the date of service of the judgment, together with five copies of petition, appeal to the Hubei High People’s Court. When filing an appeal, the Appellant should pre-pay the appeal fee in accordance with the amount of the appeal claims for dissatisfaction with this judgment and Article 13 Paragraph 1 of the Measures for Payment of Litigation Fees. [Bank: Agricultural Bank of China Wuhan Donghu Branch; recipient: Hubei Provincial Department of Finance non-tax revenue special account; account number: 0569-1. Please indicate the “Hubei High People’s Court” and “103001” to facilitate the receiving bank to confirm the receipt of funds.] If the Appellant fails to pay the appeal fee within seven days after the expiration of the appeal period, the appeal shall be automatically withdrawn. Presiding Judge: ZHANG Yu Acting Judge: REN Nina Acting Judge: YANG Cheng September 10, 2015 Clerk: WANG Peilin

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Hubei High People’s Court Civil Judgment Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2016) E Min Zhong No.251 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 607 and page 625 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision that defendant carrier was liable to pay damages for water damage to corn, rejecting carrier’s objections that the extent of water damage had been increased by Plaintiff’s delay in discharging cargo, and that Plaintiff had colluded with substitute buyer to set a low price for the wet corn. Summary Plaintiff, a freight forwarder, sued Defendant for water damage to corn carried on the Defendant’s vessel. (Plaintiff had compensated the shipper of the corn, which assigned its rights to Plaintiff.) The corn was found to be wet on arrival at the port of discharge, because of water escaping from a valve in the ship’s engine room. Some of the dry corn was discharged immediately, but the receiver rejected the wet corn. The corn remaining on the ship was not discharged for two days, despite Defendant’s efforts to get the receiver to unload it. Meanwhile, Plaintiff found a substitute buyer for the wet corn. Defendant alleged that more corn became wet as a result of the delay in discharge, which was not its fault, and that Plaintiff and the substitute buyer colluded in setting an artificially low price for the wet corn. The first instance Court rejected Defendant’s defence and held that Plaintiff was entitled to recover its loss in full, as Defendant had failed to provide evidence the Plaintiff had colluded in setting a low salvage price for the wet corn. Defendant appealed, arguing that: (1) the damaged goods were not unloaded within a reasonable time, so it should not be liable for the full amount of the damage; (2) Plaintiff and the substitute buyer of the wet corn maliciously colluded to set a low price. The appeal Court dismissed Defendant’s appeal, and held that Defendant was not able to adequately prove any of his arguments.

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Judgment The Appellant (the Defendant of first instance): RUAN Boqin. The Respondent (the Plaintiff of first instance): Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. Domicile: Unit 1401, Unit 2, No.9, Qingyuan North Road, Rudong County, Nantong, Jiangsu. Legal representative: WANG Zhengyuan, general manager of the company. The Defendant of first instance: Dongtai Donglian Shipping Co., Ltd. Domicile: Jinhai East Road, Dongtai, Yancheng, Jiangsu. Legal representative: SONG Adi, manager. With respect to the case arising from dispute over contract of carriage of goods by sea connected waters between the Appellant RUAN Boqin and the Respondent Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. (hereinafter referred to as Xinshengyuan), and the Defendant of first instance Dongtai Donglian Shipping Co., Ltd. (hereinafter referred to as Donglian), the Appellant disagreed with the Wuhan Maritime Court (2014) Wu Hai Fa Shang Zi No.01256 Civil Judgment and filed an appeal to the court. After entertaining the case on March 4, 2016, the court formed a collegiate panel according to the law and held a hearing in public on March 30, 2016. The Appellant RUAN Boqin and his agent ad litem, agent ad litem of the Respondent Xinshengyuan, appeared in court to attend the hearing. The Defendant of first instance, Donglian, was summoned by the court but refused to appear in court without proper reasons. The case should be tried by default. Now the case has been concluded. Xinshengyuan claimed to the court that: 1. Donglian should compensate Xinshengyuan goods loss 296,438 yuan; 2. RUAN Boqin should bear the joint liability for the damage to the case; 3. litigation costs should be born by Donglian and RUAN Boqin. The court of first instance found out that: on July 3, 2014, Xinshengyuan and RUAN Boqin signed a contract of carriage of goods by sea, and RUAN Boqin agreed to use M.V. SU YAN CHENG HUO 099158 for Xinshengyuan to transport 477.74 tons of corn from Jingjiang, Jiangsu to Jiashan, Zhejiang. The freight should be 30 yuan per ton, the payment period should be settled after approximately 45 days with the receipt, the delivery method should be pounds to handicap, the lost position should be 2/1000, the unloading time should be 8 days, and the rain should be delayed. The two parties agreed on the division of responsibilities and the methods of dispute resolution. On the same day, RUAN Boqin issued Letter of Commitment and promised that the corn loaded by Xinshengyuan must not be involved in the sundries, and the straw mat distributed by Xinshengyuan should be covered on the surface of the corn in the cover tarpaulin and not overloaded, and

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agreed on the responsibility for breach of promise. On the same day, RUAN Boqin installed 477.740 tons of corn for shipment. The shipment process did not rain, and Xinshengyuan issued a goods receipt with a single number of 0000378, and RUAN Boqin signed it for confirmation. On July 6, 2014, M.V. SU YAN CHENG HUO 099158 arrived at the destination port of Jiashan, Zhejiang. At 06:00 on the same day, the ship cabin of M.V. SU YAN CHENG HUO 099158 was found to be flooded. At 11:00, the ship was docked and received at the terminal. The Zhejiang Quanwang Feed Factory requested to unload the goods, but the consignee responded that there was no storeroom and no notification of the owner and dispatch had been received. At 14:00 of the same day, RUAN Boqin asked the Zhejiang Quanwang Feed Factory to unload the goods. The police asked him to call the dispatcher. Xinshengyuan informed Dalian Tianchang Grain Co., Ltd. (hereinafter referred to as Tianchang) that the company and the consignee Zhejiang Quanwang Feed Factory had notified the influx of water in the cabin of M.V. SU YAN CHENG HUO 099158 after receiving the call from RUAN Boqin to contact arrangements for unloading, Tianchang immediately informed the insurance company. On the following day, Xinshengyuan, Tianchang’s insurer PICC P&C and CCIC all coordinated with the consignee Zhejiang Quanwang Feed Factory and simultaneously investigated M.V. SU YAN CHENG HUO 099158 ship cabins. The cause of water intrusion was found to be due to faulty operation of the valve in the engine room of RUAN Boqin, leading to flooding in the cargo hold. The two insurance companies refused to pay compensation because the accident was not within the insurance coverage. On July 8, 2014, the consignee Zhejiang Quanwang Feed Factory commenced unloading of M.V. SU YAN CHENG HUO 099158 of corn. First of all, unloaded 277.232 tons of undisturbed corn from the top, leaving the remaining damp corn to Zhejiang Quanwang Feed Factory on July 9, 2014. The feed factory decided to return the goods. On the same day, Xinshengyuan and RUAN Boqin contacted an acquisition company (Jiashan Rongxin Feed Store), and it agreed to purchase it at a price of 2,000 yuan per ton in the case of bilge-free black corn. On July 10, 2014, RUAN Boqin sailed M.V. SU YAN CHENG HUO 099158 to the terminal designated by the purchaser Jiashan Rongxin Feed Store (Zhejiang Yinliang National Reserve Warehouse Co., Ltd.) and unloaded 76.22 tons of dried corn and undiscovered wet black corn. On the next day, the purchaser Jiashan Rongxin Feed Store proposed that the unit price of dry corn be set at 2,500 yuan per ton, and the damp corn should be priced according to the quality after being dried. On July 13, 2014, the purchaser Jiashan Rongxin Feed Store, the Defendant RUAN Boqin and the Plaintiff Xinshengyuan reached an acquisition agreement that: 1. 76.22 tons of dried corn, a unit price of 2,500 yuan per ton, for a total of 190,550 yuan; 2. seriously affected by the tide 125 tons of corn, the total price of 20,000 yuan. The two batches of corn totaled 210,550 yuan and were sold

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to Jiashan Rongxin Feed Store. After the accident was completed, M.V. SU YAN CHENG HUO 099158 left the Zhejiang Yinliang National Reserve Warehouse Co., Ltd. terminal on the same day. On July 15, 2014, Xinshengyuan entrusted agent ad litem ZHANG Chi to send a lawyer’s letter to RUAN Boqin, requesting him to sell 200.508 tons of corn at a unit price of 2,600 yuan per ton, deducting the processing price of 210,550 yuan and Xinshengyuan should pay the freight 14,332 yuan to RUAN Boqin, and RUAN Boqin was required to pay 296,438 yuan in damages. On August 14, 2014, the corn involved owner Tianbang issued a certificate of transfer of creditor’s rights, which proved that Xinshengyuan had paid 296,478 yuan in damages to it. Tianbang transferred the right to recover the damage to Xinshengyuan. In addition, it was found out that the corn involved was entrusted by Tianbang to sell Tianchang to Zhejiang Quanwang Industrial Co., Ltd., signing the corn sales contract and handling the accident in the name of Tianchang, but the value-added tax invoice was issued in the name of Tianbang. Ownership was Tianbang. Judging from the evidence in this case, the unit price of intact corn in the corn sales contract was 2,570 yuan/ton, the unit price of tax included with Dalian VAT invoice (2,243.35 yuan/ton 113%) and the settlement confirmation letter M.V. SU YAN CHENG HUO 099158 of the amount of fees The unit price of intact goods (515,305.56 yuan, 200,508 tons) contained in each of these products was confirmed by each other. It can be concluded that the unit value of the goods involved was 2,570 yuan/ton. The court of first instance held that: this case was the dispute over contract of carriage of goods by sea. The contract of carriage of goods by sea between Xinshengyuan and RUAN Boqin was legal and effective, and both parties should perform their respective contractual obligations in accordance with the stipulations in the contract. Xinshengyuan as the shipper should deliver the agreed goods to the carrier as RUAN Boqin at the time agreed in the contract and at the port of loading. RUAN Boqin should deliver the goods to the appointed place and deliver it to the consignee in safe and sound condition. The 200.508 tons of the 477.74 tons of corn involved were resulted in damage by water during the carrier’s transportation period. RUAN Boqin should bear the corresponding contract responsibility as the carrier. Regarding the damage to goods was caused by RUAN Boqin’s fault, he recognized the amount of damage to the goods, but he had objection to the amount of damage to the goods. He held that when the goods involved in the port of discharge arrived at the port of discharge and found moisture damage, they should immediately unload the goods. The malicious delays by Xinshengyuan and consignee led to increased losses. At the same time, it held that the damaged corn sales money was paid directly by the purchaser to Xinshengyuan, and the actual amount of money paid was unclear to RUAN Boqin, and Xinshengyuan and the buyer had the possibility of malicious collusion. The court of first instance held that Xinshengyuan and EUAN Boqin did not agree in Contract of Transport of Water Cargo signed by both parties that there was a liability clause that caused the cargo

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loss to be unloaded immediately. In this case, the corn was found damaged on July 6, and the cargo was discharged on July 8. After the unloading was completed on July 10, four days before and after, it was a reasonable period from the discovery of corn damage to the contact person’s handling of the damaged corn. RUAN Boqin held that Xinshengyuan had maliciously delayed the unloading time and caused the loss to increase, he should provide corresponding evidence to prove it, but RUAN Boqin did not provide evidence to prove that Xinshengyuan used two days to contact and dispose of the goods within two days. This had malicious and unreasonable harm to their interests. Therefore, the court of first instance did not accept the defense of RUAN Boqin. In addition, Xinshengyuan acknowledged that it received 210,550 yuan of corn sales from the purchaser Jiashan Rongxin Feed Store according to Acquisition Proof. RUAN Boqin held that Xinshengyuan and the buyer Jiashan Rongxin Feed Store had malicious collusion to be harm for the interests of RUAN Boqin, he should provide evidence. RUAN Boqin did not prove it, so the court of first instance did not accept the defense. Regarding the amount of damage to the goods. In this case, 477.74 tons of corn were transported, of which 200.508 tons were damaged by moisture. The unit price of corn involved was 2,570 yuan/ton, so the intact value of wet corn was 515,305.56 yuan (2,570 yuan/ton, 200,508 tons). According to Acquisition Proof singed by Xinshengyuan, RUAN Boqin and the damaged corn acquirer Jiashan Rongxin Feed Store, the 76.22 tons of corn damaged in 200.508 tons of corn was purchased at 2,500 yuan/ton, the total price of 125 tons of damaged corn was 20,000 yuan, a total of 210,550 yuan. Therefore, the loss of the corn involved in the batch was 304,755.56 yuan (515,305.56–210,550 yuan). Xinshengyuan only claimed 296,438 yuan and the court of first instance supported it. Regarding responsibility of Donglian. Xinshengyuan held that Donglian should bear joint liability with RUAN Boqin. The court of first instance held that Contract of Transport of Water Cargo in this case was signed by RUAN Boqin, and RUAN Boqin actually carried the corn involved with M.V. SU YAN CHENG HUO 099158, which was both the contract carrier and the actual carrier of the legal relationship in this case. RUAN Boqin’s carrier M.V. SU YAN CHENG HUO 099158 was affiliated with Donglian, but the joint liability was a legal responsibility. The law did not provide that Donglian should bear the joint and several liability with RUAN Boqin in this case, and Donglian had no contractual legal relationship or actual de facto transportation behavior in this case. Therefore, the court of first instance held that Donglian should not be liable for joint and several liability for the damages in this case. However, when Donglian stated that it was willing to assume joint and several liability in the trial, it was the act of joining the debt. It was Donglian’s disciplinary action against its civil rights and obligations within the scope of the law, and the court of first instance approved it. In summary, the claims of Xinshengyuan had legal basis and should be supported. RUAN Boqin’s defense reason should not established and the court of first instance would not accept it. Donglian voluntarily assumed joint and several liability and the court of first instance approved it. According to the Contract Law of People’s Republic of China Article 107, Article 311, the Civil Procedure Law of the

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People’s Republic of China Article 13 Paragraph 2, Article 142, the judgment was as follows: 1. RUAN Boqin should compensate Xinshengyuan for a loss of 296,438 yuan in value within ten days after the judgment came into effect; 2. Donglian should be jointly and severally liable for damages with RUAN Boqin within the above-mentioned first item of responsibility. If the obligation to pay monetary obligations was not fulfilled within the period specified in this judgment, the parties should double the payment of interest on the debt during the period of delayed performance in accordance with the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee of first instance in amount of 5,747 yuan, should be born by RUAN Boqin and Donglian. Ruan Boqin refused to accept the judgment of first instance and appealed to the court that: (1) the consignee of the case, Quanwang, had a greater fault with the goods, and the court of first instance should add it as the Defendant to participate in the lawsuit. The ship involved reached the port of destination on July 6, 2014. Quanwang could unload 477.74 tons of corn ashore on the day of the shipment. Quanwang did not take emergency unloading measures after the inundation of the corn was informed by RUAN Boqin and it was negative for the damage. So it should be responsible. (2) Xinshengyuan had a fault in this case. The ship involved was not suitable for sailing in the involved shipping lanes. The channel could not be turned over and led to the loss of self-rescue. Xinshengyuan had chosen M.V. SU YAN CHENG HUO 099158 to carry out faults and had responsibility for the expansion of cargo damage. (3) The value of the goods lost was determined in the judgment of first instance. Regarding the unit price of dry corn, the judgment of first instance was determined to be 2,570 yuan/ton including the value-added tax, and the actual unit price of damaged dried corn should be 2,274.34 yuan/ton [2,570 yuan (1 + 13%)]; Jiashan Rongxin Feed Store received 76.22 tons dry corn, this part of the goods price reduction sales had nothing to do with RUAN Boqin; in accordance with the contract of the contract, the reasonable loss of 2% should be deducted; RUAN Boqin carrier freight should be fully deducted in the amount of damage, the first instance only deducted 277.232 tons of freight. The port construction fee of 955 yuan paid by RUAN Boqin should be deducted. (4) There was malicious collusion between Xinshengyuan and Jiashan Rongxin Feed Store. Jiashan Rongxin Feed Store fully proved that it had acquired corn at very low prices. Xinshengyuan collaborated maliciously and harmed the interests of RUAN Boqin. In summary, the court of second instance was requested to revoke the judgment of first instance, and the case should sent back to the retrial or the case should be changed according to law. Xinshengyuan should bear the litigation costs of the case. Xinshengyuan argued that the facts confirmed in the judgment of first instance were clear and that the application of law was correct. The appeal should be dismissed and the judgment of first instance should be affirmed. The consignee, Quanwang, was not a party to the contract of carriage. In the event of damage to the goods, Quanwang could refuse to accept the goods. Quanwang received more than 200 tons of dry corn and there was no fault. Loss of goods was not caused by the cause of the waterway. It was caused by Ruan Boqin’s own operational errors. The

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judgment of first instance was calculated on the basis of the invoice price of the goods and was not inappropriate. Donglian did not submit its pleas. In the time limit for proof specified by the court, RUAN Boqin submitted the following evidence: Evidence 1, a photo of the exclusive terminal of Quanwang, to prove that the terminal of Quanwang could handle 477 tons of cargo, and the maximum tonnage of the vessel for the shipping lane was 100 tons. The ship was not suitable for navigation after loading; Evidence 2, freight table for airworthiness provided by Jiashan Shipping Department, to prove that the navigation channel was a Class 7 waterway and the ship was less than 100 tons seaworthy; Evidence 3, special receipts for port construction fees, to prove that Xinshengyuan should bear 955 yuan; Evidence 4. Audio CDs and manuscripts, to prove that the weather was bad during unloading and that the unloading was not timely leading to an increase in cargo damage. After the cross-examination by Xinshengyuan, the authenticity of the evidence was not recognized. Whether Quanwang unloaded the goods in a timely manner was not related to the damage. In this case, the damage occurred in the middle of transportation. The consignee could refuse to accept the goods; the copy of the evidence was not approved; the evidence was not related to the case, and the entity stated in the receipt should be required to claim the fee; the form of evidence 4 was not legal, recordings made without informing the recorder must not be taken. The court holds that Xinshengyuan had objection to the authenticity of the evidence, and refused to accept it. The copy of evidence 2 was not approved by Xinshengyuan, but the evidence can prove that the shipping lanes involved were less than 100 tons for the ship less than 100 tons. Evidence 3 has nothing to do with this case and is not admissible; the identity of the person being recorded in evidence 4 is unknown and will not be accepted. With regard to whether Quanwang and Xinshengyuan should bear responsibility for the expansion of damage, the following judgment will analyze it later. Xinshengyuan and Donglian did not submit new evidence. The court holds that the facts ascertained by the court of first instance are true and the court confirms them. The issues of the dispute in the second instance of this case are whether Quanwang and Xinshengyuan were responsible for the expansion of the cargo involved; the amount of goods lost in the case. The first issue, RUAN Boqin appealed that Quanwang refused to accept the goods and did not unload the goods in a timely manner. It was responsible for the expansion of the loss of the goods; Xinshengyuan knew that M.V. SU YAN CHENG HUO 099158 was not suitable for the fairway of the case. There was the

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fault of the ship’s election of personnel, so it should bear the corresponding responsibility. The court holds that although Quanwang is the consignee stated in the waybill, the dispute in this case is the claim of the shipper Xinshengyuan for the damage compensation brought by the actual carrier RUAN Boqin based on the Contract of Transport of Water Cargo. It is not a party involved in the dispute over contract of carriage of goods by sea. Secondly, the transportation of goods due to the operation error of RUAN Boqin caused the cargo tank to enter the water, and Quanwang is not responsible for the damage. Then, Quanwang received 277.232 tons of goods within a reasonable time after the insurer’s investigation. There is no fault. For damaged 200.508 tons of goods, Quanwang has the right to return the goods based on the quality of the goods. RUAN Boqin advocated that the consignee Quanwang should receive the views of the damaged goods in a timely manner, lacking factual basis and legal basis. Whether Xinshengyuan is liable for damages. The court holds that according to Contract of Transport of Water Cargo and Acquisition Proof entered into by RUAN Boqin and Xinshengyuan on July 3, 2014, it was shown that the actual carrier RUAN Boqin knew the port of destination before it began to transport the goods. As the actual carrier, RUAN Boqin should make necessary understanding of the basic conditions such as the depth of the shipping lanes and the tonnage limitation of seaworthy vessels when entering into the contract of carriage. If the shipping lane is not suitable for sailing on M.V. SU YAN CHENG HUO 099158, RUAN Boqin may refuse to sign a transportation contract. In the event of cargo damage, RUAN Boqin proposed that Xinshengyuan knew that there was a fault in the selection of a transport vessel, knowing the navigational conditions of the channel, and clearly violated the principle of good faith. Therefore, RUAN Boqin’s appeal grounds for Xinshengyuan’s liability for the expansion of cargo damage cannot be established. The second issue, the amount of damage to the case. Whether 13% value-added tax should be deducted for calculating the damage amount. The court holds that VAT is a turnover tax levied on the basis of the value-added amount of goods (including taxable services) generated during the transfer process. Xinshengyuan submitted the ordinary value-added tax invoice for the goods involved in the lawsuit to prove that the sales price of the goods contained VAT. Due to the loss of the goods caused by the company’s own reasons, such as the calculation of the amount of damages deducting the portion of value-added tax, Xinshengyuan will not be compensated to the owner of the value-added tax portion of the loss of goods, and the involved VAT invoices indicate that the goods involved have been paid VAT. Secondly, RUAN Boqin advocated that the amount of damages should be calculated on the basis of the VAT deduction, and there is no legal basis. Whether the amount of damage is deducted by 2‰ of the reasonable loss. Although the contract of transportation stipulates a reasonable loss of 2‰, the agreement should be that in the normal performance of the contract, the parties make special agreement that if the goods occur reasonably short, the carrier shall

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not be liable for losses within 2‰. This agreement cannot be understood as that the carrier can deduct 2‰ shipments under any circumstances. Whether the amount of damages was deducted from the 955 yuan of port construction fees. The subject of the payment stated in the receipt submitted by RUAN Boqin was not Xinshengyuan, and the transportation contract did not stipulate that the fee should be borne by Xinshengyuan. Therefore, this amount is not deducted when calculating the damage amount. The total amount of damages determined in the judgment of first instance was 304,755.56 yuan. Since the amount of damages claimed by Xinshengyuan was 296,438 yuan, the judgment of first instance all supported its claim. RUAN Boqin held that the freight costs for the damaged 200.508 tons of freight could not be deducted and could be claimed otherwise. In addition, RUAN Boqin advocated that Xinshengyuan and Jiashan Rongxin Feed Store had malicious collusion and harmed their legitimate rights and interests. Xinshengyuan, Jiashan Rongxin Feed Store and RUAN Boqin entered into an agreement for the acquisition of damaged goods, which proves that RUAN Boqin participated in and agreed to the processing price of damaged 200.508 tons of goods. It did not provide the malicious collusion of Xinshengyuan and Jiashan Rongxin Feed Store in litigation. Therefore, the court does not support the defense. In summary, RUAN Boqin’s grounds for appeal cannot be established. The facts confirmed in the judgment of first instance are clear and the law is applied correctly. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 5,747 yuan, shall be born by RUAN Boqin. The judgment is final. Presiding Judge: SU Jiang Judge: HU Zhengwei Judge: ZENG Cheng May 12, 2016 Clerk: CHEN Jianxiao

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The Supreme People’s Court of the People’s Republic of China Civil Ruling Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. v. Dongtai Donglian Shipping Co., Ltd. et al. (2017) Zui Gao Fa Min Shen No.3335 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 607 and page 616 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decisions that defendant carrier was liable to pay damages for water damage to corn, rejecting carrier’s objections that the extent of water damage had been increased by Plaintiff’s delay in discharging cargo, and that Plaintiff had colluded with substitute buyer to set a low price for the wet corn. Summary Plaintiff, a freight forwarder, sued Defendant for water damage to corn carried on the Defendant’s vessel. (Plaintiff had compensated the shipper of the corn, which assigned its rights to Plaintiff.) The corn was found to be wet on arrival at the port of discharge, because of water escaping from a valve in the ship’s engine room. Some of the dry corn was discharged immediately, but the receiver rejected the wet corn. The corn remaining on the ship was not discharged for two days, despite Defendant’s efforts to get the receiver to unload it. Meanwhile, Plaintiff found a substitute buyer for the wet corn. Defendant alleged that more corn became wet as a result of the delay in discharge, which was not its fault, and that Plaintiff and the substitute buyer colluded in setting an artificially low price for the wet corn. The first instance Court rejected Defendant’s defence and held that Plaintiff was entitled to recover its loss in full, as Defendant had failed to provide evidence the Plaintiff had colluded in setting a low salvage price for the wet corn. Defendant appealed, arguing that: (1) the damaged goods were not unloaded within a reasonable time, so it should not be liable for the full amount of the damage; (2) Plaintiff and the substitute buyer of the wet corn maliciously colluded to set a low price. The appeal Court dismissed Defendant’s appeal, and held that Defendant was not able to adequately prove any of his arguments.

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Defendant applied to the Supreme People’s Court for retrial, arguing the same points again. The Supreme People’s Court rejected Defendant’s retrial application for the reasons given by the intermediate appeal Court of second instance, namely that Defendant had failed to sufficiently prove any of its allegations.

Ruling The Claimant of Retrial (the Defendant of first instance, the Appellant of second instance): RUAN Boqin. The Respondent of Retrial (the Plaintiff of first instance, the Respondent of second instance): Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. Domicile: Unit 1401, Unit 2, No.9, Qingyuan North Road, Rudong County, Nantong, Jiangsu. Legal representative: WANG Zhengquan, general manager of the company. The Defendant of first instance: Dongtai Donglian Shipping Co., Ltd. Domicile: Jinhai East Road, Dongtai, Yancheng, Jiangsu. Legal representative: SONG Adi, manager. Agent ad litem: SHENG Honghua, lawyer of Jiangsu Chen Aiping Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea connected waters between the Claimant of Retrial RUAN Boqin and the Respondent of Retrial Jiangsu Xinshengyuan Freight Forwarding Co., Ltd. (hereinafter referred to as Xinshengyuan), and the Defendant of first instance Dongtai Donglian Shipping Co., Ltd. (hereinafter referred to as Donglian), the Claimant of Retrial disagreed with the Hubei High People’s Court (2016) E Min Zhong No.251 Civil Judgment and applied for retrial. The court formed a collegiate panel to review the case. Now the case has been concluded. RUAN Boqin applied to the court for retrial that: (1) the consignee Zhejiang Quanwang Industrial Co., Ltd. (hereinafter referred to as Quanwang) had a major fault. The courts of first instance and second instance did not add the company as the Defendant according to law, and the procedure was illegal. (2) The courts of first instance and second instance found that the actual amount of damages in the case, which was wrong. The total weight of goods in this case, the number of damaged dry corn, and the unit price of corn were found to be incorrect. (3) Xinshengyuan had fault of selection in this case. RUAN Boqin’s ship was simply not suitable for sailing on this fairway. Xinshengyuan’s fault of selection had also been faulty in the case of the loss of this case and should bear the corresponding civil legal liability. (4) The courts of first instance and second instance did not remove fair expenses in accordance with the principle of fairness when calculating the damages in the case. The port construction fee of 955 yuan should be born by the owner of goods or the

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shipper. The freight calculation was wrong and unfair to the Claimant. (5) There was malicious collusion between Xinshengyuan and Jiashan Rongxin Feed Store. To sum up, it applied for a retrial in accordance with Article 200 Sub-paragraph 2 of the Civil Procedure Law of the People’s Republic of China. After reviewing this case, the case is a case for application for retrial. It should be based on the reason for RUAN Boqin’s application for retrial. It should review the circumstances of Article 200 of the Civil Procedure Law of the People’s Republic of China. In this case, Xinshengyuan, as the shipper, initiated a lawsuit in accordance with Contract of Transport of Water Cargo concluded by RUAN Boqin as the carrier, and claimed RUAN Boqin to assume the liability for damage caused to the consignment. Quanwang was not a party involved in the transportation contract. Xinshengyuan has not filed a lawsuit against Quanwang as the Defendant. The courts of first instance and second instance did not add Quanwang to participate in the lawsuit. This is not inappropriate. RUAN Boqin’s reason for the application for retrial of the case where the courts of first instance and second instance did not add Quanwang to participate in the proceedings in this case cannot be established. In the judgments of first instance and second instance, the total corn weight was 477.74 tons according to Contract of Transport of Water Cargo concluded by the parties and the goods delivery order. The unit price of the intact corn agreed in the corn sales contract was 2,570 yuan/ton, and the Dalian VAT invoice unit price for tax-inclusive goods (2,274.35 yuan/ton * 113%) and the settlement fee confirmation letter M.V. SU YAN CHENG HUO 099158 were confirmed by the unit price of intact goods (515,305.56 yuan/200,508 tons), confirming that the value of the insured goods in good condition was 2,570 yuan/ton, which has sufficient basis. According to the facts found, the consignee received 277.232 tons of 477.74 tons of unwetted corn. The remaining moisture-determined corn was determined to be returned for processing. After being contacted by Xinshengyuan and RUAN Boqin and other parties, Jiashan Rongxin Feed Store was found to buy the corn. On July 13, 2014, Jiashan Rongxin Feed Store, RUAN Boqin and Xinshengyuan reached an agreement to purchase 76.22 tons of dried corn, 2,500 yuan per ton of unit price, a total of 190,550 yuan; 125 tons of severely affected corn, 20,000 tons yuan. The two batches of corn totaled 210,550 yuan and were sold to Jiashan Rongxin Feed Store. The courts of first instance and second instance judged that the intact value of 200.508 tons of corn damaged by moisture was 515,305.56 yuan (2,570 yuan/ ton * 200,508 tons), minus the amount of 210,550 yuan that was obtained after sales under the tripartite acquisition agreement, and the loss of corn was determined to be 304,755.56 yuan. The basis is also sufficient. RUAN Boqin’s reasons for the application for retrial of the actual amount of damage determined by the judgments of first instance and second instance are not established. In this case, the damage to corn was caused by the inflow of water into the cargo tank due to the operational errors of RUAN Boqin during the transportation. The judgments of first instance and second instance held that RUAN Boqin, as the actual carrier, should make necessary understanding of the basic conditions such as the depth of the shipping lanes and the tonnage limitation of the seaworthy ships. If the

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shipping lanes are not suitable for navigation, they may refuse to sign a transportation contract. After the occurrence of the damage, it contended that Xinshengyuan had a fault in the selection of a shipping vessel which violated the principle of good faith. It is correct that the courts of first instance and second instance did not support its defense. RUAN Boqin’s reason for application for retrial that Xinshengyuan had fault of selection in the case cannot be established. The main body of payment stated in the port construction fee receipt submitted by RUAN Boqin was not Xinshengyuan, nor did it provide evidence that the parties agreed that the cost should be born by Xinshengyuan, and the judgment of second instance did not support the claim that the fee should be deducted when calculating the loss, which is not inappropriate. Regarding the issue of deduction of freight charges, the judgment of second instance also clearly stated that it could claim its rights separately. RUAN Boqin’s reason for application for retrial that calculating damages did not deduct reasonable expenses in the judgment of first instance and second instance cannot be established. RUAN Boqin and Xinshengyuan and Jiashan Rongxin Feed Store jointly signed and confirmed the acquisition agreement signed by the three parties. Although RUAN Boqin advocated that Xinshengyuan had malicious collusion with Jiashan Rongxin Feed Store, it did not provide any evidence to prove, so the reasons for application of retrial cannot be established. In summary, RUAN Boqin’s application for retrial does not meet Article 200 of the Civil Procedure Law of the People’s Republic of China. According to the Civil Procedure Law of the People’s Republic of China Article 204 Paragraph 1, and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 395 Paragraph 2, the ruling is as follows: Dismiss the application for retrial of RUAN Boqin. Presiding Judge: REN Xuefeng Judge: YU Xiaohan Judge: HUANG Xiwu October 24, 2017 Clerk: DING Yi

Wuhan Maritime Court Civil Judgment Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E 72 Min Chu No.91 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 635. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Plaintiff seller of marine steel pipes held to be unable to prove delivery of pipes to defendant buyer because defendant did not sign one of two invoices, and Article 8 of the Interpretation of the Supreme People’s Court on the Legal Issues concerning the Trial of Cases of Disputes over Contracts for Sale and Purchase provides that in such a case, seller must provide other evidence of delivery, which Plaintiff had not done. Summary Pursuant to a sales contract between Plaintiff and Defendant, Plaintiff claimed to have delivered marine steel pipes to Defendant on two occasions. As evidence, it provided two invoices, one of which had been signed by Defendant’s employees, the other of which was unsigned. Defendant paid only part of the total sum represented by the two invoices, so Plaintiff sued for the outstanding amount. Defendant denied that Plaintiff’s evidence established that Plaintiff had delivered all the goods as agreed. The Court held that Plaintiff’s claim failed. Article 8 of the Interpretation of the Supreme People’s Court on the Legal Issues concerning the Trial of Cases of Disputes over Contracts for Sale and Purchase stated that if the buyer does not approve the invoices presented by the seller, the seller must provide other evidence of delivery. Because Plaintiff had provided no other proof of delivery in relation to the goods represented by the unsigned invoice, it could not establish that it had delivered that consignment. The sum paid by Defendant to Plaintiff exceeded the amount of the invoice that had been signed, so Defendant owed nothing to Plaintiff.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_34

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Judgment The Plaintiff: Jiangyin Parter Special Steel Industry Co., Ltd. Domicile: Jiangyin, Jiangsu. Legal representative: ZHANG Zheng, chairman of the company. Agent ad litem: HU Ting, lawyer of Jiangsu Jiangmin Law Firm. The Defendant: Fuzhou Sanfu Ship Engineering Co., Ltd. Domicile: Taizhou, Jiangsu. Legal representative: YANG Yifeng, chairman of the company. Agent ad litem: TAO Yan (the staff of the company), female, Han, born on February 27, 1976, living in Taizhou, Jiangsu. Agent ad litem: HUANG Runshou (the staff of the company), male, Han, born on January 30, 1947, living in Taixing, Jiangsu. With respect to the case arising from dispute over contract of the ship materials and spare parts supply between the Plaintiff, Jiangyin Parker Special Steel Industry Co., Ltd. (hereinafter referred to as Special Steel) and the Defendant Fuzhou Sanfu Ship Engineering Co., Ltd. (hereinafter referred to as Sanfu), the Plaintiff brought a lawsuit on January 3, 2017. After the court filed the case on January 13 of the same year, the summary procedure was applied according to law. During the trial of the case, the Plaintiff Special Steel filed a property preservation request to the court, requesting to freeze the bank deposit of the Defendant Sanfu (hereinafter all RMB) 80,000 yuan or to seize or detain other property of the Defendant’s corresponding value. The Plaintiff Special Steel provided guarantees to the court. On February 13 of the same year, the court made (2017) E 72 Min Chu No.91 Civil Ruling, allowing the request of the Plaintiff. And the ruling has been implemented. The case was heard in public on February 21 of the same year. Agent ad litem of the Plaintiff Special Steel, HU Ting, and agents ad litem of the Defendant Sanfu, TAO Yan and HUANG Runshou, attended the hearing. Now the case has been concluded. The Plaintiff Special Steel claimed to the court that: 1. the Defendant Sanfu paid the payment of 60,723.3 yuan and the liquidated damage fee of 12,144.66 yuan, totaling 72,867.96 yuan; 2. the litigation expenses were borne by the Defendant Sanfu. Facts and reasons: on December 4, 2014, the Plaintiff entered into a steel purchase contract with the Defendant, stipulating that the Plaintiff supplied the Defendant with different types of marine steel pipes. During the performance of the contract, if either party defaulted, it was required to pay 20% of the contract amount to the other party. The Plaintiff has delivered the subject matter to the Defendant in accordance with the contract, but the Defendant did not pay the corresponding amount. The Plaintiff collected the payment several times and the Defendant has not paid the amount due. The Defendant Sanfu defended that the Plaintiff did not have sufficient evidence to prove that it had fully fulfilled its supply obligation, and the Defendant had paid the Plaintiff a payment of 120,000 yuan for the ship’s steel pipe received. So it requested the court to reject the claims of the Plaintiff.

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The Plaintiff Special Steel adduced the following evidences for its litigation request: 1. the steel purchase contract and the attachment signed by the Plaintiff and the Defendant; 2. the Plaintiff supplied the Defendant with the invoice of the marine steel pipe (2 copies of the invoice on January 19, 2015, 1 invoice for January 26, 2015, 3 in total); 3. the Plaintiff’s sales of goods produced on February 3, 2015, or a list of taxable services, issue VAT invoices in sum of 180,723.3 yuan; 4. lawyer’s letter that the Plaintiff sent it to the Defendant (including the lawyer’s power of attorney) and the EMS express lists and express inquiry forms. The Defendant’s opinion on the Plaintiff’s evidence: evidence 1, no objection. Evidence 2, the three invoices was not signed by the Defendant, so the Plaintiff could not prove that the Plaintiff has delivered the goods according to the invoice. Evidence 3, there is no objection to the authenticity, but the evidence in this group cannot prove that the Plaintiff has delivered the goods stated according in the invoice to the Defendant, according to the Interpretation of the Supreme People’s Court on the Legal Issues concerning the Trial of Cases of Disputes over Contracts for Sale and Purchase (hereinafter referred to as the Explanation of sales contract case), Article 8 shall be supplemented by the fact that the Plaintiff shall provide additional evidence to prove that the goods have been delivered to the Defendant, otherwise the Plaintiff cannot claim the corresponding payment. Evidence 4, the Defendant did not receive a lawyer’s letter. After the trial, the Plaintiff added to the court the above January 26, 2015 invoice signed by the Defendant. With agreement of the agent TAO Yan, court take a photo of the invoice and send it to the cross-examination by WeChat. TAO Yan confirmed the authenticity of the invoice. The court’s opinion on the Plaintiff’s evidence certification: evidence 1, confirm the probative force. Evidence 2, the consignee on the two January 19, 2015 invoices was not signed by the Defendant, and the Defendant denied the supply of the goods in two invoices, so these two are not based on the trial; the proof of the January 26, 2015 invoice is confirmed. Evidence 3, confirm the authenticity of the evidence in the group. Evidence 4, the recipient name of the EMS courier submitted by the Plaintiff (Sanfu) and the address (No.58, Zhenkou Shui Road, Taizhou City, Jiangsu) are the same as the legal documents the court sent to the Defendant, and the EMS courier receipt is the same, so the court confirms that the Defendant has received the lawyer’s letter from the Plaintiff (including the lawyer’s power of attorney). The Defendant Sanfu did not submit any evidence. Based on the statement of two parties and the evidence confirmed by the review, the court found the facts as follows: On December 4, 2014, the Plaintiff Special Steel (supplier, Party B) and the Defendant Sanfu (purchaser, Party A) signed a steel procurement contract. The contract stipulates: (1) Product named Marine steel pipe, the Scale can be found in the contract list: the length is 6–9 m, only produce the integer meter, the calculation method is weighing, the quantity is 32.511 tons, the price (yuan/ton) is detailed in the contract annex, the total contract price is 17,4034.95 yuan; according to the actual receipt weight of Party A, and Party B should guarantee the meter quantity

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for Party A. (2) All the price are the contract factory price, which includes 17% VAT, ship inspection fee, discount interest, freight and other expenses that Party B should bear. (3) The quality requirements and technical standards shall be implemented with the relevant classification society standards, the corresponding classification society certificate shall be provided, and the delivery quantity shall be calculated according to the actual number of pounds. (4) The delivery location is in the factory area of Party A, and Party B is responsible for delivery. Party A is responsible for acceptance and receipt of the delivery note. (5) Payment method, Party A shall pay 6 months of bank acceptance within 60 days after Party A accepts and accepts the goods and receives the 17% full VAT invoice and the corresponding cargo ship inspection certificate issued by Party B. Liability for breach of contract, both parties shall perform this contract fully and correctly. Except as otherwise provided in this contract, neither party can unilaterally terminate or partially terminate the contract. The unilateral termination or partial termination of the contract shall be regarded as a fundamental breach of contract, and the defaulting party shall pay the 20% of the total price of the total contract price to the other party. If the penalty are insufficient to make up for the losses caused by the breach of contract, the defaulting party shall still be responsible for the difference; if Party B fails to deliver on time, it should pay a penalty of 1% of the total contract price for each extension of one day. For party B, if the delivery is delayed for more than 10 days or the delivery obligation cannot be fulfilled, Party A has the right to choose to terminate the contract. Party B shall pay Party A a penalty of 20% of the total contract price, and the penalty shall not make up for the losses caused by breach of contract to Party A (including the extension). Party B shall still be responsible for the difference; if Party B fails to provide the product qualification certificate and other relevant materials according to the time specified in the contract, Party B should pay Party A the penalty and compensate the losses according to the delayed delivery of the products. The contract also stipulated other matters. The price per ton of steel pipes with the same specifications as the invoices on January 26, 2015 in the above contract is: Scale 22 * 3.5 6,600 yuan, Scale 27 * 3 5,900 yuan, Scale 34 * 3 5,350 yuan, Scale 34 * 3.5 5,350 yuan, Scale 34 * 6.5 5,650 yuan, Scale 42 * 3.5 5,050 yuan, Scale 42 * 6.5 5,350 yuan, Scale 76 * 5 5,050 yuan, Scale 114 * 6 5,050 yuan, Scale 159 * 10 5,650 yuan, Scale 245 * 25 5,650 yuan. After the above contract was signed, the Plaintiff Special Steel provided the ship’s steel pipe of different specifications to the Defendant Sanfu on January 26, 2015. The invoice issued on the day of the Defendant recorded (printed) the total weight of the steel pipe of 11.784 tons, including Scale 22 * 3.5, 0.01 tons, Scale 27 * 3, 0.016 tons, Scale 34 * 3, 0.174 tons, Scale 34 * 3.5, 0.152 tons, Scale 34 * 6.5. 0.034 tons, Scale 42 * 3.5, 0.184 tons, Scale 42 * 6.5, 0.108 tons, Scale 76 * 5, 0.678 tons, Scale 114 * 6, 0.648 tons, Scale 159 * 10, 7.636 tons, Scale 245 * 25, 2.144 tons. After the weigh, the Defendant made a note on the invoice (handwritten) the total weight of the steel pipe was 11.72 tons. On February 3, 2015, the Plaintiff Special Steel produced its own sales and provided a list of taxable services. The list records that the Defendant Sanfu should

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pay the its payment (including 17% VAT) 180,723.3 yuan. On the same day, the Plaintiff issued a VAT invoice amounting to 180,723.3 yuan to the Defendant. Both the Plaintiff and the Defendant confirmed that the Defendant had paid the Plaintiff a loan amount of 120,000 yuan. Afterwards, the Plaintiff filed the lawsuit on the grounds that the Defendant defaulted on the payment. The court confirms that this case is a dispute of ship materials supply. The Plaintiff and the Defendant signed the contract, which was voluntarily reached on the basis of consensus, and did not violate the provisions of laws and administrative regulations. A contract established according to law is binding on the parties. The Plaintiff provided the Defendant provided the ship’s steel pipe and enjoyed the right to collect the corresponding payment from the Defendant. The Plaintiff claimed that the Defendant should pay the arrears of 60,723.3 yuan, based on the evidence including three invoices as described above, but the Defendant proposed that the two invoices on January 19, 2015 were not signed by their employees to attest Plaintiff has not fulfilled the obligation to deliver the corresponding goods. Article 8 of the explanation of the sale and purchase contract stipulates: “the seller only use the special invoice for value-added tax and the tax deduction information to prove that it has fulfilled the obligation to deliver the subject matter. If the buyer does not approve the offer, the seller shall provide other evidence to prove the delivery of the subject matter.” In view of the fact that the Plaintiff was unable to provide other evidence that the goods recorded on the two invoices had been delivered to the Defendant, the court did not confirm that the Plaintiff delivered the goods stated on the two invoices to the Defendant, only confirming 11.72 tons of goods signed by the Defendant’s employees on the January 26, 2015 invoice. The weight of the goods signed by the Defendant is 0.064 tons different from the 11.784 tons of goods recorded on the January 26, 2015 invoice. Since two parts did not specify the difference from which type of steel pipe. So recorded on the invoice, the court takes the average unit price of the various specifications of the steel pipe (60,650/11 yuan), the price of the difference goods was 352.9 yuan. According to the unit price of various specifications of the steel pipe listed in the invoice, the total price of 11.784 tons of goods is 65,556.9 yuan. Therefore, the price of the goods signed by the Defendant was 65,204 yuan (65,556.9–352.9 yuan), plus the value added tax (17%) was 76,288.68 yuan. Since the Defendant has paid the Plaintiff 120,000 yuan, the Defendant does not have to pay the Plaintiff. In summary, the Plaintiff Special Steel requested the Defendant Sanfu to pay the arrears of payment, but failed to provide sufficient evidence to support it. The court did not support its request. In accordance with the provisions of Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claim of the Plaintiff Jiangyin Parter Special Steel Industry Co., Ltd. Court acceptance fee in amount of 1,622 yuan, which is halved at 811 yuan in accordance with the summary procedure, shall be borne by the Plaintiff. If a party disagrees with this judgment, the party may submit within 15 days from the date of delivery of the judgment, together with copies of petition, appeal to the Hubei High People’s Court. The Appellant shall, in submitting the appeal,

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prepay the appeal case acceptance fee according to the amount of the appeal request against this judgment and the first paragraph of Article 13 of the Measures for the Payment of Litigation Fees. Bank of deposit: Agricultural Bank of China Wuhan Donghu Sub-branch; Payee: Hubei Provincial Department of Finance non-tax revenue financial account; Account number: 17xxx69 please in the bank’s certificate indicate “Hubei High People’s Court”, so convenient for the receiving bank to confirm the receipt of funds. If the Appellant has not paid the fee of the appeal within seven days after the expiration of the appeal period, the appeal shall be automatically withdrawn. Judge: ZHOU Da April 10, 2017 Clerk: ZHANG Xuemin

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Hubei High People’s Court Civil Judgment Jiangyin Parter Special Steel Industry Co., Ltd. v. Fuzhou Sanfu Ship Engineering Co., Ltd. (2017) E Min Zhong No.2785 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 629. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Affirming lower court decision that plaintiff seller of marine steel pipes was unable to prove delivery of pipes to defendant buyer because defendant did not sign one of two invoices, and Article 8 of the Interpretation of the Supreme People’s Court on the Legal Issues concerning the Trial of Cases of Disputes over Contracts for Sale and Purchase provides that in such a case, seller must provide other evidence of delivery, which Plaintiff had not done. Summary Pursuant to a sales contract between Plaintiff and Defendant, Plaintiff claimed to have delivered marine steel pipes to Defendant on two occasions. As evidence, it provided two invoices, one of which had been signed by Defendant’s employees, the other of which was unsigned. Defendant paid only part of the total sum represented by the two invoices, so Plaintiff sued for the outstanding amount. Defendant denied that Plaintiffs evidence established that Plaintiff had delivered all the goods as agreed. The first instance Court held that Plaintiff’s claim failed. Article 8 of the Interpretation of the Supreme People’s Court on the Legal Issues concerning the Trial of Cases of Disputes over Contracts for Sale and Purchase stated that if the buyer does not approve the invoices presented by the seller, the seller must provide other evidence of delivery. Because Plaintiff had provided no other proof of delivery in relation to the goods represented by the unsigned invoice, it could not establish that it had delivered that consignment. The sum paid by Defendant to Plaintiff exceeded the amount of the invoice that had been signed, so Defendant owed nothing to Plaintiff. Plaintiff appealed. The appeal Court dismissed the appeal, holding that the first instance Court had properly applied Article 8 of the Interpretation, which clearly stated that in the absence of a signed invoice, Plaintiff had to provide other evidence of delivery, which it had not done.

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Judgment The Appellant (the Plaintiff of first instance): Jiangyin Parter Special Steel Industry Co., Ltd. Domicile: Jiangyin, Jiangsu. Legal representative: ZHANG Zheng, chairman of the company. Agent ad litem: HU Ting, lawyer of Jiangsu Jiangmin Law Firm. The Respondent (the Defendant of first instance): Fuzhou Sanfu Ship Engineering Co., Ltd. Domicile: Taizhou, Jiangsu. Legal representative: YANG Qifeng, chairman of the company. Agent ad litem: TAO Yan, staff of the company, female, Han, born on February 27, 1976, living in Taizhou, Jiangsu. With respect to the case arising from dispute over contract of the ship materials and spare parts supply between the Appellant Jiangyin Parter Special Steel Industry Co., Ltd. (hereinafter referred to as “Special Steel”) and the Respondent Fuzhou Sanfu Ship Engineering Co., Ltd. (hereinafter referred to as “Sanfu”), the Appellant dissatisfied with the Wuhan Maritime Court (2017) E 72 Min Chu No.91 Civil Judgment, and appealed to the court. After the case was filed on September 6, 2017, the court formed a collegiate bench in accordance with the law and publicly heard the case on November 2, 2017. Agent ad litem of the Appellant Special Steel, HU Ting, agent ad litem of the Respondent Sanfu, TAO Yan, appeared in court to attend the lawsuit. Now the case has been concluded. Special Steel appealed that: 1. revoke the Wuhan Maritime Court (2017) E 72 No.91 Civil Judgment, and change the judgment according to law; 2. the litigation fee for the first and second trials of this case was undertaken by Sanfu. Facts and reasons: the court of first instance found that the facts were unclear and the law was wrong. Special Steel Company has delivered the contracted goods to Sanfu, and the transactions between the two parties are supported by contracts, special warehouse companies’ outbound orders, and value-added tax invoices. Sanfu has deducted the VAT invoices involved and paid part of the payment. Article 8 of the court of First Instance applicable to the Interpretation of the Supreme People’s Court on the Application of Legal Issues in the Trial of Cases of Disputes over Contracts for Sale and Purchase is an error in applicable law. Sanfu argued that the third item of the procurement contract signed by the two parties clearly stipulates that Special Steel is responsible for delivery, and Sanfu is responsible for acceptance and receipt of the delivery note. If Special Steel is delivered, the delivery note should be signed and accepted by Sanfu. The court of first instance found the facts clear and the application of law was accurate. The court of second instance was requested to dismiss the appeal and affirm the original judgment. Special Steel claimed that: 1. Sanfu should pay the purchase price of RMB (the following are RMB) 60,723.3 yuan and liquidated damages 12,144.66 yuan, a total of 72,867.96 yuan; 2, the litigation costs are paid by Sanfu.

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The court of first instance found the fact: on December 4, 2014, Special Steel (supplier, Party B) and Sanfu (purchasing party, Party A) signed a steel procurement contract. The contract stipulates: (1) Product name Marine steel pipe, the specification size can be found in the contract list, the length is 6–9 m, the whole meter is fixed, the calculation method is overweight, the quantity is 32.511 tons, the price (yuan/ton) is detailed in the contract annex, the total contract price is 174,034.95 yuan; according to the actual receipt weight of Party A, Party B guarantees the square meter of Party A. (2) Under this contract, it is locked to the factory price, which includes 17% VAT, ship inspection fee, discount interest, freight and other expenses that Party B should bear. (3) The quality requirements and technical standards shall be implemented in accordance with the relevant classification society standards, and the corresponding classification society certificate shall be provided, and the delivery quantity shall be calculated according to the actual number of pounds. (4) The delivery location is in the factory area of Party A, and Party B is responsible for delivery, and Party A is responsible for acceptance and receipt of the delivery note. (5) Payment method, Party A shall pay 6 months of bank acceptance within 60 days after Party A accepts and accepts the goods and receives the 17% full VAT invoice and the corresponding cargo ship inspection certificate issued by Party B. (6) Liability for breach of contract, both parties shall perform this contract in full and correctly. Except as otherwise provided in this contract, neither party shall unilaterally terminate or partially terminate the contract. The unilateral dissolution or partial termination of the contract shall be regarded as a fundamental breach of contract, and the defaulting party shall pay the contract to the other party. The liquidated damages of 20% of the total price, the liquidated damages are insufficient to make up for the losses caused by the breach of contract, and the defaulting party shall still be responsible for the difference; if Party B fails to deliver on time, it will pay a penalty of 1% of the total contract price for each extension of one day, Party B If the delivery is delayed for more than 10 days or the delivery obligation cannot be fulfilled, Party A has the right to choose to terminate the contract. Party B shall pay Party A a penalty of 20% of the total contract price, and the liquidated damages shall not make up for the losses caused by breach of contract to Party A (including the extension). Party B shall still be responsible for the difference; if Party B fails to provide the product qualification certificate and other relevant materials according to the time specified in the contract, Party B shall pay Party A the liquidated damages and compensate the losses according to the delayed delivery of the products. The contract also stipulated other matters. The price per ton of steel pipes with the same specifications as the invoices on January 26, 2015 in the above contract is: 22 * 3.5, 6,600 yuan, 27 * 3, 5,900 yuan, 34 * 3, 5,350 yuan, 34 * 3.5, 5,350 yuan, 34 * 6.5 specification 5,650 yuan, 42 * 3.5 specification 5,050 yuan, 42 * 6.5 specification 5,350 yuan, 76 * 5 specification 5,050 yuan, 114 * 6 specification 5,050 yuan, 159 * 10 specification 5650 yuan, 245 * 25 specification 5,650 yuan. After the above contract was signed, Special Steel provided different specifications of marine steel pipes to Sanfu on January 26, 2015. Special Steel’s invoices produced on the same day recorded (printed) total weight of steel pipes of

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11.784 tons, including 22 * 3.5 specifications 0.01 tons, 27 * 3 specifications 0.016 tons, 34 * 3 specifications 0.174 tons, 34 * 3.5 specifications 0.152 tons, 34 * 6.5 specifications 0.034 tons, 42 * 3.5 specifications 0.184 tons, 42 * 6.5 specifications 0.108 tons, 76 * 5 specifications 0.678 tons, 114 * 6 specifications 0.648 tons, 159 * 10 specifications 7.636 tons, 245 * 25 specifications 2.144 tons. After the pound, Sanfu made a note on the invoice (handwritten) the total weight of the steel pipe was 11.72 tons. On February 3, 2015, Special Steel produced its own sales or provided a list of taxable services. The list records that Sanfu Co., Ltd. pays 180,723.3 yuan for Special Steel’s purchase price (including 17% VAT). On the same day, Special Steel issued a value-added tax invoice of 180,723.3 yuan to Sanfu. Both parties confirmed that Sanfu paid Special Steel 120,000 yuan for the contract involved. The court of first instance held that the case was a dispute over the supply of ship materials and spare parts. The steel procurement contract signed between Special Steel and Sanfu was voluntarily reached on the basis of consensus and did not violate the provisions of laws and administrative regulations. A contract established according to law is binding on the parties. Special Steel has provided marine steel pipes to Sanfu in accordance with the contract and has the right to collect the corresponding payment from Sanfu. Special Steel claims that Sanfu pays arrears of 60,723.3 yuan based on 3 invoices, but Sanfu proposes that two invoices on January 19, 2015 will not be signed by its employees, and will defend Special Steel fulfilled its obligation to deliver the corresponding goods to it. Article 8 of the Interpretation of the Supreme People’s Court on the Application of Legal Issues in the Trial of Cases of Disputes over Contracts for Sale and Purchase stipulates that: “the seller shall only use the special invoices for value-added tax and tax deductions to prove that it has fulfilled the obligation to deliver the subject matter, and the buyer does not recognize The seller shall provide other evidence of the facts of the delivery of the subject matter.” In view of the fact that Special Steel was unable to provide other evidence that it had delivered the goods stated on the two invoices to Sanfu, the court of first instance did not confirm that Special Steel delivered the two invoices to Sanfu. The goods only confirmed that Special Steel delivered the 11.72 tons of goods signed by Sanfu employees on the invoice dated January 26, 2015 to Sanfu. On February 3, 2015, Special Steel produced its own sales or provided a list of taxable services. The list records that Sanfu Co., Ltd. pays 180,723.3 yuan for Special Steel’s purchase price (including 17% VAT). On the same day, Special Steel issued a value-added tax invoice of 180,723.3 yuan to Sanfu. Both parties confirmed that Sanfu has paid Special Steel 120,000 yuan for the contract involved. The court of first instance held that the case was a dispute over the supply of ship materials and spare parts. The steel procurement contract signed between Special Steel and Sanfu was voluntarily reached on the basis of consensus and did not violate the provisions of laws and administrative regulations. A contract established according to law is binding on the parties. Special Steel has provided marine steel pipes to Sanfu in accordance with the contract and has the right to collect the corresponding payment from Sanfu. Special Steel claims that Sanfu pays arrears of

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60,723.3 yuan based on 3 invoices, but Sanfu proposes that two invoices on January 19, 2015 will not be signed by its employees, and will defend Special Steel The company has fulfilled its obligation to deliver the corresponding goods to it. Article 8 of the Interpretation of the Supreme People’s Court on the Application of Legal Issues in the Trial of Cases of Disputes over Contracts for Sale and Purchase stipulates that: “the seller shall only use the special invoices for value-added tax and tax deductions to prove that it has fulfilled the obligation to deliver the subject matter, and the buyer does not recognize The seller shall provide other evidence of the facts of the delivery of the subject matter.” In view of the fact that Special Steel was unable to provide other evidence that it had delivered the goods stated on the two invoices to Sanfu, the court of first instance did not confirm that Special Steel delivered the two invoices to Sanfu. The goods only confirmed that Special Steel delivered the 11.72 tons of goods signed by Sanfu employees on the invoice dated January 26, 2015 to Sanfu. The weight of the goods signed by Sanfu employees on the invoice on January 26, 2015 is 0.064 tons different from the 11.784 tons of goods recorded on the invoice. Since both parties did not specify the type of steel pipe with the same weight difference, the court of first instance took the average unit price of various specifications of steel pipes (60,650/11 yuan) recorded on the invoice, and calculated the price of the difference goods to be 352.9 yuan. According to the unit price of various specifications of the steel pipe listed in the invoice, the total price of 11.784 tons of goods is 65,556.9 yuan. Therefore, the price of the goods signed by Sanfu is 65,204 yuan (65,556.9–352.9 yuan), plus the value added tax (17%) after the payment is 76,288.68 yuan. Since Sanfu has paid 120,000 yuan to Special Steel, Sanfu does not have to pay Special Steel. In summary, Special Steel requested Sanfu to pay the arrears, but failed to provide sufficient evidence to support it, and the court of first instance did not support its request. In accordance with the provisions of Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: reject the claim of Jiangyin Parter Special Steel Industry Co., Ltd. Court acceptance fee in amount of 1,622 yuan, shall be priced at 811 yuan in accordance with the summary procedure, shall be borne by Jiangyin Parter Special Steel Industry Co., Ltd. During the second instance, neither party submitted new evidence. The court found through trial that the facts as originally examined were true and were confirmed by the court. In view of the focus of the parties’ defense, the court combined the relevant evidence in this case for the following analysis and determination: Special Steel appealed that it had delivered the goods in accordance with the contract. Sanfu paid only 120,000 yuan and should pay the remaining amount. Special Steel claims that its contractual delivery of goods is based on two invoices dated January 19, 2015, invoices dated January 26, 2015, and Special Steel issued a value-added tax invoice of 180,723.3 yuan to Sanfu. According to the investigation, the two invoices issued on January 19, 2015 were issued by Special Steel, and the receipts of Sanfu were not recorded in the “consignee” on the two invoices. Steel

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Purchase Contract involved in the case stated that the quantity of purchased steel was 32.511 tons, but the settlement method was “based on the actual receipt weight of Party A (Sanfu)”, because Sanfu was only on the delivery form on January 26, 2015. Signing the goods, Special Steel should prove that it has delivered the steels listed on the two invoices on January 19, 2015 to Sanfu. In accordance with Article 8 of the Supreme People’s Court Interpretation on the Application of Legal Issues in the Trial of Cases of Sale and Purchase Contract Disputes, Special Steel will not be able to reach its basis in January 19, 2015 based on VAT invoices only if Sanfu does not approve it. On January 26, 2015, the two invoices stated the purpose of the goods delivered to Sanfu. The original court did not improperly determine the Special Steel’s original claims, and the court affirms it. In summary, Special Steel’s appeal request cannot be established and should be rejected. The facts confirmed by the original judgment are clear and the application of law is correct, which should be affirmed. According to Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: The appeal was dismissed and the original judgment was upheld. Court acceptance fee of second instance in amount of 1,622 yuan, shall be paid by Jiangyin Parter Special Steel Industry Co., Ltd. The judgment is final. Presiding Judge: LU Yang Judge: LIN Xianghui Judge: YU Jun November 13, 2017 Clerk: YANG Tuo

Beihai Maritime Court Civil Judgment JM Marine Ltd. v. CSSC Guijiang Co., Ltd. (2016) Gui 72 Min Chu No.76 Related Case(s) None. Cause of Action 123. Dispute over intermediary contract. Headnote Plaintiff held to be entitled to recover agency commission fee for introducing defendant shipbuilder to a customer in accordance with contract, despite defendant's denial that plaintiff performed any services; claim not time-barred by statute of limitations because time only began to run when plaintiff learned of its right to claim. Summary Plaintiff and Defendant shipbuilder agreed that Plaintiff would act as an intermediary between Defendant and the Singaporean company SMIT for the construction of two tugboats. Defendant built the tugboats for SMIT but did not pay Plaintiff the commission agreed in the contract between them. Plaintiff sued Defendant, which denied liability, arguing that the intermediary tasks had been performed by two other companies, and that Plaintiff had played no role in facilitating the transaction. Defendant also argued that Plaintiff’s claim was barred by the statute of limitations, because the claim arose when the two ships were delivered, which was more than two years before Plaintiff filed its claim with the Court. The Court held: (1) Plaintiff’s claim was not barred by the statute of limitations, because the limitation period only began to run when Plaintiff found out that the tugboats had been delivered, which was less than two years before it brought suit; (2) Plaintiff had performed the agreed tasks as intermediary between Defendant and SMIT; (3) Defendant was obliged to pay Plaintiff the agreed commission, plus interest.

Judgment The Plaintiff: JM Marine Ltd. Domicile: Akara Bldg, 24 De Castro Street Wickhams Cay 1, Road Town Tortola, British Virgin Islands. Legal representative: LUO Jianming, chairman of the company. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_35

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Agent ad litem: XUE Deming, lawyer of Guangdong Kingbridge Law Firm. Agent ad litem: LIN Jinli, apprentice lawyer of Guangdong Kingbridge Law Firm. The Defendant: CSSC Guijiang Co., Ltd. Domicile: No. 54 Qianjian Road, Wuzhou City, Guangxi Zhuang Autonomous Region, the People’s Republic of China. Legal representative: LUO Bin, chairman of the company. Agent ad litem: GAN Caipin, lawyer of Guangxi Zhengli Law Firm. Agent ad litem: WEI Yunfei, lawyer of Guangxi Zhengli Law Firm. This case arose from dispute over intermediary contract between the Plaintiff, JM Marine Ltd. (hereinafter referred to as JM), and the Defendant, CSSC Guijiang Co., Ltd. (herein after referred to as CSSC). Because the Plaintiff JM was a foreign company, this case was a foreign-related case. After entertaining it on March 14, 2016, this court legitimately constituted the collegiate bench to try the case. On April 26 and September 12, this court held hearings in public. Agents ad litem of the Plaintiff, XUE Deming and LIN Jinli, and agents ad litem of the Defendant CSSC, GAN Caipin and WEI Yunfei, appeared in the court to attend the hearings. Now the case has been concluded. The Plaintiff JM, alleged that: in the case of the Plaintiff JM introduced and facilitated the Defendant CSSC and Smit Singapore Private Limited (hereinafter referred to as SMIT), the relevant matters concerning the purchase of two anchor for tugboats contracts by SMIT with the Defendant CSSC. The plaintiff JM and the Defendant CSSC also reached an agreement on June 2016. Then they countersigned a written Commission Payment Agreement on December 30, 2010. The agreement stipulated: in view of the Plaintiff JM’s introduction and it helped the Defendant to CSSC successfully accept the orders of two anchor for tugboats of SMIT and signed the contract on August 25, 2010, the Defendant CSSC promised to pay the commission to the Plaintiff JM for 200,000 USD. The payment method was: after the two ships were launched, they would pay 100,000 USD, and after the two ships were delivered, they would pay 100,000 USD within one month. On July 17, 2014, the Plaintiff JM learned that the Defendant CSSC had respectively delivered two anchor for tugboats to SMIT on May 10 and July 25. Since then, the Plaintiff JM had repeatedly urged the Defendant CSSC to pay a commission of about 200,000 USD. However, the Defendant CSSC had not paid so far. Therefore, the Plaintiff JM claimed to the court that: 1. the Defendant CSSC should paid commission (intermediary remuneration) of 200,000 USD (according to the date of prosecution, the exchange rate of USD to RMB was equivalent to RMB1,303,000 yuan), and the interest rate would be paid 50% higher than the overdue loan interest rate of the People’s Bank of China, total in amount was RMB1,551,194 yuan (temporary to the date of prosecution was RMB248,194 yuan); 2. the court acceptance fee should be borne by the Defendant CSSC. The Defendant CSSC argued that: 1. the Plaintiff JM did not actually fulfill its intermediary contract obligations, so it did not have the right to receive commission. Before it quotated for the two standard vessels involved in the case, in order to

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take over the order, the Defendant CSSC repeatedly issued the intention of business to many people (including the Plaintiff JM). The Plaintiff JM was not the only one who knew the intention of the Singaporean SMIT Co. for the willing to purchase two standard ships and sent an inquiry to the Defendant CSSC. In fact, the effective initial inquiry was issued by an agent LIN Weixing who worked for Dragon Supply Ships Pte Ltd (hereinafter referred to as DSS) in an another intermediary, Singapore Swissco Energy Service Pte Ltd (herein after referred to as SWISSCO). After entering into a shipbuilding contract with SMIT, the Plaintiff JM also issued an inquiry in the early stage, which resulted to the Defendant CSSC to believe that the Plaintiff also participated in facilitating the transaction and signed Commission Payment Agreement by mistake. However, after the Defendant CSSC asked the Plaintiff JM to coordinate the shipbuilding contract with SMIT, the Plaintiff JM was unable to establish a contact with SMIT. Meanwhile, the Defendant CSSC found out that SMIT and its main contacts had no knowledge of the existence of the Plaintiff JM. Much evidence suggested that the plaintiff, JM, neither played a role in facilitating the transaction, nor did it practice post-coordination work that was more important than facilitating the transaction. It turned out that the shipbuilding contract between the Defendant CSSC and SMIT had no necessary causal relationship with the Plaintiff JM. So the Plaintiff, JM, claimed that the so-called commission lacked factual basis. 2. The shipbuilding contract was facilitated by SWISSCO in Singapore and there was no causal relationship with the actions of JM. After verification and confirmation, the specific work of shipbuilding contract was carried out by a worker in the business department called LIU Mou and the agent of SWISSCO, LIN Weixing. This fact was evidenced by more than 120 e-mail records related to the transaction, including tugboat information, inquiry, preliminary quotation, quotation response and the fellow coordination and communication work. 3. The case also had exceeded the statute of limitations and its claims should not be protected. According to the commission payment agreement between the Defendant CSSC and the Plaintiff JM, the first commission should be paid after two ships were launched, and the remaining commission should be paid one month later after delivery. The Defendant CSSC respectively delivered the ships to the shipowner on May 10, 2013 and July 25, 2013. The Plaintiff, JM, sent an e-mail and mailed the invoice of delivery, but the Defendant, CSSC, refused two arguments. According to the complaint, it was not true that the Plaintiff JM knew the ship was delivered on July 17, 2014 and asked for the commission. Therefore, the statute of limitations for the Plaintiff JM to claim for the payment of commission should be calculated from the date of the performance period, which was from August 25, 2013. To August 24, 2015, the factual state of none-exercise rights had reached the statutory period, the Plaintiff JM had lost the right to request protection. Therefore, the court was asked to reject the Plaintiff’s claims.

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In order to prove the claims of the Plaintiff JM, it provided the following evidence to the court: Evidence 1, commission payment agreement, to prove the intermediary contract relationship between the Plaintiff and the Defendant and the relevant agreements; Evidence 2, delivery agreement; Evidence 3, mails. Evidence 2 and 3, to prove the Defendant CSSC had delivered two tugboats to SMIT, but the Defendant CSSC did not pay intermediary remuneration of 200,000 USD to the Plaintiff JM. Evidence 4, the dunning letter, to prove that the Plaintiff JM dubbed the Defendant CSSC in 2014, but the Defendant CSSC did not pay the remuneration according to the contract; Evidence 5, mobile phone message dunning, to prove that the Plaintiff JM dubbed the Defendant CSSC, but it did not pay the remuneration; Evidence 6, the lawyer’s letter and the postal express mail order, to prove that the Plaintiff JM was still asking the commission from the Defendant CSSC until January 20, 2016. The Defendant CSSC cross-examined that, there was no objection to the authenticity of evidence 1, but there was objection to the relevancy. It was impossible to prove that the Plaintiff JM acting as the intermediary, coordinated the later work with the shipowner and the Defendant CSSC. There was no objection to the authenticity of evidence 2. There was no objection to the authenticity of evidence 3. There was an objection to the authenticity of evidence 4. The Defendant CSSC did not receive it. It belonged to the Plaintiff, JM, which only reflected a text. Besides, it did not have the content of the e-mail and the content could not reflect the content of the request for payment from the Defendant CSSC. There was objection to the authenticity of evidence 5. It was just a photo taken by the mobile phone, which did not conform to law. So there was no way to confirm its authenticity. It could not be determined who sent the information and the information content was incomplete. Except the two ships involved, the Plaintiff and the Defendant cooperated in 2007. During this period, 6 ships were traded. Even if this information was sent by the Plaintiff JM to the Defendant CSSC, it should not be treated as the commission for two boats. And the Defendant CSSC did not see the mobile phone screen, so it could not confirm the authenticity. There was no objection to the authenticity of evidence 6, but this was a claim that was more than the statue of limitation. The Defendant CSSC did not promise to pay the commission after receiving it. So it could not confirm the interruption of the statute of limitation. In order to support its defense, the Defendant CSSC provided the following evidence: Evidence 1, mail 001; Evidence 2, invoice issued by the Plaintiff JM.

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Evidence 1 and 2, to prove that the Plaintiff JM knew the facts of ship delivery at the latest on July 31, 2013. The Plaintiff JM stated that it was aware of the fact of delivery and requested the commission as a false statement on July 17, 2014. The Defendant CSSC had handed in the first ship on May 18, 2013, and the Plaintiff JM sent the invoice to the Defendant CSSC. Before the Defendant CSSC delivered the documents to the Plaintiff JM, the Plaintiff JM had already collected commission. The statue of limitation had exceeded. The statute of limitations from May 18, 2013 to the date of lawsuit of the Plaintiff JM. Evidence 3, mails 002-005, to prove that the shipowner SMIT did not know the Plaintiff JM, and indirectly proved that the Defendant CSSC and SMIT signed a shipbuilding contract was not facilitated by the Plaintiff JM. Evidence 4, commission payment agreement with SWISSCO, to prove that the intermediary who brokered the contract between the Defendant CSSC and SMIT was not the Plaintiff JM. Evidence 5, invoice, a fee voucher from Bank of China, an application for overseas remittance, a debit note for an international remittance and commission payment voucher such as bank payment voucher, to prove that the Defendant CSSC had already paid the commission for the ship construction contract signed with SMIT. Evidence 6, mails 006-132, to prove that SWISSCO had facilitated the mail record of our company’s transaction with SMIT, corroborating that the Defendant CSSC did not provide substantial intermediary services during the signing of the shipbuilding contract with SMIT. Evidence 7, the witness testimony of LIU Mou, to prove that the Plaintiff JM had not actually performed the intermediary contract. SWISSCO was the one who brokered the contract. The Plaintiff JM cross-examined that, the evidence provided by the Defendant CSSC had exceeded time limit for adducing evidence, which should not be accepted. There was no objection to the authenticity of evidence 1 and 2, but the content about 28m vessel in evidence 1 had nothing to do with this case, though the 51m vessel had been mentioned in evidence 1, there was no content that the Plaintiff JM knew that the second vessel had been delivered, on the contrary, only one vessel was mentioned, which indicated that the Plaintiff JM did not know that the second vessel had been delivered, the evidence could not prove that the claims of the Plaintiff JM had exceeded time limit for adducing evidence. It did not recognized the authenticity, legality and relevancy of evidence 3, firstly, this mail was provided by the Defendant CSSC unilaterally, and it was not notarized, so the authenticity could not be confirmed; secondly, one party of the mail, the identity of BASHAR, could not be confirmed, the Defendant CSSC could not prove the relationship with SMIT and the quality of statement on behalf of SMIT, the enquiry content in mail 002 of the Defendant CSSC indicated that CSSC did not know that BASHAR could not represent SMIT; thirdly, the enquiry content in mail 002, 003 of the Defendant CSSC and the answers of BASHAR were not about the intermediate service in this case, but referred to in general, meanwhile, BASHAR did

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not exclude the possibility that the Plaintiff JM was a secondary broker in mail 003, in addition, mail 004, 005 had nothing to do with the object of proof of the Defendant CSSC; finally, the date of mail 002, 003 was April 2016, which indicated that it was unsustainable and inconsistent that the Defendant CSSC contended that SMIT did not know the Plaintiff JM after it signed commission contract with the Plaintiff JM namely the beginning of 2011. It did not recognized the authenticity, legality and relevancy of evidence 4, there was no original copy of the evidence, and there was no other evidence to prove mutually, this evidence was formed in Singapore, but the Defendant CSSC did not make corresponding notarization in Singapore, and did not provide Chinese translation, which lacked legality, and the Defendant CSSC did not provide evidence to prove the legality of the subject quality of SWISSCO; the size of seal, the content and signature in this evidence were different from the invoice in evidence 5, so there was a doubt to the authenticity; the content of the evidence showed that the date of signing was November 28, 2010, before the date of commission agreement signed by the Plaintiff and the Defendant on December 30, 2010, which indicated that that the Defendant misunderstood that who contacted with SWISSCO was the Plaintiff JM claimed by the Defendant was inconsistent with signing contract with the Plaintiff JM; even if the evidence was true, the Defendant CSSC also failed to prove that the commission of the commission payment agreement was mutually exclusive with the commission involved in the case, and it could not deny the authenticity and legality of the commission agreement between the Plaintiff and the Defendant. It did not recognized the authenticity, legality and relevancy of evidence 5, there was no original copy of the invoice, and there was no other evidence to prove mutually, this invoice was formed in Singapore, but the Defendant CSSC did not make corresponding notarization in Singapore, and did not provide Chinese translation, which lacked legality, and the Defendant CSSC did not provide evidence to prove the legality of the subject quality of SWISSCO; the content of seal and signature in the invoice were different from evidence 4, so there was a doubt to the authenticity; the content in the evidence that the commission should be paid off before the vessel was delivered into water was different from the content of evidence 4; even if the evidence was true, the Defendant CSSC also failed to prove that the commission of the commission payment agreement was mutually exclusive with the commission involved in the case, and it could not deny the authenticity and legality of the commission agreement between the Plaintiff and the Defendant. There was no objection to the fact that the receiver of evidence 6 was LUO Jianming and the authenticity of the mail copied to LUO Jianming, it did not recognized the authenticity, legality and relevancy of other mails, the mail was provided by the Defendant CSSC unilaterally, and it was not notarized, so the authenticity could not be confirmed; according to the contents of these mails, the time of the mails occurred from February to August, 2010 namely on December 30, 2010, when the Plaintiff and the Defendant signed the commission agreement, the main object was HS (DSS) and LIU Mou, where the receiver of the mail 6 was LUO Jianming and LIU Mou, most of mails were copied to LUO Jianming, the content of the mail was the specific technical and trading conditions for ship quotation and shipbuilding,

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these evidence indicated that the Plaintiff JM provided intermediary services for the Defendant CSSC. In the evidence 7, the appearance of witnesses in the court should be submitted within ten days before the expiration of the burden of proof. The witness was the staff member of the Defendant CSSC, and had a stake with the Defendant CSSC. So, the testimony was not reliable, and through the testimony of LIU Mou, the following facts could be confirmed: it had been confirmed that he sent a mail to the Plaintiff JM on July 17, 2014. The Defendant CSSC paid the Plaintiff JM the commission for the last 28-m ship during the period from November to December, 2013, that was, after November to December, 2013, the Defendant CSSC did not pay commission to the Plaintiff again. Therefore, it could not hold that the Defendant said it received the dunning letter on September 28, 2014 and the mobile phone text message on April 10, 2015 had no relevance to the case at the time of the cross-examination; 3. the witness clearly affirmed that the coordination and dunning between the Defendant CSSC and the shipowner had the participation of the Plaintiff JM; 4. the witness was not present when the Plaintiff and the Defendant signed the commission payment agreement, so the witness should have no idea of the commission payment and the related agreement between the two parties. Therefore, the witness’ statement about the commission payment agreement was not credible. The court held that, there was no objection to the authenticity of the evidence 1– 3, 6 submitted by the Plaintiff JM and evidence 1 and 2 submitted by the Defendant CSSC, which should be used as the basis for determining the facts of the case. The disagreement should be combined with the evidence of the whole case to be comprehensively identified. Evidence 4 submitted by the Plaintiff JM was made unilaterally, so the authenticity was not confirmed. It could not be used as the basis for determining the facts of the case; evidence 5 submitted by the Plaintiff JM was a printed copy of a mobile phone text message. The identify of both parties of the communication could not be confirmed, so there was objection to the authenticity. It could not be determined as the facts of the case. There was no objection to the evidence 3 and 6 submitted by the Defendant CSSC, because the Defendant CSSC demonstrated mail alive after the trail, and the content of the mail was consistent with the printed content submitted by the Defendant CSSC, and the Plaintiff JM was also recognized that the receiver or copy recipient was LUO Jianming. The disagreement should be combined with the evidence of the whole case to be comprehensively identified; Evidence 4 submitted to the Defendant CSSC was a foreign-language evidence, and it was signed with a person other than involved in the case. It had no notarization, so the authenticity could not be verified; the court had checked the original of the fee voucher from Bank of China, the application for overseas remittance and the debit note for an international remittance submitted by the Defendant CSSC in the evidence 5 after trial, so there was no objection to the authenticity. It could be used to prove the fact of the case. The disagreement should be combined with the evidence of the whole case to be comprehensively identified. There was no original for the invoice in evidence 5, so there was objection to the authenticity of it; he bank payment certificate in evidence 5 was unilaterally

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produced by the Defendant CSSC, so the court did not confirm it, and it could not be used as the basis for determining the facts of the case. The court found out that: The Plaintiff and the Defendant signed Commission Payment Agreement on December 30, 2010, and stipulated that the Plaintiff JM introduced and helped the Defendant CSSC to successfully accept two 51.8-m anchor for tugboats of SMIT (51 m Anchor Handing Tug, Hull No. GJ01-2010-19, GJ01-2010-20). In view of the official signing of the shipbuilding agreement of the two ships on August 25, 2010, according to the friendly agreement between the Plaintiff JM and the Defendant CSSC, the Defendant CSSC promised to pay the Plaintiff JM the commission of the two ships in total amount 200,000 USD after the contract went into effect. So, the following matters were clarified that: 1. the first commission of 100,000 USD would be paid after two ships were launched. The remaining commission of 100,000 USD would be paid within one month after two ships were delivered, and the payment currency was USD. The method was TT to the Plaintiff JM’s account in Hong Kong; 2. during the construction of two ships, the Plaintiff JM was obliged to assist CSSC with SMIT, and urged SMIT to pay the shipbuilding amount according to the contract and implemented the equipment provided by the shipowner and supplied the drawings as required; 3. this agreement was attached to the shipbuilding contract between the Defendant CSSC and SMIT. If the shipbuilding contract was suspended for any reasons, this agreement would be accordingly suspended. The Defendant and its representatives signed on the agreement. On May 10, 2013, the Defendant CSSC delivered a 51-m anchor for tugboat named SMISENTOSA with the hull number GJ-01-2010-19 to SMIT. On July 25, the Defendant CSSC delivered a 51-m anchor for tugboat named SMITSERAYA with the hull number GJ01-2010-20 to SMIT. An employee of the Defendant CSSC, LIU Mou, sent the transfer agreement for the two ships to the legal representative of the Plaintiff JM, LUO Jianming. On January 20, 2016, the Plaintiff JM entrusted the lawyer XUE Deming to send Lawyer’s Letter to the Defendant CSSC, requesting the Defendant CSSC to pay the interim remuneration of 200,000 USD. So far, the Defendant CSSC had not paid the intermediary fee of 200,000 USD to the Plaintiff JM. During the trial, the Plaintiff JM stated that it introduced SMIT to the Defendant CSSC through DSS and SWISSCO. The Plaintiff JM was responsible for contacting with the Defendant CSSC. LIN Weixing was responsible for contacting with SMIT. The boss of DSS and SWISSCO was Robert Chua. LIN Weixing was a staff of DSS. The Defendant CSSC only recognized the relationship among DSS, SWISSCO and LIN Weixing. From February 8 to August 25, 2010, more than 51 mails were sent and copied to the legal representative of the Plaintiff LUO Jianming from the mailboxes of the employee of DSS LIN Weixing and the employee of the Defendant CSSC LIU Mou. Thereinto, 1. LIN Weixing of DSS sent a mail with the theme of the inquiry of price for 51-m anchor for tugboat to LUO Jianming and LIU Mou on February 8. He copied a mail with the theme of 51 m 100TBP anchor for tugboat standard on

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March 14. He copied a mail with the theme of replying 51MJIS valve to LUO Jianming, involving equipment costs on April 23. He copied a mail with the theme of the quotation draft of 51 m 800PSAHT, involving equipment quotations on May 8. He sent a mail to Robert Chua and copied a mail to LUO Jianming and LIU Mou with the theme of 51 m 5220kw anchor for tugboat-shipyard price. The content was “Respect ROBERT, please see the attached shipyard quotation, the manufacturer’s form and the general picture. That is what we will submit to SMIT”. On June 1, he sent a mail to LIU Mou and LUO Jianming with the theme of the contract discussion about the 51-m anchor for tugboat with SMIT. The content was “Respected Honglei, please pay attention that we plan to find a place in Singapore for these discussion with SMIT, probably on June 11 or 12. Please review the contract with SMIT which I sent to you last week and prepare for the trip”. On May 28, he sent a mail to LIU Mou and LUO Jianming with the theme of transmitting the mail of SMIT’s new shipbuilding contract-2  51 m anchor for tugboat. On June 17, he sent a mail to LIU Mou and copied a mail to LUO Jianming with the theme of the meeting with Guijiang Shipyard. On July 5, he sent a mail to LIU Mou and copied to LUO Jianming with the theme of 51 m anchor for the tugboat for the SMIT mail, involving the price submitted to SMIT. On August 4, he sent a mail to LIU Mou and copied to LUO Jianming with the theme of the meeting in Singapore for anchor for the tugboat. On August 12, he sent a mail to LIU Mou and copied to LUO Jianming with the theme of the meeting in Singapore for anchor for the tugboat and confirmed the meeting about it would be held with SMIT in Singapore, on Tuesday, August 24, 2010. 2. The employee of the Defendant CSSC LIU Mou, on May 10, copied an e-mail to LUO Jianming with the theme of replying to the 51m8000PSAHT’s quotation of price through his mailbox. On April 27, he copied a mail to LUO Jianming with the theme of the quoted price of 51 m, involving the base price of the tugboat, increased project and refund guarantee. He copied a mail to LUO Jianming with the theme of the replying to the contract discussion for extended quotation period for 51 m anchor for tugboat with SMIT. The content was “Respected Weixing, I would tell you that I cannot go before June 12. Regarding the quotation, I am communicating with our production department to determine the delivery date based on our new order, possibly in the middle of 2012”. On June 3, he copied the mail with the theme of the new price quotation of 51 m to LUO Jianming. On August 9, he sent a mail to LIN Weixing and replied a mail to LUO Jianming with the theme of the meeting of 51 anchor for tugboat in Singapore. The content was “Respected Weixing, I and XIE have confirmed that we would arrive in Singapore on August 20. LUO Jianming said that the meeting with SMIT would be on August 24. I thought that was OK, but we did not want to waste time discussing the terms of the contract in the meeting. Please remind SMIT to give their advice on my contract”. On August 13, he sent a mail to LIN Weixing and replied a mail to LUO Jianming with the theme of replying to the meeting for 51 m anchor for tugboat in Singapore. The content was “Respected Weixing, XIE’s team planned to go to Singapore on August 20, and go back on August 27”. He can attend the meeting of SMIT. I and LUO Jianming planned to go to Singapore on August 23. 3. The e-mails through the employee of DSS, LIN Weixing and the employee of the

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Defendant CSSC LIU Mou were not limited to the above first to second detailed statement of the number of mails. On July 31, 2013, LUO Jianming sent a mail to LIU Mou with the theme of replying the invoice of GJ20 and 21, 28 m tugboat continuing to build. The content was that: “please see the attached invoice, and helped to urge you company to pay the price, including the first 51 m (GJ01-2010-19). Because 28 m has not been delivered, please collect the invoice first, and then handle it after the ship is delivered.” On April 14, 2016, LIU Mou sent a mail to the employee of SMIT, BASHAR, asked him whether he knew the Plaintiff JM and its boss LUO Jianming; on the same day, BASHAR replied that he had never bought services from the Plaintiff JM, and if it was a second-hand middleman, he was not clear. The court also found out that, On March 14, 2016, the court received the Plaintiff JM’s claims and accepted, USD exchange rate RMB in the same day was 6.4897. The court held that: This case was an intermediary contract dispute, a foreign-related contract dispute case. According to the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 41 “the laws at the habitual residence of consumers shall apply to consumer contracts. If a consumer chooses the applicable laws at the locality of the provision of goods or services or an operator has no relevant business operations at the habitual residence of the consumer, the laws at the locality of the provision of goods or services shall apply.” The Plaintiff and the Defendant agreed to choose the PRC law as the basis for the lawsuit, and the PRC law was the most closely related with the case. So the trial of the case should be applicable to the Contract Law of the People’s Republic China and other related laws. According to the claims and defenses of the Plaintiff and the Defendant and the confirmation of the evidence, the issues of the case were that: 1. whether the Plaintiff JM’s claims exceeded the statute of limitations; 2. whether the Plaintiff JM had fulfilled the intermediary obligation in the case; 3. whether the Defendant CSSC should pay the Plaintiff JM 200,000 USD and overdue interest. 1. Whether the Plaintiff JM’s claims exceeded the statute of limitations The Defendant CSSC thought that the date of delivering the last one of the two 51-m anchor for tugboats involved in the case was on July 25, 2013, according to the commission payment agreement signed by the Plaintiff and the Defendant, the deadline for paying the last commission was one month after the two ships were delivered, so the Plaintiff JM’s effective claim for the commission payment was from August 26, 2013 to August 26, 2015. The Plaintiff JM’s claims had exceeded the statutory time limitation. However, the court held that the Plaintiff JM’s claims did not exceed the statutory time limitation, the reasons were as follows: according to the General Principles of the Civil Law of the People’s Republic China Article 135: “except as otherwise stipulated by law, the limitation of action regarding applications to a people’s court for protection of civil rights shall be two years”, Article 137 “a limitation of action shall begin when the entitled person knows or should know that his rights have been infringed upon. However, the people’s court

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shall not protect his right if 20 years have passed since the infringement. Under special circumstances, the people’s court may extend the limitation.” The Plaintiff JM claimed to the court that the Defendant CSSC should pay commission from the date when two 51-m anchor for tugboat have been delivered. On July 17, 2014, the legal representative of the Plaintiff JM, LUO Jianming, received the transfer agreement between the two ships, so the limitation of commission claimed by the Plaintiff JM should be calculated from July 17, 2014 to July 17, 2016. The court accepted the claims of the Plaintiff JM on March 14, 2016, so the claim for commission payment did not exceed the statute of limitations. The court did not confirm the defense of the Defendant CSSC. 2. Whether the Plaintiff JM had fulfilled the intermediary obligation in the case First of all, Commission of Payment Agreement signed by the Plaintiff and the Defendant was legal and valid. The agreement stipulated that the Plaintiff JM introduced and helped the Defendant CSSC successfully accept two 51.8-m anchor for tugboats of SMIT. The Defendant CSSC promised to pay the Plaintiff JM commission after the contract took effect. According to the Contract Law of the People’s Republic China (hereinafter referred to as Contract Law) Article 424 “a contract for intermediary services is a contract under which the intermediary reports to the client on opportunities for the conclusion of contracts or supplies intermediary services relating to the conclusion of contracts, and the client pays remuneration to the intermediary”, the relationship between the Plaintiff and the Defendant was the intermediary contract relationship. The Plaintiff JM was the intermediary, while the Defendant CSSC was the bailor, and the Plaintiff and the Defendant signed Commission of Payment Agreement, both parties signed and sealed on the agreement. It was their true meanings, and it did not violate laws of China and mandatory regulations, so it should be legal and valid. The Plaintiff and the Defendant should fully implement in accordance with Commission of Payment Agreement. Although the Defendant CSSC thought that the contract with the Plaintiff JM was the Plaintiff JM participated as the intermediary, the Defendant CSSC failed to submit evidence to prove that the contract was signed under a major misunderstanding, and since the contract signed in October, 2010, the Defendant CSSC did not request to terminate the contract or cancel the contract. Therefore, the court did not accept the defense of the Defendant CSSC. Secondly, the Plaintiff JM had fulfilled its primary obligation of the intermediary contract. Firstly, according to Commission of Payment Agreement signed by the Plaintiff and the Defendant, the main obligation of the Plaintiff JM as an intermediary was to introduce and successfully promote the Defendant CSSC and SMIT to reach a shipbuilding contract. The plaintiff JM said it contacted with SMIT through the employee of the DSS, LIN Weixing. Although the Defendant CSSC did not approve, the mail sent by LIN Weixing in DSS and LIU Mou of the Defendant CSSC, they signed a contract involving the contract with SMIT and the case of the 51-m anchor for tugboat. In the mail, the recipient or the copywriter was the legal representative of the Plaintiff JM, LUO Jianming, and the contents also showed that LUO Jianming had informed LIU Mou and the signing time of SMIT.

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LUO Jianming also went to Singapore, attending the signing event. It could be seen that the Plaintiff JM provided the Defendant CSSC with the information that could be referred to SMIT during the contract successfully took effect. The information was valuable to the client in contracting the shipbuilding and promoted the Defendant CSSC and SMIT to reach a shipbuilding contract on August 25, 2010. In addition, Commission of Payment Agreement signed by the Plaintiff and the Defendant confirmed that the Defendant CSSC successfully undertook the business of commissioning shipbuilding contract by SMIT. Thus, it was confirmed that the Plaintiff JM had fulfilled its main obligation of intermediary contract. The court confirmed it. Secondly, the Defendant CSSC said that the Plaintiff JM failed to coordinate with SMIT during the construction of two 51-m anchor for tugboats, which resulted that the Defendant CSSC was fined, so the Defendant CSSC argued that the Plaintiff JM did not perform the main obligations of the contract. The court held that, the commission payment agreement was an intermediary contract, and the agreement stipulated that as long as the Defendant CSSC successfully received two 51-m anchor for tugboats, it should pay the commission to the Plaintiff JM after the transaction contract was signed. After the transaction, the Plaintiff JM could obtain intermediary remuneration. The Defendant CSSC argued that it required the Plaintiff JM and SMIT to coordinate mediation to reduce the fine, it was the issue of the contract between the Defendant CSSC and SMIT. It should not be the main obligation of the intermediary contract. Therefore, the court did not accept it. Thirdly, for the defense presented by the Defendant CSSC that in the case of two 51-m ships, SWISSCO Co. always provided intermediary services, the court held that the commission payment agreement signed between the Defendant CSSC and SWISSCO were not certified. Although the Defendant said that it had already paid 50,000 USD commission to SWISSCO, according to the mail provided by the Defendant CSSC, the employee of the Defendant, who provided the information of SMIT, which did not show that it was a staff of SWISSCO. Therefore, the court did not accept it. 3. Whether the Defendant CSSC should pay the Plaintiff JM 200,000 USD and overdue interest According to the Contract Law Article 426 Paragraph 1 “Broker Entitled to Remuneration Once the broker facilitated the formation of the proposed contract, the client shall pay the remuneration in accordance with the brokerage contract. Where remuneration to the broker was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, it shall be reasonably fixed in light of the amount of labor expended by the broker. Where the broker facilitated the formation of the proposed contract by providing intermediary services in connection therewith, the remuneration paid to the broker shall be equally borne by parties thereto”, Article 107 “Types of Liabilities for Breach If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc.”, Article 112 “Liability for Damages Notwithstanding Subsequent Performance or Cure of

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Non-conforming Performance Where a party failed to perform or rendered non-conforming performance, if notwithstanding its subsequent performance or cure of non-conforming performance, the other party has sustained other loss, the breaching party shall pay damages”, the intermediary contract in the case was legal and valid. The Plaintiff JM had facilitated the Defendant CSSC to sign the contract with SMIT. The contract signed between the Defendant CSSC and SMIT was the contract that the Defendant CSSC intended to enter it when it made a commission. The Defendant CSSC did not pay the intermediary remuneration to the Plaintiff JM, which constituted a breach of contract and should bear the responsibility of paying a breach of contract, total amount 200,000 USD. The amount of 200,000 USD was calculated when the Plaintiff JM claimed to the court on March 14, 2016. The USD to RMB was calculated as exchange rate of 6.2897, equivalent to 1,297,940 yuan. The Defendant CSSC should be compensated for the loss of interest to the Plaintiff JM due to the breach of contract. The Plaintiff JM requested the Defendant CSSC to pay interest loss based on the inter-substitution contract relationship between two parties, rather than the sales contract relationship. Therefore, the Plaintiff JM requested the Defendant CSSC to pay the 50% increase in the overdue loan interest rate of the People’s Bank of China during the same period which was unfounded in the law, the court did not accept it. The Defendant CSSC should pay the Plaintiff JM the interest of 1,297,940 yuan according to the same period of the People’s Bank of China. Since the Plaintiff and the Defendant did not stipulate the liability for the breach of contract, so the interest loss should be calculated from the date on which the Plaintiff JM filled a lawsuit against the Defendant CSSC to the court on March 14, 2016. The Plaintiff JM claimed that the interest should be calculated from August 26, 2013. The court did not accept it. Pulling the threads together, the Plaintiff JM had fulfilled the main obligation of the intermediary contract, and the Defendant CSSC should pay intermediary remuneration and interest loss overdue payment to the Plaintiff JM. According to the Contract Law of the People’s Republic China Article 107, Article 112, Article 424 and Article 426 Paragraph 1, and Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 (“it is the duty of a party to an action to provide evidence in support of his allegations”), the judgment is as follows: 1. The Defendant, CSSC Guijiang Co., Ltd. should pay intermediary remuneration of 1,297,940 yuan and interest to the Plaintiff, JM Marine Ltd. (interest calculated according to the same-period interest rate of the People’s Bank of China and from March 14, 2016 to the date of actual payment); 2. Reject other claims of the Plaintiff, JM Marine Ltd. Court acceptance fee in amount of 18,761 yuan (the Plaintiff had prepaid.), the Plaintiff JM Marine Ltd. should bear 3,063 yuan, and the Defendant CSSC Guijiang Co., Ltd. should bear 15,698 yuan. The judgment obligation in this case, should be performed within 10 days after the judgment comes into force. If the obligation is not performed, according to the Civil Procedure Law of the People’s Republic of China Article 253, the obligor

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shall pay a double interest for the late fulfillment. The obligee may apply to the court for execution within two years from the last day of the performance deadline stipulated in the effective judgment of the case. If not satisfied with this judgment, within thirty days of the date of the judgment delivered, the Plaintiff, or within fifteen days of the date of the judgment delivered, the Defendant, can submit copies of the original petition to this court so as to appeal to the Guangxi Zhuang Autonomous Region High People’s Court, and shall pay the appeal fee within seven days from the expiration of the appeal period. (Receiving unit: Guangxi Zhuang Autonomous Region High People’s Court; account number: 20xxx77; bank: Nanning Wanxiang Branch of Agricultural Bank of China.) If the payment is not made within the time limitation, and the application for late payment is not submitted, the appeal shall be withdrawn automatically. Presiding Judge: SU Weilin Judge: SU Bin People’s Juror: HUANG Xiuxing November 21, 2016 Clerk: LING Chen

Wuhan Maritime Court Civil Judgment Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2015) Wu Hai Fa Shang Zi No. 01773 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 668 and page 680 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Plaintiff shipowner held not to be entitled to recover from defendant insurer on hull policy because cause of loss of ship was held not to be grounding, an insured risk, but bad cargo loading, an excluded risk. Summary The Plaintiff insured sued the Defendant-insurer for payment under a hull insurance policy after the Plaintiff’s vessel sank. The Plaintiff claimed that the accident was caused by the vessel grounding, and thus, was covered under the all-risks-covered insurance policy. However, the Court held that the vessel actually sank because when cargo was loaded on the vessel, it was concentrated in the center of the hull, which caused the ship’s frame to buckle and fracture. Such an accident was not covered under the insurance policy, and thus, did not render the Defendant-insurer liable to compensate the Plaintiff-insured. The Court rejected the Plaintiff’s claims.

Judgment The Plaintiff: Kuixia Shipping Agency (Chongqing) Co., Ltd. Domicile: Room 507, Sanxiafeng Building 2, No. 2, Yueya Street, Yongan Town, Fengjie County, Chongqing. Legal representative: YANG Zhong, chairman of the company. Agent ad litem: HUANG Xuejun, lawyer of Chongqing Wancheng Law Firm. Agent ad litem: LIU Zhang, lawyer of Chongqing Wancheng Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_36

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The Defendant: People’s Insurance Company of China Fengjie Sub-branch Domicile: Kuizhou Road, Yongan Town, Fengjie County, Chongqing. Representative: XX, general manager of the sub-branch. Agent ad litem: WANG Yongfen, female, Han, born on June 15, 1982, living in Yuzhong District, staff of People’s Insurance Company of China Chongqing Branch. Agent ad litem: GUO Feng, lawyer of Hubei Shangtai Law Firm. With respect to the case arising from the dispute over marine insurance contract between the Plaintiff Kuixia Shipping Agency (Chongqing) Co., Ltd. (hereinafter referred to as “Kuixia Shipping Agency”) and the Defendant People’s Insurance Company of China Fengjie Sub-branch (hereinafter referred to as “PICC Fengjie”), the court entertained the case on December 4, 2015, and specified Judge LIU Dong to hear the case by summary procedure. And then, because of the complicated situation, the court changed into using general procedure and constituted a trial bench in light of law and held an open hearing on March 23, 2016. LIU Dong was appointed as Presiding Judge, KONG Linggang appointed as Judge and JIANG Zhangpeng appointed as Acting Judge. HUANG Xuejun and LIU Zhang, agents ad litem of the Plaintiff Kuixia Shipping Agency, GUO Feng and ZHAO Tanghui, agents ad litem of the Defendant PICC Fengjie, appeared in court and participated in the hearing. And the court did the second trial on July 2, YANG Zhong, the legal representative of the Plaintiff Kuixia Shipping Agency, HUANG Xuejun, agent ad litem of the Plaintiff Kuixia Shipping Agency, GUO Feng and WANG Yongfen, agents ad litem of the Defendant PICC Fengjie, appeared in court and participated in the hearing. Now the case has been concluded. The Plaintiff Kuixia Shipping Agency claimed that: on October 20, 2014, Kuixia Shipping Agency bought insurance covering inland river vessel all risks for M.V. “Kuixia 609” from PICC Fengjie. The insurance effective period was from October 21, 2014 to October 20, 2015. On October 16, 2014, M.V. “Kuixia 609” sailed from Lanjiatuo Port Authority, the port of destination is Jiangyin Port. At 03:35 on October 21, M.V. “Kuixia 609” got the order from Three Gorges Ship Lock Commend Center, and prepared to go through the Shawan. During the period of leaving, the bottom of the left slides was stranded on the Shawan. The vessel was damaged and diagram situation of some part of the vessel is deteriorating, which caused M.V. “Kuixia 609” was sinking in the Yichang water at 15:14 on the same day. After the accident, Kuixia Shipping Agency immediately reported to the insurer. Later, Kuixia Shipping Agency paid salvage fee RMB1,150,000 yuan (the following currency are all RMB), and paid vessel repair fees 2,713,265 yuan. On June 18, 2015, PICC Fengjie issued Notice of Claims Rejected to Kuixia Shipping Agency for this accident was not insured accident. The Plaintiff Kuixia Shipping Agency requested the court to rule that: 1. PICC Fengjie should pay Kuixia Shipping Agency all together 2,713,265 yuan plus the interest 123,837.93 yuan (from June 19, 2015 to actual payment day, the interest should calculated based on the benchmark interest rate at that time of the People’s Bank of China, the tentative payment day would be June 18, 2016). 2. PICC Fengjie should pay the Plaintiff

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salvage fee 1,150,000 yuan plus the interest 54,396.6 yuan (from June 19, 2015 to actual payment day, the interest should calculated based on the benchmark interest rate at that time of the People’s Bank of China, the tentative payment day would be June 18, 2016). 3. Pay the legal and appraisal fee of this case. The Defendant PICC Fengjie argued that: the accident to the case did not belong to insurance case, the reason of M.V. “Kuixia 609” sinking was the improper goods stowage. Kuixia Shipping Agency provided it was an aground was no evidence to provide. The loss amount which Kuixia Shipping Agency claimed was disagreeing with the facts. PICC Fengjie requested the court to reject the claims of Kuixia Shipping Agency. In order to support its claims, the Plaintiff submitted the following evidence to the court: Evidence 1: Enterprise Legal Person Business License, Code Certificate of the Organization, Identity Certificate of the Legal Representative, Shipment by Water License, to prove that Kuixia Shipping Agency was a proper subject as the Plaintiff. The Defendant had no objection to the authenticity of this group of evidence. The court admitted the authenticity of this group of evidence. Evidence 2: Certificate of Ship Ownership, Inland Navigation Ship Certificates of Inspection, Voyage Vessel Visa Applicants, to prove that Kuixia Shipping Agency was the owner of M.V. “Kuixia 609”, and prove the seaworthiness of this ship. The Defendant had no objection to the authenticity of this group of evidence, but thought Temporary Inland Navigation Vessel Tonnage Certificate was overtime. The court admitted the authenticity of this group of evidence. Evidence 3: All risks Insurance Policy of Inland Vessel, to prove that the legal insurance relationship was existed between the Plaintiff and the Defendant. The Defendant had no objection to the authenticity of this group of evidence. The court admitted the authenticity of this group of evidence. Evidence 4: Vessel Insurance on Duty Notice, to prove that M.V. “Kuixia 609” had grounded accident during the insured period. The Defendant had no objection to the authenticity of this group of evidence, but thought this evidence cannot prove that vessel in this case was grounded. The court admitted the authenticity of this group of evidence. But the court would combine other evidence to check whether this evidence can prove this vessel was grounded. Evidence 5: Salvage Contract and its receipt, Repairing Contract and repair fee receipt, to prove that the salvage and repair fees after M.V. “Kuixia 609” sinking. PICC Fengjie held that: 1, PICC Fengjie had no objection to the authenticity of this group of evidence. 2, PICC Fengjie was not the subject of the Salvage Contract, the authenticity of this contract should be verified by the court; the

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document of the salvage fees were not the formal invoice, the stamp on this invoice is special seal of contractual use which had no correspond payment document. These cannot approve that the Plaintiff paid 1,150,000 yuan. The repairing receipt was also not the formal receipt document, and there was a large gap between the repairing fees which claimed by Kuixia Shipping Agency and that assembled by the evaluation department, that not true. The court admitted the authenticity of this group of evidence. Evidence 6: Claims Rejected Notification, to prove that PICC Fengjie refused to realize its claims liability. PICC Fengjie had no objection to the authenticity of this group of evidence, and thought its action is legal. The court admitted the authenticity of this group of evidence. After the first hearing, Kuixia Shipping Agency applied the identification, it was applied the court to identify the formation time and order of the seal and hand writing on Inland Navigation Ship Insurance Policy (Version 2009), Detailed Explanation and Notification on Insurance Exemption Clauses, to prove that the formation time of these two documents after the insurance accident. And the seals of Kuixia Shipping Agency stamped before the writing. Hence, PICC Fengjie was failure to perform an obligation that duly of disclosure, the relative clause was illegal. The court approved the claims of Kuixia Shipping Agency according to the law. After negotiation, the original Plaintiff agreed to accept the identification from the Judicial Authentication Center of the Southwest University of Political Science & Law. On March 30, 2016, the court delegated the Judicial Authentication Center to identify these two documents, and on May 25, this Judicial Authentication Center issued the Judicial Authentication Opinion. These opinions specify as follows: 1, this center cannot sure the certain formation time of the seals and printing on Inland Navigation Ship Insurance Policy (Version 2009), Detailed Explanation and Notification on Insurance Exemption Clauses; 2, the seals that “Kuixia Shipping Agency Chongqing Co., Ltd.” formed as the same time of same part printing which on the Inland Navigation Ship Insurance Policy (Version 2009), Detailed Explanation and Notification on Insurance Exemption Clauses. Kuixia Shipping Agency thought that this opinion cannot sure the certain formation time of the seals and printing, the dispute did not be solved, so it applied the Lanzhou Institute of Physical, Chinese Academy of Science to identify. PICC Fengjie held that: this opinion was explicit that the seals of Kuixia Shipping Agency on the insurance documents were formed after the printing, which not same as Kuixia Shipping Agency claimed that the sealed on the blank paper and then printed. These can approve that PICC Fengjie performed an obligation that duly of disclosure. There were no statements of facts and laws for Kuixia Shipping Agency to apply adding identification, so the court should not approve. The court held that: firstly, this opinion was explicit that the seals of Kuixia Shipping Agency on the insurance documents were formed after the printing on Inland Navigation Ship Insurance Policy (Version 2009), Detailed Explanation and

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Notification on Insurance Exemption Clauses. That can prove the text content formed before the seals which Kuixia Shipping Agency sealed on the documents. Kuixia Shipping Agency had objections for the effectiveness of the exception clause on the grounds of the formed order of the seals and text content, this had no evidence to support, so the court cannot support. Secondly, Kuixia Shipping Agency applied to identify the formed time of the seals and printing text, the Judicial Authentication Center of the Southwest University of Political Science & Law cannot provide the identification opinion for the technological reason, and then Kuixia Shipping Agency applied other party to identify. Actually, in the practice, it was a very common situation that execution of the contract before they signing the real contract. It cannot judge the execution time and effectiveness of the contract according to the real contract signing time. Even it identified that the formed time of Inland Navigation Ship Insurance Policy (Version 2009), Detailed Explanation and Notification on Insurance Exemption Clauses was late the insurance accident time through the supplemental identification, it cannot judge the insurer did not perform an obligation of explaining the exception clause when Kuixia Shipping Agency bought insurance. But on the contrary, it can confirm that Kuixia Shipping Agency had performed an obligation of telling because the text content formed before sealed the seals no matter it sealed before the vessel sinking or after. The court held, for all of the foregoing reasons, Kuixia Shipping Agency applied for supplemental identification was no sense for this case no matter what the result, on the contrary, maybe the result would affect the civil effectiveness and increase the civil cost. The court was not permitted the supplemental identification according to the Interpretation of the Supreme People’s Court on Several Issues concerning Application of the Civil Procedure Law of the People’s Republic of China. On July 13, 2016, Kuixia Shipping Agency submitted some evidence after the hearing and before judge. This purported to prove that the insurance policy was signed after the accident, PICC Fengjie did not perform the informing obligation for the exception clauses. The court held that: 1, after reviewing, parts of the submitted evidence were testimony of witnesses, they were statement of the insurance contract formation time, not belongs to the overdue submitted evidence for the objectionable reason. Even PICC Fengjie did not agree disclaims. 2, The order of the time that the insurance contract signed and the accident happened, which has not direct relationship with the insurance contract effective time. It cannot judge the insurer performance the informing obligation for the exception clauses according to the time order. Hence, this evidence cannot prove the will-be-proved facts. For all of the foregoing reasons, the court did not accept this evidence from Kuixia Shipping Agency according to Article 101 and of Article 102 Paragraph 2 of the Interpretation of the Supreme People’s Court on Several Issues concerning Application of the Civil Procedure Law of the People’s Republic of China.

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The Defendant submitted the following evidence to the court: Evidence 1: All risks Insurance Policy of Inland Vessel, Vessel Insurance Clause in Inland River (2009 version), to prove that the insurance relationship was existed between the Plaintiff and the Defendant in accordance with the law, PICC Fengjie rejected to claim was confirming to contract regulations. Evidence 2: Vessel Insurance Form in Inland River (2009 version), to prove that Kuixia Shipping Agency knew about the exceptions and voluntary bought insurance. Evidence 3: Statement and Notice of Insurance Exception Clause, Inquiry and Notice of Buying Vessel Insurance, Receipt of Relevant Materials about Vessel Insurance Contract, to prove that PICC Fengjie had informed Kuixia Shipping Agency about the relevant exceptions. Kuixia Shipping Agency argued that these foregoing three groups of evidence that: 1, the Defendant had no objection to the evidence 1, but the insurance clause did not signed-in. 2, The Defendant had no objection to the evidence 2. 3, Kuixia Shipping Agency did not sign page by page on Statement and Notice of Insurance Exception Clause, that cannot prove the insurer perform the informing obligation; Statement and Notice of Insurance Exception Clause can approve the face that the proper shipment of Kuixia Shipping Agency; the signed time has been changed on Receipt of Relevant Materials about Vessel Insurance Contract, the Defendant had objection to the authenticity. The court held that: 1, the court confirmed the authenticity of these three groups of evidence. 2, Kuixia Shipping Agency had stamped on the last page of Statement and Notice of Insurance Exception Clause, confirmed that they had received the insurance policy, Statement and Notice of Insurance Exception Clause and insurance clause, these can prove that the insurer had performed the deliver obligation of relevant documents; even Kuixia Shipping Agency did not sign page by page on the notice, the stamp on the last page had approved that this notice had 4 pages and Kuixia Shipping Agency did not submit any contrary evidence. Hence, the court ruled the evidence effectiveness admissible. 3, Although the signed time has been changed on Receipt of Relevant Materials about Vessel Insurance Contract, combined the material and Kuixia Shipping Agency stamp, the court held that the change cannot influence this receipt effectiveness, and ruled the evidence effectiveness admissible. Evidence 4: Inquiry Note of Vessel Insurance totally had 5 copies, to prove that PICC Fengjie had inquired 5 seafarers on the vessel and made note after M.V. “Kuixia 609” accident, and these 5 seafarers confirmed that there were no any collisions, stranding and grounding accident. Kuixia Shipping Agency had no objection to the authenticity of this evidence, but the seafarers in case were low-level staff not the master or chief mate, so this evidence cannot be proved; and this evidence was testimony of witnesses, the witnesses should be in the court and be inquired.

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The court admitted the authenticity of this group of evidence. But the court would combine other evidence to check whether this evidence can prove this vessel was grounded. Evidence 5: Field Scene Investigation of the Vessel Accident, to prove that on March 24, 2015, the Reasun Insurance Surveyors &Adjusters Co., Ltd. had the first scene investigation of the vessel loss in this case and made notes, Kuixia Shipping Agency legal representative YANG Zhong had signed on the notes, which confirmed that this vessel had no any stranding and grounding marks. Kuixia Shipping Agency had no objection to the authenticity of this evidence, but held that Reasun just determined the loss not identified the responsibility of the vessel accident. The court admitted the authenticity of this group of evidence. But the court would combine other evidence to check the accident reason. Evidence 6: Survey Findings of Accident in Inland River. Evidence 7: Report of Traffic Accident in Inland River. Evidence 8: Notes on Investigation and Inquiry of Traffic Accident in Inland River. Those three groups of evidence were to prove that: the Maritime Safety Administration of Yichang City held that the accident was caused by the improper stowage and insufficient security management; those seafarers did not mention that the vessel had grounding accident. Kuixia Shipping Agency held that they had no objection to the authenticity of this evidence, but the survey findings of the Maritime Safety Administration was not the absolute evidence to identify the accident reason, the final conclusion would be made by the court; this findings also confirmed that the fact of vessel grounding was one of the factors that made the vessel fracture. The court admitted the authenticity of this group of evidence. But the court would combine other evidence to check the accident liability. Evidence 9: Preliminary Analysis Report Made By the Register of Shipping of Chongqing about the Ship Structure Strengthen of M.V. “Kuixia 609”, to prove that the root reason of the vessel fracture was the shipment was beyond the yield stress of this ship building materials. Kuixia Shipping Agency held that this evidence was copies, they cannot admit the authenticity; this report was preliminary report not the final one; this report was in complete which was lack of probative force, and the accident analysis was nonconformance. The court held that this document was copied from Maritime Safety Administration of Yichang City according to the application of PICC Fengjie, which authenticity was admitted. The court would combine other evidence to confirm that whether this document can be taken as the facts of the accident reason or not.

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Evidence 10: Sinking Investigation Report of M.V. “Kuixia 609” in Yichang, to prove that the reason of the vessel fracture was the improper stowage which caused the partial pressure was concentrated; furthermore, the direct loss of this accident was 2,987,920, the compensation which claimed by Kuixia Shipping Agency was unreasonable. Evidence 11: Loss Report was issued by the MinTaiAn Property Insurance Surveyors & Loss Adjusters Co., Ltd., to prove that the loss amount was 1,833,324.2 yuan. Kuixia Shipping Agency held that it had no objection to the authenticity of this evidence, but these two document were PICC Fengjie unilaterally delegated the adjuster company to adjust, they would not admit the conclusion. The court admitted the authenticity of this group of evidence. During the trial, the Defendant applied PAN Anmin who was the surveyor of Reasun to appear in court and accept the party’s inquiry as the appraisers and inspection personnel. PAN Anmin, male, Han, was born on December 14, 1968, living in Room 201, No. 117, Gongnong Sicun, Yangpu District, Shanghai. He was the surveyor of Reasun To sum up disclaims of the Defendant and the court, PAN Anmin stated as follows: 1, the Reasun involved in this case after the vessel accident was happened until the repairing was finished; the checking part included analysis of the accident reason and the loss assignment. 2, when Reasun inspected the repairing scene of M.V. “Kuixia 609”, YANG Zhong who was the representative of the ship-owner signed to confirm. 3, the salvage fee 1,150,000 was the lowest price after inquiry at that time. 4, according to the survey and inspection, Reasun identified that the vessel fracture reason was not relate with grounding, collision or winds and waves. The improper stowage may be the root reason which caused the fracture. Reasun was not able to identify the ship quality, so the ship quality cannot be excluded as the fracture reason. 5, Reasun found a small dent under the border between the stem and stern, but the surveyor held that the influence which caused by the dent can be ignored. And the dent was not cause by this sinking accident, maybe formed before. The court finds out that: On October 13, 2014, M.V. “Kuixia 609” of Kuixia Shipping Agency shipped Titanium Concentrates Pellet on Lanjiatuo Port Authority, finished shipment on October 15. The total load packages was 3,320, the weigh was 4,980 ton. On October 16, M.V. “Kuixia 609” sailed from Lanjiatuo Port Authority, the port of destination is Jiangyin Port. At 03:35 on October 20, M.V. “609” arrived at the Three Gorges Ship Lock Commend Center, and attached mooring lines. On October 20, 2014, Kuixia Shipping Agency bought insurance covering inland river vessel all risks for M.V. “Kuixia 609” from PICC Fengjie. On the insurance form which signed and stamped by Kuixia Shipping Agency, Kuixia Shipping Agency confirmed that: the insurer had supported and explained Inland Navigation Ship Insurance Policy of PICC (Version 2009), and the insurer had detailed inform of the exceptions. On the day, PICC Fengjie issued an insurance policy whose policy number was PCEJ201450020000000348, on which specified

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that: the insured vessel was M.V. “Kuixia 609”, the gross tonnage was 3,152, dead weight tonnage was 5,460 and the insurance amount 6,500,000. The insurance period was 12 months, which was from October 21, 2014 to October 20, 2015. At the same time, PICC Fengjie had conveyed Detailed Explanation and Notification on Insurance Exemption Clauses and Inquiry and Notice of Buying Vessel Insurance to Kuixia Shipping Agency. Kuixia Shipping Agency had signed on the foregoing document, also signed and stamped on Receipt of Relevant Materials about Vessel Insurance Contract to confirm that they had get the insurance policy, insurance clause and insurance certificate. Around 03:45 on October 21, 2014, M.V. “Kuixia 609” got the order from Three Gorges Ship Lock Commend Center, and prepared to go through the Shawan. At 06:00, M.V. “Kuixia 609” arrived at the south Three Gorges Ship Lock Commend Center, at 14:10 sailed from the No. 1 ship lock of Gezhouba. At 14:55, M.V. “Kuixia 609” entered into the Yiwan Bridge water. Around 15:14, this vessel sailed to the No. 2 of Baisha brain water channel in Yichang city, red float opposite to open channel and shake violently. This vessel shake wonky and then there were water got into the middle of the vessel, the vessel medium was fractured. At 18:30, the ship stem and stern sink into water one after one. After the accident, the staff of Yichang Maritime Safety Administration inquired LIU Xiuquan the master of M.V. “Kuixia 609” on October 22 and 23, 2014. LIU Xiuquan stated that: on September 30, 2014, M.V. “Kuixia 609” round berthing Fengjie Kuixia shipyard with pontoon wharf scratches happened, cause the ship stem approximately 20 cm below the left side of the bow plate load above the broke a hole which about 10 cm in diameter, this vessel did not have other accident until its sinking; M.V. “Kuixia 609” is equipped with a manual for loading, but they never according to the manual to load cargo, usually by experience. Furthermore, Yichang Maritime Safety Administration inquired TIAN Dawei the chief mate, and LIU Hankui the Fourth Engineer Officer, both of them said that there was no any informal situation of this vessel from Lanjiatuo to this accident place. On October 23, the staff of PICC Chongqing had inspected the third mate ZHANG Yuanguang, sailor TAN Zhigao and YI Gang, the Chief Engineer Officer QIN Shulin about the vessel insurance. Among them, ZHANG Yuanguang said that, there was no collision, stranding and grounding accident in the launching distance before this sinking accident; the other three people did also not mentioned M.V. “Kuixia 609” had any collision, stranding and grounding accident before this sinking accident. On October 26, 2014, Kuixia Shipping Agency signed Salvage Contract about salvaging M.V. “Kuixia 609” with the Hukou Donggang Salvage Co., Ltd. Under the contract, which prescribed that the Hukou Salvage Company would take in charge of salvaging M.V. “Kuixia 609” and goods, the salvage fee was 1,150,000 yuan. Subsequently, the ship involved in the case was salvaged, and Kuixia Shipping Agency paid a salvage fee of 1.15 million yuan. On November 11, 2014, Kuixia Shipping Agency signed Repairing Contract with the Ship Repairing Yard of Gezhouba Group Machinery & Ship Co., LTD. of China. Under the contract agreed that the ship repairing yard is responsible for the repair project of M.V. “Kuixia 609”.

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M.V. “Kuixia 609” salvage out of the water and kept in the Ship Repairing Yard of Gezhouba Group Machinery & Ship Co., LTD. of China waited for repairing, during this period, the surveyor PAN Anmin of Reasun who was delegated by PICC Chongqing to carry on the field survey of M.V. “Kuixia 609” many times during January 2015 to march. And made Field Scene Investigation of the Vessel Accident this report detailed the damage situation of the hull, machinery, equipment and other facilities; the report also contained evidence that there was no marks that grounded or touched by an unidentified object on the bottom of the vessel. The legal representative of Kuixia Shipping Agency, YANG Zhong, was signed and confirmed by the representative of the insured in the survey report. On March 13, 2015, the Register of Shipping of Chongqing made Preliminary Analysis Report about the Ship Structure Strengthen of M.V. “Kuixia 609”, that in case accident, the stress and strength deck hatch coaming top edge stress has been beyond the yield stress of hull construction materials, M.V. “Kuixia 609” of fracture become inevitable. On May 27, 2015, Yichang Maritime Safety Administration made the No. 03004 of 2014 Survey Findings of Accident in Inland River for M.V. “Kuixia 609” sinking accident. In Survey Findings of Accident in Inland River, “the accident briefly introduce” clearly specified: 03:00 on October 21, 2014, M.V. “Kuixia 609” after the three gorges ship lock scheduling command center prepared from Shawan sailing lock, at the beginning of the ship cast off in the process, the left sides of the ship stranded in Shawan nozzle at the bottom of the bow, the master LIU Xiuquan use suitable, back and left and right rudder to cooperate, at 03:55 on October 21, 2014 this vessel saved by itself. In this part of the facts, Kuixia Shipping Agency admitted during the trial that the ship’s personnel did not report the case to the Marine department or report to the insurer after the discovery of the ship’s grounding and self-rescue. As to the cause of the accident, the following points are indicated in the conclusion of the investigation on the traffic accident in Inland River: 1. the unreasonableness of the stowage of M.V. “Kuixia 609” is the direct cause of the accident. Loading of the goods mainly concentrated in the center of vessel, which leads to the ship’s local stress concentration, more than the hull material yield limit, caused ship structure buckling deformation gradually, is the direct cause of hull fracture and sinking; M.V. “Kuixia 609” stayed in Shawan brake of departure, the left sides of the ship ran aground at the bottom of the bow, the ship in the process of self-help to take off the light, local stress situation worse, may cause the hull of the wheel structure buckling deformation may cause a certain influence. 2. Improper safety management of shipping company is the indirect cause of this accident. The operator has no supervision, inspection and guidance on the cargo stowage plan made by the master. On June 12, 2015, Reasun made Vessel Sinking Inspection Report of M.V. “Kuixia 609” in Yichang, of which “accident reason analyzed by the surveyor” specified that: The ship sank because of improper cargo which caused local stress concentration, the resulting stress exceeds the yield strength limit of hull construction, which caused ship structure is damaged, eventually led to M.V. “Kuixia 609” fracture and sank; at the same time, the design defects and construction quality

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of the ship are not excluded. In the survey conclusion, Reasun held that the vessel sank reason was the improper stowage, and excluded this vessel met the natural disasters like strong breeze above 6 before its sinking; no any fire, bombing; no any collision, stranding and grounding. Hence, this case not the insurance accident, so insurer needs not to compensate any claims by the insured. On June 18, 2015, PICC Fengjie issued the Reject Notice of Claims for that this sank accident not the insurance accident, PICC Fengjie rejected to pay the compensation because of the exceptions. The court also finds out that: M.V. “Kuixia 609” was built on September 16, 2011, the shipowner and operator both was Kuixia Shipping Agency. When sank accident happened, all document were in the valid period except for Vessel Tonnage Certificate in Inland River. According to Article 6 of Vessel Insurance Clause in Inland River of PICC (2009 version): during the period of insurance that no ship seaworthy (not drag), including improper staffing, technical status, vessel sailing area, uses does not conform to the stipulations of the voyage (pull) or goods loaded wrong, and so on and so forth, loss and expense which because of the improper stowage are all exclusions, the insurer may not be held responsible for compensation. Reasun, is a private limited liability company registered in Shanghai, its insurance assessment business, including: the subject-matter insured before the test, estimation and risk assessment, of insurance mark after be or get out of danger survey, inspection, loss assessment and adjustment; Other business approved by CIRC. The court held that: This case was dispute over marine insurance contract. Kuixia Shipping Agency bought insurance for the vessel in case, and paid the insurance premium, PICC Fengjie issued All risks Insurance Policy of Inland Vessel, the legal insurance relationship was existed between the Plaintiff and Defendant. According to the facts which had been identified, PICC Fengjie had informed and explained the insurance liability, exceptions and obligations when Kuixia Shipping Agency bought insurance. Hence, Statement and Notice of Insurance Exception Clause, insurance policy in the case and Vessel Insurance Clause in Inland River of PICC (2009 version) were all the effective parts of the insurance contract, of which the clause that ruled two parties’ obligations and rights, exceptions and exclusions all had legal power for the Plaintiff and the Defendant. Kuixia Shipping Agency claimed that PICC Fengjie did not perform the obligations of informing the exceptions which caused the clause did not have the legal effectiveness was lack of evidence, the court wouldn’t support. Combine the claims and disclaims of the two parties, the focus of this case was that this case was insurance accident or not. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China: “the Party should support evidence for its claims.” Kuixia Shipping Agency as the insured who held that the grounding accident caused this accident and held this accident was insurance accident; it should support enough evidence to support its claims. During this trail, the evidence which can prove the foregoing faces only Vessel Insurance on Duty Notice which specified that “there

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was damage under the bottom of the Bow, and this vessel saved by self-rescue”. The court held that the insurance on duty notice and the damage reason only the unilateral statement of Kuixia Shipping Agency after the accident, it did not have the effectiveness. Combined the evidence which submitted by PICC Fengjie which cannot prove that this vessel accident was caused by the grounding accident. The reasons as follows: 1, after the accident, the staff of Yichang Maritime Safety Administration inquired the master, chief mate and seafarers of M.V. “Kuixia 609”. All of them confirmed that there was no any informal situation of this vessel from Lanjiatuo to this accident place. 2, After the accident, Reasun had inspected the third mate ZHANG Yuanguang, sailor TAN Zhigao and YI Gang, the Chief Engineer Officer QIN Shulin about the vessel insurance. All of them said that, there was no grounding accident in the voyage before the accident was happened. 3, Form the evidence submitted by the two parties, of which except for Vessel Insurance on Duty Notice included the grounding accident, another one is Survey Findings of Accident in Inland River which made by the Yichang Maritime Safety Administration on May 27, 2015. On the survey findings specified the vessel grounding self-rescue process, which form the supplement survey of maritime department. Even though this part of evidence was facts no matter the facts of this evidence was enough or not, combined the inquiry of seafarers on M.V. “Kuixia 609” after the accident which can prove that the grounding accident only has little influence which caused that most of the seafarers were unclear about this reason. Furthermore, from Field Scene Investigation of the Vessel Accident which signed and confirmed by YANG Zhong the legal representative of Kuixia Shipping Agency, “there was no marks that grounded or touched by an unidentified object on the bottom of the vessel”, which can identify the influence of the grounding accident was very small. Under this solution, Kuixia Shipping Agency regarded the grounding accident as the reason of the vessel fracture was unpersuasive. 4, Kuixia Shipping Agency said that after the grounding accident, the vessel was self-rescued 20 min later because of master’s operations. This can prove that even though the vessel had grounding accident, it was the part of the bottom of the stem, which had limit influence for the vessel operations, otherwise it cannot be self-rescued. Furthermore, M.V. “Kuixia 609” had 10 h common voyage from refloating to fracture, it was unreasonable to owe the fracture reason to the foregoing grounding. 5, When they analyzed the accident reason, the maritime department stated in Survey Findings of Accident in Inland River that: “the ship in the process of self-help to take off the light, local stress situation worse, may cause the hull of the wheel structure buckling deformation may cause a certain influence.” There are two “maybe” in this statement which can find that the maritime department was uncertain about the grounding accident influence. Therefore, it cannot prove that there was direct relationship between the grounding and fracture according to the two “maybe”. For all of the foregoing analysis, Kuixia Shipping Agency claimed that this accident was caused by the grounding was lack of enough evidence, the court cannot support. On the contrary, according to the inspection of relevant inspect department and liability identification of maritime department: the

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unreasonableness of the stowage of M.V. “Kuixia 609” is the direct cause of the accident. Loading of the goods mainly concentrated in the center of vessel, which leads to the ship’s local stress concentration, more than the hull material yield limit, caused ship structure buckling deformation gradually. That means the unreasonableness of the stowage of M.V. “Kuixia 609” had direct relationship with the vessel fracture and sank in accordance the facts which were identified so far. This vessel always was in a condition that not suitable for navigation form the beginning of voyage until it happened sank accident. According to Article 6 of Vessel Insurance Clause in Inland River of PICC (2009 version): during the period of insurance that ship unseaworthy condition, the liability, loss and expense which because of the improper stowage are all exclusions, the insurer may not be held responsible for compensation. PICC Fengjie rejected the compensation claims for this reason was confirmed to the agreement, the court support this rejection. For all of the foregoing statement, the claims of Kuixia Shipping Agency were lack of facts and laws to support, the court would not support its claims. According to Article 8 of the Contract Law of the People’s Republic of China, and Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claims of the Plaintiff Kuixia Shipping Agency (Chongqing) Co., Ltd. Court acceptance fee in amount of 39,132 yuan and the identification fee in amount of 26,400 yuan, both of them will be borne by the Plaintiff Kuixia Shipping Agency (Chongqing) Co., Ltd. If dissatisfied with this Judgment, any party shall within fifteen days as of the service of this judgment, submit three Statements of Appeal to the court, with duplicates in the number of the opposing parties, so as to make an appeal before Hubei High People’s Court. Appeal entertainment fee shall be paid in advance according to Article 13 Paragraph 1 of the Legal Fee Paying Means when submitting the Statement of Appeal. [Deposit bank: Agricultural Bank of China Wuhan Branch; Name of account: the non-tax revenue settlement account of Hubei Finance Department; Number of account: 05XXX69-1. If payers pay in the form of bank transfer on bank exchange, the payers shall note “Hubei High People’s Court” or the code of the Hubei High People’s Court “103001” in remittance order or bank transfer document.] If the fee is not paid within seven days after the period of appeal expire, the appeal will be automatically recalled. Presiding Judge: LIU Dong Judge: KONG Linggang Acting Judge: JIANG Zhangpeng July 16, 2016 Clerk: MA Shuai

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Hubei High People’s Court Civil Judgment Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2016) E Min Zhong No. 1617 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 655 and page 680 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Affirming lower court decision holding plaintiff shipowner not entitled to recover from defendant insurer on hull policy because cause of loss of ship was held not to be grounding, an insured risk, but bad cargo loading, an excluded risk, and rejecting plaintiff’s argument that defendant insurer failed to explain exclusions to plaintiff. Summary The Plaintiff insured sued the Defendant-insurer for payment under a hull insurance policy after the Plaintiff’s vessel sank. The Plaintiff claimed that the accident was caused by the vessel grounding, and thus, was covered under the all-risks-covered insurance policy. However, the trial Court held that the vessel actually sank because when cargo was loaded on the vessel, it was concentrated in the center of the hull, which caused the ship’s frame to buckle and fracture. Such an accident was not covered under the insurance policy, and thus, did not render the Defendant-insurer liable to compensate the Plaintiff-insured. The trial Court rejected the Plaintiff’s claims. The Plaintiff appealed. The appeal Court affirmed the judgment of the trial Court for the same reason: that the cause of the sinking was improper loading and concentration of cargo, which stressed the hull of the vessel and caused the hull to fracture, contrary to the Plaintiff-insured’s assertion that the grounding of the ship caused it to sink. The Plaintiff-Appellant also claimed that it should not be bound by exclusion clauses in the insurance contract covering what sorts of accidents were beyond the scope of the policy because the Defendant-Appellee insurer had failed to explain the clauses to it. The appeal Court rejected this claim, holding that Plaintiff-Appellant had bought hull insurance from Defendant-Appellee many times in the past and should have been aware of the kind of exclusion clauses the policy contained.

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Judgment The Appellant (the Plaintiff of first instance): Kuixia Shipping Agency (Chongqing) Co., Ltd. Domicile: Room 507, Sanxiafeng Building 2, No. 2, Yueya Street, Yongan Town, Fengjie County, Chongqing. Legal representative: YANG Zhong, chairman of the company. Agent ad litem: HUANG Xuejun, lawyer of Z&Z Attorneys at Law. Agent ad litem: WANG Longhao, lawyer of Z&Z Attorneys at Law. The Respondent (the Defendant of first instance): People’s Insurance Company of China Fengjie Sub-branch Domicile: Kuizhou Road, Yongan Town, Fengjie County, Chongqing. Representative: XX, general manager for the sub-branch. Agent ad litem: GUO Feng, lawyer of Hubei Shangtai Law Firm. Agent ad litem: TIAN Zhuan, lawyer of Hubei Shangtai Law Firm. Dissatisfied with the Civil Judgment (2015) Wu Hai Fa Shang Zi No. 01773 rendered by Wuhan Maritime Court of the People’s Republic of China in respect of the case of dispute over marine insurance contract, the Appellant Kuixia Shipping Agency (Chongqing) Co., Ltd. (hereinafter referred to as “Kuixia Shipping Agency”) filed an action against the Respondent People’s Insurance Company of China Fengjie Sub-branch (hereinafter referred to as “PICC Fengjie”) before the court. The court entertained the case on November 21, 2016 and constituted a trial bench in light of law. HUANG Xuejun and WANG Longhao, agents ad litem of the Respondent Kuixia Shipping Agency, GUO Feng and TIAN Zhuan, agents ad litem of the Respondent PICC Fengjie, appeared in court and participated in the action. Now the case has been concluded. Kuixia Shipping Agency appealed to revoke the first-instance judgment and support all its claims; and PICC Fengjie should bear the first and second instance cost fees. Facts and reasons: 1, the facts identified by the first instance were wrong. (1) PICC Fengjie never gave Kuixia Shipping Agency insurance form and insurance contract, and did not explain any exceptions to the Appellant. (2) M.V. “Kuixia 609” had grounding accident. (3) Inland Navigation Vessel Tonnage Certificate was not overtime. 2, The applicable law of the first instance was wrong. The evidence support liability of the exceptions informing obligations should be PICC Fengjie, not Kuixia Shipping Agency. PICC Fengjie argued that: the appeal that PICC Fengjie did not inform the exceptions to Kuixia Shipping Agency cannot be established. (1) The claims of Kuixia Shipping Agency had no facts prove. (2) Kuixia Shipping Agency had signed to confirm that PICC Fengjie had informed them the exceptions. (3) This case had the exclusion that the insurer had statement obligations. 2, This accident was not insurance accident. (1) Kuixia Shipping Agency did not submit evidence to prove what is said “grounding accident” was happened; (2) the improper stowage of this vessel was the root reason. According to the Principle of Proximate Causation,

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the Maritime Code of the People’s Republic of China and convention of insurance contract, this case was exclusion liability; PICC Fengjie need not respond compensations; (3) this case was exceptions under the insurance contract, PICC Fengjie performed the exceptions informed obligations, so the exception clause should put into effect. At the same time, this case was legal exception case, PICC Fengjie can reject compensation in accordance laws. 3, It is assumed that this case was insurance accident, the compensation which claimed by Kuixia Shipping Agency was over the actual loss, the exclusions clause under the insurance contract should put into effect immediately. PICC Fengjie applied the court to dismiss the appeal, and affirm the original judgment. Kuixia Shipping Agency claimed the court of first instance that: 1, PICC Fengjie should pay Kuixia Shipping Agency all together 2,713,265 yuan plus the interest 123,837.93 yuan (from June 19, 2015 to actual payment day, the interest should calculated based on the benchmark interest rate at that time of the People’s Bank of China, the tentative payment day would be June 18, 2016). 2, PICC Fengjie should pay the Plaintiff salvage fee 1,150,000 yuan plus the interest 54,396.6 yuan (from June 19, 2015 to actual payment day, the interest should calculated based on the benchmark interest rate at that time of the People’s Bank of China, the tentative payment day would be June 18, 2016). 3, Pay the legal and appraisal fee of this case. The court of first instance ascertained the facts as follows: On October 13, 2014, M.V. “Kuixia 609” of Kuixia Shipping Agency shipped Titanium Concentrates Pellet on Lanjiatuo Port Authority, finished shipment on October 15. The total load packages was 3,320, the weigh was 4,980 ton. On October 16, M.V. “Kuixia 609” sailed from Lanjiatuo Port Authority, the port of destination is Jiangyin Port. At 03:35 on October 20, M.V. “Kuixia 609” arrived at the Three Gorges Ship Lock Commend Center, and attached mooring lines. On October 20, 2014, Kuixia Shipping Agency bought insurance covering inland river vessel all risks for M.V. “Kuixia 609” from PICC Fengjie. On the insurance form which signed and stamped by Kuixia Shipping Agency, Kuixia Shipping Agency confirmed that: the insurer had supported and explained Vessel Insurance Clause in Inland River of PICC (2009 version), and the insurer had detailed inform of the exceptions. On the day, PICC Fengjie issued an insurance policy whose policy number was PCEJ201450020000000348, on which specified that: the insured vessel was M.V. “Kuixia 609”, the gross tonnage was 3,152, dead weight tonnage was 5,460 and the insurance amount 6,500,000. The insurance period was 12 months, which was from October 21, 2014 to October 20, 2015. At the same time, PICC Fengjie had conveyed Detailed Explanation and Notification on Insurance Exemption Clauses and Inquiry and Notice of Buying Vessel Insurance to Kuixia Shipping Agency. Kuixia Shipping Agency had signed on the foregoing document, also signed and stamped on Receipt of Relevant Materials about Vessel Insurance Contract to confirm that they had get the insurance policy, insurance clause and insurance certificate. Around 03:45 on October 21, 2014, M.V. “Kuixia 609” got the order from Three Gorges Ship Lock Commend Center, and prepared to go through the Shawan. At

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06:00, M.V. “Kuixia 609” arrived at the south Three Gorges Ship Lock Commend Center, at 14:10 sailed from the No. 1 ship lock of Gezhouba. At 14:55, M.V. “Kuixia 609” entered into the Yiwan Bridge water. Around 15:14, this vessel sailed to the No. 2 of Baisha brain water channel in Yichang, red float opposite to open channel and shake violently. This vessel shake wonky and then there were water got into the middle of the vessel, the vessel medium was fractured. At 18:30, the ship stem and stern sink into water one after one. After the accident, the staff of Yichang Maritime Safety Administration inquired LIU Xiuquan the master of M.V. “Kuixia 609” on October 22 and 23, 2014. LIU Xiuquan stated that: on September 30, 2014, M.V. “Kuixia 609” berthing Fengjie Kuixia shipyard with pontoon wharf scratches happened, cause the ship stem approximately 20 cm below the left side of the bow plate load above the broke a hole which about 10 cm in diameter, this vessel did not have other accident until its sinking; M.V. “Kuixia 609” is equipped with a manual for loading, but they never according to the manual to load cargo, usually by experience. Furthermore, Yichang Maritime Safety Administration inquired TIAN Dawei the chief mate, and LIU Hankui the Fourth Engineer Officer, both of them said that there was no any informal situation of this vessel from Lanjiatuo to this accident place. On October 23, the staff of PICC Chongqing had inspected the third mate ZHANG Yuanguang, sailor TAN Zhigao and YI Gang, the Chief Engineer Officer QIN Shulin about the vessel insurance. Among them, ZHANG Yuanguang said that, there was no collision, stranding and grounding accident in the launching distance before this sinking accident; the other three people did also not mentioned M.V. “Kuixia 609” had any collision, stranding and grounding accident before this sinking accident. On October 26, 2014, Kuixia Shipping Agency signed Salvage Contract about salvaging M.V. “Kuixia 609” with the Hukou Donggang Salvage Co., Ltd. Under the contract, which prescribed that the Hukou Salvage Company would take in charge of salvaging M.V. “Kuixia 609” and goods, the salvage fee was 1,150,000 yuan. Subsequently, the ship involved in the case was salvaged, and Kuixia Shipping Agency paid a salvage fee of 1.15 million yuan. On November 11, 2014, Kuixia Shipping Agency signed Repairing Contract with the Ship Repairing Yard of Gezhouba Group Machinery & Ship Co., LTD. of China. Under the contract agreed that the ship repairing yard is responsible for the repair project of M.V. “Kuixia 609”. M.V. “Kuixia 609” salvage out of the water and kept in the Ship Repairing Yard of Gezhouba Group Machinery & Ship Co., LTD. China waited for repairing, during this period, the surveyor PAN Anmin of Reasun who was delegated by PICC Chongqing to carry on the field survey of M.V. “Kuixia 609” many times during January 2015 to march. And made Field Scene Investigation of the Vessel Accident this report detailed the damage situation of the hull, machinery, equipment and other facilities; the report also contained evidence that there was no marks that grounded or touched by an unidentified object on the bottom of the vessel. The legal representative of Kuixia Shipping Agency, YANG Zhong, was signed and confirmed by the representative of the insured in the survey report.

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On March 13, 2015, the Register of Shipping of Chongqing made Preliminary Analysis Report about the Ship Structure Strengthen of M.V. “Kuixia 609”, the that in case accident, the stress and strength deck hatch coaming top edge stress has been beyond the yield stress of hull construction materials, M.V. “Kuixia 609” of fracture become inevitable. On May 27, 2015, Yichang Maritime Safety Administration made the No. 03004 of 2014 Survey Findings of Accident in Inland River for M.V. “Kuixia 609” sinking accident. In the Survey Findings of Accident in Inland River, “the accident briefly introduce” clearly specified: 03:00 on October 21, 2014, M.V. “Kuixia 609” after the three gorges ship lock scheduling command center prepared from Shawan sailing lock, at the beginning of the ship cast off in the process, the left sides of the ship stranded in Shawan nozzle at the bottom of the bow, the master LIU Xiuquan use suitable, back and left and right rudder to cooperate, at 03:55 on October 21, 2014 this vessel saved by itself. In this part of the facts, Kuixia Shipping Agency admitted during the trial that the ship’s personnel did not report the case to the Marine department or report to the insurer after the discovery of the ship’s grounding and self-rescue. As to the cause of the accident, the following points are indicated in the conclusion of the investigation on the traffic accident in Survey Findings of Accident in Inland River: 1. the unreasonableness of the stowage of M.V. “Kuixia 609” is the direct cause of the accident. Loading of the goods mainly concentrated in the center of vessel, which leads to the ship’s local stress concentration, more than the hull material yield limit, caused ship structure buckling deformation gradually, is the direct cause of hull fracture and sinking; M.V. “Kuixia 609” stayed in Shawan brake of departure, the left sides of the ship ran aground at the bottom of the bow, the ship in the process of self-help to take off the light, local stress situation worse, may cause the hull of the wheel structure buckling deformation may cause a certain influence. 2. Improper safety management of shipping company is the indirect cause of this accident. The operator has no supervision, inspection and guidance on the cargo stowage plan made by the master. On June 12, 2015, Reasun made Vessel Sinking Inspection Report of M.V. “Kuixia 609” in Yichang, of which “accident reason analyzed by the surveyor” specified that: the ship sank because of improper cargo which caused local stress concentration, the resulting stress exceeds the yield strength limit of hull construction, which caused ship structure is damaged, eventually led to M.V. “Kuixia 609” fracture and sank; At the same time, the design defects and construction quality of the ship are not excluded. In the survey conclusion, Reasun held that the vessel sank reason was the improper stowage, and excluded this vessel met the natural disasters like strong breeze above 6 before its sinking; no any fire, bombing; no any collision, stranding and grounding. Hence, this case not the insurance accident, so insurer need not to compensate any claims by the insured. On June 18, 2015, PICC Fengjie issued Reject Notice of Claims for that this sank accident not the insurance accident, PICC Fengjie rejected to pay the compensation because of the exceptions. Other facets identified by the court of the first instance that:

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M.V. “Kuixia 609” was built on September 16, 2011, the shipowner and operator both was Kuixia Shipping Agency. When sank accident happened, all document were in the valid period except for Vessel Tonnage Certificate in Inland River. According to the Article 6 of Vessel Insurance Clause in Inland River of PICC (2009 version): during the period of insurance that no ship seaworthy (not drag), including improper staffing, technical status, vessel sailing area, uses does not conform to the stipulations of the voyage (pull) or goods loaded wrong, and so on and so forth, loss and expense which because of the improper stowage are all exclusions, the insurer may not be held responsible for compensation. Reasun, is a private limited liability company registered in Shanghai, its insurance assessment business, including: the subject-matter insured before the test, estimation and risk assessment, of insurance mark after be or get out of danger survey, inspection, loss assessment and adjustment; Other business approved by CIRC. The court of the first instance held that: This case was dispute over marine insurance contract. Kuixia Shipping Agency bought insurance for the vessel in case, and paid the insurance premium, PICC Fengjie issued All risks Insurance Policy of Inland Vessel, the legal insurance relationship was existed between the Plaintiff and Defendant. According to the facts which had been identified, PICC Fengjie had informed and explained the insurance liability, exceptions and obligations when Kuixia Shipping Agency bought insurance. Hence, Statement and Notice of Insurance Exception Clause, insurance policy in the case and Vessel Insurance Clause in Inland River of PICC (2009 version) were all the effective parts of the insurance contract, of which the clause that ruled two parties’ obligations and rights, exceptions and exclusions all had legal power for the Plaintiff and the Defendant. Kuixia Shipping Agency claimed that PICC Fengjie did not perform the obligations of informing the exceptions which caused the clause did not have the legal effectiveness was lack of evidence, the court wouldn’t support. Combine the claims and disclaims of the two parties, the focus of this case was that this case was insurance accident or not. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China: “the Party should support evidence for its claims.” Kuixia Shipping Agency as the insured who held that the grounding accident caused this accident and held this accident was insurance accident; it should support enough evidence to support its claims. During this trail, the evidence which can prove the foregoing faces only Vessel Insurance on Duty Notice which specified that “there was damage under the bottom of the Bow, and this vessel saved by self-rescue”. The court held that the insurance on duty notice and the damage reason only the unilateral statement of Kuixia Shipping Agency after the accident, it did not have the effectiveness. Combined the evidence which submitted by PICC Fengjie which cannot prove that this vessel accident was caused by the grounding accident. The reasons as follows: 1, after the accident, the staff of Yichang Maritime Safety Administration inquired the master, chief mate and seafarers of M.V. “Kuixia 609”. All of them confirmed that there was no any informal situation of this vessel from Lanjiatuo to this accident place. 2, After the accident, Reasun had inspected the

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third mate ZHANG Yuanguang, sailor TAN Zhigao and YI Gang, the Chief Engineer Officer QIN Shulin about the vessel insurance. All of them said that, there was no grounding accident in the voyage before the accident was happened. 3, Form the evidence submitted by the two parties, of which except for Vessel Insurance on Duty Notice included the grounding accident, another one is the Survey Findings of Accident in Inland River which made by the Yichang Maritime Safety Administration on May 27, 2015. On the survey findings specified the vessel grounding self-rescue process, which form the supplement survey of maritime department. Even though this part of evidence was facts no matter the facts of this evidence was enough or not, combined the inquiry of seafarers on M.V. “Kuixia 609” after the accident which can prove that the grounding accident only has little influence which caused that most of the seafarers were unclear about this reason. Furthermore, from Field Scene Investigation of the Vessel Accident which signed and confirmed by YANG Zhong the legal representative of Kuixia Shipping Agency, “there was no marks that grounded or touched by an unidentified object on the bottom of the vessel”, which can identify the influence of the grounding accident was very small. Under this solution, Kuixia Shipping Agency regarded the grounding accident as the reason of the vessel fracture was unpersuasive. 4, Kuixia Shipping Agency said that after the grounding accident, the vessel was self-rescued 20 min later because of master’s operations. This can prove that even though the vessel had grounding accident, it was the part of the bottom of the stem, which had limit influence for the vessel operations, otherwise it cannot be self-rescued. Furthermore, M.V. “Kuixia 609” had 10 h common voyage from refloating to fracture, it was unreasonable to owe the fracture reason to the foregoing grounding. 5, When they analyzed the accident reason, the maritime department stated in Survey Findings of Accident in Inland River that: “the ship in the process of self-help to take off the light, local stress situation worse, may cause the hull of the wheel structure buckling deformation may cause a certain influence.” There are two “maybe” in this statement which can find that the maritime department was uncertain about the grounding accident influence. Therefore, it cannot prove that there was direct relationship between the grounding and fracture according to the two “maybe”. For all of the foregoing analysis, Kuixia Shipping Agency claimed that this accident was caused by the grounding was lack of enough evidence, the court cannot support. On the contrary, according to the inspection of relevant inspect department and liability identification of maritime department: the unreasonableness of the stowage of M.V. “Kuixia 609” is the direct cause of the accident. Loading of the goods mainly concentrated in the center of vessel, which leads to the ship’s local stress concentration, more than the hull material yield limit, caused ship structure buckling deformation gradually. That means the unreasonableness of the stowage of M.V. “Kuixia 609” had direct relationship with the vessel fracture and sank in accordance the facts which were identified so far. This vessel always was in a condition that not suitable for navigation form the beginning of voyage until it happened sank accident. According to Article 6 of Vessel Insurance Clause in Inland River of PICC (2009 version): During the period of insurance that ship

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unseaworthy condition, the liability, loss and expense which because of the improper stowage are all exclusions, the insurer may not be held responsible for compensation. PICC Fengjie rejected the compensation claims for this reason was conformed to the agreement, the court support this rejection. For all of the foregoing statement, the claims of Kuixia Shipping Agency were lack of facts and laws to support, the court would not support its claims. According to Article 8 of the Contract Law of the People’s Republic of China, Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, reject the claims of the Plaintiff Kuixia Shipping Agency Chongqing Co., Ltd. Court acceptance fee in amount of 39,132 yuan and the identification fee in amount of 26,400 yuan, both of them will be borne by the Plaintiff Chongqing Kuixia Shipping Agency Co., Ltd. During the second instance, the two parties submit the evidence about the appeal. The court organized two parties to exchange evidence. Kuixia Shipping Agency submitted a written certificate: the Underwriting Document Introduction for M.V. “Kuixia 609”, they said this evidence was form the computer of YANG Kaishan of PICC Fengjie, the evidence was a picture that YANG Kaishan asked the staff of Kuixia Shipping Agency to take, to prove that PICC Fengjie did not perform the obligation of informing exceptions when Kuixia Shipping Agency bought insurance. Statement and Notice of Insurance Exception Clause, Inquiry and Notice of Buying Vessel Insurance, Receipt of Relevant Materials about Vessel Insurance Contract which supported by PICC Fengjie in the first instance all replacement on the next day. PICC Fengjie held that: the authenticity was rejected, the introduction was printed and the stamp on which was ambiguous that was not clear to see if it was stamp of Kuixia Shipping Agency; the purposes was rejected, this evidence cannot prove that PICC Fengjie did not perform the informing obligation. The court held that: the introduction was testimony of witnesses; the court would not adopt this evidence because the witness did not appear in the court. Kuixia Shipping Agency applied another four witnesses to appear in the court to testify the fact that Kuixia Shipping Agency had bought insurance for M.V. “Kuixia 609”, this purported to prove that PICC Fengjie did not perform the informing obligation. Witness Xu (male, Han, born on December 13, 1963, living in 7-1, Unit 1, Building 7, No. 528, Shicheng Road, Yongan Town, Fengjie County, Chongqing). I have been driving to tender with YANG Zhong X and YANG Zonglin on 20, 21. I do not know about the insurance. On that day, we returned to Fengjie from Chongqing at 4 p.m. On the way back to Fengjie, Yang X Lin was driving and YANG Zhongzhong sat it the co-driver seat. I sat in the back row and heard the two of them in front of me saying that something had happened to the ship. Witness Yang 1 (male, Han nationality, born on February 14, 1963), Room 2, Unit 7, No. 95, Shixian East road, Yongan town, Fengjie County, Chongqing city. ID number: The crew member of Kuixia Shipping Agency, whose testifying was: I was in my office at three o’clock on the afternoon, and I got a call saying that something had happened to the ship. We leave work at half past five. Later, PICC Fengjie YANG Kaishan called me to past the official seal for improving the

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insurance information, so I asked cashier Wei to past the official seal. I didn’t go to bid in the day before. Kuixia Shipping Agency has 28 ships, general manager and shipowner bought insurance for every ship. Kuixia Shipping Agency had bought insurance for M.V. “Kuixia 609” before. On the afternoon of October 21, YANG Kaishan asked to take official seal, which was taken by Wei at that time. My leg was broken and I couldn’t go. After Wei past the seal, how to seal is not clear. Witness Wei (female, Han, born on July 10, 1986, living in Room 4-3, Building 13, No. 22, Xiaojian Road lane, Yufu Street, Fengjie County. Staff of Kuixia Shipping Agency). I only came to the company for a month or two, when the accident happened, that should be Yang 1 send official seal to PICC Fengjie, because his leg is not convenient, he let me send official seal to insurance company. Later, I went to the insurance company and called YANG Kaishan in the corridor. I took the official seal to YANG Kaishan, and used the official seal several times on that day. The document which sealed by the seal was not clear. When Yang 1 informed me, I knew M.V. “Kuixia 609” sank accident. When I sent the official seal, I did not know it would be used for improving the insurance documents. The reason why I sent the official seal three or four times that day was because I was sent back for the first time, and then I got the phone call to send the official seal, and I went back and forth several times. Our company is about ten minutes’ walk from PICC Fengjie. I had sent it three or four times. Every time the official seal was sent to YANG Kaishan, he sealed documents by himself. At that time, I was the social security administrator of Kuixia Shipping Agency. It is not clear whether M.V. “Kuixia 609” was bought insurance in PICC Fengjie or not. I do not know who was going to do the insurance buying procedure every time. It is not clear that there were no other people to send PICC Fengjie the official seal to complete the corresponding procedures except for Yang 1. Witness Yang 2 (male, Han, born on June 11, 1967, Room 4, Unit 1, No. 146, Yufu street Station Road, Fengjie county, Chongqing. The staff member of Kuixia Shipping Agency). His testifying as follows: on October 20, 2014, I paid the premium in the lobby of PICC Fengjie. I paid the premium and then left. The first day the premium was negotiated, so I just need to pay in the next day. In the afternoon of the 21, I got a call from the ship, and I reported to PICC Fengjie. Later, the Marine department contacted me to deal with the subsequent events. At the same time, I informed the legal representative YANG Zhong that I was ready to go to the scene, YANG Zhong told me to wait for him to go together. Around 5 p.m., YANG Kaishan, a member of PICC Fengjie, called me and asked to complete the relevant procedures of M.V. “Kuixia 609”. We went topic Fengjie, but we were not there when we improved the insurance procedures. We were signing something but I did not stamp. It is not clear whether PICC Fengjie notified Yang 1 to send the official seal. The insurance of M.V. “Kuixia 609” and other ships were I found YANG Kaishan to cover. YANG Kaishan was familiar with me, Yang 1 and YANG Zhong. When I signed it, I signed a piece of paper but I didn’t notice what it was because I was very busy. Kuixia Shipping Agency’s business was mainly my management; I was the deputy manager of running management. We bought the inland river insurance for M.V. “Kuixia 609” in 2013 in PICC Fengjie for every year. The material I just showed you is my

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signature. It was signed at four or five o’clock on the 21. The previous ship purchase insurance is not necessarily my responsibility, who may go when who was in company. Bought insurance for M.V. “Kuixia 609” before was not by me. No other company personnel were present when signing the receipt. PICC Fengjie held that: 1, the effectiveness of testimony of witnesses was less the written evidence; 2, all of witnesses were staff of Kuixia Shipping Agency, they had stake with Kuixia Shipping Agency, so the effectiveness of testimony of witnesses was low; 3, and there was obvious conflict among the testimony of the four witnesses. For example, it is clear to see that the sign was above the seal on the document which signed by Yang 2, that means sealed before signed and the signed time was around 4 or 5 p.m. but Wei said she sent the seal to PICC Fengjie was around 6 p.m. If they sealed before signed, Wei must meet Yang 2, but she said she did not see any other staff of Kuixia Shipping Agency. Furthermore, that document was signed on October 20. For all of the foregoing statement, the testimony of witnesses cannot be trusted and taken as the facts of this case. The court held that: the four witnesses were all the staff of Kuixia Shipping Agency, they had stake with Kuixia Shipping Agency. According to the Article 69 of the Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures, the testimony of witnesses cannot be served as the basis of establishment of a fact in this case. PICC Fengjie submitted two groups of evidence; evidence 1, the each copy of all risks Insurance Policy of Inland Vessel for M.V. “Kuixia 609”, M.V. “Kuixia 608” and M.V. “Kuixia 66”, to prove that Kuixia Shipping Agency had bought all risks insurance for M.V. “Kuixia 609”, M.V. “Kuixia 608” and M.V. “Kuixia 66”, the insurance period were 2013.10.9–2014.10.18, 2014.5.18–2015.5.17, 2013.10.9– 2014.10.8. Evidence 2, Three copies of Vessel Insurance Indemnity/ Fees Calculation Sheets. These purported to prove that Kuixia Shipping Agency had bought all risks insurance for M.V. “Kuixia 609”, the insured period was 2013.10.19–2014.10.18. And there were two insurance compensation accidents during this period. Furthermore, Kuixia Shipping Agency had bought all risks insurance for M.V. “Kuixia 608”, the insured period was 2014.5.18–2015.5.17. These two groups of evidence proved that there were exclusions that insurer had explicit informing obligation in this case. Kuixia Shipping Agency had bought insurance many times; it should similar and clear about the exceptions. This case was matched the principles that “Continuous renewal or same underwriter and policy-holder second above similar insurance contract, the contract liability clauses content consistent and the insured person there is evidence that has the same disclaimer to policy-holder fulfill the obligation of a specified, can be regarded as the insurer has to perform the specified obligations”. Kuixia Shipping Agency held that: 1, it had no objection to the authenticity of the insurance policy and fee calculation sheet of M.V. “Kuixia 609”, it is not clear about M.V. “Kuixia 608” and M.V. “Kuixia 66”, because they were called ship; 2, there was no relevance between the two groups of evidence and this case, it bought insurance before cannot prove that PICC Fengjie had perform the explain obligation when they bought insurance to the case, the purposes was rejected.

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The court held that: the two groups of evidence were insurance policy and compensation documents which signed and issued by PICC Fengjie, the court admitted the authenticity because Kuixia Shipping Agency confirmed the authenticity of relevant document about M.V. “Kuixia 609”. Because there was no other contrary evidence to prove the documents about other ships of Kuixia Shipping Agency was counterfeited, the court admitted its authenticity. Such evidence can prove that the vessel to the case had bought insurance in PICC Fengjie for many times. The court held that, this case was dispute over guarantee contract in the sea water. On October 20, 2014, Kuixia Shipping Agency bought insurance covering inland river vessel all risks for M.V. “Kuixia 609” from PICC Fengjie; the insurance contract relationship was established between the two parties. According to the main points of appeals and responses, the court summarizes and illustrates the outstanding issues in this case and as follows: whether the event to this case was insurance event under the insurance contract agreement; whether PICC Fengjie perform the exception clauses explaining obligations. For these, the court ruled as follows: For the problem that whether the event to this case was insurance event under the insurance contract agreement. Kuixia Shipping Agency claimed that they had bought all risks insurance for the vessel to the case, and after established the insurance contract then the vessel had grounding event which caused sank accident. The grounding event was within the bounds of all risks, so PICC Fengjie should compensate loss. The court held that, Survey Findings of Accident in Inland River for M.V. “Kuixia 609” identified that improper stowage was the root reason of sank accident, improper safety management of shipping company is the indirect cause of this accident. According to Article 4 and Article 5 of Vessel Insurance Clause in Inland River of PICC (2009 version), the total loss, liability fees of collision and strike of ships, sue and labour charges which caused by the improper stowage and safety management was not within the compensation bounds of insurance against total loss only and all risks. Hence, this case was not within the bounds of the insurance contract agreement, PICC Fengjie can reject to compensate. Kuixia Shipping Agency claimed that the grounding event was one of the reasons which caused sank accident, so PICC Fengjie should pay compensation according to the “Several Causes and One Effect” theory. The court held that Kuixia Shipping Agency claimed the vessel to the case had grounding event was lack of evidence to prove. Reasons as follows: 1, Kuixia Shipping Agency did not report the grounding event to relevant department according to regulations; 2, after the accident, the Maritime Safety Administration and surveyor company inquired some staff of the vessel to this case. All of them confirmed that there was no any informal situation of this vessel; 3, Survey Findings of Accident in Inland River specified the process of vessel grounding and self-rescue, but the court did not find prove points of this statement. Furthermore, the vessel fracture and sank accident reason was identified in Survey Findings of Accident in Inland River that: “the ship in the process of self-help to take off the light, local stress situation worse, may cause the hull of the wheel structure buckling deformation may cause a certain influence.” There are two

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“maybe” in this statement which can find that the maritime department was uncertain about the grounding accident influence. Therefore, it cannot prove that grounding was the reason of vessel fracture, this claim was lack of evidence to prove, the court would not support. For the problem that whether PICC Fengjie performed the exception clauses explaining obligations. Kuixia Shipping Agency claimed that PICC Fengjie signed insurance contract and relevant document after the accident to the case; hence PICC Fengjie did not perform the exception clauses explaining obligations. The exception clause had not the legal effectiveness which cannot limit Kuixia Shipping Agency. The court held that, the testimony of witnesses which submitted by Kuixia Shipping Agency cannot be taken as solo proof points to this case, because they had no other evidence proof. The court held that the facts claimed by Kuixia Shipping Agency did not exist. Kuixia Shipping Agency bought all risks insurance from PICC Fengjie many times, Kuixia Shipping Agency should have basic knowledge about the business insurance clause as professional ship agency. On October 20, 2014, Kuixia Shipping Agency sealed on Detailed Explanation and Notification on Insurance Exemption Clauses, this can prove that PICC Fengjie had performed the exception clauses explaining obligations. Furthermore, if the event to the case beyond the compensation under the insurance contract agreement, the insurance company can refuse to compensate whether the insurance company performed the exception clauses explaining obligations or not. It is no sense for this case to judge whether PICC Fengjie performed the exception clauses explaining obligations or not. The claims of Kuixia Shipping Agency had no enough evidence to support; the court does not support them. For all of foregoing, the appeal of Kuixia Shipping Agency cannot be established and is dismissed. The judgment of the first instance identified the facts clearly, applicable law of the first instance was right, and the judgment should be affirmed. According to Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 39,132 yuan, should be borne by Kuixia Shipping Agency. The judgment is final. Presiding Judge: SU Jiang Judge: OU Haiyan Judge: DAI Qifen December 13, 2016 Clerk: CHENG Jianxiao

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The Supreme People’s Court of the People’s Republic of China Civil Ruling Kuixia Shipping Agency (Chongqing) Co., Ltd. v. People’s Insurance Company of China Fengjie Sub-branch (2017) Zui Gao Fa Min Shen No. 2847 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 655 and page 668 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote The Supreme Court affirmed lower court decisions holding plaintiff shipowner not entitled to recover from defendant insurer on hull policy because cause of loss of ship was held not to be grounding, an insured risk, but bad cargo loading, an excluded risk, and rejecting plaintiff’s argument that defendant insurer failed to explain exclusions to plaintiff. Summary The Supreme People’s Court affirmed the first and second instance judgments, wherein the claims for compensation by the Plaintiff-insured were rejected, as the accident for which the Plaintiff-insured sought compensation was not covered within the scope of the insurance policy. The Plaintiff-insured raised the same arguments to the court as it did both previous trials, and the court affirmed those judgments on the same reasoning and facts.

Ruling The Claimant of Retrial (the Plaintiff of first instance, the Appellant of second instance): Kuixia Shipping Agency (Chongqing) Co., Ltd. Domicile: Room 507, Sanxiafeng Building 2, No. 2, Yueya Street, Yongan Town, Fengjie County, Chongqing. Legal representative: YANG Zhong, chairman of the company. Agent ad litem: WANG Yu, lawyer of Beijing Hengdu Law Firm. Agent ad litem: DU Hui, lawyer of Beijing Hengdu Law Firm.

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The Respondent of Retrial (the Defendant of first instance, the Respondent of second instance): People’s Insurance Company of China Fengjie Sub-branch Domicile: Kuizhou Road, Yongan Town, Fengjie County, Chongqing. Representative: XX, general manager of the sub-branch. Dissatisfied with the Civil Judgment (2016) E Min Zhong No. 1617 (hereinafter referred to as the judgment of second instance) rendered by the Hubei High People’s Court in respect to the dispute over marine insurance contract, the Claimant of Retrial, Kuixia Shipping Agency (Chongqing) Co., Ltd. (hereinafter referred to as “Kuixia Shipping Agency”) filed against the Respondent of Retrial, People’s Insurance Company of China Fengjie Sub-branch (hereinafter referred to as “PICC Fengjie”) an application for retrial to the court. The court entertained the case and constituted a bench for trial. Now the case has been concluded. Kuixia Shipping Agency claimed that, in its application for retrial, firstly, that the grounding of the vessel was the main cause of the shipwreck. Survey Findings of Accident in Inland River and Field Scene Investigation of the Vessel, made by the Yichang Maritime Safety Administration, as well as the pictures and Vessel Insurance on Duty Notice proved that the vessel had been grounded. Reject Compensation Notice of PICC Fengjie also proved that the vessel had been grounded. The judgment of second instance wrongly rejected the fact that the vessel had been grounded. Secondly, Survey Findings of Accident in Inland River cannot be taken as fact, as its assessment that the improper stowage and safety management of this vessel caused the accident was not supported by evidence. PICC Fengjie did not submit evidence to exclude the influence of the grounding in this case. Third, when the two parties signed the insurance contract, PICC Fengjie did not explain any of the exceptions to Kuixia Shipping Agency. After the accident occurred, PICC Fengjie asked Kuixia Shipping Agency to seal the contract, and thus, the exceptions clause is not binding on Kuixia Shipping Agency. Overall, the judgment of second instance incorrectly identified the facts and incorrectly applied the law. Kuixia Shipping Agency filed an application for retrial to the court according to Article 200 Sub-paragraph 2 and Sub-paragraph 6 of the Civil Procedure Law of the People’s Republic of China. PICC Fengjie claimed that, firstly, that the accident involved in this case did not fall within the scope of insured accidents per the insurance contract, and PICC Fengjie was thus not required to compensate the insured for its loss. The evidence submitted by Kuixia Shipping Agency could not prove that the vessel was grounded, and even if the vessel had been grounded, there was no relation between the grounding and the sinking of M.V. “Kuixia 609.” Regardless of whether the vessel was grounded, the vessel was already in an unseaworthy condition from the outset of its voyage. Secondly, the improper stowage of cargo upon this vessel was the root cause of the sinking. According to the Principle of Proximate Causation, the Maritime Code of the People’s Republic of China, and the convention on insurance contracts, the cause of this accident was not covered by the all risks insurance policy. PICC Fengjie need not compensate the insured party whether or not they performed their obligation to inform them of the exception clause. Overall, the judgment of

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second instance clearly and correctly identified the facts and correctly applied the applicable law; thus, the application for retrial should be dismissed. Upon review, the court finds that this case arose from a dispute over an insurance contract in the sea water. In reviewing the retrial petition of Kuixia Shipping Agency and the points of PICC Fengjie, the court mainly surveyed whether this accident was within the scope of the coverage of the insurance contract. Kuixia Shipping Agency claimed that the vessel was damaged by the grounding event, which was within the scope of insurance coverage, according to Article 4 of the Insurance Clause. The Maritime Department interviewed the master, the mate, and the third mate. PICC Fengjie’s staff interviewed the third mate, the chief engineer officer, and some sailors. All of them mentioned that the vessel had undergone a grounding event during its voyage. After the vessel was salvaged, YANG Zhong, the legal representative of Kuixia Shipping Agency, signed and confirmed Field Scene Investigation of the Vessel Accident, stating, “there were no marks that showed that the vessel had grounded or had been touched by an unidentified object on the bottom of the vessel.” Survey Findings of Accident in Inland River, made by the Maritime Department in the Yichang district of Yichang Maritime Safety Administration (the special accident investigation group), reported on the investigation of relevant sailors, the inspection of the accident location, the investigation into the port loading situation, the inspection and sampling of the ship after it was salvaged on the spot, and the accident analysis conference. The evidence submitted by Kuixia Shipping Agency cannot overturn the conclusions in this survey, so Survey Findings of Accident in Inland River can be taken as fact in identifying the cause of the accident. According to Survey Findings of Accident in Inland River, improper stowage was the root cause of the sinking accident, and improper safety management was the indirect cause of the accident. Even though this survey finding had said that this vessel had undergone a grounding event on October 21, 2014, the vessel was refloated 55 min later because the master took measures to self-rescue. This survey’s findings regarded the improper stowage as the root cause of the accident. Combined with the fact that the master and sailors did not mention the grounding event during their investigation, it is understood that there was no causal relationship between the grounding incident and the sinking of the M.V “Kuixia 609.” The judgment of second instance was reasonable in rejecting the claim of Kuixia Shipping Agency that its vessel was damaged because of the grounding event. The insurance in this case was “all risks insurance of vessel in Inland River,” which was not the insurance on sea under Article 216 of the Maritime Code of People’s Republic of China. PICC Fengjie’s claim that the Maritime Code of People’s Republic of China should be applied to this case does conform with the law. Detailed Explanation and Notification on Insurance Exemption Clauses, which was sealed by Kuixia Shipping Agency, proves that PICC Fengjie had performed its obligation to explain the exception clauses to the insured on October 20, 2014. Kuixia Shipping Agency claimed that the above-mentioned documents were sealed after the accident occurred upon PICC Fengjie’s request; however, Kuixia Shipping Agency only submitted testimony of 4 witnesses. The judgment of second instance judged that the 4 witnesses had an interested stake in Kuixia

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Shipping Agency, and had no other evidence. The judgment of second instance’s decision to reject the testimony of these witnesses was proper. For all of the foregoing reasons, the application for retrial of Kuixia Shipping Agency did not conform to Article 200 of the Civil Procedure Law of the People’s Republic of China. According to Article 204 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, and Article 395 Paragraph 2 of the Interpretation of the Supreme People’s Court on Application of the Civil Procedure Law of the People’s Republic of China, the ruling is as follows: Dismiss the application for retrial of Kuixia Shipping Agency (Chongqing) Co., Ltd. Presiding Judge: YU Xiaohan Judge: REN Xuefeng Judge: HUANG Xiwu October 20, 2017 Clerk: CHEN Hui

Wuhan Maritime Court Civil Judgment LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2016) E 72 Min Chu No.1573 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the judgment of retrial are on page 693 and page 701 respectively. Cause of Action 241. Dispute over port operation. Headnote Defendant stevedore company held not liable for cargo damage, as Plaintiff insurer, in subrogation of cargo receivers, and cargo surveyor it engaged could not prove the true extent of damage and residual value of the cargo. Summary Cargo was damaged by Defendant stevedore company. Cargo receivers thought that the cargo was unusable for normal production purpose and therefore refused to accept it. Defendant and Plaintiff insurer, in subrogation of cargo receivers, could not find specialized inspection institute to ascertain the true extent of cargo damage and whether it could be reused to any extent, and Plaintiff’s cargo survey concluded, based on available information and documents, that the cargo had constructive total lost. Thus, Plaintiff filed lawsuit to claim for total price of cargo against Defendant. Court of first instance held that Plaintiff had but failed to discharge the burden to prove the true extent of damage and residual value of the cargo, so its claim should be rejected.

Judgment The Plaintiff: LIG Property Insurance (China) Co., Ltd. Domicile: Jianye District, Nanjing, Jiangsu. Organization code certificate: 71788444-8. Legal representative: Cao Zheyu, chairman. Agent ad litem: WANG Chun, lawyer of Jiangsu Senyuan Law Firm. Agent ad litem: DING Yan, lawyer of Jiangsu Senyuan Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_37

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The Defendant: Nanjing Port Longtan Container Co., Ltd. Domicile: Qixia District, Nanjing, Jiangsu. Unified social credit code: 91320000721736034X. Legal representative: DI Feng, chairman. Agent ad litem: CAO Jiping, lawyer of Jiangsu Tianzhe Law Firm. Agent ad litem: GU Chuande, lawyer of Jiangsu Tianzhe Law Firm. With respect to the case arising from dispute over port operation between the Plaintiff, LIG Property Insurance (China) Co., Ltd. (hereinafter referred to as “LIG”), and the Defendant, Nanjing Port Longtan Container Co., Ltd. (hereinafter referred to as “Longtan Company”), the Plaintiff filed an action to the Nanjing Xixia People’s Court on March 14, 2016. After Longtan Company filed a challenge to jurisdiction, the case was transferred to the court for trial. On September 6 of the same year, after the court entertained the case, Judge XIONG Wenbo applied summary procedure according to law, and on October 31, the court held a hearing in public. Agent ad litem of LIG, WANG Chun, agents ad litem of Longtan Company, CAO Jiping and GU Chuande, appeared in court to attend the hearing. Now the case has been concluded. LIG claimed to the court that: 1. Longtan Company should compensate for the loss of claims (in RMB unless otherwise specified) 169,0145.6 yuan and the interest (from September 26, 2015 to the date of actual payment according to the benchmark interest rate of the People’s Bank of China for the same period of time). Facts and reasons: LG Chemical (Nanjing) Information Electronic Materials Co., Ltd. (hereinafter referred to as “Electronic Company”) insured Domestic Cargo Transportation Insurance (collectively) at LIG. The insurance period was from April 1, 2014 to March 31, 2015. In November 2014, Electronic Company purchased a batch of polarizing film raw materials from Japan Synthetic Chemical Industry Co., Ltd., and the goods were transported by container (container number GESU6893820/092209) to the 03 floor of the Pier No.06 of Longtan Company. On November 23 of the same year, YANG Jianhua, the long bridge driver of Longtan Company, drove the R15 field bridge during the operation. The extracted adjacent container fell to the container of Electronic Company, causing the container to fall over and fall over the flatbed and causing damage. This fact were confirmed by a written statement from Longtan Company Security Department. According to Shanghai Highlevels Insurance Surveying Co., Ltd. (hereinafter referred to as “appraisal company”), the value of the damage was 1,690,145.6 yuan. On September 25, 2015, LIG paid the above-mentioned amount of claims to Electronic Company and obtained the insurance subrogation right. Longtan Company argued that: 1. the “accident passage” issued by the security department of Longtan Company was not a proof of the damage caused by the case, only the fact that the container was destroyed; 2. LIG only provided Domestic Cargo Transportation Insurance (collectively) policy, without providing the insurance application for the goods involved, and the insurance relationship certificate directly related to the goods involved, so it could not obtain the insurance subrogation right; 3. at the time of the incident, the metal bracket part of the

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two-volume cargo in the container involved was deformed and damaged. The outsourcing was slightly damaged. After the incident, the goods involved were piled up in the open air, and Electronic Company expanded the losses; 4. the appraisal report lacked the basis for testing. The loss identification was only based on the naked eye of Electronic Company and was not scientific and impartial. The parties submitted evidence in accordance with the law around the claims, and the parties involved in the organization conducted evidence exchange and cross-examination. The evidence of no objection to the parties shall be confirmed by the court and supported in the volume. The evidence for objection to the parties is as follows: Firstly, the record of accident of that the container was broken on November 23, 2014. LIG used this to prove that the loss of goods was caused by the employees of Longtan Company in the performance of the duties. Longtan Company had no objection to the authenticity of the evidence, but held that it could only prove that the accident caused container damage and deformation of the vehicle plate, and could not prove the damage caused by the accident, and had no relevancy to the case. The court holds that the evidence can reflect the accident situation and can be used as the basis for determining the facts of the case. As to whether the damage will be caused, it should be comprehensively explained later. Secondly, the assessment report. LIG used this to prove that the damage caused by the accident involved was 1,690,145.6 yuan. Longtan Company had no objection to the apparent authenticity of the evidence, but held had objection to the authenticity of the report and it had nothing to do with the case. The reasons were as follows: 1. the report was unilaterally commissioned by LIG, lacking impartiality; 2. the goods were stored in the open-air yard, and Longtan Company was not notified at the time of inspection. After the incident, the tally company only stated that “the outer packaging was damaged and the internal goods were to be checked”; 3. LIG did not provide the goods involved in the contract according to the agreement of insurance materials; 4. no evidence to prove the relationship between Electronic Company and LG Chem (Korea), LG Chem (China), the object of LIG’s claim was wrong; 5. the goods are only inspected by the relevant departments of Electronic Company, the appraiser did not notify Longtan Company or a third party to participate, and Electronic Company was not qualified for inspection; 6. the process of secondary production of the goods involved in Electronic Company was confidential, and few manufacturers in China could produce and use it to determine that the goods involved had no residual value. The statement lacked factual or legal basis. The court holds that the evidence was made by a qualified third-party appraisal company and cannot be denied by the unilateral entrustment of LIG; Longtan Company did not submit evidence to the contrary, as the basis for determining the facts of the case, as to whether it can be achieved the purpose of the proof of LIG, it should be comprehensively explained later. Thirdly, two photos of the goods involved. Longtan Company used this to prove that the goods involved were piled up in open space, resulting in the expansion of cargo damage, and Electronic Company should bear corresponding responsibility. LIG held that the authenticity could not be verified. The appraisal report stated that

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the goods were stacked in the warehouse during the inspection, and the responsibility of Longtan Company should not be alleviated. The court holds that even if the evidence is true, it can only prove the stacking of goods during the shooting of Longtan Company, and it cannot fully meet the proof purpose of Longtan Company, and it is not the basis for determining the facts of the case. Based on the statement of the parties and the evidence confirmed by the review, the court finds out the facts as follows: On March 31, 2014, LIG issued Cargo Insurance General Insurance Policy numbered 899992014320100000020, stating that the insured was Electronic Company with insurance coverage from 0:00 on April 1, 2014 to 24:00 on March 31. The insured goods were batteries, polarizing plates, etc. The premiums were declared and paid monthly, and the insurance policy was specifically agreed upon. The policy stated that: the insured LG Chem had an independent legal entity in China and any form of subsidiary or affiliated company (including those that obtained and participated in the investment during the insurance period); the insurance value of the insurance subject was the invoice amount. The bonus was 10%; the insured should report the amount and list of shipments that happened last month to the insurer before the 10th of each month, and the monthly premium should be paid. At 13:20 on November 23, 2014, when the driver of Longtan Company was hoisting, the container on the spreader fell into other containers, causing the container numbered GESU6893820 to fall onto the board, causing the container damage. The damaged container was loaded with a batch of polarizing film raw materials imported by Electronic Company from Japan, with a quantity of 20,000 m. The unit price of the goods was 1,477.4 yen per meter and was carried by Sinotrans Container Lines Co., Ltd. On December 24, 2014, China Ocean Shipping Tally Corporation stated that the outer packaging of the goods involved was damaged and the internal cargo was to be investigated. On December 2, 2014, commissioned by LIG, the appraisal company appointed the appraiser to go to Longtan Company for on-site investigation. On December 24 of the same year, the appraisal company also sent staff to Electronic Company to conduct surveys. During the investigation of the appraisal company, the goods involved was photographed and filed. After investigation, the appraisal company estimated that the container seal was intact, the left side was damaged, and there were collision marks from front to back; there were two volumes of polarizing plate raw materials in the container, which were placed on the left side of the container before and after, and the upper iron frame of the cargo collapsed. The transparent protective cover hanging outside collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was seriously damaged, the internal cargo was exposed in a large area, the aluminum foil of the second half of the cargo was damaged, and some protective bags had hole-breaking phenomenon in the back half. On December 30, 2014, Electronic Company submitted a quality anomaly report to the appraisal company, arguing that two rolls of raw materials were dumped in the container, the incoming iron frame was seriously damaged, the packaging was

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severely damaged, the end face was poorly cleaned, and the quality risk was extremely high. And clearly proposed to reject the goods involved. Electronic Company also issued the corresponding production standards to appraisal company, requiring the appearance end face to be free from foreign matter and flat, without damage or offset. It was pointed out that the end face of the goods involved was seriously offset, and the risk of abnormal breakage of the damage could not be put into production. Electronic Company also issued a calculation book for the abnormal raw material input test cost to the appraisal company, which stated the test cost of the two cases. Under normal conditions (TAC break), the cost was that: 1. 4,800 Kuraray PVA 960 m, 2. test with TAC 2,500 m, PE film 2,500 m, oppleading film 1,000 m, 3. waste normal production time 5 h, 4. labor 10 people, 5. profit loss, 6. energy costs, equipment depreciation. In this case, the test cost totals approximately USD 131,582. In the case of sudden damage (roll damage), the costs were that: 1. increase the cost of repair and replacement of lamiroll damage, 2. increase the abnormal downtime by 5 h, 3. replace the quality of running wear in the initial roll of new roll, 4. labor cost, energy fee, equipment depreciation expenses increased by 5 h, 5. increase profit loss. The cost of testing in this case amounted to approximately USD 226,343. The appraisal company and LIG, Longtan Company, Sinotrans Container Lines Co., Ltd., PICC Nanjing (the insurer of Longtan Company) discussed issues such as accident follow-up claims, and agreed that PICC Nanjing should find the first degree of damage to damaged goods. Tripartite testing agency and residual value recycler. PICC Nanjing replied that the goods involved were used less in domestic factories, did not find the corresponding testing units, and did not find the corresponding residual value recyclers. Regarding the compensation for damages, the appraisal company negotiated with LIG, Longtan and Sinotrans Container Lines Co., Ltd., but failed to reach an agreement. The appraisal company assessed the above situation and held that it was unlikely to persuade Electronic Company to receive and disassemble the goods for inspection. The reasons were as follows: 1. Electronic Company was the production unit, and there was no relevant tool for actual testing. The detection was mostly the actual production on the machine. The computer and the physical and physical data of the semi-finished products and finished products were tested. 2. When Electronic Company was in production, it was not directly processed and cut for the goods involved, but needed to be used together with other raw materials, such as the quality of the goods involved or in the process of stretching on the machine, it would cause downtime or other accidents, which would cause other raw materials to be damaged together and cause more losses. 3. The goods involved were not urgent materials. After the incident, Electronic Company adjusted the last plan and re-purchased. A batch of goods of the same type. The appraisal company also held that the damaged goods were high-precision raw materials. If they were slightly collided, they would be damaged or offset. If the goods were knocked down and hit the cabinet, they would be polluted and could not be produced on the machine. The production process of Electronic Company was confidential. There were very few manufacturers in China, and the goods involved could not be reused.

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As a result, the appraisal company finally determined that the goods were totally damaged and there was no residual value. According to the invoice of the goods involved, combined with the exchange rate at the time of the incident, the value of the damaged goods determined by the appraisal company was 1,536,496 yuan. According to the agreement on the total amount of the insurance policy, the total amount of the commercial invoice was 10%, and the accident loss was 1,690,145.6 yuan. On September 25, 2015, LIG paid insurance claims 1,690,145.6 yuan to Electronic Company, and obtained the receipt and equity transfer letter issued by Electronic Company. The court holds that: This case is the dispute over port operation. When the staff of Longtan Company hoisted the container at the port, the container on the spreader fell and hit the container carrying the goods belonging to Electronic Company, causing the container to fall and the goods in the container to be lost. Longtan Company’s improper operation violates the civil rights and interests of Electronic Company and should be liable for compensation. As the insurer of Electronic Company, LIG obtained the insurance subrogation right after paying the claims to Electronic Company. Longtan Company should finally assume the liability for compensation to LIG. The rights obtained by LIG belong to the transfer of legal claims, and the right to claim for compensation by Electronic Company is exercised. The claims for compensation and the insurance contract belong to different legal relationships. The court only conducts legal relationship between Electronic Company and Longtan Company. This court will not examine whether there is a valid insurance contract relationship between LIG and Electronic Company proposed by Longtan Company. However, the amount of the claim for the insurance subrogation of LIG is related to the actual loss of Electronic Company. LIG paid 10% of the invoice price to Electronic Company based on the terms of the insurance target agreed by the contract with Electronic Company, which is 10% of the invoice price. It is the behavior of both parties in the contractual legal relationship. In the infringement legal relationship, it is not exempted from the burden of proof that LIG should be responsible for the actual loss of Electronic Company due to the payment of 10% of the invoice price. Otherwise, the court should not protect it. Longtan Company held that Electronic Company expanded the losses on the grounds that the goods involved were stored in the open space. There was no evidence to prove that Longtan Company held that Electronic Company should bear the corresponding responsibility, and the court does not support it. Regarding whether the goods involved in the loss happened and how the amount of the loss is determined, it is the biggest issue in this case. The evidence that LIG claimed that the total loss of the goods had no residual value is mainly the report of the appraisal company. The main reasons for the report were as follows: 1. the raw materials of the two rolls of polarizing plates in the container were placed on the left side of the container before and after the protection of the goods. The iron frame collapsed, and the transparent protective cover hanging on the outside all collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was

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seriously damaged, the internal cargo was exposed in a large area, and the aluminum foil in the second half of the roll was damaged. The second half was broken. Some protective bags had holes. 2. Electronic Company held that 2 rolls of raw materials in the container were dumped, the incoming iron frame was seriously damaged, the packaging was seriously damaged, and the end face was poorly cleaned. According to the production standard, the appearance end surface of the raw material was required to be free from foreign matter and flat, without damage or offset. Therefore, it refused to accept the goods involved. 3. As the insurer of Longtan Company, PICC Nanjing did not find the third party to be tested and the merchant who recovered the residual value. 4. Electronic Company was a production unit, and there was no relevant tool for actual testing. Most of the tests were actual production on the machine. The production was not directly processed and cut for the goods involved, but needed to be used together with other raw materials, such as the quality of the goods involved or Any downtime or other accidents caused by stretching on the machine would cause other materials to be damaged together and cause more losses. If Electronic Company detected the actual production through the machine, there were two possible accidents, the estimated losses were 131,582 US dollars, 226,343 US dollars respectively. Regarding point 1, according to the photos of the appraisal company’s on-site investigation and retention, it can be confirmed that the package of the goods involved was damaged, combined with the strict production standards of Electronic Company, namely the surface of the raw material was required to have no foreign matter and flatness, without damage or offset. It is inferred that there is a certain degree of damage to the goods involved. After investigation, China Ocean Shipping Tally Corporation held that the outer packaging of the goods involved was damaged, and the internal cargo was to be inspected, but the goods in the container were not inspected. Therefore, in the absence of evidence to the contrary, Longtan Company held that the accident involved only caused the container to fall. The court does not support the claim that the goods in the container are damaged. Regarding points 2, 3 and 4, it can be summarized as follows: Electronic Company found that it was not suitable for production after it was inspected. If it was used on the machine, it needed to be used together with other raw materials, which could cause more losses, so it refused to accept the goods. However, Longtan Company or PICC Nanjing did not find a suitable third-party testing agency. Therefore, only the total loss of the goods could be estimated. This part of the reason avoids the problem of whether the goods involved can be repaired and the losses caused by the production on the machine are determined and greater than the total loss of the goods. Although there is a certain degree of damage to the goods involved, Electronic Company can contact the Japanese manufacturer and other relevant units to assess whether it can be repaired. If the goods involved in the production of the goods, Electronic Company listed the amount of losses that may be caused, but the amount of the above losses is simply stated by Electronic Company, there is no specific calculation standard or basis, and there is no third-party evaluation or other evidence to prove that it is insufficient to prove the amount of possible loss. If it is determined that the goods involved are totally

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damaged, LIG is responsible for providing sufficient and valid evidence that the goods involved cannot be repaired, and if the production of the machine will cause greater losses, Electronic Company cannot be considered to be secret and its own production is secret. Pulling the threads together, there should be some damage to the goods involved. However, due to the fact that LIG did not fully provide the evidence to prove the amount of damage, the court does not protect the claims of Longtan Company that Longtan Company should compensate for the loss. In accordance with Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claims of the Plaintiff LIG Property Insurance (China) Co., Ltd. Court acceptance fee in amount of 20,011 yuan, which due to the application of summary procedure is reduced to 10,005.5 yuan, shall be born by LIG. The remaining 10,005.5 yuan shall be returned by the court. If not satisfied with the judgment, the parties can submit three sets of the original appeal within 15 days from the date of service of the judgment, together with copies of petition according to the number of the other parties, so as to appeal to the Hubei High People’s Court. Judge: XIONG Wenbo May 27, 2017 Clerk: DENG Yanfa

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Hubei High People’s Court Civil Judgment LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2017) E Min Zhong No.3219 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the judgment of retrial are on page 685 and page 701 respectively. Cause of Action 241. Dispute over port operation. Headnote Affirming first instance Court’s decision holding that Defendant stevedore company was not liable for cargo damage, as Plaintiff insurer, in subrogation of cargo owner, and cargo surveyor it engaged could not prove the true extent of damage and residual value of the cargo. Summary Cargo was damaged by Defendant stevedore company. Cargo receivers thought that the cargo was unusable for normal production purpose and therefore refused to accept it. Defendant and Plaintiff insurer, in subrogation of cargo receivers, could not find specialized inspection institute to ascertain the true extent of cargo damage and whether it could be reused to any extent, and Plaintiff’s cargo survey concluded, based on available information and documents, that the cargo had constructive total lost. Thus, Plaintiff filed lawsuit to claim for total price of cargo against Defendant. Court of first instance held that Plaintiff had but failed to discharge the burden to prove the true extent of damage and residual value of the cargo, so its claim should be rejected. Plaintiff appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

Judgment The Appellant (the Plaintiff of first instance): LIG Property Insurance (China) Co., Ltd. Domicile: Jianye District, Nanjing, Jiangsu. Organization code certificate: 71788444-8.

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Legal representative: CAO Zheyu, chairman. Agent ad litem: LI Jun, lawyer of Jiangsu Senyuan Law Firm. The Respondent (the Defendant of first instance): Nanjing Port Longtan Container Co., Ltd. Domicile: Qixia District, Nanjing, Jiangsu. Unified social credit code: 91320000721736034X. Legal representative: DI Feng, chairman. Agent ad litem: CAO Jiping, lawyer of Jiangsu Tianzhe Law Firm. Agent ad litem: GU Chuande, lawyer of Jiangsu Tianzhe Law Firm. With respect to the case arising from dispute over port operation between the Appellant, LIG Property Insurance (China) Co., Ltd. (hereinafter referred to as “LIG”), and the Respondent, Nanjing Port Longtan Container Co., Ltd. (hereinafter referred to as “Longtan Company”), the Appellant disagreed with the Wuhan Maritime Court (2016) E 72 Min Chu No.1573 Civil Judgment, and appealed to the court. After entertaining the case on November 11, 2017, the court formed a collegial panel according to law. On November 23, the court held a hearing in public. Agent ad litem of the Appellant LIG, LI Jun, agents ad litem of the Respondent Longtan Company, CAO Jiping and GU Chuande, appeared in court to attend the hearing. Now the case has been concluded. LIG appealed that: revoke the Wuhan Maritime Court (2016) E 72 Min Chu No.1573 Civil Judgment in accordance with the law, and Longtan Company should compensate LIG for the loss of claims (in RMB unless otherwise specified) 1,690,145.6 yuan and the interest Court acceptance fees of first and second instances should be born by Longtan Company. Facts and reasons: 1. the court of first instance found the facts, which were wrong. The test cost of the goods involved in the loss of the goods involved in the test was USD 131,582 and USD 226,343, respectively, and the court of first instance identified the test cost as an estimated loss error. Damaged goods must be tested before they could be confirmed whether the goods were lost, to what extent and whether they could be repaired, repair costs and how to dispose of them. The cost of the test was close to the full value of the goods, no matter where they were repaired and disposed of. 2. The court of first instance aggravated the burden of proof of LIG and was obviously unfair. LIG exhausted the burden of proof to prove the loss of goods. Longtan Company as an infringer should verify or provide clues to the Japanese manufacturer to provide evidence, or apply for judicial appraisal. The burden of proof was on Longtan Company. Regardless of the chemical nature and trade confidentiality of the damaged goods, the court of first instance held that LG Chemical (Nanjing) Information Electronic Materials Co., Ltd. (hereinafter referred to as Electronic Company) could contact Japanese manufacturers for evaluation and repair, but Japanese manufacturers were the production of raw materials. Enterprises and far away from abroad, the deep processing and specific use of the material was not necessarily more professional than Electronic Company, not to mention the cost of transportation to and from the company even if there was the possibility of repair.

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The residual value of the damaged goods could be disposed of by Longtan Company, and Longtan Company could also seek compensation from its own insurance company. The court of first instance not only determined that there was a loss, but also did not determine the specific loss and did not require the infringer to bear the burden of proof. Longtan Company argued that: LIG did not perform its burden of proof on its own and should bear the consequences of its unfavorable lawsuit. LIG did not fully prove the actual loss of the goods. Although there was a certain degree of damage to the goods involved, the amount of losses claimed by LIG was listed by Electronic Company itself. There was no specific calculation standard and basis, and there was no assessment by other third-party organizations or other evidence to prove the possible amount of loss. LIG should not be supported by the correct way of directly contacting the supplier of the goods involved and entrusting the supplier to conduct quality appraisal. LIG claimed in first instance that: 1. Longtan Company should compensate for the loss of claims (in RMB unless otherwise specified) 169,0145.6 yuan and the interest (from September 26, 2015 to the date of actual payment according to the benchmark interest rate of the People’s Bank of China for the same period of time). The court of first instance confirmed the facts that: on March 31, 2014, LIG issued Cargo Insurance General Insurance Policy numbered 8999920 14320100000020, stating that the insured was Electronic Company with insurance coverage from 0:00 on April 1, 2014 to 24:00 on March 31. The insured goods were batteries, polarizing plates, etc. The premiums were declared and paid monthly, and the insurance policy was specifically agreed upon. The policy stated that: the insured LG Chem had an independent legal entity in China and any form of subsidiary or affiliated company (including those that obtained and participated in the investment during the insurance period); the insurance value of the insurance subject was the invoice amount. The bonus was 10%; the insured should report the amount and list of shipments that happened last month to the insurer before the 10th of each month, and the monthly premium should be paid. At 13:20 on November 23, 2014, when the driver of Longtan Company was hoisting, the container on the spreader fell into other containers, causing the container numbered GESU6893820 to fall onto the board, causing the container damage. The damaged container was loaded with a batch of polarizing film raw materials imported by Electronic Company from Japan, with a quantity of 20,000 m. The unit price of the goods was 1,477.4 yen per meter and was carried by Sinotrans Container Lines Co., Ltd. On December 24, 2014, China Ocean Shipping Tally Corporation stated that the outer packaging of the goods involved was damaged and the internal cargo was to be investigated. On December 2, 2014, commissioned by LIG, the appraisal company appointed the appraiser to go to Longtan Company for on-site investigation. On December 24 of the same year, the appraisal company also sent staff to Electronic Company to conduct surveys. During the investigation of the appraisal company, the goods involved was photographed and filed. After investigation, the appraisal company estimated that the container seal was intact, the left side was damaged, and there

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were collision marks from front to back; there were two volumes of polarizing plate raw materials in the container, which were placed on the left side of the container before and after, and the upper iron frame of the cargo collapsed. The transparent protective cover hanging outside collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was seriously damaged, the internal cargo was exposed in a large area, the aluminum foil of the second half of the cargo was damaged, and some protective bags had hole-breaking phenomenon in the back half. On December 30, 2014, Electronic Company submitted a quality anomaly report to the appraisal company, arguing that two rolls of raw materials were dumped in the container, the incoming iron frame was seriously damaged, the packaging was severely damaged, the end face was poorly cleaned, and the quality risk was extremely high. And clearly proposed to reject the goods involved. Electronic Company also issued the corresponding production standards to appraisal company, requiring the appearance end face to be free from foreign matter and flat, without damage or offset. It was pointed out that the end face of the goods involved was seriously offset, and the risk of abnormal breakage of the damage could not be put into production. Electronic Company also issued a calculation book for the abnormal raw material input test cost to the appraisal company, which stated the test cost of the two cases. Under normal conditions (TAC break), the cost was that: 1. 4,800 Kuraray PVA 960 m, 2. test with TAC 2,500 m, PE film 2,500 m, oppleading film 1,000 m, 3. waste normal production time 5 h, 4. labor 10 people, 5. profit loss, 6. energy costs, equipment depreciation. In this case, the test cost totals approximately USD 131,582. In the case of sudden damage (roll damage), the costs were that: 1. increase the cost of repair and replacement of lamiroll damage, 2. increase the abnormal downtime by 5 h, 3. replace the quality of running wear in the initial roll of new roll, 4. labor cost, energy fee, equipment depreciation expenses increased by 5 h, 5, increase profit loss. The cost of testing in this case amounted to approximately USD 226,343. The appraisal company and LIG, Longtan Company, Sinotrans Container Lines Co., Ltd., PICC Nanjing (the insurer of Longtan Company) discussed issues such as accident follow-up claims, and agreed that PICC Nanjing should find the first degree of damage to damaged goods. Tripartite testing agency and residual value recycler. PICC Nanjing replied that the goods involved were used less in domestic factories, did not find the corresponding testing units, and did not find the corresponding residual value recyclers. Regarding the compensation for damages, the appraisal company negotiated with LIG, Longtan and Sinotrans Container Lines Co., Ltd., but failed to reach an agreement. The appraisal company assessed the above situation and held that it was unlikely to persuade Electronic Company to receive and disassemble the goods for inspection. The reasons were as follows: 1. Electronic Company was the production unit, and there was no relevant tool for actual testing. The detection was mostly the actual production on the machine. The computer and the physical and physical data of the semi-finished products and finished products were tested. 2. When Electronic Company was in production, it was not directly processed and cut for the goods

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involved, but needed to be used together with other raw materials, such as the quality of the goods involved or in the process of stretching on the machine, it would cause downtime or other accidents, which would cause other raw materials to be damaged together and cause more losses. 3. The goods involved were not urgent materials. After the incident, Electronic Company adjusted the last plan and re-purchased. A batch of goods of the same type. The appraisal company also held that the damaged goods were high-precision raw materials. If they were slightly collided, they would be damaged or offset. If the goods were knocked down and hit the cabinet, they would be polluted and could not be produced on the machine. The production process of Electronic Company was confidential. There were very few manufacturers in China, and the goods involved could not be reused. As a result, the appraisal company finally determined that the goods were totally damaged and there was no residual value. According to the invoice of the goods involved, combined with the exchange rate at the time of the incident, the value of the damaged goods determined by the appraisal company was 1,536,496 yuan. According to the agreement on the total amount of the insurance policy, the total amount of the commercial invoice was 10%, and the accident loss was 1,690,145.6 yuan. On September 25, 2015, LIG paid insurance claims 1,690,145.6 yuan to Electronic Company, and obtained the receipt and equity transfer letter issued by Electronic Company. The court of first instance held that, this case was the dispute over port operation. When the staff of Longtan Company hoisted the container at the port, the container on the spreader fell and hit the container carrying the goods belonging to Electronic Company, causing the container to fall and the goods in the container to be lost. Longtan Company’s improper operation violated the civil rights and interests of Electronic Company and should be liable for compensation. As the insurer of Electronic Company, LIG obtained the insurance subrogation right after paying the claims to Electronic Company. Longtan Company should finally assume the liability for compensation to LIG. The rights obtained by LIG belonged to the transfer of legal claims, and the right to claim for compensation by Electronic Company was exercised. The claims for compensation and the insurance contract belonged to different legal relationships. The court of first instance only conducted legal relationship between Electronic Company and Longtan Company. The court of first instance would not examine whether there was a valid insurance contract relationship between LIG and Electronic Company proposed by Longtan Company. However, the amount of the claim for the insurance subrogation of LIG was related to the actual loss of Electronic Company. LIG paid 10% of the invoice price to Electronic Company based on the terms of the insurance target agreed by the contract with Electronic Company, which was 10% of the invoice price. It was the behavior of both parties in the contractual legal relationship. In the infringement legal relationship, it was not exempted from the burden of proof that LIG should be responsible for the actual loss of Electronic Company due to the payment of 10% of the invoice price. Otherwise, the court of first instance should not protect it. Longtan Company held that Electronic Company expanded the losses on the grounds that

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the goods involved were stored in the open space. There was no evidence to prove that Longtan Company held that Electronic Company should bear the corresponding responsibility, and the court of first instance did not support it. Regarding whether the goods involved in the loss happened and how the amount of the loss was determined, it was the biggest issue in this case. The evidence that LIG claimed that the total loss of the goods had no residual value was mainly the report of the appraisal company. The main reasons for the report were as follows: 1. the raw materials of the two rolls of polarizing plates in the container were placed on the left side of the container before and after the protection of the goods. The iron frame collapsed, and the transparent protective cover hanging on the outside all collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was seriously damaged, the internal cargo was exposed in a large area, and the aluminum foil in the second half of the roll was damaged. The second half was broken. Some protective bags had holes. 2. Electronic Company held that 2 rolls of raw materials in the container were dumped, the incoming iron frame was seriously damaged, the packaging was seriously damaged, and the end face was poorly cleaned. According to the production standard, the appearance end surface of the raw material was required to be free from foreign matter and flat, without damage or offset. Therefore, it refused to accept the goods involved. 3. As the insurer of Longtan Company, PICC Nanjing did not find the third party to be tested and the merchant who recovered the residual value. 4. Electronic Company was a production unit, and there was no relevant tool for actual testing. Most of the tests were actual production on the machine. The production was not directly processed and cut for the goods involved, but needed to be used together with other raw materials, such as the quality of the goods involved or Any downtime or other accidents caused by stretching on the machine would cause other materials to be damaged together and cause more losses. If Electronic Company detected the actual production through the machine, there were two possible accidents, the estimated losses were 131,582 US dollars, 226,343 US dollars respectively. Regarding point 1, according to the photos of the appraisal company’s on-site investigation and retention, it could be confirmed that the package of the goods involved was damaged, combined with the strict production standards of Electronic Company, namely the surface of the raw material was required to have no foreign matter and flatness, without damage or offset. It was inferred that there was a certain degree of damage to the goods involved. After investigation, China Ocean Shipping Tally Corporation held that the outer packaging of the goods involved was damaged, and the internal cargo was to be inspected, but the goods in the container were not inspected. Therefore, in the absence of evidence to the contrary, Longtan Company held that the accident involved only caused the container to fall. The court of first instance did not support the claim that the goods in the container are damaged. Regarding points 2, 3 and 4, it could be summarized as follows: Electronic Company found that it was not suitable for production after it was inspected. If it was used on the machine, it needed to be used together with other raw materials, which could cause more losses, so it refused to accept the goods. However, Longtan

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Company or PICC Nanjing did not find a suitable third-party testing agency. Therefore, only the total loss of the goods could be estimated. This part of the reason avoided the problem of whether the goods involved could be repaired and the losses caused by the production on the machine are determined and greater than the total loss of the goods. Although there was a certain degree of damage to the goods involved, Electronic Company could contact the Japanese manufacturer and other relevant units to assess whether it could be repaired. If the goods involved in the production of the goods, Electronic Company listed the amount of losses that could be caused, but the amount of the above losses was simply stated by Electronic Company, there was no specific calculation standard or basis, and there was no third-party evaluation or other evidence to prove that it was insufficient to prove the amount of possible loss. If it was determined that the goods involved were totally damaged, LIG was responsible for providing sufficient and valid evidence that the goods involved could not be repaired, and if the production of the machine would cause greater losses, Electronic Company could not be considered to be secret and its own production was secret. Pulling the threads together, there should be some damage to the goods involved. However, due to the fact that LIG did not fully provide the evidence to prove the amount of damage, the court of first instance did not protect the claims of Longtan Company that Longtan Company should compensate for the loss. In accordance with Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: reject the claims of LIG. Court acceptance fee of first instance in amount of 20,011 yuan, due to the application of summary procedure, the fee should be reduced by 10,005.5 yuan, which should be born by LIG. 10,005.5 yuan should be returned by the court of first instance. During the second instance, the parties did not submit new evidence. After investigation, the facts confirmed by the court of first instance are true, so the court should confirm them. The issue of in second instance is whether the loss of the goods claimed by LIG can be supported. The court holds that the staff of Longtan Company did not operate improperly when hoisting containers in the port. The container on the spreaders fell to the containers of Electronic Company, causing a certain degree of damage to the goods inside the container and infringing the civil rights of Electronic Company. Article 2 of the Tort Liability Law of the People’s Republic of China, Longtan Company should bear the tort liability. The question about the amount of damage. The court holds that after the accident involved, Electronic Company should conduct a test assessment of the damage to determine the extent of the loss and the amount of the loss. Even if a suitable third-party testing organization cannot be found in China, Electronic Company should contact the Japanese manufacturer for evaluation or repair. Compared with Longtan Company, Electronic Company, as an affiliate of the manufacturer, is more qualified to contact the Japanese manufacturer for evaluation or repair. Electronic Company neglected to fulfill the obligations on the grounds of excessive costs. The

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reason of appeal of LIG that Longtan Company should contact the Japanese manufacturer to verify the loss cannot be established. Electronic Company is the consignee of the goods, and does not have the qualification to assess the test, and there is no relevant tool for the actual test. The amount of the losses listed by Electronic Company has no specific calculation standard and basis, and there is no other evidence to prove that the goods can prove the amount of the loss. LIG only relied on Electronic Company’s own estimated test costs to determine the basis for the total loss of the goods. The goods involved were not tested, and the cost of testing did not actually happen. The court of first instance held that the test expenses claimed by LIG were not the same as the estimated losses. LIG failed to submit sufficient and valid evidence to prove the amount of damages. According to Article 90 of the Supreme People’s Court Interpretation of the Application of the Civil Procedure Law of the People’s Republic of China, it shall bear the responsibility of failing to provide evidence. The reason of appeal of LIG to claim damages from Longtan Company shall not be supported by the court. Pulling the threads together, the facts confirmed by the first-instance judgment are clear, the application of law is correct, and the first-instance trial was handled properly. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 20,011 yuan, shall be born by LIG Property Insurance (China) Co., Ltd. The judgment is final. Presiding Judge: SU Jiang Judge: OU Haiyan Judge: DAI Qifen December 7, 2017 Clerk: MA Yue

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The Supreme People’s Court of the People’s Republic of China Civil Judgment LIG Property Insurance (China) Co., Ltd. v. Nanjing Port Longtan Container Co., Ltd. (2018) Zui Gao Fa Min Zai No.452 Related Case(s) This is the judgment of retrial, and the judgment of first instance and the judgment of second instance are on page 685 and page 693 respectively. Cause of Action 241. Dispute over port operation. Headnote Overturning the lower courts’ decisions and holding Defendant stevedore company liable for constructive total loss of cargo, as Plaintiff insurer discharged its burden of proof, i.e. engaging licensed cargo surveyor to inspect the cargo which, on available information, issued report to conclude the constructive total loss. Summary Cargo was damaged by Defendant stevedore company. Cargo receivers thought that the cargo was unusable for normal production purpose and therefore refused to accept it. Defendant and Plaintiff insurer, in subrogation of cargo receivers, could not find specialized inspection institute to ascertain the true extent of cargo damage and whether it could be reused to any extent, and Plaintiff’s cargo survey concluded, based on available information and documents, that the cargo had constructive total lost. Thus, Plaintiff filed lawsuit to claim for total price of cargo against Defendant. Court of first instance held that Plaintiff had but failed to discharge the burden to prove the true extent of damage and residual value of the cargo, so its claim should be rejected. Plaintiff appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law. Plaintiff made petition to the Supreme Court of China for retrial. The Supreme Court of appeal overturned the lower courts’ decisions and held Defendant stevedore company liable for constructive total loss of cargo. The rationale was that Plaintiff insurer discharged its burden to prove the cargo had constructive total loss: (i) it engaged licensed cargo surveyor to inspect the cargo; (ii) the surveyor, based on available information, issued report to conclude the constructive total loss of cargo; and (iii) there was no rebutting evidence.

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Judgment The Claimant of retrial (the Plaintiff of first instance, the Appellant of second instance): LIG Property Insurance (China) Co., Ltd. Domicile: Jianye District, Nanjing, Jiangsu. Legal representative: KIMHYUN, chairman. Agent ad litem: WANG Chun, lawyer of Jiangsu Senyuan Law Firm. Agent ad litem: PANG Lianchuan, lawyer of Jiangsu Senyuan Law Firm. The Respondent of retrial (the Defendant of first instance, the Respondent of second instance): Nanjing Port Longtan Container Co., Ltd. Domicile: Qixia District, Nanjing, Jiangsu. Legal representative: DI Feng, chairman. Agent ad litem: CAO Jiping, lawyer of Jiangsu Tianzhe Law Firm. Agent ad litem: GU Chuande, lawyer of Jiangsu Tianzhe Law Firm. With respect to the case arising from dispute over port operation between the Claimant of retrial, LIG Property Insurance (China) Co., Ltd. (hereinafter referred to as “LIG”), and the Respondent of retrial, Nanjing Port Longtan Container Co., Ltd. (hereinafter referred to as “Longtan Company”), the Claimant of retrial disagreed with the Hubei High People’s Court (hereinafter referred to as the court of second instance) (2017) E Min Zhong No.3219 Civil Judgment (hereinafter referred to as the judgment of second instance), and applied to the court for retrial. The court made (2018) Zui Gao Fa Min Shen No.3157 Civil Ruling to retry the case, and formed a collegial panel according to law. Now the case has been concluded. LIG claimed to the Wuhan Maritime Court (hereinafter referred to as the court of first instance) that: 1. Longtan Company should compensate for the loss of claims (in RMB unless otherwise specified) 1,690,145.6 yuan and the interest (from September 26, 2015 to the date of actual payment according to the benchmark interest rate of the People’s Bank of China for the same period of time). Facts and reasons: LG Chemical (Nanjing) Information Electronic Materials Co., Ltd. (hereinafter referred to as “Electronic Company”) insured Domestic Cargo Transportation Insurance (collectively) at LIG. The insurance period was from April 1, 2014 to March 31, 2015. In November 2014, Electronic Company purchased a batch of polarizing film raw materials from Japan Synthetic Chemical Industry Co., Ltd., and the goods were transported by container (container number GESU6893820/092209) to the 03 floor of the Pier No.06 of Longtan Company. On November 23 of the same year, YANG Jianhua, the long bridge driver of Longtan Company, drove the R15 field bridge during the operation. The extracted adjacent container fell to the container of Electronic Company, causing the container to fall over and fall over the flatbed and causing damage. This fact were confirmed by a

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written statement from Longtan Company Security Department. According to Shanghai Highlevels Insurance Surveying Co., Ltd. (hereinafter referred to as “appraisal company”), the value of the damage was 1,690,145.6 yuan. On September 25, 2015, LIG paid the above-mentioned amount of claims to Electronic Company and obtained the insurance subrogation right. Longtan Company argued that: 1. the “accident passage” issued by the security department of Longtan Company was not a proof of the damage caused by the case, only the fact that the container was destroyed; 2. LIG only provided Domestic Cargo Transportation Insurance (collectively) policy, without providing the insurance application for the goods involved, and the insurance relationship certificate directly related to the goods involved, so it could not obtain the insurance subrogation right; 3. at the time of the incident, the metal bracket part of the two-volume cargo in the container involved was deformed and damaged. The outsourcing was slightly damaged. After the incident, the goods involved were piled up in the open air, and Electronic Company expanded the losses; 4. the appraisal report lacked the basis for testing. The loss identification was only based on the naked eye of Electronic Company and was not scientific and impartial. The court of first instance found out that: on March 31, 2014, LIG issued the Cargo Insurance General Insurance Policy numbered 899992014320100000020, stating that the insured was Electronic Company with insurance coverage from 0:00 on April 1, 2014 to 24:00 on March 31. The insured goods were batteries, polarizing plates, etc. The premiums were declared and paid monthly, and the insurance policy was specifically agreed upon. The policy stated that: the insured LG Chem had an independent legal entity in China and any form of subsidiary or affiliated company (including those that obtained and participated in the investment during the insurance period); the insurance value of the insurance subject was the invoice amount. The bonus was 10%; the insured should report the amount and list of shipments that happened last month to the insurer before the 10th of each month, and the monthly premium should be paid. At 13:20 on November 23, 2014, when the driver of Longtan Company was hoisting, the container on the spreader fell into other containers, causing the container numbered GESU6893820 to fall onto the board, causing the container damage. The damaged container was loaded with a batch of polarizing film raw materials imported by Electronic Company from Japan, with a quantity of 20,000 m. The unit price of the goods was 1,477.4 yen per meter and was carried by Sinotrans Container Lines Co., Ltd. On December 24, 2014, China Ocean Shipping Tally Corporation stated that the outer packaging of the goods involved was damaged and the internal cargo was to be investigated. On December 2, 2014, commissioned by LIG, the appraisal company appointed the appraiser to go to Longtan Company for on-site investigation. On December 24 of the same year, the appraisal company also sent staff to Electronic Company to conduct surveys. During the investigation of the appraisal company, the goods

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involved was photographed and filed. After investigation, the appraisal company estimated that the container seal was intact, the left side was damaged, and there were collision marks from front to back; there were two volumes of polarizing plate raw materials in the container, which were placed on the left side of the container before and after, and the upper iron frame of the cargo collapsed. The transparent protective cover hanging outside collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was seriously damaged, the internal cargo was exposed in a large area, the aluminum foil of the second half of the cargo was damaged, and some protective bags had hole-breaking phenomenon in the back half. On December 30, 2014, Electronic Company submitted a quality anomaly report to the appraisal company, arguing that two rolls of raw materials were dumped in the container, the incoming iron frame was seriously damaged, the packaging was severely damaged, the end face was poorly cleaned, and the quality risk was extremely high. And clearly proposed to reject the goods involved. Electronic Company also issued the corresponding production standards to appraisal company, requiring the appearance end face to be free from foreign matter and flat, without damage or offset. It was pointed out that the end face of the goods involved was seriously offset, and the risk of abnormal breakage of the damage could not be put into production. Electronic Company also issued a calculation book for the abnormal raw material input test cost to the appraisal company, which stated the test cost of the two cases. Under normal conditions (TAC break), the cost was that: 1. 4,800 Kuraray PVA 960 m, 2. test with TAC 2,500 m, PE film 2,500 m, oppleading film 1,000 m, 3. waste normal production time 5 h, 4. labor 10 people, 5. profit loss, 6. energy costs, equipment depreciation. In this case, the test cost totals approximately USD 131,582. In the case of sudden damage (roll damage), the costs were that: 1. increase the cost of repair and replacement of lamiroll damage, 2. increase the abnormal downtime by 5 h, 3. replace the quality of running wear in the initial roll of new roll, 4. labor cost, energy fee, equipment depreciation expenses increased by 5 h, 5. increase profit loss. The cost of testing in this case amounted to approximately USD 226,343. The appraisal company and LIG, Longtan Company, Sinotrans Container Lines Co., Ltd., PICC Nanjing (the insurer of Longtan Company) discussed issues such as accident follow-up claims, and agreed that PICC Nanjing should find the first degree of damage to damaged goods. Tripartite testing agency and residual value recycler. PICC Nanjing replied that the goods involved were used less in domestic factories, did not find the corresponding testing units, and did not find the corresponding residual value recyclers. Regarding the compensation for damages, the appraisal company negotiated with LIG, Longtan and Sinotrans Container Lines Co., Ltd., but failed to reach an agreement.

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The appraisal company assessed the above situation and held that it was unlikely to persuade Electronic Company to receive and disassemble the goods for inspection. The reasons were as follows: 1. Electronic Company was the production unit, and there was no relevant tool for actual testing. The detection was mostly the actual production on the machine. The computer and the physical and physical data of the semi-finished products and finished products were tested. 2. When Electronic Company was in production, it was not directly processed and cut for the goods involved, but needed to be used together with other raw materials, such as the quality of the goods involved or in the process of stretching on the machine, it would cause downtime or other accidents, which would cause other raw materials to be damaged together and cause more losses. 3. The goods involved were not urgent materials. After the incident, Electronic Company adjusted the last plan and re-purchased. A batch of goods of the same type. The appraisal company also held that the damaged goods were high-precision raw materials. If they were slightly collided, they would be damaged or offset. If the goods were knocked down and hit the cabinet, they would be polluted and could not be produced on the machine. The production process of Electronic Company was confidential. There were very few manufacturers in China, and the goods involved could not be reused. As a result, the appraisal company finally determined that the goods were totally damaged and there was no residual value. According to the invoice of the goods involved, combined with the exchange rate at the time of the incident, the value of the damaged goods determined by the appraisal company was 1,536,496 yuan. According to the agreement on the total amount of the insurance policy, the total amount of the commercial invoice was 10%, and the accident loss was 1,690,145.6 yuan. On September 25, 2015, LIG paid insurance claims 1,690,145.6 yuan to Electronic Company, and obtained the receipt and equity transfer letter issued by Electronic Company. The court of first instance held that, this case was the dispute over port operation. When the staff of Longtan Company hoisted the container at the port, the container on the spreader fell and hit the container carrying the goods belonging to Electronic Company, causing the container to fall and the goods in the container to be lost. Longtan Company’s improper operation violated the civil rights and interests of Electronic Company and should be liable for compensation. As the insurer of Electronic Company, LIG obtained the insurance subrogation right after paying the claims to Electronic Company. Longtan Company should finally assume the liability for compensation to LIG. The rights obtained by LIG belonged to the transfer of legal claims, and the right to claim for compensation by Electronic Company was exercised. The claims for compensation and the insurance contract belonged to different legal relationships. The court of first instance only conducted legal relationship between Electronic Company and Longtan Company. The court of first

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instance would not examine whether there was a valid insurance contract relationship between LIG and Electronic Company proposed by Longtan Company. However, the amount of the claim for the insurance subrogation of LIG was related to the actual loss of Electronic Company. LIG paid 10% of the invoice price to Electronic Company based on the terms of the insurance target agreed by the contract with Electronic Company, which was 10% of the invoice price. It was the behavior of both parties in the contractual legal relationship. In the infringement legal relationship, it was not exempted from the burden of proof that LIG should be responsible for the actual loss of Electronic Company due to the payment of 10% of the invoice price. Otherwise, the court of first instance should not protect it. Longtan Company held that Electronic Company expanded the losses on the grounds that the goods involved were stored in the open space. There was no evidence to prove that Longtan Company held that Electronic Company should bear the corresponding responsibility, and the court of first instance did not support it. Regarding whether the goods involved in the loss happened and how the amount of the loss was determined, it was the biggest issue in this case. The evidence that LIG claimed that the total loss of the goods had no residual value was mainly the report of the appraisal company. The main reasons for the report were as follows: 1. the raw materials of the two rolls of polarizing plates in the container were placed on the left side of the container before and after the protection of the goods. The iron frame collapsed, and the transparent protective cover hanging on the outside all collapsed. The outer aluminum foil of one roll was completely scraped, the protection bag was seriously damaged, the internal cargo was exposed in a large area, and the aluminum foil in the second half of the roll was damaged. The second half was broken. Some protective bags had holes. 2. Electronic Company held that 2 rolls of raw materials in the container were dumped, the incoming iron frame was seriously damaged, the packaging was seriously damaged, and the end face was poorly cleaned. According to the production standard, the appearance end surface of the raw material was required to be free from foreign matter and flat, without damage or offset. Therefore, it refused to accept the goods involved. 3. As the insurer of Longtan Company, PICC Nanjing did not find the third party to be tested and the merchant who recovered the residual value. 4. Electronic Company was a production unit, and there was no relevant tool for actual testing. Most of the tests were actual production on the machine. The production was not directly processed and cut for the goods involved, but needed to be used together with other raw materials, such as the quality of the goods involved or Any downtime or other accidents caused by stretching on the machine would cause other materials to be damaged together and cause more losses. If Electronic Company detected the actual production through the machine, there were two possible accidents, the estimated losses were 131,582 US dollars, 226,343 US dollars respectively.

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Regarding point 1, according to the photos of the appraisal company’s on-site investigation and retention, it could be confirmed that the package of the goods involved was damaged, combined with the strict production standards of Electronic Company, namely the surface of the raw material was required to have no foreign matter and flatness, without damage or offset. It was inferred that there was a certain degree of damage to the goods involved. After investigation, China Ocean Shipping Tally Corporation held that the outer packaging of the goods involved was damaged, and the internal cargo was to be inspected, but the goods in the container were not inspected. Therefore, in the absence of evidence to the contrary, Longtan Company held that the accident involved only caused the container to fall. The court of first instance did not support the claim that the goods in the container are damaged. Regarding points 2, 3 and 4, it could be summarized as follows: Electronic Company found that it was not suitable for production after it was inspected. If it was used on the machine, it needed to be used together with other raw materials, which could cause more losses, so it refused to accept the goods. However, Longtan Company or PICC Nanjing did not find a suitable third-party testing agency. Therefore, only the total loss of the goods could be estimated. This part of the reason avoided the problem of whether the goods involved could be repaired and the losses caused by the production on the machine are determined and greater than the total loss of the goods. Although there was a certain degree of damage to the goods involved, Electronic Company could contact the Japanese manufacturer and other relevant units to assess whether it could be repaired. If the goods involved in the production of the goods, Electronic Company listed the amount of losses that could be caused, but the amount of the above losses was simply stated by Electronic Company, there was no specific calculation standard or basis, and there was no third-party evaluation or other evidence to prove that it was insufficient to prove the amount of possible loss. If it was determined that the goods involved were totally damaged, LIG was responsible for providing sufficient and valid evidence that the goods involved could not be repaired, and if the production of the machine would cause greater losses, Electronic Company could not be considered to be secret and its own production was secret. Pulling the threads together, there should be some damage to the goods involved. However, due to the fact that LIG did not fully provide the evidence to prove the amount of damage, the court of first instance did not protect the claims of Longtan Company that Longtan Company should compensate for the loss. In accordance with Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: reject the claims of LIG. Court acceptance fee of first instance in amount of 20,011 yuan, due to the application of summary procedure, the fee should be reduced by 10,005.5 yuan, which should be born by LIG. 10,005.5 yuan should be returned by the court of first instance.

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LIG disagreed with the judgment of first instance and appealed that revoke the Wuhan Maritime Court (2016) E 72 Min Chu No.1573 Civil Judgment in accordance with the law, and Longtan Company should compensate LIG for the loss of claims (in RMB unless otherwise specified) 1,690,145.6 yuan and the interest Court acceptance fees of first and second instances should be born by Longtan Company. Facts and reasons: 1. the court of first instance found the facts, which were wrong. The test cost of the goods involved in the loss of the goods involved in the test was USD 131,582 and USD 226,343, respectively, and the court of first instance identified the test cost as an estimated loss error. Damaged goods must be tested before they could be confirmed whether the goods were lost, to what extent and whether they could be repaired, repair costs and how to dispose of them. The cost of the test was close to the full value of the goods, no matter where they were repaired and disposed of. 2. The court of first instance aggravated the burden of proof of LIG and was obviously unfair. LIG exhausted the burden of proof to prove the loss of goods. Longtan Company as an infringer should verify or provide clues to the Japanese manufacturer to provide evidence, or apply for judicial appraisal. The burden of proof was on Longtan Company. Regardless of the chemical nature and trade confidentiality of the damaged goods, the court of first instance held that LG Chemical (Nanjing) Information Electronic Materials Co., Ltd. (hereinafter referred to as Electronic Company) could contact Japanese manufacturers for evaluation and repair, but Japanese manufacturers were the production of raw materials. Enterprises and far away from abroad, the deep processing and specific use of the material was not necessarily more professional than Electronic Company, not to mention the cost of transportation to and from the company even if there was the possibility of repair. The residual value of the damaged goods could be disposed of by Longtan Company, and Longtan Company could also seek compensation from its own insurance company. The court of first instance not only determined that there was a loss, but also did not determine the specific loss and did not require the infringer to bear the burden of proof. Longtan Company argued that: LIG did not perform its burden of proof on its own and should bear the consequences of its unfavorable lawsuit. LIG did not fully prove the actual loss of the goods. Although there was a certain degree of damage to the goods involved, the amount of losses claimed by LIG was listed by Electronic Company itself. There was no specific calculation standard and basis, and there was no assessment by other third-party organizations or other evidence to prove the possible amount of loss. LIG should not be supported by the correct way of directly contacting the supplier of the goods involved and entrusting the supplier to conduct quality appraisal. The court of second instance confirmed the facts found out by the court of first instance. The issue of in second instance was whether the loss of the goods claimed by LIG could be supported.

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The court of second instance held that the staff of Longtan Company did not operate improperly when hoisting containers in the port. The container on the spreaders fell to the containers of Electronic Company, causing a certain degree of damage to the goods inside the container and infringing the civil rights of Electronic Company. Article 2 of the Tort Liability Law of the People’s Republic of China, Longtan Company should bear the tort liability. The question about the amount of damage. The court of second instance held that after the accident involved, Electronic Company should conduct a test assessment of the damage to determine the extent of the loss and the amount of the loss. Even if a suitable third-party testing organization could not be found in China, Electronic Company should contact the Japanese manufacturer for evaluation or repair. Compared with Longtan Company, Electronic Company, as an affiliate of the manufacturer, was more qualified to contact the Japanese manufacturer for evaluation or repair. Electronic Company neglected to fulfill the obligations on the grounds of excessive costs. The reason of appeal of LIG that Longtan Company should contact the Japanese manufacturer to verify the loss could not be established. Electronic Company was the consignee of the goods, and did not have the qualification to assess the test, and there was no relevant tool for the actual test. The amount of the losses listed by Electronic Company had no specific calculation standard and basis, and there was no other evidence to prove that the goods could prove the amount of the loss. LIG only relied on Electronic Company’s own estimated test costs to determine the basis for the total loss of the goods. The goods involved were not tested, and the cost of testing did not actually happen. The court of first instance held that the test expenses claimed by LIG were not the same as the estimated losses. LIG failed to submit sufficient and valid evidence to prove the amount of damages. According to Article 90 of the Supreme People’s Court Interpretation of the Application of the Civil Procedure Law of the People’s Republic of China, it should bear the responsibility of failing to provide evidence. The reason of appeal of LIG to claim damages from Longtan Company should not be supported by the court of second instance. Pulling the threads together, the facts confirmed by the first-instance judgment were clear, the application of law was correct, and the entity was handled properly. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 20,011 yuan, should be born by LIG. LIG claimed in retrial that: 1. the facts of Longtan Company’s infringement were clear and the evidence was conclusive. Longtan Company’s self-reported incidents and the site survey records in the assessment report proved that there was a direct causal relationship between Longtan Company’s infringement and the damaged goods. 2. LIG fulfilled the burden of proof for the amount of loss of the goods involved. LIG entrusted the appraisal company to determine the damage, the

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procedure was legal and effective. Prior to entrusting the appraisal company, LIG agreed with Longtan Company and other related companies to agree that PICC Nanjing would look for a third-party testing agency and residual value recycler for the extent of damage to the damaged goods. On the premise that Longtan Company could not find the corresponding testing agency and residual value recycler, LIG entrusted the appraisal company to assess and determine the damage, and the procedure was legal and effective. The conclusion of the loss assessment report had sufficient factual and legal basis. Although Electronic Company as not a professional testing agency, it was the most qualified professional company as a direct user of the materials involved when it could not find other professional third-party testing agencies. Simulating the actual production on the machine for testing was also a professional testing method. Although the two kinds of test expenses listed in the assessment report were not actually happened, they were already higher than the value of the goods themselves, which was constructive total loss. Longtan Company did not recognize the probative force of the assessment report, but did not apply to the court for reassessment and did not cite the contrary evidence to overturn the assessment report. The court of second instance held that, Electronic Company should contact Japanese manufacturers for assessment or repair matters, which was aggravating the burden of proof of LIG. The high cost of the goods involved in the test for return to Japan and the acceptability of the synthetic chemistry were both issues. The court of second instance should never impose the burden of proof that exceeded the legal obligations on LIG. During the period of retrial, Synthetic Chemistry mailed the Instruction to Electronic Company, which proved that the cost of testing each product in the case one by one would be much higher than the price of the product itself, and no need to return to the factory for testing and maintenance. 3. The judgment of second instance clearly violated the legal principles of fairness and justice. The fact of Longtan Company’s infringement was clear, but according to the judgment of second instance, the company could be completely exempted from the burden of proof. The second-instance judgment was to encourage insurance company to improperly pay for delays in insurance accidents. In conclusion, LIG required to change the case to support the claims, and litigation costs of first and second instances should be born by Longtan Company. Longtan Company argued that: 1. LIG claimed that the goods involved were constructive total loss, but failed to provide evidence to prove it. The goods involved were not professionally inspected by a qualified institution. LIG only reached the conclusion that the cargo involved was constructive total loss based on the test costs assessed by Electronic Company without evaluation qualifications and corresponding tools, which had no legal basis. LIG paid more than 10% of the indemnity for the invoice price of the goods involved, which was an agreement between the insurer and the insured. The increased claims could not be claimed by Longtan Company. 2. LIG advocated that the assessment report was documentary

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evidence, and the people’s court should confirm that the probative force lacked factual and legal basis. The assessment report was based on the information provided by Electronic Company and the assessment test cost to draw a conclusion about the constructive total loss. The assessment report completely relied on the opinions of Electronic Company, and lacked its own views. The judgment of second instance did not deny the procedural legality of the assessment report, but only not concluded the conclusion of the assessment report that the goods involved were totally damaged. The assessment report lacked third-party professional inspection and test conclusions, lacked authenticity and impartiality, and could not be used as the basis for assessing the degree of damage to the goods involved. The evaluation report did not belong to documentary evidence and belonged to the appraisal conclusion in civil evidence in nature, but it was not a judicial appraisal, and the effect of evidence should be confirmed by the people’s court. The judgment if second instance adhered to the principle of who claimed and provided evidence, which did not increase the burden of proof of LIG. 3. The Instruction of Synthetic Chemistry provided by LIG was not true or legal, it could not prove that the goods involved were constructive total loss. The Instruction of Synthetic Chemistry provided by LIG did not go through the notarization and confirmation procedures and could not be used as evidence in this case. In conclusion, it required to dismiss the application for retrial of LIG. During the period of retrial, LIG submitted Instruction of Synthetic Chemistry, to prove that the cost of testing the goods involved would be much higher than the value of the goods themselves. Longtan Company did not recognize the authenticity and legality of Instruction. After investigation, the court holds that the cargo damage accident happened on November 23, 2014, and Instruction was made on May 8, 2018. Synthetic Chemistry did not visit the accident site in person. So the company made the judgment in Instruction based on an unknown basis. And Longtan Company did not recognize the probative force of Instruction. The authenticity of the contents in Instruction was doubtful. So the court does not accept the evidence provided by LIG. As to the facts confirmed by the court of second instance, LIG and Longtan Company had no objection, so the court confirms them. The court holds that, the case is the dispute over port operation. According to the application for retrial of LIG and the pleas of Longtan Company, the issues in retrial are: whether LIG fulfilled the burden of proof for the extent of the cargo damage involved, and whether the amount of loss of goods involved advocated by LIG can be supported. The staff of Longtan Company performed improper operation when lifting the container in the port, resulting in the damage of the goods in the container of Electronic Company. Longtan Company infringed the civil rights and interests of Electronic Company due to faults and should bear tort liability. After paying the insurance compensation to Electronic Company, LIG obtained the right of insurance subrogation. Regarding the amount of cargo damage, LIG advocated that the

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total damage of the cargo had no residual value, and submitted an assessment report to prove it. On whether LIG fulfilled the burden of proof on the extent of the cargo damage involved: firstly, the assessment report was made by an assessment company with assessment qualifications. The assessment report was based on that the damaged goods were high-precision raw materials, and a slight collision would cause damage and deviation. And the goods were contaminated after being knocked down and hit the container, which could not be produced on the machine. Electronic Company was a production unit, there was no actual detection tool, and the detection was mostly the actual production on the machine. During production, it needed to be used together with other raw materials. If the goods involved had quality problems or cause downtime or other accidents during the stretching process, they would cause greater losses. The production process of Electronic Company was confidential. There were few domestic manufacturers, and the goods involved could not be reused. The goods should be deemed to be totally damaged and have no residual value. The conclusion of the assessment report has the corresponding reasons to support. Secondly, before the evaluation report was made, Electronic Company submitted the quality abnormal report and the cost calculation report of the abnormal raw material input test to the assessment company. Longtan Company advocated that Electronic Company did not have the qualification for assessment and testing, and the amount of losses listed by the company was not sufficient to prove the loss of the goods involved. The court of second instance also held that, Electronic company did not have the qualification for assessment and testing, nor the relevant tools for actual testing, which were insufficient to prove the possible loss of goods. But in this case, the assessment report claimed by LIG on which the goods were totally damaged was made by a qualified assessment company, not by Electronic Company. The assessment company made reference to the documents submitted by Electronic Company, and combined with the relevant facts, made a judgment that the goods were estimated to be totally damaged, which is not a simple copy of the documents submitted by Electronic Company. Although Electronic Company did not assess the qualification for testing, this fact does not affect the validity of the assessment report made by the qualified assessment company with reference to the information submitted by it. Thirdly, LIG submitted an assessment report to prove the claims. The assessment report was made by an assessment company that was legally established and obtained the corresponding qualifications, which can initially prove the claim of LIG that the goods involved were totally damaged. The court of second instance did not deny the effect of the assessment report. According to the principle of who claims and who gives evidence, Longtan Company wants to deny LIG’s claim, it needs to provide the opposite evidence which is enough to overturn the assessment report. Although Longtan Company held that the assessment report was not scientific and fair, it did not cite sufficient evidence to deny the report. Longtan Company should bear the consequences of weak evidence. Fourthly, after the accident, the insurer of Longtan

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Company PICC Nanjing, LIG, Sinotrans, Longtan Company discussed the follow-up claims and other issues, and agreed that PICC Nanjing would look for third-party detection of the extent of the damaged goods and salvage value recyclers. PICC Nanjing did not find a testing unit and residual value recycler. Only when Longtan Company did not find the unit involved in the cargo damage detection, LIG entrusted the assessment company to determine the loss. Longtan Company wants to deny the validity of the assessment report, neither claiming to reappraise the cargo damage involved, nor giving evidence to the contrary, so the claim cannot be established. Fifthly, Longtan Company held that the estimated testing fee of the assessment company was not happened, and LIG could not prove its claim. The assessment report held that, many unexpected situations would happen through the actual production inspection on the machine, and the loss caused by the insurer could be difficult to accept. Because the damaged goods were high-precision raw materials, the goods were contaminated after being hit by the container, and could not be produced on the machine. There were few domestic manufacturers, and the goods were finally determined to be unusable and had no residual value. The cost of detecting the loss of goods involved was too high and could not be used again. The actual total loss was inevitable, and it was presumed to be constructive total loss. The claim of Longtan Company cannot be established. In the light of the circumstances of this case, the judgment of second instance held that the assessment report submitted by LIG was insufficient to prove its claim about the total loss of the goods involved, which lacks factual or legal basis, and should be corrected. Regarding the issue about the amount that Longtan Company should compensate. The assessment company held that, the goods involved were totally damaged, and according to the invoice of the goods involved, combined with the exchange rate at the time of the incident, the value of the damaged goods was determined to be 1,536,496 yuan. According to the agreement that the total amount of insurance subject matter in the insurance policy involved was 10% plus the commercial invoice amount, LIG paid a total of 1,690,145.60 yuan in insurance claims to Electronic Company. After gaining the right of subrogation, LIG claimed that Longtan Company should compensate the loss of 1,690,145.60 yuan and corresponding interest. According to the Tort Liability Law of the People’s Republic of China Article 9, in case of infringement on the property of others, the property loss shall be calculated according to the market price at the time of the loss or in other ways. According to the invoice of the goods involved, combined with the exchange rate at the time of the incident, the assessment company estimated that the value of the damaged goods was 1,536,496 yuan. Longtan Company, as the infringer of the accident, should compensate Electronic Company for the damage of 1,536,496 yuan and corresponding interest. After obtaining the right of subrogation, LIG claimed the rights of Longtan Company within the scope of the claim for damage compensation of Electronic Company. The total amount of the

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subject-matter insured is 10% of the commercial invoice amount plus the agreement between LIG and Electronic Company. The binding effect of this agreement is not as good as that of Longtan Company. So Longtan Company should only compensate for 1,536,496 yuan and the corresponding interest for the goods involved of LIG. The court should not support the excessive part of the litigation claims of LIG. LIG requested Longtan Company to compensate for the loss of goods involved and the corresponding interest. The interest was calculated from the benchmark interest rate of the People’s Bank of China during the same period from September 26, 2015 to the date of actual payment. According to the facts ascertained in the second-instance judgment, on September 25, 2015, LIG paid insurance claims to Electronic Company and obtained the receipt and transfer of rights and interests issued by Electronic Company. LIG’s claims on the calculation period and interest rate of Longtan Company’s compensation interest comply with the law, and the court supports them. Pulling the threads together, the claim of LIG that the goods involved were totally loss should be supported. The application of law by the court of second instance is wrong, which should be corrected. According to the Civil Procedure Law of the People’s Republic of China Article 207 Paragraph 1, Article 170 Paragraph 1 Sub-paragraph 2, and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 403, the judgment is as follows: 1. Revoke the Hubei High People’s Court (2017) E Min Zhong No.3219 Civil Judgment; 2. Revoke the Wuhan Maritime Court (2016) E 72 Min Chu No.1573 Civil Judgment; 3. Nanjing Port Longtan Container Co., Ltd. shall compensate LIG Property Insurance (China) Co., Ltd. for the loss of goods involved RMB 1,536,496 yuan and the interest (from September 26, 2015, based on the People’s Bank of China loan interest rate for the same period until the actual repayment date) within ten days after the judgment comes into effect. If Nanjing Port Longtan Container Co., Ltd. fails to perform the obligations of pecuniary payment within the period stipulated in the judgment, it shall pay double interest on the debt for the delayed period in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee of first instance in amount of RMB 10,005.50 yuan, Nanjing Port Longtan Container Co., Ltd. shall bear 9,005.50 yuan, and LIG Property Insurance (China) Co., Ltd. shall bear 1,000 yuan. Court acceptance fee of

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second instance in amount of RMB 20,011 yuan, Nanjing Port Longtan Container Co., Ltd. shall bear 18,011 yuan, and LIG Property Insurance (China) Co., Ltd. shall bear 2,000 yuan. The judgment is final. Presiding Judge: WANG Shumei Judge: YU Xiaohan Judge: HUANG Xiwu December 27, 2018 Judge Assistant: ZHAO Ke Clerk: XIAO Bolun

Ningbo Maritime Court Civil Judgment LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2015) Yong Hai Fa Tai Shang Chu Zi No.412 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 731. Cause of Action 241. Dispute over port operation. (Editor’s Note: this cause of action is chosen for sake of convenience.) Headnote Plaintiff lessee held to be entitled to recover deposit paid to defendant, lessor of a shipyard, because plaintiff had performed its obligations under the lease, and had paid tax on the ship constructed and had satisfied defendant’s liability in unrelated proceedings. Summary Plaintiff (LI Fan) leased shipbuilding space from Defendant (Taizhou). Plaintiff paid a deposit to Defendant and also paid the monthly rental fees and associated charges. Plaintiff and Defendant agreed that the shipbuilding contract for the ship to be built in Defendant’s yard would be made between the Defendant and the purchaser, and the purchase price would be paid into Defendant’s account. Plaintiff built the ship and delivered it to the purchaser. Plaintiff paid tax, late payment fees, fines and interest charges for the construction of the ship to the Taxation Bureau. Plaintiff and Defendant were held jointly and severally liable in separate legal proceedings about leasing shipyard space to non-parties, and Plaintiff satisfied the judgment. Plaintiff now sought repayment of the deposit on the basis that the sums paid for taxation and satisfaction of the judgment in the other proceedings far exceeded the amount of the deposit. The Court held that Plaintiff had performed his obligations under the agreement with Defendant and had paid the tax owing on the ship and satisfied Defendant’s liability arising under the judgment in the other proceedings, so he was entitled to return of the deposit.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_38

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Judgment The Plaintiff: LI Fan. Agent ad litem: LI Yingwei, lawyer of Zhejiang Time Law Firm. The Defendant: Taizhou Ocean Shipping Repair Co., Ltd. Domicile: Shaxiang, Yongquan Town, Linhai, Zhejiang. Legal representative: ZHANG Jinlong, chairman of the company. Agent ad litem: ZHU Guojun, lawyer of Zhejiang Xinping Law Firm. With respect to the case arising from dispute over maritime affairs between the Plaintiff LI Fan and the Defendant Taizhou Ocean Shipping Repair Co., Ltd. (hereinafter referred to as “Yuanyang Company”), the Plaintiff filed an action to the court on August 27, 2015. After entertaining the case on August 31, 2015, the case was tried by Judge LIN Shen in summary procedure. Because the parties had disputes regarding the case, the court ruled to transfer the case into general procedure and formed a collegiate panel. The court held hearings in public on October 30 and December 9, 2015. Agent ad litem of the Plaintiff LI Fan, LI Yingwei, and agent ad litem of the Defendant Yuanyang Company, ZHU Guojun, appeared in court to attend the hearings. Now the case has been concluded. The Plaintiff LI Fan claimed that: on January 18, 2011, the Plaintiff leased the shipway (or slipway) to the Defendant for shipbuilding operations. The two parties signed a copy of the shipway lease agreement, stipulating that the Defendant provided the No.2 shipway to the Plaintiff for shipbuilding. The lease term was from February 18, 2011 to the date of launching the ship. After the conclusion, the Plaintiff fulfilled as agreed. On March 27, 2012, the Defendant requested the Plaintiff to pay a tax deposit of 1 million yuan, and promised to refund the payment after the problem of the tax payment of the ship under construction was solved. If it was not refunded, the interest would be calculated at 1 cent and 5% of the monthly interest. As the tax issue of the ship built by the Plaintiff had not been settled at that time, the Plaintiff remitted 1 million yuan to the account designated by the Defendant as required by the Defendant. On May 27, 2014, the Plaintiff’s shipbuilding taxation matter was terminated, namely the Defendant was required to refund the deposit of 1,000,000 yuan. However, after repeated claims by the Plaintiff, the Defendant was delayed and the malicious defaults caused great economic losses to the Plaintiff. In order to protect the legitimate rights and interests, the Plaintiff filed the claims to the court that the Defendant should return the tax payment of RMB1 million and pay interest calculated from May 27, 2014 to the date of return, at a monthly interest rate of 1 point and 5 cents, or 1.5% of the monthly interest rate. The Defendant Yuanyang Company did not submit defense in written but argued in hearings that: the Defendant did not owe any money to the Plaintiff, but the Plaintiff did not perform the payment obligation according to the contract. The Defendant’s shipway fee had not been paid. The 1 million yuan paid by the Plaintiff was actually the arrears of rent and other related expenses on the No.1 slipway, and

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the excess payment was the payment for the No.2 slipway. It should be forfeited by the Plaintiff using the financial special seal (2) delivered by the Defendant. In view of the fact that the original teller is not established, it had no right to require the Defendant to pay interest, nor did it stipulate interest in the contract, and the calculation of interest had no factual basis. In summary, the Defendant requested to reject the Plaintiff’s claims. The Plaintiff LI Fan submitted the following evidence materials to the court to support the claims: 1. Copy of shipway lease agreement, to prove the fact that the Plaintiff leased the Defendant’s slipway and the agreement made by both parties; 2. Two original receipts for receipts of 200,000 yuan and 1 million yuan respectively, the original transfer receipt reissued by Taizhou Bank Linhai Chonghe Sub-branch, copy of debit subpoena for special transfer of Taizhou Bank, to prove that the Defendant collected a deposit of 200,000 yuan and a tax deposit of 1 million yuan from the Plaintiff, and the 370,000 yuan in the current account of the Plaintiff’s shipbuilding money was deducted by the court; 3. Original copy of tax payment book (for bank receipts only), to prove that the Plaintiff had paid the tax for building the ship, fulfilled the tax obligation, and the shipbuilding affairs had been completed; 4. Original copy of the payment receipt and fee list for the charter fee for the No.2 berth of Yuanyang Company in February 2011, original copy of the payment receipt and fee list for the lease of berth No.1–2 of Yuanyang Company from March to October 2011, original copy of the payment receipt for the lease of the berth No.1–2 of Yuanyang Company in November 2011, to prove that the Plaintiff had paid the Defendant’s No.1 and 2 slipway rental fees; 5. Original Ship Inspection Fee Notice of Zhejiang Ship Inspection Bureau, to prove that the Plaintiff paid 181,887 yuan in cash to the Taizhou Ship Inspection Office; 6. SMS printout, to prove that the Defendant owed the relevant money to the Plaintiff and asked the Plaintiff to be considerate. The Defendant Yuanyang Company submitted the following evidence materials to the court to support the defense: 1. Copy or original copy of slipway charter fee and various charges from March to September 2011, original of the final settlement list of berth 1–2, to prove that the Plaintiff should pay to the Defendant the berth rental fee and other related expenses and the amount owed by the Plaintiff; 2. Copy of the agreement dated February 15, 2011, to prove that before the Plaintiff and the Defendant started to perform the agreement, the Plaintiff’s shipbuilding yard was transferred from the Defendant’s berth 2 to the berth 1. The monthly rent was RMB120,000 yuan and the Plaintiff used the Defendant’s berth for 7–8 months; 3. Two photocopies, to prove that the Defendant’s gantry crane used by the Plaintiff was damaged and not repaired;

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4. Original fact sheet, to prove that the financial seal (2) on the two receipts cited by the Plaintiff was given to the Plaintiff and others for use by the Defendant, and was still at the Plaintiff’s place; 5. Two original certificates, to prove that according to the request of the Plaintiff, prior to the signing of the agreement, the Defendant specially engraved a special financial seal numbered 3310820137762 (2) for the Plaintiff to use, and when the Defendant, as the anchor unit for building the ship, signed a ship construction contract with the buyer, the Defendant would follow the usual practice that the special financial seal was engraved and handed over to the affiliate for use; the special financial seal (2) involved had not been scrapped and was still at the Plaintiff’s; 6. Copy of Taizhou Bank’s seal card and original statement, to prove that the Plaintiff had been using the Defendant’s special financial seal (2) to handle business related to the account since the establishment of the current account of the shipbuilding money involved until December 2014; 7. Voice list, call recording record and CD, to prove that the Defendant did give the financial seal (2) involved to the Plaintiff and others for use; 8. Original equity agreement, to prove that the Plaintiff had a partnership relationship with GAO Xianmin and others, supporting the authenticity of the Defendant’s statement; 9. Original copy of the Defendant’s financial seal numbered 3310820137582, to prove that the financial seal used by the Defendant had no serial number mark, and the financial seal (2) involved was engraved by the Defendant for the Plaintiff’s use. Based on the application of the Defendant Yuanyang Company, the court notified GAO Xianmin, an outsider of the case, to come to the court to talk and make a transcript of the conversation. GAO Xianmin stated that: in 2011, she and LI Fan and others leased the berth of Yuanyang Company to build a 980 standard container, 15,500 gross tonnage container ship, named M.V. XIN BIN HE, and the buyer was Fujian Changan Shipping Co., Ltd., on February 14, 2011 (first month of the lunar calendar), the construction started and the ship was delivered in March 2012. The total ship payment of RMB60.5 million yuan had been paid in full and paid to the special account opened by the partnership in the Taizhou Bank Linhai Branch in the name of Yuanyang Company. In order to prevent individual shareholders from not contributing capital in the process of shipbuilding partnership, LI Fan proposed that all partners signed a share agreement to be bound, and each partner signed a written agreement, namely the share agreement submitted by the Defendant was dated February 11, 2011. The text of the agreement was drafted by LI Fan, signed and stamped by his seven partners. The signing date was written by LI Fan on February 11, 2011, and it was true. M.V. XIN BIN HE was originally scheduled to be built on the No.2 slipway of Yuanyang Company. Because the ship inspection department proposed that the gantry crane of the No.2 slipway was too small, it was moved to the No.1 slipway for construction until launching on March 18, 2011. The

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No.2 slipway was mainly used to scatter on ship components. After the signing of the slipway lease agreement, Yuanyang Company required its partner to pay a deposit of 200,000 yuan, and the partnership then paid a deposit of 200,000 yuan to Yuanyang Company through LI Fan. During the actual implementation of the agreement, Yuanyang Company would calculate the berth rent and other related expenses from around March 10, 2011. Regarding the payment status of the shipbuilding partnership, because of the 60,000 yuan rent of Yuanyang Company’s No.1 slipway rent (120,000 yuan/month), it must be paid to WENG Liying and WENG Lijie (involving the subletting of some of the sites rented by WENG Liying and WENG Lijie), so since April 2011, the partnership would detain 60,000 yuan of slipway rent every month. At that time, the lawsuit between Yuanyang Company, WENG Liying and WENG Lijie was being heard by the court. The Defendant Yuanyang Company submitted a copy of the final settlement list of No.1 and No.2 shipway subtotal 863,800 yuan (mainly the arrears of the No.1 shipway, excluding the factory inspection fee and gantry crane repair fee, nearly 8 on the No.2 shipway). The monthly costs (rent, etc.) was true, but the final financial account was in the hands of LI Fan. The billing list was produced by Yuanyang Company. The remarks were written by the company itself. The signatures and seals were written by four partners, and the specific time could not be remembered. According to KE Minhui, LI Fan once proposed to add another point on the basis of 863,800 yuan, paying 100 million yuan to Yuanyang company, and the deposit of 200,000 yuan for the ship’s platform would no longer be requested from Yuanyang company. The positions of the two sides were clear, and Yuanyang company agreed. However, the parties did not sign a written agreement. The pen of 1 million yuan had been paid by LI Fan to Yuanyang Company. In addition, in order to facilitate the flow of funds for shipbuilding, Yuanyang Company had engraved a financial special seal (2) for its partner, which had been kept by LI Fan. The above-mentioned deposits of 200,000 yuan and 1 million yuan were true, but the corresponding bills were untrue, and there was no so-called tax deposit. Other partners had not signed or printed the above settlement list, but the contents of the list were agreed. In addition, 370,000 yuan in its partner account was deducted by the court and then released by the court. The whereabouts of the payment was still unclear. After cross-examination, the Defendant’s cross-examination opinion was as follows: evidence 1 was only a copy and the authenticity could not be confirmed; the court verified that the 200,000 yuan contained in Article 10 was not a deposit and was not interest-bearing; the fifth and final comments indicated the rent standard of the Plaintiff renting the Defendant’s slipway; the authenticity, legality and relevancy of the two receipts in evidence 2 were dissenting, forged, and added. The Defendant’s financial special seal (2) was delivered to the Plaintiff and was still in the Plaintiff’s office. The Defendant could not issue a receipt to the Plaintiff in the special financial seal, and the two receipts contain large sums, but there was no signature of the payee; there was no objection to the authenticity of the reissuance of the transfer receipt of the Taizhou Bank Linhai Chonghe Sub-branch, but the amount of RMB1 million involved was not a tax deposit, but the rent of the ship’s

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platform paid by the Plaintiff to the Defendant and others. Related expenses: the authenticity of the special transfer debit summons of Taizhou Bank was not recognized; regarding evidence 3, there was as no objection to the authenticity, but the fact that the Plaintiff claimed the tax payment can only prove that the Plaintiff has paid the part. Taxation: taxation was the obligation of the Plaintiff, and there is no connection with the tax payment deposit. The above 1 million yuan is not a tax payment guarantee; there is no objection to the fee list in evidence 4, and there is no objection to the time marked on the fee list. There is no time to mark it. This group of evidence proves that the Plaintiff used the Defendant No.2 berth for 7 or 8 months; there was objection to the authenticity and legality of the payment documents, and the date of the record is March 2011. The financial special seal (2) stamped on the 7th receipt and the financial special seal (2) stamped on the two receipts of the Plaintiff’s evidence 2 are not the same seal. The financial special seal is affixed, and the cash receipt is simply stamped. The receipt of the receipt issued by the Defendant to the Plaintiff is stamped with the financial special seal used by the Defendant, and all the money between the original and the Defendant is transferred by bank transfer. The identity of the person named “Zhu” in the lower right corner of the collection receipt is unknown. The payers recorded in the bank transfer voucher are HUANG Jian, and the payment is not related to the case, reflecting the other personal contacts between the Defendant’s shareholder KE Minhui and HUANG Jian; regarding evidence 5, the authenticity, legality and relevancy are objectionable. If the Plaintiff has already paid the ship inspection fee, the payment document should be provided, and the ship inspection fee claimed by the Defendant is the engineer’s ship inspection fee charged by the Defendant, not an administrative fee. As for evidence 6, the authenticity, legality and relevancy have objections, and there is no other evidence to support it. The Defendant shareholder KE Minhui did not send the alleged group of text messages to the Plaintiff, so the texts were forged. Regarding the evidence submitted by the Defendant, the Plaintiff’s crossexamination opinion was as follows: regarding evidence 1, the charter fee and the list of fees for the period from March to September 2011 were true, in addition to the three-month fee list, which was included in the above list of charges. Except the beginning of April, the monthly deduction of 60,000 yuan was paid to WENG Liying (the agreement on February 15, 2011 was true), and the remaining funds had been paid to Yuanyang Company by cash or bank transfer. The total amount of payment was not recorded. The financial settlement accounts between the two parties were basically gone after the Plaintiff’s payment was completed. The final settlement list of the No.1 to No.2 ship provided by the Defendant was forged (by comparing the paper and the seal, it can be determined that the formation time of the final settlement list is basically the same as the formation time of the situation statement), and the No.1 shipway fee is “arrears.” The 480,000 yuan was paid to WENG Liying on the basis of the agreement of February 15, 2011, which was deducted by 60,000 yuan. The damage repair fee 124,800 yuan for the gantry cranes of No.1 and No.2 was fictitious. The following arrears were 259,000 yuan. It is also untrue. (From the list of ship charter fees and various charges from March to

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September 2011 provided by the Defendant, it can be seen that the monthly rent, water and electricity, wages, and other Plaintiffs have been paid.) The amount of 863,800 yuan and GAO Xianmin’s debt offset in the conversation transcripts are quite different. The ship inspection fee (ZC) Plaintiff has also paid off, meaning that there is no arrears of 200,000 yuan. Regarding the 7-month use fee of the No.2 shipway, that evidence is also untrue because the fee is included in the monthly rent of 120,000 yuan. Evidence 2 is a copy, and the authenticity is determined by the court. The agreement can justify the fact that the Plaintiff has paid the rent of the ship involved in the case. Evidence 3 has no original evidence. After the use of the Defendant’s berth, it is impossible to prove the fact that the Plaintiff used the Defendant’s berth to cause damage to the gantry crane. The evidence can reflect that the ship, constructed by the Plaintiff, has been completed and was not parked in the Defendant’s factory area. In response to the business relationship ending, evidence 4 is forged, and the Defendant’s financial special seal (2) is indeed the Defendant’s engraving, but it is not true that the financial special seal (2) is used by the Plaintiff and others. The financial special chapters are usually kept by the Defendant’s general manager KE Minhui. When the Plaintiff needs to use the chapter, he will find KE Minhui to seal. Sometimes he covered a few blank bank financial bills to the Plaintiff. The financial special seal of the Plaintiff is not kept. The Plaintiff’s office has no objection to the rest of the content; there is no objection to a certificate in evidence 5 concerning the financial special seal (2). It is precisely the financial special seal (2) involved in the case of the Defendant, not the Plaintiff, because the Defendant can only be scrapped if the seal is recovered; there is no objection to the authenticity and legitimacy of the signature card in evidence 6, and three seals are printed on it. The Defendant’s opinion must be used at the same time, which simply proves that the financial special seal (2) involved has been kept by the Defendant and was not used by the partner. There is no objection to the authenticity and legality of the statement. It shows that the starting date of actual use of the account by the Plaintiff was from January 30, 2011 to April 24, 2014. According to the Defendant’s opinion, the above three seals must be used at the same time. This can also prove that the financial special seal (2) involved has been kept by the Defendant, and the record of the 370,000 yuan recorded by the Linhai People’s Court can prove that the Plaintiff’s 370,000 yuan for the other case was deducted by the court. Regarding evidence 7, there is objection. The Plaintiff did not confirm the financial special chapter involved (2) at the Plaintiff; regarding evidence 8, there is no objection to the authenticity, and the Plaintiff’s charter lease agreement can mutually confirm it. It can prove that the Plaintiff used the Defendant’s No.1 and No.2 berths to construct the ship from 2011, and the year 2010 recorded in the Defendant’s evidence 1 is not true; the share agreement reflects the internal partnership between the Plaintiff and the other six persons such as GAO Xianmin and is not related to this case. The 15,500-ton container ship contained in the container of the Plaintiff partner on the Defendant’s No.1 shipway (the No.2 shipway is mainly used for ship component dispersal) consisted of construction work for a total of 10 months, and the ship’s fee has been paid; regarding evidence 9, there is no objection to the authenticity, relevancy and

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purpose of proof. In addition to the financial special chapter (2) involved, the Defendant also entrusted a special financial chapter (2), (3), and (4). From the common sense, the financial special seal belongs to the important seal of the unit and cannot be arbitrarily engraved or loaned. Regarding GAO Xianmin conversational transcripts produced by the court, the Plaintiff’s cross-examination found that GAO Xianmin and the other four people had a stake in the Plaintiff’s outcome. The two sides had a quarrel and had a fight. The transcript of GAO Xianmin’s Defendant’s statement of the No.1 and No.2 berths was finally settled. The custody of the special seal (2), the nature of the payment of 1 million yuan by the Plaintiff, and the description of the situation issued by the Plaintiff are untrue. The rest of the transcript has no objection; the Defendant has no objection and can claim that the Plaintiff can pay. The so-called 200,000 yuan deposit is used to pay for ship inspection fees. The so-called 1 million yuan tax payment guarantee is used to pay the remaining boat rental fees and other related expenses. The court holds that the evidence issued by the Plaintiff, although a copy, is basically clear, and can initially confirm the relationship between the original and the Defendant’s charter contract, and the Defendant did not provide evidence to the contrary. Therefore, in combination with the court’s investigation, the evidence shall be recognized as the final evidence. Evidence 2 records the original receipt of the two receipts with an amount of 1 million yuan. The original copy of the re-issue of the transfer of the Taizhou Bank Linhai Chonghe Sub-branch and the copy of the special transfer debit memo of Taizhou Bank has no direct correlation, so only the authenticity of the form is confirmed, and the relevancy and the purpose of the certificates are not recognized. The receipt of the receipt with the amount of 200,000 yuan is the original, and the Defendant recognizes the fact of the payment. The authenticity of the receipt of the receipt is not recognized. The court believes that according to the relevant statement made by the Plaintiff in the 7th evidence of the Defendant, it can be initially determined that the Plaintiff held the financial special seal (2). In this case, the Plaintiff never proved that he returned the financial special seal to the Defendant, or that the financial special seal is held by the Defendant. In combination with the Defendant’s evidence, the amount of the money recorded in the Taizhou Bank statement was recorded from January 2011 to 2014. In April, from the time span and transaction frequency, it can be further confirmed that the Plaintiff did not return the financial special seal (2) to the Defendant. The financial special seal is not held by the Defendant. Evidence 3 is the original, stamped with the receipt of tax payment and the special seal for taxation of the Linhai State Taxation Bureau. The form is standardized, and the content is clear. The Defendant has no objection to the authenticity and disagrees with the taxable facts that the Plaintiff has to prove. The court believes that the budgetary items contained in the evidence materials of the group include tax deferred income, fines, and interest charges, in addition to value-added tax and income tax. In the absence of evidence to the contrary, it can be preliminarily determined that the Plaintiff has constructed the ship in question. On May 27, 2014, all tax liabilities were fulfilled, so the evidence materials of the group were confirmed. Evidence 4, in which most

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of the fee list is original, is clear and signed by the Plaintiff, and the Defendant has no objection to its authenticity and legality, so it is confirmed. The payment documents are originals; the contents are clear and can be mutually confirmed with the above list of fees. The receipts of the receipts are stamped with a cash receipt, and the signature “Zhu” in the lower right corner is the same as the original name of the Defendant, Zhu’s surname, dated 2011. A receipt for receipt on the 7th of the month is additionally stamped with the financial special seal (2) of the Defendant numbered 3310820130950. The seal number is consistent with the number of the financial special seal (2) of the Defendant engraved on April 12, 2010 as stated in the Defendant’s evidence 5, and the Plaintiff of the payer HUANG Jian recorded in the bank transfer voucher has been made in court. It is necessary to explain that the words “HUANG Jian” appeared in the “Remarks” column of the Taizhou Bank statement. The above evidence materials can initially reflect the fact that the Plaintiff actually settled the rent of the ship No.1 and No.2 involved in the case and other related expenses. In the absence of evidence to the contrary, the above evidentiary materials and the facts of the Plaintiff’s payment reflected are recognized as final evidence. Evidence 5, without the official seal of the ship inspection department, and no valid evidence such as payment documents, is not directly related to the trial of this case, so it is not recognized. Evidence 6, no valid evidence, such as communication records, exists, and the source is unknown. Therefore, the authenticity, legality, and relevancy of evidence 6 cannot be confirmed because the Defendant did not recognize it, so the court did not recognize it. The Defendant provided evidence 1, in which the fee list was signed by the Plaintiff, and the list of fees from March to September in the Plaintiff’s evidence 4 was basically the same. The Plaintiff had no objection to the authenticity, and it was, therefore, identified. Although the final settlement list of the No.1–2 slipway was the original, the undersigned “GAO Xianmin”, “LIANG Yonglin”, “CHEN Weibing”, and “LIANG Genhua” did not appear in court, and the Plaintiff held objection. In the absence of other valid evidence, only the formal truth of the list is confirmed, and the relevancy and the purpose of the certification are not recognized. Evidence 2, although it is a copy, the content is clear, and the Plaintiff did not raise an objection, so it was confirmed. Evidence 3 is only a copy, and did not indicate the time and place of shooting, so it cannot be determined to have an objective relationship with the case. Also, the Plaintiff did not recognize it. Therefore, the court only confirms the authenticity of the evidence material and does not recognize the relevancy and the purpose of the certificate. Evidence 4, although the original, the signatures “GAO Xianmin”, “LIANG Yonglin”, “CHEN Weibing”, and “LIANG Genhua” did not appear in court; the Plaintiff held the contents of the financial special seal (2) for the Plaintiff and others. There is disagreement and there is no objection to the rest. Accordingly, part of the content of the evidence that the Plaintiff has no objection to is determined within the scope directly related to the trial of the case, and the part that is not recognized by the Plaintiff is rebutted because there is no evidence to the contrary. Evidence 5, containing the original, the Plaintiff has no objection, and one of the certificates concerning the Defendant’s entrusted financial special seals (2), (3), and (4) on April 12, 2010 is not related to

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the case. Thus, only the authenticity is confirmed, and its relevancy to the case is not confirmed. The number of the financial special seal (2) of the Defendant contained in the other certificates and the financial statement of the Defendant contained in the Taizhou Bank Seal Card was issued by the Defendant. The numbers are the same and are identified. Evidence 6, the Plaintiff has no objection to its authenticity and legality, and it is determined that the court initially finds that the Plaintiff has used the financial special seal on the Taizhou Bank seal card from January 30, 2011 to April 24, 2014 (2), and the Plaintiff, the legal representative of the Defendant, ZHANG Jinlong’s, personal seal. A total of three seals to handle the facts related to the business of the ship-related accounts. Evidence 7, which is the original, can indirectly reflect the specific whereabouts of the financial special seal (2) involved. The Plaintiff did not raise an objection, so the evidence material was identified within the scope directly related to the trial of the case as evidence of the case. Evidence 8, the original, the Plaintiff has no objection to authenticity, but objects to the relevancy. The court believes that the evidence material is a partnership agreement between the Plaintiff and GAO Xianmin, reflecting the rights and obligations within the partnership. It is not directly related to the trial of this case, so only the authenticity of the evidence material is confirmed, and its relevancy to the case is not confirmed. Evidence 9 is the original, but its origin cannot be proven. The Plaintiff also disagreed with its relevancy and the object of the certificate, so only the authenticity of the evidence material was confirmed, and its relevancy to the case was not confirmed. GAO Xianmin’s transcripts produced by the court, the Plaintiff’s authenticity of the contents of the Defendants No.1 and No.2 of the Defendant stated by GAO Xianmin, the custody of the financial special seals (2), and the nature of the 1 million yuan paid by the Plaintiff were not recognized. There is no objection to the rest of the transcript, and the Defendant has no objection. Therefore, the court determines that the evidence material has no objection to both the original and the Defendant and is directly related to the trial of the case. As the final evidence, part of the content that the Plaintiff refuses to recognize is also within the scope of the other valid evidence in this case. It is determined that the rest of the content is not recognized. Based on the above confirmation of evidence, and combined with the investigation, the court confirms the following facts: On January 18, 2011, LI Fan and Yuanyang Company entered into a lease agreement for the ship’s platform, stipulating that LI Fan needed to lease Yuanyang Company’s No.2 shipway (including the supporting door lift, water, electricity, and shipbuilding blocks) for the construction of the ship. The lease term should be from February 18, 2011 to the date when the ship was completed and launched. The monthly rent of 100,000 yuan shall be calculated from February 18, 2011. After the agreement was signed, LI Fan should pay Yuanyang Company a deposit of RMB200,000 yuan, including construction. Regarding team accidents, labor disputes, quality guarantee deposits, and deposits that were received before LI Fan built the ship, Yuanyang Company announced in the factory whether there were labor disputes and untreated matters caused by LI Fan, no public disputes, and all

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matters after 5 days of publicity. After the processing was completed, Yuanyang Company would return it to LI Fan at one time, no interest, and so on. LI Fan himself and Yuanyang Company’s general manager, KE Minhui, signed and affixed the official seal of Yuanyang Company’s unit at the end of the agreement. In addition, both LI Fan and Yuanyang Company verbally agreed that the shipbuilding contract must be signed with Fujian Changan Shipping Co., Ltd. in the name of Yuanyang Company in charge of shipbuilding, and the shipbuilding money must be remitted to Yuanyang Company’s bank account. Yuanyang Company must open a bank account and engrave one. The financial special seal is used by LI Fan to facilitate access to the shipbuilding payment. To this end, after being examined and approved by the Public Security Bureau of Linhai City, Yuanyang Company engraved a financial special seal (2) numbered 3310820137762 at the Linhai Guangxing Seal Service Center on January 14, 2011. A bank account with an account number of 5169 was opened in the Linhai Sub-branch of Taizhou Bank. After the signing of the ship chart rental agreement, Yuanyang Company provided the above-mentioned financial special seal (2) and the specially opened bank account to LI Fan. The use of the bank account reserved the above-mentioned financial special seal (2) and the legal representative of LI Fan and Yuanyang Company. ZHANG Jinlong’s personal seal has three seals. LI Fan paid a deposit of 200,000 yuan to Yuanyang Company and began to use Yuanyang Company’s No.2 berth to build the ship. Later, the ship inspection department proposed that the gantry crane No.2 was too small. With the consent of Yuanyang Company, LI Fan transferred to Yuanyang Company’s No.1 berth to construct the ship on March 18, 2011, until the ship was launched in the same winter. No.2 berth was mainly used for ship component dispersal. The monthly rent of 120,000 yuan and other related expenses should be settled by LI Fan upon settlement by both LI Fan and Yuanyang Company. As of December 2011, LI Fan paid Yuanyang Company’s side the total rent of No.1 shipway and No.2 shipway (including electricity, gas, gantry crane repair, and rent) which totaled 2,435,648 yuan. In March 2012, the 15,500 gross tonnage container ship (ship name M.V. XIN BIN HE), built by LI Fan, was delivered to the fixed-build Fujian Changan Shipping Co., Ltd. On May 27, 2014, LI Fan paid the Linhai State Taxation Bureau the tax and late payment fees, fines, and interest charges for the construction of the vessel involved in the case, which totaled 382,893 yuan. LI Fan obtained six tax payment certificates issued by the receiving bank. In addition, on February 15, 2011, Yuanyang Company, and the outsiders WENG Liying and WENG Lijie, acted as Party A and Party B respectively. LI Fan acted as an intermediary, and the three parties jointly entered into a letter of agreement. The two parties agreed that the 15,500-ton container ship built on the No.1 ship platform would be successfully constructed and launched into the port. After the three parties negotiated and mediated through an intermediary, Party A would lease the land leased by Party B to Changdian Village. The middle channel was bounded; the west was bounded by drainage ditch; and the land was bounded by Shaxiang Village in the north. Party A charged the middle party a monthly fee of 120,000 yuan, and 50% of it was paid to Party B. The agreement on the slip of the

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ship signed between the party and the intermediary party should be paid by the intermediary party to Party B on a monthly basis. After Party A and Party B signed this agreement, Party B should not refuse to construct, launch, or operate the ship for any reason, and would do a good job in coordination. LI Fan, the legal representative of Yuanyang Company, ZHANG Jinlong, WENG Liying, and WENG Lijie signed the agreement at the end of the agreement and stamped the official seal of Yuanyang Company. After LI Fan and Yuanyang Company failed to pay the above-mentioned ship-to-ship fee, WENG Liying and WENG Lijie appealed to the court on November 7, 2013, requesting Yuanyang Company to pay the 10-year ship-to-ship rental fee of 600,000 yuan and interest loss. LI Fan was jointly and severally charged. The case went to trial and subsequently had a retrial. On December 24, 2015, the court made (2015) Yong Hai Fa Tai Shang Chong Zi No.2 Civil Judgment and ordered LI Fan to pay WENG Liying and WENG Lijie a rent of 600,000 yuan with corresponding interest. Yuanyang Company sought additional reimbursement for the above payments. After the judgment was pronounced, neither party appealed. During the enforcement of the case, on March 7, 2016, the court deducted LI Fan’s bank deposit of 694,100 yuan (including legal fees of 9,800 yuan and enforcement fee of 8,500 yuan). LI Fan then filed an execution objection to the court. After the objection request was rejected by the court, it was submitted to the Zhejiang High People’s Court for a request for reconsideration. On December 28, 2016, the Zhejiang High People’s Court issued (2016) Zhe Zhi Fu No.24 Enforcement Ruling and rejected LI Fan’s application for reconsideration. On February 13, 2017, LI Fan signed (2016) Zhe Zhi Fu No.24 Enforcement Ruling. On March 9, 2017, the court retired 675,800 yuan from the bank account of the applicant executor WENG Lijie. On April 7, 2017, the court delivered (2016) Zhe Zhi Fu No.24 Enforcement Ruling to Yuanyang Company. The court holds that this case was a maritime dispute arising from the contractual relationship in respect of the lease of shipway. The agreement on the lease of the shipway involved, signed by LI Fan and Yuanyang Company, showed the real meaning of the two parties. The contents were clear and did not violate the mandatory provisions of laws and administrative regulations. It should be considered valid and legally binding on LI Fan and Yuanyang Company. During the implementation of the agreement, LI Fan actually paid a deposit of 1,000,000 yuan to Yuanyang Company, but the purpose of the payment was not specified. The time of payment was in the same month as the delivery time of the ship involved. The court holds that the Plaintiff’s claim that the payment was a tax bond was established. In the case where the Plaintiff provided evidence to prove that it fulfilled the obligation to pay taxes on the construction of the ship involved, Yuanyang Company should return the above-mentioned 1 million yuan to the Plaintiff, and should bear the corresponding civil liabilities in accordance with the law. As for the Defendant’s argument that the Plaintiff owed its slipway expenses, the court holds that according to the agreement signed by the Plaintiff the defendant and the outsiders WENG Liying and WENG Lijie on February 15, 2011, the Plaintiff should pay 50% of what if needed to pay the Defendant’s (i.e. 50% x 120,000 per month) to WENG Liying and WENG Lijie. WENG Liying and WENG Lijie filed a

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separate lawsuit against the Plaintiff and the Defendant with the court for the payment. So whether the Plaintiff owed the Defendant’s slipway fees should not be resolved in that seperate case. Further, the Plaintiff requested the Defendant to pay the interest calculated at a monthly interest rate being 1.5% from May 27, 2014 to the date of return, but did not provide corresponding evidence of the monthly interest rate being 1.5%, and the Defendant did not approve it, so it was not supported. It is determined that from the day after the Plaintiff completed the tax liability for the construction of the ship involved, namely from May 28, 2014, to the day when the Defendant actually pays it off, the corresponding interest would be calculated based on the People’s Bank of China benchmark loan interest rate for the same period. In summary, part of the claim of the Plaintiff is reasonable, and the court supports it. According to the Contract Law of the People’s Republic of China Article 60 Paragraph 1, Article 107, and the Civil Procedure Law of the People’s Republic of China Article 60 Paragraph 1, the judgment is as follows: 1. The Defendant Taizhou Ocean Shipping Repair Co., Ltd. should refund Plaintiff LI Fan the fee of RMB1,000,000 yuan within 10 days from the effective date of this judgment and pay the corresponding interest (from the date of May 28, 2014 to the date of actual payment, based on the benchmark interest rate of the People’s Bank of China for the same period of time); 2. Reject other claims of the Plaintiff LI Fan. If this obligation to pay is not fulfilled within the time limit specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 4,300 yuan, shall be born by the Defendant Taizhou Ocean Shipping Repair Co., Ltd. If either party disagrees with this judgment, it can submit within 15 days from the date of delivery of the judgment, together with copies according to the number of other parties in this case, so as to appeal to the Zhejiang High People’s Court. Presiding Judge: ZHU Zhongjun Judge: LIN Shen Acting Judge: JIN Tao January 8, 2016 Acting Clerk: ZHOU Qianqian

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Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 60 Paragraph 1 The first party shall fully perform its obligations in accordance with the agreement. Article 107 If one of the parties fails to perform the contractual obligations or performs the contractual obligations that are not in conformity with the agreement, it shall be liable for breach of contract, such as continuing to perform, taking remedial measures or compensating for losses. 2. Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 The parties have the responsibility to provide evidence for their claims. Article 253 If the person subject to execution fails to perform the obligation to pay money according to the period specified in the judgment, ruling and other legal documents, he shall double the interest on the debt during the period of delay in performance. If the person subject to execution fails to perform other obligations in the period specified in the judgment, ruling and other legal documents, he shall pay the late performance fee.

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Zhejiang High People’s Court Civil Judgment LI Fan v. Taizhou Ocean Shipping Repair Co., Ltd. (2016) Zhe Min Zhong No.132 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 717. Cause of Action 241. Dispute over port operation. (Editor’s Note: This cause of action is chosen for sake of convenience.) Headnote Affirming lower court decision that plaintiff lessee was entitled to recover deposit paid to defendant, lessor of a shipyard, because plaintiff had performed its obligations under the lease, and had paid tax on the ship constructed and had satisfied defendant’s liability in unrelated proceedings. Summary Plaintiff (LI Fan) leased shipbuilding space from Defendant (Taizhou). Plaintiff paid a deposit to Defendant and also paid the monthly rental fees and associated charges. Plaintiff and Defendant agreed that the shipbuilding contract for the ship to be built in Defendant’s yard would be made between the Defendant and the purchaser, and the purchase price would be paid into Defendant’s account. Plaintiff built the ship and delivered it to the purchaser. Plaintiff paid tax, late payment fees, fines and interest charges for the construction of the ship to the Taxation Bureau. Plaintiff and Defendant were held jointly and severally liable in separate legal proceedings about leasing shipyard space to non-parties, and Plaintiff satisfied the judgment. Plaintiff now sought repayment of the deposit on the basis that the sums paid for taxation and satisfaction of the judgment in the other proceedings far exceeded the amount of the deposit. The first instance Court held that Plaintiff had performed his obligations under the agreement with Defendant and had paid the tax owing on the ship and had satisfied Defendant’s liability arising under the judgment in the other proceedings, so he was entitled to return of the deposit. Defendant appealed. The appeal Court dismissed the appeal, holding that Defendant’s characterization of the reason for payment of the deposit was incorrect.

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Judgment The Appellant (the Defendant of first instance): Taizhou Ocean Shipping Repair Co., Ltd. Domicile: Shaxiang, Yongquan Town, Linhai, Zhejiang. Legal representative: ZHANG Jinlong, chairman of the company. Agent ad litem: ZHU Guojun, lawyer of Zhejiang Xinping Law Firm. The Respondent (the Plaintiff of first instance): LI Fan. With respect to the case arising from dispute over maritime affairs between the Appellant Taizhou Ocean Shipping Repair Co., Ltd. (hereinafter referred to as “Yuanyang Company”) and the Respondent LI Fan, the Appellant refused to accept the Ningbo Maritime Court (2015) Yong Hai Fa Tai Shang Chu Zi No.412 Civil Judgment, and appealed to the court. After the court entertained the case on March 1, 2016, it formed a collegiate bench according to law, and on March 23 of the same year, the case was cross-examined heard. ZHU Guojun, agent ad litem of the Appellant Yuanyang Company, and the Respondent LI Fan, attend the cross-examination. Now the case has been concluded. LI Fan claimed that: on January 18, 2011, LI Fan leased the shipway to Yuanyang Company for shipbuilding operations. The two parties signed a copy of the shipway lease agreement, stipulating that Yuanyang Company provided the No.2 shipway to LI Fan for shipbuilding. The lease term was from February 18, 2011 to the date of launching the ship. After the conclusion, LI Fan fulfilled as agreed. On March 27, 2012, Yuanyang Company requested LI Fan to pay a tax deposit of 1 million yuan, and promised to refund the payment after the problem of the tax payment of the ship under construction was solved. If it was not refunded, the interest would be calculated at 1 cent and 5% of the monthly interest. As the tax issue of the ship built by LI Fan had not been settled at that time, LI Fan remitted 1 million yuan to the account designated by Yuanyang Company as required by Yuanyang Company. On May 27, 2014, LI Fan’s shipbuilding taxation matter was terminated, namely Yuanyang Company was required to refund the deposit of 1,000,000 yuan. However, after repeated claims by LI Fan, Yuanyang Company was delayed and the malicious defaults caused great economic losses to LI Fan. In order to protect the legitimate rights and interests, LI Fan filed the claims to the court that Yuanyang Company should return the tax payment of RMB1 million and pay interest calculated from May 27, 2014 to the date of return, at a monthly interest rate of 1 point and 5 cents, or 1.5% of the monthly interest rate. In hearing, Yuanyang Company argued that: Yuanyang Company did not owe any money to LI Fan, but LI Fan did not perform the payment obligation according to the contract. Yuanyang Company’s shipway fee had not been paid. The 1 million yuan paid by LI Fan was actually the arrears of rent and other related expenses on the No.1 slipway, and the excess payment was the payment for the No.2 slipway. It

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should be forfeited by LI Fan using the financial special seal (2) delivered by Yuanyang Company. In view of the fact that the original teller is not established, it had no right to require Yuanyang Company to pay interest, nor did it stipulate interest in the contract, and the calculation of interest had no factual basis. In summary, Yuanyang Company requested to reject LI Fan’s claims. The court of first instance found out that, on January 18, 2011, LI Fan and Yuanyang Company entered into a lease agreement for the ship’s platform, stipulating that LI Fan needed to lease Yuanyang Company’s No.2 shipway (including the supporting door lift, water, electricity, and shipbuilding blocks) for the construction of the ship. The lease term should be from February 18, 2011 to the date when the ship was completed and launched. The monthly rent of 100,000 yuan shall be calculated from February 18, 2011. After the agreement was signed, LI Fan should pay Yuanyang Company a deposit of RMB200,000 yuan, including construction. Regarding team accidents, labor disputes, quality guarantee deposits, and deposits that were received before LI Fan built the ship, Yuanyang Company announced in the factory whether there were labor disputes and untreated matters caused by LI Fan, no public disputes, and all matters after 5 days of publicity. After the processing was completed, Yuanyang Company would return it to LI Fan at one time, no interest, and so on. LI Fan himself and Yuanyang Company’s general manager, KE Minhui, signed and affixed the official seal of Yuanyang Company’s unit at the end of the agreement. In addition, both LI Fan and Yuanyang Company verbally agreed that the shipbuilding contract must be signed with Fujian Changan Shipping Co., Ltd. in the name of Yuanyang Company in charge of shipbuilding, and the shipbuilding money must be remitted to Yuanyang Company’s bank account. Yuanyang Company must open a bank account and engrave one. The financial special seal is used by LI Fan to facilitate access to the shipbuilding payment. To this end, after being examined and approved by the Public Security Bureau of Linhai City, Yuanyang Company engraved a financial special seal (2) numbered 3310820137762 at the Linhai Guangxing Seal Service Center on January 14, 2011. A bank account with an account number of 5169 was opened in the Linhai Sub-branch of Taizhou Bank. After the signing of the ship chart rental agreement, Yuanyang Company provided the above-mentioned financial special seal (2) and the specially opened bank account to LI Fan. The use of the bank account reserved the above-mentioned financial special seal (2) and the legal representative of LI Fan and Yuanyang Company. ZHANG Jinlong’s personal seal has three seals. LI Fan paid a deposit of 200,000 yuan to Yuanyang Company and began to use Yuanyang Company’s No.2 berth to build the ship. Later, the ship inspection department proposed that the gantry crane No.2 was too small. With the consent of Yuanyang Company, LI Fan transferred to Yuanyang Company’s No.1 berth to construct the ship on March 18, 2011, until the ship was launched in the same winter. No.2 berth was mainly used for ship component dispersal. The monthly rent of 120,000 yuan and other related expenses should be settled by LI Fan upon settlement by both LI Fan and Yuanyang Company. As of December 2011, LI Fan paid Yuanyang Company’s side the total rent of No.1 shipway and No.2 shipway (including electricity, gas, gantry crane repair, and rent) which

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totaled 2,435,648 yuan. In March 2012, the 15,500 gross tonnage container ship (ship name M.V. XIN BIN HE), built by LI Fan, was delivered to the fixed-build Fujian Changan Shipping Co., Ltd. On May 27, 2014, LI Fan paid the Linhai State Taxation Bureau the tax and late payment fees, fines, and interest charges for the construction of the vessel involved in the case, which totaled 382,893 yuan. LI Fan obtained six tax payment certificates issued by the receiving bank. In addition, on February 15, 2011, Yuanyang Company, and the outsiders WENG Liying and WENG Lijie, acted as Party A and Party B respectively. LI Fan acted as an intermediary, and the three parties jointly entered into a letter of agreement. The two parties agreed that the 15,500-ton container ship built on the No.1 ship platform would be successfully constructed and launched into the port. After the three parties negotiated and mediated through an intermediary, Party A would lease the land leased by Party B to Changdian Village. The middle channel was bounded; the west was bounded by drainage ditch; and the land was bounded by Shaxiang Village in the north. Party A charged the middle party a monthly fee of 120,000 yuan, and 50% of it was paid to Party B. The agreement on the slip of the ship signed between the party and the intermediary party should be paid by the intermediary party to Party B on a monthly basis. After Party A and Party B signed this agreement, Party B should not refuse to construct, launch, or operate the ship for any reason, and would do a good job in coordination. LI Fan, the legal representative of Yuanyang Company, ZHANG Jinlong, WENG Liying, and WENG Lijie signed the agreement at the end of the agreement and stamped the official seal of Yuanyang Company. After LI Fan and Yuanyang Company failed to pay the above-mentioned ship-to-ship fee, WENG Liying and WENG Lijie appealed to the court on November 7, 2013, requesting Yuanyang Company to pay the 10-year ship-to-ship rental fee of 600,000 yuan and interest loss. LI Fan was jointly and severally charged. The case went to trial and subsequently had a retrial. On December 24, 2015, the court made (2015) Yong Hai Fa Tai Shang Chong Zi No.2 Civil Judgment and ordered LI Fan to pay WENG Liying and WENG Lijie a rent of 600,000 yuan with corresponding interest. Yuanyang Company sought additional reimbursement for the above payments. After the judgment was pronounced, neither party appealed. During the enforcement of the case, on March 7, 2016, the court deducted LI Fan’s bank deposit of 694,100 yuan (including legal fees of 9,800 yuan and enforcement fee of 8,500 yuan). LI Fan then filed an execution objection to the court. After the objection request was rejected by the court, it was submitted to the Zhejiang High People’s Court for a request for reconsideration. On December 28, 2016, the Zhejiang High People’s Court issued (2016) Zhe Zhi Fu No.24 Enforcement Ruling and rejected LI Fan’s application for reconsideration. On February 13, 2017, LI Fan signed (2016) Zhe Zhi Fu No.24 Enforcement Ruling. On March 9, 2017, the court retired 675,800 yuan from the bank account of the applicant executor WENG Lijie. On April 7, 2017, the court delivered (2016) Zhe Zhi Fu No.24 Enforcement Ruling to Yuanyang Company. The court of first instance held that this case was a maritime dispute arising from the relationship between the contract and the lease of shipway. The agreement on the lease of the ship involved, signed by LI Fan and Yuanyang Company, contained

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the real meaning of the two parties. The content was clear and did not violate the mandatory provisions of laws and administrative regulations. It should be considered valid and legally binding on LI Fan and Yuanyang Company. During the implementation of the agreement, LI Fan actually paid a deposit of 1,000,000 yuan to Yuanyang Company, the purpose of the payment was not specified, and the payment time of the payment was in the same month as the delivery time of the ship involved. The court holds that LI Fan’s claim that the payment was a tax bond was established. In the case where LI Fan provided evidence to prove that it fulfilled the obligation to pay taxes on the construction of the ship involved, Yuanyang Company should return the above-mentioned 1 million yuan to LI Fan, and should bear the corresponding civil liabilities in accordance with the law. As for Yuanyang Company’s argument that LI Fan owed its slipway expenses, according to the agreement signed by LI Fan and Yuanyang Company and the outsiders Weng Liying and Weng Lijie on February 15, 2011, LI Fan should pay Yuanyang Company a monthly amount of 120,000 yuan. 50% of the slipway fee was paid to WENG Liying and WENG Lijie. WENG Liying and WENG Lijie filed a separate lawsuit against LI Fan and Yuanyang Company with the court for the payment. So whether LI Fan owed Yuanyang Company’s slipway fees should not be resolved in this case. LI Fan requested Yuanyang Company to pay the interest calculated at a monthly interest rate of 1.5% from May 27, 2014 to the date of return, but did not provide corresponding evidence of the monthly interest rate of 1.5%, and Yuanyang Company did not approve it, so it was not accepted. It was determined that from the day after LI Fan completed the tax liability for the construction of the ship involved, namely from May 28, 2014 to the day when Yuanyang Company actually pays it off, the corresponding interest would be calculated based on the People’s Bank of China benchmark loan interest rate for the same period. In summary, part of the claim of LI Fan was reasonable, the court supported it. According to the Contract Law of the People’s Republic of China Article 60 Paragraph 1, Article 107, the Civil Procedure Law of the People’s Republic of China Article 60 Paragraph 1, the judgment is as follows: 1. Yuanyang Company should refund the compensation fee of 1,000,000 yuan within 10 days from the effective date of this judgment and pay the corresponding interest (from the date of May 28, 2014 to the date of actual payment, based on the benchmark interest rate of the People’s Bank of China for the same period of time); 2. reject other claims of LI Fan. Yuanyang Company refused to accept the judgment of first instance and appealed to the court that: 1. the court of first instance found that the amount of RMB1 million yuan paid by LI Fan was tax payment deposit on March 27, 2012, which was incorrect. The payment was for LI Fan to pay the cost of the boat. The court of first instance only presumed that the penalty of the one million yuan was the tax payment guarantee, and there was no factual basis; 2. Shipway Lease Agreement had a no duty-guarantee deposit agreement. When LI Fan paid the penalty of 1 million yuan, the ship had been sold. It was not in accordance with common sense to pay such a huge amount of tax payment guarantee, and LI Fan actually paid only 300,000 yuan of tax, which was also very different from 1 million yuan. 3. GAO Xianmin was a partner of LI Fan, who issued Final

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Settlement List of 1–2 Shipways. And the transcript of the conversation could confirm and prove that LI Fan still owed 863,800 yuan for the shipway’s fee and gantry crane repair fee after the settlement; the ship inspection fee was 200,000 yuan, and the shipway’s fee was 700,000 yuan. 4. The court of first instance found that the payment documents submitted by LI Fan were incorrect, and the receipts received by the court were false. The bank transfer vouchers were not related to the case and could not be used as the basis for finalization. Furthermore, LI Fan has repeatedly claimed that the huge amount of shipway fees have been paid in cash, which is not correct, and the receipts of receipts are covered with financial special seals, the authenticity of which cannot be determined; 5. The payment was on March 7, 2011. The receipt of the receipt is stamped with the “Taizhou Ocean Shipping Repair Co., Ltd. Financial Special Chapter (2)” with the number 3310820130950, which has been scrapped, and the receipt of the receipt is also false; 6. The payer of the bank transfer voucher is not LI Fan or its partner People; these vouchers cannot be used as a basis for finalization. 7. The first-instance judgment is improperly applied. Even if the payment is a tax-guaranteed deposit, it can be offset against LI Fan’s outstanding total still owed to Ocean Shipping’s charter rentals. In summary, Yuanyang Company requested that the court revoke the first-instance judgment, and LI Fan’s first-instance litigation request be rejected. LI Fan replied in second instance that: Yuanyang Company’s slipway rental fee had been paid every month, which was reflected by the receipts. After the ship was built, the tax was not completed because the invoice deduction took a certain amount of time. After the tax was completed, LI Fan was reminded and informed to pay the appropriate taxes. KE Minhui, general manager of Yuanyang Company, also sent a text message saying that he was embarrassed to owe money, and the content of the text message was also shown to the court of first instance. Yuanyang Company should return the 1 million yuan tax payment deposit. None of the parties provided new evidence during the second instance. The facts ascertained in the first instance are supported by corresponding evidence and are confirmed by the court. The court holds that according to the appeal request, the reasons stated by the parties and the defense opinions, the issue of the second instance of this case is whether the case involving 1 million yuan is a tax payment guarantee, and whether Yuanyang Company should return it. On March 27, 2012, LI Fan transferred 1 million yuan to the account of KE Minhui, the general manager of Yuanyang Company. This is based on the transfer certificate of Taizhou Bank. The facts are clear. The reason for the 1 million yuan payment was not stated, but LI Fan claimed that it was a tax payment guarantee. Judging both the time of the court of first instance combined with the payment of the money and the construction of the ship’s tax payment, LI Fan’s claim was not improper. Although Yuanyang Company claimed that the payment was for the rental of the ship platform, it did not provide sufficient evidence to support that proposition. In addition, Ocean Shipping, and the outsiders WENG Liying and WENG Lijie as Party A and Party B respectively, with LI Fan as the intermediary, signed a tripartite agreement, whereby LI Fan should pay 50% of the chartering fee to the outsiders WENG

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Liying and WENG Lijie. The current outsiders WENG Liying and WENG Lijie filed a lawsuit in the court of first instance, requesting Yuanyang Company and LI Fan to pay the shipping platform rental fee. Therefore, LI Fan and Yuanyang Company regarding the cost of shipway rental, involving third parties, should not be resolved in this case. Even if LI Fan still owes the cost of Yuanyang Company shipway rental, Yuanyang Company can also claim to solve it. Therefore, the arguing of the nature of the 1 million yuan funded by the Yuanyang Company was not accepted. In summary, the reasons for the appeal of Yuanyang Company are not established. The facts found in the first-instance judgment are clear, the application of law is correct, and the case is properly handled. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 13,800 yuan, shall be born by Taizhou Ocean Shipping Repair Co., Ltd. The judgment is final. Presiding Judge: KONG Fanhong Acting Judge: HUO Tong Acting Judge: ZHENG Enliang May 24, 2016 Clerk: DING Lin

Shanghai Maritime Court Civil Judgment Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2016) Hu 72 Min Chu No.1841 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 755. Cause of Action 233. Dispute over ship operation loan contract. Headnote Plaintiff shipyard held to be able to recover rental for slipway and loan made to individual defendant for ship construction and refitting; corporate defendant jointly and severally liable for loan but not slipway rental. Summary The first Defendant (ZHAO Zhansong) rented the Plaintiff’s slipway for the construction of four ships and the refitting of a fifth ship. The Plaintiff took no part in the construction and refitting but merely provided the premises. The Plaintiff also loaned money to the first Defendant for the purpose of construction and refitting of the ships. The loaned money was paid directly to the second Defendant, which purchased the materials. The second Defendant engaged in litigation with one of the vendors of equipment in separate proceedings. The Defendants did not pay the rent or repay the loan, so the Plaintiff exercised a lien over the five ships and other equipment, in separate court proceedings. The Plaintiff now sued both Defendants seeking payment of rent (and overdue rent), repayment of the loan, and confirmation of its entitlement to a lien over the Defendants’ property. The first Defendant argued that the loan was not yet due because the ships had not yet been launched. The second Defendant denied any responsibility because it was not party to either contract and acted only as agent for the first Defendant when purchasing equipment. The Court held: (1) the first Defendant, as party to the rental and loan contracts, was clearly liable to the Plaintiff for both unpaid rent and repayment of the loan; (2) the first Defendant was the reason why the ships had not been launched, so the loan payment was due; (3) although the second Defendant had not signed either contract, the first Defendant was acting on its behalf, and the second Defendant had not claimed to be merely an agent when engaged in separate legal proceedings with

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_39

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an equipment vendor, so the second Defendant was liable as a participant in the construction and refitting of the ships; (4) the second Defendant was jointly liable for repayment of the loan, but not the slipway rental; (5) the Plaintiff was entitled to exercise a lien over the Defendants’ property remaining at the slipway.

Judgment The Plaintiff: Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. Domicile: Guanyun County, Lianyungang, Jiangsu. Legal representative: WANG Liqian, general manager of the company. Agent ad litem: MENG Danmei, lawyer of Jiangsu Dongyundi Law Firm. Agent ad litem: SHI Jing, lawyer of Jiangsu Dongyundi Law Firm. The Defendant: ZHAO Zhansong, male, Han, born on February 9, 1973, living in Lianyungang, Jiangsu Agent ad litem: ZHU Mengjie, lawyer of Jiangsu Shangyang Law Firm. The Defendant: Jiangsu Songhai Ship Engineering Co., Ltd. Domicile: No.07, Building 1, Phoenix Building, East Keyuan Road, Haizhou District, Lianyungang, Jiangsu. Legal representative: ZHAO Zhansong, general manager of the company. Agent ad litem: SUN Qingjun, lawyer of Jiangsu Shangyang Law Firm. With respect to the case arising from dispute over ship operation loan contract between the Plaintiff, Lianyungang Wuzhou Shipbuilding Industry Co., Ltd., and the Defendant, ZHAO Zhansong and the Defendant, Jiangsu Songhai Ship Engineering Co., Ltd. (hereinafter referred to as Songhai Ship Engineering), the Plaintiff filed an action to the court on June 18, 2016. After entertaining this case on the same day, the court formed a collegiate panel to try this case in accordance with law. Previously, the Plaintiff filed an application for pre-litigation property preservation to the court, requesting for the preservation of the property in sum of RMB850,000 yuan in name of the two Defendants and for arrest of the ship M.V. SONG HAI BO 1 owned by ZHAO Zhansong and four under-construction ships with their identification numbers CNXXXXXXXXXX, CNXXXXXXXXXXX, CNXXXXXXXXXXX, CNXXXXXXXXXXX respectively. The court, in accordance with law, made (2016) Hu 72 Cai Bao No.94, (2016) Hu 72 Cai Bao No.94-1 Civil Rulings, (2016) Hu 72 Cai Bao No.95 Civil Ruling respectively, approved the Plaintiff’s application for property preservation and implemented preservative measures on relevant property on May 19, 2016. The Defendant Songhai Ship Engineering raised a challenge of jurisdiction over the case during the period for submitting briefs and argued that the dispute involved was a private loan dispute between the individual and the enterprise and the dispute should be governed by the

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local court. Through investigation, on August 2 of the same year, the court made (2016) Hu 72 Min Chu No.1841 Civil Ruling in accordance with law, rejecting the Defendant Songhai Ship Engineering’s challenge of jurisdiction. The Defendant was not satisfied with the ruling of first instance and filed an appeal. Through investigation, the Shanghai High People’s Court made (2016) Hu Min Xia Zhong No.180 Civil Ruling on October 13 of the same year, dismissing the appeal and affirming the original ruling. On November 16 of the same year, the court held a hearing in public. Agents ad litem of the Plaintiff, MENG Danmei and SHI Jing, agent ad litem of the Defendant ZHAO Zhansong, ZHU Mengjie, agent ad litem of the Defendant Songhai Ship Engineering, SUN Qingjun, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff claimed that: on November 15, 2013, the two Defendants signed the slipway renting agreement with the Plaintiff due to the construction and reconstruction of ships, also borrowed RMBXXXXXXX yuan from the Plaintiff and agreed on the corresponding interest and repayment period. The agreement stipulated that the two Defendants rented the Plaintiff’s slipway to rebuild and build the ship and the Defendants should compensate for the use of the Plaintiff’s water, electricity and accommodation, etc. Before the ships were launched, the two Defendants were required to pay off the rent of the slipway and etc. If the two Defendants failed to pay on time or are unable to pay the amount owed, the Plaintiff had right to stop the power supply or had a lien on the ships. After the agreement was signed, the Plaintiff fulfilled the corresponding obligations according to the agreement, but the two Defendants did not repay the loan within the repayment period and did not pay the rent and other expenses according to the agreement. Despite the repeated urge of the Plaintiff, the Defendants still refused to repay and pay. The Plaintiff exercised a lien on the ships and their attachments involved. For this reason, the Plaintiff claimed that: 1. the two Defendants should jointly and severally repay the loan of RMBXXXXXXX yuan and interest (calculated according to the standard of 1.2% per month from the next day of each borrowing to the date of actual repayment); 2. the joint and several payment should be calculated to the slipway rent RMBXXXXXXX yuan until the date of July 31, 2016, the subsequent rent (calculated to the date when the ship involved was actually removed from the slipway) and other expenses in sum of RMB109,948.50 yuan; 3. the two Defendants should jointly and severally compensate the loss of RMB10,000 born by the Plaintiff which was incurred from the application for pre-litigation property preservation; 4. the Plaintiff should be confirmed to have a lien on all the property of the two Defendants at the place of the Plaintiff (including a ship for reconstruction, four newly-built ships, two diesel engines and two gearboxes). The Defendant ZHAO Zhansong argued that: according to the agreement, the loan and interest should be paid off before ships were launched. Now the five ships involved were not launched, so the debt involved did not expire and the Plaintiff had no right to demand repayment; the five ships involved were moved to the open space by the Plaintiff without any slipway rent generated, so the Plaintiff’s request for the payment of high slipway rent was unfounded; the notice of lien issued by the

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Plaintiff to the two Defendants only gave three days to raise an objection, which did not comply with the law; the bill of slipway rent provided by the Plaintiff was not confirmed with signature after December 2015; the Defendant ZHAO Zhansong paid a deposit of RMB50,000 yuan to the Plaintiff, but the Plaintiff did not deduct it in the lawsuit; the debt involved was the personal debt of the Defendant ZHAO Zhansong, which did not show it was required for the operation of the Defendant Songhai Ship Engineering, so it had nothing to do with the Defendant Songhai Ship Engineering. For this reason, the Defendant ZHAO Zhansong requested a judgement in accordance with law. The Defendant Songhai Ship Engineering argued that, it, in accordance with law, should not bear joint liability in this case; neither it was a contractual counterpart nor it used the loan of the Defendant ZHAO Zhansong. Even if it, in its own name, purchased two diesel engines and two gearboxes from the outsider Lianyungang Jiruiyu Diesel Ship Electric Sets Co., Ltd. (hereinafter referred to as Jirui Ship Electric), however, the above-mentioned equipment was in the place where the Plaintiff’s domicile was located and was used for the ship that the Defendant ZHAO Zhansong built. The Defendant Songhai Ship Engineering was entrusted by the Defendant ZHAO Zhansong to purchase the equipment and the Defendant Songhai Ship Engineering did not make any profit during the purchase, but instead the Defendant Songhai Ship Engineering assumed the debt of more than RMB700,000 yuan. For this reason, the Defendant Songhai Ship Engineering requested to reject the Plaintiff’s claims. To support the claims, the Plaintiff provided the following evidence: 1. Agreement of slipway rent signed on November 15, 2013 between the Plaintiff and the Defendant ZHAO Zhansong, to prove the fact that the Defendant ZHAO Zhansong rented the slipway and borrowed money from the Plaintiff for the reconstruction and construction of the new ships. The Defendant ZHAO Zhansong had no objection to the effect of evidence, but it argued that in later period, the ships did not actually occupy the slipway and the slipway rent should not be calculated. The Defendant Songhai Ship Engineering had no objection to the authenticity, and it argued that because the agreement was signed between the Defendant ZHAO Zhansong and the Plaintiff, the agreement had nothing to do with it, accordingly, it was unable to confirm the contents of the agreement. The court holds that the effect of evidence should be confirmed due to acceptance of the contractual counterpart, the Defendant ZHAO Zhansong. 2. IOUs (10 pieces) issued by the Defendant ZHAO Zhansong, to prove that it issued the IOUs in several times in terms of the loan of RMBXXXXXXX yuan and the Plaintiff was required to remit the loan to the Defendant’s designated account respectively and the loan was used for procurement and construction needed in the process of ships’ reconstruction and new construction. The Defendant ZHAO Zhansong had no objection to the effect of evidence, but it argued that the interest should be calculated from the date of actual loan. The Defendant Songhai Ship Engineering had no objection to the authenticity, but it argued that the evidence had nothing to do with itself. The court holds that the

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effect of evidence should be confirmed due to acceptance of the Defendant ZHAO Zhansong. Regarding whether the Defendant Songhai Ship Engineering should bear the responsibility, the court will confirm it separately and comprehensively. 3. Bank transfer receipt (11 pages), to prove that the Plaintiff remitted the loan of RMBXXXXXXX yuan to the Defendant ZHAO Zhansong’s designated account at the request of the Defendant ZHAO Zhansong. The Defendant ZHAO Zhansong had no objection to the effect of evidence and argued that it could prove that all the loan had nothing to do with the Defendant Songhai Ship Engineering. The Defendant Songhai Ship Engineering was not clear about the above situation and argued that it had nothing to do with it; two payments amounting RMB500,000 yuan and RMB800,000 yuan were directly paid by the Plaintiff to Jirui Ship Electric and they were used to purchase the diesel engines and gearboxes by the Plaintiff for the Defendant ZHAO Zhansong, which had nothing to do with the Defendant Songhai Ship Engineering. The court holds that the effect should be confirmed due to acceptance of the Defendant ZHAO Zhansong. Regarding whether the Defendant Songhai Ship Engineering should bear the responsibility, the court will confirm it separately and comprehensively. 4. Bills of slipway rent and other expenses, to prove the expenses arising from the reconstruction and new construction of the ship as of December 31, 2015, which was confirmed by the construction director XIANG Jiufu of the two Defendants. The Defendant ZHAO Zhansong accepted the slipway rent and other due expenses incurred as of December 31, 2015, but it argued that it had never confirmed the due interest. The Defendant Songhai Ship Engineering had no objection to the authenticity, but it argued that the expenses incurred from fulfilling the above-mentioned implementation of the agreement of slipway renting had nothing to do with it. The court holds that the effect of evidence should be confirmed because the two Defendants accepted the authenticity. Regarding whether the Defendant Songhai Ship Engineering should bear the responsibility, the court will confirm it separately and comprehensively. 5. Notification of the lien as well as the waybill, to prove that because the two Defendants delayed the payment of rent and other expenses and did not repay the loan and interest, the Plaintiff exercised the lien in accordance with law and notified the two Defendants. The Defendant ZHAO Zhansong had no objection to the authenticity thereof, but it argued that the Plaintiff should give at least two-month term for performance to it, but in fact the Plaintiff only gave three days to raise objection, so the way in which the Plaintiff exercised the lien did not comply with the law. The Defendant Songhai Ship Engineering had no objection to the authenticity, but it argued that it did not enter into a contract with the Plaintiff, so the Plaintiff had no right to exercise the lien to it. The court holds that the effect of evidence should be confirmed because the two Defendants accepted the authenticity. Regarding whether the Plaintiff has the lien, the court will confirm it separately and comprehensively.

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6. (2015) Hai Shang Chu Zi No.227 Civil Ruling and Mediation Agreement made by the Lianyungang Haizhou District People’s Court (hereinafter referred to as Haizhou Court), the purchase and sale contract and the query results on National Enterprise Credit Information Publicity System, to prove that the Defendant ZHAO Zhansong, as the legal representative and shareholder of the Defendant Songhai Ship Engineering, used the money borrowed from the Plaintiff for the operation of the Defendant Songhai Ship Engineering, and the Defendant Songhai Ship Engineering should be jointly and severally liable for it. The Defendant ZHAO Zhansong had no objection to the effect of evidence, but it argued that it entrusted the Defendant Songhai Ship Engineering to purchase diesel engines and gearboxes and the Defendant Songhai Ship Engineering acted as a latent agency, accordingly, it was not enough to prove that the loan involved was used for the operation of the Defendant Songhai Ship Engineering. The Defendant Songhai Ship Engineering had no objection to the authenticity, but it argued that the diesel engines and gearboxes it purchased were used for the ships of the Defendant ZHAO Zhansong, which could not prove that the loan involved was used for the company’s operation. The court holds that the effect of evidence should be confirmed because the two Defendants accepted the authenticity. Regarding whether the Defendant Songhai Ship Engineering should bear the responsibility, the court will confirm it separately and comprehensively. 7. Testimony of the witness XIANG Jiufu in court, to prove ZHAO Zhansong’s loan and ships under construction were all used for the operation of the Defendant Songhai Ship Engineering and the ships involved were still parked on the slipway. Both the two Defendants had objection to the testimony of the witness and argued that the business involved was the personal behavior of the Defendant ZHAO Zhansong and this business had nothing to do with the Defendant Songhai Ship Engineering, and the ships involved was no longer on the slipway. The court holds that the witness XIANG Jiufu, employed by the Defendant ZHAO Zhansong, was the person who in charge of the construction project at the place of the Plaintiff, and the testimony submitted by the witness had high credibility. Combined with the other evidence material, the court confirms the effect of the testimony. Certificate of the ownership of “Songhai Bo 1” ship, certificate of nationality, and the scene photos of the ships involved submitted to the court in support of its defense of the Defendant ZHAO Zhansong, to prove that the dispute involved had nothing to do with the Defendant Songhai Ship Engineering and currently the ships were not parked on the slipway. The Plaintiff had objection to the authenticity, and argued that it was inconsistent with the original after check. Even if it could be proved that the registered owner of M.V. SONG HAI BO 1 was the Defendant ZHAO Zhansong, considering the close relationship between the two Defendants and the main equipment and material for construction and reconstruction of ships involved were provided by the Defendant Songhai Ship Engineering, the purpose of submitting evidence was not accepted; even if the photos were true

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and showed that the ships involved was being parked on the slipway. The Defendant Songhai Ship Engineering accepted both the effect of evidence and the purpose of submitting evidence. The court holds that after the authenticity of ships’ certificates were verified by Lianyungang Maritime Safety Administration, the effect of evidence should be confirmed; as for the scene photos of ships, they were checked inconsistent with the original or the original electronic data, and the scene reflected by the photos failed to identify the ships involved and their specific parking position with no other evidence in the case verified, accordingly, the effect of evidence should not be confirmed. (2015) Hai Zhi Yi Zi No.110 Enforcement Ruling made by Haizhou Court provided to the court in support of its defense of the Defendant Songhai Ship Engineering, to prove that payment RMBXXXXXXX yuan to Jirui Ship Electric that the Plaintiff admitted in a separated case was the remittance of the Plaintiff to purchase diesel engines and gearboxes, and had nothing to do with the Defendant Songhai Ship Engineering. The Plaintiff did not accept the authenticity and argued that it was checked inconsistent with the original but argued that the enforcement ruling finally rejected the enforcement objection of the Plaintiff in the case, therefore the purpose of the Defendant Songhai Ship Engineering’s submitting evidence could not be achieved. The Defendant ZHAO Zhansong accepted both the effect of evidence and the purpose of submitting evidence, and argued that it was the actual purchaser of the diesel engines and gearboxes and the Defendant Songhai Ship Engineering acted as a latent agency. The court holds that the Plaintiff, as the objection executor, should have received the original copy of the enforcement ruling, so unless the Plaintiff provided the contrary evidence to refute, its failure to check the original thus denying the authenticity would not be accepted by the court, therefore the effect of evidence should be confirmed. The court finds out that: On November 15, 2013, the Plaintiff and the Defendant ZHAO Zhansong signed an agreement of slipway renting, stipulating that the slipway that the Defendant ZHAO Zhansong contracted from the Plaintiff was used for reconstruction and construction of new ships; both parties confirmed that a reconstructed ship with a length of 79.80 m (namely M.V. SONG HAI BO 1 whose registered owner was the Defendant ZHAO Zhansong) needed a rent of RMB200,000 yuan. If the construction period exceeded 5.5 months, the extra time would be additionally calculated at RMB30,000 yuan per month; the slipway rent of four newly-constructed with a length of 36 m was RMB20,000 yuan per month. If the construction period exceeded 4.5 months, the extra time would be additionally calculated at RMB7,000 yuan per ship per month; during the lease term, expenses incurred by the water and electricity for production, gas, accommodation, management and other expenses that the Defendant ZHAO Zhansong needed to pay to the Plaintiff were clearly prescribed in the agreement; within three days after the agreement was signed, the Defendant ZHAO Zhansong should pay a deposit of RMB50,000 yuan to the Plaintiff and pay off all the rent before the ships were launched. All other relevant expenses should be paid on a monthly basis or on frequency and should be settled before the 5th of the following month. If the

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Defendant ZHAO Zhansong failed to pay on time or was unable to pay, the Plaintiff was entitled to stop the power supply or had a lien on ships; the agreement stipulated that RMBXXXXXXX yuan that the Defendant ZHAO Zhansong borrowed from the Plaintiff was calculated at the 1.2% monthly standard interest rate, and the interest was paid quarterly. The loan should be directly paid by the Plaintiff to the designated company in which the Defendant ZHAO Zhansong purchased the material. The Defendant ZHAO Zhansong should repay RMB800,000 yuan and interest and pay off all the loan and interest before each newly-constructed was launched. If the Defendant ZHAO Zhansong had special circumstances, the ships were handled by the Plaintiff two months after the completion of construction, and the loan should be paid off first, and then the balance should be returned to the Defendant ZHAO Zhansong. After the agreement of slipway renting was signed, the Defendant ZHAO Zhansong issued ten IOUs to the Plaintiff on November 23, 2013, December 3, 2013, December 23, 2013 and January 2, 2014 respectively, confirming that because the ship was built and rebuilt at the place of the Plaintiff, the Defendant ZHAO Zhansong borrowed totaled RMBXXXXXXX yuan (monthly interest rate of 1.2%) from the Plaintiff and promised to pay the principal and interest before the ships were launched. During the period from November 26, 2013 to April 2, 2014, the Plaintiff transferred RMBXXXXXXX yuan in batches to the Defendant ZHAO Zhansong’s personal account or its designated account. The specific remittance situation was: remittance of RMB600,000 yuan on November 26, 2013; remittance of RMBXXXXXXX yuan on December 4, 2013; remittance of RMB800,000 yuan on December 11, 2013; remittance of RMB50,000 yuan on December 23, 2013; on December 30, 2013, remittances were RMB700,000 yuan; on January 5, 2014, remittances were RMB100,000 yuan; on January 17, 2014, remittances were RMB300,000 yuan and RMB500,000 yuan respectively; on March 11, 2014, remittances were RMB700,000 yuan and RMB500,000 yuan respectively; on April 2, 2014, remittances were RMB120,000 yuan and RMB130,000 yuan respectively. Among them, a remittance of RMB800,000 yuan on December 11, 2013 and a remittance of RMB700,000 yuan on March 11, 2014 were directly sent by the Plaintiff to Jirui Ship Electric’s account according to the instructions of the Defendant ZHAO Zhansong. On November 16, 2013, Jirui Ship Electric and the Defendant Songhai Engineering signed a purchase and sale contract of Lianyungang Jiruiyu Diesel Ship Electric Sets Co., Ltd. The contract stipulated that the Defendant Songhai Engineering should purchase six sets of diesel engines and six gearboxes from Jirui Ship Electric with the total contract price of RMBXXXXXXX yuan; the delivery time was December 31 of the same year, and the delivery place was the Plaintiff’s shipyard; the Defendant ZHAO Zhansong, as the legal representative of the Defendant Songhai Ship Engineering, signed at the “Demand Side” column of the purchase and sale contract and stamped the official seal of the Defendant Songhai Ship Engineering. Due to the dispute over the sale and purchase contract, Jirui Ship Electric sued the Defendant Songhai Ship Engineering to the Haizhou Court. The Haizhou Court accepted the case on January 26, 2015 and made (2015) Hai Shang

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Chu Zi No.227 Civil Ruling on February 4 of the same year and detained the two diesel engines (Model YC6CL1200) and two gearboxes (Model No.1200) that the Defendant Songhai Ship Engineering deposited at the place of the Plaintiff of this case. Later the Defendant Songhai Ship Engineering and Jirui Ship Electric reached a mediation agreement over the dispute, stipulating that the Defendant Songhai Ship Engineering should pay Jirui Ship Electric cargo payment of RMB765,200 yuan before October 31 of the same year. If the payment was overdue, the Defendant Songhai Engineering should pay extra penalty of RMB150,000 yuan to Jirui Ship Electric and bear the litigation costs. For this reason, Haizhou Court made (2015) Hai Shang Chu Zi No.227 Civil Mediation to confirm the above mediation agreement. Later the Plaintiff in this case raised an objection to the Haizhou Court on the above-mentioned preservation measures for the two diesel engines and two gearboxes, and Haizhou Court made (2015) Hai Zhi Yi Zi No.110 Enforcement Ruling on December 5, 2015, rejecting the enforcement objection raised by the Plaintiff in this case. According to the bills of the slipway rent and other expenses issued by the Plaintiff, as of December 31, 2015, the slipway rent under the slipway renting agreement was RMBXXXXXXX yuan and the other expenses were RMB109,946.50 yuan. Of this, XIANG Jiufu, who was accredited to the Plaintiff’s office by the Defendant ZHAO Zhansong and in charge of the construction project, signed on the bill to confirm it. During the trial, witness XIANG Jiufu stated in court that he was employed by the Defendant ZHAO Zhansong to contract the construction and reconstruction of the ship involved (the original unpowered M.V. SONG HAI BO 1 would be reconstructed into a powered ship), and the contract was signed with the Defendant ZHAO Zhansong; the Defendant ZHAO Zhansong, acting as the legal representative of the Defendant Songhai Ship Engineering, began to negotiate with XIANG Jiufu, and the steel plates received during the construction process were sprayed with the words of the Defendant Songhai Ship Engineering; when the contract was signed, the Defendant ZHAO Zhansong paid a deposit of RMB50,000 yuan to XIANG Jiufu. The follow-up fee was borrowed by the Defendant ZHAO Zhansong from the Plaintiff, and the Plaintiff directly transferred the money to Defendant ZHAO Zhansong. Besides, XIANG Jiufu confirmed that he had been to the scene a few days before the trial and the ships were parked on the slipway of the Plaintiff’s shipyard. As the Defendant ZHAO Zhansong did not repay the arrears and pay the rent and other expenses by convention, the Plaintiff wrote to the two Defendants on April 29, 2016, stating that the Defendant ZHAO Zhansong would exercise a lien on all the property of the two Defendants at the Plaintiff and demanded that the two Defendants reimburse the agreed rent, other fees and interest within five days after receipt of the letter; if the two Defendants did not raise a written objection within three days after the receipt of the letter, the above-mentioned performance period should be deemed to be accepted, and the Plaintiff would auction and sell the properties according to the law if the two Defendants failed to perform so that the Plaintiff could be paid in priority. However, up to now, the two Defendants had still not paid the Plaintiff the amount owed. In addition, in terms of (2016) Hu 72 Cai

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Bao No.94, (2016) Hu 72 Cai Bao No.94-1, and (2016) Hu 72 Cai Bao No.95 Civil Ruling on the pre-litigation property preservation, the Plaintiff had already paid the application fee of RMB10,000 yuan. The court holds that: This case is a maritime dispute arising from the lease of the slipway and the borrowing for the purpose of construction or reconstruction of the ships. According to the slipway renting agreement between the Plaintiff and the Defendant ZHAO Zhansong, the Defendant ZHAO Zhansong rented the slipway from the Plaintiff and borrowed RMBXXXXXXX yuan from the Plaintiff for the purpose of constructing or rebuilding the ship. Therefore, the two parties formed the lease contract relationship on one hand and constituted the loan contract relationship on the other hand. Both parties shall exercise their rights and perform their obligations in accordance with the contract. The Plaintiff has already delivered the slipway to the Defendant ZHAO Zhansong and provided the water supply and electricity and other services required for the construction of the ships. At the same time, the Plaintiff loaned the money to Defendant ZHAO Zhansong. The Defendant ZHAO Zhansong has so far been in arrears with the agreed rent, other expenses, loans and interest, which has constituted a breach of contract, so the Defendant ZHAO Zhansong should be liable for breach of contract including continuing to perform and compensating for losses. On the Defendant ZHAO Zhansong’s defense that “the five ships involved have not been launched due to the Plaintiff’s reasons, so the debt has not expired”, the court holds that, according to the agreement in the case, the Defendant ZHAO Zhansong rented the Plaintiff’s slipway to build and rebuild the ships in question by itself, namely that the Plaintiff only provided the construction site and was not responsible for the actual construction of the ships involved. Therefore, compared with the Plaintiff, the Defendant ZHAO Zhansong was more clear about whether the ships was in a state of being launched and for what reason they had not been launched, but the Defendant ZHAO Zhansong did not provide any evidence to prove that the reason why the ship involved was not launched was due to the cause of the Plaintiff. On the contrary, in the case that the Defendant ZHAO Zhansong rented the Plaintiff’s slipway to build ships, the construction progress of the ship was controlled by the Defendant ZHAO Zhansong. Therefore, in the absence of evidence to the contrary, it should be confirmed that the reason why the ship involved was not launched should be attributed to the Defendant ZHAO Zhansong. In fact, the agreement in the case stipulates that other expenses such as water, electricity, gas, accommodation, management, etc. shall be paid on a monthly basis or on frequency, and shall be settled before the 5th of the following month, however, according to the bill signed and confirmed by XIANG Jiufu, who was accredited to the Plaintiff’s office by the Defendant ZHAO Zhansong and in charge of the construction project, the Defendant ZHAO Zhansong has owed the above-mentioned other expenses that should have been settled in time since April 2014, totaling RMB109,948.50 yuan; as for the money that the Plaintiff lent, the two parties also agreed to settle the interest on a quarterly basis, but the Defendant ZHAO Zhansong also did not provide proof that he had paid interest on

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the loan by contract. The above facts shall be deemed as the Defendant ZHAO Zhansong’s failure to perform the agreed obligations by its actions, and the Plaintiff shall, in accordance with the law, require the Defendant ZHAO Zhansong to bear the liability for breach of contract before the expiration of the original agreed term for performance. Therefore, the court refused to accept the Defendant ZHAO Zhansong’s defense. On the Defendant ZHAO Zhansong’s defense that “the ship involved had been moved to the open space by the Plaintiff and the follow-up slipway rent was not produced”, the court holds that the testimony of the witness XIANG Jiufu in court had confirmed that the ship in question was currently parked, and the Defendant ZHAO Zhansong did not provide sufficient and valid evidence to refuted this, so the Defendant ZHAO Zhansong should bear the unfavorable consequences of its inability to provide evidence. Therefore, the court refuses to accept the Defendant ZHAO Zhansong’s defense reason. As for the Defendant ZHAO Zhansong’s defense that “a deposit of RMB50,000 yuan was paid”, the court also does not accept it because the Defendant ZHAO Zhansong failed to provide any evidence to prove it. As for the rent, as of December 31, 2015, the rent of the slipway was RMBXXXXXXX under the agreement on slipway renting, and the Defendant ZHAO Zhansong had no objection to this. According to the agreement on slipway renting involved, the subsequent overdue rent standard shall be calculated at RMB30,000 yuan per month for one reconstructed ship and shall be calculated at RMB7,000 yuan per month for four newly-constructed ships. Since 2016, the subsequent overdue slipway rent of the five ships involved totaled RMB58,000 yuan per month. Considering that the court implemented the preservation measures on the five vessels involved on May 19, 2016, the Plaintiff assisting the execution will acquire settlement according to the other regulations during the subsequent judicial seizure period. Therefore, in this case, the court only supports the slipway rent calculated to the day before the implementation of the preservation, namely, to May 18 of the same year, totaling RMBXXXXXXX yuan. Regarding other relevant expenses of RMB109,948.50 yuan, the Defendant ZHAO Zhansong also had no objection, so the court also supports it. As for the loan, the Plaintiff and the Defendant ZHAO Zhansong clearly agreed on the principal and interest-bearing methods. Provided they do not go against the law, they are supported by the court. The deadline for interest-bearing interest shall be the date when the judgement comes into effect, so the court shall make appropriate adjustments. On this basis, the main dispute of the case involved mainly is on whether the Defendant Songhai Ship Engineering should assume responsibility in this case. In this regard, the court holds that according to the agreement on the slipway renting involved, the Defendant ZHAO Zhansong explicitly requested the Plaintiff to pay the money directly to the designated company that purchased the materials. In combination with the reasons for the loan confirmed in the IOUs, it should be confirmed that the loan that Defendant ZHAO Zhansong borrowed from the Plaintiff was used for ship construction and reconstruction. Among them, there were two sums of RMBXXXXXXX yuan, which were remitted to the Jirui Ship

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Electric’s account by the Plaintiff at the request of the Defendant ZHAO Zhansong for the purchase of two diesel engines and gearboxes. And the case that has been ascertained shows that the sale and purchase contract involved in the transaction was signed by the Defendant Songhai Ship Engineering in its name and Jirui Ship Electric, namely that the two diesel engines and gearboxes involved were purchased from Jirui Ship Electric in the name of the Defendant Songhai Ship Engineering and they will be used for the construction and reconstruction of the ships involved. At the same time, the testimony of witness XIANG Jiufu also indicated that the Defendant ZHAO Zhansong, acting as the legal representative of the Defendant Songhai Ship Engineering, began to negotiate business with XIANG Jiufu, and the steel plates received during the construction process were sprayed with the typeface “the Defendant Songhai Ship Engineering”. The above facts show that the Defendant ZHAO Zhansong, acting as the legal representative of the Defendant Songhai Ship Engineering, acted in the name of the Defendant Songhai Ship Engineering in the construction contracting, and in the process of purchasing marine equipment, the Defendant Songhai Ship Engineering has actually participated in it. Although the Defendant Songhai Ship Engineering argued that it, on behalf of Defendant ZHAO Zhansong, signed contract with Jirui Ship Electric in the form of latent agency in the process of equipment procurement, but after the relevant disputes on equipment procurement with Jirui Ship Electric became a litigation, the Defendant Songhai Ship Engineering did not disclose the Defendant ZHAO Zhansong to the other party. On the contrary, the Defendant Songhai Ship Engineering continued to reach a mediation agreement with Jirui Ship Electric in its own name in another case. The above behavior was not consistent with the latent agent that it defended. Therefore, the court does not accept the defense reason of the Defendant Songhai Ship Engineering. Accordingly, the Defendant ZHAO Zhansong, acting as the legal representative of the Defendant Songhai Ship Engineering, borrowed money from the Plaintiff for the purpose of ship construction and transformation, and the Defendant Songhai Ship Engineering has actually participated in it. It should be confirmed that the loan was used for operation of the Defendant Songhai Ship Engineering, therefore, the Defendant Songhai Ship Engineering shall bear the responsibility for joint repayment in terms of the loan and interest involved in accordance with the law. There is no legal basis for the joint and several liability forms advocated by the Plaintiff, and the court does not support this. The agreement on the slipway renting was signed between the Plaintiff and the Defendant ZHAO Zhansong. There is no evidence that the Defendant Songhai Ship Engineering actually participated in the contract. According to the principle of contractual relativity, the Plaintiff can only claim to Defendant ZHAO Zhansong that the rent was owed. Even if the slipway renting was closely related to the construction and transformation of the ships involved and the Defendant Songhai Engineering has actually participated in the construction and transformation of the ships, however, in the absence of clear legal provisions, the Defendant ZHAO Zhansong who was the non-contractual counterpart, shall not be subject to joint liability. Therefore, the court does not support the Plaintiff’s request that the

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Defendant Songhai Ship Engineering should assume joint liability for the payment of the slipway rent involved. As for the lien claimed by the Plaintiff, the agreement on the slipway renting involved clearly stipulated that in the case of the Plaintiff’s renting the slipway, the ship involved was parked on the Plaintiff’s slipway in the process of construction and reconstruction. Under the circumstances that the construction of the ship involved was stagnant, the Plaintiff legally obtained actual possession of the five ships and marine equipment involved. Although the Defendant ZHAO Zhansong defended that the notification of lien issued by the Plaintiff to it gave too short period to raise an objection, this was only a procedural provision for the exercise of the lien and did not affect the confirmation of the Plaintiff’s lien. The Plaintiff’s exercise of the lien shall still be carried out in accordance with the law according to the realization procedures of the security interest. Therefore, the Plaintiff’s lien on the ships and the equipment on board is in compliance with relevant laws and regulations, and the court confirms it according to law. The Plaintiff’s loss of RMB10,000 yuan due to the application fee for pre-litigation property preservation is the necessary expense for Plaintiff to protect its own rights and interests, which should be jointly compensated by the two Defendants. In summary, according to the Contract Law of the People’s Republic of China Article 60 Paragraph 1, Article 107, Article 108, and Article 113 Paragraph 1, the Property Law of the People’s Republic of China Article 230, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases Article 23 Paragraph 2, the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90, and the Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation Article 69 Sub-paragraph 4, the judgement is as follows: 1. The Defendant ZHAO Zhansong shall repay the debt of RMBXXXXXXX yuan and interest to the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. within 10 days after the effective date of this judgment (interest calculated at month standard rate of 1.2%; interest for RMB600,000 yuan will be calculated from November 27, 2013, interest for RMBXXXXXXX yuan will be calculated from December 5, 2013, interest for RMB800,000 yuan will be calculated from December 12, 2013, interest for RMB50,000 yuan will be calculated from December 24, 2013, interest for RMB700,000 yuan will be calculated from December 31, 2013, interest for RMB100,000 yuan will be calculated from January 6, 2014, interest for RMB800,000 yuan will be calculated from January 18, 2014, interest for RMBXXXXXXX yuan will be from March 12, 2014, interest for RMB250,000 yuan will be calculated from April 3, 2014, all until the effective date of the judgment);

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2. The Defendant Jiangsu Songhai Ship Engineering Co., Ltd. shall be jointly liable to the Plaintiff regarding repayment of the adjudicated obligation in the first item of the judgement above; 3. The Defendant ZHAO Zhansong shall pay the slipway rentals RMBXXXXXXX yuan (calculated to May 18, 2016) and other related expenses RMB109,948.50 yuan to the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. within 10 days after the effective date of this judgment; 4. The court confirms that the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. shall enjoy the right of lien on M.V. SONG HAI BO 1, four underconstruction ships with their ship identification numbers of CNXXXXXXXXXX, CNXXXXXXXXXXX, CNXXXXXXXXXXX and CNXXXXXXXXXXX respectively, two diesel engines (Model YC6CL 1200) and two gearboxes (Model 1200); 5. The Defendant ZHAO Zhansong and the Defendant Jiangsu Songhai Ship Engineering Co., Ltd. shall jointly compensate the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. for a loss of RMB10,000 yuan within 10 days after the effective date of this judgment; 6. Not support other claims of the Plaintiff Lianyungang Wuzhou Ship Engineering Co., Ltd. The Defendant ZHAO Zhansong and the Defendant Jiangsu Songhai Ship Engineering Co., Ltd., if they fail to perform the obligation to pay money according to the period specified in this judgment, shall double pay interest in the delayed period in accordance with the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of RMB67,758 yuan, RMB4,977 shall be born by the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd., RMB50,942 yuan shall be jointly born by the Defendant ZHAO Zhansong and the Defendant Jiangsu Songhai Ship Engineering Co., Ltd., and the remaining RMB11,839 shall be born by the Defendant ZHAO Zhansong. In case of dissatisfaction with this judgment, the Plaintiff Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. the Defendant ZHAO Zhansong and the Defendant Jiangsu Songhai Ship Engineering Co., Ltd. may within 15 days upon the service of judgement submit a statement of appeal to the court, together with duplicates in accordance with the number of the opposite parties, to lodge an appeal to the Shanghai High People’s Court. Presiding Judge: XX People’s Juror: YANG Yuquan People’s Juror: LI Bingshan December 5, 2016 Clerk: CHEN Mengqi

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Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 60 Each party shall fully perform its own obligations as agreed upon. …… Article 107 If a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses. Article 108 Anticipatory Breach Where one party expressly states or indicates by its conduct that it will not perform its obligations under a contract, the other party may hold it liable for breach of contract before the time of performance. Article 113 Where a party failed to perform or rendered non-conforming performance, thereby causing loss to the other party, the amount of damages payable shall be equivalent to the other party's loss resulting from the breach, including any benefit that may be accrued from performance of the contract, provided that the amount shall not exceed the likely loss resulting from the breach which was foreseen or should have been foreseen by the breaching party at the time of conclusion of the contract. …… 2. Property law of People’s Republic of China Article 230 In case an obligor (debtor) fails to pay its due debts, the oblige (creditor) may take the lien of the obligor’s movable properties he as lawfully possessed and be entitled to seek preferred payments from these movable properties. The “obligee” prescribed in the preceding Paragraph shall be the lienor (lien holder), and the “movable properties” as occupied shall be the property under lien. 3. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the burden to provide evidence for its claims. …… 4. Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases Article 23 …… If the legal representative or responsible person of the enterprise signs a private loan contract with the lender in the name of the individual and the borrowed item is used for the production and operation of the enterprise, and the lender requests the enterprise and the individual to share the responsibility, the people's court shall support it.

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5. Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90 The parties shall provide evidence to prove the facts on which the claim is based or the facts of refuting the other party’s claim, except as otherwise provided by law. Before the judgment is made, if the party fails to provide evidence or the evidence is insufficient to prove its factual claim, the party with the burden of proof shall bear the unfavorable consequences. 6. Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation Article 69 The following evidences may not be used independently as the basis for affirming the facts of a case: …… (4) Photocopies or reproductions that cannot be verified against the original document or original thing ……

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Shanghai High People’s Court Civil Judgement Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. v. ZHAO Zhansong et al. (2017) Hu Min Zhong No.236 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 739. Cause of Action 233. Dispute over ship operation loan contract. Headnote Affirming lower court decision holding plaintiff shipyard entitled to recover rental for slipway and loan made to individual defendant for ship construction and refitting; corporate defendant jointly and severally liable for loan but not slipway rental. Summary The first Defendant (ZHAO Zhansong) rented the Plaintiff’s slipway for the construction of four ships and the refitting of a fifth ship. The Plaintiff took no part in the construction and refitting but merely provided the premises. The Plaintiff also loaned money to the first Defendant for the purpose of construction and refitting of the ships. The loaned money was paid directly to the second Defendant, which purchased the materials. The second Defendant engaged in litigation with one of the vendors of equipment in separate proceedings. The Defendants did not pay the rent or repay the loan, so the Plaintiff exercised a lien over the five ships and other equipment, in separate court proceedings. The Plaintiff now sued both Defendants seeking payment of rent (and overdue rent), repayment of the loan, and confirmation of its entitlement to a lien over the Defendants’ property. The first Defendant argued that the loan was not yet due because the ships had not yet been launched. The second Defendant denied any responsibility because it was not party to either contract and acted only as agent for the first Defendant when purchasing equipment. The first instance Court held: (1) the first Defendant, as party to the rental and loan contracts, was clearly liable to the Plaintiff for both unpaid rent and repayment of the loan; (2) the first Defendant was the reason why the ships had not been launched, so the loan payment was due; (3) although the second Defendant had not signed either contract, the first Defendant was acting on its behalf, and the second Defendant had not claimed to be merely an agent when engaged in separate legal

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proceedings with an equipment vendor, so the second Defendant was liable as a participant in the construction and refitting of the ships; (4) the second Defendant was jointly liable for repayment of the loan, but not the slipway rental; (5) the Plaintiff was entitled to exercise a lien over the Defendants’ property remaining at the slipway. The second Defendant appealed; the first Defendant did not respond to a subpoena and did not participate. No new evidence was introduced The appeal Court affirmed the first instance judgment on facts and law and dismissed the second Defendant’s appeal.

Judgment The Appellant (the Defendant of first instance): Jiangsu Songhai Ship Engineering Co., Ltd. Domicile: No.07, Building 1, Phoenix Building, East Keyuan Road, Haizhou District, Lianyungang, Jiangsu. Legal representative: ZHAO Zhansong, general manager of the company. Agent ad litem: LI Qiusheng, lawyer of Jiangsu Tianwan Law Firm. The Respondent (the Plaintiff of first instance): Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. Domicile: Guanyun County, Lianyungang, Jiangsu. Legal representative: WANG Liqian, general manager of the company. Agent ad litem: MENG Danmei, lawyer of Jiangsu Dongyundi Law Firm. Agent ad litem: SHI Jing, lawyer of Jiangsu Dongyundi Law Firm. The Defendant of first instance: ZHAO Zhansong, male, Han, born on February 9, 1973, living in Lianyugang, Jiangsu With respect to the case arising from dispute over ship operation loan contract between the Appellant Jiangsu Songhai Ship Engineering Co., Ltd. (hereinafter referred to as Songhai Ship Engineering), the Respondent Lianyungang Wuzhou Shipbuilding Industry Co., Ltd. (hereinafter referred to as Wuzhou) and the Defendant of first instance ZHAO Zhansong, the Appellant disagreed with the Shanghai Maritime Court (2016) Hu 72 Min Chu No.1841 Civil Judgement, and appealed to the court. After entertaining this case on June 23, 2017, the court organized a collegiate panel in accordance with law and held a hearing in public on August 7, 2017. Agent ad litem of the Appellant Songhai Ship Engineering, LI Qiusheng, agent ad litem of the Respondent Wuzhou, SHI Jing, appeared in court to attend the hearing. The Defendant of first instance ZHAO Zhansong, though the court delivered a subpoena according to law, did not appeared in court to attend the hearing. Now the case has been concluded.

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Songhai Ship Engineering appealed to revoke the second and fifth items of the original judgment and change the judgement that Songhai Ship Engineering should not bear the responsibility for joint repayment. The main reasons were as follows: firstly, the judgment of first instance approved that the agreement of slipway renting was signed between ZHAO Zhansong and Wuzhou, and the agreement had nothing to do with Songhai Ship Engineering; and the loan item and the agreement of slipway renting were actually integrated, but the court of first instance separated the two things, which was obviously wrong. Secondly, Songhai Ship Engineering did not participate in ZHAO Zhansong’s employment of borrowing and ship reconstruction. The diesel engine sales contract signed between Songhai Shipping and Jirui Ship Electric was also used for all the ships of ZHAO Zhansong. It was not used for the production and operation of Songhai Ship Engineering, and Songhai Ship Engineering did not profit from the sale contract. Instead, they assumed the debt. The judgment of first instance applied the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases Article 23 Paragraph 2: if the legal representative or responsible person of the enterprise signed a private loan contract with the lender in the name of the individual and the borrowed item was used for the production and operation of the enterprise, and the lender requested the enterprise and the individual to share the responsibility, the people’s court should support it, which was a obviously erroneous law application. Thirdly, as far as Songhai Ship Engineering knew, XIANG Jiufu and the shareholder and legal representative of Wuzhou were fellow villagers and ZHAO Zhansong was also recommended by XIANG Jiufu to reconstruct ships at Wuzhou. The opposite party in the construction agreement signed by XIANG Jiufu was ZHAO Zhansong and the construction agreement had nothing to do with Songhai Ship Engineering. Therefore, XIANG Jiufu’s testimony that he reconstructed ships for Songhai Ship Engineering was a false statement, and the witness testimony could not be taken as the basis of judgment. Wuzhou argued that: firstly, ZHAO Zhansong, as the legal representative and actual controller of Songhai Ship Engineering, entered into a loan agreement with Wuzhou in his own name, but the borrowings were all used for the production and operation of Songhai Ship Engineering. Songhai Ship Engineering also actually participated in the ship construction and transformation related to the money involved. Second, Songhai Ship Engineering and the outsider Lianyungang Jiruiyu Diesel Ship Electric Sets Co., Ltd. (hereinafter referred to as Jirui Ship Electric) signed a contract for the purchase and sale of diesel engines. After Wuzhou paid money in accordance with ZHAO Zhansong’s instructions, Songhai Ship Engineering actually carried out the payment and received the goods, and in the separate litigation of Songhai Ship Engineering and Jirui Ship Electric, Songhai Ship Engineering was confirmed that it actually participated in the reconstruction and construction of ships. Third, the witness XIANG Jiufu, as the construction party in the reconstruction of ships involved, had nothing to do with Wuzhou, and there were even no so-called stakes. On the contrary, judging from the fact that ZHAO Zhansong acting as legal representative of Songhai Shipping negotiated

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with XIANG Jiufu on contracting matters of ship construction and payment confirmation on construction site materials and expenses, and the received materials were marked with the name of Songhai Ship Engineering, ZHAO Zhansong was inseparable from Songhai Ship Engineering. In summary, Songhai Ship Engineering together with ZHAO Zhansong should be liable for the joint repayment of the loan owed to Wuzhou. The facts of the first instance were clearly identified and the applicable law was correct, so Wuzhou requested the second instance to reject the appeal and affirmed the original judgment. ZHAO Zhansong did not appear in court and participated in the action, and he did not reply. Wuzhou claimed to the court of first instance that: on November 15, 2013, ZHAO Zhansong and Songhai Ship Engineering signed the slipway renting agreement with Wuzhou due to the construction and reconstruction of ships, also borrowed RMB6,000,000 yuan from Wuzhou and agreed on the corresponding interest and repayment period. The agreement stipulated that ZHAO Zhansong and Songhai Ship Engineering rented Wuzhou’s slipway to rebuild and build the ship and ZHAO Zhansong and Songhai Ship Engineering should compensate for the use of Wuzhou’s water, electricity and accommodation, etc. Before the ships were launched, ZHAO Zhansong and Songhai Ship Engineering were required to pay off the rent of the slipway and etc. If ZHAO Zhansong and Songhai Ship Engineering failed to pay on time or are unable to pay the amount owed, Wuzhou had right to stop the power supply or had a lien on the ships. After the agreement was signed, Wuzhou fulfilled the corresponding obligations according to the agreement, but ZHAO Zhansong and Songhai Ship Engineering did not repay the loan within the repayment period and did not pay the rent and other expenses according to the agreement. Despite the repeated urge of Wuzhou, ZHAO Zhansong and Songhai Ship Engineering still refused to repay and pay. Wuzhou exercised a lien on the ships and their attachments involved. For this reason, Wuzhou claimed that: 1. ZHAO Zhansong and Songhai Ship Engineering should jointly and severally repay the loan of RMB6,000,000 yuan and interest (calculated according to the standard of 1.2% per month from the next day of each borrowing to the date of actual repayment); 2. the joint and several payment should be calculated to the slipway rent RMB1,874,000 yuan until the date of July 31, 2016, the subsequent rent (calculated to the date when the ship involved was actually removed from the slipway) and other expenses in sum of RMB109,948.50 yuan; 3. ZHAO Zhansong and Songhai Ship Engineering should jointly and severally compensate the loss of RMB10,000 born by Wuzhou which was incurred from the application for pre-litigation property preservation; 4. Wuzhou should be confirmed to have a lien on all the property of ZHAO Zhansong and Songhai Ship Engineering at the place of Wuzhou (including a ship for reconstruction, four newly-built ships, two diesel engines and two gearboxes). ZHAO Zhansong argued that: according to the agreement, the loan and interest should be paid off before ships were launched. Now the five ships involved were not launched, so the debt involved did not expire and Wuzhou had no right to demand repayment; the five ships involved were moved to the open space by

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Wuzhou without any slipway rent generated, so Wuzhou’s request for the payment of high slipway rent was unfounded; the notice of lien issued by Wuzhou to ZHAO Zhansong and Songhai Ship Engineering only gave three days to raise an objection, which did not comply with the law; the bill of slipway rent provided by Wuzhou was not confirmed with signature after December 2015; ZHAO Zhansong paid a deposit of RMB50,000 yuan to Wuzhou, but Wuzhou did not deduct it in the lawsuit; the debt involved was the personal debt of ZHAO Zhansong, which did not show it was required for the operation of Songhai Ship Engineering, so it had nothing to do with Songhai Ship Engineering. For this reason, ZHAO Zhansong requested a judgement in accordance with law. Songhai Ship Engineering argued that: it, in accordance with law, should not bear joint liability in this case; neither it was a contractual counterpart nor it used the loan of ZHAO Zhansong. Even if it, in its own name, purchased two diesel engines and two gearboxes from the outsider Jirui Ship Electric, however, the above-mentioned equipment was in the place where Wuzhou’s domicile was located and was used for the ship that ZHAO Zhansong built. Songhai Ship Engineering was entrusted by ZHAO Zhansong to purchase the equipment and Songhai Ship Engineering did not make any profit during the purchase, but instead Songhai Ship Engineering assumed the debt of more than RMB700,000 yuan. For this reason, Songhai Ship Engineering requested to reject Wuzhou’s claims. The court of first instance found out that: On November 15, 2013, Wuzhou and ZHAO Zhansong signed an agreement of slipway renting, stipulating that the slipway that ZHAO Zhansong contracted from Wuzhou was used for reconstruction and construction of new ships; both parties confirmed that a reconstructed ship with a length of 79.80 m (namely M.V. SONG HAI BO 1 whose registered owner was ZHAO Zhansong) needed a rent of RMB200,000 yuan. If the construction period exceeded 5.5 months, the extra time would be additionally calculated at RMB30,000 yuan per month; the slipway rent of four newly-constructed with a length of 36 m was RMB20,000 yuan per month. If the construction period exceeded 4.5 months, the extra time would be additionally calculated at RMB7,000 yuan per ship per month; during the lease term, expenses incurred by the water and electricity for production, gas, accommodation, management and other expenses that ZHAO Zhansong needed to pay to Wuzhou were clearly prescribed in the agreement; within three days after the agreement was signed, ZHAO Zhansong should pay a deposit of RMB50,000 yuan to Wuzhou and pay off all the rent before the ships were launched. All other relevant expenses should be paid on a monthly basis or on frequency and should be settled before the 5th of the following month. If ZHAO Zhansong failed to pay on time or was unable to pay, Wuzhou was entitled to stop the power supply or had a lien on ships; the agreement stipulated that RMB6,000,000 yuan that ZHAO Zhansong borrowed from Wuzhou was calculated at the 1.2% monthly standard interest rate, and the interest was paid quarterly. The loan should be directly paid by Wuzhou to the designated company in which ZHAO Zhansong purchased the material. ZHAO Zhansong should repay RMB800,000 yuan and interest and pay off all the loan and interest before each newly-constructed was launched. If ZHAO Zhansong had

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special circumstances, the ships were handled by Wuzhou two months after the completion of construction, and the loan should be paid off first, and then the balance should be returned to ZHAO Zhansong. After the agreement of slipway renting was signed, the Defendant ZHAO Zhansong issued ten IOUs to Wuzhou on November 23, 2013, December 3, 2013, December 23, 2013 and January 2, 2014 respectively, confirming that because the ship was built and rebuilt at the place of Wuzhou, the Defendant ZHAO Zhansong borrowed totaled RMB6,000,000 yuan (monthly interest rate of 1.2%) from Wuzhou and promised to pay the principal and interest before the ships were launched. During the period from November 26, 2013 to April 2, 2014, Wuzhou transferred RMB6,000,000 yuan in batches to the Defendant ZHAO Zhansong’s personal account or its designated account. The specific remittance situation was: remittance of RMB600,000 yuan on November 26, 2013; remittance of RMB1,500,000 yuan on December 4, 2013; remittance of RMB800,000 yuan on December 11, 2013; remittance of RMB50,000 yuan on December 23, 2013; on December 30, 2013, remittances were RMB700,000 yuan; on January 5, 2014, remittances were RMB100,000 yuan; on January 17, 2014, remittances were RMB300,000 yuan and RMB500,000 yuan respectively; on March 11, 2014, remittances were RMB700,000 yuan and RMB500,000 yuan respectively; on April 2, 2014, remittances were RMB120,000 yuan and RMB130,000 yuan respectively. Among them, a remittance of RMB800,000 yuan on December 11, 2013 and a remittance of RMB700,000 yuan on March 11, 2014 were directly sent by Wuzhou to Jirui Ship Electric’s account according to the instructions of ZHAO Zhansong. On November 16, 2013, Jirui Ship Electric and Songhai Engineering signed a purchase and sale contract of Lianyungang Jiruiyu Diesel Ship Electric Sets Co., Ltd. The contract stipulated that Songhai Engineering should purchase six sets of diesel engines and six gearboxes from Jirui Ship Electric with the total contract price of RMB1,415,200 yuan; the delivery time was December 31 of the same year, and the delivery place was Wuzhou’s shipyard; ZHAO Zhansong, as the legal representative of Songhai Ship Engineering, signed at the “Demand Side” column of the purchase and sale contract and stamped the official seal of Songhai Ship Engineering. Due to the dispute over the sale and purchase contract, Jirui Ship Electric sued Songhai Ship Engineering to the Haizhou Court. The Haizhou Court accepted the case on January 26, 2015 and made (2015) Hai Shang Chu Zi No.227 Civil Ruling on February 4 of the same year and detained the two diesel engines (Model YC6CL1200) and two gearboxes (Model No.1200) that Songhai Ship Engineering deposited at the place of Wuzhou of this case. Later Songhai Ship Engineering and Jirui Ship Electric reached a mediation agreement over the dispute, stipulating that Songhai Ship Engineering should pay Jirui Ship Electric cargo payment of RMB765,200 yuan before October 31 of the same year. If the payment was overdue, Songhai Engineering should pay extra penalty of RMB150,000 yuan to Jirui Ship Electric and bear the litigation costs. For this reason, Haizhou Court made (2015) Hai Shang Chu Zi No.227 Civil Mediation to confirm the above mediation agreement. Later Wuzhou in this case raised an objection to the Haizhou Court on the above-mentioned preservation measures for the two diesel engines and

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two gearboxes, and Haizhou Court made (2015) Hai Zhi Yi Zi No.110 Enforcement Ruling on December 5, 2015, rejecting the enforcement objection raised by Wuzhou in this case. According to the bills of the slipway rent and other expenses issued by Wuzhou, as of December 31, 2015, the slipway rent under the slipway renting agreement was RMB1,020,000 yuan and the other expenses were RMB109,946.50 yuan. Of this, XIANG Jiufu, who was accredited to Wuzhou’s office by ZHAO Zhansong and in charge of the construction project, signed on the bill to confirm it. During the trial, witness XIANG Jiufu stated in court that he was employed by ZHAO Zhansong to contract the construction and reconstruction of the ship involved (the original unpowered M.V. SONG HAI BO 1 would be reconstructed into a powered ship), and the contract was signed with ZHAO Zhansong; ZHAO Zhansong, acting as the legal representative of Songhai Ship Engineering, began to negotiate with XIANG Jiufu, and the steel plates received during the construction process were sprayed with the words of Songhai Ship Engineering; when the contract was signed, ZHAO Zhansong paid a deposit of RMB50,000 yuan to XIANG Jiufu. The follow-up fee was borrowed by ZHAO Zhansong from Wuzhou, and Wuzhou directly transferred the money to ZHAO Zhansong. Besides, XIANG Jiufu confirmed that he had been to the scene a few days before the trial and the ships were parked on the slipway of Wuzhou’s shipyard. As ZHAO Zhansong did not repay the arrears and pay the rent and other expenses by convention, Wuzhou wrote to ZHAO Zhansong and Songhai Ship Engineering on April 29, 2016, stating that ZHAO Zhansong would exercise a lien on all the property of ZHAO Zhansong and Songhai Ship Engineering at Wuzhou and demanded that ZHAO Zhansong and Songhai Ship Engineering reimburse the agreed rent, other fees and interest within five days after receipt of the letter; if ZHAO Zhansong and Songhai Ship Engineering did not raise a written objection within three days after the receipt of the letter, the above-mentioned performance period should be deemed to be accepted, and Wuzhou would auction and sell the properties according to the law if ZHAO Zhansong and Songhai Ship Engineering failed to perform so that Wuzhou could be paid in priority. However, up to now, ZHAO Zhansong and Songhai Ship Engineering had still not paid Wuzhou the amount owed. In addition, in terms of (2016) Hu 72 Cai Bao No.94, (2016) Hu 72 Cai Bao No.94-1, and (2016) Hu 72 Cai Bao No.95 Civil Ruling on the pre-litigation property preservation, Wuzhou had already paid the application fee of RMB10,000 yuan. The court of first instance holds that: This case was a maritime dispute arising from the lease of the slipway and the borrowing for the purpose of construction or reconstruction of the ships. According to the slipway renting agreement between Wuzhou and ZHAO Zhansong, ZHAO Zhansong rented the slipway from Wuzhou and borrowed RMB6,000,000 yuan from Wuzhou for the purpose of constructing or rebuilding the ship. Therefore, the two parties formed the lease contract relationship on one hand and constituted the loan contract relationship on the other hand. Both parties should exercise their rights and perform their obligations in accordance with the contract. Wuzhou had

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already delivered the slipway to ZHAO Zhansong and provided the water supply and electricity and other services required for the construction of the ships. At the same time, Wuzhou loaned the money to ZHAO Zhansong. ZHAO Zhansong had so far been in arrears with the agreed rent, other expenses, loans and interest, which had constituted a breach of contract, so ZHAO Zhansong should be liable for breach of contract including continuing to perform and compensating for losses. On ZHAO Zhansong’s defense that “the five ships involved have not been launched due to Wuzhou’s reasons, so the debt has not expired”, the court of first instance held that, according to the agreement in the case, ZHAO Zhansong rented Wuzhou’s slipway to build and rebuild the ships in question by itself, namely that Wuzhou only provided the construction site and was not responsible for the actual construction of the ships involved. Therefore, compared with Wuzhou, ZHAO Zhansong was more clear about whether the ships was in a state of being launched and for what reason they had not been launched, but ZHAO Zhansong did not provide any evidence to prove that the reason why the ship involved was not launched was due to the cause of Wuzhou. On the contrary, in the case that ZHAO Zhansong rented Wuzhou’s slipway to build ships, the construction progress of the ship was controlled by ZHAO Zhansong. Therefore, in the absence of evidence to the contrary, it should be confirmed that the reason why the ship involved was not launched should be attributed to ZHAO Zhansong. In fact, the agreement in the case stipulated that other expenses such as water, electricity, gas, accommodation, management, etc. should be paid on a monthly basis or on frequency, and should be settled before the 5th of the following month, however, according to the bill signed and confirmed by XIANG Jiufu, who was accredited to Wuzhou’s office by ZHAO Zhansong and in charge of the construction project, ZHAO Zhansong has owed the above-mentioned other expenses that should have been settled in time since April 2014, totaling RMB109,948.50 yuan; as for the money that Wuzhou lent, the two parties also agreed to settle the interest on a quarterly basis, but ZHAO Zhansong also did not provide proof that he had paid interest on the loan by contract. The above facts should be deemed as ZHAO Zhansong’s failure to perform the agreed obligations by its actions, and Wuzhou should, in accordance with the law, require ZHAO Zhansong to bear the liability for breach of contract before the expiration of the original agreed term for performance. Therefore, the court of first instance refused to accept ZHAO Zhansong’s defense. On ZHAO Zhansong’s defense that “the ship involved had been moved to the open space by Wuzhou and the follow-up slipway rent was not produced”, the court of first instance held that the testimony of the witness XIANG Jiufu in court had confirmed that the ship in question was currently parked, and ZHAO Zhansong did not provide sufficient and valid evidence to refuted this, so ZHAO Zhansong should bear the unfavorable consequences of its inability to provide evidence. Therefore, the court of first instance refused to accept ZHAO Zhansong’s defense reason. As for ZHAO Zhansong’s defense that “a deposit of RMB50,000 yuan was paid”, the court of first instance also did not accept it because ZHAO Zhansong failed to provide any evidence to prove it.

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As for the rent, as of December 31, 2015, the rent of the slipway was RMB1,020,000 under the agreement on slipway renting, and ZHAO Zhansong had no objection to this. According to the agreement on slipway renting involved, the subsequent overdue rent standard should be calculated at RMB30,000 yuan per month for one reconstructed ship and shall be calculated at RMB7,000 yuan per month for four newly-constructed ships. Since 2016, the subsequent overdue slipway rent of the five ships involved totaled RMB58,000 yuan per month. Considering that the court of first instance implemented the preservation measures on the five vessels involved on May 19, 2016, Wuzhou assisting the execution would acquire settlement according to the other regulations during the subsequent judicial seizure period. Therefore, in this case, the court of first instance only supported the slipway rent calculated to the day before the implementation of the preservation, namely, to May 18 of the same year, totaling RMB1,286,800 yuan. Regarding other relevant expenses of RMB109,948.50 yuan, ZHAO Zhansong also had no objection, so the court of first instance also supported it. As for the loan, Wuzhou and ZHAO Zhansong clearly agreed on the principal and interest-bearing methods. Provided they did not go against the law, they were supported by the court of first instance. The deadline for interest-bearing interest should be the date when the judgement came into effect, so the court of first instance should make appropriate adjustments. On this basis, the main dispute of the case involved mainly was on whether Songhai Ship Engineering should assume responsibility in this case. In this regard, the court of first instance held that according to the agreement on the slipway renting involved, ZHAO Zhansong explicitly requested Wuzhou to pay the money directly to the designated company that purchased the materials. In combination with the reasons for the loan confirmed in the IOUs, it should be confirmed that the loan that ZHAO Zhansong borrowed from Wuzhou was used for ship construction and reconstruction. Among them, there were two sums of RMB1,300,000 yuan, which were remitted to the Jirui Ship Electric’s account by Wuzhou at the request of ZHAO Zhansong for the purchase of two diesel engines and gearboxes. And the case that had been ascertained showed that the sale and purchase contract involved in the transaction was signed by Songhai Ship Engineering in its name and Jirui Ship Electric, namely that the two diesel engines and gearboxes involved were purchased from Jirui Ship Electric in the name of Songhai Ship Engineering and they would be used for the construction and reconstruction of the ships involved. At the same time, the testimony of witness XIANG Jiufu also indicated that ZHAO Zhansong, acting as the legal representative of Songhai Ship Engineering, began to negotiate business with XIANG Jiufu, and the steel plates received during the construction process were sprayed with the typeface “the Defendant Songhai Ship Engineering”. The above facts showed that ZHAO Zhansong, acting as the legal representative of Songhai Ship Engineering, acted in the name of Songhai Ship Engineering in the construction contracting, and in the process of purchasing marine equipment, Songhai Ship Engineering had actually participated in it. Although Songhai Ship Engineering argued that it, on behalf of ZHAO Zhansong, signed contract with Jirui Ship Electric in the form of latent agency in the process of

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equipment procurement, but after the relevant disputes on equipment procurement with Jirui Ship Electric became a litigation, Songhai Ship Engineering did not disclose ZHAO Zhansong to the other party. On the contrary, Songhai Ship Engineering continued to reach a mediation agreement with Jirui Ship Electric in its own name in another case. The above behavior was not consistent with the latent agent that it defended. Therefore, the court of first instance did not accept the defense reason of Songhai Ship Engineering. Accordingly, ZHAO Zhansong, acting as the legal representative of Songhai Ship Engineering, borrowed money from Wuzhou for the purpose of ship construction and transformation, and Songhai Ship Engineering had actually participated in it. It should be confirmed that the loan was used for operation of Songhai Ship Engineering, therefore, Songhai Shipping Engineering should bear the responsibility for joint repayment in terms of the loan and interest involved in accordance with the law. There was no legal basis for the joint and several liability forms advocated by Wuzhou, and the court of first instance did not support this. The agreement on the slipway renting was signed between Wuzhou and ZHAO Zhansong. There was no evidence that Songhai Ship Engineering actually participated in the contract. According to the principle of contractual relativity, Wuzhou could only claim to ZHAO Zhansong that the rent was owed. Even if the slipway renting was closely related to the construction and transformation of the ships involved and Songhai Engineering had actually participated in the construction and transformation of the ships, however, in the absence of clear legal provisions, ZHAO Zhansong who was the non-contractual counterpart, should not be subject to joint liability. Therefore, the court of first instance did not support Wuzhou’s request that Songhai Ship Engineering should assume joint liability for the payment of the slipway rent involved. As for the lien claimed by Wuzhou, the agreement on the slipway renting involved clearly stipulated that in the case of Wuzhou’s renting the slipway, the ship involved was parked on Wuzhou’s slipway in the process of construction and reconstruction. Under the circumstances that the construction of the ship involved was stagnant, Wuzhou legally obtained actual possession of the five ships and marine equipment involved. Although ZHAO Zhansong defended that the notification of lien issued by Wuzhou to it gave too short period to raise an objection, this was only a procedural provision for the exercise of the lien and did not affect the confirmation of Wuzhou’s lien. Wuzhou’s exercise of the lien should still be carried out in accordance with the law according to the realization procedures of the security interest. Therefore, Wuzhou’s lien on the ships and the equipment on board was in compliance with relevant laws and regulations, and the court of first instance confirmed it according to law. Wuzhou’s loss of RMB10,000 yuan due to the application fee for pre-litigation property preservation was the necessary expense for Wuzhou to protect its own rights and interests, which should be jointly compensated by ZHAO Zhansong and Songhai Ship Engineering. 1. In summary, according to the Contract Law of the People’s Republic of China Article 60 Paragraph 1, Article 107, Article 108, and Article 113 Paragraph 1, the

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Property Law of the People’s Republic of China Article 230, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases Article 23 Paragraph 2, the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90, and the Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation Article 69 Sub-paragraph 4, the judgement was as follows: 1. ZHAO Zhansong should repay the debt of RMB6,000,000 yuan and interest to Wuzhou within 10 days after the effective date of this judgment (calculated at month standard of 1.2%, and RMB600,000 yuan would be calculated from November 27, 2013, RMB600,000 yuan would be calculated from December 5, 2013, RMB800,000 yuan would be calculated from December 12, 2013, RMB50,000 yuan would be calculated from December 24, 2013, RMB700,000 yuan would be calculated from December 31, 2013, RMB100,000 yuan would be calculated from January 6, 2014, RMB800,000 yuan would be calculated from January 18, 2014, RMB1,200,000 yuan would be from March 12, 2014, RMB250,000 yuan would be calculated from April 3, 2014, until the effective date of the judgment); 2. Songhai Ship Engineering should be liable to Wuzhou for joint repayment on the assigned obligation in the first item of the judgement main text; 3. ZHAO Zhansong should pay the slipway rent RMB1,286,800 yuan (calculated to May 18, 2016) and other related expense RMB109,948.50 yuan to Wuzhou within 10 days after the effective date of this judgment; 4. the court of first instance confirmed that Wuzhou should enjoy the right of lien on M.V. SONG HAI BO 1, four under-construction ships with their ship identification numbers of CNXXXXXXXXXX, CNXXXXXXXXXXX, CNXXXXXXXXXXX and CNXXXXXXXXXXX respectively, two diesel engines (Model YC6CL 1200) and two gearboxes (Model 1200); 5. ZHAO Zhansong and Songhai Ship Engineering should jointly compensate Wuzhou for a loss of RMB10,000 yuan within 10 days after the effective date of this judgment; 6. not support other claims of Wuzhou. Court acceptance fee of first instance in amount of RMB67,758 yuan, RMB4,977 should be born by Wuzhou, RMB50,942 yuan should be jointly born by ZHAO Zhansong and Songhai Ship Engineering, and the remaining RMB11,839 should be born by ZHAO Zhansong. During the second instance, the parties did not submit new evidence. The court finds out that: The first-instance judgement: “Among them, a remittance of RMB800,000 yuan on December 11, 2013 and a remittance of RMB700,000 yuan on March 11, 2014 were directly sent by Wuzhou to Jirui Ship Electric’s account according to the instructions of ZHAO Zhansong” should be “a remittance of RMB500,000 on March 11, 2014”. The remaining facts ascertained by the first-instance court can be supported by relevant evidence. In the absence of new evidence from all parties, the court confirms the facts ascertained by the first-instance court.

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The court holds that: This case is a loan contract and a lease contract dispute. The main issue of the second instance is whether Songhai Shipping should be liable for joint repayment of ZHAO Zhansong’s loan of 6 million principal and interest from Wuzhou and the resulting property preservation application fee. According to Article 64 of the Civil Procedure Law of the People’s Republic of China: “a party shall have the burden to provide evidence for its claims.” According to the facts ascertained by the courts of first instance and second instance, ZHAO Zhansong borrowed 6 million yuan successively from Wuzhou for the reconstruction and repair of the ships; ZHAO Zhansong entered into the slipway agreement and the ship construction contract with Wuzhou and XIANG Jiufu respectively; at the same time, ZHAO Zhansong, as the legal representative of Songhai Ship Engineering, entered into the purchase and sale contract of diesel engines and gearboxes with Jirui Ship Electric in the name of Songhai Ship Engineering. The relevant funds were transferred from the company account. In addition, in combination with the testimony of XIANG Jiufu in the first-instance court and judging from the facts that ZHAO Zhansong acting as the legal representative of Songhai Ship Engineering negotiated ships’ reconstruction with XIANG Jiufu and the fact that the steel plate received during the construction process was sprayed with Songhai Ship Engineering, Songhai Ship Engineering participated in ZHAO Zhansong’s ship reconstruction and construction project. Wuzhou, as a lender, could not control the actual use of the loan. Wuzhou completed the initial burden of proof on the loan used in the production and operation of the company. Although Songhai Ship Engineering defended that ZHAO Zhansong’s loan was not used for the production and operation of Songhai Ship Engineering, ZHAO Zhansong himself, the legal representative of Songhai Ship Engineering, was more aware of the specific use of the 6 million borrowing involved and mastered the corresponding account information. However, he did not provide valid evidence to support his claims, so the court has difficulty in accepting this. In the first instance, the judgement that Songhai Ship Engineering and ZHAO Zhansong jointly repaid the principal and interest owed to Wuzhou is not improper. In view of the above-mentioned, the court confirms that Songhai Ship Engineering and ZHAO Zhansong jointly repaid the principal and interest owed to Wuzhou. Wuzhou’s property preservation application fee is triggered by the loan, and it is not improper for Songhai Ship Engineering and ZHAO Zhansong to joint share. In summary, Songhai Ship Engineering’s appeal cannot be established and should be dismissed; the judgment of first instance is not improper and can be affirmed. According to the Civil Procedure Law of the People’s Republic of China Article 144, Article 170 Paragraph 1 Sub-paragraph 1, and Article 175, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB53,870 yuan, shall be born by the Appellant Jiangsu Songhai Ship Engineering Co., Ltd. The judgement is final. Presiding Judge: SUN Chenmin Judge: ZHANG Jun Judge: ZHOU Yi November 28, 2017 Clerk: CHEN Xi

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 144 If the defendant, having been served with a summons, refuses to appear in court without justified reasons, or if he withdraws during a court without the permission of the court, the court may make a judgement by default. Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: (1) If the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; …… Article 175 The judgment and the written order of a people’s court of second instance shall be final.

Beihai Maritime Court Civil Judgment Lifu Petroleum (International) Co., Ltd. v. Guangxi Ruifeng Shipping Co., Ltd. (2017) Gui 72 Min Chu No.414 Related Case(s) None. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Plaintiff bunker supplier held to be entitled to recover cost of oil supplied to defendant’s ship on three occasions, which defendant did not pay for; interest awarded but at lower rate than provided for in bunker supply contract. Summary Plaintiff bunker supplier supplied oil on three occasions to Defendant’s ship M.V. “Rui Feng 8,” but Defendant did not pay for the oil. Plaintiff sued Defendant, who did not appear to defend the case. The Court held that Plaintiff was entitled to recover the price of the oil and also interest, but interest was awarded at a lower rate than that provided for in the bunker supply contract.

Judgment The Plaintiff: Lifu Petroleum (International) Co., Ltd. Domicile: Room 1902, Floor 19th, Huixian Building No.55-61, Shek Pai Wan Road, Hong Kong Special Administrative Region. Legal representative: LIN Lipan, chairman. Agent ad litem: LIN Yong, male, lawyer of Fujian Yuanyi Law Firm. Agent ad litem: YU Zhen, male, lawyer of Fujian Yuanyi Law Firm. The Defendant: Guangxi Ruifeng Shipping Co., Ltd. Domicile: No.706, Floor 7th, Pacific Century Square A, No.35 Jinzhou Road, Qingxiu District, Nanning, Guangxi Zhuang Autonomous Region. Legal representative: CHEN Yongling, executive director.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_40

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With respect to the case arising from dispute over contract for shipping materials and spares supply between the Plaintiff, Lifu Petroleum (International) Co., Ltd., and the Defendant, Guangxi Ruifeng Shipping Co., Ltd., after the case on November 8, 2017, this court applied the summary procedure and legitimately constituted the collegiate bench to try the case on December 6. Agent ad litem of the Plaintiff, YU Zhen, appeared in the court, the Defendant, Guangxi Ruifeng Shipping Co., Ltd, after legal subpoena, did not appear in the court, the case was tried in absentia according to law. Now the case has been concluded. The Plaintiff, Lifu Petroleum (International) Co., Ltd., claimed to the court that: 1. the Defendant should pay charge for oil 195,300 yuan and penal interest 80,988.4 yuan (calculated at the rate of 3% per month, momentarily from the date of owed payment to October 19, 2017, the later interest calculated to actual date of fulfillment); 2. the Defendant should bear the lawyer’s fee of 20,100 yuan for the realization of the creditor’s right; 3. court acceptance fee should be borne by the Defendant. Facts and reasons: on January 14, February 19, December 13, 2016, the Plaintiff supplied oil to M.V. “RUI FENG 8” owned by the Defendant in three times. According to Oil Supply Debt Certificate, payment for oil should be paid within 3 weeks after oiling, if the payment was overdue, the liquidated damages should be calculated at the monthly interest rate of 3% of the total amount owed; all expenses incurred by the Plaintiff in the collection of the arrears, such as transportation, legal costs, legal costs and preservation costs, should be borne by the Defendant. The Defendant could not pay payment for oil according to agreement after the Defendant signed Oil Supply Certificate, the Plaintiff repeatedly asked the Defendant to repay the money, but the Defendant still ignored it. The Plaintiff contended that, the overdue of payment for oil by the Defendant had constitutes breach of contract, the Defendant should immediately repay the payment for oil to the Plaintiff and pay the overdue interest and lawyer’s fee as agreed. In order to protect the legitimate rights and interests of the Plaintiff, the Plaintiff asked the court for a judgment as requested. The Defendant did not submit written defence or evidence to the court. To support its claims, the Plaintiff submitted the following evidence: Evidence 1, Oil Supply Debt Certificate, to prove the facts that M.V. “RUI FENG 8” owned by the Defendant was oiled by the Plaintiff, and both parties agreed that the interest on overdue repayment should be calculated at 3% of the total monthly amount of arrears. Meanwhile, to prove the fact that the Defendant should bear lawyer’s fee; Evidence 2, commission contract, invoice of lawyer’s fee and transfer voucher, to prove the fact that the Plaintiff paid lawyer’s fee 20,100 yuan. The court held that, after legal subpoena, did not appear in the court, which was deemed to waive its right to reply, testify, cross-examine and debate. The legal source of evidence 1 and 2 provided by the Plaintiff could be proved, mutual verification of evidence could form a complete chain of evidence, which could be used as a basis for ascertaining the facts of the case. As the evidence provided by

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the Plaintiff and its statements could be mutually verified, the court confirmed the facts brought by the Plaintiff. The court held that, this case was arisen from dispute over contract for shipping materials and spares supply. Because the Plaintiff was a legal person in Hong Kong Special Administrative Region, so the case was contract dispute involved Hong Kong, the Plaintiff chose to apply Chinese law, the Defendant did not appear in the court after legal subpoena, which was deemed to abandon the opportunity to choose application of law, therefore, the court applied Chinese law to try this case. In this case, the Plaintiff supplied oil to M.V. “RUI FENG 8” owned by the Defendant, and issued Oil Supply Debt Certificate to the Defendant, what stated on Oil Supply Debt Certificate included quality of oil, quantity, unit price, amount of owed money, responsibility for breach of contract and other terms, the Defendant signed and confirmed the amount of owed money on the certificate, therefore, the intention of the Plaintiff and the Defendant about ship oil supply was true, the contract relationship for oil supply between the two parties was valid and established. The Plaintiff fulfilled obligation to supply oil for the Defendant’s vessel as agreed, the fact that the Defendant owed the Plaintiff payment for oil 195,300 yuan constituted breach of contract, it should bear corresponding liability for breach of contract. Therefore, the claim of the Plaintiff that the Defendant should pay payment for oil 195,300 yuan was legal and the court supported it. About the interest of overdue payment claimed by the Plaintiff, according to the Interpretation of Several Issues concerning the Application of Contract Law the People’s Republic of China by the Supreme People’s Court (II) Article 29 “if the party concerned claims that the agreed penalty for breach of contract is excessively high and requests to be appropriately reduced, the people’s court shall, on the basis of actual losses, take into account the performance of the contract, the fault degree of the party concerned, the expected benefits and other comprehensive factors, weigh the penalty in accordance with the principles of fairness and good faith, and make an award. If the liquidated damages agreed upon by the parties exceed 30% of the losses caused, they may generally be deemed as the provisions of the Paragraph 2 of Article 114 of the contract law that ‘excessively exceeds the losses caused’”. Oil Supply Debt Certificate agreed that payment for oil should be fulfilled within 3 weeks, if the payment was overdue, the liquidated damages should be calculated at the monthly interest rate of 3% of the total amount owed, but the Plaintiff did not prove the exact composition of its actual loss, so the Plaintiff’s actual loss was essentially the loss of interest during the occupation of funds, and the default interest rate was excessively higher than the actual loss caused by the Plaintiff, so the interest rate should be adjusted according to law to 1.3 times the benchmark interest rate of the People’s Bank of China on loans of the same level in the same period, calculated from the date of each payment to the date of actual payment. About lawyer’s fee claimed by the Plaintiff, Oil Supply Debt Certificate indicated that the defendant should bear the legal costs incurred by the Plaintiff in the collection of the arrears, so the lawyer’s fee 20,100 yuan claimed by the Plaintiff was legal and the court supported it.

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According to the Contract Law of the People’s Republic of China Article 107, Article 159, Article 161, and the Interpretation of Several Issues concerning the Application of Contract Law of the People’s Republic of China by the Supreme People’s Court (II) Article 29, the judgment is as follows: 1. The Defendant, Guangxi Ruifeng Shipping Co., Ltd., should pay 195,300 yuan and default interest to the Plaintiff, Lifu Petroleum (International) Co., Ltd., (interest on 22,250 yuan to be calculated from February 5, 2016 to October 19, 2017 at 1.3 times of the benchmark interest rate of the People’s Bank of China for the same period and at the same level; interest on 77,750 yuan to be calculated from March 12, 2016 to October 19, 2017 at 1.3 times of the benchmark interest rate of the People’s Bank of China for the same period and at the same level; interest on 95,300 yuan to be calculated from January 4, 2017 to October 19, 2017 at 1.3 times of the benchmark interest rate of the People’s Bank of China for the same period and at the same level; the interest after October 20, 2017 to be based on 195,300 yuan at 1.3 times of the benchmark interest rate of the People’s Bank of China for the same period and at same level to the last date of fulfillment); 2. The Defendant, Guangxi Ruifeng Shipping Co., Ltd., should pay lawyer’s fee 20,100 yuan to the Plaintiff, Lifu Petroleum (International) Co., Ltd. 3. Reject other claims of the Plaintiff, Lifu Petroleum (International) Co., Ltd. Court acceptance fee in amount of 5,746 yuan, which was reduced by half to 2,873 yuan, should be borne by the Defendant, Guangxi Ruifeng Shipping Co., Ltd. If the obligor does not fulfill obligation of payment within 10 days after the judgment comes into effect, then according to the Civil Procedure Law of the People’s Republic of China Article 253, it should pay double interest on the debt for the delay in performance. The right holder may apply to the court for execution within two years from the last day of the execution of the effective judgment of this case. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit 1 original petition and copies according to the number of the other parties to appeal to the Guangxi Zhuang Autonomous Region High People’s Court. Within seven days from the date of filing the appeal petition, the fee of the appeal against the judgment of first instance should be paid (name of collection organ: Guangxi Zhuang Autonomous Region High People’s Court; account: 20xxx77; bank of deposit: the Agricultural Bank of China Nanning Wanxiang Branch). If the payment is overdue, the appeal should be withdrawn automatically. Judge: LIU Hai December 6, 2017 Judge Assistant: TANG Huaze Clerk: ZHI Dong

Ningbo Maritime Court Civil Judgment Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2016) Zhe 72 Min Chu No.2097 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 779. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant carrier held liable for delivery of cargo without presentation of original bills of lading, despite absence of evidence that intended receiver had not in fact received the goods; liability based upon value of goods in shipper’s export declaration. Summary Plaintiff filed suit against Defendant for its failure to properly deliver goods to a Brazilian buyer pursuant to a bill of lading issued to Plaintiff by Defendant. Defendant argued that Plaintiff could not prove that the buyer did not receive the goods in question. Nevertheless, the Court held that Defendant was liable, regardless of whether the it was proven that buyer actually received the goods, because Defendant had delivered the goods without presentation of the original bill of lading. Further, Defendant could not prove that the value of the goods was not as high as claimed by Plaintiff, so it was held to be liable for the value of the goods delineated in the “export declaration.”

Judgment The Plaintiff: Luy International Imp&Exp Co., Ltd. Domicile: Room 2105, YW2011, Trend Centre, 29-31 Cheung Lee Street, Chai Wan, Hong Kong Special Administrative Region. Legal representative: LU Yingying, executive director of the company. Agent ad litem: LIU Xianmin, lawyer of Shanghai Sloma & Co.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_41

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The Defendant: Shenzhen Wei Jiang International Logistics Co., Ltd. Domicile: Room 1913, 1A East of First Phase of Hezhenghui, Xixiang Road, Xixiang Street, Baoan District, Shenzhen, Guangdong. Legal representative: FAN Qichao, general manager of the company. Agent ad litem: LIU Yinsheng, lawyer of Guangdong Zhuoshang Law Firm. Agent ad litem: YANG Xiao, lawyer of Guangdong Zhuoshang Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, Luy International Imp&Exp Co., Ltd., and the Defendant, Shenzhen Wei Jiang International Logistics Co., Ltd., the court entertained the case on August 29, 2016, applied the general procedure according to law and held a hearing in public twice on October 20 and December 2 of the same year. Agent ad litem of the Plaintiff LIU Xianmin, agents ad litem of the Defendant LIU Yinsheng (he did not appear in court for second time of hearing), YANG Xiao, appeared in court and participated in the hearings. Now the case has been concluded. The Plaintiff Luy International Imp&Exp Co., Ltd. claimed to the court that: the Defendant Shenzhen Wei Jiang International Logistics Co., Ltd. should compensate the Plaintiff for a loss of USD69,968.82. Facts and reasons: as a middleman of international trade, the Plaintiff purchased a batch of goods in the domestic market and sold them to the buyers in Brazil. The quantity of the goods was 677 cases, which was worth 69,968.82 US dollars. The Defendant was entrusted to handle the shipment matters for the above goods from the port of Ningbo to the port of Brazil, the Defendant issued and delivered the full set of original bills of lading to the Plaintiff, bill of lading number VSL2015000042, container number GVCU5187648, a way of delivery CY-CY. After shipment, the buyer in Brazil is slow to pay, the container is also unknown. The Plaintiff held that the Defendant as the carrier of the goods in question, which shall transport, store and load the goods carefully and properly according to the law and the contract. The Plaintiff’s cargo is missing, and the Defendant shall be liable for compensation according to law, so the lawsuit shall be instituted. The Defendant Shenzhen Wei Jiang International Logistics Co., Ltd. argued that, 1. The Plaintiff’s claims the buyer of Brazil does not actually receive the goods lack of evidence, firstly, the Plaintiff claimed that after the shipment of the goods, the buyer was delay in payment of goods, but the payment was not paid was trade disputes between the Plaintiff and Brazil’s buyer, which cannot prove that the buyer does not actually receive the goods; secondly, the Plaintiff has not provided any written certificate issued by the buyer for not receiving the goods; thirdly, the Plaintiff provides a full set of original bills of lading, nor can it prove that the buyer has not actually received the goods. According to the law of the Brazil, the Brazil pickup party can collect the goods from the customs bonded area without providing the original bill of lading. 2. The value of the goods claimed by the Plaintiff is far higher than the actual value, and the Defendant shall not accept it. The Defendant requested the court to dismiss the Plaintiff’s petition.

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To support its claims, the Plaintiff provides evidence to the court as follows: 1. Bill of lading, to prove that the Defendant is the carrier of the goods in question in the case; 2. Container inquiry records and translation, to prove that the container in question has been unpacking and re-operation; 3. Customs declaration, 4. commercial invoice, 5. export commodity purchase and sale contract, to prove the value of the goods in question and the facts of the Plaintiff purchase. After a court certificate, for the evidence provided by the Plaintiff, the Defendant has recognized the authenticity, legality and relevancy of evidence 1 bill of lading, and not recognized the content of the proof; for evidence 2, there is no objection to the record and translation of the container, but it cannot confirm the current whereabouts of the goods. For evidence 3, the customs declaration has no original, it is not approved and signed by the Customs Department, it cannot confirm its authenticity and legitimacy, and the price of customs declaration is obviously higher than the market value. For evidence 4, the authenticity, legality and relevancy of the commercial invoice were not recognized, the evidence is made by the Plaintiff and does not provide a Chinese version, which can not confirm the time of formation of the evidence and the authenticity of the content. For evidence 5, the purchase and sale contract was also made by the Plaintiff unilaterally, the authenticity, legality and relevancy shall not be recognized. The Defendant did not submit evidence to the court. After the trial, the court holds that: the Defendant recognized the authenticity of evidence 1 and 2 of the Plaintiff, the court shall recognize it. Evidence 3 of the Plaintiff, the declaration is the record material to declare, the customs declaration has been confirmed by customs clearance, the information of the container number, the number of goods, the port of unloading, etc. noted on the declaration can be confirmed with the bill of lading. In spite of the objection, the Defendant failed to provide the opposite evidence to overthrow it, the court shall recognize the evidence. For evidence 4, commercial invoices can also be corroborated with the bill of lading in terms of bill of lading number, number of containers, etc., the court shall also recognize the evidence. Evidence 5 of the Plaintiff, the purchase and sale contract was made by one party and it cannot be seen it was in connection with the goods in question in the case, the court shall not recognize the evidence. In accordance with the statements of the parties and the valid evidence confirmed by the parties, the court affirmed the following facts: In January 2015, the Plaintiff Luy International Imp&Exp Co., Ltd. signed a trade contract with Brazil customers and exported a batch of small commodities to Brazil. The invoice value of the goods was USD FOB79,221.25. The Plaintiff delivered the goods to the Defendant Shenzhen Wei Jiang International Logistics Co., Ltd. for shipment. On January 21, 2015, the Defendant issued three copies of a NVOCC bill of lading, numbered VSL2015000042, to the Plaintiff. The recorded consigner was the Plaintiff. The consignee and the notifying party were ZANTTEIMPORTACAOEEXPORTACAOLTDA, the vessel

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name was TUBULAA993W/1504S, the port of shipment was Ningbo, the port of discharge and the place of delivery were Brazil Ihaka, the way of transportation was CY-CY, the container No.GVCU5187648. The total price of goods recorded in the export declaration form of the goods in question was USD69,968.82. After the goods were shipped, the Plaintiff claimed that it did not receive payment. According to the transfer record of container, the goods have been unpacked, the container has been put into use again. At present, the Plaintiff still holds a full set of original bill of lading. It was also found that the Defendant has registered the business qualification of the non-ship carrier in the transportation department of China, and the bill of lading in question was used in the format of the record bill of lading. The court holds that the Plaintiff is a Hong Kong company and the port of transport in question was the port of Brazil, and the case has foreign related factors. The transport originating place of this case was Ningbo, according to Article 27 of the Civil Procedure Law of the People’s Republic of China, the court has jurisdiction right over the case according to law. Both the Plaintiff and the Defendant agreed to apply the law of the People’s Republic of China. According to Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the case applies to the law of People’s Republic of China in accordance with the law. The Plaintiff has actually delivered the goods to the Defendant and the Plaintiff was the actual shipper of the contract of transportation in question. The Defendant issued a bill of lading in his own name and was the carrier of the contract of transportation in question. The contract of carriage of goods by sea between the Plaintiff and the Defendant is established and valid according to law, and the parties shall carry out the contract according to the contract. The container after arriving at the port of destination has been unpacked and put into other transport voyage, while the transport mode in question was “CY to CY” FCL delivery, therefore, it can be a preliminary proof of the fact that the goods in question have been delivered without the bill of lading. Under this circumstance that the Plaintiff still holds a full set of original bills of lading, regardless of whether the goods have been delivered to the consignee recorded in the bill of lading, which shall not affect the establishment of the behavior that delivered the goods without the bill of lading. The Defendant violated the contract stipulations that the carrier shall deliver the goods on the basis of the original bill of lading and the relevant legal provisions, and shall be liable for compensation in accordance with the law. On the Plaintiff cannot prove that the consignee does not actually extract the goods, so the defense that it does not have the obligation to compensate for the payment of the goods was against the law, the court shall not adopt it. As for the loss of the goods, the value of the goods recorded in the export declaration of the goods in question was 69,968.82 US dollars. Although the Defendant claimed that the value was too high, the Defendant did not provide the contrary evidence to overturn it. The court is subject to the amount recorded in the export declaration. To sum up, the claim that the Plaintiff requested the Defendant to compensate the loss of goods is justified, and the court shall support it. In accordance with Article 71 of the Maritime Code of the People’s Republic of China, Article 2 and Article 6 of the Provisions of the Supreme People’s Court on Certain Issues

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concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading, the judgment is as follows: The Defendant, Shenzhen Wei Jiang International Logistics Co., Ltd., shall compensate the Plaintiff, Luy International Imp&Exp Co., Ltd., for loss of USD69,968.82 within 10 days after the judgment comes into effect. If the person subject to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB8,272 yuan, shall be borne by the Defendant. If unsatisfied with the judgment, the Plaintiff, Luy International Imp&Exp Co., Ltd., may submit a statement of appeal to the court within 30 days upon service of the judgment and the Defendant, Shenzhen Wei Jiang International Logistics Co., Ltd., may submit a statement of appeal to the court within 15 days upon service of the judgment, together with copies of petition according to the number of the other parties, so as to appeal to the Zhejiang High People’s Court. Presiding Judge: QIAN Bingbing Acting Judge: YANG Shimin Acting Judge: XIA Guangen January 19, 2017 Acting Clerk: ZHU Danying

Appendix: Relevant Laws 1. Maritime Code of the People’s Republic of China Article 71 A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. A provision in the document stating that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking. 2. Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading Where a carrier, in violation of laws, delivers goods without the original bill of lading (B/L), thus injuring the original B/L holder’s rights under the B/L, the original B/L holder may request the carrier to bear the civil liability for the resultant loss.

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The amount of compensation for the loss caused by a carrier to the holder of an original B/L due to delivery of goods without the original B/L shall be calculated based on the value of the goods plus freight and insurance expenses when the goods are shipped. 3. Civil Procedure Law of the People’s Republic of China Article 253 If the person subjected to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment. If the person subjected to execution fails to fulfil his other obligations within the period specified in the judgment or written order or any other legal document, he shall pay a charge for the dilatory fulfilment.

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Zhejiang High People’s Court Civil Judgment Luy International Imp & Exp Co., Ltd. v. Shenzhen Wei Jiang International Logistics Co., Ltd. (2017) Zhe Min Zhong No.131 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 773. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court judgment that defendant carrier was liable for delivery of cargo without presentation of original bills of lading, despite absence of evidence that intended receiver had not in fact received the goods; appeal court held that lower court erred in basing value of goods on shipper’s export declaration, but judgment affirmed because defendant provided no evidence of true value. Summary The Plaintiff filed a lawsuit against the Defendant for its failure to properly deliver goods to a Brazilian buyer pursuant to a bill of lading issued to the Plaintiff by the Defendant. The Defendant argued that the Plaintiff could not prove that the buyer did not receive the goods in question. Nevertheless, the court of first instance held that the Defendant was liable, regardless of whether the it was proven that buyer actually received the goods, because the Defendant had delivered the goods without presentation of the original bill of lading. Further, the Defendant could not prove that the value of the goods was not as high as claimed by the Plaintiff, so it was held to be liable by the court of first instance for the value of the goods delineated in the “export declaration”. The Defendant appealed. The court of second instance affirmed the judgment of first instance that the Defendant should bear liability for delivering the goods without presentation of the original bill of lading. However, the court of second instance also concluded that the judgment of the court of first instance improperly calculated the amount of the loss, relying only on the amount recorded in the “export declaration” of goods, which lacked sufficient evidence to support the price of the goods, but the court of first instance’s judgment was affirmed on this point, too, as the Defendant had provided no other evidence of the true value of the goods.

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Judgment The Appellant (the Defendant of first instance): Shenzhen Wei Jiang International Logistics Co., Ltd. Domicile: Room 1913, 1A East of First Phase of Hezhenghui, Xixiang Road, Xixiang Street, Baoan District, Shenzhen, Guangdong. Legal representative: FAN Qichao, general manager of the company. Agent ad litem: LIU Yinsheng, lawyer of Guangdong Zhuoshang Law Firm. Agent ad litem: YANG Xiao, lawyer of Guangdong Zhuoshang Law Firm. The Respondent (the Plaintiff of first instance): Luy International Imp&Exp Co., Ltd. Domicile: Room 2105, YW2011, Trend Centre, 29-31 Cheung Lee Street, Chai Wan, Hong Kong Special Administrative Region. Legal representative: LU Yingying, executive director of the company. Agent ad litem: LIU Xianmin, lawyer of Shanghai Sloma & Co. With respect to the case arising from dispute over contract of carriage of goods by sea between Shenzhen Wei Jiang International Logistics Co., Ltd. (hereinafter referred to as “Wei Jiang Company”) and Luy International Imp & Exp Co., Ltd. (hereinafter referred to as “Luy Company”), the Appellant appealed to the court due to its refusal to obey the civil judgment of Ningbo Maritime Court (2016) Zhe 72 Min Chu No.2097. After the case was entertained on February 23, 2017, the court organized a collegiate bench in accordance with the law, and held a hearing in public on March 16th of the same year. Agent ad litem of the Appellant Wei Jiang Company, LIU Yinsheng, and agent ad litem of the Respondent Luy Company, LIU Xianmin, appeared in court and participated in the case. Now the case has been concluded. Luy Company claimed to the court of first instance on August 29, 2016 that: as a middleman of international trade, Luy Company purchased a number of goods at the home port and resold them to the buyer in Brazil. The quantity of goods equaled 677 cases, with a value of USD69,968.82. The above-mentioned goods were entrusted to Wei Jiang Company to handle the shipment matters from Ningbo port to the port of Brazil. Wei Jiang Company issued and delivered a full set of original bills of lading to Luy Company. The bill of lading number was VSL2015000042; the container number was GVCU 5187648; and the delivery mode was CY-CY. After shipment, the buyers in Brazil were slow to pay, and the container in question was also unknown. Luy Company held that Wei Jiang Company was the carrier of the goods in question, which was to be transported, stored, and loaded carefully and properly according to the provisions of the law and the contract agreement. The whereabouts of the goods of Luy Company are unknown, and Wei Jiang Company shall bear the liability in accordance with the law. Therefore, Luy Company filed a lawsuit and asked for the following order: the lawsuit of this case is brought to the

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order of order: Wei Jiang Company shall compensate for the loss of USD69,968.82 to Luy Company. In view of the claim of Luy Company, Wei Jiang Company argued that: 1. Luy Company claims that the buyer in Brazil has not actually received the goods, and this claim lacks enough evidence. First of all, Luy Company claimed that after the shipment of goods, the buyer in Brazil delayed payment, but payment for goods had not been paid due to the trade disputes between Luy Company and the buyer in Brazil, which cannot prove that the buyer did not actually receive the goods; secondly, Luy Company does not provide any written certificate issued by the buyer for not receiving the goods. Thirdly, Luy Company provides a full set of original bills of lading, and it cannot prove that the buyer has not actually received the goods. According to the law of Brazil, the Brazilian receiving party can take delivery from the customs bonded area without providing the original bill of lading. 2. The value of the goods claimed by Luy Company was far higher than the actual value, and Wei Jiang Company does not accept it. In summary, Wei Jiang Company requested to reject the claims of Luy Company. The court of first instance found that: In January 2015, Luy Company signed a trade contract with the Brazilian buyers and exported a batch of small goods to Brazil. The invoice value of the goods was FOB USD79,221.25. Luy Company delivered the above goods to Wei Jiang Company for shipment. On January 21, 2015, Wei Jiang Company issued three copies of an NVOCC bill of lading numbered VSL2015000042 to Luy Company. The recorded shipper was Luy Company; the consignee and notifying party was ZANTTEIMPORTACAOEEXPORTACAOLTDA; the voyage was TUBULAA993W/1504S; the port of shipment was Ningbo; the port of discharge and the place of delivery was Brazil; transportation mode was CY-CY; the container was No.GVCU5187648. The total price of goods recorded in the export declaration form of the goods in question was USD69,968.82. After the shipment of the goods in question, Luy Company claimed that it did not receive the payment for the goods. According to the transfer record of the container in question, the goods have been unpacked, and the containers have been put into use again. At present, Luy Company still holds a full set of the original bills of lading. It was also found that Wei Jiang Company has been registered in the transportation department of China, and the bill of lading in question was used in the filing form of the bill of lading. The court of first instance held that Luy Company was a Hong Kong company, the port of transport in question was the port of Brazil, and the case has foreign related factors. The transport originating place of this case was Ningbo, according to Article 27 of the Civil Procedure Law of the People’s Republic of China, the court has jurisdiction rights over the case according to law. Both of the parties agreed to apply the law of the People’s Republic of China. According to Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the case applies to the law of People’s Republic of China in accordance with the law. Luy Company has delivered the goods to Wei Jiang Company, and Luy Company was the actual shipper of the contract of

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transportation in question. Wei Jiang Company issued a bill of lading in his own name and was the carrier of the contract of transportation in question. The contract of carriage of goods by sea between the two parties is established and valid according to law, and the parties shall carry out the contract according to its terms. The container, after arriving at the port of destination, had been unpacked and put into another transport voyage, while the transport mode in question was “CY to CY” FCL delivery. Therefore, it can be a preliminary proof of the fact that the goods in question have been delivered without the bill of lading. Under this circumstance, along with the fact that Luy Company still holds a full set of the original bills of lading, regardless of whether the goods have been delivered to the consignee recorded in the bill of lading, it shall not affect the establishment of the behavior that Wei Jiang Company delivered the goods without the bill of lading. Wei Jiang Company violated the contract stipulations that the carrier shall deliver the goods on the basis of the original bill of lading as well as the relevant legal provisions, and it shall be liable for compensation in accordance with the law. The court will not adopt Jiang Company’s claim that Luy Company cannot prove that the consignee did not actually extract the goods, meaning it does not have the obligation to compensate for the payment of the goods. As for the loss of the goods, the value of the goods recorded in the export declaration of the goods in question was USD69,968.82. Although Wei Jiang Company claimed that the value was too high, the Defendant did not provide the contrary evidence to overturn it. The court is subject to the amount recorded in the export declaration. To sum up, the appeal that Luy Company requested Wei Jiang Company to compensate the loss of goods is justified, the court shall support it. In accordance with Article 71 of the Maritime Code of the People’s Republic of China, Article 2 and Article 6 of the Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bills of Lading, the court of first instance judged on January 19, 2017 that: Wei Jiang Company should compensate Luy Company for loss of USD69,968.82 within 10 after the judgment comes into effect. If the person subjected to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB8,272 yuan, shall be borne by Wei Jiang Company. Wei Jiang Company refused to obey the judgment of first instance and appealed to the court: 1. The judgment of first instance determined the amount of actual loss only by the customs export customs declaration form submitted by Luy Company, which was an unclear case fact. There is no endorsement and signature of the Customs Department on the declaration form, and the authenticity cannot be identified. Luy Company did not provide the contract and invoice signed with the domestic supplier to confirm the reasonableness of the customs declaration price. In addition, Luy Company has not provided its contract of sale and the mean of payment

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between the buyers of Brazil to prove its actual loss. In view that non-delivery of goods in Brazil is very common, and Luy Company is a trader engaged in international import and export business, it does not rule out the possibility of receiving in advance most or even all the payment for goods from the buyers in Brazil according to the specific situation in Brazil. 2. The judgment of first instance did not fully consider the changes in the customs policy of Brazil, that is, the one-sided application of relevant laws and judicial interpretations, which are applicable to legal errors. The Ministry of Finance of Brazil implemented Decree No.1356 on May 6, 2013. After the implementation of the act, the delivering party can collect goods from the customs bonded area without providing the original bill of lading. Customs only plays the role of tax supervision and does not interfere in the normal legal delivery. Therefore, in this case, the reason Luy Company still holds a full set of original bills of lading and the goods were delivered is due to the changes in Brazil’s customs policy. Wei Jiang Company does not hold any fault and should not be liable for compensation. In summary, Wei Jiang Company requested to reverse the judgment and amend the judgment to reject the requests of first instance of Luy Company. For the appeal request of Wei Jiang Company, Luy Company replied in court that: the facts of the judgment of first instance are clearly ascertained, and the law and regulations are correctly applied in the original judgment; the appeal should be dismiss and the original judgment should be affirmed. In the second instance, Luy Company did not submit new evidence. Wei Jiang Company submitted two evidence materials to the court: Evidence 1: Letter on the Completion of the Work on the Completion of the Legally Ascertained Service issued by the Shenzhen blue ocean modern legal service development center and the related annexes to prove that Wei Jiang Company entrusted the center to identify the Brazilian law. Evidence 2: Legal Opinion issued by LI Huanjiang and ZHU Wenhua, legal experts of Shenzhen blue sea modern legal service development center, to prove that the Ministry of finance of Brazil has implemented the 1356th act on May 6, 2013. The decree amended the provisions of Decree No.680 issued on October 2, 2006, repealed the first of the fifty-fourth and fifty-seventh of Decree No.680 and the independent section of the fifty-ninth. After the implementation of the new decree, the documents provided by the importer from the customs free zone are not included in the original bill of lading. According to the evidence submitted by Wei Jiang Company, Luy Company expressed the following qualitative evidence: it has no objection to the authenticity of Evidence 1, but Wei Jiang Company has not submitted the relevant evidence. Evidence 2 was evidence formed from abroad, which shall handle related notarial certification formalities according to the law. The new provisions of the Ministry of finance of the Brazil are formulated only to improve the efficiency of customs clearance. But before changing the order, the consignee has already requested to deliver the original bill of lading in exchange for a small bill of lading, and the original bill of lading must still be presented. Therefore, the two sets of evidence cannot prove the factum probandum of Wei Jiang Company.

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After investigation, the evidence submitted by Wei Jiang Company is certified as follows: Luy Company has no objection to the authenticity of Evidence 1 and has recognized it. It can be proved that Shenzhen blue sea modern legal service development center is the foreign law recognition base approved by the Supreme People’s Court. Evidence 2 was the legal opinions issued by foreign legal experts, which did not handle the formalities of notarization in accordance with the relevant laws, and Luy Company put forward an objection to this. Therefore, the formal authenticity of the legal opinion was not recognized. To say the least, even if the form authenticity can be identified, the legal opinion book only lists the third contents of the current Decree No.1356 of the Ministry of Finance of Brazil, and it fails to submit a complete legal text. It is not yet to be found that the consignee in Brazil can be able to extract the goods without the original bill of lading in the territory of the country. Therefore, the evidence shall not be identified. After the trial, the court confirmed the facts determined by the judgment of first instance. The court holds that: because Luy Company is a company registered in the Hongkong Special Administrative Region and the port of destination is in Brazil, this case is a contract dispute concerning foreign carriage of goods by sea. In the first instance, the parties agreed to apply the law of the People’s Republic of China. Therefore, according to Article 3 of the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China, the court shall apply the law of the People’s Republic of China in accordance with the law. According to the appeals and reasons of Wei Jiang Company and the plea of Luy Company, the focus of the second instance is as follows: whether Wei Jiang Company shall bear the liability of Luy Company for the goods in question which were delivered without the bill of lading, and if found liable, what is the value to be compensated. The two parties have no objection to the focus of the dispute, so the court analyzed the case as follows: In this case, both parties have no objection to the fact that the goods in question were delivered without the original bill of lading. However, Wei Jiang Company claims that it did not deliver the goods with the original bill of lading according to the amended local law of Brazil, so it is not liable for it in accordance with the law. The judgment of first instance determined the loss of the goods in accordance with the amount recorded in the export declaration form of the goods in question, which is not clearly identified. The court holds that, first, according to Article 7 of the Provisions of the Supreme People’s Court on Certain Issues concerning the Application of Law to the Trial of Cases Involving Delivery of Goods without Original Bill of Lading (hereinafter referred to as the Judicial Interpretation on Delivery of Goods without the Original Bill of Lading), “if a carrier is obligated, according to the provisions of the laws of the place where the port of discharge is located stated in the bill of lading, to deliver the goods arrived at the port of discharge to the local authority in charge of customs or port, the carrier shall not bear the civil liability for delivery of goods without any original bill of lading.” In this case, Wei Jiang Company did not submit the legal basis for the carrier to deliver the goods to local customs or port authorities after the arrival of the goods to

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the port, and only submitted the “legal advice” that the consignee did not have to show the original bill of lading when the goods were drawn from the customs free zone. Because the “legal opinion” does not have the form elements of the overseas evidence, it cannot prove factum probandum, nor does it constitute the important condition explaining why the carrier should not bear the liability stipulated in Article 7 of the Judicial Interpretation on Delivery of Goods without the Original Bill of Lading. So in the case that Luy Company still holds a full set of original bills of lading and Wei Jiang Company did not submit sufficient evidence to refute the delivery of goods without the original bills of lading, Wei Jiang Company shall bear the compensation responsibility for the payment loss of Luy Company. Secondly, even if Wei Jiang Company claims that Luy Company did not submit its sales contracts and consultations with its domestic sellers and buyers in Brazil, it failed to prove the actual value of the goods involved. For the high risks that it is difficult to withdraw the money after receiving the goods on the shipment of goods to Brazil, it does not exclude the possibility that Luy Company has withdrawn most of the money. However, Wei Jiang Company failed to submit evidence to prove the above claims. Therefore, the judgment of first instance decided that the loss of Luy Company’s payment was USD69,968.82 in accordance with the value of the goods declared in the case of export declaration for goods in question, was appropriate and shall be maintained. In summary, Wei Jiang Company accepted the entrustment of Luy Company to ship the goods in question to the port of destination, but Wei Jiang Company delivered the goods to the consignee without the original bills of lading, so it shall bear civil liability for the loss of goods of Luy Company. Wei Jiang Company’s defence that it shall not bear the compensation liability for delivery of the goods without the original bill of lading as that was done in accordance with the law in Brazil is inappropriate. Its other defence that it is incorrect for the judgment of first instance to confirm the loss merely in accordance with the amount recorded in the goods export declaration form lacks enough evidence and reasons and shall not be supported. The judgment of first instance clearly ascertained the facts and the law and regulations were correctly applied in that judgment. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB8,272 yuan, shall be born by Shenzhen Wei Jiang International Logistics Co., Ltd. The judgment is final. Presiding Judge: KONG Fanhong Acting Judge: ZHENG Enliang Acting Judge: HUO Tong May 17, 2017 Clerk: YOU Liping

Tianjin Maritime Court Civil Judgment LV Xiangyin et al. v. Tianjin Sheng Quan Construction Engineering Group Co., Ltd. et al. (2017) Jin 72 Min Chu No.150 Related Case(s) None. Cause of Action 243. Dispute over marine development and utilization of sea. Headnote Defendant sub-contractor held liable to pay outstanding sums due to plaintiff sub-sub-contractors on sand blowing contract; main contractor held to be not jointly and severally liable as sub-contractor had signed sub-sub-contract in his own name, not as agent for main contractor but main contractor ordered to pay management fee to plaintiffs rather than to sub-contractor. Summary The second Defendant (Tianjin Sheng Quan) agreed to act as sub-contractor for the sand-blowing phase of a Vacuum Preloading Project, as part of a still larger project. The second Defendant then sub-sub-contracted the project to the first Defendant (ZHOU Lianhe) on terms by which the first Defendant undertook to complete the project independently and assumed sole responsibility for his own profits or losses. The second Defendant agreed to pay the first Defendant a management service fee of 0.5% of the contract value. The first Defendant then sub-sub-sub-contracted the sand-blowing part of the project to the Plaintiffs, at an agreed amount per cubic meter of sand blown. The Plaintiffs completed the project as agreed but the first Defendant paid only a small portion of the amount due. The Plaintiffs sued both Defendants, arguing that the second Defendant was jointly and severally liable for the amount owed by the first Defendant. The Court held: (1) the first Defendant did not dispute the amount owing to the Plaintiffs and was obliged to pay it to them, plus interest; (2) the second Defendant was not jointly and severally liable for the amount owed to the Plaintiffs, because the first Defendant had contracted with the Plaintiffs in his own name and not as agent for the second Defendant; but (3) the management fee, which was still owing from the second Defendant to the first Defendant, should be paid by the second Defendant to the Plaintiffs instead, as they had undertaken the work in question.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_42

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Judgment The Plaintiff: LV Xiangyin, male, born on January 14, 1967, Han, living in Weishan County, Shandong. Agent ad litem: LI Dongfeng, lawyer of Tianjin Jin Hua Da Law Firm. The Plaintiff: MENG Jie, male, born on October 5, 1974, Han, living in Weishan County, Shandong. Agent ad litem: LI Dongfeng, lawyer of Tianjin Jin Hua Da Law Firm. The Defendant: ZHOU Lianhe, male, born on January 31, 1968, Han nationality, living in Tanggu District, Tianjin City. The Defendant: Tianjin Sheng Quan Construction Engineering Group Co., Ltd. Domicile: West side of Caoxin Village, Shigezhuang Town, Baodi District, Tianjin City. Legal representative: YANG Shisong, general manager of the company. Agent ad litem: SUN Yanchun, lawyer of Tianjin Bin Yue Law Firm. With respect to the case arising from dispute over exploitation and utilization of the ocean between the Plaintiff, LV Xiangyin, the Plaintiff, MENG Jie, and the Defendant, ZHOU Lianhe, and the Defendant, Tianjin Sheng Quan Construction Engineering Group Co., Ltd. (hereinafter referred to as Tianjin Sheng Quan), after entertaining the case on March 27, 2017, the court legitimately applied summary procedure to try the case. The Defendants suited by the two Plaintiffs were ZHOU Lianhe and Tianjin Sheng Quan and Tianjin Xinhe Shipbuilding Heavy Industry Co., Ltd. (hereinafter referred to as Tianjin Xinhe Shipbuilding) when the two Plaintiffs brought the case to the court. During the trial, two Plaintiffs applied to withdraw the civil claims against Tianjin Xinhe Shipbuilding. Upon investigation, the court granted the motion and issued (2017) Jin 72 Min Chu No.150 Civil Ruling to approve Plaintiffs’ request to withdraw the civil claims against Tianjin Xinhe Shipbuilding. The court held a hearing in public on May 15, 2017. Agent ad litem of the Plaintiffs LV Xiangyin and MENG Jie, LI Dongfeng, and agent ad litem of the Defendants, ZHOU Lianhe and Tianjin Sheng Quan, SUN Yanchun, appeared in the court to attend the hearing. Now the case has been concluded. The two Plaintiffs claimed to the court that: 1. the Defendant, ZHOU Lianhe, should compensate the two Plaintiffs a project fund of RMB631,159 yuan and the fund’s interests (calculated in accordance with the benchmark lending rates for the same period of People’s Bank of China from March 1, 2014 to the date of actual payment); 2. the Defendant, Tianjin Sheng Quan should burden joint and several liabilities for the project fund above; 3. court acceptance fee should be burdened by the two Defendants. Facts and reasons: Tianjin Xinhe Shipbuilding, as the owner, outsourced the Vacuum Preloading Project of Tianjin Xinhe Shipbuilding Heavy

LV Xiangyin MENG Jie v. ZHOU Lianhe Tianjin Sheng Quan …

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Industry Port Base Phase II to the Defendant Tianjin Sheng Quan, the Defendant Tianjin Sheng Quan then subcontracted the project to the Defendant ZHOU Lianhe. On July 11, 2013, the two Plaintiffs and the Defendant ZHOU Lianhe signed Sand Blowing Construction Agreement, agreeing that the two Plaintiffs should carry out the sand blowing construction for the Vacuum Preloading Project of the Tianjin New River Shipping Co. Port Base Phase II, the price was RMB7 yuan per cubic meter according to the sand ship’s real volume. After signing the agreement, the two Plaintiffs led the sand blowing ship to carry out sand blowing project and completed the contracted project in September 2013. The total amount was 128,737 m3. The total value was RMB901,159 yuan. However, up to June 2016, the Defendant, ZHOU Lianhe, only paid RMB270,000 yuan. Though the two Plaintiffs had pursued the issue multiple times, the Defendant, ZHOU Lianhe, had never paid off. Due to the illegal subcontracting of Tianjin Sheng Quan, the Defendant Tianjin Sheng Quan should burden the relevant liabilities according to the law. The Defendant ZHOU Lianhe argued that, he accepted the total construction amount and the total value of the project claimed by the two Plaintiffs but contended that the construction fee had already been paid off. The Defendant Tianjin Sheng Quan argued that, on December 21, 2012, Tianjin Sheng Quan signed Subcontracting Agreement for Construction with the First Engineering Department of Tianjin Foundation Engineering Co. (hereinafter referred to as First Engineering Department of Foundation Engineering Co.), Tianjin Sheng Quan had a subcontracting relationship with First Engineering Department of Foundation Engineering Co. On December 31, 2013, the Defendant ZHOU Lianhe signed Business Cooperation Agreement with the Defendant Tianjin Sheng Quan, which expressly agreed that the project involved should be independently operated and accounted by the Defendant ZHOU Lianhe and that he should assume sole responsibility for his own profits or losses. Therefore, the Defendant ZHOU Lianhe should be responsible for all debts during the project. As settled between the Defendant ZHOU Lianhe and First Engineering Department of Foundation Engineering Co., the payment for the project was RMB52,179,234 yuan, the Defendant Tianjin Sheng Quan had already disbursed all the project fund—a total of RMB49,519,617 yuan which should be paid to First Engineering Department of Foundation Engineering Co.—to the Defendant ZHOU Lianhe. According to the claims by the two Plaintiffs and the argument by the two Defendants, the issue in this case were: 1. whether the Defendant ZHOU Lianhe should pay the construction fee to the two Plaintiffs; 2. the amount and the calculation basis of the construction fee; 3. whether the Defendant Tianjin Sheng Quan should burden the joint liability for payment. In order to prove their claims, the two Plaintiffs provided the following evidence as follows: 1. the original copy of Sand Blowing Construction Agreement, to prove that the both parties signed the agreement on July 11, 2013, and agreed upon specific terms of the agreement, and to prove that two parties had a contractual relationship of marine exploitation and utilization; 2. the original copy of Project

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Information Sheet, to prove the fact that the Defendant Tianjin Sheng Quan was the qualified subject of the case, and that the two Plaintiffs had already fulfilled the obligation under the construction agreement which had been inspected and accepted; 3. the original copy of the receipt, to prove that the two Plaintiffs had already fulfilled the obligation under the construction agreement and that the total amount of blown sand in the two ships were 128,737 m3 according to the actual amount of the sand ships. The Defendant ZHOU Lianhe’s cross-examination opinion regarding the two Plaintiffs’ evidence was that: he approved the authenticity and purpose of all the evidence of the Plaintiffs. The Defendant Tianjin Sheng Quan’s cross-examination opinion regarding the two Plaintiffs’ evidence: there was objection to the authenticity, relevancy and purpose of proof of evidence 1, the two Plaintiffs had never been undertaken sand blowing assignment from the Defendant Tianjin Sheng Quan there was objection to the authenticity, relevancy and purpose of proof of evidence 2, the two Plaintiffs and the Defendant Tianjin Sheng Quan had no sand blowing business cooperation on sand blowing operation and the original copy of the Project Information Sheet should not be in hand of the two Plaintiffs even though it was true. There was objection to the authenticity, relevancy and purpose of proof of evidence 3, the receipt had no signature of the Defendant ZHOU Lian his own. Regarding to the evidence provided by the two Plaintiffs, the court held the opinion as follows: the authenticity of the evidence 1 and 3 provided by the Plaintiffs were duly confirmed. The evidence 1 could prove that the two Plaintiffs had signed Sand Blowing Construction Agreement with the Plaintiff ZHOU Lianhe. Evidence 3 could prove the construction amount completed by the two Plaintiffs. Although the Defendant Tianjin Sheng Quan had objection to the authenticity of the evidence 3 and claimed that the Defendant ZHOU Lianhe did not sign his name. However, the Defendant ZHOU Lianhe had already confirmed the authenticity of the evidence in court. Therefore, the court did not accept the objection of the Defendant Tianjin Sheng Quan The signature of the Defendant ZHOU Lianhe on evidence 2 was obviously inconsistent with the signature of the Defendant in evidence 1, so the authenticity could not be confirmed. In order to prove his claim, the Defendant ZHOU Lianhe provided the following evidence: the printed copy of the statements of account from 2013 to 2016. To prove that the Defendant ZHOU Lianhe did not owe the two Plaintiffs project fund. The two Plaintiffs’ cross-examination opinion to the Defendant ZHOU Lianhe’s evidence: there was objection to the authenticity of the evidence and believed that the evidence was written by the Defendant ZHOU Lianhe on his own. The Defendant Tianjin Sheng Quan’s cross-examination opinion regarding to the Defendant ZHOU Lianhe’s evidence: there was no objection to the authenticity of the evidence. Regarding to the evidence provided by the Defendant ZHOU Lianhe, the court held the opinion as follows: the evidence was written by the Defendant ZHOU

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Lianhe unilaterally and the Defendant ZHOU Lianhe failed to provide other relevant evidence to support it. Therefore, the authenticity of the evidence could not be confirmed. In order to prove its claim, the Defendant Tianjin Sheng Quan provided the following materials as evidence: 1. the original copy of Tianjin Subcontracting Agreement for Construction Engineering, to prove the time and price of the Defendant Tianjin Sheng Quan’s subcontracting project in the case; 2. the original copy of Business Cooperation Agreement, to prove the time that the Defendant Tianjin Sheng Quan signed the agreement with the Defendant ZHOU Lianhe, as well as that the Defendant ZHOU Lianhe should independently operate the project and assume sole responsibility for his own profits or losses and other relevant contents, two parties were in a subcontracting relationship; 3. the original copy of the statement, to prove that the Defendant ZHOU Lianhe should be responsible for the construction and debts settlement of the project in the case; 4. the original copy of 3 receipts, which proved that the Defendant Tianjin Sheng Quan paid the Defendant ZHOU Lianhe RMB49,519,617 yuan in 3 separate installments, the actual settlement being RMB52,179,234 yuan. The two Plaintiffs’ cross-examination opinion regarding to the evidence provided by the Defendant Tianjin Sheng Quan were that: there was no objection to the authenticity of the evidence 1, but no written evidence of payment was provided to the court, the contract should be referred to as a more reliable evidence. There was no objection to the authenticity of the evidence 2 and 3, but they argued that the Defendant Tianjin Sheng Quan and the Defendant ZHOU Lianhe was introduced into business and that the Defendant ZHOU Lianhe was not qualified. The two Plaintiffs expressed no cross-examination opinion regarding to the evidence 4, it was not sufficient to establish the fact about payment solely on the receipt. Regarding to the evidence provided by the Defendant Tianjin Sheng Quan, the court held the opinion as follows: the authenticity of the evidence 1–3 had been confirmed. Evidence 1 proved that the Defendant Tianjin Sheng Quan had signed Tianjin Subcontracting Agreement for Construction Engineering with the First Engineering Department of Foundation Engineering Co. Evidence 2 proved that the Defendant ZHOU Lianhe had signed Business Cooperation Agreement with the Defendant Tianjin Sheng Quan. Evidence 3 proved that the Defendant Tianjin Sheng Quan issued the Statement to authorize the Defendant ZHOU Lianhe to be a representative of the Defendant Tianjin Sheng Quan, the Defendant ZHOU Lianhe should be responsible for contract signing, construction, settlement and other matters during the construction of the project in this case. Evidence 4 was only receipts. Without relevant records of payment, the authenticity could not be confirmed. Combining the evidence investigated and the statements of both parties, the court held the opinion as follows: on December 21, 2012, the Defendant Tianjin Sheng Quan signed Tianjin Subcontracting Agreement for Construction Engineering with First Engineering Department of Foundation Engineering Co., and First Engineering Department of Foundation Engineering Co. subcontracted the “sand blowing construction for the Vacuum Preloading Project of the Tianjin New

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River Shipping Co. Port Base Phase II” to the Defendant Tianjin Sheng Quan On December 31, 2012, the Defendant Tianjin Sheng Quan issued the Statement to authorize the Defendant ZHOU Lianhe to be a representative of the company, the Defendant ZHOU Lianhe should be responsible for contract signing, construction, settlement and other matters of the project in the project of “sand blowing construction for the Vacuum Preloading Project of the Tianjin New River Shipping Co. Port Base Phase II” with First Engineering Department of Foundation Engineering Co. On March 12, 2013, the Defendant ZHOU Lianhe signed Business Cooperation Agreement with the Defendant Tianjin Sheng Quan, agreeing that the Defendant ZHOU Lianhe was subordinated to the Defendant Tianjin Sheng Quan, and could operate items as covered under the business license of the Defendant Tianjin Sheng Quan. The Defendant Tianjin Sheng Quan agreed that the Defendant ZHOU Lianhe could undertake the sand blowing construction for the Vacuum Preloading Project of the Tianjin New River Shipping Co. Port Base Phase II in the name of the Defendant Tianjin Sheng Quan, the Defendant ZHOU Lianhe should independently operate and carry out accounting duties on his own, and assume sole responsibility for his own profits or losses. The Defendant Tianjin Sheng Quan charged 0.5% of the contract value undertook by the Defendant ZHOU Lianhe in the name of the Defendant Tianjin Sheng Quan as the management service fee. On July 11, 2013, the two Plaintiffs signed Sand Blowing Construction Agreement with the Defendant ZHOU Lianhe, agreeing that the Defendant ZHOU Lianhe should deliver the sand blowing construction of “the Vacuum Preloading Project of the Tianjin New River Shipping Co. Port Base Phase II” to the two Plaintiffs. The total amount of sand blew should be no less than 100,000 m3, price being calculated by the sand ship’s real volume, unit price being RMB 7 yuan per cubic meter. The two Plaintiffs had completed the sand blowing construction in accordance with Sand Blowing Construction Agreement, the total amount was 128,737 m3 and the total project fund was RMB 901,159 yuan. The project in the case was completed on September 30, 2013. The Defendant ZHOU Lianhe had confirmed the total construction amount completed by the two Plaintiffs and the total value of the project above in the court. The two Plaintiffs had confirmed that the Defendant ZHOU Lianhe had paid the project fund of RMB 270,000 yuan. As the Defendant ZHOU Lianhe failed to pay the outstanding project fund of RMB631,159 yuan for the construction fee, the two Plaintiffs brought the case to the court. The court considered that the case was a contract dispute over the exploitation and the utilization of the ocean, the two Plaintiffs being the constructors and the Defendant ZHOU Lianhe being the subcontractor. According to Article 2 of the Provisions of the Supreme People’s Court concerning Law Applicable to the Trial of Cases Involving Disputes Over Contracts on the Construction: “if the construction contract is invalid, and that the construction project is qualified after completion and acceptance, if the contractor requests to be paid the project price in accordance with the contract, it shall be supported.” In this case, the two Plaintiffs had no construction grade certificate for port and waterway construction, therefore they were not qualified to carry out construction and Sand Blowing Construction

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Agreement signed between the two Plaintiffs and the Defendant ZHOU Lianhe was invalid. However, since the project was completed and had been accepted as qualified, the two Plaintiffs were entitled to request the Defendant ZHOU Lianhe to pay the project fund as agreed in the contract. As to whether the Defendant ZHOU Lianhe should pay the two plaintiffs project fund, as well as the amount of the construction fee and the basis for calculation, the Defendant ZHOU Lianhe claimed that all the construction fee had been paid off, so he did not owe the two Plaintiffs any project fund. The court held the opinion that although the Defendant ZHOU Lianhe claimed to have paid off all the project fund, he could not provide valid payment voucher, could not prove that he had paid all the construction fee to the two Plaintiffs. Therefore, the Defendant ZHOU Lianhe’s claim was not supported. Because the Defendant ZHOU Lianhe had confirmed the total amount of work to be 128,737 m3 and the total project fund of RMB901,159 yuan as claimed by the two Plaintiffs in the court. Meanwhile, the two plaintiffs confirmed that the Defendant ZHOU Lianhe had paid RMB270,000 yuan for the project. Therefore, the Defendant ZHOU Lianhe should pay the remaining construction fee of RMB631,159 yuan to the two Plaintiffs. Considering that the project in the case was completed on September 30, 2013, it was appropriate for the two Plaintiffs to require the interests be calculated in accordance with the benchmark lending rates for the same period of People’s Bank of China from March 1, 2014 to the date of actual payment, the claim was thus supported by the court. As to whether the Defendant Tianjin Sheng Quan should burden the joint and several liabilities for the construction payment, the two Plaintiffs claimed that the Defendant Tianjin Sheng Quan should bear the joint and several liabilities for the construction payment because the Defendant Tianjin Sheng Quan illegally subcontracted. The Defendant Tianjin Sheng Quan claimed that according to the provisions of Statement signed between the Defendant ZHOU Lianhe and the Defendant Tianjin Sheng Quan, the Defendant ZHOU Lianhe should independently operated and carry out accounting duties and assume sole responsibility for his own profits or losses. Therefore, the Defendant Tianjin Sheng Quan Should not bear the joint and several liabilities for the construction payment. The court held the opinion as follows: firstly, although the Defendant ZHOU Lianhe subcontracted the project in this case in the name of the Defendant Tianjin Sheng Quan, the Defendant ZHOU Lianhe signed Sand Blowing Construction Agreement with the two Plaintiffs in his own name, not the Defendant Tianjin Sheng Quan; meanwhile, the two Plaintiffs could not provide evidence to prove that the Defendant ZHOU Lianhe signed Sand Blowing Construction Agreement with them as a representative of the Defendant Tianjin Sheng Quan Therefore, according to the Article 2 of the Provisions of the Supreme People’s Court concerning Law Applicable to the Trial of Cases Involving Disputes Over Contracts on the Construction, the two Plaintiffs were only entitled to request the Defendant ZHOU Lianhe to pay the project fund as stipulated in the contract. Secondly, the settled amount of the project in this case was RMB901,159 yuan. The Defendant Tianjin Sheng Quan claimed that it had paid all the fee to the Defendant ZHOU Lianhe except the 0.5% management fee

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for the project in this case. The Defendant ZHOU Lianhe had confirmed this claim in the court. Although the two Plaintiffs did not confirm the claim, they could not provide evidence to prove that the Defendant Tianjin Sheng Quan charged more for the construction fee. Therefore, considering that the Defendant Tianjin Sheng Quan did not charge for the construction fee involved, it should not burden the liability to pay all the construction fee as the opposite party in the contract with the two Plaintiffs. However, according to the principle that rights should match obligations, the Defendant Tianjin Sheng Quan should burden the liability for paying to the two Plaintiffs in the range of management fee of RMB4,506 yuan (901,159  0.5%) charged. Therefore, the two Plaintiffs’ claim that the Defendant Tianjin Sheng Quan should pay off all the construction fee lacked facts and legitimate basis, the court did not support it. By way of conclusion, the two Plaintiffs had a contract relationship with the Defendant ZHOU Lianhe over the exploitation and the utilization of the ocean. As the Defendant ZHOU Lianhe failed to pay the project fund in time, he breached the contract. The Defendant ZHOU Lianhe should burden the liabilities for breaching of contract; he should continue to perform the contract and pay the interests. The Defendant Tianjin Sheng Quan should burden the liability for payment in the range of management fee charged for its illegal subcontracting. Therefore, the Defendant ZHOU Lianhe should pay RMB631,159 yuan and its interests (calculated in accordance with the benchmark lending rates for the same period of People’s Bank of China from March 1, 2014 to the date of actual payment) to the two Plaintiffs. The Defendant Tianjin Sheng Quan should burden the joint and several liabilities with the Defendant ZHOU Lianhe in the range of management fee of RMB4,506 yuan charged. Considering the circumstances above, according to the Contract Law of the People’s Republic of China Article 107, the Provisions of the Supreme People’s Court concerning Law Applicable to the Trial of Cases Involving Disputes Over Contracts on the Construction Article 2 and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. The Defendant ZHOU Lianhe shall, within 10 days after the judgment comes into effect, pay the construction fee of RMB631,159 yuan to the Plaintiff LV Xiangyin and the Plaintiff MENG Jie; 2. The Defendant ZHOU Lianhe shall, within 10 days since the judgment comes into effect, pay the interest of the construction fee as mentioned above (calculated in accordance with the benchmark lending rates for the same period of People’s Bank of China from March 1, 2014 to the date of actual payment); 3. The Defendant Tianjin Sheng Quan shall take the joint and several liabilities with the Defendant ZHOU Lianhe in respect of management fee of RMB4,506 yuan claimed; 4. Other claims of the Plaintiff LV Xiangyin and the Plaintiff MENG Jie shall be rejected.

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Should it fail to perform the obligation to pay within the period required by this judgment, the Defendant ZHOU Lianhe and the Defendant Tianjin Sheng Quan shall, according to Article 253 of the Civil Procedure Law of the People’s Republic of China, pay double liability interest occurred during the delayed period. Court acceptance fee in amount of RMB5,056 yuan, shall be paid by the Defendant ZHOU Lianhe, and the Defendant Tianjin Sheng Quan shall bear the joint and several liabilities in the range of RMB36 yuan. Either party that refuses to accept this judgment as final may, within 15 days after service of this judgment, appeal to the Tianjin High People’s Court by submitting an appeal petition with 4 copies to the court. Acting Judge: WU Wenzhe July 19, 2017 Clerk: LIANG Yan

Tianjin Maritime Court Civil Judgment Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2016) Jin 72 Min Chu No. 1002 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 812. Cause of Action 207. Dispute over shipbuilding contract. Headnote Ship purchaser held to be entitled to return of advance payments made for purchase of two ships to be built by defendant shipbuilder, after tripartite agreement between purchaser, shipbuilder and finance company was held to have been terminated. Summary Plaintiff (Kanghai) agreed to buy two ships to be built by first Defendant (Zhenhua). Plaintiff paid the first installment of the purchase price, 8.75 million yuan for each ship, in accordance with the terms of the shipbuilding contracts. There were three conditions for payment of the second installment: (1) receipt by the purchaser of the original of a letter of guarantee from seller’s bank; (2) receipt by the purchaser of the original of a payment order; and (3) receipt by the purchaser of the original of a commencement certificate signed by seller, purchaser, and a classification society. Plaintiff then transferred the two shipbuilding contracts to second Defendant (Minsheng), a finance company. Second Defendant agreed to pay the remaining installments of the purchase price, to become owner of the ships, and to lease them to Plaintiff. Plaintiff, first Defendant and second Defendant signed a tripartite agreement for each ship, by which first Defendant, the shipbuilder, agreed to allow Plaintiff to transfer the contracts to second Defendant, and second Defendant agreed to pay the remaining installments of the purchase price. Second Defendant did not pay first Defendant any of the installments on either ship, so first Defendant sent Plaintiff a notice terminating the shipbuilding contract. In separate legal proceedings, the Court held that the tripartite agreements were terminated, and the parties returned to their original positions. In these proceedings Plaintiff sued both Defendants, seeking return of the advance

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_43

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payments. The Court held: (1) the parties were bound by the previous decisions that the tripartite agreements were terminated; (2) first Defendant had not fulfilled the three conditions for payment of the second installment on either ship, so second Defendant was not in breach of contract for not paying the installment, and therefore neither was Plaintiff; (3) the shipbuilding contract was terminated by first Defendant’s conduct, and so first Defendant should return to Plaintiff the money advanced by Plaintiff.

Judgment The Plaintiff: Nantong Kanghai Shipping Co., Ltd. Domicile: No. 3, Yongkang Road, Nantong Gangzha Economic Development Zone, Jiangsu. Legal representative: HUANG Lingen, chairman of the company. Agent ad litem: ZHANG Shanbin, lawyer of Jiangsu Tongnan Law Firm. The Defendant: Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. Domicile: Qidong Yinyang Shipbuilding Industrial Park, Jiangsu. Legal representative: DAI Wenkai, chairman of the company. Agent ad litem: CHEN Xuebin, lawyer of Grandall (Shanghai) Law Firm. Agent ad litem: ZHANG Sai, lawyer of Grandall (Shanghai) Law Firm. The Defendant: Minsheng Financial Leasing Co., Ltd. Domicile: Room 402, Door 01-02, Building 3, North Third Road No. 158 Financial Centre, Tianjin Airport Industrial Park. Legal representative: ZHOU Wei, chairman of the company. Agent ad litem: QU Jiyuan, lawyer of Beijing Zhonglun W&D (Tianjin) Law Firm. Agent ad litem: ZHONG Xin, lawyer of Beijing Zhonglun W&D (Tianjin) Law Firm. With respect to the case arising from the dispute over shipbuilding contract between the Plaintiff, Nantong Kanghai Shipping Co., Ltd. (hereinafter referred to as Kanghai Company), the Defendant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. (hereinafter referred to as Zhenhua Company), and, the Defendant, Minsheng Financial Leasing Co., Ltd. (hereinafter referred to as Minsheng Company), the plaintiff sued to this court, and after entertaining the case on December 1, 2016, this court tried a case in which the general procedure was followed. This court held hearings publicly on February 15 and March 23, 2016, and the legal representative of Kanghai Company, HUANG Lingen, agent ad litem ZHANG Shanbin, agents ad litem of Zhenhua Company, CHEN Xuebin and

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ZHANG Sai, agents ad litem of Minsheng Company, QU Jiyuan and ZHONG Xin, appeared in the court to attend the hearings. Now the case has been concluded. Kanghai Company claimed to the court that: 1. the two Defendants should return the advance payment for shipbuilding RMB17.5 million yuan jointly and severally; 2. the two Defendants should compensate the interest loss calculated in 8% annual interest rate (from April 13, 2011 to the date of judgement); 3. the court acceptance fee should be borne by the two Defendants. Facts and reasons: On January 8, 2011, Kanghai Company and Zhenhua Company signed the shipbuilding and sales contract, Kanghai Company bought two 47500DTW bulk-cargo ships (ships’ number DD026 and DD027) from Zhenhua Company, after the contract had signed, Kanghai Company remitted to Zhenhua Company 17.5 million yuan at five different times. After that, Kanghai Company and the two Defendants signed a tripartite agreement on shipbuilding and sales contract, Kanghai Company and Minsheng Company signed a bilateral agreement on shipbuilding and sales contract. On July 30, 2013, Zhenhua Company announced to terminate the shipbuilding contract. On September 12, 2013, Zhenhua Company entrusted Dahua Certified Public Accountants Co., Ltd. to issue the company confirmation requests to Kanghai Company, the content was that up to August 31, 2013, Zhenhua Company should pay Kanghai Company the advance payment 17.5 million yuan. Kanghai Company sued Zhenhua Company to Shanghai Maritime Court in August, 2014, requiring Zhenhua Company to return advance payment for shipbuilding and the interest, because the tripartite contract for shipbuilding and sales stipulated that the first installment of money paid by Kanghai Company was regarded as payment by Minsheng Company, if Kanghai Company had recourse to the paid money, the right should be enforced by Minsheng Company, so Kanghai Company applied for withdrawal of the action to Shanghai Maritime Court. In 2015, Kanghai Company sued Minsheng Company to Tianjin Maritime Court, requiring Minsheng Company to return 17.5 million yuan and to compensate the interest loss, Tianjin Maritime Court (2015) Jin Hai Fa Shang Chu Zi No. 69 and No. 24 Civil Judgments confirmed that, after the termination of financial leasing contract, the rights and liabilities of different parties resumed to that before the contract signed, Kanghai Company resumed the purchaser status in the shipbuilding contract, Tianjin High People’s Court confirmed in the judgement of the second instance that Kanghai Company had right to claim compensation to Zhenhua Company, Kanghai Company accordingly petitioned the court for making the two Defendants to return the advance payment and compensate the interest loss. Zhenhua Company argued to the court that: firstly, the two parties of the financial leasing contract were Kanghai Company and Minsheng Company, the three parties of the tripartite contract were Kanghai Company, Minsheng Company and Zhenhua Company, the parties of the two contracts were different. The financial leasing contract contained legal relation of financial leasing, the tripartite contract contained legal relation of transference of obligatory right debt, the nature of the legal relations of two contract was different. From the point of the tripartite contract contents, the tripartite contract was an independent contact, its operation or termination did not condition the financial leasing contract’s operation or termination,

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therefore, the termination of financial leasing contract did not lead to the termination of tripartite contract at the same time. Kanghai Company had filed a lawsuit concerning financial lease to Tianjin Maritime Court, after the trial, Tianjin Maritime Court terminated the financial leasing contract between Kanghai Company and Minsheng Company, and confirmed that, “after termination of financial leasing contract, the rights and liabilities of different parties resumed to that before the contract signed. The shipbuilding contract transference bilateral agreement signed by the Plaintiff and the Defendant and the tripartite agreement about ship building and sales contract signed by the Plaintiff, the Defendant and the third party, were terminated at the same time as the agreement signed for fulfilling the financial leasing contract. The Plaintiff resumed the purchaser status in the shipbuilding and sales contract”. Kanghai Company did not satisfy with the judgment and lodged an appeal, Tianjin High People’s Court dismissed the appeal and affirmed the original judgement. However, the judgment of second instance did not terminate the tripartite agreement in written form, the judgement from Tianjin Maritime Court did not bring the effect of terminating the tripartite agreement, the reasons were: 1. Kanghai Company’s claim in the former lawsuit was restricted to financial leasing contract, Tianjin Maritime court had no right to try the shipbuilding contract and tripartite agreement. 2. The opinion that the tripartite agreement terminated at the same time of the judgement of Tianjin Maritime court was only appeared in the judging reasons, but it was not involved in the result of judgement or the main judgement. 3. The tripartite agreement and the financial leasing contract were mutual independent, Kanghai Company should initiate a lawsuit independently to terminate the tripartite, therefore, Tianjin Maritime Court’s judgement’s opinion that the tripartite agreement was terminated when the financial leasing contract was terminated had no legal basis. 4. The judgement of the second instance made by Tianjin High People’s Court quoted the tripartite agreement’s contents as judging reason, it proved that the second instance did not support the reason for tripartite agreement involved in the first instance. Therefore, the tripartite agreement was not terminated, it was still in force. Secondly, according to the tripartite agreement, Kanghai Company lost the legal right to claim for the advance payment, 17.5 million yuan, and the interest to Zhenhua Company. The reasons were: 1. the tripartite agreement had been fulfilled, Kanghai Company’s right in the shipbuilding contract had been transferred to Minsheng Company, Kanghai Company could not bring a lawsuit against Zhenhua Company in the status of purchaser in shipbuilding contact. 2. According to the tripartite agreement Article 2 Paragraph 1 and Paragraph 2, the first installment paid by Kanghai Company was regarded as payment by Minsheng Company, Kanghai Company had no right to claim for the money to Zhenhua Company on ground of tripartite agreement on shipbuilding contact. 3. Even if Kanghai Company was regarded to have right to bring a lawsuit against Zhenhua Company, Kanghai Company should bring it in the name of Minsheng Company. Thirdly, according to shipbuilding and sales contract, Kanghai Company had right to reserve purchaser’s advanced payment, in the circumstances of not making up the Kanghai Company’s cost and fee due to the fulfillment of shipbuilding contract and the economic loss due to purchaser s default, the

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purchaser had no right to require Zhenhua Company to return the advanced payment. Zhenhua Company, as the builder, had spent cost and fee on building the ship involved in the case, and had suffered some loss, liquidation should be conducted in this case, although the shipbuilding contract had been terminated, the liquidation term in the contract was still in force, only after the liquidation was completed, the problem that Kanghai Company required Zhenhua Company to return the money came into view, before the liquidation was completed, Zhenhua Company had right to reserve Kanghai Company’s advance payment 17.5 million yuan. Minsheng Company argued to the court that: 1. according to the binding judgments of Tianjin Maritime Court and Tianjin High People’s Court, the financial leasing contract had been terminated, the agreements related to the financial leasing contract were terminated together, Kanghai Company resumed the purchaser status of the shipbuilding contract, had right to claim for compensation to Zhenhua Company, Minsheng Company was not related to the shipbuilding contract, so Minsheng Company was not proper subject of the case. 2. Even if Minsheng Company was a qualified subject, because Minsheng Company had no default in fulfilling the contract, so it should not bear any liability for the loss suffered by Minsheng Company. The only liability Minsheng Company borne in the financial leasing contract and the related agreements was to pay related money for ship building, Zhenhua Company was responsible for the other business on ship building, it was determined by the nature of financial leasing contract, because the condition for payment stipulated by the shipbuilding contract was not mature from beginning to end, Minsheng Company had no fault in not paying for ship building, did not break the contract. 3. According to the contact, Kanghai Company had ability to exercise right of claim, Minsheng Company was not negligent in claiming. 4. The shipbuilding contract was an underlying contract, since Zhenhua Company had terminated the shipbuilding contract, the basis of contact disappeared, the tripartite agreement was naturally terminated. In order to prove its claims, Kanghai Company proved the following evidence: 1. shipbuilding and sales contract, to prove that Kanghai Company, as purchaser, Zhenhua Company, as seller, established shipbuilding contract relationship; 2. Shipbuilding and sales contract bilateral agreement on shipbuilding and sales contract, tripartite agreement on shipbuilding and sales contract, to prove that the subject of shipbuilding contract had changed, the purchaser was changed from Kanghai Company to Minsheng Company, the builder was still Zhenhua Company, the rights and obligations had been transferred to Minsheng Company, liquidation claimed by Zhenhua Company should be conducted with Minsheng Company. 3. Payment document of the advance payment, 17.5 million yuan, to prove that Kanghai Company had paid Zhenhua Company 17.5 million yuan. 4. Shanghai Maritime Court Decision, to prove that the statute of Kanghai Company’s lawsuit did not run out. 5. Tianjin Maritime Court (2015) Jin Hai Fa Shang Chu Zi No. 69, No. 24 Civil Judgments, (2015) Jin Gao Min Si Zhong Zi No. 87, No. 88 Civil Judgments, to prove that the court had confirmed that Zhenhua Company should bear the liability for the shipbuilding contract’s failure to be fulfilled, Tianjin High People’s Court held that although the rights and obligations of the shipbuilding

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contract had been transferred to Minsheng Company, Kanghai Company still had right to claim for compensation to Zhenhua Company because the advance payment 17.5 million yuan was paid to Zhenhua Company. In order to prove its claims, Kanghai Company proved the following evidence: 1. shipbuilding and sales contract (ship’s number: DD026), the supplement agreement and the supplement agreement 1, signed by Kanghai Company and Zhenhua Company, to prove that Kanghai Company bought a 47,500-ton bulk-cargo ship from Zhenhua Company, the ship’s number was DD026, the contract stipulated two parties’ rights and obligations. 2. Shipbuilding and sales contract (ship’s number: DD026), the supplement agreement and the supplement agreement 1, signed by Kanghai Company and Zhenhua Company, the proving purpose was the same as above. 3. L/G for the first installment of advance payment for ship DD026 and ship DD027, issued by Jiangsu Bank Nantong Branch on March 17, 2011, to prove that Jiangsu Bank Nantong Branch issued two L/G for first installment of advance payment for ship DD026 and ship DD027, the amount was 8.75 million yuan respectively, the original copy of L/G had been given to Kanghai Company. 4. The first installment order for ship DD026 and ship DD027, given by Zhenhua Company to Kanghai Company on March 21, 2011, to prove that Zhenhua Company had informed Kanghai Company to pay the first installment, the original copy of payment order had been given to Kanghai Company. 5. The board decision of Zhenhua Company on March 21, 2011, to prove that the board of directors of Zhenhua Company agreed to perform the shipbuilding contract on ship DD026 and ship DD027, signed with Kanghai Company, the original copy of the decision had been given to Kanghai Company. 6. The tripartite agreement on DD026 signed by Kanghai Company and the two Defendants. 7. The tripartite agreement on DD027 signed by Kanghai Company and the two Defendants, to prove that the two contracts’ basic contents were the same except for the different ship’s number, and tripartite agreement Article 2’s related stipulation on Zhenhua Company agreed that Kanghai Company transferred, Minsheng Company acquired the rights and obligations in the two ships’ shipbuilding contract. 8. Commencement certificate and the translation of ship DD026, issued by China Classification Society on August 16, 2011, to prove that the commencement certificate of ship DD026 was confirmed upon signatures of Zhenhua Company’s representative, HUANG Jianyuan, Kanghai Company’s representative, WANG Qin, Minsheng Company’s representative, LIN Weitong, and the original copy was taken by Minsheng Company’s representative, LIN Weitong, on September 8, 2011. 9. L/G for the second installment of advance payment for ship DD026, issued by Jiangsu Bank Nantong Branch on September 7, 2011, and the EMS certificate of the mail from Jiangsu Bank Nantong Branch to Minsheng Company, to prove that Jiangsu Bank Nantong Branch accepted Zhenhua Company’s appeal, established L/G for the second installment of advance payment for ship DD026, Minsheng Company was the beneficiary, the amount was 52.5 million yuan, the original copy was mailed by Jiangsu Bank Nantong Branch to Minsheng Company’s LIN Weitong on September 13, 2011. 10. The second installment order for ship DD026 and the EMS certificate issued by Zhenhua Company to Kanghai Company on September 9, 2011, to prove that Zhenhua

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Company had issued Minsheng Company the second installment order for ship DD026, the original copy of payment order was mailed by Zhenhua Company to Minsheng Company’s to LIN Weitong. 11. (2017) Hu Dong Zheng Jing Zi No. 2354 Notarization issued by Shanghai Oriental Notary Public Office, to prove that on September 13, 2011, Zhenhua Company’s ZHOU Zhongbin sent email to Minsheng Company’s LIN Weitong and copied to Kanghai Company’s WANG Qin, the email informed that the original copies of the second installment order and the L/G for the second installment of advance payment were sent by express to Minsheng Company’s LIN Weitong, the email was attached with the L/G, payment order and the scanning copy of EMS receipt. 12. Commencement certificate and the translation of ship DD027, issued by China Classification Society on December 28, 2011, to prove that China Classification Society issued commencement certificate for ship DD027. 13. Written confirmation and translation for ship DD026 and ship DD027, issued by China Classification Society on December 31, 2011, to prove that ship DD026 and ship DD027 had reached the same building stage of keel laydown. 14. (2017) Hu Dong Zheng Jing Zi No. 2355 Notarization issued by Shanghai Oriental Notary Public Office, to prove that L/G for the second installment of advance payment was sent by Minsheng Company to Jiangsu Bank Nantong Branch on January 18, 2012. 15. Letter of presentation issued by the account manager, TIAN Longjia, of Jiangsu Bank Nantong Branch, to prove that L/G for the second installment of advance payment for ship DD026 was sent by the account manager and the responsible person, TIAN Longjia, to Minsheng Company’s LIN Weitong on September 13, 2011. 16. The bilateral agreement on shipbuilding and sales contract signed by Minsheng Company and Kanghai Company for ship DD026 and ship DD027, to prove agreement Article 3 paragraph 1, Article 4 Paragraph 1, Article 6 Paragraph 2, according to the stimulation above, except for meeting of the conditions for payment stimulated in shipbuilding contract, the second installment paid by Minsheng Company to Zhenhua Company should meet the internal conditions between Minsheng Company and Kanghai Company, that was Minsheng Company received Kanghai Company’s self-raised fund. 17. The answer which was submitted by Minsheng Company in the case of (2015) Jin Hai Fa Shang Chu Zi No. 24, No. 69 (part), to prove that Minsheng Company claimed that Kanghai Company did not pay the self-raised fund to Minsheng Company in accordance with their bilateral agreement, caused Kanghai Company could not pay the second installment of advance payment to Zhenhua Company, based on Kanghai Company’s severe default, Minsheng Company could not fulfill the financial leasing contract, and reserved the legal prosecution rights for Kanghai Company’s default, it showed that the conditions for payment of the shipbuilding contract had been met, Minsheng Company did not pay Kanghai Company the second installment of shipbuilding payment due to the internal stipulation between Minsheng Company and Kanghai Company. 18. The trial record on March 18, 2015 of the case (2015) Jin Hai Fa Shang Chu Zi No. 24, No. 69, to prove that the legal representative of Kanghai Company admitted that the conditions for the second installment had been met, and claimed that Minsheng Company did not inform Kanghai Company to pay the self-raised fund in writing, Kanghai Company believed that Minsheng Company

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should compensate for it, it showed that the conditions for payment had been met, Kanghai Company’s loss was caused by Minsheng Company’s not paying the second installment of shipbuilding payment, Kanghai Company should claim for compensation to Minsheng Company instead of Zhenhua Company. 19. The contract for purchasing diesel engine, signed by Zhenhua Company and Jiangsu Antai Power Machine Co., Ltd. on June 1, 2011, and the payment voucher of Zhenhua Company, to prove that Zhenhua Company bought a diesel engine for ship DD026, and paid the first installment, 3.256 million yuan. 20. The contract for purchasing diesel generating sets signed by Zhenhua Company and Medium-high Diesel Engine Heavy Industry Co., Ltd. on June 8, 2011, and the payment voucher of Zhenhua Company, to prove that Zhenhua Company bought two diesel generating sets for ship DD026 and ship DD027, and paid the first installment, 1.44 million yuan. 21. Two contracts signed by Zhenhua Company and China Ship South China Marine Machinery Co., Ltd. on June 8, 2011, and the payment voucher of Zhenhua Company, to prove that Zhenhua Company bought steering engines for ship DD026 and ship DD027, and paid part of the first installment, 200 thousand yuan. 22. Four procurement contracts signed by Zhenhua Company and Nantong Huifa Ship Supporting Co., Ltd. in October, 2011, the payment voucher of Zhenhua Company, the complaint on these contracts, the settlement agreement and the photos of the stock, to prove that Zhenhua Company bought manhole covers and bilge well covers for ship DD026 and ship DD027, and paid the supplier 389,381.76 yuan, these goods were now deposited in Zhenhua Company. 23. The contract signed by Zhenhua Company and Nantong Honghan Trading Co., Ltd. on September 28, 2011, the payment voucher and the photos of the stock, to prove that Zhenhua Company bought the initial board decks for ship DD026, Zhenhua Company had paid all the payments for goods, 3,487,126.03 yuan, these goods were now deposited in Zhenhua Company. 24. The technical service contract for designing the 47,000-ton bulk-cargo ship signed by Zhenhua Company and Shanghai Jiahao Ship Engineering Designing Co., Ltd., and the payment voucher of Zhenhua Company, to prove that Zhenhua Company entrusted architect to provide submitting/detailed design for ship DD026 and ship DD027, and technical service for production design for part of the hull, Zhenhua Company and paid the architect the first installment of design fee 924 thousand yuan and the second installment of design fee 1.386 million yuan for ship DD026, 2.31 million yuan in total. 25. The technical service contract for detailed design and production design for the 47,000-ton bulk-cargo ship signed by Zhenhua Company and Nantong Hainade ship engineering design Co., Ltd. on March 28, 2911, and the payment voucher of Zhenhua Company, to prove that Zhenhua Company had paid the first installment of design fee 720 thousand yuan and part of the second installment of design fee 460 thousand yuan, 1.18 million yuan in total. 26. The agreement for construction of classification ship inspection service signed by Zhenhua Company and Nanjin Branch office of China Classification Society on July 8, 2011, and the payment voucher of Zhenhua Company, to prove that Zhenhua Company had paid the first and the second installment of service fee, that was 1.218 million yuan, 60% of the total payment. 27. The payment voucher of fee for plan approval for DD026/27 paid by Zhenhua

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Company to Australia GIBSONMINTO & ATTONPTY Ltd, technical specification of 47500DWT bulk-cargo ship (part), to prove that Zhenhua Company had paid Australia GIBSONMINTO & ATTONPTY Ltd (Australia Plan approval Centre) assessment fee for freight house arrangement plan 1475 Dollar A, according to current rate converted to RMB9,929.7 yuan, and paid additional tax 575.36 yuan, 10,505.16 yuan in total. 28. The payment voucher for L/G fee for ship DD026/27 paid by Zhenhua Company to Jiangsu Bank Nantong Development Zone Branch, to prove that to fulfill the shipbuilding contract Zhenhua Company paid the poundage for L/G, 17,500 yuan in total, to Jiangsu Bank Nantong Development Zone Branch. 29. Contracts list of the contracts for ship DD026/27 that had been signed but not been paid for, to prove that Zhenhua Company had done a lot of preparations for building ship DD026/27, including purchasing equipment, raw materials, because the second installment had not been transferred to account, the contract was not fulfilled. 30. The cost budget of Zhenhua Company’s ship DD026/27, to prove that according to the budget, the total cost of each ship of ship DD026 and ship DD027 was 169.203 million yuan, the selling price of each ship stipulated by the contract was 180 million yuan. If the shipbuilding contract was fulfilled, Zhenhua Company could gain profit 10.797 million yuan from each ship, the profit margin of the cost was 6.38%. 31. Zhejiang High People’s Court (2014) Zhe Hai Zhong No. 32 Civil Judgement, to prove that shipbuilding profit margin in 2011 and 2012 was about 5%. In order to prove its claims, Minsheng Company proved the following evidence: 1. shipbuilding and sales contract; 2. tripartite agreement; 3. financial leasing contract; 4. bilateral agreement, the four evidence above proved that the contracts accordingly were voluntarily agreed by each party, each party should fulfill the contracts and the stipulations on conditions for payment and subjects. 5. Two civil judgement from Tianjin High People’s Court, to prove that the financial leasing contract and the attached agreement had been dissolved, Minsheng Company did not violate the obligation of payment, the court confirmed to resumed to the state before the financial leasing contract was signed, amounting to Minsheng Company not participating in the contract involved in the case. 6. LIN Weitong’s testimony. The aforementioned evidence were cross-examined in the trial of the case, each party had fully issued cross-examination opinion. The court’s confirmation opinions to Kanghai Company and Minsheng Company’s evidence: the two Defendants had no objection to the authenticity of Kanghai Company’s five evidences, Kanghai Company and Zhenhua Company had no objection to the authenticity of Minsheng Company’s evidence 1–5, so the court confirmed the authenticity of Kanghai Company’s five evidence and Minsheng Company’s evidence 1–5. As to LIN Weitong’s testimony provided by Minsheng Company, the claim of not receiving the original copy of L/G for the second installment of advance payment for ship DD026 in the testimony contradicted evidence 14 provided by Zhenhua Company, the court did not confirm this part of testimony, the court confirmed the claim of not receiving the original copy of the second installment order for DD026.

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The court’s confirmation opinions to Zhenhua Company’s evidence: Kanghai Company and Minsheng Company had no objection to authenticity of evidence 1, 2, 6, 7, 16, the court confirmed the aforementioned evidence’s authenticity. Evidence 3, 4, 8, 12, 13 were the evidences confirmed by other effective judgment of the court, the court confirmed the probative force. Evidence 5 could be mutually confirmed by evidence 1, the court confirmed its authenticity. Evidence 9, 14, 15 could be mutually confirmed by each other, evidence 14 had passed notarization, the court confirmed the authenticity of these three evidences, which proved that received L/G for the second installment of advance payment for ship DD026. Evidence 10 and evidence 11 was mutually confirmed by each other, and evidence 11 had passed notarization, the court confirmed the authenticity of these two evidences, but due to the lack of Minsheng Company’s signing formalities, these could not prove that Minsheng Company had received the second installment order for ship DD026. Evidence 17, 18 was taken from files of the court, the court confirmed their authenticity. Evidence 19–28 were original copies, Kanghai Company and Minsheng Company had no objection to their authenticity, the court confirmed their authenticity. Evidence 29, 30 were party’s statements, due to the lack of other evidences’ backing up, the court did not confirm them. Evidence 31 was judgement of people’s court, the court confirmed its authenticity. According to the statements of the parties and valid evidence confirmed by the court, the court confirmed the fact as follows: Zhenhua Company and Kanghai Company signed two shipbuilding and sales contract basically similar in contents on January 8, 2011, bought two 47,500-ton bulk-cargo ship (hull number was DD026, DD027 respectively). Both of the shipbuilding and sales contracts stipulated that “the first installment is 8.75 million yuan; the second installment is 52.5 million yuan. The conditions of the second installment of payment was when the purchaser receive the original copy of L/G for the second installment of advance payment established by seller bank, when the purchaser received the original copy of payment order, and when purchaser confirms that it has received the original copy of commencement certificate signed by the representatives of the seller, classification society and purchaser”. The contract also stipulated that “all the payments paid by the purchaser before the ship delivery have the character of advance payment. If the purchaser cancels or dissolves the contract in accordance with the rights given by the articles in the contact, the seller should unconditionally and immediately returned all the payments by installments of contract price paid by the purchaser to the seller under this contract, … in this circumstance, if the seller has obligation to return the payments by installments, the seller should pay the interest of these payments of each installment to the purchaser at 8% annual rate, the interest period is from the date that the seller receives each installment of payment to the date that the seller returns and remits the money”. “If the purchaser breaks the contract, the seller has right to reserve all the money paid by the purchaser under this contract”. Zhenhua Company sent the first installment payment order to Kanghai Company on March 21, 2011, Kanghai Company paid Zhenhua Company 2 million yuan on March 13, 4 million yuan on May 4, and 7.5 million yuan on May 31. The

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aforementioned payment was 17.5 million yuan in total, including the first installment of payment for ship DD026, 8.75 million yuan, and the first installment of payment for ship DD0267, 8.75 million yuan. In order to raise funds, Kanghai Company transferred the aforementioned two shipbuilding contracts to Minsheng Company, Minsheng Company would pay the money that had not been paid under the shipbuilding contract and gain the ownership of the two aforementioned ships, then Minsheng Company would charter the ships to Kanghai Company in form of financial lease, for this reason, Kanghai Company and M2 signed two financial leasing contracts and two bilateral agreements on transferring shipbuilding contract (hereinafter referred to as bilateral agreements). The contents of the two bilateral agreements were basically the same, the agreements stipulated that “Kanghai Company continues to fulfill all the obligations except for obligation of payment under the shipbuilding contract, Minsheng Company will pay the second to the fifth installment of payment to Zhenhua Company under the shipbuilding contract, but Kanghai Company should pay the self-raised fund 8.75 million yuan, 5% of the total cost for the second installment of shipbuilding payment under the shipbuilding contract, the self-raised portion should be paid to the Minsheng Company’s specified account according to the written notice of Minsheng Company at least 5 banking days before the first payment of Minsheng Company is expected to expire, Minsheng Company will uniformly pay the money to Zhenhua Company”. “In the circumstance of Zhenhua Company’s not breaking the agreement, if Minsheng Company failed to fulfill the obligation of paying the ship’s price in time attributable to itself, Minsheng Company should be liable for breach of contract of delaying payment to the shipyard, if the shipyard compensates to Kanghai Company and Kanghai Company suffers actual loss, Minsheng Company should compensate for it.” Kanghai Company, Zhenhua Company and Minsheng Company singed two tripartite agreements basically similar in contents on shipbuilding and sales contract for ship DD026 and ship DD027 (hereinafter referred to as tripartite agreements). The tripartite agreements stipulated “Zhenhua Company confirms to agree Kanghai Company to transfer the shipbuilding contract to Minsheng Company, Minsheng Company shall pay the second to the fifth installment of payment under the shipbuilding contract, Minsheng Company promises to pay the money for shipbuilding according to the rules of the payment stipulated by shipbuilding contract”. As to the building of ship DD026, China Classification Society issued shipbuilding commencement certificate, the representatives of Kanghai Company, Minsheng Company and Classification Society signed in the commencement certificate on August 16, 2011, Minsheng Company gained the original copy of the commencement certificate on September 8. On September 7, 2011, Jiangsu Bank Nantong Branch issued the L/G for the second installment of advance payment, the amount guaranteed was 52.5 million yuan, Minsheng Company was beneficiary, the employee of Nantong Branch, TIAN Longjia, sent the L/G directly to Minsheng Company’s LING Weitong, due to not receiving the second installment of advance payment for ship DD026 on schedule, to reduce the loss of deposit, Zhenhua Company required Minsheng Company to return the aforementioned L/G to

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Jiangsu Bank Nantong Branch, Minsheng Company sent the L/G back to Nantong Branch in January, 2012. As to the building of ship DD027, there was no signature of Minsheng Company on the commencement certificate of ship DD027, Zhenhua Company did not inform Minsheng Company to pay the second installment of advance payment, and did not issued the L/G for the second installment of advance payment. On July 30, 2013, Zhenhua Company issued the notification of termination of contract to Kanghai Company, to terminate shipbuilding contracts for DD026 and DD027. On December 24, 2015, Kanghai Company filed a lawsuit against Minsheng Company to the court and applied to add Zhenhua Company as the third party, required to terminate the financial leasing contract signed by Kanghai Company and Minsheng Company, and required Minsheng Company to compensate the advance payment, 17.5 million yuan, and the loss of interest. After the trail, the court made (2015) Jin Hai Fa Shang Chu Zi No. 69 (hereinafter referred to as No. 69 Case) and No. 24 (hereinafter referred to as No. 24 Case) Civil Judgement, terminating the financial leasing contract signed by Kanghai Company and Minsheng Company and rejecting Kanghai Company’s other claims. The aforementioned judgement held that “after termination of financial leasing contract, the rights and liabilities of different parties resumed to that before the contract signed. The shipbuilding contract transference bilateral agreement signed by the Plaintiff and the Defendant and the tripartite agreement about ship building and sales contract signed by the Plaintiff, the Defendant and the third party, were terminated at the same time as the agreement signed for fulfilling the financial leasing contract. The Plaintiff resumed the purchaser status in the shipbuilding and sales contract”. Kanghai Company did not satisfy with the judgment and lodged an appeal, Tianjin High People’s Court dismissed the appeal and affirmed the original judgement. To fulfilled the shipbuilding contract, Zhenhua Company paid the fees as followed: the first installment for diesel engine, 3.256 million yuan, the deposit for diesel generating sets, 1.44 million yuan, part of the first installment for steering engines, 200 thousand yuan, payment for manhole covers and etc., 389,381.76 yuan, payment for steel board 3,487,126.03 yuan, technical service fee for ship design, 2.31 million yuan, technical service fee for detailed design and production design, 1.18 million yuan, classification society’s plan approval, inspection and certificate service fee, 1.218 million yuan, Australia plan approval fee and tax fee, 10,505.16 yuan, the poundage for L/G, 17,500 yuan. The court held that the case was the dispute over shipbuilding and sales contract, the issues of this case were that: 1. whether the tripartite agreement was terminated; 2. the default conducts of the three parties after termination of the contract; 3. whether the two Defendants should return advance payment to Kanghai Company. 1. Whether the tripartite agreement was terminated No. 69 Case and No. 24 Case Civil Judgement of the court were legally effective, Kanghai Company, Zhenhua Company and Minsheng Company, as the parties of the aforementioned cases, should be restricted to the aforementioned judgement.

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When the aforementioned judgement terminated the financial leasing contract signed by Kanghai Company and Minsheng Company, they confirmed that “the bilateral agreement and the tripartite agreement were terminated at the same time, Kanghai Company resumed the purchaser status in the shipbuilding and sales contract”, Zhenhua Company, as ship builder of the shipbuilding and sales contract, had legal relation of shipbuilding and sales contract with Kanghai Company, as the ship purchaser, according to the shipbuilding and sales contract, Kanghai Company’s paying 17.5 million yuan to Zhenhua Company was to fulfill the obligation of paying the first installment under the contract, so the dispute caused by the returning the money naturally belonged to the dispute caused by shipbuilding contract, therefore Kanghai Company had right to require Zhenhua Company to return the shipbuilding advance payment in accordance with the shipbuilding and sales contract. Zhenhua Company denied that the tripartite agreement had been terminated, then held that Kanghai Company had no right to claim to it in accordance with the tripartite agreement, but it did not provide evidence to overturn the aforementioned effective judgements, so the reason was untenable, the court did not support it. 2. The default conducts of the three parties after termination of the contract According to shipbuilding and sales contract for ship DD026 and DD027, the conditions for payment of ship purchaser paying the second installment includes three items: 1. the purchaser receive the original copy of L/G for the second installment of advance payment established by seller bank; 2. the purchaser received the original copy of payment order; 3. the purchaser confirms that it has received the original copy of commencement certificate signed by the representatives of the seller, classification society and purchaser. As far as ship DD026 was concerned, the court’s No. 69 Case effective judgement confirmed that “the material provided by Zhenhua Company could prove that Minsheng Company gained commencement certificate on September 8, 2011, Jiangsu Bang Nantong Branch issued the L/G for advance payment on September 7, 2011, of which the beneficiary was Minsheng Company, but it could not prove whether Minsheng Company had actually received the original copy of L/G for advance payment and the original copy of payment order, the court confirmed that the conditions of Minsheng Company’s paying the second installment had not been fulfilled, Minsheng Company’s conduct of not paying the second installment did not break the contract”. As to the commencement certificate, the aforementioned judgement confirmed that Minsheng Company had received the original copy, the three parties had no objection to it during the trial. As to the original copy of L/G for second installment, Zhenhua Company supplemented an email that had passed notarization during the trial, the email recorded that Zhenhua Company had required Minsheng Company to return the original copy of L/G for second installment, Minsheng Company inquired the bank address from Zhenhua Company, and sent the original copy of L/G back to Jiangsu Bank Nantong Branch, therefore, it could be confirmed that Minsheng Company received the original copy of L/G for second installment, the email that Zhenhua Company supplemented in

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this case was enough to overturn the confirmation to this fact in No. 69 Case effective judgement. As to the original copy of payment order, during the trial of No. 69 Case, Zhenhua Company submitted the copy of EMS receipt showing that it sent the original copy of payment order to Minsheng Company, and the email. During the trial, Zhenhua Company did not supplement other evidences except passing the email notarization, the aforementioned email was sent by Zhenhua Company’s ZHOU Zhongbin to Minsheng Company’s LING Weitong, the main content was “the original copies of L/G for second installment and the payment order have been expressed to your company, the attachment are the scanning copy and express number”. According to the related regulations of the Civil Procedure Law of the People’s Republic of China, for regular factum probandum, as far as the evidence provided by the party can prove that the existence of the fact is highly probable, the court can confirm the fact, but for the fact that is confirmed by the effective judgement, the evidence’s probative force should reach the extent to overturn the fact, that is, the extent to which the opposite fact is established, Zhenhua Company did not supplement new evidences in this case, there was no Minsheng Company’s reply in the email that had passed notarization, the EMS receipt was a copy without the record of Minsheng Company’s signing situation, therefore the evidence provided by Zhenhua Company could not prove that Minsheng Company had received the original copy of payment order, not enough to overturn the confirmation to the fact by No. 69 judgement. As far as ship DD027 was concerned, the court’s No. 24 judgement confirmed that none of the three conditions of payment were fulfilled. During the trial, Zhenhua Company also admitted that it did not issued L/G for second installment, and did not send the payment order. In conclusion, one condition of payment for ship DD026 was not fulfilled, none of the three conditions of payment for ship DD026 was fulfilled, therefore Minsheng Company’s not paying the second installment for two ships did not break the contract, Kanghai Company naturally had no breach to contract as well. 3. Whether the two Defendants should return advance payment to Kanghai Company The Contract Law of the People’s Republic of China Article 97 stipulated that, remedies in case of termination upon termination of a contract, a performance which has not been rendered is discharged; if a performance has been rendered, a party may, in light of the degree of performance and the nature of the contract, require the other party to restore the subject matter to its original condition or otherwise remedy the situation, and is entitled to claim damages. Kanghai Company paid the advance payment, 17.5 million yuan, to Zhenhua Company in accordance with the shipbuilding and sales contract, and Kanghai Company had no fault in the termination of shipbuilding and sales contract, it had right to require Zhenhua Company to restore to original condition after the termination of contract, Zhenhua Company should return the advance payment, 17.5 million yuan, charged from Kanghai Company to Kanghai Company, and should compensate Kanghai Company the interest loss according to the contract. Since Kanghai Company had

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no fault in the termination of shipbuilding and sales contract, Zhenhua Company’s claim of reserving Kanghai Company’s advance payment to charge against its loss in shipbuilding lacked legal basis, the court did not support it. Minsheng Company did not actually occupy Kanghai Company’s advance payment, so it did not bear the liability of returning Kanghai Company’s advance payment. Pulling the threads together, according to the Contract Law of the People’s Republic of China Article 97, the judgment is as follows: 1. The Defendant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd., should return the Plaintiff, Nantong Kanghai Shipping Co., Ltd., the advance payment 17.5 million yuan within ten days from the effective date of this judgment; 2. The Defendant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd., should pay the Plaintiff, Nantong Kanghai Shipping Co., Ltd., the interest of the aforementioned money (interest of 2 million yuan should be calculated from April 13, 2011, interest of 4 million yuan should be calculated from May 3, 2011, interest of 4 million yuan should be calculated from May 4, 2011, interest of 7.5 million yuan should be calculated from May 31, 2011, all should be calculated to the date of actual performance of duty within the period specified in this judgment and at 8% annual rate); 3. Reject other claims of Nantong Kanghai Shipping Co., Ltd. If the Defendant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd., was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 126,800 yuan, should be borne by the Defendant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit five copies of the original petitions to appeal to the Tianjin High People’s Court. Presiding Judge: LI Zengqiang Judge: CHEN Jianpeng People’s Juror: GUO Huiling May 23, 2017 Clerk: MA Sai

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Tianjin High People’s Court Civil Judgment Nantong Kanghai Shipping Co., Ltd. v. Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. et al. (2017) Jin Min Zhong No. 393 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 797. Cause of Action 207. Dispute over shipbuilding contract. Headnote Affirming lower court decision that ship purchaser was entitled to return of advance payments made for purchase of two ships to be built by defendant shipbuilder, after tripartite agreement between purchaser, shipbuilder and finance company was held to have been terminated. Summary Plaintiff (Nantong Kanhai) agreed to buy two ships to be built by first Defendant (Shanghai Zhenhua). Plaintiff paid the first installment of the purchase price, 8.75 million yuan for each ship, in accordance with the terms of the shipbuilding contracts. There were three conditions for payment of the second installment: (1) receipt by the purchaser of the original of a letter of guarantee from seller’s bank; (2) receipt by the purchaser of the original of a payment order; and (3) receipt by the purchaser of the original of a commencement certificate signed by seller, purchaser, and a classification society. Plaintiff then transferred the two shipbuilding contracts to second Defendant (Minsheng), a finance company. Second Defendant agreed to pay the remaining installments of the purchase price, to become owner of the ships, and to lease them to Plaintiff. Plaintiff, first Defendant and second Defendant signed a tripartite agreement for each ship, by which first Defendant, the shipbuilder, agreed to allow Plaintiff to transfer the contracts to second Defendant, and second Defendant agreed to pay the remaining installments of the purchase price. Second Defendant did not pay first Defendant any of the installments on either ship, so first Defendant sent Plaintiff a notice terminating the shipbuilding contract. In separate legal proceedings, the Court held that the tripartite agreements were terminated, and the parties returned to their original positions. In these proceedings Plaintiff sued both Defendants, seeking return of the advance payments. The first instance Court held: (1) the parties were bound by the previous decisions that the tripartite agreements were terminated; (2) first Defendant had not

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fulfilled the three conditions for payment of the second installment on either ship, so second Defendant was not in breach of contract for not paying the installment, and therefore neither was Plaintiff; (3) the shipbuilding contract was terminated by first Defendant’s conduct, and so first Defendant should return to Plaintiff the money advanced by Plaintiff. First Defendant appealed, arguing that the shipbuilding contract was terminated as a result of default by Plaintiff and second Defendant, not itself, so the first instance judgment should be reversed, or at least the costs that it had incurred in commencing construction of the ships should be deducted from the advance payment before return to Plaintiff. The appeal Court held that the parties were not bound by the previous decisions, because the conclusion that the tripartite agreements were terminated was not a necessary part of those decisions. Nevertheless, the appeal Court then held that the tripartite agreements were terminated when the financial lease was terminated. The appeal Court also held that neither Plaintiff nor second Defendant was in breach of the shipbuilding contract, so Plaintiff was entitled to return of the advance payment upon termination of the shipbuilding contract. Accordingly, the appeal court affirmed the first instance judgment.

Judgment The Appellant (the Defendant of first instance): Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. Domicile: Qidong Yinyang Shipbuilding Industrial Park, Jiangsu. Legal representative: DAI Wenkai, chairman of the company. Agent ad litem: JIA Yiou, lawyer of Grandall (Shanghai) Law Firm. Agent ad litem: ZHANG Sai, lawyer of Grandall (Shanghai) Law Firm. The Respondent (the Plaintiff of first instance): Nantong Kanghai Shipping Co., Ltd. Domicile: No. 3, Yongkang Road, Nantong Gangzha Economic Development Zone, Jiangsu. Legal representative: HUANG Lingen, chairman of the company. Agent ad litem: ZHANG Shanbin, lawyer of Jiangsu Tongnan Law Firm. The Respondent (the Defendant of first instance): Minsheng Financial Leasing Co., Ltd. Domicile: Room 402, Door 01-02, Building 3, North Third Road No. 158 Financial Centre, Tianjin Airport Industrial Park. Legal representative: ZHOU Wei, chairman of the company. Agent ad litem: QU Jiyuan, lawyer of Beijing Zhonglun W&D (Tianjin) Law Firm. Agent ad litem: ZHONG Xin, lawyer of Beijing Zhonglun W&D (Tianjin) Law Firm.

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With respect to the case arising from dispute over shipbuilding contract between the Appellant, Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. (hereinafter referred to as Shanghai Zhenhua Company), the Respondent, Nantong Kanghai Shipping Co., Ltd. (hereinafter referred to as Nantong Kanghai Company), and the Respondent, Minsheng Financial Leasing Co., Ltd. (hereinafter referred to as Minsheng Leasing Company), the Appellant disagreed the (2016) Jin 72 Min Chu No. 1002 Civil Judgment made by Tianjin Maritime Court and an appeal was filed in the court. After registering this case on July 6, 2017, the court legitimately constituted the collegiate bench to try the case, and held a hearing publicly. Agents ad litem of the Appellant Shanghai Zhenhua Company, JIA Yiou and ZHANG Sai, the legal representative of the Respondent Nantong Kanghai Company, HUANG Lingen, and agent ad litem ZHANG Shanbin, and agents ad litem of the Respondent Minsheng Leasing Company, QU Jiyuan and ZHONG Xin, appeared in the court to attend the hearing. Now the case has been concluded. Shanghai Zhenhua Company appealed to the court that: 1. the court was requested to abrogate the first-instance judgement, commute to reject Nantong Kanghai Company’s claims or deduct ship building cost 13,508,512.95 yuan and the related interests that should be borne by Nantong Kanghai Company and Minsheng Leasing Company from 17.5 million yuan, or determine to dismiss a lawsuit, or return the case to the court of first instance for retrial. 2. The court acceptance fee of the first and second instance should be borne by Nantong Kanghai Company and Minsheng Leasing Company. Facts and reasons: 1. the judgement of first instance omitted important facts. The actual reasons for non-fulfillment of financial leasing contract and the bilateral contract were that financial leasing contract was not actually fulfilled and the parties had no willingness to fulfill, which were confirmed by the judgments of first instance of (2015) Jin Hai Fa Shang Chu Zi No. 24 Civil Case (hereinafter referred to as No. 24 Case) and (2015) Jin Hai Fa Shang Chu Zi No. 69 Civil Case (hereinafter referred to as No. 69 Case). The second installment should be paid in September 2011, but Minsheng Leasing Company did not pay the money, Nantong Kanghai Company did not have the self-raised fund ready either. To avoid further loss, in January 2011, Shanghai Zhenhua Company and Minsheng Leasing Company negotiated to send back L/G, after that, within one and a half years, neither Nantong Kanghai Company nor Minsheng Leasing Company had intention to pay the money, Shanghai Zhenhua Company had no choice but to notice Nantong Kanghai Company to terminate the shipbuilding and sales contract on January 2013. According to the judgement of first instance, it was existed to the ships involved that conditions of payment were not fulfilled, Nantong Kanghai Company and Minsheng Leasing Company did not break the contract, but the judgement of the first instance did not find out the influence of non-fulfillment of financial leasing contract and the bilateral contract to shipbuilding and sales contract, and did not consider that Shanghai Zhenhua Company had no default. 2. In the No. 24 Case and the No. 69 Case, Minsheng Leasing Company maintained that it had not received the L/G sent by Shanghai Zhenhua Company, until the fact was found out that Minsheng Leasing Company had received the original copy of L/G. Minsheng Leasing Company’s statement of

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not receiving the original copy of L/G and the payment order was not fact, adverse inference should be made to it. When sending the L/G and payment order, Shanghai Zhenhua Company had scanned the document contents and the EMS receipt which were sent to Minsheng Leasing Company’s LIN Weitong via email. According to shipbuilding and sales contract, the email should be deemed to have been submitted since it was sent. Even if it failed to prove that the original payment order had been delivered to the other party, the first-instance judgment should also pay attention to whether Nantong Kanghai Company and Minsheng Leasing Company had the willingness to perform the obligation of the second installment in good faith, while Nantong Kanghai Company and Minsheng Leasing Company did not have the willingness to perform the payment obligation. 3. During the trial of first instance, Shanghai Zhenhua Company brought a counterclaim for shipbuilding loss, the court of first instance rejected the counterclaim. Shanghai Zhenhua Company raised the defense of shipbuilding loss, but the first-instance judgement held that Shanghai Zhenhua Company’s claim for reserving advance payment to offset shipbuilding loss lacked legal basis, objectively depriving Shanghai Zhenhua Company’s right to file another lawsuit. Moreover, the first-instance court rejected Shanghai Zhenhua Company’s counterclaim, but it did not give statutory appeal period, which was a breach of procedural law. 4. The termination of tripartite agreement confirmed by the first-instance judgement exceeded Nantong Kanghai Company’s claims in the first instance, and was without legal basis. When Nantong Kanghai Company filed this lawsuit, it did not require to terminate the tripartite agreement, and in the civil judgments of No. 69 Case and No. 24 Case, the termination of tripartite agreement was only recorded in the reason for judgement, it did appear in the main judgement, the effect of modification or suspension of civil legal relations would not be produced, and the second-instance judgments of No. 24 Case and No. 69 Case did not support the aforementioned reasons for judgement. The tripartite agreements were independent agreement, so the termination of financial leasing contracts would not necessarily result in their automatic termination. Under the circumstance of tripartite agreements’ effectiveness, Nantong Kanghai Company had no right to claim 17.5 million yuan to Shanghai Zhenhua Company. 5. According to shipbuilding and sales contract, only when the contract was broken by Shanghai Zhenhua Company and the purchaser terminated the contract could Shanghai Zhenhua Company return all the money paid, RMB17.5 million yuan, and pay the interests at an annual rate of 8% to the purchaser when Shanghai Zhenhua Company received the Notice for Termination of Contract issued by the purchaser, but in this case, Shanghai Zhenhua Company did not break the contract, and the shipbuilding and sales contracts were not terminated by the purchaser, so the relevant articles of the shipbuilding and sales contracts could not be applied. In this case, due to the financial problems of Nantong Kanghai Company, the parties concerned had been negotiating to suspend payment of the second installment. Since Nantong Kanghai Company and Minsheng Leasing Company had delayed notification to Shanghai Zhenhua Company to resume the performance of contracts, Shanghai Zhenhua Company notified the termination of shipbuilding and sales contacts. Whether the Shanghai Zhenhua Company broken the contract should be confirmed in

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accordance with the shipbuilding and sales contracts, and not providing the original payment order was not a contractual breach. Nantong Kanghai Company had admitted in the No. 24 Case and No. 69 Case that the second installment’s conditions of payment had been fulfilled, Shanghai Zhenhua Company terminated the contract because Minsheng Leasing Company did not pay the second installment. In the trial of this case, Nantong Kanghai Company indicated that the performance of the shipbuilding and sales contracts was not related to itself. Minsheng Leasing Company also claimed in the first-instance court, that the three parties actually postponed the payment of the second installment in oral agreement, there was no written documents. Even if the existing evidence failed to prove that the Shanghai Zhenhua Company had delivered the original payment order to Minsheng Leasing Company, it only led to the second installment’s conditions’ not being met, instead of Shanghai Zhenhua Company’s breach of contract. This case was actually caused by the problem of funds, after the parties agreed to suspend payment of the second installment, Shanghai Zhenhua Company had to postpone the construction of the ship, not due to Shanghai Zhenhua Company’s default leading to the suspension of shipbuilding. Minsheng Leasing Company and Nantong Kanghai Company had indicated that they would no longer perform the shipbuilding and sales contracts in their own actions, in this circumstance, Shanghai Zhenhua Company informed Nantong Kanghai Company to terminate the shipbuilding and sales contracts, Nantong Kanghai Company had no objection to it as well. From the negative behaviors of Nantong Kanghai Company and Minsheng Leasing Company that they did not urge or terminate the contracts within one and a half years after the suspension of the ship involved in the case, it could also be confirmed that shipbuilding was suspended caused by financial reasons, not by Shanghai Zhenhua Company. The cost of shipbuilding incurred before the termination of contracts should be borne by Nantong Kanghai Company and Minsheng Leasing Company, and be deducted from the settlement of the shipbuilding amount of 17.5 million yuan. 6. The first-instance judgment ordered Shanghai Zhenhua Company to pay interests to Nantong Kanghai Company at 8% annual interest rate, which was without legal basis. Nantong Kanghai Company argued to the court that the first-instance judgment was correct and the original judgement should be maintained. The ships involved in the case were not built, Nantong Kanghai Company did not obtain the ship involved, the advance payment paid by Nantong Kanghai Company should be returned and the interests should be paid as agreed in the contract. Minsheng Leasing Company argued to the court that the appeal should be rejected in accordance with law. As far as the shipbuilding and sales contracts were concerned, Minsheng Leasing Company was not the proper subject. When the financial leasing contracts and the tripartite agreements were terminated, Minsheng Leasing Company had no relation with the rights and obligations under the shipbuilding and sales contracts involved, and should not bear any liability for the dispute caused by the termination of shipbuilding and sales contracts between Nantong Kanghai Company and Shanghai Zhenhua Company. Even if Minsheng

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Leasing Company was confirmed to be the proper subject of the contract, it had no default when fulfilling the contracts, and should not bear any liability. The claims lodged by Nantong Kanghai Company to the court of first instance were showed as follows: 1. Shanghai Zhenhua Company and Minsheng Leasing Company should return the advance payment for shipbuilding RMB17.5 million yuan jointly and severally; 2. Shanghai Zhenhua Company and Minsheng Leasing Company should compensate the interest loss calculated in 8% annual interest rate (from April 13, 2011 to the date of judgment); 3. The court acceptance fee should be borne by Shanghai Zhenhua Company and Minsheng Leasing Company. Facts confirmed by the court of first instance: Shanghai Zhenhua Company and Nantong Kanghai Company signed two shipbuilding and sales contract basically similar in contents on January 8, 2011, to buy two 47,500-ton bulk-cargo ship (hull number was DD026, DD027 respectively). Both of the shipbuilding and sales contracts stipulated that “the first installment is 8.75 million yuan; the second installment is 52.5 million yuan. The conditions of the payment of second installment are when the purchaser receives the original copy of L/G for the second installment of advance payment established by seller bank, when the purchaser receives the original copy of payment order, and when the purchaser confirms that it has received the original copy of commencement certificate signed by the representatives of the seller, classification society and purchaser”. The contracts also stipulated that “all the payments paid by the purchaser before the ship delivery have the character of advance payment. If the purchaser cancels or dissolves the contract in accordance with the rights given by the articles in the contact, the seller should unconditionally and immediately returned all the payments by installments of contract price paid by the purchaser to the seller under this contract, … under this circumstance, if the seller has obligation to return the payments by installments, the seller should pay the interest of these payments of each installment to the purchaser at 8% annual rate, the interest period is from the date that the seller receives each installment of payment to the date that the seller returns and remits the money”. “If the purchaser breaks the contract, the seller has right to reserve all the money paid by the purchaser under this contract”. Shanghai Zhenhua Company sent the first installment payment order to Nantong Kanghai Company on March 21, 2011, Nantong Kanghai Company paid Shanghai Zhenhua Company 2 million yuan on March 13, 4 million yuan on May 4, and 7.5 million yuan on May 31. The aforementioned payment was 17.5 million yuan in total, including the first installment of payment for ship DD026, 8.75 million yuan, and the first installment of payment for ship DD0267, 8.75 million yuan. In order to raise the funds, Nantong Kanghai Company transferred the aforementioned two shipbuilding contracts to Minsheng Leasing Company, who would pay the money that had not been paid under the shipbuilding contracts and gain the ownership of the two aforementioned ships, then Minsheng Leasing Company would charter the ships to Nantong Kanghai Company in form of financial lease, for this reason, Nantong Kanghai Company and Minsheng Leasing Company signed two financial leasing contracts and two bilateral agreements on transferring shipbuilding contract (hereinafter referred to as bilateral agreements). The contents of

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the two bilateral agreements were basically the same, which stipulated that “Nantong Kanghai Company continues to fulfill all the obligations except for obligation of payment under the shipbuilding contract, Minsheng Leasing Company will pay the second to the fifth installment of payment to Shanghai Zhenhua Company under the shipbuilding contract, but Nantong Kanghai Company should pay the self-raised fund 8.75 million yuan, 5% of the total cost for the second installment of shipbuilding payment under the shipbuilding contract, the self-raised portion should be paid to the Minsheng Leasing Company’s specified account according to the written notice of Minsheng Leasing Company at least 5 banking days before the first payment of Minsheng Leasing Company is expected to expire, Minsheng Leasing Company will uniformly pay the money to Shanghai Zhenhua Company”. “In the circumstance of Shanghai Zhenhua Company’s not breaking the agreement, if Minsheng Leasing Company failed to fulfill the obligation of paying the ship’s price in time attributable to itself, Minsheng Leasing Company should be liable for breach of contract of delaying payment to the shipyard, if the shipyard claims to Nantong Kanghai Company while Nantong Kanghai Company suffers actual loss, Minsheng Leasing Company should compensate for it.” Nantong Kanghai Company, Shanghai Zhenhua Company and Minsheng Leasing Company singed two tripartite agreements basically similar in contents on shipbuilding and sales contract for ship DD026 and ship DD027 (hereinafter referred to as tripartite agreements). The tripartite agreements stipulated “Shanghai Zhenhua Company confirms to agree to Nantong Kanghai Company transferring the shipbuilding contract to Minsheng Leasing Company, Minsheng Leasing Company shall pay the second to the fifth installment under the shipbuilding contract, Minsheng Leasing Company promises to pay the money for shipbuilding according to the rules of the payment stipulated by shipbuilding contract”. As to the building of ship DD026, China Classification Society issued the shipbuilding commencement certificate, the representatives of Nantong Kanghai Company, Minsheng Leasing Company and Classification Society signed the commencement certificate on August 16, 2011, and Minsheng Leasing Company gained the original copy of the commencement certificate on September 8. On September 7, 2011, Jiangsu Bank Nantong Branch issued the L/G for the second installment of advance payment, the amount guaranteed was 52.5 million yuan, Minsheng Leasing Company was beneficiary, the employee of Nantong Branch, TIAN Longjia, sent the L/G directly to Minsheng Leasing Company’s LING Weitong, due to not receiving the second installment of advance payment for ship DD026 on schedule, to reduce the loss of deposit, Shanghai Zhenhua Company required Minsheng Leasing Company to return the aforementioned L/G to Jiangsu Bank Nantong Branch, Minsheng Leasing Company sent the L/G back to Nantong Branch in January, 2012. As to the building of ship DD027, there was no signature of Minsheng Leasing Company on the commencement certificate for ship DD027, and Shanghai Zhenhua Company did not inform Minsheng Leasing Company to pay the second installment of advance payment or issued the L/G for the second installment of advance payment.

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On July 30, 2013, Shanghai Zhenhua Company issued the Notification for Termination of Contract to Nantong Kanghai Company, to terminate shipbuilding contracts for DD026 and DD027. On December 24, 2015, Nantong Kanghai Company filed a lawsuit against Minsheng Leasing Company to the court of first instance and applied to add Shanghai Zhenhua Company as the third party, it required to terminate the financial leasing contracts signed by Nantong Kanghai Company and Minsheng Leasing Company, and it required Minsheng Leasing Company to compensate the advance payment, 17.5 million yuan, and the loss of interests. After the trail, the court of first instance made No. 69 Case Civil Judgement and No. 24 Case Civil Judgement, terminating the financial leasing contracts signed by Nantong Kanghai Company and Minsheng Leasing Company and rejecting Nantong Kanghai Company’s other claims. The aforementioned judgement held that “after termination of financial leasing contracts, the rights and liabilities of different parties resumed to that before the contract signed. The shipbuilding contract transference bilateral agreements signed by the Plaintiff and the Defendant and the tripartite agreements about ship building and sales contract signed by the Plaintiff, the Defendant and the third party, were terminated at the same time as the agreement signed for fulfilling the financial leasing contract. The Plaintiff resumed the purchaser status in the shipbuilding and sales contracts”. Nantong Kanghai Company did not satisfy with the judgment and lodged an appeal, Tianjin High People’s Court dismissed the appeal and affirmed the original judgement. To fulfill the shipbuilding contracts, Shanghai Zhenhua Company paid the fees as followed: the first installment for diesel engine, 3.256 million yuan, the deposit for diesel generating sets, 1.44 million yuan, part of the first installment for steering engines, 200 thousand yuan, payment for manhole covers and etc., 389,381.76 yuan, payment for steel board 3,487,126.03 yuan, technical service fee for ship design, 2.31 million yuan, technical service fee for detailed design and production design, 1.18 million yuan, classification society’s plan approval, inspection and certificate service fee, 1.218 million yuan, Australia plan approval fee and tax fee, 10,505.16 yuan, the poundage for L/G, 17,500 yuan. The court of first instance held that the case was the dispute over shipbuilding and sales contracts, the issues of this case was that: 1. whether the tripartite agreements were terminated; 2. the default conducts of the three parties after termination of contracts; 3. whether Shanghai Zhenhua Company and Minsheng Leasing Company should return advance payment to Nantong Kanghai Company. 1. Whether the tripartite agreements were terminated No. 69 Case and No. 24 Case civil judgments of the court of first instance were legally effective, Nantong Kanghai Company, Shanghai Zhenhua Company and Minsheng Leasing Company, as the parties of the aforementioned cases, should be restricted to the aforementioned judgments. When the aforementioned judgments terminated the financial leasing contract signed by Nantong Kanghai Company and Minsheng Leasing Company, they confirmed that the bilateral agreements and the tripartite agreements were terminated at the same time, Nantong Kanghai Company

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resumed the purchaser status in the shipbuilding and sales contracts, while Shanghai Zhenhua Company, as ship builder of the shipbuilding and sales contracts, had legal relation of shipbuilding and sales contracts with the ship purchaser, Nantong Kanghai Company, according to the shipbuilding and sales contract, the 17.5 million yuan paid by Nantong Kanghai Company to Shanghai Zhenhua Company was to fulfill the obligation of paying the first installment under the contracts, so the dispute caused by the returning the money naturally belonged to the dispute caused by shipbuilding contracts, therefore Nantong Kanghai Company had right to require Shanghai Zhenhua Company to return the shipbuilding advance payment in accordance with the shipbuilding and sales contracts. Shanghai Zhenhua Company denied that the tripartite agreements had been terminated, then held that Nantong Kanghai Company had no right to claim to it in accordance with the tripartite agreements, however, it did not provide evidence to overturn the aforementioned effective judgments, so the reason was untenable, the court of first instance did not support it. 2. The default conducts of the three parties after termination of the contracts According to shipbuilding and sales contracts for ship DD026 and DD027, the conditions for payment of ship purchaser paying the second installment includes three items: 1. the purchaser received the original copy of L/G for the second installment of advance payment established by seller bank; 2. the purchaser received the original copy of payment order; 3. the purchaser confirmed that it had received the original copy of commencement certificate signed by the representatives of the seller, classification society and purchaser. As far as ship DD026 was concerned, the first-instance court’s No. 69 Case effective judgement confirmed that “the materials provided by Shanghai Zhenhua Company could prove that Minsheng Leasing Company gained commencement certificate on September 8, 2011, Jiangsu Bang Nantong Branch issued the L/G for advance payment on September 7, 2011, of which the beneficiary was Minsheng Leasing Company, but it could not prove whether Minsheng Leasing Company had actually received the original copy of L/G for advance payment and the original copy of payment order, the court of first instance confirmed that the conditions of Minsheng Leasing Company’s paying the second installment had not been fulfilled, Minsheng Leasing Company’s conduct of not paying the second installment did not break the contract”. As to the commencement certificate, the aforementioned judgement confirmed that Minsheng Leasing Company had received the original copy, the three parties had no objection to it during the trial. As to the original copy of L/G for second installment, Shanghai Zhenhua Company supplemented an email that had passed notarization during the trial, the email recorded that Shanghai Zhenhua Company had required Minsheng Leasing Company to return the original copy of L/G for second installment, Minsheng Leasing Company inquired the bank address from Shanghai Zhenhua Company, and sent the original copy of L/G back to Jiangsu Bank Nantong Branch, therefore, it could be confirmed that Minsheng Leasing Company received the original copy of L/G for second installment, the email that Shanghai Zhenhua Company supplemented in this case was enough to

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overturn the confirmation to this fact in No. 69 Case effective judgement. As to the original copy of payment order, during the trial of No. 69 Case, Shanghai Zhenhua Company submitted the copy of EMS receipt showing that it sent the original copy of payment order to Minsheng Leasing Company, and the email. During the trial, Shanghai Zhenhua Company did not supplement other evidences except passing the email notarization, the aforementioned email was sent by Shanghai Zhenhua Company’s ZHOU Zhongbin to Minsheng Leasing Company’s LING Weitong, the main content was “the original copies of L/G for second installment and the payment order have been expressed to your company, the attachment are the scanning copy and express number”. According to the related regulations of the Civil Procedure Law of the People’s Republic of China, for regular factum probandum, as far as the evidence provided by the party could prove that the existence of the fact was highly probable, the court of first instance could confirm the fact, but for the fact that was confirmed by the effective judgement, the evidence’s probative force should reach the extent to overturn the fact, that was, the extent to which the opposite fact was established, Shanghai Zhenhua Company did not supplement new evidences in this case, there was no Minsheng Leasing Company’s reply in the email that had passed notarization, the EMS receipt was a copy without the record of Minsheng Leasing Company’s signing situation, therefore the evidence provided by Shanghai Zhenhua Company could not prove that Minsheng Leasing Company had received the original copy of payment order, not enough to overturn the confirmation to the fact by No. 69 judgement. As far as ship DD027 was concerned, the first-instance court’s No. 24 judgement confirmed that none of the three conditions of payment were fulfilled. During the trial, Shanghai Zhenhua Company also admitted that it did not issued L/G for second installment, and did not send the payment order. Pulling the threads together, one condition of payment for ship DD026 was not fulfilled, none of the three conditions of payment for ship DD026 was fulfilled, therefore, Minsheng Leasing Company’s not paying the second installment for two ships did not break the contracts, Nantong Kanghai Company naturally had no breach to contracts as well. 3. Whether Shanghai Zhenhua Company and Minsheng Leasing Company should return advance payment to Nantong Kanghai Company The Contract Law of the People’s Republic of China Article 97 stipulated that, remedies in case of termination upon termination of a contract, a performance which has not been rendered is discharged; if a performance has been rendered, a party may, in light of the degree of performance and the nature of the contract, require the other party to restore the subject matter to its original condition or otherwise remedy the situation, and is entitled to claim damages. Nantong Kanghai Company paid the advance payment, 17.5 million yuan, to Shanghai Zhenhua Company in accordance with the shipbuilding and sales contracts, and Nantong Kanghai Company had no fault in the termination of shipbuilding and sales contracts, it had right to require Shanghai Zhenhua Company to restore to original condition after the termination of contracts, so Shanghai Zhenhua Company should

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return the advance payment, 17.5 million yuan, charged from Nantong Kanghai Company to Nantong Kanghai Company, and should compensate Nantong Kanghai Company the interest loss according to the contracts. Since Nantong Kanghai Company had no fault in the termination of shipbuilding and sales contracts, Shanghai Zhenhua Company’s claim of reserving Nantong Kanghai Company’s advance payment to charge against its loss in shipbuilding lacked legal basis, the court of first instance did not support it. Minsheng Leasing Company did not actually occupy Nantong Kanghai Company’s advance payment, so it did not bear the liability of returning Nantong Kanghai Company’s advance payment. To sum up, according to the Contract Law of the People’s Republic of China Article 97, the first-instance judgment was that: 1. Shanghai Zhenhua Company should return Nantong Kanghai Company the advance payment 17.5 million yuan within ten days from the effective date of this judgment; 2. Shanghai Zhenhua Company should pay Nantong Kanghai Company the interest of the aforementioned money (2 million yuan should be calculated from April 13, 2011, 4 million yuan should be calculated from May 3, 2011, 4 million yuan should be calculated from May 4, 2011, 7.5 million yuan should be calculated from May 31, 2011, all of them should be calculated to the date of actual performance of duty within the period specified in this judgment, at 8% annual rate); 3. reject other claims of Nantong Kanghai Company. If Shanghai Zhenhua Company was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 126,800 yuan, should be borne by Shanghai Zhenhua Company. During the second trial, the parties did not submit new evidence materials. The facts found out by the first-instance court were backed up by related evidences, the court confirmed them. In addition, the court found out that: about the involved two ships DD026 and DD027, the financial leasing contracts’ numbers were MSFL-2011-0542-C-ZZ-001 and MSFL-2011-0542-C-ZZ-002 respectively, the first page of the contract recorded “Minsheng Financial Leasing” or “Minsheng Financial Leasing Service Contract”; the tripartite agreements’ number were MSFL-2011-0542-C-ZZ-001-BC and MSFL-2011-0542-C-ZZ-002-BC respectively, the first page of the agreements recorded “Minsheng Financial Leasing Service Contract”. The bilateral agreements’ numbers were MSFL-2011-0542-C-ZZ-001-ZR and MSFL-2011-0542-C-ZZ-002-ZR respectively, the first page of the agreements recorded “Minsheng Financial Leasing Service Contract”. The foreword of the tripartite agreements stipulated that: considering the shipbuilding and sales contract signed by Shanghai Zhenhua Company and Nantong Kanghai Company has been being fulfilled, in order to raise funds, after negotiated with Minsheng Leasing Company, Nantong Kanghai Company decided to gain funds by financial leasing, Minsheng Leasing Company would pay the money that had not been paid under the shipbuilding contract and bought the aforementioned ship, then Minsheng Leasing Company would gain the complete ownership of the ship, then it would charter the ship to Nantong Kanghai Company in form of

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financial lease, Shanghai Zhenhua Company confirmed to agree Nantong Kanghai Company transferring the shipbuilding contract to Minsheng Leasing Company, “party A, B and C … after friendly negotiation… hereby agree upon, and shall be bound by, the following terms for the matters concerning shipbuilding and financial leasing.” During the first instance, Shanghai Zhenhua Company instituted a counterclaim against Nantong Kanghai Company and Minsheng Leasing Company to the court of first instance, the court of first instance made (2016) Jin 72 Min Chu No. 1002 Civil Ruling (hereinafter referred to as Decision on counterclaim) on March 22, 2017, ruling against acceptance of Shanghai Zhenhua Company’s counterclaim on grounds that the Defendant of the counterclaim could only be the plaintiff of the principal claim, and that Shanghai Zhenhua Company’s listing Minsheng Leasing Company as a co-Defendant in the counterclaims did not meet the conditions for filing a counterclaim. The Decision on counterclaim did not record the contents informing the party of appeal right at the end. The court held that the case was the dispute over shipbuilding contracts. During the trial of the second instance, the three parties had no objection to the termination of financial leasing contracts and shipbuilding and sales contracts for ship DD026 and ship DD027, the fact that the advance payment, 17.5 million yuan, had been actually paid to Shanghai Zhenhua Company and had been returned, and the fact that the three conditions of the second installment for DD027 were not fulfilled. According to each party’s plea opinions and statements, the court confirmed the issues of the second instance as follows: 1. whether the tripartite agreements involved had been terminated; 2. whether the parties had breach of contracts; 3. whether there was a serious procedural error in the court of first instance. 1. Whether the tripartite agreements involved had been terminated The first article in the main judgement of the first-instance court for No. 24 Case and No. 69 Case was that: the financial leasing contracts signed by Nantong Kanghai Company and Minsheng Leasing Company, which numbers were MSFL-2011-0542-C-ZZ-001 and MSFL-2011-0542-C-ZZ-002 respectively, were terminated when the judgement was effective. The aforementioned main judgement did not include the termination of tripartite agreements, but both of the reasons for judgments for the aforementioned two cases explained that after financial leasing contracts were terminated, the tripartite agreements, signed for fulfilling financial leasing contracts, were terminated at the same time. Reason for judgement was the core contents of the judgement, which played an important role in identifying legal relationships and finding out legal liabilities. Although confirmation for some legal issue was not stated clearly by the main judgement, when it was explained in the reason for judgement, it would result in the legal restraint, however, it should meet the conditions as follows: firstly, the confirmation was the explanation aiming at the issues of the case; secondly, the matters involved in the confirmation had been comprehensively explained and debated by the parties in the former case; thirdly, the confirmation was a substantial confirmation; fourthly, the confirmation was cited in the latter case on one’s own

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initiative. Since the issues of No. 24 Case and No. 69 Case were: 1. whether the two parties of the financial leasing contracts had breach to contract, and whether the contract was terminated; 2. the rights and obligations of each party in shipbuilding contracts, and whether there was breach to contracts; 3. whether the amount of loss claim by Nantong Kanghai Company had factual and legal basis, it was not an issue in both of the two case whether the tripartite agreements were terminated, and during the trials of the aforementioned two cases and the case on appeal, although the tripartite agreements were involved, each party did not comprehensively explained and debated whether the tripartite agreements were terminated. Therefore, the explanations on whether the tripartite agreements were terminated in the reason for judgement for No. 24 Case and No. 69 Case did not result in the legal restraint to this case. About whether the tripartite agreements should be terminated. In this case, both the court of first instance and this court regarded it as an issue, and organized each party for abundant explanation and debate. Under the circumstance that the financial leasing contracts were terminated by No. 24 Case and No. 69 Case, the court held that: firstly, in the respect of the standard model of the contracts, the first pages of the financial leasing contacts and the tripartite agreements recorded “Minsheng Financial Leasing” or “Minsheng Financial Leasing Service Contract”, it should be confirmed that the aforementioned contracts were Minsheng Leasing Company’s specific service contracts for its financial leasing and related services. Secondly, in the respect of the numbers of tripartite agreements, there was coherence between the numbers of financial leasing contracts and that of tripartite agreements, the first six character of them were the same, and only difference was that “BC” was added as the tail of the agreements’ numbers. It should be confirmed that tripartite agreements had a strong correlation with the financial leasing contracts. Thirdly, in the respect of the contracts’ contents, the foreword of tripartite agreements clearly mentioned that “considering” the shipbuilding and sales contract signed by Shanghai Zhenhua Company and Nantong Kanghai Company has been being fulfilled, in order to raise funds, after negotiated with Minsheng Leasing Company, Nantong Kanghai Company decided to gain funds by financial leasing, Shanghai Zhenhua Company confirmed to agree Nantong Kanghai Company transferring the shipbuilding contract to Minsheng Leasing Company. It can be seen that the purpose of the tripartite agreements was to fulfill financial leasing contracts and shipbuilding and sales contracts. In addition, the foreword of tripartite agreements stipulated that the matters were “matters concerning shipbuilding and financial leasing”, the tripartite agreements Article 1 “Definition” stipulated that the words it used “had the same meaning with shipbuilding contract”, Article 2 “Transferring of rights and obligations under shipbuilding contract”, Article 3 “payment for ship” clearly involved the rearrangement of rights and obligations under shipbuilding and sales contract, Article 4 Paragraph 3 clearly stipulated that Shanghai Zhenhua Company confirmed to know that tripartite agreement was the arrangement concerning financial leasing, Minsheng Leasing Company would gain the ship building contract, pay the money, gain the complete ownership of the ship, charter the ship to Nantong Kanghai Company in form of financial lease and gain

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the rent. The above contents could also prove that the tripartite agreements were signed for the performance of the financial leasing contracts and the shipbuilding and sales contracts, and could not exist separately from the financial leasing contracts and the shipbuilding and sales contracts. In the case that the financial leasing contracts had been terminated in the No. 24 Case and the No. 69 Case and maintained by the judgment of the second instance, and the shipbuilding and sales contracts had been unanimously approved of termination by each party, the tripartite agreements should be determined to be terminated as well. The court did not support Shanghai Zhenhua Company’s corresponding appeal. 2. Whether the parties had breach of contracts The shipbuilding and sales contracts for DD026 and DD027 both stipulated the conditions for payment of the second installment as follows: 1. the purchaser received the original copy of L/G for the second installment of advance payment established by seller bank; 2. the purchaser received the original copy of payment order; 3. the purchaser confirmed that it had received the original copy of commencement certificate signed by the representatives of the seller, classification society and purchaser. As for the three payment conditions for the second installment for DD027, each party agreed that none of the them were achieved. Therefore, Minsheng Leasing Company, as the main subject of payment, did not break of contract, neither was Nantong Kanghai Company. About whether the payment conditions for the second installment for DD027 were achieved. According to the facts found out by the court of first instance, the original Minsheng Leasing Company. As for whether the original payment order was obtained by Minsheng Leasing Company, although the No. 69 Case confirmed that whether Minsheng Leasing Company actually received it could not be proved, Shanghai Zhenhua Company added an email during the first trial of this case, which was enough to overturn the fact confirmed by the No. 69 Case’s effective judgment confirmation. As for whether the original payment order was actually received by Minsheng Leasing Company, although Shanghai Zhenhua Company submitted the (2017) Hu Dong Zheng Jing No. 2354 Notary in the first instance, proving that Shanghai Zhenhua Company’s ZHOU Zhongbing had sent an email to Minsheng Leasing Company’s LIN Weitong, and copied to Nantong Kanghai Company’s WANG Qing, to inform that the original payment order for the second installment and the L/G for the second installment of advance payment had been sent to Minsheng Leasing Company’s LIN Weitong via express, and the e-mail was attached with the scanning copies of L/G, payment notice and EMS receipt, however, the documents involved in the payment conditions of the contract should be originals instead of electronic documents. The available evidence was insufficient to prove that Minsheng Leasing Company actually received the original payment order. Under this circumstance, the payment conditions for the second installment for the ship DD026 had not been fulfilled, so Minsheng Leasing Company and Nantong Kanghai Company did not have any breach of contract.

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In the case that the shipbuilding and sales contracts and tripartite agreements were all terminated, and Nantong Kanghai Company did not break the contracts, Shanghai Zhenhua Company’s holding the 1.75-million-yuan advance payment no longer had legal or contractual basis, it should return the money to Nantong Kanghai Company. Regarding the calculation of interest on advance payment, although the “purchaser’s terminating contract” stipulated in Chapter 10 of the shipbuilding and sales contract was not consistent with this case, the Notice of Termination of Contract sent by Shanghai Zhenhua Company to Nantong Kanghai Company on July 30, 2013, clearly stated that the basis for the termination of the contract was the relevant contents in “Chapters 10, 11 and 12 of the contract”, and after comprehensive considering that Nantong Kanghai Company had no default, the 17.5-million-yuan advance payment was long-term occupied by Shanghai Zhenhua Company from 2011, and Nantong Kanghai Company objectively had capital loss, the judgment of first instance confirmed that it was proper that Shanghai Zhenhua Company should pay the interests of advance payment at an annual rate of 8% to Nantong Kanghai Company, the judgement should be maintained. As to whether the three parties actually reached an agreement to suspend the second installment, although Minsheng Leasing Company stated in the trial of the first instance that “and in fact, the three parties agreed to suspend the second installment, but there was no written document”, Nantong Kanghai Company did not explicitly confirm it and there was no other evidence to support it. Therefore, the existing evidence in this case was not enough to confirm that the three parties had agreed to suspend the second installment, the court did not support the Shanghai Zhenhua Company’s relevant claim. 3. Whether there was a serious procedural error in the court of first instance. Shanghai Zhenhua Company claimed that there was a serious procedural error in the court of first instance, the main reasons of which were that the court of first instance did not give it right to appeal against the Decision on counterclaim, and that the judgement of the first instance exceeded the claim. In this regard, the court held that, on one hand, after Shanghai Zhenhua Company received the Decision on counterclaim, it did not file a complaint on the Decision on counterclaim to the court of first instance or this court, and according to the 2016 edition of the “Civil Litigation Document Style”, the civil decision (for the inadmissibility of counterclaims) did not require the contents of the right to appeal at the end. The Decision on counterclaims was made in accordance with the style requirement and were not inappropriate. Therefore, the above reasons of Shanghai Zhenhua Company could not be established. However, though Shanghai Zhenhua Company’s counterclaim against the existence of shipbuilding loss was not accepted by the court of first instance, Shanghai Zhenhua Company could still claim rights separately. On the other hand, regarding whether the first-instance judgment’s confirming the termination exceeded Nantong Kanghai Company’s claim in the first instance, thus forming a judgment exceeding claims. Nantong Kanghai Company’s first-instance complaint had clearly involved the tripartite agreements, and its claims was in fact

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dependent on the confirmation of No. 24 Case and No. 69 Case that the tripartite agreements had been terminated, while Shanghai Zhenhua Company and Minsheng Leasing Company’s defenses both involved the tripartite agreements (Shanghai Zhenhua Company claimed that tripartite agreements were legal, valid and had not been terminated, Minsheng Leasing Company claimed the contractual basis of tripartite agreements had disappeared), the issue was lifted on the dispute over whether tripartite agreements had been terminated. As mentioned above, since the tripartite agreements were signed for performance of the financial leasing contracts and the shipbuilding and sales contracts, they could not exist separately from the financial leasing contracts and the shipbuilding and sales contracts. Therefore, the judgment of the first instance judgment confirming that the tripartite agreements were terminated, did not exceed the claims. Accordingly, there was no serious procedural error in the court of first instance. In conclusion, Shanghai Zhenhua Company’s appeals could not be established, and should be dismissed; the result of the first-instance judgement was not inappropriate, and should be maintained. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 126,800 yuan, should be borne by Shanghai Zhenhua Heavy Industry Qidong Ocean Project Co., Ltd. The judgement is final. Presiding Judge: GENG Xiaoning Acting Judge: LI Shanchuan Acting Judge: ZHANG Xin September 30, 2017 Clerk: SUN Chao

Shanghai Maritime Court Civil Judgment Ningbo Feng Hu An He Investment Partnership (Limited Partnership). v. Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. et al. (2016) Hu 72 Min Chu No.2915 Related Case(s) None. Cause of Action 234. Dispute over maritime security contract. Headnote Judgment in favor of plaintiff lender in default of appearance by defendant borrower and guarantor, plaintiff given priority charge over guarantor’s vessel. Summary Plaintiff sued Defendant Shanghai Hong Sheng Gang Tai Shipping Co. Ltd (the borrower) and Tai Zhou Gang Tai Shipping Co., Ltd. (the guarantor) for breach of a maritime security contract. Plaintiff argued that it was the creditor of the loan and guarantee contract, and that the Defendants did not perform their obligations of payment and breached their contract. The Defendants did not appear in the proceedings, and the Court found fully in favour of the Plaintiff. The Court ordered that the Defendants should complete their payment as required under the contract with interest, and the Plaintiff should have the priority over the guarantor’s vessel for compensation to the extent of the mortgage guarantee.

Judgment The Plaintiff: Ningbo Feng Hu An He Investment Partnership (Limited Partnership). Domicile: Room 1913, Building 11, Meishan Avenue Business Center, Beilun District, Ningbo, Zhejiang. Legal representative: ZHENG Hualing, general manager of the partnership. Agent ad litem: MO Qingbin, lawyer of Shanghai Wanzhong Law Firm. Agent ad litem: WANG Lei, lawyer of Shanghai Wanzhong Law Firm. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_44

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The Defendant: Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. Domicile: Room 1001, No.53 Huangpu Road, Hongkou District, Shanghai. The Defendant: Taizhou Gang Tai Shipping Co., Ltd. Domicile: Room 604-606, Oriental Constellation A, Tengda Road, Luqiao District, Taizhou, Zhejiang. With respect to the case arising from dispute over loan agreement secured by a ship between the Plaintiff, Ningbo Feng Hu An He Investment Partnership (Limited Partnership), and the Defendants, Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. (hereinafter referred to as Shanghai Hong Sheng) and Taizhou Gang Tai Shipping Co., Ltd. (hereinafter referred to as Taizhou Gang Tai), the Plaintiff filed an action to the court on November 1, 2016. The court entertained the case on the same day and organized a collegiate panel in accordance with the law and held a hearing in public on March 7, 2017. WANG Lei, as the agent ad litem of the Plaintiff, appeared in court to attend the hearing. The Defendants, Shanghai Hong Sheng Gang Tai Shipping Co., Ltd and Taizhou Gang Tai Shipping Co., Ltd., were summoned by the court according to law and, without justifiable reasons, did not appear in court to attend the hearing. The court held the trial by default according to law. Now the case has been concluded. The Plaintiff alleged that: China Construction Bank Limited Shanghai Hongkou Branch (hereinafter referred to as the “Construction Bank”) signed RMB Liquidity Loan Contract No.507123620130001 with the Defendant Shanghai Hong Sheng on November 26, 2013. The amount of the loan was RMB18.4 million yuan (the following currencies are all in RMB), and the loan period was one year from December 2, 2013 to December 1, 2014, and the interest rate was fixed at 6%. If the loan under the contract was overdue, the penalty interest rate would be 50% higher than the loan interest rate. At the same time, the contract stipulated that the loan repayment would be paid on a monthly basis, and the principal would be repaid in one lump sum. The settlement date was fixed on the 20th day of each month. On the same day, in order to ensure the effective performance of the loan contract, the Defendant Taizhou Gang Tai and the Construction Bank both signed a mortgage agreement No.507123620130001. The Defendant Taizhou Gang Tai agreed to mortgage the ship “Gang Tai 2” bulk carrier under its name (ship registration No.070506000233) to the Construction Bank. Mortgage guarantee was provided to the Construction Bank for the aforementioned bank loan issued to the Defendant Shanghai Hong Sheng. The scope of the guarantee was all the debts under the contract, including but not limited to the total loan principal, interest (including compound interest and penalty interest), liquidated damages, compensation, etc. After the signing of the mortgage contract, the Construction Bank and the mortgagor jointly handled the registration procedures for ship mortgage and obtained the ship mortgage registration certificate on December 2, 2013. The above contracts were witnessed by the lawyers of Shanghai Zhi Yi Xing Law Firm, and a certificate was issued. According to the application of the Defendant Shanghai Hong Sheng,

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the Construction Bank issued a loan of 18.4 million yuan on December 6, 2013, and according to the loan transfer certificate, the loan period was fixed from December 6, 2013 to December 5, 2014. After the expiration of the above loan contract, due to the Defendant Shanghai Hong Sheng’s failure to repay the loan due, Shanghai Hong Sheng applied to the Construction Bank to extend the term of the loan. After inspection, the Construction Bank agreed to sign RMB Loan Extension Agreement with the Defendant Shanghai Hong Sheng, the mortgagee DING Weimin, the Defendant Taizhou Gang Tai, and the guarantor DING Genyou on December 31, 2014. The contract re-agreed the loan amount to be 16,926,000 yuan. The maturity date of the loan was December 4, 2015, and the loan interest rate was a fixed rate which was the CCB LPR interest rate plus 50 basis points (namely 6%). Meanwhile, the mortgagor, DING Weimin, the Defendant, Taizhou Gang Tai, and the guarantor, DING Genyou, continued to provide guarantee for the loan of the Defendant Shanghai Hong Sheng. However, on February 11, 2015, the Construction Bank learned that the Defendant Shanghai Hong Sheng, could go bankrupt and the company’s management, including the actual controller DING Genyou, had gone missing. The news had been confirmed by many media and staff of Shanghai Hong Sheng. Therefore, according to the loan agreement signed by the Construction Bank and the Defendant Shanghai Hong Sheng, in the event that the Defendant Shanghai Hong Sheng had serious difficulties in operation or the financial situation deteriorated, the legal representative or the chief executive could not perform his duties properly, or the Construction Bank could determine that the Defendant Shanghai Hong Sheng might endanger the creditor’s rights, the Construction Bank should have the right to announce the maturity of the loan immediately and require the Defendant Shanghai Hong Sheng to repay the principal, interest, and other expenses of all outstanding and undue debts under the loan contract immediately. After that, the Construction Bank sued the two Defendants in the Shanghai Maritime Court on October 19, 2015, and the Shanghai Maritime Court accepted the lawsuit of the Construction Bank on November 4, 2015. On November 20, 2015, China Construction Bank Corporation Shanghai Branch transferred all the claims to the China Cinda Asset Management Corporation Co., Ltd. Shanghai Branch Corporation (hereinafter referred to as “Cinda”). On December 29, the transfer of creditor’s rights was published in Wen Hui Daily. The Construction bank applied for withdrawal of the proceedings to the Shanghai Maritime Court because of the transfer of creditor’s rights to Cinda on June 15, 2016, and the Shanghai Maritime Court granted it in court and issued a ruling. On July 18, 2016, Cinda signed Debt Transfer Agreement with the Plaintiff to transfer creditor’s rights to the Plaintiff. In the agreement, the parties confirmed that the book value of the debt was RMB16,350,679.47 yuan by May 31, 2016; the interest receivable was RMB606,171.91 yuan; and the interest of collection was 0 yuan. The yield was RMB676,882.46 yuan. The sum of the principal and interest was RMB17,633, 733.84 yuan. After that, on October 2, 2016, Cinda announced the transfer of creditor’s rights on Wen Hui Daily.

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The Defendant Shanghai Hong Sheng had not fulfilled the obligation of repayment until now, and the Defendant Taizhou Gang Tai had not fulfilled the corresponding mortgage guarantee obligations after the loan expired. So the Plaintiff filed a suit to the court that: 1. the Defendant Shanghai Hong Sheng should immediately reimburse the Plaintiff the principal of RMB16,350,679.47 yuan, interest and overdue interest of RMB1,283,054.37 yuan (calculated until May 31, 2016) and overdue interest from June 1, 2016 to the total fulfillment date (taking the principal of 16,350,679.47 yuan as the base, the interest rate was calculated based on the fixed penalty interest rate of RMB Loan Extension Agreement, namely an increased 50% of the 6% interest rate of the loan). 2. The Defendant Taizhou Gang Tai should take the mortgage guarantee responsibility for the above-mentioned first payment obligation of the Defendant Shanghai Hong Sheng with “Gang Tai 2” bulk carrier (ship registration number: 070506000233) which was under its name. The Plaintiff had the right to apply for the auction and sale of the above collateral, and the proceeds would be given priority within the scope of the guarantee. 3. The court acceptance fee and the announcement fee should be jointly born by the two Defendants. The Defendant Shanghai Hong Sheng and the Defendant Taizhou Gang Tai did not respond to the pleas. Evidentiary materials provided by the Plaintiff to support its allegations: Evidence 1. RMB Liquidity Loan Contract (contract No.507123620130001) and (2013) Hu Zhi Lv Jian Zi No.119 Certificate, to prove that there was a loan contractual relationship between the Construction Bank and the Defendant Shanghai Hong Sheng. The agreed loan amount, the term of the loan, the interest rate of the loan, the method of repayment, the overdue penalty interest rate, and the signing process of the contract were witnessed by the lawyer of Shanghai Zhi Yi Xing Law Firm. Evidence 2. Mortgage Contract (contract No.507123620130001), (2013) Hu Zhi Lv Jian Zi No.119 Certificate, Registration Certificate of the Ship Mortgage and the detailed information of ship, to prove that the Defendant Taizhou Gang Tai assumed mortgage guarantee responsibility for the loan of the Defendant Shanghai Hong Sheng and agreed on the mortgage to the Construction Bank of “Gang Tai 2” bulk carrier under the name of the Defendant Taizhou Gang Tai and that the signing process of the mortgage contract was witnessed by the lawyer of Shanghai Zhi Yi Xing Law Firm. At the same time, the registration of the mortgage of the ship had been registered, and the Construction Bank obtained the registration certificate of the ship mortgage on December 2, 2013. Evidence 3. RMB Loan Extension Agreement (contract No.507123620130001-1), to prove that the Construction Bank and the Defendant Shanghai Hong Sheng had re-agreed on the loan amount to be RMB16,926,000 yuan. The loan interest rate was a fixed rate of 6%. And the Defendant Taizhou Gang Tai provided collateral for the above loan of the Defendant Shanghai Hongsheng. Evidence 4. Contract for the Transfer of Assets between China Construction Bank Corporation Shanghai Branch and Cinda (Contract No.CCB2015008-SH) and

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Notice of Transfer of Creditor’s Rights between China Construction Bank Corporation Shanghai Branch and Cinda, to prove that on November 20, 2015, China Construction Bank Corporation Shanghai Branch transferred creditor’s rights to Cinda and made an announcement on December 29 in Wen Hui Daily. Evidence 5. Debt Transfer Agreement and Announcement of the Transfer of Creditor’s Rights between Cinda and the Plaintiff, to prove that on July 18, 2016, Cinda transferred creditor’s rights to the Plaintiff, and the debt principal and interest of the creditor’s rights totaled 17,633,733.84 yuan up as of May 31, 2016. And on October 2, 2016, Cinda made a notice about the transfer of creditor’s rights in Wen Hui Daily. Evidence 6. Ningbo Maritime Court (2015) Yong Hai Fa Tai Deng Zi No.154 Civil Ruling, to prove that the Construction Bank applied for registration of the creditor’s rights to the loan secured by the collateral involved to the Ningbo Maritime Court. The court granted the permission to register. Evidence 7. Shanghai Hongkou District People’s Court, (2015) Hong Min Wu (Shang) Chu Zi No.115 Civil Judgment, to prove that the Defendant Shanghai Hong Sheng violated the loan contract and failed to repay the principal with interest, which constituted a breach of contract. The Construction Bank announced the acceleration of maturity of the loan by filing a lawsuit, and claimed the relevant rights. The civil judgment entered into force by the court confirmed the relevant facts. The Defendant, Shanghai Hong Sheng, and the Defendant, Taizhou Gang Tai, did not appear in court to issue cross examine opinions about the Plaintiff’s evidential materials, nor did they provide any evidence. The court holds that two Defendants did not appear in court and did not submit any evidence which shall be considered that the two Defendants gave up their rights. Further, the evidential materials provided by the Plaintiff are original, conforming to the conditions of evidence stipulated by law that constitute the chain of evidence. Therefore, the court confirms that they are the conclusive evidence for the case. The evidence provided by the Plaintiff can prove that the facts stated by it are true. The court confirms the facts described by the Plaintiff. The court finds out that: On November 26, 2013, the Construction Bank, as a lender (Party B) and the Defendant Shanghai Hong Sheng as the borrower (Party A), signed RMB Liquidity Loan Contract, No.507123620130001, for a loan amount of 18.4 million yuan. The term of loan was one year (from December 2, 2013 to December 1, 2014). The loan interest rate was a fixed interest rate which was 6%. The repayment method of this contract was to pay interest on a monthly basis, and the principal would be repaid in one lump sum. The settlement date was fixed on the 20th day of each month. The penalty interest rate for overdue loans under this contract was 50% higher than that of the loan interest rate. Loan interest was calculated from the day the loan was transferred to the loan issuance account. The loan interest under this contract was calculated on a daily basis (and the daily interest rate = the annual interest rate/360). If Party A failed to pay interest on the settlement date as stipulated in the contract, compound interest should accrue

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from the next day. Article 10 of the contract stipulates the two parties’ liabilities for breach of contract and the remedial measures for the situation when Party B’s claims were endangered. The third point listed eight “situations that may endanger the claims of Party B”. The fourth point of “Party B relief measures” (four) was “to declare the loan to be immediately expired and party A is required to immediately repay the principal, interest, and expenses of all debts due and not yet due under this contract”. Cost arising from the breach of any agreement of this contract by Party A (including but not limited to the actual costs of litigation incurred, arbitration fees, property protection fees, travel expenses, execution fees, assessment fees, auction fees, notarial fees, delivery fees, announcement fees, lawyer fees, etc. which occurred to Party B as a result of Party A’s breach of contract) should be born by Party A. On the same day, the Defendant Taizhou Gang Tai as the mortgagor (Party A) and the Construction Bank as the mortgagee (Party B) signed the contract of mortgage No.507123620130001 to ensure the performance of RMB Liquidity Loan Contract No.507123620130001 signed by Shanghai Hong Sheng and the Construction Bank and to guarantee the realization of the creditor’s rights of the Construction Bank. The Defendant Taizhou Gang Tai was willing to set up a mortgage on “Gang Tai 2” bulk carrier (ship registration No.070506000233) to provide mortgage guarantee for the debts owed by the debtor and the Construction Bank in accordance with the main contract. The scope of the guarantee was all debts under the main contract. Including but not limited to all principal and interest (including compound interest and penalty interest), liquidated damages, compensation, and other payments to be made by the debtor to Party B. The expenses incurred by Party B in realizing the creditor’s rights and security rights (including but not limited to the actual costs of litigation incurred, arbitration fees, property preservation fees, travel expenses, execution fees, assessment fees, auction fees, notarial fees, delivery fees, announcement fees, lawyer fees etc.). After the signing of the mortgage contract, the Construction Bank and the Defendant Taizhou Gang Tai jointly handled the registration procedures for the ship mortgage and obtained the registration certificate of the ship mortgage on December 2, 2013. The certificate recorded: The ship name was “Gang Tai 2”; the ship registration No.070506000233; the Ship owners was Taizhou Gang Tai; the Mortgagee was Taizhou Gang Tai; the mortgagor was the Construction Bank; the date of registration for the mortgage was November 29, 2013; the amount of secured claims was 18.4 million yuan; and the period of payment was from December 2, 2013 to December 1, 2014. The lawyer of Shanghai Zhi Yi Xing Law Firm issued (2013) Hu Zhi Lv Jian Zi No.119 Certificate for witnessing the signing of the above RMB Liquidity Loan Contract and Mortgage Contract on December 4, 2013. On December 6, 2013, the Construction Bank issued a loan of 18.4 million yuan to the Defendant Shanghai Hong Sheng. According to the loan transfer certificate, the loan period was fixed from December 6, 2013 to December 5, 2014 by the Construction Bank. The Construction Bank, as the lender (Party B), and the Defendant Shanghai Hong Sheng as the borrower (Party A), Taizhou Gang Tai, as the guarantor (Party C), and the legal representative of the Defendant Taizhou Gang Tai, DING Genyou,

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and DING Weimin, signed the agreement on Extension of RMB Loan Agreement on December 31, 2014. Since Party A was unable to repay the loan under No.507123620130001 RMB Liquidity Loan Contract (hereinafter referred to as “the original loan contract”), it applied to Party B to extend the term of the loan. After examination, Party B agreed that Party A should be allowed to postpone the repayment, and party C agreed to provide the guarantee. The three parties had concluded this agreement by a consensus. Party B agreed to extend the loan repayment for the principal borrowed by Party A under the original loan contract. The amount for extension was 16,926,000 yuan, and the period of extension was 12 months. After the extension, the maturity date of the loan was December 4, 2015. The sum of the original loan period and the duration of the extended period was 24 months. The loan interest rate was a fixed rate 6% that was the LPR interest rate (at the time of the loan extension under this agreement, the LPR interest rate referred to the One-year RMB loan prime rate of China Construction Bank Corporation on the working day before the extension date. Since then, when the loan interest rate was adjusted in accordance with the previous agreement, the LPR interest rate referred to the One-year RMB loan prime rate of China Construction Bank Corporation on the working day before the adjustment date) plus 50 basis points. The interest rate remained unchanged during the period of the extension. The penalty interest rate for overdue loans under this agreement was 50% higher than that of the loan interest rate. The repayment method was that 500,000 yuan should be repaid on the 21st day of each month, and the remaining principal would be paid in one lump sum. Party C agreed to provide a guarantee for the loan after the extension. If Party C was the guarantor of the original loan contract, the rights and obligations were still performed in accordance with the terms of the mortgage contract No.507123620130001. Party C shall be responsible for timely completion, if it was necessary to apply for the corresponding procedures such as renewal of registration and renewal of insurance. After the entry into force of this Agreement, the original loan contract should continue to be valid, and the rights and obligations of both Party A and B should still be performed in accordance with the original loan contract, but where the original agreement was inconsistent with this agreement, this Agreement shall prevail. On February 25, 2015, the Construction Bank, as the Plaintiff, sued the Defendants DING Weimin, Taizhou Gang Tai, DING Genyou, and the third party Shanghai Hong Sheng in the Shanghai Hongkou District People’s Court, and requested the Defendants DING Weimin, Taizhou Gang Tai, and DING Genyou to undertake the guarantee responsibility or mortgage responsibility. The Shanghai Hongkou District People’s Court made (2015) Hong Min Wu (Shang) Chu Zi No.115 Civil Judgment on August 19, 2015 after it tried the case: “the Construction Bank learned that Shanghai Hong Sheng might be closed down, and the company’s management, including the actual controller DING Genyou, had recently gone missing, on February 11, 2015. The news had been reported by many media, and Shanghai Hong Sheng staff also confirmed it. At the same time, Shanghai Hong Sheng defaulted on the loan principal and interest, which is in violation of the contract’s obligation of repayment. Therefore, according to the loan contract signed

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by the Construction Bank and Shanghai Hong Sheng, the Construction Bank has the right to declare the loan as expired immediately and request Shanghai Hong Sheng to repay the principal, interest, and other expenses of all maturity and undue debts under the loan contract immediately. … The third party, Shanghai Hong Sheng, failed to fulfill its debt service obligation under the contract, and constituted a breach of contract. Moreover, the operating condition during the loan extension period deteriorated, endangering the claims of the construction bank. The Construction Bank announced the loan was due in advance according to the stipulations of RMB Working Capital Loan Contract and RMB Loan Extension Agreement. The reason is justified. Shanghai Hong Sheng should return the remaining principal of the loan to the Construction Bank, as well as the interest and overdue interest calculated according to the contract.” The judgement came into effect. The court also finds out that: The Construction Bank sued two Defendants in the court on October 19, 2015. The court accepted the case on November 4, 2015. The case number was (2015) Hu Hai Fa Shang Chu Fi No.2979. During the hearing in the court, on November 20, 2015, China Construction Bank Corporation Limited Shanghai Branch signed Asset Transfer Contract with Cinda to transfer all the creditor’s rights and assets including the creditor’s rights for the loan debt involved to Cinda in the form of a package sale. The principal amount of the creditor’s rights on the base date was 16,350,724.09 yuan, and the debt interest was 606,171.91 yuan. Both parties jointly announced the assignment of the creditor’s rights and debts in Wen Hui Daily on December 29, 2015, requiring the debtor and the guarantor to immediately fulfill the principal and interest repayments obligation or corresponding guarantee responsibilities stipulated in the main creditor’s rights contract and guarantee contract to Cinda from the date of the announcement. On June 15, 2016, the Construction Bank applied to the court to withdraw the lawsuit, and the court granted it. On July 18, 2016, Cinda signed Creditor’s Rights Transfer Agreement with the Plaintiff. Cinda transferred the creditor’s rights of the loan involved to the Plaintiff. Both parties confirmed that the book value of the creditor’s rights under this agreement as of May 31, 2016 (the base date of transfer) was 163,506,679.47 yuan, 606,171.91 yuan for the interest receivable, 0 yuan for the collection of interest, and 676,882.46 yuan for the compound interest; the sum of the original principal plus interest was 176,337,333.84 yuan. On October 2, 2016, Cinda and the Plaintiff jointly announced the notification of assignment of creditor’s rights and debt collection in Wen Hui Daily, requiring the borrower and guarantor to fulfill their obligations and assumed corresponding legal liabilities stipulated in the corresponding contract (agreement) to the Plaintiff. The court further finds out that: On December 2, 2015, the Construction Bank applied for the registration of creditor’s rights to the Ningbo Maritime Court due to the announcement of the Ningbo Maritime Court’s announcement of “Gang Tai 2” bulk carrier owned by Taizhou Gang Tai, requesting the repayment of loan principal of 16,350,679.47 yuan with interest of 797,707.98 yuan from the auction of “Gang

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Tai 2” bulk carrier (tentatively calculated until November 4, 2015), and provided Mortgage Contract, Registration Certificate of Ship Mortgage, RMB Working Capital Loan Contract, RMB Loan Extension Agreement, and the acceptance notice and adducing evidence notice of (2015) Hu Hai Fa Shang Chu Zi No.2979 of the court as evidence. Ningbo Maritime Court issued (2015) Yong Hai Fa Tai Deng Zi No.154 Civil Ruling on December 4, 2015, allowing the application of the Construction Bank to apply for the registration of creditor’s rights. Afterwards, Ningbo Maritime Court successfully auctioned “Gang Tai 2” bulk carrier according to law. The court holds that: This case is the dispute over loan contract secured by a ship, which belongs to the scope of the case specially accepted by the maritime court. RMB Working Capital Loan Contract and RMB Loan Extension Agreement signed by the Construction Bank and the Defendant Shanghai Hong Sheng, as well as Mortgage Contract signed by the Construction Bank and the Defendant Taizhou Gang Tai, are the true intentions of the parties signing the contract. They are not in violation of the law and regulations and are legally established and legally valid. All parties signing the contract shall strictly abide by the stipulations of the contract. According to the facts ascertained, the Construction Bank had already granted the loan according to the contract, and the Defendant Shanghai Hong Sheng’s failure to fulfill the debt service obligation according to the contract constituted a breach of contract. After negotiations, the Construction Bank agreed to the extension of the original loan. However, during the extension of the loan, the Defendant Shanghai Hong Sheng experienced a deterioration in operating conditions, endangering the creditor’s rights of the Construction Bank; that the Construction Bank declared the loan to expire in advance in accordance with the provisions of RMB Working Capital Loan Contract and RMB Loan Extension Agreement and required the Defendant Shanghai Hong Sheng to return the remaining principal of the loan and the corresponding interest and overdue interest is in accordance with contractual and legal requirements. The Defendant Shanghai Hong Sheng should bear the corresponding liability for breach of contract. The Defendant Taizhou Gang Tai, as the mortgagor, provided the ship mortgage for the Defendant Shanghai Hong Sheng’s loan issued by the Construction Bank. Now the Defendant Shanghai Hong Sheng is in default, so the Defendant Taizhou Gang Tai should bear the agreed mortgage guarantee responsibility. According to the stipulations of Mortgage Contract involved, the scope of the mortgage guarantee liability that the Defendant Taizhou Gang Tai should bear was all the debts under the main contract, including but not limited to all the principal, interest (including the compound interest and the default interest), other payments that the debtor should pay to the creditor, and expenses incurred by the creditor to realize its creditor’s rights and security rights (including but not limited to legal fees and announcement fees). According to the agreement of RMB Loan Extension Agreement, the Defendant Taizhou Gang Tai, as the guarantor of the original loan contract, shall still perform its relevant rights and obligations in accordance with the agreement of the mortgage contract and it has the obligation to complete the renewal of registration.

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Article 7 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Laws in Cases concerning the Acquisition, Management and Disposal of Assets Formed by Non-performing Loans of State-owned Banks by Financial Asset Management Companies stipulates that where the debtor fails to repay the loan within the time limit, if the interest calculation method agreed in the original loan contract does not violate the provisions of laws and regulations, the agreement is valid. Where there is no agreement or the agreement is unclear, the interest and the compound interest shall be calculated in accordance with the regulations of the People’s Bank of China on the Administrative Provisions on RMB Interest Rates. Article 9 stipulates that after a financial asset management company accepts a secured creditor’s rights, it can obtain a mortgage on the creditor’s right according to law, and the original mortgage registration shall remain valid. Article 10 stipulates that if the debtor signs the agreement on assignment of creditor’s rights or the notification on assignment of creditor’s rights or signs the notice on collection of debt, the time limit for the action will be suspended. If the debtor’s rights transfer notice or notice issued by the original creditor’s bank in a national or provincial influential newspaper has the debt collection content, the notice or circular may be used as evidence of the suspension of the time limit for the action. Article 2 of the Supplementary Notice of the Supreme People’s Court on Issues Related to the Acquisition and Disposal of Bank non-performing assets by Financial Asset Management Companies stipulates that if state-owned commercial banks (including state-owned holding banks) transfer non-performing loans to financial asset management companies or financial asset management companies acquire and dispose of non-performing loans, the secured creditor’s rights shall be transferred at the same time without obtaining the consent of the guarantor, and the guarantor shall continue to bear the guarantee responsibility for the transferee within the scope of the original guarantee without the consent of the guarantor. The agreement in the guarantee contract that the change of the contract requires the consent of the guarantor is not binding on the creditor to transfer the creditor’s rights. In this case, Asset Transfer Contract signed by China Construction Bank Corporation Limited Shanghai Branch and Cinda and Creditor’s Rights Transfer Agreement signed by Cinda and the Plaintiff also represented the true intentions of the parties signing the contract. The signing and announcement procedures meet the above requirements of the Supreme People’s Court. The court confirms that the two creditor’s rights transfers are legal and effective. The Plaintiff has the right to claim the liability for breach of contract under the loan contract from the Defendant Shanghai Hong Sheng and to claim the corresponding mortgage guarantee liability from the Defendant Taizhou Gang Tai. The Defendant Shanghai Hong Sheng shall repay the remaining loan principal and the corresponding interest and the overdue interest to the Plaintiff as agreed in the contract. The Defendant Taizhou Gang Tai, as the mortgage guarantor, shall assume the mortgage guarantee responsibility for the above debts of the Defendant Shanghai Hong Sheng within the agreed mortgage guarantee scope. Considering the mortgaged ship provided by the Defendant Taizhou Gang Tai has been auctioned by the court according to law, the Plaintiff has the right to be given priority to

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be compensated within the scope of the mortgage guarantee. If the Defendant Taizhou Gang Tai assumes the mortgage guarantee responsibility, the Plaintiff has the right to claim compensation from the Defendant Shanghai Hong Sheng accordingly. To sum up, in accordance with of the Contract Law of the People’s Republic of China Article 60 Paragraph 1, Article 205, Article 206 and Article 207, the Guaranty Law of the People’s Republic of China Articles 46 and Article 53, the Provisions of the Supreme People’s Court on Scope of Cases Admissible to Maritime Courts Article 48, the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Laws in Cases concerning the Acquisition, Management, and Disposal of Assets Formed by Non-performing Loans of State-owned Banks by Financial Asset Management Companies Article 7, Article 9 and Article 10, the Supplementary Notice of the Supreme People’s Court on Issues Related to the Acquisition and Disposal of Bank Non-performing Assets by Financial Asset Management Companies Article 2, and the Civil Procedure Law of the People’s Republic of China Article 144, the judgment is as follows: 1. The Defendant Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. shall repay the principal amount of loan of RMB163,506,679.47 yuan to the Plaintiff Ningbo Feng Hu An He Investment Partnership (Limited Partnership) within ten days from the effective date of this judgment, and the interest and overdue interest in amount of RMB128,305,504.37 yuan calculated till May 31, 2016, and the overdue interest from June 1, 2016 to the day of full settlement (based on the principal amount of RMB163,506,679.47 yuan and at the interest rate 9% per annum); 2. The Defendant Taizhou Gang Tai Shipping Co., Ltd. shall undertake the mortgagor’s responsibility for the above-mentioned debt of the Defendant Shanghai Hong Sheng Gang Tai Shipping Co., Ltd., and the Plaintiff Ningbo Feng Hu An He Investment Partnership (Limited Partnership) has the right in priority to be compensated within the scope of the mortgage guarantee from the proceeds of the judicial auction of “Gang Tai 2” bulk carrier (ship registration number: 0705060000233) owned by the Defendant Taizhou Gang Tai Shipping Co., Ltd. If the Defendant Taizhou Gang Tai Shipping Co., Ltd. assumes the aforesaid mortgage guarantee responsibility, it has the right to claim recourse compensation from the Defendant Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. If the Defendant Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. and the Defendant Taizhou Gang Tai Shipping Co., Ltd. fail to fulfill their monetary payment obligations within the time stipulated in this judgment, they shall double the payment of debt interest during the period of delay in performance in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB127,602.40 yuan, and the announcement fee in amount of RMB560 yuan, totaling RMB128,162.40 yuan, shall be

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jointly born by the Defendant Shanghai Hong Sheng Gang Tai Shipping Co., Ltd. and the Defendant Taizhou Gang Tai Shipping Co., Ltd. If the Plaintiff and the Defendants are not satisfied with the judgment, they may, within fifteen days upon service of this judgment, submit a statement of appeal with duplicates according to the number of other parties, to appeal to the Shanghai High People’s Court. Presiding judge: KE Yonghong Judge: CHEN Lei People’s Juror: YANG Jianye March 7, 2017 Clerk: XIE Yizhou

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 60 The parties shall fully perform their respective obligations in accordance with the contract. …… Article 205 The borrower shall pay the interest at the prescribed time. Where the time of interest payment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, if the loan term is less than one year, the interest shall be paid together with the principal at the time of repayment; if the loan term is one year or longer, the interest shall be paid at the end of each annual period, and where the remaining period is less than one year, the interest shall be paid together with the principal at the time of repayment. Article 206 The borrower shall repay the principal at the prescribed time. Where the time of repayment was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, the borrower may repay at any time; and the lender may demand repayment from the borrower within a reasonable time. Article 207 Where the borrower failed to repay the loan at the prescribed time, it shall pay delayed repayment interest in accordance with the contract or the relevant stipulations of the state. 2. Guaranty Law of the People’s Republic of China Article 46 The scope of guaranty of mortgage includes the principal debt and the interest thereof, default fine, compensation for damage and expenses for enforcing the mortgage, unless otherwise provided in the mortgage contract.

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Article 53 The mortgagee, who is not paid at the maturity of the obligation, may, through agreement with the mortgagor, be paid out of the proceeds from the conversion of the mortgaged property or from the auction or sale of the mortgaged property; if they fail to reach an agreement, the mortgagee may bring a lawsuit in a People’s Court. If the proceeds from the conversion of the mortgaged property or the proceeds from the auction or sale thereof exceed the claim, the balance shall be returned to the mortgagor; if the proceeds do not cover the claim, the difference shall be paid by the debtor. 3. Provisions of the Supreme People’s Court on the Scope of Cases Admissible to Maritime Courts Article 48 Cases of disputes over borrowing contracts secured against vessels, transport containers or port and waterway equipment and facilities, excluding cases whereby the parties concerned only file actions against disputes over the borrowing contracts. 4. Provisions of the Supreme People’s Court on Several Issues concerning the Application of Laws in Cases concerning the Acquisition, Management and Disposal of Assets Formed by Non-performing Loans of State-Owned Banks by Financial Asset Management Companies Article 7 If the debtor overdue the loan, the interest calculation method stipulated in the original loan contract does not violate the provisions of laws and regulations, that agreement shall be valid. If there is no agreement or the agreement is unclear, the interest and the compound interest shall be calculated in accordance with the regulations of the People’s Bank of China on the Administrative Provisions on RMB Interest Rates. Article 9 After accepting the secured creditor’s rights, the financial asset management company can obtain a mortgage right on the creditor’s rights according to law, and the original mortgage registration shall remain valid. Article 10 If the debtor signs the agreement on assignment of creditor’s rights or the notification on assignment of creditor’s rights or signs the notice on collection of debt, the time limit for the action will be suspended. If the debtor’s rights transfer notice or notice issued by the original creditor’s bank in a national or provincial influential newspaper has the debt collection content, the notice or circular may be used as evidence of the suspension of the time limit for the action. 5. Supplementary Notice of the Supreme People’s Court on Issues Related to the Acquisition and Disposal of Bank Bad Assets by Financial Asset Management Companies Article 2 If state-owned commercial banks (including state-owned holding banks) transfer non-performing loans to financial asset management companies or financial asset management companies acquire and dispose of non-performing loans, the

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secured creditor’s rights shall be transferred at the same time without obtaining the consent of the guarantor, and the guarantor shall continue to bear the guarantee responsibility for the transferee within the scope of the original guarantee without the consent of the guarantor. The agreement in the guarantee contract that the change of the contract requires the consent of the guarantor is not binding on the creditor to transfer the creditor’s rights. 6. Civil Procedure Law of the People’s Republic of China Article 144 Where the Defendant refuses to appear before the court without proper reason after being summoned by the people’s court, or he leaves the court session halfway without permission, the court may render a judgment by default.

Ningbo Maritime Court Civil Judgment Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe 72 Min Chu No.449 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 851. Cause of Action 236. Dispute over contract for construction of dock or harbor. Headnote Plaintiff earthwork contractor held to be entitled to recover balance of contract price for removal of earthwork, rejecting defendant’s argument that the work had not been properly done. Summary The Plaintiff and the Defendant signed Contract of the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project. After completion of the project, the Plaintiff requested the payment, and the Defendant failed to pay off the full amount under the contract. The Plaintiff sued the Defendant for the payment due. The Defendant argued that the Plaintiff did not meet the contract requirements for constructing the project. The court held that the Plaintiff had completed the project under the contract requirements. The Defendant should pay the amount due.

Judgment The Plaintiff: Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. Domicile: Jiangbei District, Ningbo, Zhejiang. Legal representative: WANG Nianhong, general manager of the company. Agent ad litem: SUN Guihua, male, born on Janurary 8, 1954, Han, the staff of the Plaintiff. The Defendant: Hong Run Construction Group Co., Ltd. Domicile: Xiangshan District, Zhejiang. Legal representative: ZHENG Hongfang, chairman of the company. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_45

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Agent ad litem: YU Guoji, male, project manager of the Defendant. Agent ad litem: SHI Quanpei, lawyer of Grandall (Ningbo) Law Firm. With respect to the case arising from dispute over maritime matters between the Plaintiff, Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. (hereinafter referred to as “Hong Teng”) and the Defendant, Hong Run Construction Group Co., Ltd. (hereinafter referred to as “Hong Run”), and after entertaining the case on March 8, 2017, the court legitimately constituted the collegiate bench to try a case in which the general procedure was followed. The court held a hearing in public on April 20, 2017. Legal representative of the Plaintiff, WANG Nianhong, agent ad litem of the Plaintiff, SUN Guihua, and agent ad litem of the Defendant, SHI Quanpei, appeared in the court to attend the hearing. As for the evidence submitted by the Defendant, the court convened both parties to a hearing on August 21, 2017. Now the case has been concluded. The Plaintiff, Hong Teng, claimed to the court that: 1. the Defendant was ordered to pay 207,368 yuan of project payment to the Plaintiff; 2. the acceptance fee was borne by the Defendant. Facts and reasons: on December 28, 2014, the Plaintiff and the Defendant signed Contract for the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project. After the contract was signed, the actual earthwork volume of the Plaintiff completed according to the contract was 16,497.60 m3 and was confirmed by the paper document of the Defendant’s construction builder on the spot. According to the contract article 3 “settlement method and unit price,” the Defendant should pay 907,368 yuan of project payment for the Plaintiff. On February 4, 2015, the Defendant paid 700,000 yuan of project payment in two times for the Plaintiff, and the balance 207,368 yuan was repeatedly requested by the Plaintiff; the Defendant had not paid it so far. The Defendant, Hong Run argued that: 1. the fact claimed by the Plaintiff was not true, and the quantity of the Plaintiff’s claim was not calculated according to the contract and the drawing, which was improper. After the Defendant’s statistical verification, the actual quantity of the Plaintiff completed was 13,069.31 m3. 2. The Plaintiff claimed that the settlement price was calculated at 55 yuan per cubic meter, which was not in conformity with the contract. Article 3 of the contract was agreed that the settlement price should be calculated at 50 yuan per cubic meter. The Plaintiff could get additional subsidy reward of 5 yuan per cubic meter by cooperating with the Defendant’s construction schedule actively, but Article 5 engineering quality requirement of the contract also required that the Plaintiff provide the Defendant with the relevant clearance certificate of transportation of the shipping distance not less than 8 km by land plus 48 km by sea, otherwise the Defendant would settle accounts at a unit price of not more than 40 yuan per cubic meter. After the signing of the contract between the two parties and until the completion of the project, the Plaintiff did not provide the Defendant with the clearance certificate of transportation and other relevant documents, formalities, and other relevant information as agreed in the contract, resulting in the Defendant being unable to report to the owner unit for settlement. Therefore, according to the

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contract agreement, the total price of the project completed by the Plaintiff should be calculated at 40 yuan per cubic meter as 522,772.4 yuan. 3. According to the contract agreement to settle accounts, in fact, the Defendant did not owe the Plaintiff’s project payment, and the Defendant overpaid project payment to the Plaintiff. The Defendant reserves the litigation right to request Plaintiff to return the money. 4. Article 4 payment method of the contract agreed that according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis, the balance was due in accordance with the circumstance of the owner’s progress payment. Although the project had been completed and the report had been submitted to the owner unit, the settlement of the owner unit was still under audit, and the Plaintiff was now asking for payment, so the condition and time limit of payment had not been met. In summary, the Defendant thought that the Plaintiff’s claim was inconsistent with the facts and lacked basis, so it requested to reject the Plaintiff’s claims. In order to prove its claims, the Plaintiff Hong Teng submitted the following evidence to the court: Evidence 1, the contract for the discarded disposal project of the earthwork of the Cheng Lang Bridge and the connection project, to prove the contractual rights and obligations of both the Plaintiff and the Defendant. Evidence 2, 11 certificates of party A’s engineering earthwork measurement, to prove the quantity of earthwork completed. Evidence 3, two invoice bookkeeping couplets, to prove that the Defendant had paid 700,000 yuan. In order to prove its defense, the Defendant, Hong Run submitted the following evidence to the court after the trial: Evidence 1, the catalogue of material and the policy basis that the Plaintiff should provide in accordance with the contract, including the clearance card (clearance certificate), certificate of temporary transit terminal operation corresponding to the clearance certificate, waste marine dumping permit, valid elimination settlement voucher, the proof of transport distance corresponding to the clearance certificate, and other materials required by the construction unit and the Defendant for the settlement audit. Evidence 2, Ningbo Municipal Engineering Preliminary Office certification, construction contract payment clause, to prove the fact that the project involved had not completed the progress of the project payment according to the contract. Evidence 3, the general description of the bill of quantity of the bidding documents for the construction of Cheng Lang Bridge and connection engineering, together with the evidence 1 to prove the basis stipulated in Article 5.2 of the contract between the Plaintiff and the Defendant, and the fact that the Plaintiff did not provide corresponding information, which affected the settlement between the Defendant and the construction unit. Evidence 4, Ningbo Fei Hong Foundation Engineering Co., Ltd. to prove the fact that all the broken materials of pile foundation pier and pile head in the foundation

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pit of bridge construction of the project involved (including 3# and 4#) were all brought out by the unit. After cross-examination, as for the evidence of the Plaintiff, the Defendant held that: there was no objection to evidence 1 and 3; there was objection to evidence 2, some of which was not part of the original documents; some could be confirmed, and some had repeated calculations, and the earthwork involved in 3# and 4# pile foundation pier and pile head were transported by the Defendant itself. As for the evidence of the Defendant, the Plaintiff cross-examined that: evidence 1 was that the Defendant applied the terms of the contract of carriage of construction slags (mud); the river channel dredged soil of this case was not land construction residue or mud, which was transported directly by water of the dredger. There was no transit terminal or settlement. The dumping permit should be applied for and provided by the Defendant. The Plaintiff had completed settlement materials. Evidence 2 could not prove delay of payment under the project progress but that the project of Cheng Lang Bridge had not been completed only. The contract has no provisions of the payment condition after the completion of the settlement. Evidence 3 has no binding effect on the Plaintiff. Evidence 4 had nothing to do with the Plaintiff’s claim, and the content of proof was false. Therefore, contrary to the facts, it did not have the power of proof. After investigation, the court held that: because the Defendant had no objection to evidence 1 and 3 of the Plaintiff, the admissibility of evidence 1 and 3 could be confirmed. Although the Defendant believed that part of the Plaintiff’s evidence 2 was not the original copy, after repeated comparisons by the court, the 11 certificate originals confirmed the apparent authenticity of evidence 2. As for the total earthwork involved in the proof because the Defendant submitted counter evidence, the probative force of the evidence would be reviewed in the analysis of the issue of dispute below. Evidence 1 of the Defendant was a relevant policy provision, and Measures for the Assessment and Management of Maritime Transport Vessels on the Construction Residue (Mud) of Ningbo (Trial) and Measures for the Assessment and Management of Temporary Transfer Terminal on the Construction Residue (Mud) of Ningbo (Trial) were valid until August 31, 2013. Whether this provisional evidence could prove the defense of the Defendant, that was and whether the unit price of the bill should be reduced should be judged by the merits of the case. Evidence 3 was a document between the Defendant and the construction unit, which was not binding on the Plaintiff and could only be used as a reference material to explain the meaning of the contract clauses involved between the Plaintiff and the Defendant, and its probative force would be reviewed in the analysis of the issue of dispute below combined with evidence 1. Evidence 2 was the original, and the admissibility was confirmed. Evidence 2 had no other evidence to verify, so its power was weak, and the content of the proof had nothing to do with the contract between the Plaintiff and the Defendant, nor could deny the admissibility of evidence 2 of the Plaintiff, so it was not confirmed. According to the statements of the parties and the valid evidence, the court finds out the facts as follows:

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On December 28, 2014, the Plaintiff, Hong Teng and the Defendant Hong Run signed Contract of the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project, which agreed that: Article 2 scope and content, comprehensive unit price for disposal of earthwork by ship of the main pier of the project and other parts, including all workers’ wages, insurance premiums, labor protection appliances, transport vessels, dumping charges, transportation charges, damage to machinery and equipment and maintenance fees, relevant handling fees of various services, the fine bills of the administrative law enforcement departments, maritime, water conservancy, port and shipping, environmental protection, production safety, the cost of civilized construction, various fees and taxes, and all other matters involved in disposal for the disposal of earthwork. Article 3 the settlement method and unit price, 3.1 the quantity of settlement was tentatively set at 12,000 m3; the quantity of 3# and 4# main bridge site earthwork was calculated according to the foundation pit volume (deducted the reserved backfill in the field), and the other parts were calculated according to measurement of the actual situation of the site; 3.2 Shipping earthwork disposal unit price was settled at RMB 50 yuan/cubic meter (unit price including invoicing and all costs), party B (refers to the Plaintiff) could get additional subsidy reward of 5 yuan/cubic meter with cooperating with the party A’s (refers to the Defendant) construction schedule actively; 3.3 the total estimated value was temporarily about 660,000 yuan, and the quantity of the project was settled according to the actual value. The unit price was carried out according to the 3.2. Article 4 method of payment, according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis. The balance was paid in accordance with the circumstance of the owner’s progress payment; the party B should provide the party A with invoices, which were tax deductible and in accordance with the financial system. Article 5 engineering quality requirement, after signing the contract, the Plaintiff should send a ship to carry out the agreed construction of the earthwork clearance and transport. From August 31, 2014 to June 4, 2015, the Defendant’s on-site personnel signed 11 certificates on the quantity of the Plaintiff’s transport of earthwork, to prove the total quantity of earthwork was 16,497.513 m3. In February 2015, the Defendant paid 700,000 yuan in two payments to the Plaintiff. The Plaintiff claimed to the Defendant that there was balance to be paid, and the dispute between the two parties was litigated. The court held that: the contract signed between the Plaintiff and the Defendant was an expression of the true consent between the parties. The content of which was lawful, should be confirmed as valid. The parties should perform their obligations in accordance with the contract. According to the claims of both parties, the issues of the case were: 1. the quantity of earthwork actually completed by the Plaintiff; 2. what criteria should be used to calculate the contract price; 3. whether the condition was met, the Plaintiff required the Defendant to pay immediately.

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1. As for the quantity of earthwork actually completed by the Plaintiff The Defendant claimed that the quantity of earthwork claimed by the Plaintiff had not been calculated in accordance with the contract and the drawing, which was improper. After the Defendant’s statistical verification, the actual quantity of the Plaintiff completed was 13,069.31 m3. The contract involved indicated that the quantity of settlement was tentatively set at 12,000 m3, and the quantity of 3# and 4# main bridge site earthwork was calculated according to the foundation pit volume (deducted the reserved backfill in the field), and the other parts were calculated according to measurement of the actual situation of the site. The 11 certificates provided by the Plaintiff showed that the quantity of 3# and 4# main bridge site earthwork was measured, calculated, and examined by the Defendant’s on-site personnel, and other parts of the earthwork were also confirmed by the Defendant’s on-site personnel, to prove that the total quantity of earthwork of the Plaintiff’s transport was 16,497.513 m3, the Defendant confirmed some of the evidence and accepted the identity of all signatories. Therefore, the evidence of the Plaintiff should be accepted without the Defendant’s sufficient evidence and reasons. In order to prove his defense, the Defendant provided counter evidence, evidence 4, but evidence 4 was not direct evidence, which could not negate the power of proof of the Plaintiff’s evidence; the Defendant also explained the duplication and expansion of the Plaintiff’s claim by some of the design drawings and on-site photographs. However, the calculation method of engineering quantity stipulated in the contract was not according to the drawings, but according to the field volume and field measurement to calculate, it was possible that there was a difference quantity between the drawing calculation and the field actual measurement calculation. Therefore, regarding the Defendant’s defense, both evidence and reasons were insufficient, and could not be adopted. The court confirmed that the actual quantity of earthwork completed by the Plaintiff was 16,497.513 m3. 2. What criteria should be used to calculate the contract price Articles 3.2 and 5.2 of the contract involved agreed on the settlement criteria, corresponding to different circumstances, the Plaintiff and the Defendant also according to different Articles to calculate the project price. Article 3.2 should be a normal calculation method, and Article 5.2 should be an exception. The Defendant relied on evidence 1 and 3 to prove that the Plaintiff’s conduct was in conformity with the circumstance stipulated in Article 5.2. The court held that the Plaintiff’s testimony was in conformity with the actual circumstance of the case. The permission for dumping wastes in the sea should be applied for by the construction unit. The assessment measure was aimed at the transport ship and the transit terminal, and the two trial provisions provided by the Defendant had become invalid. The Defendant submitted the discarded earthwork involved in the case to the Plaintiff for disposal by shipping, knowing that there could be no 8 km land transport. There was no violation of the Plaintiff or Defendant by the relevant

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administrative department during and after the abandonment of the earthwork by shipping by the Plaintiff. The Defendant had only made some general requests so far, no specific document or the name of material should be provided by the Plaintiff. The Defendant’s evidence and reasons were insufficient, and the price could not be calculated in the case in accordance with Article 5.2 of contract, and at the same time, the Defendant had not claimed and proved that the Plaintiff did not actively cooperate with the progress of construction. Therefore the case should calculate the price according to Article 3.2 of contract, that was, 55 yuan per cubic meter; the total price of the contract should be 907,363 yuan, excluding 70,000 yuan already paid by the Defendant; the Defendant still owed 207,363 yuan for the Plaintiff’s project payment. 3. Whether the condition was achieved, the Plaintiff required the Defendant to pay immediately Article 4 of the contract involved agreed that according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis. The balance was paid in accordance with the circumstance of the party A’s progress payment. Party B should provide party A with invoices, which were tax deductible and in accordance with the financial system. The Defendant accordingly claimed that the settlement of the owner unit was still under audit, and the condition and deadline the Plaintiff required for payment were not achieved now. The court held that evidence 2 provided by the Defendant was only indicated that “the Cheng Lang Bridge and the connection project had not completed settlement so far,” rather than aiming at the specific progress payment, which was not relevant to the terms of the contract. It had been more than two years since the Plaintiff completed the contract of the discarded disposal project of the earthwork. The corresponding progress payment of the project should have been put in place, and the Defendant was still in default, so it should bear the liability for breach of contract. To conclude, the Plaintiff’s claim was reasonable and the court should protect it. According to the Contract Law of the People’s Republic of China Article 107, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: The Defendant, Hong Run Construction Group Co., Ltd., shall pay 207,363 yuan of project payment to the Plaintiff, Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd., within 10 days after the judgment comes into effect. If the party against whom enforcement is sought fails to perform any other obligation during a period specified in a judgment, according to the Civil Procedure Law of the People’s Republic of China Article 64, the party against whom enforcement is sought shall pay double interest for the debt for the period of deferred performance. Court acceptance fee in amount of 4,411 yuan, shall be born by the Defendant, Hong Run Construction Group Co., Ltd.

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If not satisfied with this judgment, the parties, within fifteen days of the date of the judgment be delivered, can submit copies of the original petitions to appeal to the Zhejiang High People’s Court. Presiding Judge: HU Jianxin Acting Judge: SHAN Yajuan Acting Judge: LV Huizhi August 31, 2017 Acting Clerk: ZHENG Jing

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 107 If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. 2. Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 A party shall have the responsibility to provide evidence in support of its own propositions. Article 253 If the person subject to execution fails to fulfill his or her obligations in respect to payment of money within the time limit specified by a judgment or order or any other legal document, he or she shall pay a multiplied interest on the debt for the period of deferred fulfillment. If the person subject to execution fails to fulfill his or her other obligations within the time limit specified by a judgment or order or any other legal document, he or she shall pay a surcharge for the deferred fulfillment.

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Zhejiang High People’s Court Civil Judgment Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. v. Hong Run Construction Group Co., Ltd. (2017) Zhe Min Zhong No.681 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 843. Cause of Action 236. Dispute over contract for construction of dock or harbor. Headnote Affirming lower court decision holding plaintiff earthwork contractor to be entitled to recover balance of contract price for removal of earthwork, rejecting defendant’s argument that the work had not been properly done. Summary The Plaintiff and the Defendant signed Contract of the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project. After completion of the project, the Plaintiff requested the payment, and the Defendant failed to pay off the full amount under the contract. The Plaintiff sued the Defendant for the payment due. The Defendant argued that the Plaintiff did not meet the contract requirements for constructing the project. The court held that the Plaintiff had completed the project under the contract requirements. The Defendant should pay the amount due. Then the Defendant appealed, alleging the Respondent did not complete the project. The Zhejiang High People’s Court confirmed the first instance’s finding of facts and dismissed the case due to lack of sufficient evidence.

Judgment The Appellant (the Defendant of first instance): Hong Run Construction Group Co., Ltd. Domicile: Xiangshan County, Zhejiang. Legal representative: ZHENG Hongfang, chairman of the company. Agent ad litem: SHI Quanpei, lawyer of Grandall (Ningbo) Law Firm.

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The Respondent (the Plaintiff of first instance): Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. Domicile: Jiangbei District, Ningbo, Zhejiang. Legal representative: WANG Nianhong, general manager of the company. Agent ad litem: SUN Guihua, male, born on January 8, 1954, Han, the staff of the company. With respect to the case arising from dispute over maritime matters between the Appellant, Hong Run Construction Group Co., Ltd. (hereinafter referred to as “Hong Run”) and the Respondent, Ningbo Jiangbei Hong Teng Underwater Engineering Construction Co., Ltd. (hereinafter referred to as “Hong Teng”), the Appellant disagreed with the Ningbo Maritime Court (2017) Zhe 72 Min Chu No.449 Civil Judgment and lodged an appeal to the court. After entertaining the case on September 25, 2017, the court formed a collegiate panel and held a hearing in public on October 11, 2017. SHI Quanpei, agent ad litem of Appellant Hong Run, WANG Nianhong, legal representative of the Respondent Hong Teng, and SUN Guihua, agent ad litem of the Respondent Hong Teng, appeared in the court to attend the hearing. Now the case has been concluded. Hong Teng claimed to the first instance that: Hong Run was ordered to pay 207,368 yuan of the project payment and bear the court acceptance fee. Facts and reasons: on December 28, 2014, Hong Teng and Hong Run signed Contract for the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project. After the contract was signed, the actual earthwork volume of Hong Teng completed according to the contract was 16,497.60 m3 and was confirmed by the paper document of Hong Run’s construction builder on the spot; according to the contract Article 3 “settlement method and unit price”, Hong Run should pay 907,368 yuan of project payment for Hong Teng. On February 4, 2015, Hong Run paid 700,000 yuan of project payment in two payments, and the balance 207,368 yuan was repeatedly urged, had been paid. Hong Run argued in the first instance that: 1. Hong Teng claimed that the quantity of Hong Teng’s claim was not calculated according to the contract and the drawing, which was improper. After Hong Run’s statistical verification, the actual quantity Hong Teng completed was 13,069.31 m3. 2. Hong Teng claimed that the settlement price was calculated at 55 yuan per cubic meter, which was not in conformity with the contract. Article 3 of the contract agreed was that the settlement price should be calculated at 50 yuan per cubic meter, so Hong Teng could get an additional subsidy reward of 5 yuan per cubic meter for cooperating with Hong Run’s construction schedule actively, but Article 5 engineering quality requirement of the contract also agreed that Hong Teng must provide Hong Run with the relevant clearance certificate of transportation of the shipping distance not less than 8 km by land + 48 km by sea, otherwise Hong Run would settle accounts at a unit price of not more than 40 yuan per cubic meter. After the signing of the contract between the two parties until the completion of the project, Hong Teng did not provide Hong Run with the clearance certificate of transportation and other relevant documents, formalities, and other relevant information as agreed in the contract,

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resulting in Hong Run being unable to report to the owner unit for settlement. Therefore, according to the contract, the total price of the project completed by Hong Teng should be calculated at 40 yuan per cubic meter as 522,772.4 yuan. 3. According to the contract to settle accounts, in fact, Hong Run had not owed Hong Teng’s project payment, and Hong Run had overpaid project payment to Hong Teng. Hong Run would preserve the litigation right to claim Hong Teng to return. 4. Article 4 payment method of the contract agreed that according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis, the balance was paid in accordance with the circumstance of the owner’s progress payment. Although the project had been completed and the report had been submitted to the owner unit, the settlement of the owner unit was still under audit, and Hong Teng was now asking for payment, the condition and time limit of payment had not been met. In summary, Hong Run requested to dismiss Hong Teng’s claims. The court of first instance found out that: on December 28, 2014, Hong Teng and Hong Run signed Contract for the Discarded Disposal Project of the Earthwork of the Cheng Lang Bridge and the Connection Project, which agreed that: Article 2 scope and content, comprehensive unit price for disposal of earthwork by ship of the main pier of the project and other parts, including all workers’ wages, insurance premiums, labor protection appliances, transport vessels, dumping charges, transportation charges, damage to machinery and equipment and maintenance fees, relevant handling fees of various services, the fine bills of the administrative law enforcement departments, maritime, water conservancy, port and shipping, environmental protection, production safety, the cost of civilized construction, various fees and taxes, and all other matters involved in disposal for the disposal of earthwork. Article 3 the settlement method and unit price. 3.1 the quantity of settlement was tentatively set at 12,000 m3; the quantity of 3# and 4# main bridge site earthwork was calculated according to the foundation pit volume (deducted the reserved backfill in the field), and the other parts were calculated according to measurement of the actual situation of the site; 3.2. Shipping earthwork disposal unit price was settled at 50 yuan/cubic meter (unit price including invoicing and all costs), party B (refers to Hong Teng) could get additional subsidy reward of 5 yuan/ cubic meter with cooperating with the party A’s (referred to Hong Run) construction schedule actively; 3.3 the total estimated value was temporarily about 660,000 yuan, and the quantity of the project was settled according to the actual value. The unit price was carried out according to the 3.2. Article 4 method of payment, according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis. The balance was paid in accordance with the circumstance of the owner’s progress payment, so party B should provide party A with invoices, which were tax deductible and in accordance with the financial system. Article 5 engineering quality requirement. After signing the contract, Hong Teng should send a ship to carry out the agreed construction of the earthwork clearance and transport. From August 31, 2014 to June 4, 2015, Hong Run’s on-site personnel signed 11 certificates on the quantity of Hong Teng’s transport of earthwork, to prove that the

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total quantity of earthwork was 16,497.513 m3. In February 2015, Hong Run paid 700,000 yuan in two payments to Hong Teng. Hong Teng claimed against Hong Run that there was the balance was to be paid. The dispute between the two parties was litigated. The court of first instance held that: the contract signed between Hong Teng and Hong Run was an expression of the true consensual intent. The content was lawful, it should be confirmed as valid, and both parties should perform their obligations in accordance with the contract. According to the claims of both parties, the issues of the case were: 1. the quantity of earthwork actually completed by Hong Teng; 2. what criteria should be used to calculate the contract price; 3. whether the condition was met, Hong Teng required Hong Run to pay immediately. 1. As for the quantity of earthwork actually completed by Hong Teng Hong Run claimed that the quantity of earthwork claimed by Hong Teng had not been calculated in accordance with the contract and the drawing, which was improper. After Hong Run’s statistical verification, the actual quantity that Hong Teng completed was 13,069.31 m3. The contract involved agreed that the quantity of settlement was tentatively set at 12,000 m3. The quantity of 3# and 4# main bridge site earthwork was calculated according to the foundation pit volume (deducted the reserved backfill in the field), and the other parts were calculated according to measurement of the actual situation of the site. The 11 certificates provided by Hong Teng showed that the quantity of 3# and 4# main bridge site earthwork was measured, calculated, and examined by Hong Run’s on-site personnel, and other parts of the earthwork were also confirmed by Hong Run’s on-site personnel. To prove that the total quantity of earthwork of Hong Teng’s transport was 16,497.513 m3, Hong Run confirmed some of the evidence and accepted the identity of all signatories; therefore, the evidence of Hong Teng should be accepted without Hong Run’s sufficient evidence and reasons. In order to prove his defense, Hong Run provided counter evidence, evidence 4, but evidence 4 was not direct evidence, which could not negate the power of proof of Hong Teng’s evidence; Hong Run also explained the duplication and expansion of Hong Teng’s claim by some of the design drawings and on-site photographs too; however, the calculation method of engineering quantity stipulated in the contract was not according to the drawings, but according to the field volume and field measurement to calculate, it was possible that there was a difference quantity between the drawing calculation and the field actual measurement calculation. Therefore, in Hong Run’s defense, both evidence and reasons were insufficient, could not be supported. The court confirmed that the actual quantity of earthwork completed by Hong Teng was 16,497.513 m3. 2. What criteria should be used to calculate the contract price Articles 3.2 and 5.2 of the contract involved agreed on the settlement criteria, corresponding to different circumstances, Hong Teng and Hong Run also according to different Articles to calculate the project price. Article 3.2 should be a normal calculation method, and Article 5.2 should be an exception. Hong Run relied on

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evidence 1 and 3 to prove that Hong Teng’s conduct was inconsistent with the circumstance stipulated in Article 5.2. The court held that Hong Teng’s testimony was inconsistent with the actual circumstance of the case. The permission for dumping wastes in the sea should be applied for by the construction unit; the assessment measure was aimed at the transport ship and the transit terminal, and the two trial provisions provided by Hong Run had become invalid. Hong Run submitted the discarded earthwork involved in the case to Hong Teng for disposal by shipping, knowing that there could be no 8 km land transport; there was no violation of Hong Teng or Defendant by the relevant administrative department during and after the abandonment of the earthwork by shipping by Hong Teng; Hong Run had only made some general requests so far, so no specific document or the name of material should be provided by Hong Teng. Hong Run’s evidence and reasons were insufficient, so the price should not be calculated in the case in accordance with Article 5.2 of the contract. At the same time, Hong Run had not claimed and proved that Hong Teng did not actively cooperate with the progress of construction. Therefore the case should calculate the price according to Article 3.2 of the contract, that was, 55 yuan per cubic meter; the total price of the contract should be 907,363 yuan, excluding 70,000 yuan already paid by Hong Run; Hong Run still owed 207,363 yuan for Hong Teng’s project payment. 3. Whether the condition was achieved, Hong Teng required Hong Run to pay immediately Article 4 of the contract involved agreed that according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis. The balance was paid in accordance with the circumstance of the party A’s progress payment; party B should provide party A with invoices, which were tax deductible and in accordance with the financial system. Hong Run accordingly claimed that the settlement of the owner unit was still under audit, and the condition and deadline Hong Teng required for payment were not achieved now. The court held that evidence 2 provided by Hong Run only indicated that “the Cheng Lang Bridge and the connection project had not completed settlement so far”, rather than aiming at the specific progress payment, which was not relevant to the agreed content of the contract. It had been more than two years since Hong Teng completed the contract of the discarded disposal project of the earthwork, so the corresponding progress payment of the project should have been put in place. Hong Run was still in arrears with Hong Teng, so it should bear the liability for breach of contract. To conclude, Hong Teng’s claim was reasonable, and the court should accept it. According to the Contract Law of the People’s Republic of China Article 107, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the court made (2017) Zhe 72 Min Chu No.449 Civil Judgment on August 31, 2017: Hong Run should pay 207,363 yuan of project payment to Hong Teng. If the party against whom enforcement was sought failed to perform any other obligation during a period specified in a judgment, according to the Civil Procedure Law of the People’s Republic of China Article 64, the party against whom enforcement was

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sought should pay double interest for the debt for the period of deferred performance. Court acceptance fee of first instance in amount of 4,411 yuan, should be born by Hong Run. Hong Run was not satisfied with this judgment and appealed to the court. Hong Run asked to revoke the court of first instance’s judgement and change the judgment to reject the claims of Hong Teng according to law. Facts and reasons: 1. the court of first instance was incorrect in the determination of the quantity of earthwork actually completed by Hong Teng. According to Article 3.1 of the contract, “the quantity of 3# and 4# main bridge site earthwork was calculated according to the foundation pit volume (deducting the reserved backfill in the field).” Although the settlement list submitted by Hong Teng in the first instance of earthwork volume of North and South cushion caps calculated by Hong Teng on February 9, 2015, there was the signature of Hong Run’s construction personnel. The calculation was based on the drawing of the cap, rather than on the basis of the on-site volume to measure and calculate, and the total quantity of earthwork also did not reflect “deducted the reserved backfill in the field;” therefore, statement was specifically marked as, “the specific quantity was based on ZHENG Yaqin’s audit.” After ZHENG Yaqin’s examination, excluding the repeated calculation part of the cap and the transportation part of the packing and piers, the quantity of earthwork actually completed by Hong Teng should be 13,069.31 m3. 2. The court of first instance was incorrect in the determination of the price of the project. The contract agreed on the unit price of the earthwork volume separately in Articles 3.2 and 5.2. It was the agreement between the two parties to adopt different valuation methods under different circumstances, which was not as the court of first instance confirmed that Article 3.2 was a general clause and Article 5.2 was a special clause. According to the contract, Hong Teng must provide documents such as the clearance certificate of transportation as stipulated in Article 5.2, in order to settle the unit price in accordance with Article 3.2. Otherwise, it should be paid with the standard of 40 yuan per cubic meter. To say the least, Hong Teng would not get additional alternative reward of 5 yuan even if the price was calculated in accordance with Article 3.2 of the contract. According to the principle of “who claimed, who gave evidence,” Hong Teng claimed to receive the reward which should also be proved by its evidence. 3. The court of first instance was incorrect in the determination of the conditions for payment achieved. Article 4 of the contract agreed that the balance “should be paid according to the situation in place.” The progress payment in this case had not yet achieved the condition for payment. Hong Teng argued in the second instance that: 1. the quantity of earthwork claimed by Hong Teng was supported by the statements signed by the staff of Hong Run. Even though one of the documents contained the words “the specific quantity was based on ZHENG Yaqin’s audit”, it could not overthrow the proof of the remaining statements. 2. Hong Run could not prove that Hong Teng did not “actively cooperate with party A’s construction progress” in the performance of the contract, and there was no “8 km land transportation” in the case, and the examination method of the documents such as the clearance certificate of transportation provided by Hong Run were all ineffective, and it was also not aimed at the river

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mud at sea in this case. 3. The involved project was not the main part of the bridge construction project, and the settlement of its cost was not enough to affect the settlement of the whole project, and the Cheng Lang Bridge and the connection project had been put into use, the corresponding project payment of the owner of the bridge should be in place, and Hong Run should pay the fee. Hong Teng asked the court to dismiss the appeal and affirm the original judgment. During the second instance, Hong Teng did not submit new evidence. Hong Run submitted the invoice of Ningbo Municipal Engineering Preliminary Office to pay part of the project payment to Hong Run, to prove that the involved project payment was not paid in full. The payment condition of this case was not yet met. Hong Teng held that: the authenticity of the invoice had no objection, but there was no relation with the case, the owner’s payment was only for the overall progress of the project, not for the discarded disposal project of the earthwork; therefore, Hong Run could not achieve its purpose of proof. After the trial, the court held that the formal authenticity of the evidence could be confirmed, but the evidence was only part of the invoices of which the contractor of Cheng Lang Bridge and the connection project paid to Hong Run for the project payment, which was impossible to prove that the contractor had not yet paid to Hong Run completely for the cost of the discarded disposal project of the earthwork by shipping involved in the case. Therefore, the purpose of its proof was not confirmed. After the trial, the court confirmed the facts identified in the first instance. The court held that: the contract involved in the case was an expression of the genuine intentions of the parties. The content of which did not violate the prohibition provisions of the laws and regulations and should be confirmed as legal and valid. According to the claims of both parties, the court summarized and assessed the issues in the second instance of the case as follows: 1. Whether the court of first instance was correct in the determination of the quantity of earthwork actually completed by Hong Teng In the first instance, Hong Teng submitted 11 statements of the quantity of earthwork, which were all signed and confirmed by the staff of Hong Run. According to the 11 statements, between August 31, 2014 and June 4, 2015, the total quantity of earthwork completed of the Hong Run’s transport was 16,497.513 m3, only one of the statements dated February 9, 2015 marked as, “the specific quantity was based on ZHENG Yaqin’s audit”, while the other 10 statements were not marked that based on ZHENG Yaqin’s audit. Therefore, the court held that Hong Run only based its calculations on the contents marked on the statement of February 9, 2015, to require that the quantity of earthwork completed by Hong Teng was all according to ZHENG Yaqin’s audit and confirmation, and there was no factual basis. As for the disputed statement of February 9, 2015, the statement stated the quantity of earthwork of the south cap was 2,081.961 m3; the quantity of earthwork of the north cap was 1,909.726 m3; the quantity of earthwork outside the south and north caps was 351.6 m3. For the above 3 quantities of earthwork, Hong Run also admitted its evidence submitted in the first instance, Cheng Lang Bridge and Connection Project Audit form. Although the evidence material was not confirmed

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by the court of first instance because it did not have the signature and seal of any agent or unit, which did not meet the requirement of the form of evidence, the evidence was submitted by Hong Run itself. Therefore, Hong Run admitted itself to the quantity of earthwork above mentioned, and the court was also confirmed. In addition, as for the Hong Run’s claim that the quantity of 3# and 4# piers earthwork and the north and south cap were calculated repeatedly, the statement showed that the total volume was 1,203 m3 which was calculated repeatedly with cushion cap pit, and there was an opinion that another 855 m3 earthwork was transported by Hong Run, which should be deducted from the total quantity of 16,497.52 m3 claimed by Hong Teng. Because Hong Run did not submit any evidence to prove, the court could not support it. In summary, the original judgment had a factual basis for the determination of the quantity of earthwork actually completed by Hong Teng, and there was no improper determination in this regard. 2. How to calculate the contract price involved in the case Hong Run claimed that, Hong Teng did not provide documents such as the clearance certificate of transportation according to the contract, so the unit price should be settled at 40 yuan/cubic meter as stipulated in Article 5.2 of the contract; even if the unit price was calculated according to Article 3.2 of the contract, because Hong Teng could not provide relevant evidence of cooperating with Hong Run’s construction schedule actively, it could not receive an additional subsidy reward of 5 yuan/cubic meter. After investigation, Article 3.2 of the contract involved in the case agreed that “the unit price for the disposal of earthwork by ship was settled at 50 yuan/cubic meter (unit price including invoicing and all costs), and party B could get additional subsidy reward of 5 yuan/cubic meter with cooperating with the party A’s construction schedule actively”; Article 5.2 agreed that “party B must provide party A with the relevant clearance certificate of transportation of the shipping distance not less than 8 km by land + 48 km by sea, so that party A could report and settle accounts, party B should handle all relevant documents, formalities, and all other relevant materials in time, otherwise party A would settle accounts at a unit price of not more than 40 yuan per cubic meter. Earthwork must be disposed of in the marine dumping site stipulated in the permit, otherwise, party B should bear all the responsibilities.” The court held that, the contract involved did not make a specific agreement on what was meant by “the relevant clearance certificate of transportation of the shipping distance not less than 8 km by land + 48 km by sea,” and the both parties did not also enter into a supplementary agreement on it; according to the agreement of Article 3.1 of the contract, the quantity of disposal of the earthwork by shipping was tentatively confirmed at 12,000 m3. The total price was tentatively estimated about 660,000 yuan, so that the unit price was 55 yuan/cubic meter; there was no evidence indicating that the discarded disposal project of the earthwork of Hong Teng or Hong Run was investigated and dealt with by the administrative department for the problem of clearance certificate of transportation of the shipping; Hong Run had not submitted evidence to prove that it had requested Hong Teng to provide clearance certificate of transportation of the

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shipping after the completion of its contractual obligations until the prosecution in this case. Therefore, the court did not support Hong Run’s claim proposed in the lawsuit that Hong Teng failed to provide the relevant clearance certificate of transportation of the shipping according to the contract. The unit price of earthwork should be calculated at 40 yuan per cubic meter. As for whether Hong Teng could get an additional subsidy reward of 5 yuan/ cubic meter, the court held that, the bridge construction project had now been completed, and the project payment of Hong Run had received 85%, and in the case of estimating the total price of the project, the two sides had calculated the quantity of earthwork according to the unit price of 55 yuan/cubic meter, Hong Run should bear the burden of proof of its claim that it claimed Hong Teng did not cooperate with the construction schedule actively and should not get additional subsidy reward of 5 yuan/cubic meter. Now Hong Run could not give evidence, should bear the adverse consequence. In summary, the court held that the court of first instance’s calculation of the unit price of the project was appropriate. 3. Whether the condition was achieved, Hong Run paid the balance of project payment Hong Run claimed that according to the contract agreement, the balance “according to the condition in place to pay”, now the project was not completed settlement, the condition of the balance of project payment was not yet achieved. The court held that, although Article 4 of the contract agreed that “according to the completion of the project and after the owner’s project payment in place, to pay 70% of the project completed last month on a pro rata basis, the balance was paid in accordance with the circumstance of the party A’s progress payment”, whether the progress payment of the contract was in place or not, it was not equal to the settlement of the completion of the project; therefore, payment should not be made on whether the settlement of the completion of the project was completed. In addition, the work of the discarded earthwork completed by Hong Teng belonged to the preparatory work of the construction of the bridge project, which is more than 900,000 yuan of the project payment accounted for a very low proportion of the bidding price of about 200 million yuan in the Cheng Lang Bridge and connection project, and the project had now been completed. Therefore, the court did not support the claim of Hong Run that the condition of the balance of project payment was not yet achieved. To conclude, the contract in this case was legal, effective, and binding on both parties. Hong Teng had already fulfilled the contract obligation according to the contract, and Hong Run had paid part of the project payment, but still owed 207,363 yuan of project payment. It had a breach of contract and should bear the liability for repayment. The facts that the first instance judgment had identified were clear, and the application of the law was correct and the case was handled properly. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 4,413 yuan, shall be borne by Hong Run Construction Group Co., Ltd. The judgment is final. Presiding Judge: XU Xianghong Judge: WANG Jianfang Judge: KONG Fanhong October 26, 2017 Clerk: XU Yijing

Ningbo Maritime Court Civil Judgment Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2013) Yong Hai Fa Shang Chu Zi No.632 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 875 and page 890 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Co-Defendants carrier and actual carrier held jointly and severally liable for the deterioration of cargo as the pre-loading inspection report showed the cargo was sound. The compensation to be paid to Plaintiff shipper was 100% direct losses and 50% indirect losses suffered by shipper as a result of cargo deterioration. Summary Plaintiff shipper contracted with Defendant carrier to transport the cargo, bunkers, and delivered the same to the 19 fishing boats in the port of discharge. Carrier engaged Co-Defendant actual carrier to physically complete the transportation. After the bunkers were delivered, the fishing boats, while using the bunkers, suffered engine problems and the bunkers remaining on the boats were found to contain bitumen. The fishing boats incurred salvage fees, repair costs, tank washing fees and disposal of deteriorated bunkers fees. The fishing boats also suffered loss of profit, as they could not do fishing. Shipper paid about USD 550,000 to the fishing boats to indemnify the above-mentioned fees and costs incurred or suffered by them, and seek a recourse of the indemnification of about USD 550,000 paid to the fishing boats, together with claims for deterioration of the cargo, deteriorated bunkers storage fees and inspection fees in a total sum of about USD 250,000, from Co-Defendants. Court of first instance held that Co-Defendants were jointly and severally liable for 100% of the direct losses suffered by shipper (about USD 250,000), as the bunkers were sound prior to loading and the deterioration was presumed to take place during transportation. Court of first instance further held that Co-Defendants were jointly and severally liable for 50% of indirect losses arising from the deterioration of cargo (50% of about USD 550,000), as shipper was also faulty as it failed to inspect the bunkers before they were delivered to the fishing boats.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_46

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Judgment The Plaintiff: Ningbo Shun Ri Jin Business Co., Ltd. Domicile: Room 1001, No.43, Liuzhuang Lane, Haishu District, Ningbo, Zhejiang. Legal representative: SHEN Zhanghui, general manager of the company. Agent ad litem: LI Huibin, lawyer of Zhejiang Haoshang Law Firm. Agent ad litem: SHI Jie, lawyer of Zhejiang Haoshang Law Firm. The Defendant: Zhejiang Shengrong Shipping Co., Ltd. Domicile: Room 101–103, the first floor, building 2 Gongqian Road, Taohua Town, Putuo District, Zhoushan, Zhejiang. Legal representative: HU Qianlie, general manager of the company. The Defendant: Zhoushan Hongheng Shipping Co., Ltd. Domicile: No.1, the second floor, building B Gongqian Road. Taohua Town. Putuo District, Zhoushan, Zhejiang. Legal representative: WENG Yan, general manager of the company. The Defendant: RUAN Yongjiang Agent ad litem of the three Defendants: XU Delin, lawyer of Zhejiang Jinhan Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, Ningbo Shun Ri Jin Business Co., Ltd. (hereinafter referred to as Shun Ri Jin), and the Defendant, Zhejiang Shengrong Shipping Co., Ltd. (hereinafter referred to as Shengrong), and the Defendant, Zhoushan Hongheng Shipping Co., Ltd. (hereinafter referred to as Hongheng), the Plaintiff filed an action on September 6, 2013 to the court. After entertaining it, the court legitimately constituted the collegiate bench to try the case. During the period of proof, the Plaintiff applied for adding RUAN Yongjiang as the joint Defendant in the case, which was permitted by the court after investigation. As a result of the Plaintiff’s application, the court made (2013) Yong Hai Fa Shang Chu Zi No.632 Civil Ruling on October 30, 2013 to limit the right of the Defendants Hongheng and Shengrong to transfer, mortgage, or bareboat charter M.V. “Hong Heng 118” and M.V. “Sheng Rong 16”. The Plaintiff applied for forensic samples of the oil in the port of shipment, which was permitted by the court. The court held two hearings in public on November 20, 2013 and September 26, 2014, and the legal representative of Plaintiff, SHEN Zhanghui, agent ad litem of Plaintiff, LI Huibin, agent ad litem of the three Defendants, XU Delin, appeared in the court to attend the hearings, and witnesses MAO Mou, LIN Mou and SHEN Mou appeared in the court to give evidence and answer inquiry. Now the case has been concluded. The Plaintiff Shun Ri Jin claimed that: in January 2013, the Plaintiff, in order to cooperate with a person other than involved in the case, LIN Kequan to supply oil to the fishing boats in Fenghua area, bought 942.02 tons of No. 4 fuel oil in Shanghai Southern Suburb Supply Chain Management Co., Ltd. (hereinafter referred to as “Southern Suburb”), then commissioned the Defendant Shengrong for

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transporting and paid the freight. Shengrong delegated the Defendant Hongheng to carry by its M.V. “Hong Heng 118” actually. On February 4, 2013, M.V. “Hong Heng 118” began its voyage at Lianyungang Wuyang Chemical Dock, on February 6, it anchored after arriving in Zhoushan Shenjiamen sea area. On the afternoon of February 14, the batch of fuel oil was delivered to the destination, Tongzhao sea area, in Fenghua, and on the same day and the following day, it lightered directly to “Zhe Feng Yu 18,009, 18,010, 11,075, 11,076, 17,067, 17,068, 11,015, 11,016, 13,097, 13,098, 18,065, 16,066, 11,089, 11,090, 80,251, 22,077, 22,078, 16,001, 16,002” a total of 19 fishing vessels. Before the barges to supply the oil, the Plaintiff Shun Ri Jin entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. for the quantity inspection of the goods, they did not find loss of quantity, but the inspectors CHEN Jian violated the sampling code in the process, he only collected samples in the middle of the cabin. During the period from February 16, 2013 to February 18, the 19 fishing vessels went out for fishing, then, they had so many problems such as the main engines parking, unable to start, one after another. After the replacement of the oil pumps, they could start but the power attenuation was obvious, the main engine filters and pistons were seriously blocked, oil impurities and sediments were too many, resulting in piston rings, piston rods, cylinder liner, valve being damaged. Two of the ships “Zhejiang Feng Yu 22,077–22,078” were towed back to the harbor Shengjiamen in Zhoushan because of the loss of power at sea. As a result of the fishing season, most of the fishing vessels returned to the sea for working after having an emergency repairmen in the harbour. And they returned to the harbour to have permanent repairs after the fishing operation was completed. As the fuel oil could not continue to use, the Plaintiff Shun Ri Jin hired sand ship to recycle the residual oil on 19 fishing vessels to its chartered Fenghuaxiexing Oil Depot for temporary storage. In the case of all the involved fishing vessels owners’ fierce complaints because of the massive failure, the Plaintiff Shun Ri Jin and LIN Kequan reported it to the Fenghua Public Security Bureau immediately, the latter made investigative records to salesman ZHONG Yanfeng in Shanghai Southern Suburb Supply Chain Management Co., Ltd., the legal representative of Shengrong, HU Qianlie, the shipowner representative of M.V. “Hong Heng 118”, RUAN Jianguang, inspector CHEN Jian in Zhejiang Zhongheng Commodity Inspection Co., Ltd. and the shipowners of the 19 fishing vessels made Record of Investigation, and the Fenghua Public Security Bureau commissioned Tongbiao Standard Technical Services Ltd. (hereinafter referred to as Tongbiao), Zhenhai Laboratory tested samples on the loading and discharging port. April 25, 2013, the Plaintiff commissioned the Chinese Academy of Sciences, Ningbo Institute of Materials Technology and Engineering to test the samples of residual oil, they concluded that the impurities were mainly asphalt. The Plaintiff also commissioned the Shanghai Fanhuatianheng Insurance Public Shares Co., Ltd. and Shanghai Ejoy Insurance public Shares Co., Ltd. to investigate the accident, and to prove that the mass failure of the main engine of the fishing vessel was caused by the excessive sediment of the fuel oil. And they also evaluated the cost of repairing the damaged fishing vessels, towing,

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transportation, loss of fishing gears, loss of fishing and oil and the cost of loss of depreciation of oil products, etc. After the incident, in order to calm the situation as soon as possible, after the coordination of mediation by the relevant departments, the Plaintiff had made a payment to the shipowner of the damaged fishing vessels, including: the total cost of direct repairs of fishing vessels amounted to 822,670 yuan; the cost of fishing and producing amounted to 2,403,500 yuan, the cost of trawler towing and rescuing amounted to 35,000 yuan, the total loss of recycling oil and washing cabin costs amounted to 84,000 yuan, the cost of the salvage of the fishing gears amounted to 150,000 yuan; the loss of residual oil devaluation amounted to 1,554,333 yuan, total loss of oil due to impurity effect was 61,500 yuan, the cost of the residual oil storage and labour amounted to 144,400 yuan (to August 2013), the cost of various inspection amounted to 21,357 yuan, in summary, the Plaintiff suffered the total loss of 5,276,760 yuan because of the oil quality accident. In the trial, the Plaintiff increased the lawsuit request, and changed the cost of residual oil loss to 1,953,757.54 yuan, the residual oil storage and the labour expense loss were changed to 200,866 yuan (from April 2013 to November), the total lawsuit request losses amounted to 25,732,650.54 yuan. The Plaintiff Shun Ri Jin held the three Defendants as the carriers and the actual carriers of the goods, had the natural obligation to ship the consignment to the port of destination and deliver the goods safely and intactly, now they caused a loss to the Plaintiff and the negotiations failed. So the Plaintiff claimed to the court, required that the three Defendants should compensate for the loss of RMB 5,732,650.54 yuan and the corresponding interest (at the same time as the bank loan interest rate from the date of prosecution of the Plaintiff from the day of the actual compensation). The Defendant Shengrong argued that: the legal representative HU Qianlie of Shengrong did not know the Plaintiff Shun Ri Jin’s legal representative SHEN Zhanghui, they also did not have business dealings, Shengrong was not the carrier in this case. After the Plaintiff and Shanghai Southern Suburb reached the oil sale agreement, HU Qianlie was out of the intention to help, introduced Hongheng to the Plaintiff and finally Hongheng and the Plaintiff reached a contract of carriage of goods by sea, which was agreed that Hongheng sent M.V. “Hong Heng 118” to transport the oil goods. Therefore, Shengrong did not have any contract of carriage with the Plaintiff, that the Plaintiff sued Shengrong to bear the responsibility had no facts or legal basis, the Defendant Shengrong requested the court to reject the Plaintiff’s claims against the Defendant. The Defendants, Hongheng and RUAN Yongjiang, both argued that: Hongheng and RUAN Yongjiang had fulfilled all obligations complying with the Plaintiff’s contract of carriage, and delivered all the oil goods it transported to the Plaintiff. So even if there was a loss, it should be born by the Plaintiff. In order to support the lawsuit request, the Plaintiff provided the following evidence to the court:

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Evidence 1, two Defendants’ enterprises information, to prove two Defendant’s subject status of the lawsuit, because the Plaintiff applies for adding the third Defendant, so it submitted the third Defendant’s household registration information. Evidence 2, oil purchases and sales contract, VAT invoices, cooperation agreement, the ship’s basic information table of M.V. “Hong Heng 118”, issued oil certificates, the mobile phone message to HU Qianlie sent to SHEN Zhanghui, Ningbo Bank Online bank transaction voucher, the Plaintiff legal representative’s marriage license, space report, the interview transcripts of inquiry by the ministry of Public Security of LIN Kequan, SHEN Zhanghui, ZHONG Yanfeng, HU Qianlie, RUAN Jianguang, SHEN Yongjun, LIN Keyong, LIN Xiangjun, SHEN Yunqiang, SHEN Yizhong, SHEN Caizhi, SHEN Xidou, LIN Hongjie, LIN Yakang. “Zhe Feng Yu 18,009–18,010, 11,075–11,076, 17,067–17,068, 11,015–11,016, 13,097– 13,098, 18,065–18,066, 11,089–11,090”, ship registration certificate, fishing permission, “Zhe Feng Yu 16,001–16,002, 22,077–22,078” ship registration certificate, fishing permission, resident residence booklets, fishing boat transfer contracts, “Zhe Ping Yu 80,251” ship inspection and registration photos, “Zhe Xiang Yu 70,030” ship registration certificate, fishing permission and agreement, proof provided by Marine and Fisheries Bureau in Fenghua, which was used to prove that: on January 17, 2013, Shun Ri Jin bought 942.02 tons of No. 4 fuel oil in Shanghai Southern Suburb, and cooperated with LIN Kequan to sell the fishing boats of the Fenghua area, then Shun Ri Jin commissioned Shengrong to transport the involved fuel oil, and paid the freight to the legal representative of Shengrong, HU Qianlie, Shengrong then commissioned Hongheng to dispatch its own M.V. “Hong Heng 118” to take the actual carriage; from February 6, 2013, M.V. “Hong Heng 118” anchored in the Zhoushan sea area for 8 days, loaded with the involved No. 4 fuel oil, during the period it had been violated maritime regulations to close the Automatic Identification System (AIS). On February 14, 2013, M.V. “Hong Heng 118” arrived in the Fenghua Tongzhao sea area, and it supplied the batch of fuel oil directly to “Zhe Feng Yu 18,009, 18,010, 11,075, 11,076, 17,067, 17,068, 11,015, 11,016, 13,097, 13,098, 18,065”, 18,066, 11,089, 11,090, 80,251, 22,077, 22,078, 16,001, 16,002”, a total of 19 fishing vessels; subsequently, during the period from February 16, 2013 to February 18, the 19 fishing vessels went out to sea, then, they had so many problems such as the main engine parking, unable to start, one after another. After the replacement of the oil pumps, they could start but the power attenuation was obvious, the main engine filters and pistons were seriously blocked, oil impurities and sediments were too much, resulting in piston rings, piston rods, cylinder liner, valve being damaged. Two of the ships “Zhe Feng Yu 22,077– 22,078″ were towed back to the harbour Shengjiamen in Zhoushan because of the loss of power at sea. As the fuel oil could not continue to use, the Plaintiff Shun Ri Jin hired sand ship to recycle the residual oil on 19 fishing vessels to its chartered Fenghuaxiexin Oil Depot for temporary storage; at the same time, as a result of the fishing season, most of the fishing vessels returned to the sea for working after having an emergency repairs in the harbour, and they returned to the harbour to have permanent repairs after the fishing operation was completed.

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Evidence 3, the interview transcripts of Fenghua Public Security Bureau of Zhejiang Zhongheng Commodity Inspection Co., Ltd.’s inspectors CHEN Jian, certificate of employment issued by Fenghua Public Security Bureau, the identification report issued by Tongbiao, a test report issued by the Chinese Academy of Sciences, Ningbo Institute of Materials Technology and engineering, Entry and Exit Visa Records, recording materials of SHEN Zhanghui and RUAN Jianguang, Investigation and Inspection Report of Batch of Oil Products in Fenghua Fishing Boat on February 15, 2013 about Impurities that Caused Host Mass Failure, Accident of the Oil Quality No. 4 Fuel of M.V. “Hong Heng 118” Unqualified, to prove that the Plaintiff Shun Ri Jin entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. for the quantity inspection of the goods, they did not find a loss of quantity, but the inspectors CHEN Jian violated the sampling code in the process, he only collected samples in the middle of the cabin. M.V. “Hong Heng 118” declared to the maritime department that tabulation was only 750 tons when it entered the harbour, but the declaration of tabulation changed back to 960 tons when it left the harbour. Combined with the inspection and identification results of loading port samples and the samples before discharging to the fishing vessels, it could be determined that M.V. “Hong Heng 118” substituted the ship’s No. 4 fuel oil with a large quantity of impurities and sediment of inferior when it stopped in the Zhoushan port area, and RUAN Jianguang also admitted that the engineer had told him that the fuel oil had a lot of impurities, so it could be seen that the involved fuel oil was problematic. The report issued by the Insurance Assessment Company proved from a professional point of view that the mass failure of the involved 19 fishing vessels were caused by serious excess of the sediment of the fuel oil, it also estimated the cost of ship repairs, tugboat cost, suction sand barge oil and transportation cost, fishing gears loss, fishing boat fishing production loss, the loss of oil depreciation and other losses caused by this mass failure accident. Evidence 4, fishing vessel parts replacement, repair bills and receipts, the list of Shun Ri Jin directly paid part of the repair bill and payment certificate, certificate and situation description issued by Fenghua   Qifeng Village Villagers Committee, the compensation agreement signed by Shun Ri Jin and the damaged shipowners of fishing vessel, the bank payment voucher, the fee receipt of mending the nets, the online banking payment voucher, the transportation fee receipt and payment voucher for entrusting the sand-absorbing ship to recover the residual oil, the fishing vessel oil tank cleaning fee receipt, Xiexing Oil Depot inventory list, oil depot contract, receipt, employment agreement, payroll, invoice, remnant handling letter, mailing express signing record, supplementary inquiry letter, subsequent supplements issued by Shanghai Fanhua Tianheng Insurance Co., Ltd., the sales contract signed by the Plaintiff and Zhoushan Hongbang Fuel Co., Ltd. and the corresponding special invoice for value-added tax, the residual oil sales contract signed by the Plaintiff and WANG Hongyin and the corresponding special invoice for value-added tax to prove: after the massive failure accident that happened to the fishing vessels, Shun Ri Jin compensated for the damaged shipowners of fishing vessel, including the replacement of fishing vessel parts and the loss of repair costs 822,670 yuan; fishing production losses total 2,403,500 yuan (according to the loss

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standard of 126,500 yuan per fishing boat); net replenishment costs total 150,000 yuan; “Zhe Feng Yu 22,077, 22,078” tugboat costs 35,000 yuan; residual oil transfer transportation costs 65,000 yuan; the Plaintiff transferred 727.243 tons of residual oil from 19 fishing boats into the contracted Xiexing Oil Depot. During the storage period from April 2013 to November, the total storage and labour costs were lost to 200,866 yuan; the total cost loss was 19,000 yuan; the evaluation and appraisal fee totalled 21,357 yuan; in order to avoid further expansion of the loss, the Plaintiff searched for the highest selling price of the residual oil of 3,900 yuan per ton, and urged the three Defendants to deal with the residual goods as soon as possible, but the three Defendants did not respond. So the remaining 689.905 tons of residual oil was sold at 3,900 yuan per ton by the Plaintiff, and 38.0796 tons of oil residue was sold at 3,000 yuan per ton. Therefore, the total loss of oil products was 195,375.75 yuan. In summary, the total loss of Shun Ri Jin was 5,732,650.54 yuan because of suffering from the accident. Evidence 5, the certificate issued by Zhoushan Longyu Dengbu Oil Depot, to prove that M.V. “Hong Heng 118” reported to the maritime administration that it stopped at Zhoushan Longyu Dengbu Oil Depot on February 11, 2013 was false. Evidence 6, due to the application of the Plaintiff Shun Ri Jin, witnesses MAO, LIN, and SHEN appeared in court to testify. MAO Mou said that: “I repaired the oil pumps that SHEN Zhanghui brought from March to April, the pumps specifically from which ships were not clear.” LIN said that: “SHEN Zhanghui started calling me to recycle used oil and clean the oil tanks in March. A total of 10 times, I did not remember the specific name of the ship.” SHEN said that: “in March, I went to transport oil for SHEN Zhanghui, firstly, I put the oil on our fishing boat, and then drove to the oil depot where the oil were sent by the small boat. I have no relative relationship with SHEN Zhanghui, and the signature on the receipt confirmation form was indeed my signature.” The Defendants, Shengrong, Hongheng, and RUAN Yongjiang did not submit any evidence. Entrusted by the court, China Inspection and Certification Group Ningbo Co., Ltd. issued an appraisal report, and the appraisal conclusion was that the test results of the sample oil extracted at the loading port of M.V. “Hong Heng 118” ship were qualified. After cross-examination in court, the Defendant provided the following opinions on the evidence provided by the Plaintiff: There was no objection to the authenticity of evidence 1. There was no objection to the evidence related to the contract of carriage of goods by sea in the second evidence, the transcript of the public security department, the 19 groups of registration certificates for the involved fishing vessels, and the certificate provided by the Fenghua Marine and Fisheries Bureau, but the contract signed by the Plaintiff and the Shanghai Southern Suburb supply Chain Management Co., Ltd. was considered having nothing to do with the case, and the authenticity of the contract could not be determined; Shengrong only introduced the business to the Plaintiff and had not signed a transportation contract with it; although the AIS system was closed during M.V. “Hong Heng 118” mooring in the

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Shenjiamen port, the behaviour could not prove that Shengrong or Hongheng had stolen fuel oil. There was no objection to the authenticity of evidence 3, but it could not achieve the purpose of proof. Whether the oil used by the involved vessel was unloaded by M.V. “Hongheng 118” could not be ascertained. It was reasonable to suspect that there were some pre-storage oil and later refuelling oil in the oil, the sample being tested could not be determined as the fuel oil involved. There was no objection to the certificate and facts issued by the village committee of Fenghua, Qifeng Village, and the compensation agreement signed by the Plaintiff and the damaged shipowners of fishing vessel, online payment vouchers of the online payment of the towing expenses, and the authenticity of the invoice of identification fee. But It was believed that there was no corresponding invoice for the replacement of fishing vessel parts, repair bills and receipts, so the actual loss of the shipowners could not be proved; the fishing production loss of the damaged fishing vessel must be calculated according to its actual loss; the authenticity and relevance of the replenishment of the mending nets fee and the storage of the oil depot were objectionable. The Xiexing Oil Depot was rent by the Plaintiff. The inventory list was issued by the unilateral party, so the authenticity was doubtful. The employment agreement and the payroll were made by the Plaintiff unilaterally, the authenticity was doubtful; the supplementary inquiry letter and the follow-up supplement issued by the public appraisal company were unilaterally produced by the Plaintiff, which none of the three Defendants recognized. And the company had not received the reminder letter for the residual goods; the residual oil sales contract and the corresponding VAT special invoice were doubtful. There was no objection to the authenticity of evidence 5, but it was believed that the facts that Shun Ri Jin want to be certified could not be proved, and it was no relation to this case. For the witness testimony in evidence 6, it was believed that MAO Mou could not clarify the oil pump he repaired from which ships, and could not prove that his repair behaviour was related to the case. LIN Mou knew nothing about the ship’s ship number that recycled the residual oil. Therefore, even if Shun Ri Jin indeed entrusted him to recycle the residual oil, he could not prove that the residual oil he recycled was the residual oil involved in this case. SHEN Mou mentioned that the sand-absorbent boat did not have an oil pump and needed to be transported to his ships by another small boat. Therefore, he was unclear that which fishing boats the residual oil came from. Besides, even if he signed the two bills personally, through his statement, it could be seen that the two fee bills were supplemented afterwards, because he mentioned that the first signature was above, there was no content below, but in fact there was content, so the defenders considered that the testimony of the witness was not credible. The Defendant Hongheng verified that Shun Ri Jin had only paid the freight to the account provided by HU Qianli, the legal representative of the inventor Shengrong, and Shengrong had no contract for the carriage of goods by sea with the former. There was a real contract for the carriage of goods by sea between

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Hongheng and the Plaintiff. The cross-examination opinions of other evidences were consistent with that of Shengrong. The cross-examination opinions of the Defendant RUAN Yongjiang was consistent with that of Shengrong. The Plaintiff and Defendants had no objection to the appraisal report issued by China Inspection and Certification Group Ningbo Co., Ltd. According to the investigation, the court holds that among the evidence provided by the Plaintiff Shun Ri Jin, the three Defendants had no objection to evidence 1, 2 and 3, and the court confirms it. In the fourth evidence, the fishing vessel replacement parts, repair cost list and receipt were supported by the originals provided by the damaged fishing vessel owners. The authenticity could be confirmed. The court had determined that the total loss of this part was 728,950 yuan; the original sales receipts of some repairs and the testimony of the witness MAO Mou had been confirmed each other, their authenticity was undoubtedly determined. The total repair cost of this part was 93,720 yuan. In summary, the court determined that the Shun Ri Jin’s direct repair costs for the fishing boat due to the involved accident amounted to 822,670 yuan. The certificate and the situation report issued by the village committee of XX Qifeng Village in Fenghua were stamped with the seal of the village committee, and the daily production loss of each pair of fishing boats confirmed by the committee was 2.5–3.5 million yuan, which was close to that of public assessment report, so it had been recognized. The amount of compensation agreement signed by Shun Ri Jin and the shipowners of damaged fishing vessel was 126,500 yuan per fishing boat, which was lower than the estimate of the insurance company and the certificate provided by the village committee of Qifeng Village. The situation showed by the committee was correspond to the situation that Shun Ri Jin reduced compensation after negotiating with the fishing vessel owners, so its authenticity should be confirmed. The court had determined that the fishing loss of the damaged fishing boat was 126,500 yuan per fishing boat, totalling 2,403,500 yuan. The nets mending fee receipt was issued by the Plaintiff unilaterally, so its authenticity could not be determined. The three Defendants’ questioning of evidence was reasonable, so the evidence can’t be recognized. The online banking payment voucher for towing expenses and the certificate provided by the Fenghua Fishing Port Supervisor were mutually confirmed. Therefore, the court determined that the cost of towing the damaged fishing vessel was 35,000 yuan. The transportation cost of entrusting the sand-absorbing ship to recover the residual oil was 65,000 yuan, which was consistent with the testimony of the witness SHEN, so it could be confirmed. The fishing vessel oil tank cleaning fee was 19,000 yuan, which was consistent with the testimony of the witness LIN, so it could be confirmed. The entrance list of the Xiexing Oil Depot, the oil depot contract and the oil depot’s workers’ payrolls were mutually confirmed, and the factual authenticity of recovering 727.243 tons of residual oil had no objection. Since Shun Ri Jin leased a total of 2,000 tons of oil tanks, the lease date was from October 2012. From the 1st to the 30th of September 2015, the oil depot storage contract was not specifically designed for the involved accident, so the storage cost during the period mentioned above

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(6  12  200,000 + 2  12  250,000 + 3,700  8  2  200,866 yuan) should not be included in the loss of residual oil storage and labour costs. According to the actual proportion of the amount of residual oil recovered in the tank, the court determined that the losses of residual oil storage and labour were: (727.243  2,000)  200,866 7 3,039 yuan. The Plaintiff and the Defendants had no objection to the inspection fees, they were identified as 21,357 yuan. Regarding to the loss of oil depreciation of Shun Ri Jin, the authenticity of the loss could be confirmed according to the contract signed by Zhoushan Hongbang Fuel Co., Ltd. and WANG Hongyin, and the special invoice for value-added tax. The calculation method of loss asked by the Plaintiff was: total  (original price— current price), which was according to with law, so it could be confirmed. Therefore, the depreciation loss of the oil involved was: 903.9404  (5,500 − 3,965) + 38.0796  (5,500 - 3,000) = 1,482,747.514 yuan. Shun Ri Jin claimed for the loss of oil loss of 61,500 yuan that could not be rejected from the fishing boat due to impurities. There was no direct evidence to prove it. Combined with the evidence of the whole case, in view of the fact that oil loss did exist, the court decides that the loss is 60,000 yuan. Based on the statement of Plaintiff and Defendants, and the evidence that had been confirmed, the court determines the facts as follows: In January 2013, the Plaintiff Shun Ri Jin purchased 942.02 tons of No. 4 fuel oil from Shanghai Southern Suburb Supply Chain Management Co., Ltd. in order to cooperate with LIN Kequan to supply oil to the fishing boats in Fenghua area. The legal representative of the Plaintiff, SHEN Zhanghui, and HU Qianlie, the legal representative of the Defendant Shengrong, verbally agreed on the specific transportation matters by telephone. And according to the instructions of HU Qianlie, the legal representative of Shengrong CHEN Hui’s wife paid the freight to the legal representative of the Defendant HU Qianlie’s account. Subsequently, Shengrong entrusted the Defendants Hongheng and RUAN Yongjiang, the latter dispatched its own M.V. “Hong Heng 118” to carry out the actual carriage. On February 4, 2013, M.V. “Hong Heng 118” sailed after the shipment of the Wuyang Chemical Terminal in Lianyungang. Shun Ri Jin and the ship’s representative inspected the fuel oil and sampled and sealed it. On February 6, M.V. “Hong Heng 118” arrived in the Shenjiamen area of Zhoushan and anchored. On the afternoon of February 14, M.V. “Hong Heng 118” delivered the fuel oil to the destination port, Tongzhao sea area of Fenghua, and directly supplied it on the same day and the next day to Zhe Feng Yu 18,009, 18,010, 11,075, 11,076, 17,067. 17,068, 11,015, 11,016, 13,097, 13,098, 18,065, 16,066, 11,089, 11,090, 80,251, 22,077, 22,078, 16,001, and 1602 total 19 fishing boats. Before the oil supply was transferred, the Plaintiff entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. to inspect the quantity of the goods. The inspector CHEN Jian only sampled in the middle of the cabin, and the test results did not find a short amount. During the period from February 16, 2013 to February 18, the 19 fishing vessels went out to sea, then, they had so many problems such as the main engine parking, unable to start, one after another. After the replacement of the oil pumps they could start but the power attenuation was obvious, the main engine filters and pistons

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were seriously blocked, oil impurities and sediments were too much, resulting in piston rings, piston rods, cylinder liner, valve being damaged. Two of the ships “Zhe Feng Yu 22,077–22,078” were towed back to the harbour Shengjiamen in Zhoushan because of the loss of power at sea, and the towing rescue costs 35,000 yuan in the process. As a result of the fishing season, most of the fishing vessels returned to the sea for working after having an emergency repairmen in the port. And they returned to the port to have permanent repairs after the fishing operation was completed. Shun Ri Jin paid for the replacement of parts and repairs fee. It also arranged repair for the damaged oil pumps and paid for it. After the accident, due to the large number of damaged fishing vessels and the emotional shipowners, Shun Ri Jin compensated for each boat of 126,500 yuan for their fishing production losses under the coordination and mediation of the village committee of Fengxu Village, Fenghua. As the fuel oil could not be used continuously, the Plaintiff hired the sand transport ship to recover 727.243 tons of residual oil from the 19 fishing boats to its leased oil depot Fenghua Xiexing. The storage period was from April to November 2013. In the case of all the involved fishing vessels owners’ fierce complaints because of the massive failure, the Plaintiff Shun Ri Jin and LIN Kequan reported it to the Fenghua Public Security Bureau immediately, the latter made investigative records to salesman ZHONG Yanfeng in Shanghai Southern Suburb Supply Chain Management Co., Ltd., the legal representative of Shengrong, HU Qianlie, the shipowners representative of M.V. “Hong Heng 118”, RUAN Jianguang, inspector CHEN Jian in Zhejiang Zhongheng Commodity Inspection Co., Ltd. and the shipowners of the 19 fishing vessels, and the Fenghua Public Security Bureau commissioned Tongbiao Standard Technical Services Ltd., Zhenhai Laboratory tested samples on the loading and unloading port. The test result was that the fuel oil involved in the case met the national standard when loading. On April 25, 2013, the Plaintiff commissioned the Chinese Academy of Sciences, Ningbo Institute of Materials Technology and Engineering tested the samples of residual oil, they concluded that the impurities were mainly asphalt. The Plaintiff also commissioned the Shanghai Fanhuatianheng Insurance Public Shares Co., Ltd. and Shanghai Ejoy Insurance Public Shares Co., Ltd. to investigate the accident, and their conclusion was that the mass failure of the main engine of the fishing vessel was caused by the excessive sediment of the fuel oil. On June 9, 2014, the court, because of the agreement of the parties, entrusted the China Inspection and Certification Group Ningbo Co., Ltd. to conduct judicial appraisal of the sample oil extracted during the shipment of M.V. “Hong Heng 118” at the loading port. The test result was that the sample was qualified Fuel oil. Due to the group accidents of the fishing vessel involved in the case, Shun Ri Jin carried out various repairs and compensations for the damaged fishing vessels, and the oil products involved in the case also suffered depreciation and losses. The losses involved in the Plaintiff’s losses were 822,670 yuan for the direct repair of fishing vessels, 2,403,500 yuan for fishing production losses, 35,000 yuan for fishing boat towing rescue costs, 65,000 yuan for residual oil recovery, 19,000 yuan

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for washing costs, and 1,482,747.51 yuan for oil depreciation losses. The loss of oil loss was 60,000 yuan, the loss of residual oil storage and labour costs was 73,039 yuan, and the cost of various inspections was 21,357 yuan. The court held that this case was a dispute over the contract of waterway cargo transportation. The Plaintiff Shun Ri Jin and the Defendant’s legal representative HU Qianlie verbally agreed on specific transportation matters by telephone, and Shun Ri Jin paid the transportation expenses to its account according to the requirements of HU Qianlie. HU Qianlie did not declare that his behaviour was an individual behaviour. Therefore, his behaviour, as the Defendant’s legal representative behaviour should be recognized as a job behaviour, so the Defendant Shengrong and the Plaintiff Shun Ri Jin legally established a waterway cargo transport contract relationship, the Defendant Shengrong carried out the contractual carriage of the goods involved. The Defendant Shengrong defended that it just introduced the transportation business, which was inconsistent with the facts and lacked in reasons. The court refused to adopt it. The Defendants Hongheng and RUAN Yongjiang were the shipowners of M.V. “Hongheng 118”. The goods involved were the shipowners of M.V. “Hong Heng 118”. Therefore, Hongheng and RUAN Yongjiang were the actual carriers of the goods involved. There was no objection here, so the court identified the fact. The Plaintiff Shun Ri Jin proved that the fuel oil at the port of shipment was qualified oil, and the oil involved was directly transferred from M.V. “Hong Heng 118” to the 19 damaged fishing boats. There was no transit tool to contact the oil. And all of the 19 fishing boats that had been refuelled had the same fault. The identification had proven that fuel added to the fishing boat contained asphalt, which was consistent with the cause of the fault. Therefore, the court determined that the cargo damage involved in the case occurred during the transportation. The Defendant, Shengrong, as the carrier of the goods involved, should not be liable for compensation if it failed to agree to the loss when the goods were damaged or delayed of delivery under the authority of the actual carrier. So it should take the responsibilities only when the goods were under its authority. As the shipper, the Plaintiff had the right to demand compensation for damages. As the actual carriers, the Defendants Hongheng and RUAN Yongjiang should be jointly and severally liable for the loss of the goods. For the amount of accident losses involved, the loss of oil depreciation was 1,482,747.51 yuan, the loss of oil loss was 60,000 yuan, the loss of residual oil storage and labour costs was 73,039 yuan, and the cost of various inspections was 21,357 yuan, totalling 1,673,714.51 yuan, which was the direct loss of cargo damage. And the three Defendants should be liable for compensation. Among them, the direct repair cost of fishing vessels lost 822,670 yuan, the fishing boat production loss was 2,403,500 yuan, the fishing boat towed rescue loss 35,000 yuan, the recovered residual oil cost was 65,000 yuan, and the washing cost was 19,000 yuan, totalled 3,345,170 yuan, which was an indirect loss of cargo damage. Although the indirect loss was caused by the loss of goods in the transportation, the Plaintiff himself also had a fault. There was no arrangement for the personnel to strictly follow the standard sampling and testing, so that the fuel oil damaged by the accident was added to the fishing vessel involved, which was

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another necessary reason for the loss of the fishing vessel involved. Therefore, the Plaintiff and the three Defendants should each bear 50% of the responsibility, that was, for this part, the three Defendants acting as carriers should compensate the Plaintiff 1,672,585 yuan. Therefore, the three Defendants should compensate the Plaintiff for the direct loss of 1,637,143.51 yuan and the indirect loss of 1,672,585 yuan, a total of 3,309,728.51 yuan. Pulling the threads together, the court supported the legal and reasonable parts of the Plaintiff’s claims, according to Article 107 and Article 321 of the Contract Law of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, so the judgment is as follows: 1. The Defendants, Zhejiang Shengrong Shipping Co., Ltd., Zhoushan Hongheng Shipping Co., Ltd., and RUAN Yongjiang, shall pay the Plaintiff, Ningbo Shun Ri Jin Business Co., Ltd., within 10 days from the effective date of the judgment the loss caused by the accident, 330,072.58 yuan and interest (from the Plaintiff’s case-filing date September 6, 2013 to the date of payment determined by this judgment). The three Defendants were jointly and severally liable. 2. Reject other claims of the Plaintiff Ningbo Shun Ri Jin Business Co., Ltd. If the payment obligation is not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 48,740 yuan, the Plaintiff Ningbo Shun Ri Jin Business Co., Ltd. shall bear 20,600 yuan, and the Defendants, Zhejiang Shengrong Shipping Co., Ltd., Zhoushan Hongheng Shipping Co., Ltd., and RUAN Yongjiang, shall bear 28,140 yuan; appraisal fee in amount of 8,500 yuan, shall be born by the three Defendants. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit copies of the original petition to appeal to the Zhejiang High People’s Court. [In the seven days from the expiration of the appeal period, the pre-payment of the appeal fee shall be made in sum of 48,740 yuan (the specific amount shall be determined by the Zhejiang High People’s Court, and the excess will be refunded later). Money Transfer: Zhejiang Provincial Department of Finance Non-tax Income Settlement; Account Number: 19000101040006575401001; Bank: Agricultural Bank of China West Lake Branch.] If the payment is overdue, the appeal is deemed to be automatically withdrawn. Presiding Judge: XIAO Zibei Judge: LI Xianda People’s Juror: ZHOU Zhenyi June 23, 2015 Acting Clerk: ZHU Danying

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Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 107 Where one of the parties does not perform a contractual obligation, or does not perform a contractual obligation as agreed, the said party shall assume its liability for breach of contract by providing ongoing performance, adopting remedial measures, or paying compensatory damage, etc. Article 312 Amount of Damages in Case of Loss of Cargo Where the parties agreed on the amount of damages in case of damage to or loss of the cargo, the damages payable is the prescribed amount; if the amount of damages was not prescribed or clearly prescribed, and cannot be determined in accordance with Article 61 hereof, it shall be calculated based on the prevailing market price at the destination when the cargo was or should have been delivered. Where a law or administrative regulation provides otherwise in respect of the method for calculation of damages and any limitation on damages, such provisions apply. 2. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the responsibility to provide evidence in support of its own propositions.

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Zhejiang High People’s Court Civil Judgment Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2015) Zhe Hai Zhong Zi No.219 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 861 and page 890 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote By overturning the decision of first instance Court, Court of appeal held that Co-Defendants carrier and actual carrier were not liable for the cargo deterioration, as shipper did not carry out cargo inspection after it was discharged or before it was delivered to the fishing boats and the pre-loading inspection report along was insufficient to prove the deterioration, if any, took place in the period of carrier’s responsibility. Summary Plaintiff shipper contracted with Defendant carrier to transport the cargo, bunkers, and delivered the same to the 19 fishing boats in the port of discharge. Carrier engaged Co-Defendant actual carrier to physically complete the transportation. After the bunkers were delivered, the fishing boats, while using the bunkers, suffered engine problems and the bunkers remaining on the boats were found to contain bitumen. The fishing boats incurred salvage fees, repair costs, tank washing fees and disposal of deteriorated bunkers fees. The fishing boats also suffered loss of profit, as they could not do fishing. Shipper paid about USD 550,000 to the fishing boats to indemnify the above-mentioned fees and costs incurred or suffered by them, and seek a recourse of the indemnification of about USD 550,000 paid to the fishing boats, together with claims for deterioration of the cargo, deteriorated bunkers storage fees and inspection fees in a total sum of about USD 250,000, from Co-Defendants. Court of first instance held that Co-Defendants were jointly and severally liable for 100% of the direct losses suffered by shipper (about USD 250,000), as the bunkers were sound prior to loading and the deterioration was presumed to take place during transportation. Court of first instance further held that Co-Defendants were jointly and severally liable for 50% of indirect losses arising from the deterioration of cargo (50% of about USD 550,000), as shipper was also faulty as it failed to inspect the bunkers before they were delivered to the fishing boats.

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Carrier and actual carrier appealed. Court of appeal held that to claim against carrier and actual carrier for cargo loss or damage, shipper ought to discharge burden to prove that the deterioration took place in the period of carrier’s responsibility (for non-containerized cargo, the period started from the time of loading till the time of discharge when the cargo was under the custody of carrier). In this case, shipper only provided the cargo inspection report prior to loading and report of the bunkers remaining on the fishing boat. Shipper did not raise any protest regarding the cargo upon discharge. The afore-said pre-loading report and fishing boat report were insufficient to prove the location of cargo deterioration, as deterioration may take place after the discharge of cargo (out of the carrier’s responsibility period).

Judgment The Appellant (the Plaintiff of first instance): Ningbo Shun Ri Jin Business Co., Ltd. Domicile: Room 1001, No.43, Liuzhuang Lane, Haishu District, Ningbo, Zhejiang. Legal representative: SHEN Zhanghui, general manager of the company. Agent ad litem: LI Huibin, lawyer of Haoshang (Zhejiang) Law Firm. Agent ad litem: SHI Jie, lawyer of Haoshang (Zhejiang) Law Firm. The Appellant (the Defendant of first instance): Zhejiang Shengrong Shipping Co., Ltd. Domicile: Room 101–103, the first floor, building 2 Gongqian Road, Taohua Town, Putuo District, Zhoushan, Zhejiang. Legal representative: HU Shankang, general manager of the company. The entrusted agent: WU Hongming, the lawyer of Zhejiang L&H Law Firm The Appellant (the Defendant of first instance): Zhoushan Hongheng Shipping Co., Ltd. Domicile: No. 1, the second floor, building B Gongqian Road. Taohua Town. Putuo District, Zhoushan, Zhejiang. Legal representative: WEN Yan, general manager of the company. The Appellant (the Defendant of first instance): RUAN Yongjiang Agent ad litem of the above two Appellants: YANG Yonghua, lawyer of Zhe XX Sheng Law Firm. Agent ad litem of the above two Appellants: WANG Tao, lawyer of Zhe XX Sheng Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellants, Ningbo Shun Ri Jin Business Co., Ltd. (hereinafter referred to as Shun Ri Jin), Zhejiang Shengrong Shipping Co., Ltd. (hereinafter referred to as Shengrong), Zhoushan Hongheng Shipping Co., Ltd. (hereinafter referred to as Hongheng), and RUAN Yongjiang, the Appellants were not satisfied

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with the Ningbo Maritime Court (2013) Yong Hai Fa Shang Chu Zi No. 632 Civil Judgment, and appealed to the court. After entertaining the case on August 24, 2015, the court legitimately constituted the collegiate bench, and held a hearing in public on September 17 of the same year. Legal representative of the Appellant Shun Ri Jin, SHEN Zhanghui, agent ad litem, LI Huibin, agent ad litem of the Appellant Shengrong, WU Hongming, the Appellant RUAN Yongjiang and agents ad litem of his as well as the Appellant Hongheng, YANG Yonghua and WANG Tao appeared in the court. Now the case has been concluded. Shun Ri Jin claimed to the Ningbo Maritime Court on September 6, 2013 that: in January 2013, Shun Ri Jin, in order to cooperate with a person other than involved in the case, LIN Kequan to supply oil to the fishing boats in Fenghua area, bought 942.02 tons of No.4 fuel oil in Shanghai Southern Suburb Supply Chain Management Co., Ltd. (hereinafter referred to as “Southern Suburb”), then commissioned the Defendant Shengrong for transporting and paid the freight. Shengrong delegated the Defendant Hongheng to carry by its M.V. “Hong Heng 118” actually. On February 4, 2013, M.V. “Hong Heng 118” began its voyage at Lianyungang Wuyang Chemical Dock, on February 6, it anchored after arriving in Zhoushan Shenjiamen sea area. On the afternoon of February 14, the batch of fuel oil was delivered to the destination, Tongzhao sea area, in Fenghua, and on the same day and the following day, it lightered directly to “Zhe Feng Yu 18,009, 18,010, 11,075, 11,076, 17,067, 17,068, 11,015, 11,016, 13,097, 13,098, 18,065, 16,066, 11,089, 11,090, 80,251, 22,077, 22,078, 16,001, 16,002” a total of 19 fishing vessels. Before the barges to supply the oil, Shun Ri Jin entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. for the quantity inspection of the goods, they did not find loss of quantity, but the inspectors CHEN Jian violated the sampling code in the process, he only collected samples in the middle of the cabin. During the period from February 16, 2013 to February 18, the 19 fishing vessels went out for fishing, then, they had so many problems such as the main engines parking, unable to start, one after another. After the replacement of the oil pumps, they could start but the power attenuation was obvious, the main engine filters and pistons were seriously blocked, oil impurities and sediments were too many, resulting in piston rings, piston rods, cylinder liner, valve being damaged. Two of the ships “Zhejiang Feng Yu 22,077–22,078” were towed back to the harbor Shengjiamen in Zhoushan because of the loss of power at sea. As a result of the fishing season, most of the fishing vessels returned to the sea for working after having an emergency repairmen in the harbor. And they returned to the harbor to have permanent repairs after the fishing operation was completed. As the fuel oil could not continue to use, Shun Ri Jin hired sand ship to recycle the residual oil on 19 fishing vessels to its chartered Fenghuaxiexing Oil Depot for temporary storage. In the case of all the involved fishing vessels owners’ fierce complaints because of the massive failure, Shun Ri Jin and LIN Kequan reported it to the Fenghua Public Security Bureau immediately, the latter made investigative records to salesman ZHONG Yanfeng in Shanghai Southern Suburb Supply Chain Management Co., Ltd., the legal representative of Shengrong, HU Qianlie, the

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shipowner representative of M.V. “Hong Heng 118”, RUAN Jianguang, inspector CHEN Jian in Zhejiang Zhongheng Commodity Inspection Co., Ltd. and the shipowners of the 19 fishing vessels made Record of Investigation, and the Fenghua Public Security Bureau commissioned Tongbiao Standard Technical Services Ltd. (hereinafter referred to as Tongbiao), Zhenhai Laboratory tested samples on the loading and discharging port. April 25, 2013, Shun Ri Jin commissioned the Chinese Academy of Sciences, Ningbo Institute of Materials Technology and Engineering to test the samples of residual oil, they concluded that the impurities were mainly asphalt. Shun Ri Jin also commissioned the Shanghai Fanhuatianheng Insurance Public Shares Co., Ltd. and Shanghai Ejoy Insurance public Shares Co., Ltd. to investigate the accident, and to prove that the mass failure of the main engine of the fishing vessel was caused by the excessive sediment of the fuel oil. And they also evaluated the cost of repairing the damaged fishing vessels, towing, transportation, loss of fishing gears, loss of fishing and oil and the cost of loss of depreciation of oil products, etc. After the incident, in order to calm the situation as soon as possible, after the coordination of mediation by the relevant departments, Shun Ri Jin had made a payment to the shipowners of the damaged fishing vessels, including: the total cost of direct repairs of fishing vessels amounted to 822,670 yuan; the cost of fishing and producing amounted to 2,403,500 yuan, the cost of trawler towing and rescuing amounted to 35,000 yuan, the total loss of recycling oil and washing cabin costs amounted to 84,000 yuan, the cost of the salvage of the fishing gears amounted to 150,000 yuan; the loss of residual oil devaluation amounted to 1,554,333 yuan, total loss of oil due to impurity effect was 61,500 yuan, the cost of the residual oil storage and labour amounted to 144,400 yuan (to August 2013), the cost of various inspection amounted to 21,357 yuan, in summary, Shun Ri Jin suffered the total loss of 5,276,760 yuan because of the oil quality accident. In the trial, Shun Ri Jin increased the lawsuit request, and changed the cost of residual oil loss to 1,953,757.54 yuan, the residual oil storage and the labour expense loss were changed to 200,866 yuan (from April 2013 to November), the total lawsuit request losses amounted to 25,732,650.54 yuan. Shun Ri Jin held Shengrong, Hongheng and RUAN Yongjiang as the carriers and the actual carriers of the goods, had the natural obligation to ship the consignment to the port of destination and deliver the goods safely and intactly, now they caused a loss to Shun Ri Jin and the negotiations failed. So Shun Ri Jin claimed to the court, required that Shengrong, Hongheng and RUAN Yongjiang should compensate for the loss of RMB 5,732,650.54 yuan and the corresponding interest (at the same time as the bank loan interest rate from the date of prosecution of Shun Ri Jin from the day of the actual compensation). Shengrong argued in the first instance that: the legal representative HU Qianlie of Shengrong did not know Shun Ri Jin’s legal representative SHEN Zhanghui, they also did not have business dealings, Shengrong was not the carrier in this case. After the Plaintiff and Shanghai Southern Suburb reached the oil sale agreement, HU Qianlie was out of the intention to help, introduced Hongheng to Shun Ri Jin and finally Hongheng and Shun Ri Jin reached a contract of carriage of goods by

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sea, which was agreed that Hongheng sent M.V. “Hong Heng 118” to transport the oil goods. Therefore, Shengrong did not have any contract of carriage with Shun Ri Jin, that Shun Ri Jin sued Shengrong to bear the responsibility had no facts or legal basis, Shengrong requested the court to reject Shun Ri Jin’s claims against Shengrong. Hongheng and RUAN Yongjiang both argued that: Hongheng and RUAN Yongjiang had fulfilled all obligations complying with Shun Ri Jin’s contract of carriage, and delivered all the oil goods it transported to Shun Ri Jin. So even if there was a loss, it should be born by Shun Ri Jin. The court of first instance found out that: In January 2013, Shun Ri Jin purchased 942.02 tons of No. 4 fuel oil from Shanghai Southern Suburb Supply Chain Management Co., Ltd. in order to cooperate with LIN Kequan to supply oil to the fishing boats in Fenghua area. The legal representative of Shun Ri Jin, SHEN Zhanghui, and HU Qianlie, the legal representative of the Defendant Shengrong, verbally agreed on the specific transportation matters by telephone. And according to the instructions of HU Qianlie, the legal representative of Shengrong CHEN Hui’s wife paid the freight to the legal representative of the Defendant HU Qianlie’s account. Subsequently, Shengrong entrusted the Defendants Hongheng and RUAN Yongjiang, the latter dispatched its own M.V. “Hong Heng 118” to carry out the actual carriage. On February 4, 2013, M.V. “Hong Heng 118” sailed after the shipment of the Wuyang Chemical Terminal in Lianyungang. Shun Ri Jin and the ship’s representative inspected the fuel oil and sampled and sealed it. On February 6, M.V. “Hong Heng 118” arrived in the Shenjiamen area of Zhoushan and anchored. On the afternoon of February 14, M.V. “Hong Heng 118” delivered the fuel oil to the destination port, Tongzhao sea area of Fenghua, and directly supplied it on the same day and the next day to Zhe Feng Yu 18,009, 18,010, 11,075, 11,076, 17,067. 17,068, 11,015, 11,016, 13,097, 13,098, 18,065, 16,066, 11,089, 11,090, 80,251, 22,077, 22,078, 16,001, and 1602 total 19 fishing boats. Before the oil supply was transferred, Shun Ri Jin entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. to inspect the quantity of the goods. The inspector CHEN Jian only sampled in the middle of the cabin, and the test results did not find a short amount. During the period from February 16, 2013 to February 18, the 19 fishing vessels went out to sea, then, they had so many problems such as the main engine parking, unable to start, one after another. After the replacement of the oil pumps they could start but the power attenuation was obvious, the main engine filters and pistons were seriously blocked, oil impurities and sediments were too much, resulting in piston rings, piston rods, cylinder liner, valve being damaged. Two of the ships “Zhe Feng Yu 22,077–22,078” were towed back to the harbor Shengjiamen in Zhoushan because of the loss of power at sea, and the towing rescue costs 35,000 yuan in the process. As a result of the fishing season, most of the fishing vessels returned to the sea for working after having an emergency repairmen in the port. And they returned to the port to have permanent repairs after the fishing operation was completed. Shun Ri Jin paid for the replacement of parts and repairs fee. It also arranged repair for the damaged oil pumps and paid for it. After the accident, due to

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the large number of damaged fishing vessels and the emotional shipowners, Shun Ri Jin compensated for each boat of 126,500 yuan for their fishing production losses under the coordination and mediation of the village committee of Fengxu Village, Fenghua. As the fuel oil could not be used continuously, Shun Ri Jin hired the sand transport ship to recover 727.243 tons of residual oil from the 19 fishing boats to its leased oil depot Fenghua Xiexing. The storage period was from April to November 2013. In the case of all the involved fishing vessels owners’ fierce complaints because of the massive failure, Shun Ri Jin and LIN Kequan reported it to the Fenghua Public Security Bureau immediately, the latter made investigative records to salesman ZHONG Yanfeng in Shanghai Southern Suburb Supply Chain Management Co., Ltd., the legal representative of Shengrong, HU Qianlie, the shipowners representative of M.V. “Hong Heng 118”, RUAN Jianguang, inspector CHEN Jian in Zhejiang Zhongheng Commodity Inspection Co., Ltd. and the shipowners of the 19 fishing vessels, and the Fenghua Public Security Bureau commissioned Tongbiao Standard Technical Services Ltd., Zhenhai Laboratory tested samples on the loading and unloading port. The test result was that the fuel oil involved in the case met the national standard when loading. On April 25, 2013, Shun Ri Jin commissioned the Chinese Academy of Sciences, Ningbo Institute of Materials Technology and Engineering tested the samples of residual oil, they concluded that the impurities were mainly asphalt. Shun Ri Jin also commissioned the Shanghai Fanhuatianheng Insurance Public Shares Co., Ltd. and Shanghai Ejoy Insurance Public Shares Co., Ltd. to investigate the accident, and their conclusion was that the mass failure of the main engine of the fishing vessel was caused by the excessive sediment of the fuel oil. On June 9, 2014, the court, because of the agreement of the parties, entrusted the China Inspection and Certification Group Ningbo Co., Ltd. to conduct judicial appraisal of the sample oil extracted during the shipment of M.V. “Hong Heng 118” at the loading port. The test result was that the sample was qualified Fuel oil. Due to the group accidents of the fishing vessel involved in the case, Shun Ri Jin carried out various repairs and compensations for the damaged fishing vessels, and the oil products involved in the case also suffered depreciation and losses. The losses involved in Shun Ri Jin’s losses were 822,670 yuan for the direct repair of fishing vessels, 2,403,500 yuan for fishing production losses, 35,000 yuan for fishing boat towing rescue costs, 65,000 yuan for residual oil recovery, 19,000 yuan for washing costs, and 1,482,747.51 yuan for oil depreciation losses. The loss of oil loss was 60,000 yuan, the loss of residual oil storage and labour costs was 73,039 yuan, and the cost of various inspections was 21,357 yuan. The court held that this case was a dispute over the contract of waterway cargo transportation. Shun Ri Jin and the Defendant’s legal representative HU Qianlie verbally agreed on specific transportation matters by telephone, and Shun Ri Jin paid the transportation expenses to its account according to the requirements of HU Qianlie. HU Qianlie did not declare that his behaviour was an individual behaviour. Therefore, his behaviour, as Shengrong’s legal representative behavior should be

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recognized as a job behaviour, so Shengrong and Shun Ri Jin legally established a waterway cargo transport contract relationship, Shengrong carried out the contractual carriage of the goods involved. Shengrong defended that it just introduced the transportation business, which was inconsistent with the facts and lacked in reasons. The court of first instance refused to adopt it. Hongheng and RUAN Yongjiang were the shipowners of M.V. “Hongheng 118”. The goods involved were the shipowners of M.V. “Hong Heng 118”. Therefore, Hongheng and RUAN Yongjiang were the actual carriers of the goods involved. There was no objection here, so the court of first instance identified the fact. Shun Ri Jin proved that the fuel oil at the port of shipment was qualified oil, and the oil involved was directly transferred from M.V. “Hong Heng 118” to the 19 damaged fishing boats. There was no transit tool to contact the oil. And all of the 19 fishing boats that had been refuelled had the same fault. The identification had proven that fuel added to the fishing boat contained asphalt, which was consistent with the cause of the fault. Therefore, the court of first instance determined that the cargo damage involved in the case occurred during the transportation. Shingon, as the carrier of the goods involved, should not be liable for compensation if it failed to agree to the loss when the goods were damaged or delayed of delivery under the authority of the actual carrier. So it should take the responsibilities only when the goods were under its authority. As the shipper, Shun Ri Jin had the right to demand compensation for damages. As the actual carriers, Hongheng and RUAN Yongjiang should be jointly and severally liable for the loss of the goods. For the amount of accident losses involved, the loss of oil depreciation was 1,482,747.51 yuan, the loss of oil loss was 60,000 yuan, the loss of residual oil storage and labour costs was 73,039 yuan, and the cost of various inspections was 21,357 yuan, totalling 1,673,714.51 yuan, which was the direct loss of cargo damage. And Shengrong, Hongheng and RUAN Yongjiang should be liable for compensation. Among them, the direct repair cost of fishing vessels lost 822,670 yuan, the fishing boat production loss was 2,403,500 yuan, the fishing boat towed rescue loss 35,000 yuan, the recovered residual oil cost was 65,000 yuan, and the washing cost was 19,000 yuan, totalled 3,345,170 yuan, which was an indirect loss of cargo damage. Although the indirect loss was caused by the loss of goods in the transportation, Shun Ri Jin himself also had a fault. There was no arrangement for the personnel to strictly follow the standard sampling and testing, so that the fuel oil damaged by the accident was added to the fishing vessel involved, which was another necessary reason for the loss of the fishing vessel involved. Therefore, Shun Ri Jin, Shengrong, Hongheng and RUAN Yongjiang should each bear 50% of the responsibility, that was, for this part, Shengrong, Hongheng and RUAN Yongjiang acting as carriers should compensate Shun Ri Jin 1,672,585 yuan. Therefore, Shengrong, Hongheng and RUAN Yongjiang should compensate Shun Ri Jin for the direct loss of 1,637,143.51 yuan and the indirect loss of 1,672,585 yuan, a total of 3,309,728.51 yuan. Pulling the threads together, the court of first instance supported the legal and reasonable parts of Shun Ri Jin’s claims, according to Article 107 and Article 321 of the Contract Law of the People’s Republic of China, and Article 64 Paragraph 1

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of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: 1. Shengrong, Hongheng and RUAN Yongjiang should pay Shun Ri Jin, within 10 days from the effective date of the judgment. the loss caused by the accident, 330,072.58 yuan and interest (from Shun Ri Jin’s indictment date was from September 6, 2013 to the date of payment determined by this judgment); for which Shengrong, Hongheng and RUAN Yongjiang were jointly and severally liable. 2. Reject other claims of Shun Ri Jin. If the payment obligation was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee of first instance in amount of 48,740 yuan, Shun Ri Jin should bear 20,600 yuan, Shengrong, Hongheng Shipping and RUAN Yongjiang should bear 28,140 yuan; appraisal fee in amount of 8,500 yuan, should be born by Shengrong, Hongheng and RUAN Yongjiang. Shun Ri Jin, Shengrong, Hongheng and RUAN Yongjiang were all dissatisfied with the first-instance judgment and appealed to the court. Shun Ri Jin appealed that: firstly, it was wrong that the first-instance judgment did not confirm or fully confirm for the partial loss that Shun Ri Jin appealed in the first instance. 1. As for the loss of oil products involved in the case, the first-instance judgment was calculated by Shun Ri Jin’s purchase price from Southern Suburb, however, at that time, the oil involved in the case had been sold, so it should be calculated at a price of 6,000 yuan/ton, which was a total of 1,953,757.54 yuan. 2. Due to the group failure of the 19 fishing vessels’ shipowners involved in the case, the replenishment fee of 150,000 yuan paid by Shun Ri Jin had the receipts issued by the repairing person as evidence, which should be confirmed. 3. The 2,000-ton oil tank that had been rented by Shun Ri Jin, due to the quality problems of the oil, the remaining space after the recovery of 727.243 tons of residual oil could no longer store the qualified oil, and the rent of the entire tank still needed to be paid. It was wrong that the first-instance judgment determined that the loss was 73,039 yuan according to the actual proportion of the oil recovery. Secondly, the first-instance judgment determined that Shun Ri Jin should bear 50% responsibility for the losses incurred by the vessels involved in the case, which was obviously wrong. 1. Entrusted inspector to strictly follow the rules to sample was not an obligation to Shun Ri Jin, and the company allowed the inspector to sample the central part of the inspection based on the trust of the carrier. 2. To take a step back, even if there was a fault of Shun Ri Jin, the direct cause of the accident was the quality problem in the process of oil transportation, and there was no causal relationship between the inspection personnel and the strict sampling according to the regulations. The company should not be responsible for this. In summary, Shun Ri Jin requested for revoking the first item of the first-instance judgment and changing to support the first-instance litigation request of the company. Shengrong’s appeal against Shun Ri Jin was pleaded in court that: 1. Shengrong was not the party involved in the contract of transportation, and only played the role of inter-mediation. Therefore, it should not take any contractual obligations. The dispute arising from the transportation of goods between Shun Ri Jin and Hongheng

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had nothing to do with Shengrong. 2. There was no direct evidence in the judgment of the first instance that Hongheng had stolen or mixed other bad oil products during the transportation process. The facts of its determination were based on a series of inferences. According to the facts of the review, when the oil was loaded, it was only sampled in the middle, so it was not excluded that the oil itself had quality problems when it was boarded. For the two central sampling, the court of first instance adopted different attitudes and opinions. From the appraisal report, there was no evidence that Hongheng should be responsible for the quality of oil transportation. In summary, the request was dismissing the claims of Shun Ri Jin. Hongheng and RUAN Yongjiang argued that: Hongheng and RUAN Yongjiang had fulfilled all the obligations of the transportation contract as the carriers and should not bear any responsibilities. The accident in this case was caused by the improper performance of the contractual obligations of Shun Ri Jin. It should take the responsibility. 1. Inspection of goods was the right and obligation of Shun Ri Jin, as contract law, maritime law and waterway cargo transportation contract rules stipulated that the shipper or consignee should inspect the goods at the agreed time limit when picking up the goods. The inspection of the goods was both the rights and the obligations of the shippers. Shun Ri Jin said that there was no laws, regulations and departmental rules requiring. The company must entrust the inspectors to strictly follow the standard sampling test, which was obviously wrong. 2. As a carrier, Hongheng only assisted Shun Ri Jin for sampling. It was not a substitute for Shun Ri Jin to inspect. In the case that Shun Ri Jin and the seller did not send personnel to participate in the delivery, Hongheng and RUAN Yongjiang, as carriers, assisted the shipper in sampling the oil at the time of shipment, and cooperated with Shun Ri Jin carrying out sampling before unloading, they had fulfilled its due diligence obligations and duties, so there were no obligations and duties. The evidence of the two sample data entrusted by the Fenghua Municipal Public Security Bureau provided by Shun Ri Jin had proved that Hongheng had properly fulfilled all obligations of the transportation contract. 3. Exhaustion of contractual obligations was the responsibility of the carrier. Whether or not sampling according to the standard was the right of Shun Ri Jin. Whether the carrier had exhausted its duties could not determine whether Shun Ri Jin would strictly follow the specifications. Regardless of whether the carrier was responsible or not, Shun Ri Jin should strictly carry out sampling and inspection, and should also bear the responsibility arising from failing to perform this right. 4. The cause of the accident of the fishing vessel was caused by the contractual inspection obligation of Shun Ri Jin, but not the so-called “oil quality accident”. The oil sales contract for such a significant amount of money had not been fully taken care of by Shun Ri Jin since the beginning of the contract. When signing the contract, the buyer and the seller did not agree on the variety and quality of the oil; at the time of delivery, Shun Ri Jin did not send personnel to participate in the loading and sampling of the oil; Before unloading, Shun Ri Jin was present but it did not carry out sampling for inspection in accordance with the regulations; after sampling, it only did the weight detection but not quality inspection, and then it transferred the oil to the fishing boat directly. This led to the occurrence of this group incident. In the first instance of this

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case, Shun Ri Jin always emphasized that Hongheng and RUAN Yongjiang had stolen oil products during transportation, which led to the group accident, but did not submit corresponding evidences. In summary, the request was to dismiss Shun Ri Jin’s appeal and support Hongheng’s appeal. Shengrong appealed that: firstly, the facts determined by the first-instance judgment was wrong. 1. The first-instance judgment found that “the Plaintiff’s legal representative SHEN Zhanghui and the Defendant’s legal representative HU Qianlie contacted and verbally agreed on specific transportation matters”. It was wrong. The actual situation was that SHEN Zhanghui entrusted ZHONG Yanfeng of Southern Suburb to call HU Qianlie to find a ship for transportation. At that time, there was no empty ship in Shengrong, so HU Qianlie introduced the business to Hongheng. HU Qianlie and SHEN Zhanghui did not know each other, and they never made a phone call, nor did they make a verbal agreement on transportation matters. 2. The first-instance judgment found that “… and according to the instructions of HU Qianlie, the wife of the legal representative SHEN Zhanghui paid the freight to the Defendant’s legal representative to HU Qianlie’s account”. It was wrong. The fact was that the freight did not enter Shengrong’s account, but entered LIU Qiong’s personal account. 3. The judgment of the first instance found that “… and then the company was entrusted to the Defendant Hongheng”, it was wrong. Actually, Shengrong was only used as an intervening introduction. Secondly, the legal relationship found by first-instance judgment was wrong. 1. According to the transcripts of the parties, HU Qianlie did not discuss with SHEN Zhanghui on the transportation involved in the case. HU Qian lie in this case only introduced the business to Hongheng. This facts could not determine that Shengrong and Shun Ri Jin approached an agreement on an oral transportation contract. 2. Under the circumstances of inconsistency between the parties, the contractual relationship should be determined in accordance with the facts actually performed, namely, Hongheng who carried out the actual carriage, RUAN Yongjiang and Shun Ri Jin constituted a contract of carriage. 3. The behaviour of HU Qianlie in this case should be characterized as personal intermediary business, and the freight involved in the case had not entered the account of Shengrong, but entered the account of LIU Qiong, who was designated by HU Qianlie. And HU Qianlie’s behavior had exceeded the company’s business scope and could not be recognized as a job behaviour. 4. The transfer of the commission only occurred in the performance of the commission contract. There was no evidence that there was a transfer relationship among Shengrong, Hongheng and RUAN Yongjiang, and there was no evidence to prove that it constituted a contractual relationship with Shun Ri Jin. In summary, the request was to change the first-instance judgment, and to reject the claims of Shun Ri Jin. In response to the appeal requests and reasons of Shengrong, Shun Ri Jin pleaded that the first-instance judgment found that “the contractual relationship between the water and cargo transportation between Shengrong and Shun Ri Jin was established, and the Shengrong was the carrier involved in the case”. It was true. Shengrong claimed that HU Qianlie and SHEN Zhanghui did not know before and the two sides did not make oral agreements on transportation matters, which

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was a false statement. Shun Ri Jin provided evidence of rebuttal. The freight involved in the case was transferred to the LIU Qiong’s account, but it was paid according to the mobile phone SMS notification of the legal representative of the company, HU Qianlie. If Shengrong was only an intermediary introducer, it should not collect the freight from the company. Although the parties involved did not sign a written transportation contract, according to the fact that HU Qiang was the legal representative of the company and Shun Ri Jin paid the freight according to its instructions, it was enough to prove that the transportation contract was established between Shengrong and Shun Ri Jin. In summary, the request was to dismiss the appeal of Shengrong. Hongheng and RUAN Yongjiang pleaded in court that: firstly, regarding to the legal relationship stated by Shengrong between it and Hongheng in this case, the opinions of Hongheng and RUAN Yongjiang were consistent with the first-instance statement. Secondly, Hongheng and RUAN Yongjiang agreed that the carrier or the actual carrier did not breach the contract and should not be liable. Hongheng and RUAN Yongjiang appealed that: firstly, the appraisal report and test results could not prove that the oil involved in the case was qualified fuel oil at the loading port. The court of first instance mistakenly determined that the sample oil test result from the port of loading was qualified oil, and there was no evidence that the oil at the time of loading was suitable for use as a fuel for ships. Secondly, regardless of whether the oil at the time of shipment was qualified, whether it could be applied to the ship as a fuel, in view of the same sampling method and the test results at the time of loading and unloading, and there was no short amount, so the fulfilment of obligations of Hongheng and RUAN Yongjiang were in accordance with the contract and should not take the responsibilities. Thirdly, even if there was a quality problem with the fuel oil involved in the case, the fishing vessel had failed after the transfer to the 19 fishing vessels involved. The reason for that did not exclude the possibilities of upstream and downstream. It was too hasty for the court of first instance to determine that the cargo damage of the goods involved was in transit. The carrier was liable for compensation without precluding the reasonable suspicion. The total presumption was not in line with the high degree of probabilistic requirements, and the judgment result was obviously wrong. In summary, the request was to change the first-instance judgment and reject the claims of Shun Ri Jin. In response to the appeal and reasons of Hongheng and RUAN Yongjiang, Shun Ri Jin pleaded that: firstly, the determination of the first-instance judgment that the oil involved in the shipment was qualified was correct, and there was no bad endorsement on the oil product certificate. The relevant indicator data was in line with the technical standards for lightweight No. 4 fuel oil. Secondly, according to the multiple identification data in this case, there was basically no difference in the test data of the oil involved in the loading port and the port of discharge. Therefore, the quality problem of the fuel oil involved was due to the doping of sludge deposits rather than the intrinsic quality. Thirdly, it was precisely because the sediment in the fuel oil involved exceeded the standard that the 19 fishing vessels involved in the case had a group failure, and the first-instance judgment was correct. In summary, the request was to dismiss Hongheng and RUAN Yongjiang’s appeal.

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Shengrong pleaded in court that it agreed to the appeal of Hongheng and RUAN Yongjiang. In the second instance, Shengrong did not submit new evidence. Shun Ri Jin submitted two pieces of evidence to the court: evidence 1, HU Qianlie and SHEN Zhanghui’s mobile phone text messages in September 2012, and the case involving transportation occurred in January 2013, to prove that Shengrong’s appeal that HU Qianlie and SHEN Zhanghui did not know each other was a fake statement. Evidence 2, fuel oil standard of the Ministry of Petroleum and Chemical Industry of China, to prove that the actual quality index of the oil involved in the case met the requirements of the light fuel oil No.4 fuel, which was qualified fuel oil. Hongheng and RUAN Yongjiang submitted two voyage vessel visa application forms to the court and it was intended to prove that the weight of the goods declared by M.V. “Hong Heng 118” when leaving the post was 750 tons. The fact that M.V. “Hong Heng 118” unloaded 200 tons did not exist. Shengrong’s opinions of cross-examination on the evidence submitted by Shun Ri Jin believed that: for the authenticity of evidence 1, from the technical point of view, the mobile phone number could be modified in the mobile phone, and if Shun Ri Jin wanted to prove SHEN Zhanghui and HU Qianlie knew each other before, an archive of the telecommunications sector should be provided. To take a step back, even if SHEN Zhanghui and HU Qianlie had text messages in September 2012, they could not prove that HU Qianlie and SHEN Zhanghui actually had a connection with the transportation contract in this case. And the record of the Public Security Bureau had already reflected that the shipping business involved in the case was connected by ZHONG Yanfeng, he connected with HU Qianlie. And it was not directly connected by SHEN Zhanghui. Therefore, the evidence could not achieve its proof purpose. Evidence 2 was not related to this case. From the perspective of cargo transportation, as long as the quality of the goods when received by the carrier was consistent with the quality of the goods when delivered, the contractual obligations could be thought fulfilled and the possibility was not excluded that the quality did not meet the standards at the loading port. As for the evidence submitted by Shun Ri Jin, Hongheng and RUAN Yongjiang cross-examined that: evidence 1 referred to the relationship between Shun Ri Jin and Shengrong in this case, it had nothing to do with Hongheng and RUAN Yongjiang, so the opinions of Hongheng and RUAN Yongjiang were determined by the facts that ascertained by the court. There was no objection to the formal truth and legitimacy of evidence 2, but there was an disagreement on its relevance and object of proof. That standard was not a mandatory national standard. In fact, in the oil industry, especially large state-owned enterprises had their own company standards, and it is the industry standards of the provinces, so the evidence was essentially not relevant to this case. If decide whether the oil was qualified referring to that standard, since only a few indexes in the standard were identified in the first trial, the evidence could not prove that the fuel in the loading port was qualified fuel oil. Shun Ri Jin’s evidence on the evidence submitted by Hongheng and RUAN Yongjiang was that: there was no objection to the formal truth of the evidence. The evidence further confirmed that M.V. “Hong Heng 118” actually loaded nearly 950

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tons, but declared 750 tons to the maritime department. This Ship violating the most basic legal declaration obligation was premeditated, and it deliberately wanted to steal oil from the very beginning. Shengrong had no objection to the evidence submitted by Hongheng and RUAN Yongjiang. After investigation, the evidence submitted by Shun Ri Jin was certified by the court as follows: since the number of the accredited evidence 1 of Shengrong was owned by HU Qianlie himself, the authenticity of the evidence was recognized. From the content of the evidence, HU Qianlie and SHEN Zhanghui had contact before the transportation business involved, so it was possible to the Shengrong’s claim that HU Qianlie and SHEN Zhanghui did not know each other and could not make an export contract for transportation matters. The parties had no objection to the authenticity of the evidence 2, so it was identified. Judging from the flash point parameters of the standard, the oil involved in the case met the standards at the time of shipment. Hongheng and RUAN Yongjiang could identify the claim of unqualified fuel oil in the oil system based on the data of flash point and carbon residue. No evidence can support this request. However, since the parameters selected in the inspection and analysis report issued by Tongbiao commissioned by the Fenghua Municipal Public Security Bureau were not all in the standard, it was impossible to determine from the data of the standard whether the oil involved in the case was a qualified fuel oil at the time of shipment. The evidence submitted by Hongheng and RUAN Yongjiang was considered that: the parties have no objection to the authenticity of the evidence, so it was identified. Judging from the contents of the visa application form, the weight of the goods declared by M.V. “Hong Heng 118” was 750 tons from the beginning to the end, which was inconsistent with the actual carrying capacity. However, since there was no short amount after being delivered to the port of destination, so according to this could not determine that Hongheng unloaded 200 tons of unloaded goods during transportation. The first-instance judgment found that the results of the inspection of the samples of the oil loading port of the company and the China Inspection and Certification Group Ningbo Co., Ltd. were “in accordance with national standards” and “qualified fuel oil”. There was no clear basis for that. And this determined to change that. Other facts identified in the first instance judgment were supported by relevant evidence and could be confirmed. Although Shun Ri Jin and Hongheng and RUAN Yongjiang objected to some facts of the first instance, they failed to provide contrary evidence so the court did not support it. The court holds that this case was a dispute over the contract of carriage of goods by sea. According to the appeal request and reasons of Shun Ri Jin, Shengrong, Hongheng and RUAN Yongjiang, as well as the defence opinions of the parties, the issues of the dispute in this case were: 1. whether Shengrong was the carrier involved. 2. Whether Shengrong and the actual carriers Hongheng and RUAN Yongjiang should jointly compensate Shun Ri Jin for the cargo damage accident involved in the case; if it was necessary to bear, What was the amount of the loss that should be borne. The parties had no objection to the focus of the controversy summarized by the court. The analysis of the court was as follows:

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1. Whether Shengrong was the carrier involved Shengrong claimed that its legal representative HU Qianlie and the legal representative of Shun Ri Jin, SHEN Zhanghui, did not know each other, and that HU Qianlie was commissioned by the staff of the Southern Suburb to introduce the oil transportation ship. Shengrong was not involved in the case and should not bear the burden of the case. As for this part, the court believed that according to the existing evidence, HU Qianlie and SHEN Zhanghui had contacted by telephone on the transportation involved in the case, and HU Qianlie once informed SHEN Zhanghui by SMS that the freight involved in the case should be paid to personal account of HU Qianlie’s wife. Contrary to the identity of the intermediaries introduction to the company, combined with the identity of the legal representative of Shengrong and its failure to affirm the above acts were personal acts, it could be concluded that Shengrong was contracted with Shun Ri Jin and they established a contract for the carriage of goods by sea. Although there was no written agreement between the two parties, the verbal agreement between the legal representatives of the two parties did not affect the establishment of a contractual relationship for the carriage of goods by sea between the two parties. 2. Whether Shengrong and the actual carrier Hongheng, RUAN Yongjiang should jointly compensate the company for the cargo damage accident involved in the case; if it was necessary to bear, what was the amount of the loss. The parties had no objection to the identity of the actual carriers of Hongheng and RUAN Yongjiang involved, it should be confirmed. Shengrong, Hongheng and RUAN Yongjiang believed that the oil purchased by Shun Ri Jin may be unqualified oil when it was loaded. Though the oil was qualified fuel oil, after certification of Tongbiao. The ship-to-ship sample and the sample at the time of unloading were consistent with the test data. Therefore, it should not be assumed that the cargo damage involved occurred during the carrier’s liability period. Shengrong, Hongheng and RUAN Yongjiang should not be liable for this. The court considers that, according to Article 46 of the Maritime Code of the People’s Republic of China, “the responsibility of the carrier with respect to non-containerized goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom. During the period the carrier is in charge of the goods, the carrier shall be liable for the loss of or damage to the goods, except as otherwise provided for in this Section.” Therefore, the liability period of the carrier and the actual carrier in this case was from the time when the oil was loaded onto the ship to the time the ship was unloaded. If Shun Ri Jin required the carrier involved in the case to be liable for damages, it should prove that the damage occurred during the carrier’s liability period. Although Shun Ri Jin commissioned the Ningbo Institute of Materials Technology and Engineering of the Chinese Academy of Sciences to conduct tests after the occurrence of the damage, the test concluded that the residual oil contained a large amount of asphalt. However, the

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sample extracted by this test occurred outside the carrier’s liability period, so it could not be assumed that the carrier was liable. Shun Ri Jin reported the case to the Fenghua Public Security Bureau after the damage. The bureau commissioned Tongbiao to test the sample of the fuel oil port and the port of discharge at the test. The test results were the parameters of the two samples, especially the extraction in the sediment having no change. Because Shun Ri Jin held that the fuel oil involved in the case was qualified fuel oil at the time of shipment, so according to the above test results of Tongbiao, the quality of the fuel oil when unloading was consistent with the that of loading, and it was impossible to conclude that the cargo damage involved occurred in the carrier’s responsibility period. Although Shun Ri Jin claimed that CHEN Jian, the inspector of Zhejiang Zhongheng Commodity Inspection Co., Ltd., did not strictly follow the specifications in the discharge port and only sampled in the middle, but Shun Ri Jin admitted that the act had been approved, so it could not be claimed that the cargo damage involved was caused by the carrier’s fault. Pulling the threads together, Shun Ri Jin entrusted Shengrong to ship the oil involved in the case, and the contractual relationship of the sea cargo transportation was established between the two parties. The oil was actually carried by M.V. “Hong Heng 118” owned by Hongheng and RUAN Yongjiang, so Hongheng and RUAN Yongjiang were the actual carriers of the oil involved. Shun Ri Jin’s claim that the cargo damage involved in the case occurred during the transportation so the compensation should be taken by Shengrong, Hongheng, and RUAN Yongjiang had insufficient evidence and reasons. The first-instance judgment incorrectly identified the responsibility and should be corrected. The reasons for the appeal of Shengrong, Hongheng and RUAN Yongjiang were established and should be supported. In accordance with Article 170 Paragraph 1 Sub-paragraph 2 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. Revoke the Ningbo Maritime Court (2015) Yong Hai Fa Shang Chu Zi No.632 Civil Judgment; 2. Reject the claims of Ningbo Shun Ri Jin Business Co., Ltd. Court acceptance fee of first instance in amount of 48,740 yuan, the appraisal fee in amount of 8,500 yuan, and court acceptance fee of second instance in amount of 48,740 yuan, shall be born by Ningbo Shun Ri Jin Business Co., Ltd. The judgment is final. Presiding Judge: KONG Fanhong Acting Judge: CHEN Wei Acting Judge: HUO Tong November 19, 2015 Clerk: DING Lin

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The Supreme People’s Court of the People’s Republic of China Civil Ruling Ningbo Shun Ri Jin Business Co., Ltd. v. Zhejiang Shengrong Shipping Co., Ltd. et al. (2016) Zui Gao Fa Min Shen No.1484 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 861 and page 875 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Supreme People’s Court affirmed appeal court’s decision holding Co-Defendants not liable for cargo loss or damage or losses suffered by fishing boats, as shipper failed to prove that the cargo deterioration occurred during the carrier’s period of responsibility. Summary Plaintiff shipper contracted with Defendant carrier to transport the cargo, bunkers, and delivered the same to the 19 fishing boats in the port of discharge. Carrier engaged Co-Defendant actual carrier to physically complete the transportation. After the bunkers were delivered, the fishing boats, while using the bunkers, suffered engine problems and the bunkers remaining on the boats were found to contain bitumen. The fishing boats incurred salvage fees, repair costs, tank washing fees and disposal of deteriorated bunkers fees. The fishing boats also suffered loss of profit, as they could not do fishing. Shipper paid about USD 550,000 to the fishing boats to indemnify the above-mentioned fees and costs incurred or suffered by them, and seek a recourse of the indemnification of about USD 550,000 paid to the fishing boats, together with claims for deterioration of the cargo, deteriorated bunkers storage fees and inspection fees in a total sum of about USD 250,000, from Co-Defendants. Court of first instance held that Co-Defendants were jointly and severally liable for 100% of the direct losses suffered by shipper (about USD 250,000), as the bunkers were sound prior to loading and the deterioration was presumed to take place during transportation. Court of first instance further held that Co-Defendants were jointly and severally liable for 50% of indirect losses arising from the deterioration of cargo (50% of about USD 550,000), as shipper was also faulty as it failed to inspect the bunkers before they were delivered to the fishing boats.

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Carrier and actual carrier appealed. Court of appeal held that to claim against carrier and actual carrier for cargo loss or damage, shipper ought to discharge burden to prove that the deterioration took place in the period of carrier’s responsibility (for non-containerized cargo, the period started from the time of loading till the time of discharge when the cargo was under the custody of carrier). In this case, shipper only provided the cargo inspection report prior to loading and report of the bunkers remaining on the fishing boat. Shipper did not raise any protest regarding the cargo upon discharge. The afore-said pre-loading report and fishing boat report were insufficient to prove the location of cargo deterioration, as deterioration may take place after the discharge of cargo (out of the carrier’s responsibility period). Shipper made a petition to Supreme People’s Court for retrial, which affirmed the determination of the appeal Court with the same rationale.

Ruling The Claimant of Retrial (the Plaintiff of first instance, the Appellant of second instance): Ningbo Shun Ri Jin Business Co., Ltd. Domicile: Room 1001, No. 43, Liuzhuang Lane, Haishu District, Ningbo, Zhejiang. Legal representative: SHEN Zhanghui, general manager of the company. Agent ad litem: DONG Guowen, lawyer of Beijing Hanma Law Firm. The Respondent of Retrial (the Defendant of first instance, the Appellant of second instance): Zhejiang Shengrong Shipping Co., Ltd. Domicile: Room 101–103, the first floor, building 2 Gongqian Road, Taohua Town, Putuo District, Zhoushan, Zhejiang. Legal representative: HU Shankang, general manager of the company. Agent ad litem: YU Hongbo, lawyer of Zhejiang Xingzhou Law Firm. The Respondent of Retrial (the Defendant of first instance, the Appellant of second instance): Zhoushan Hongheng Shipping Co., Ltd. Domicile: No.1, the second floor, building B Gongqian Road. Taohua Town. Putuo District, Zhoushan, Zhejiang. Legal representative: WENG Yan, general manager of the company. Agent ad litem: YANG Yonghua, lawyer of Zhe XX Sheng Law Firm. Agent ad litem: WANG Tao, lawyer of Zhe XX Sheng Law Firm. The Respondent of Retrial (the Defendant of first instance, the Appellant of second instance): RUAN Yongjiang, male, born on June 10, 1971, Han, living in Putuo District, Zhoushan, Zhejiang Agent ad litem: YANG Yonghua, lawyer of Zhe XX Sheng Law Firm. Agent ad litem: WANG Tao, lawyer of Zhejiang XX Sheng Law Firm.

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With respect to the case arising from dispute over contract of carriage of goods by sea between the Claimant of Retrial, Ningbo Shun Ri Jin Business Co., Ltd. (hereinafter referred to as Shun Ri Jin) and the Respondents of Retrial, Zhejiang Shengrong Shipping Co., Ltd. (hereinafter referred to as Shengrong), Zhoushan Hongheng Shipping Co., Ltd. (hereinafter referred to as Hongheng), and RUAN Yongjiang, the Claimant of Retrial disagreed with the Zhejiang High People’s Court (2015) Zhe Hai Zhong Zi No.219 Civil Judgment, so it applied for retrial to the court. The court legitimately constituted the collegiate bench, and the review has been concluded. Shun Ri Jin applied for retrial that: (1) the court of second instance determined that the quality of the oil involved when unloading and loading was not changed according to the inspection results in the middle of the ship’s cabin. The fact determined above was wrong. (2) After the oil involved in the case was directly transferred from M.V. “Hong Heng 118” to the 19 fishing boats, the main engines failure occurred in all the fishing boats. According to the inspection, the cause of the accident was the fishing boats being added too much oil deposits, which could prove that the deterioration of oil quality occurred during the carrier’s transportation. (3) The court of second instance judged that the carrier should not be liable for damages caused by the oil accident involved in the case. It was wrong. Although the court of first instance determined that the damage occurred during the carrier’s liability period, there was an error in determining the carrier’s liability ratio and calculating the amount of the loss. In summary, according to Article 200 Paragraph 2 of the Civil Procedure Law of the People’s Republic of China, Shun Ri Jin requested a retrial of the case. Shengrong submitted opinions that: (1) there was no contractual relationship about water transportation and cargo transportation between Shengrong and Shun Ri Jin. (2) The facts and applicable laws of the original judgment were correct. It requested to dismiss the retrial application of Shun Ri Jin. Hongheng and RUAN Yongjiang submitted their opinions that: (1) there was no significant change in the sample test data when the oil was loaded and unloaded. The court of second instance determined that the carrier did not have a breach of contract and the conclusion was correct. (2) Shun Ri Jin claimed that the oil involved in the case was a qualified product at the time of shipment, and it became substandard oil with a large amount of impurities during unloading. There was no factual basis. (3) The evidence provided by Shun Ri Jin could not exclude the possibility that the oil involved in the case was not suitable for the use of fishing vessels and the use of mixed oil, so the conclusion could not be drawn that the loss of cargo occurred during the carrier’s management. They requested to dismiss the retrial application of Shun Ri Jin. The court held a hearing on May 15, 2017, and Shun Ri Jin submitted two new pieces of evidence. Evidence 1, Tongbiao Standard Technical Services Ltd. (hereinafter referred to as Tongbiao) petroleum product sampling process, to prove the petroleum product sampling process specification for the upper, middle and lower points of each single cabin to extract samples. Shengrong, Hongheng and RUAN Yongjiang had objections to the authenticity, legality and relevancy. They

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considered that the evidence had no signature of the written unit and did not have the formal requirements of evidence. Evidence 2, testimony of TAO Siqian, a staff member of Lianyungang Wuyang Chemical Co., Ltd. (hereinafter referred to as Wuyang Chemical), and applied for the witness to testify in court, to prove the process of loading the oil involved in M.V. “Hong Heng 118” and the sampling situation of oil at the loading port TAO Siqian stated in the hearing procedure that Wuyang Chemical was the actual supplier of the oil involved in the case, and the goods were shipped from the Warehouse of Wuyang Chemical. TAO Siqian was responsible for the escort of oil products. The oil involved was in the warming state at that time. TAO Siqian asked the ship’s representative to sample at the upper, middle and lower points of the cabin, but he was not clear whether the ship was sampled as required. Shengrong’s cross-examination showed that he did not actually participated in transportation, and had no knowledge of cargo transportation and sample extraction. Hongheng and RUAN Yongjiang believed that TAO Siqian’s statement in court was in contradiction with the testimony of witnesses issued before and should not be believed. The court held the view that evidence 1 and evidence 2 could not prove that the facts were different from the original judgment, nor could it overturn the determination of the original judgment. The court holds that the case was a dispute over the contract of coastal cargo transportation. According to Article 2 of the Maritime Code of the People’s Republic of China, the provisions of Chap. IV of the Law on Contracts for the Carriage of Goods by Sea could not apply to the carriage of goods by sea between the ports of the People’s Republic of China. Based on the Article 46 of the Maritime Code of the People’s Republic of China, the judgment of the second instance determined the period of liability of the carrier in this case, which applied the laws wrongly. The case shall be governed by the provisions of the Contract Law of the People’s Republic of China to determine the carrier’s responsibility. According to the retrial application of Shun Ri Jin, the issue of this case was whether the oil involved in the case had been damaged during transportation. Based on the evidence of the trial and the facts ascertained, the oil products involved in the case were purchased by Shun Ri Jin from Shanghai Southern Surburb Supply Chain Management Co., Ltd. The two parties did not specify the quality standards and technical indicators of the oil products in the oil purchases and sales contract. Shun Ri Jin entrusted Shengrong to carry the oil products involved in the case, and the products were actually carried by M.V. “Hong Heng 118”. Hongheng and RUAN Yongjiang were the shipowners of the ship. On February 4, 2013, M.V. “Hong Heng 118” started the loading of the oil at Wuyang Chemical Dock. It anchored on the Shenjiamen sea area in Zhoushan on February 6 and arrived at the unloading port of Fenghua, Tongzhao sea area in the afternoon of February 14. The oil involved in the case from February 14 to 15 was directly supplied from M.V. “Hong Heng 118” to the 19 fishing vessels such as “Zhe Feng Yu 22,077” and “Zhe Feng Yu 22,078”. The 19 fishing boats occurred group failure, so the Shun Ri Jin reported it to the Fenghua Public Security Bureau. In order to determine the quality of the oil involved, the relevant parties extracted the oil samples three times at different stages. Before the cargo was put on

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the ship, the relevant parties sampled and sealed the on-board oil products on M.V. “Hong Heng 118”. Wuyang Chemical’s representative TAO Siqian and the ship’s representative RUAN Jianguang jointly signed Send Oil Product Certificate, which recorded that the variety name was No. 4 and the quantity was 942.02 tons. There were no specific quality standards and technical indicators. After receiving the report, Fenghua Public Security Bureau entrusted Tongbiao to test the oil sample at the loading port, and the sediment index was 0.01% (mass score). In the hearing, Shun Ri Jin recognized the quality of the oil when it was shipped. Before the unloading of the goods, Shun Ri Jin entrusted Zhejiang Zhongheng Commodity Inspection Co., Ltd. (hereinafter referred to as Zhongheng) to test the weight of the oil. CHEN Jian, the inspector of Zhongheng, extracted and sealed the unloading port oil sample in the middle of the cabin. Fenghua Municipal Public Security Bureau entrusted Tongbiao to test the oil samples in the unloading port. Compared with the oil sample test results of the loading port, the parameters of the two samples, especially the sediment, did not change. Although CHEN Jian’s sampling method in the middle of the unloading port was improper, Zhongheng was commissioned by Shun Ri Jin to take samples, and the sampling procedure was approved by Shun Ri Jin. Shun Ri Jin should bear the responsibility for sampling in the middle of the unloading port. After the group failure in the fishing boat, Shun Ri Jin hired individual sand transport vessels to transfer the residual oil from the 19 fishing vessels to the Fenghua Xiexing Oil Depot for storage. Shun Ri Jin commissioned Shanghai Fanhua Tianheng Insurance Co., Ltd. and Shanghai Ejoy Insurance Co., Ltd. to investigate the accident, they determined that the group’s diesel engine failure was caused by excessive fuel oil deposits. Shun Ri Jin commissioned Ningbo Institute of Materials Technology and Engineering of the Chinese Academy of Sciences to test the recovered oil samples. The conclusion was that the black residue in the sample was mainly asphalt. The group failure in the fishing vessel involved in the case could prove that the recovered oil actually contained many asphaltene sediments, and the quality of the recovered oil samples was indeed worse than that of the cargo port. However, the recovered oil sample was taken after the carrier delivering the goods to the shipper. At that time, the transportation involved in the case had been completed. Besides, the quality inspection results of the oil sample at the unloading port and the oil sample at the loading port had not changed greatly, so it was impossible to draw the conclusion that the damage occurred during the carrier’s transportation liability period. According to Article 311 of the Contract Law of the People’s Republic of China, the carrier shall be liable for damages or loss of the goods during the transportation process. Shun Ri Jin claimed that the oil damage involved in the case occurred during the carrier’s transportation period and should bear the responsibility of offering proofs, but it did not provide sufficient evidence to prove it. The court of second instance determined that Shengrong, Hongheng and RUAN Yongjiang should not be liable for damages caused by oil accidents involved in the case. The determination had no obviously improper place. Pulling the threads together, the retrial application of Shun Ri Jin did not comply with Article 200 of the Civil Procedure Law of the People’s Republic of China.

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According to Article 204 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, and Article 395 Paragraph 2 of the Interpretation of the Supreme People’s Court on Civil Procedure Law of the People’s Republic of China, the ruling is as follows: Dismiss the application for retrial of Ningbo Shun Ri Jin Business Co., Ltd. Presiding Judge: HU Fang Acting Judge: HUANG Xiwu Acting Judge: ZHANG Kexin June 12, 2017 Clerk: LI Na

Ningbo Maritime Court Civil Judgment Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2016) Zhe 72 Min Chu Zi No.1139 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the ruling of retrial are on page 910 and page 920 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant NVOCC held liable for misdelivery of goods by delivering to someone other than the consignee named on the bill of lading, without checking that the person taking delivery was authorized by the named consignee to act on its behalf. Summary The Defendant NVOCC arranged carriage of a cargo of clothes from Ningbo to Los Angeles. The goods were delivered to someone other than the named consignee on the bill of lading, without checking that the person taking delivery had authorization from the named consignee to take delivery on its behalf. The named consignee did not pay the plaintiff, the seller of the goods, for the goods. The Court held that the defendant was liable to the plaintiff for misdelivery of the goods.

Judgment The Plaintiff: Ningbo Yinzhou District Fuluote Clothing Co., Ltd. Domicile: Room 319, No. 2, 728 East Songjiang Road, Yinzhou District, Ningbo City, Zhejiang Province. Legal representative: XU Mingliang, general manager of the company. Agent ad litem: LI Huibin, lawyer of Zhejiang haoshang Law Firm. Agent ad litem: SHI Jie, lawyer of Zhejiang Haoshang Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_47

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The Defendant: Ningbo Branch of Shanghai ACE Logistics Co., Ltd. Domicile: 11th floor, No. 88, East Baizhang Road, Yinzhou District, Ningbo City, Zhejiang Province. Representative: CHEN Jianxing, general manager of the company. The Defendant: Shanghai ACE Logistics Co., Ltd. Domicile: Room 802, No. 155, Xueqian Street, Shanghai. Legal representative: XUE Shundi, general manager of the company. Agents ad litem of the two Defendants: JI Yufeng, lawyer of Shanghai Huiye Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, Ningbo Yinzhou District Fuluote Clothing Co., Ltd. (hereinafter referred to as “Fuluote”), and the Defendants, Ningbo Branch of Shanghai ACE Logistics Co., Ltd., (hereinafter referred to as “ACE Ningbo”) and Shanghai ACE Logistics Co., Ltd. (hereinafter referred to as “ACE”), the court entertained the case on May 17, 2016. During the trial, due to the complexity of the case, it was decided on July 21, 2016 that summary judgement was not proper and that this case was to be handled by general procedure. According to the application of the Plaintiff, on May 18, 2016, the court decided to freeze the bank deposit of the Defendant ACE Ningbo of RMB 940,000 yuan or to seal up or seize other property of equivalent value, and the execution was completed. The court heard the case publicly on June 27, 2016 and September 1, 2016. The legal representative of the Plaintiff Fuluote, XU Mingliang (did not appear in the court for the second hearing), and agent ad litem, LI Huibin, and agent ad litem of the Defendants ACE and ACE Ningbo, JI Yunfeng, appeared in the court to participate in the litigation. The mediation and consultation between the two parties failed, now the case has been concluded. The Plaintiff Fuluote claimed that: 1. the two Defendants should compensate the Plaintiff payment RMB 914,305.73 yuan with the corresponding interest (since January 30, 2016 to the performance date determined by the legally effective judgment, in accordance with the People’s Bank of China on the day of enterprise loan interest rate); 2. court acceptance fee of the case should be borne by the two Defendants. The facts and reasons were stated as follows. On November 17, 2015, the buyer, URBAN SUBURBAN, INC., (hereinafter referred to as “URBAN”) and the Plaintiff signed No. J151122B foreign trade contract, which stated the agreement to purchase 8,760 pieces of men’s cotton knitting cardigan from the Plaintiff; unit price was USD8/piece; payment was USD 70,080; in addition, to purchase 8,760 pieces of men’ s cotton knitting sweater; unit price was USD8/piece; payment was USD 70,080; the total amount of USD 140,160. The date of shipment was November 22, 2015, and the port of loading was Shanghai, China. The port of destination was Los Angeles, etc. On the next day, after negotiation between the buyer and the seller, the loading port was changed to Ningbo, and URBAN agreed to pay for the goods within 60 days after the delivery of the goods. In order to execute the foreign trade contract as outlined above, on November 18, 2015, the

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Plaintiff delivered the goods to the carrier, the Defendant, ACE Ningbo, which was designated by URBAN. The Defendant, ACE Ningbo, gave the Plaintiff No. ACENGBSF21511123 copy of the straight bill of lading, which indicated that the shipper was the Plaintiff, consignee and notify party was URBAN, the port of destination forwarder was TRUSTEXPRESS (LAX) INC, the loading port was Ningbo, China, the name of vessel was M.V. CSCL YELLOW SEA, the voyage was V. 0021E, the unloading port was Los Angeles, 730 cases of men’ s cotton knitted cardigans and men’ s cotton knitted sweaters, country of origin was China, container number was CAXU9943673, Seal No. F1933789, a 40 feet high box, freight collect, yard to yard, shipper packing, counting, sealing, etc. As the Plaintiff requested telex release, after the Plaintiff submitted the telex release guarantee to the Defendant ACE Ningbo, the Defendant ACE Ningbo did not issue the original bill of lading and directly changed the telex release procedures. After shipping the goods, the Plaintiff did not receive the payment for the goods and asked URBAN for information. The company said it had not received the goods. The Plaintiff urged to ask the Defendant ACE Ningbo for the goods whereabouts; the Defendant said it had delivered the goods to CTA, which was designated by URBAN, but it was unable to offer URBAN mandates and goods delivery procedures; then ACE Ningbo declined to comment, and the Plaintiff failed to negotiate with it many times. Upon investigation, the Defendant ACE was a first-class forwarder registered and approved by the Ministry of Communications of the People’s Republic of China, and the Defendant ACE Ningbo was a branch established by the Defendant ACE in Ningbo. The Plaintiff contended that the two Defendants, as NOVCCs of the goods involved, did not deliver the goods to the consignee recorded in the bill of lading and the telex release guarantee, and had constituted a serious breach of contract, which caused the Plaintiff to suffer losses about 140,160 USD, calculated according to the exchange rate of USD to RMB 1:6.5233 on January 30, 2016, equivalent to RMB 914,305.73 yuan. Therefore, the two Defendants should bear full liability. The two Defendants jointly argued that: 1. the ownership and risk of the goods in this case had been transferred to the buyer. This case was a telex release, and the Plaintiff had no bill of lading, so the Plaintiff had no right to claim the real right; 2. the Plaintiff could not explain the trade contract buyers identity and could not confirm who should pay. After URBAN denied itself as buyers, there was no basis for the Plaintiff to propose whether the losses existed or the correct amount of money; 3. in the case that the trade partner chosen by the Plaintiff was suspected of fraud, the Plaintiff refused to change the consignee without any reasons, leading to the expansion of losses, and the Plaintiff should bear the corresponding consequences; 4. the Plaintiff had applied for relief to China Export & Credit Insurance Corporation, Ningbo Branch (hereinafter referred to as “CECIC Ningbo”); insurance claims were still in processing, and the insurance company had not claimed to refuse compensation, so the Plaintiff should not claim against the Defendants; 5. there was false information regarding the value of goods in this case; the customs declaration price with the Plaintiff had apparent inconsistencies compared to the price declared by CECIC Ningbo. There was the suspicion of defrauding export tax

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rebates because of the false claim of the goods’ value. The two Defendants, therefore, requested the court to dismiss the Plaintiff’s claims. The parties submitted evidence in accordance with the law around the lawsuit request, and the court organized the parties to conduct cross-examination. The Plaintiff’s evidence 1, 2, 3, and 8 were without objection from the parties; evidence 1 and evidence 3 of the two Defendants were also without objection, so the court confirmed and corroborated the evidence. For the evidence and facts disputed by the parties, the court concluded as follows: There was no objection from the two Defendants on the form authenticity of evidence 4, 5, 6 submitted by the Plaintiff. But they pointed out that URBAN was not an actual buyer, and thus was not the other party of the foreign trade contract. After investigation, evidence 4, 5, and 6 could be recognized and that the Plaintiff and Dave Li (hereinafter referred to as “Dave”) were involved in the trade contracts and made changes to the contract items; whether URBAN was the actual buyer of the foreign trade contract involved and its influence on the handling of the case were comprehensively analysed by the court and further explained in the reasoning part of this document. For the Plaintiff’s evidence 7, the court would integrate the emails provided by the two Defendants for analysis and certification. The Plaintiff’s evidence 9 and the court’s investigation and verification letter to CECIC Ningbo could be mutually verified and the evidence was confirmed by the court. Evidence 2 of the two Defendants, the Plaintiff contended whether CTA got a power of attorney and did not confirm the evidence. After investigation, the court held that the message would be notarized at the notary office and met the requirements of the evidence form, so the court confirmed its authenticity. In terms of relevancy, it showed that CTA claimed before Dave was authorized to handle related affairs and it mentioned “Mr. HUANG.” CTA encountered something abnormal when handling shipment, and it required the Plaintiff to contact the consignee and gave specific instructions. For evidence 4 of the two Defendants, the Plaintiff held that although the email was notarized, the identity of Niko and the authenticity of the content of the email could not be confirmed. Evidence 7 of the Plaintiff and evidence 7 of the two Defendants had something about the comment Cindy distributed to the Plaintiff at 10:12 January 6, 2016. The court decided that the part could prove that Cindy narrated Elaine of CTA that the goods did not receive URBAN authorities; in the Plaintiff’s evidence 7, the email time information sent by CTA at 9:49 on January 6, 2016 and evidence 7 of the two Defendants that CTA company sent Cindy disclaimer was identical. Therefore, the court affirmed the disclaimer of CTA, and it could prove that the Plaintiff received the disclaimer forwarded by Cindy; CTA found out that URBAN was not the buyer of the goods involved. Dave was not the representative of URBAN, he and required the Plaintiff to change the consignee. In conclusion, evidence 7 of the two Defendants were confirmed. To evidence 7 of the Plaintiff, the email that XU Mingliang sent to Cindy on March 16, 2016, the court affirmed its authenticity, but the evidence could only prove that the Plaintiff had made representations on the delivery of the goods at the port of destination but did not get a definite reply of the Defendant. For evidence 5 and 6, these two emails, the Plaintiff thought that they

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had nothing to do with them and did not receive the emails, and did not confirm the two emails, so the court held that the two emails were confirmed by the notary, and the court confirmed its authenticity. The evidence could prove that CTA asked Cindy to contact the Plaintiff; it communicated with Dave, and CTA gave the requirement of changing the consignee to the Plaintiff through Cindy. As for the evidence 8 and 9 of the two Defendants, the Plaintiff had no objection to the authenticity of their forms, and the court confirmed them. The Plaintiff did not confirm the evidence 10 and 12 of the two Defendants. Upon investigation, the court held that no original copy of the attachment was available for verification, and there was no other evidence to prove it, so the court did not confirm them. As for the Defendant’s evidence 11, the court confirmed that the Plaintiff had received the content of the email sent by Dave on January 19, 2016. As for the evidence 13 to 18 provided by the two Defendants, the Plaintiff held that the above evidence was irrelevant to the dispute of the case. The court, upon investigation, considered that the Plaintiff had a reasonable objection and did not recognize the evidence. Evidence 19 of the two Defendants was comprised of U.S. laws and regulations. It was not evidence, and the court did confirm it. As for Defendants’ evidence 20, the Plaintiff confirmed its authenticity, but did not think it was relevant. The court, after investigation, held that the evidence had been notarized and met the requirements of foreign evidence, which should be confirmed. As for the two Defendants’ evidence 21, the Plaintiff held that it was unable to confirm its authenticity, and it was unrelated to the case. The court, after investigation, held that the chat records which had been notarized at the notary office, could reflect the actual circumstances of the bilateral exchanges in the process of business operations. Although the Plaintiff denied its authenticity, the Plaintiff failed to put forward any contrary evidence, so the court confirmed it. According to the recognition of the evidence, the parties’ statements and trial survey, the court confirmed the facts as follows: in November 2015, the buyer Dave, who claimed to represent URBAN, signed Number J151122B foreign trade contract with the Plaintiff and agreed to purchase, from the Plaintiff, 8,760 pieces of men’s cotton knitting cardigan, 8,760 pieces of men’s cotton knitting sweater; unit price was USD8/piece; total amount was USD 140,160. The date of loading was November 22, 2015, port of loading was Shanghai Port, and the port of destination was Los Angeles. After negotiation, the loading port was changed to Ningbo Port, and the buyer should pay for the goods within 60 days after delivery. On November 18, 2015, the Plaintiff delivered the goods to the foreign buyer’s designated carrier, namely the Defendant ACE Ningbo. According to declaration to Beilun customs, the unit price of the goods involved in the export declaration was USD 8, and the total value of the goods was USD 140,160. On November 23, 2015, the goods involved was on shipment. The Defendant ACE Ningbo issued the No. ACENGBSF21511123 copy of straight bill of lading to the Plaintiff, which indicated that the shipper was the Plaintiff; the consignee and notify party was URBAN; forwarder of the port of destination was TRUSTEXPRESS (LAX) INC; the loading port was Ningbo, China; the name of the vessel was M.V. CSCL YELLOW SEA; the voyage was V. 0021E; the unloading port was

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Los Angeles; the goods were 730 cases of men’s cotton knitted cardigans and men’ s cotton knitted sweaters; the country of origin was China; the container number was CAXU9943673, Seal No. F1933789, a 40 feet high box, freight collect, yard to yard; shipper’s packing, counting, sealing, etc. At the same day, the Plaintiff contacted the Defendant’s staff, Cindy, to change the consignee’s contact number. Therefore, the Plaintiff issued a guarantee of change, requesting to change the consignee and the notify party on HBL, not changing AMS information, specifically changing URBAN’s telephone number 212-XX1-4499 to 646–709-2353, and the resulting expenses and liabilities were borne by the Plaintiff. During the shipment of the goods involved, Anna, a staff member of the Plaintiff, communicated with Cindy (Chinese name: CUI Mingyue), an employee of the Tianjin Branch of the Defendant ACE through E-mail and QQ. After the goods arrived in the United States, Elaine, a staff member of person other than involved in the case CTA, contacted Cindy, an employee of the Tianjin Branch of the Defendant ACE by email about the goods involved. On November 30, 2015, the Plaintiff paid the Defendant ACE Ningbo 3,900 yuan for the three pieces of export goods, including the goods involved. The next day, the Plaintiff entrusted Ningbo Jinduo Garments Co., Ltd., a person other than those involved in the case, to pay the remaining freight forwarding fee of 8,100 yuan for the three goods. Among them, the freight forwarding cost of this case was 4,000 yuan. On December 2, 2015, the Defendant ACE Ningbo confirmed the acceptance of freight forwarding fees. After that, the Plaintiff proposed a telex release guarantee to the Defendant ACE Ningbo, stating that due to the need of the customer request to arrange telex release the goods to the consignee URBAN involved, and assume the resulting all risks and costs. After receiving the letter of guarantee, the Defendant ACE Ningbo did not issue the original straight bill of lading and directly changed the telex release procedures. Around early December in 2015, the goods in this case arrived at the port of destination. After that, the customs clearance procedures were completed, and the goods were picked up by CTA of the port of destination. After CTA took delivery of the goods, it was found in the process of releasing the goods that the staff and telephone numbers of the consignee were abnormal. After a field investigation, the consignee URBAN denied the goods were purchased by it. CTA contacted the Defendant ACE and the Plaintiff to change the consignee. The three parties failed to reach an agreement. On December 30, 2014, CECIC Ningbo issued a comprehensive short-term export credit insurance policy with the policy number of SCH033097 to the Plaintiff. On January 28, 2016, the Plaintiff reported to the underwriter CECIC Ningbo to claim for delay in payment to request the goods involved three ticket goods exported to the United States, because of the buyer and forwarding dispute. On March 18 of the same year, CECIC Ningbo accepted the claim. The insurance claim was still pending. It was also found that ACE had already registered the operating qualification of NVOCC business in China’s transportation department, and the Defendant ACE Ningbo did not have its own registered bill of lading.

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The court held that this case was a dispute caused by the wrongful delivery of goods by the Plaintiff’s export goods to the carrier after they had been transported, and it was a dispute over the contract of carriage of goods by sea. According to the litigation and defence opinions of both parties, the issues of this case were summarized as follows: 1. The principal status of the Plaintiff and the Defendants in the transport contract involved In this case, the Plaintiff, as a shipper, consigned goods to the Defendant, ACE Ningbo. The Defendant, ACE Ningbo, had a copy of the bill of lading issued by the carrier without a special statement. The format was ACE company registered on the bill of lading. During business operations, the shipment’s arrangement, and the processing of this case after the occurrence of disputes was executed mainly by staff of ACE Tianjin Branch, Cindy, who contacted with the Plaintiff. The transport of goods was managed by ACE as a whole. Therefore, the court held that the carrier of the goods involved was ACE, and ACE Ningbo was only an agent to accept the business involved. 2. The application of law of the case In this case, the goods involved were exported to the United States, and the delivery of the goods took place outside of China’s territory. Therefore, this case had foreign elements, and the parties could choose the applicable law according to law. However, the Defendant in this case did not issue the original bill of lading, neither did the parties claim and prove that there an agreement on the application of the law. During the trial process, the Plaintiff claimed to apply Chinese law; two Defendants claimed that American law should be applied to the goods delivery and customs clearance issues, but the other issues should apply Chinese law. The Defendants offered the court two of the laws regarding custom duties in the Code of Federal Regulations. The court held that the two Defendants argued for the application of American law and that the law of that country should be provided. But the laws that the two Defendants provided were not complete or comprehensive; the rules were not applicable to the case and had no clear legal opinions for evidence, and neither provisions of the law nor the domestic book could be referred. In accordance with Article 10 of the Application of Law for Foreign-related Civil Regulations of the People’s Republic of China, Chinese law should be applied in this case. 3. Whether the Defendant ACE misdelivered the goods The court held that the Plaintiff had entered into a contract of carriage of goods by sea with ACE, which was obligated to deliver the goods safely to the consignee as agreed. The foreign contract involved was signed by Dave on behalf of URBAN and the Plaintiff. When signing, the Plaintiff did not review Dave’s identity and authorization procedures, which was imprudent. Moreover, it was not until the goods were delivered to the CTA that they find out that URBAN was not the buyer of the goods involved in the company. But in this case, the Plaintiff expressly

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agreed upon the goods consignee for URBAN, though objectively URBAN could not take the goods, but this did not exempt ACE as the carrier of cautious delivery obligations; it still had to deal with checking the actual consignee’s identity. In this case, the Plaintiff did not send instructions to the Defendant that the goods were delivered to CTA. As a result, whether CTA got the consignee company’s authorization to pick the goods involved in the case became decisive to whether ACE should bear the responsibilities of incorrect delivery. In the Plaintiff’s evidence 7 email, ACE’s staff, Cindy, was paraphrasing that Elaine in CTA did not receive URBAN’ s authorization, while the evidence 2 of the Defendant ACE showed that ACE company Elaine’s statement that URBAN’s Dave provided authorization before sailing. The statements cited by the Plaintiff and the Defendant directly contradict each other, and both sides failed to present other evidence to prove otherwise. Therefore, it could not be used to affirm whether CTA had got URBAN’s authorization to extract the goods. The court held that ACE company as the carrier, had a legal obligation to carefully review the consignee’ s identity and should bear the burden of proof that CTA had got the consignee’ s authorization. If it could not prove the acceptance of the goods involved by CTA was authorized by the consignee, URBAN, for the cargo, it should assume the legal consequences for not adducing evidence. Therefore, the court concluded that CTA had misdelivered the goods, which caused the Plaintiff to lose control of the goods involved and should bear the legal responsibility for the wrong delivery. The two Defendants claimed against the Plaintiff were in the insurance settlement and should not asked to pay. This court held, this case and the insurance claim did not have the same legal relation, so this court should not accept the defence. 4. The Plaintiff’s loss The claim of the Plaintiff for loss payment was USD140,160 because of ACE company’s improper delivery of the goods to the named consignee. According to the middle exchange rate on January 30, 2016 US dollars into RMB 1:6.5233, calculated as 914,305.73 yuan, and requested the interest since January 30, 2016 to the performance date determined by effective judgment, in accordance with the People’s Bank of China on the day of the interest of the loan interest rate the same period. The Defendant ACE argued that the value of goods was false, customs declaration price and the price that the Plaintiff ACE Ningbo admitted was apparently inconsistent, and there was suspicion of defrauding export tax rebates (false claims of the goods value). The court held that the two Defendants did not provide enough evidence to refute the Plaintiff’ s claim, and the customs declaration and export price of the goods involved were clear, so the court rejected the defence of the two Defendants. In December 2015, the goods involved were obtained by a person other than involved in the case, CTA, since the Plaintiff’s right was damaged, the Plaintiff’s claim in accordance with the exchange rates on January 30, 2016, and the interest calculated according to the corresponding interest value loss, were all legal and reasonable, the court confirmed the claim. To conclude, the claims of the Plaintiff were reasonable, and the court supported them. In accordance with the Application of Law for Foreign-related Civil

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Regulations of the People’s Republic of China Article 10, the Maritime Code of the People’s Republic of China Article 46 Paragraph 1, the Contract Law of the People’s Republic of China Article 107, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. Shanghai ACE Logistics Co., Ltd. shall compensate the Plaintiff Ningbo Yinzhou District Fuluote Clothing Co., Ltd. for cargo price loss in amount of 914,305.73 yuan, within 10 days after this judgement comes into effect, together interest calculated from January 30, 2016 to this judgment to determine the performance of the date as per the loan interest rate of the People’s Bank of China for the same period); 2. Reject other claims of the Plaintiff Ningbo Yinzhou District Fuluote Clothing Co., Ltd. Court acceptance fee in amount of RMB 12,940 yuan, and the preservation fee in amount of RMB 5,000 yuan, shall be borne by the Defendant Shanghai ACE Logistics Co., Ltd. If not satisfied with this judgment, within fifteen days of the date of the judgment delivered, a party can submit copies of the original petition to appeal to the Zhejiang High People’s Court. Presiding Judge: ZHANG Jilin Acting Judge: WANG Liansheng Acting Judge: LV Huizhi December 14, 2016 Acting Clerk: XIN Yi

Appendix 1: List of Evidence Evidence provided by the Plaintiff Ningbo Yinzhou District Fuluote Clothing Co., Ltd. 1. Packing list, bill of lading copy and translation, telex release guarantee, export goods customs declaration, customs entry, to prove that on November 18, 2015, the Plaintiff delivered the goods to the carrier, namely the Defendant ACE Ningbo designated by URBAN. The Defendant ACE Ningbo provided copy of the bill of lading No. ACENGBSF21511122; because the Plaintiff required telex release, after the Plaintiff submitted guarantee of telex release to the Defendant ACE Ningbo, the Defendant Ningbo Branch directly change the telex release formalities instead of issuing the original straight bill of lading; the goods involved had been successfully declared and shipped by Ningbo Branch;

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2. Confirmation of shipping export charges, invoices, payment receipt, entrusted payment letter, etc., to prove that the Plaintiff had paid the booking fee, trailer fee, customs clearance fee, etc. to the Defendant ACE Ningbo; 3. The bill of lading registered in Ministry of Communications, to prove that the Defendant ACE was approved by Ministry of Communications to register first-level freight forwarders, the Defendant ACE Ningbo was a branch firm set up in Ningbo; 4. Sales confirmation and translation, to prove that on November 17, 2015, URBAN purchased 9,000 pieces of men’ s cotton knitted cardigan and 9,000 pieces of men’s cotton knitting sweater, total amount USD 144,000 from the Plaintiff; 5. Commercial invoices, packing list and the corresponding translation (what the Plaintiff offered was in English), to prove that after negotiation between the seller and the buyer, the port of loading was changed to Ningbo, China, and agreed upon in the foreign buyer payment within 60 days after delivery of the goods, etc.; 6. The New York state registration documents and translations, statements and translations were used to prove that the Plaintiff did not receive the payment after the shipment of the goods involved; 7. E-mail (included XU Mingliang transferred to Cindy at 10:00 January 10, 2016, email on March 16, 2016 sent by XU Mingliang to Cindy and reply emails of Cindy on the next day), to prove that the Plaintiff urged the goods whereabouts to the Defendant ACE Ningbo many times and Tianjin branch, the Defendant ACE Ningbo said it had delivered the goods to URBAN designated CTA, but it could not provide authorization to entrust formalities, goods delivery formalities, then it declined to comment, though the Plaintiff had repeatedly negotiated, still failed to find a solution jointly; 8. Short-term export credit insurance comprehensive insurance policy, to prove that the sales of goods involved, in order to avoid the risk from the normal trading including no-withdrawal the payment for goods after delivery of the goods to the buyer, the Plaintiff applied to China Export & Credit Insurance Corporation, Ningbo Branch for a short-term export credit insurance; 9. The application of the claim and the informative letter, to prove that in the case of the specific whereabouts of the goods involved were unclear, the Plaintiff asked China Export & Credit Insurance Corporation, Ningbo Branch for compensation, on the grounds that the buy delay payments after the goods were on shipment. Although the insurance company had registered a case, it had orally refused to compensate since the buyer did not receive the goods. Evidence provided by the Defendants, Shanghai ACE Logistics Co., Ltd. and Ningbo Branch of Shanghai ACE Logistics Co., Ltd. 1. Telex release of guarantee and change of the guarantee, to prove that the goods involved were telex released, that the Plaintiff had no original bill of lading and that the Plaintiff changed the consignee information in the middle of the shipment;

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2. E-mail (on December 17, 2015, CTA sent to ACE Cindy), to prove that CTA confirmed that it had got authorization of URBAN’s Dave before customs clearance, at the same time, required to contact with Mr. HUANG, goods in warehouse of CTA, shipper should disappoint consignee; 3. E-mail (on January 5, 2016, sent by Fuluote Anna to ACE Cindy), to prove that the Plaintiff confirmed that the consignee was Dave; 4. Email (on January 5, 2016, Niko sent to ACE Cindy), to prove that CTA was contacted by Dave. 5. E-mail (on January 5, 2016, CTA sent to ACE Cindy), to prove that CTA required shipper to provide consignee information for contacting; 6. E-mail (on January 15, 2016, CTA company sent to ACE Cindy), to prove that CTA once again required the Plaintiff to change the consignee. The Plaintiff refused to change the consignee and was prepared to claim for compensation from CECIC. 7. Email (on January 19, 2016, Anna sent to ACE Cindy), to prove the goods’ now in the control of the port of destination CTA. CTA found in operation that the consignee identity was in doubt, and stopped receiving, and advised the Plaintiff to change the consignee immediately; the Defendant promptly notified the Plaintiff of CTA information; the Plaintiff confirmed that his client had paid the sea freight. 8. E-mail (on January 21, 2016, ACE Cindy gave to the staff of Plaintiff Anna), to prove that CTA had direct contacted with the Plaintiff, and informed the Plaintiff that URBAN was not the owner of the goods; 9. E-mail (on January 21,2016, CTA sent to the staff of the Plaintiff Anna), to prove that the Plaintiff was aware of CTA company’s contact information, and even provided a CTA mobile phone number of the company’s personnel to CECIC Ningbo, the case had been handled by CECIC Ningbo in the follow up; 10. E-mail (on March 12, 2016, CTA forwarded the email sent by CECIC to ACE Cindy), to prove that HUANG Jie was suspected of fraud and was not actually a staff member of URBAN; 11. E-mail (on May 26, 2016, CTA sent to ACE Cindy), to prove that the consignee with the Plaintiff and CTA were still in touch to see goods, receive the goods on January 19, 2016. The Plaintiff knew that the goods were still in the place of CTA; 12. E-mail (June 24, 2016, CTA forwarded the email it sent to CECIC to ACE), to prove that the Plaintiff admitted to CECIC Ningbo that the actual prices was USD1 per piece, its suspected tax fraud; 13. Attorney papers and translation, to prove that the Defendant had consigned the goods to Ningbo Feidi International Forwarding Co., Ltd. 14. Bill of lading and translation, to prove that Ningbo Feidi International Forwarding Co., Ltd. carried the goods involved and issued the bill of lading; 15. Confirmation of revenue and expenses, to prove that the Defendant and Ningbo Feidi International Forwarding Co., Ltd. had confirmed the details of transportation and charges of the goods involved;

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16. Statement of account, to prove that the Defendant has confirmed the details of the transportation and charges of the goods involved with Ningbo Feidi International Forwarding Co., Ltd.; 17. AMS information, to prove that Ningbo Feidi International Forwarding Co., Ltd. had made AMS information declaration to the U.S. customs, and the goods involved had been declared under the name of URBAN. 18. Invoices, to prove that the Defendant had paid the fee to Ningbo Feidi International Forwarding Co., Ltd. 19. (CODE OF FEDERAL REGULATIONS: TITLE 19 CUSTOM DUTIES Parts 141 to 199) 141.32 and 141.46, to prove that the United States federal law stipulated that the customs clearance needed letter of authorization. 20. US notarized documents, to prove the real existence of CTA. 21. QQ chatting records, to prove the communication records of the Plaintiff and the Defendant in this case.

Appendix 2: Legal Provisions Quoted in this Case 1. Application of Law for Foreign-related Civil Regulations of the People’s Republic of China Article 10 Foreign laws applicable to foreign-related civil relations shall be ascertained by the people’s court, arbitral authority, or administrative organ. If any party chooses the applicable foreign laws, he shall provide the laws of this country. If foreign laws cannot be ascertained or there are no provisions in the laws of this country, the laws of the People’s Republic of China shall apply. 2. Maritime Code of the People’s Republic of China Article 46 The responsibilities of the carrier with regard to the goods carried in containers covers the entire period during which the carrier is in charge of the goods, starting from the time the carrier has taken over the goods at the port of loading, until the goods have been delivered at the port of discharge. The responsibility of the carrier with respect to non-containerized goods covers the period during which the carrier is in charge of the goods, starting from the time of loading of the goods onto the ship until the time the goods are discharged therefrom. During the period the carrier is in charge of the goods, the carrier shall be liable for the loss of or damage to the goods, except as otherwise provided for in this Section.

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3. Contract Law of the People’s Republic of China Article 107 If a party fails to perform its obligations under a contract, or rendered non-conforming performance, it shall bear the liabilities for breach of contract by specific performance, cure of non-conforming performance or payment of damages, etc. 4. Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1 The party shall have the responsibility to provide evidence in support of its own propositions.

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Zhejiang High People’s Court Civil Judgment Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2017) Zhe Min Zhong No.52 Related Case(s) This is the judgment of second instance, and the judgment of first instance and the ruling of retrial are on page 897 and page 920 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court’s decision holding defendant NVOCC liable for misdelivery of goods by delivering to someone other than the consignee named on the bill of lading, without checking whether the person taking delivery was authorized by the named consignee to act on its behalf. Summary The defendant NVOCC arranged carriage of a cargo of clothes from Ningbo to Los Angeles. The goods were delivered to someone other than the named consignee on the bill of lading, without checking that the person taking delivery had authorization from the named consignee to take delivery on its behalf. The named consignee did not pay the plaintiff, the seller of the goods, for the goods. The first instance Court held that the defendant was liable to the plaintiff for misdelivery of the goods. On appeal by the defendant, the appeal Court affirmed the decision of the trial Court, holding that the defendant had failed to provide evidence showing that the value of the goods was incorrect. Further, the defendant did not provide sufficient materials for the court to apply the laws of the United States in this case as it requested.

Judgment The Appellant (the Defendant of first instance): Shanghai ACE Logistics Co., Ltd. Domicile: Room 802, No. 155, Xueqian Street, Shanghai. Legal representative: XUE Shundi, chairman of the company.

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Agent ad litem: JI Yufeng, lawyer of Shanghai Huiye Law Firm. Agent ad litem: ZHU Qiang, lawyer of Zhejiang Pingfan Law Firm. The Respondent (the Plaintiff of first instance): Ningbo Yinzhou District Fuluote Clothing Co., Ltd. Domicile: Room 319, No. 2, Lane 728, East Songjiang Road, Yinzhou District, Ningbo City, Zhejiang Province. Legal representative: XU Mingliang, general manager of the company. Agent ad litem: LI Huibin, lawyer of Zhejiang Haoshang Law Firm. Agent ad litem: SHI Jie, lawyer of Zhejiang Haoshang Law Firm. The Defendant of first instance: Ningbo Branch of Shanghai ACE Logistics Co., Ltd. Domicile: 11th floor, No. 88, East Baizhang Road, Jiangdong District, Ningbo City, Zhejiang Province. Representative: CHEN Jianxing, general manager of the company. Agent ad litem: ZHU Qiang, lawyer of Zhejiang Pingfan Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant, Shanghai ACE Logistics Co., Ltd. (hereinafter referred to as “ACE”), Ningbo Branch of Shanghai ACE Logistics Co., Ltd. (hereinafter referred to as “ACE Ningbo”), and the Respondent Ningbo Yinzhou District Fuluote Clothing Co., Ltd. (hereinafter referred to as “Fuluote”), as disagreeing with (2016) Zhe 72 Min Chu Zi No. 1139 Civil Judgement made by the Ningbo Maritime Court, the Appellant filed an appeal to the court. After filing the case on January 17, 2017, the court formed a collegiate panel according to the law and held a public hearing on February 13, 2017. Agent ad litem of ACE Ningbo, ZHU Qiang, agent ad litem of the Appellant ACE, JI Yufeng, and agent ad litem of the Respondent Fuluote, LI Huibin, appeared in court to participate in the litigation. During the trial, the Appellant ACE Ningbo withdrew its appeal, and the court allowed ACE Ningbo to participate in the case as the Defendant of first instance. Now the case has been concluded. Fuluote claimed to the court of first instance on May 17, 2016 that: on November 17, 2015, the buyer URBAN SUBURBAN, INC. (hereinafter referred to as “URBAN”) and Fuluote signed No. J151122B foreign trade contract and agreed to purchase 8,760 pieces of cotton knitted cardigans of Fuluote. The unit price was USD8/piece; the total payment was USD 70,080. The parties also signed another contract to purchase 8,760 pieces of men’s cotton knitted sweater; the unit price was USD8/piece; total payment was USD 70,080; the total amount for the two contracts was USD 140,160. The date of the shipment was on November 22, 2015, port of loading was Shanghai, China; the port of destination was Los Angeles, etc. On the next day, after negotiation between the buyer and the seller, the loading port was changed to Ningbo, and URBAN agreed to pay the goods within 60 days after delivery. In order to fulfil the foreign trade contract, on November 18, 2015, Fuluote delivered the relevant goods to URBAN designated by the carrier ACE Ningbo. ACE Ningbo issued by the Numbers for ACENGBSF21511123 copy of

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straight bill of lading to Fuluote, indicating that the shipper was Fuluote, the consignee and notify party was URBAN, the forwarder at the port of destination was TRUSTEXPRESS (LAX) INC, the loading port was Ningbo, China, the name of vessel was M.V. CSCL YELLOW SEA, voyage was V. 0021E, the unloading port was Los Angeles, 730 cases of men’ s cotton knitted cardigan and men’s cotton knitted sweater, country of origin was China, the container number was CAXU9943673, seal number was F1933789, one FEU, freight collect, yard to yard, shipper packing, counting, sealing, etc. Fuluote requires telex release. After Fuluote submitted telex release guarantee to ACE Ningbo, ACE Ningbo directly changed the telex release formalities issuing a B/L. After the shipment of the goods involved, Fuluote did not receive the payment for goods. It inquired with URBAN, which said it had not received the goods. Fuluote asked ACE Ningbo about the goods whereabouts, ACE Ningbo said it had delivered the goods to CTA designated by URBAN, but was unable to offer URBAN mandates and goods delivery procedures, then declined to comment. Then, Fuluote failed to negotiate many times. Upon investigation, ACE was a first-class forwarder registered and approved by the ministry of communications of the People’ s Republic of China, and its Ningbo branch was a branch established by ACE in Ningbo. Fuluote contended that, ACE and ACE Ningbo as NVOCC, did not deliver the goods to the named consignee according to the bill of lading and telex release guarantee, which constituted a serious breach of contract, causing Fuluote loan losses of USD 140,160, according to the middle for January 30, 2016 US dollars into RMB exchange rate 1:6.5233, converted into 914,305.73 yuan, ought to bear full liability to pay compensation. So it appealed to the court, requested to the judge that: 1. ACE and ACE Ningbo should jointly compensate for Fuluote in the sum of a payment of RMB 914,305.73 yuan and the corresponding interest (since January 30, 2016 to effective judgment to determine the performance of the same period in accordance with the People’s Bank of China on the day of enterprise loan interest rate); 2. court acceptance fee of the case should be borne by ACE and ACE Ningbo. ACE and ACE Ningbo jointly defended Fulutoe’s claims by stating that: 1. in this case, the ownership of the goods and risk was transferred to the buyer. The case was telex released, and Fuluote telex released without a bill of lading. Thus, Fuluote could not claim property rights; 2. Fuluote could not explain the identity of buyer in the trade contract, and could not confirm who should be paid after URBAN denied it for buyers; 3. in the case that the trading partner chosen by Fuluote was suspected of fraud, there was no reasons for Fuluote to refuse to change the consignee, resulting in the expansion of losses, which should bear the corresponding consequences; 4. Fuluote had applied for relief to China Export & Credit Insurance Corporation, Ningbo Branch (hereinafter referred to as “CECIC Ningbo”) for insurance claims, which were still being processed; 5. the value of goods in this case is false. Customs declaration price to CECIC Ningbo with Fuluote admitted that the price had apparent inconsistencies; there was the suspicion of defrauding export tax rebates and false claims surrounding the value of the goods. In conclusion, ACE and ACE Ningbo requested the court to reject the application of the company.

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The first-instance court found that in November 2015, the buyer, Dave, the self-assumed representative of URBAN signed the foreign trade contract No. J151122B with Fuluote, agreed to purchase 8,760 pieces of men’s cotton knitted cardigan from Fuluote, 8,760 pieces of men’s cotton knitted sweater; unit price was USD 8 per piece; total amount was USD 140,160; the date of shipment was on November 22, 2015; the port of loading was Shanghai; the port of destination port was Los Angeles, etc. After negotiation, the loading port should be changed to Ningbo Port, and the buyer should pay for the goods within 60 days after delivery. On November 18, 2015, Fuluote delivered the relevant goods to the foreign buyer’s designated carrier, namely ACE Ningbo. According to the customs declaration to Beilun, the unit price of the goods involved in the export declaration was USD8, and the total value of the goods was USD 140,160. On November 23, 2015, in the case of loading the goods shipment, ACE Ningbo issued Numbers for ACENGBSF21511123 straight bill of lading copy to Fuluote, which indicated that the Fuluote was the shipper, URBAN was consignee and notify party, the forwarder at port of destination was TRUSTEXPRESS (LAX) INC, the loading port was Ningbo, China; name of vessel was M.V. CSCL YELLOW SEA; voyage was V. 0021E; the unloading port was Los Angeles; goods for 730 cases of men’s cotton knitted cardigan and men’s cotton knitted sweater; country of origin was China; container number was ECMU9165570; seal number was F1933955; one FEU; freight collect, yard to yard, shipper’s packing, counting, sealing, etc. On the same day, Fuluote contacted ACE Ningbo staff member Cindy to change the consignee’s contact phone number; therefore, the change letter of guarantee was issued by Fuluote, it requested to change the consignee and notify party on HBL, not to change the AMS information, specifically to change the telephone number of URBAN from 212-391-4499 to 646-709-2353. Therefore, the resulting costs and responsibility should be borne by the Fuluote. Regarding the process of the goods, the staff of Fuluote, Anna and employee of ACE Tianjin branch, Cindy (Chinese name: CUI Mingyue), conversed by email and QQ chatting for business communication. After the goods arrived in the United States, Elaine, a staff member of a person other than involved in the case, CTA, contacted both parties through email about the goods involved. On November 30, 2015, the company paid 3,900 yuan to ACE Ningbo for three shipments of export goods, including the goods involved; on the next day, Fuluote entrusted Ningbo Jinduo Garments Co., Ltd., a person other than those involved in the case, to pay the remaining freight forwarding fee of 8,100 yuan for the three tickets. Among them, the freight forwarder cost of this case was 4,000 yuan. On December 2, 2015, ACE Ningbo confirmed receipt of freight forwarding fees. Later, Fuluote submitted a guarantee of telex release to ACE Ningbo, and assumed the resulting all risks and costs. After receiving the letter of guarantee, ACE Ningbo did not issue the original straight bill of lading, and directly changed the telex release procedures. In early December 2015, the goods involved arrived at the port of destination and completed customs clearance procedures. Later, the goods were picked up by CTA.

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After CTA took delivery of the goods, it was found that the staff and telephone number of the consignee who could be contacted during the process of delivery were abnormal. After a field investigation, the consignee URBAN denied that the goods were purchased for it. CTA contacted ACE and Fuluote to change the consignee, but the three parties failed to reach an agreement. On December 30, 2014, CECIC Ningbo issued a comprehensive insurance policy of short-term export credit insurance with the policy number of SCH033097 to Fuluote. On January 28, 2016, Fuluote reported a case to the underwriter CECIC Ningbo, including the goods involved three ticket goods exported to the United States because of the buyer and forwarding dispute, claimed for delay in payment. On March 18 of the same year, CECIC Ningbo accepted the claim. The insurance claim was still pending. It was also found that ACE had registered NVOCC in China’s transportation department, and ACE Ningbo had no ownership registered on the bill of lading. The court of first instance held that this case was a dispute arising from the wrong delivery of goods by Fuluote, after the goods were delivered to the carrier for export, and it was a dispute over the contract of carriage of goods by sea. According to the litigation and defence opinions of both parties, the issues of this case were summarized as follows: 1. The principal status of the parties in the transport contract involved Fuluote, as a shipper, shipped the goods involved to ACE Ningbo; ACE Ningbo had a copy of the bill of lading issued by the carrier without special statement. The format for the bill of lading was registered by ACE; during business operation, it arranged shipment of goods and the processing of this case after the occurrence of disputes mainly by ACE staff of Tianjin branch. Cindy, who contacted with Fuluote, was involved in the transport of goods by ACE as a whole. Therefore, the court of first instance determined that the carrier of the goods involved was ACE, and ACE Ningbo only accepted the business involved as the agent of ACE. 2. Legal issues concerning the application of the case In this case, the goods involved were exported to the United States, the delivery of goods took place outside of China’s territory. Therefore, this case had foreign elements, and the parties could choose the applicable law according to law. However, the carrier in question had not issued the original bill of lading, and the parties had not claimed and proved that there was any agreement on the application of the law. In the proceeding of the first instance, Fuluote claimed to apply for Chinese law. ACE and ACE Ningbo claimed on the goods delivery and customs clearance under United States law, the remaining should apply under Chinese law, and offered the first-instance court custom duty part of Code of Federal Regulations. The court of first instance held that ACE and ACE Ningbo, advocated the application of American law and should provide the law of the country. But where the law provided was complete and comprehensive, the law rules applicable to the case had no clear legal opinions for evidence, and provisions of the law nor the domestic book for reference. In accordance with Article 10 of the Application of

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Law for Foreign-related Civil Regulations of the People’s Republic of China, Chinese law should be applicable in this case. 3. Whether ACE had mis-delivered the goods The court of first instance held that under the contract of carriage of goods by sea, Fuluote and ACE had the obligation to deliver the goods safely to the consignee as agreed. Dave on behalf of URBAN signed foreign trade contract with Fuluote. Fuluote did not review when the signing of Dave’s identity and authorization procedures took place and had been imprudent until the goods delivered to CTA found that URBAN was not the buyer of the goods involved in the company. But Fuluote expressly agreed upon in the case of the goods that the consignee was URBAN. Though objectively, URBAN could not take the goods, it did not exempt from ACE as the carrier of careful delivery obligations, was still dealing with identity checking of the actual consignee. In this case, Fuluote did not send instructions to deliver the goods to CTA to ACE and ACE Ningbo; therefore, about whether CTA acceptance of goods was authorized by URBAN became decisive point regarding whether ACE should bear the responsibilities of incorrect delivery. Evidence 7 provided by Fuluote, that emails with ACE company staff Cindy reported that Elaine of CTA did not receive authorization of URBAN, and the evidence 2 provided by ACE that Elaine of CTA stated that Dave of URBAN had provided authorization before sailing. Both sides’ cited statements contradicted the other, and failed to put forward other evidence to support; therefore, one party could not provide mail statements on whether the goods taken by CTA had the authorization of URBAN. The first-instance court held that, ACE, as the carrier, carefully review that the consignee’s identity was the legal obligation, which in this case had proved that CTA had the rights to the burden of proof of the consignee’s authorization; it could not prove that CTA took the goods involved as authorized by the consignee URBAN, which should bear the legal consequences of failure of presenting evidence. Therefore, the court of first instance confirmed that ACE had mis-delivered the goods, which resulted in the loss of control over the goods involved and should bear the legal responsibility for the incorrect delivery. In the case of ACE, ACE Ningbo argued that Fuluote was in the insurance claims processing, which should not be asked for compensation. The court of first instance held that, this case and insurance claim were not the same legal relation, this case was dealt with in advance and all should be done without exception. 4. Losses of Fuluote Fuluote advocated that it sustained a loss of USD 140,160 since ACE had not delivered the goods to the named consignee, according to the middle of January 30, 2016 USD into RMB exchange rate 1:6.5233, equivalent to 914,305.73 yuan, and requested the interest since January 30, 2016 to the performance date determined by effective judgment of the same period in accordance with the People’s Bank of China on the day of the interest of the loan interest rate. ACE raised a defence stating that the value of goods asserted by Fuluote was false. ACE stated that the

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customs declaration price was different and that Fuluote communicated with CECIC Ningbo and admitted that there was apparent price inconsistency. Thus, there was suspect of defrauding export tax rebates and a false claim of good’s value. The first-instance court held that ACE failed to provide sufficient evidence to rebut the claims of Fuluote, and in the case the goods export price was clear; therefore, the defence of ACE and ACE Ningbo could not be confirmed. The goods involved were acquired by a person other than those involved in the case, CTA, in December 2015, and the rights of Fuluote had been damaged since then. Fuluote contended that the exchange rate of January 30, 2016 should be converted into the value loss of goods and the corresponding interest should be calculated, which was reasonable and should be supported. To conclude, the claims of Fuluote was reasonable and should be supported. The first-instance court, in accordance with the Application of Law for Foreign-related Civil Regulations of the People’s Republic of China Article 10, the Maritime Code of the People’s Republic of China Article 46 Paragraph 1, the Contract Law of the People’s Republic of China Article 107, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment was as follows: 1. ACE should compensate Fuluote payment of goods 914,305.73 yuan and interest effective decision within 10 days after this judgement came into effect (since January 30, 2016 until the end of the court decision for the implementation of the loan interest rate according to the People’ s Bank of China in the same period); 2. reject other claims of Fuluote. The first-instance case acceptance fee in amount of 12,940 yuan and the preservation fee in amount of 5,000 yuan, should be borne by ACE. ACE disagreed the judgment of first instance and appealed to the court that: firstly, the facts confirmed in the first instance were unclear, and the allocation of the burden of responsibility was improper. 1. the first-instance court confirmed that Fuluote signed trade contract directly with Dave, the random action of Fuluote to trade with the counterparty objectively resulted that URBAN could not receive the goods involved. 2. The first-instance judgment confirmed that ACE had the burden of proof to prove that CTA obtainment of goods was authorized by the consignee, URBAN, but according to the facts identified, CTA was on behalf of the consignee at the port of destination customs for clearance of customs, it was not the consignee, and the fact that Dave contacted CTA many times to require acceptance of goods indicated that CTA was the party of clearance of customs on behalf of the consignee. According to the provisions of the customs law part in Code of Federal Regulation, the goods involved in the United States customs for clearance of customs all needed to provide POA, the action that the goods involved had clearance itself had proven that CTA held the authorization document of URBAN. 3. The judgment of first instance failed to identify any fault of Fuluote, which was obviously wrong. The faults include that they signed the contract but did not verify the identity, did not receive the deposit, changed consignee phone after the issuance of the bill of lading, and refused to change the consignee. Therefore, Fuluote should be responsible for the expansion of loss. In addition, though the goods involved were in CTA, but Fuluote did not lose the control of the goods involved, it could

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have gotten the goods as long as it paid the relevant expenses of clearance, but Fuluote did not take any action to pick up the goods. 4. The first-instance judgment ignored the suspicion that Fuluote cheated the insurance. That the court of first instance judged that ACE should bear the compensation of loss was inappropriate, even though the company had already chosen the insurance claims and the insurance claims were still in progress. 5. ACE had fulfilled its obligation of carefully reviewing the identity of the consignee, without any fault, and it notified Fuluote when it found out about the suspension of the identity of consignee. Secondly, the first-instance judgment was wrong in applying the law. The customs clearance at the port of destination was in the United States; the recognition of the behaviour of law should apply to the United States law. In the first instance, ACE submitted all the federal code of the customs law section, proved that some goods had clearance of customs, which indicated that CTA had authorization of URBAN, but the court of first instance refused to apply the law by the reason that it could not be confirmed correctly and completely, which was improper. In conclusion, the original judgment was requested to dismiss, and the claims of Fuluote should be rejected. In response to ACE’s appeal, Fuluote argued that: firstly, it was correct that ACE should bear the burden to prove that CTA had received the authorization of URBAN judged by the court of first instance. The straight bill of lading involved, and the guarantee of telex release stated that consignee was URBAN rather than Dave. ACE, as the carrier, was responsible for the careful review of the consignee’s identity and should deliver the goods to the named consignee URBAN. Secondly, in the situation that ACE could not prove that CTA had received the authorization of URBAN, it delivered the goods to CTA, which was a breach of contract, and it should bear the liability. 1. CINDY, a staff member of ACE, had reported that ELAINE of CTA had not received the authorization letter of URBAN. 2. The so-called field survey of CTA, contacting the staff of consignee and abnormal telephone number were its only unilateral statements in the email, which did not affect that ACE was wrong in its delivery of the goods and should bear the liability for compensation. Thirdly, it was wrong that ACE said that Fuluote did not lose ownership of the goods involved. 1. Fuluote had never contacted with CTA, and the existing evidence could not confirm whether CTA was the customs clearance agent at the port of destination. 2. That ACE company said consignee URBAN was not a trade counterparty and caused the objective failure of delivery of the goods happened after ACE’s incorrect delivery, which did not affect the burden of the liability of ACE. Fourthly, ACE said that Fuluote should bear all the liability for the imprudent choice of trade counterparty, which was incorrect. Although Fuluote did not confirm the identity of Dave and authorization procedures comprehensively, carefully, but did not affect the fact that the consignee was URBAN in this case, and Fuluote had insured with CECIC Ningbo against possible loss of the goods involved. Regarding whether the goods involved had been delivered to CTA by mistake, ACE could not prove that the goods were still controlled by it. Fifthly, ACE said that Fuluote and Dave’s trade behaviour suspected an illegal crime, which lacked an objective basis, and if ACE could obey the basic obligation of carrier, whether the case was an illegal crime or not, it did not have to assume responsibility. Sixthly, that the first-instance court, according to the

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regulation of China regarding application of foreign law, determined that ACE submitted to the customs law of the relevant laws had no effect was correct, and ACE was still not be able to obtain evidence of authorization, which did not accord with common sense. In conclusion, the court was requested to dismiss the appeal and affirm the original judgment. ACE Ningbo argued that it agreed with ACE’s opinions of appeal. During the second trial, no new evidence was submitted by either party. After the trial, the court confirmed the facts identified in the first instance decision. The court held that this case was caused by the failure of ACE to deliver the goods to the consignee of the straight B/L which was a maritime cargo contract dispute. According to appeal and reasons of ACE and the opinion of defence of Fuluote and ACE Ningbo; the issues for second instance trial to the case were: 1. whether the application of law in first instance was correct. 2. Whether it is correct for ACE to assume liability for the incorrect delivery of goods to Fuluote. The parties had no objection to the issues concluded by the court. The analyses of this case was as follows: 1. Whether the application of law in the judgment of first instance was correct ACE contended that customs clearance at the port of destination was in the United States; the recognition of the nature of the behaviour should apply to law of the United States, namely that the U.S. customs required the carrier to deliver the cargo to port authorities after the goods to the port, and clearance company authorized by the consignee could take the goods to the port side, so ACE had no fault in this case during delivery of the goods. The court held that during the first instance, ACE submitted to the court for the assembly of Code of Federal Regulations of customs duty part, for the United States was case law country, in the case that ACE failed to submit complete laws and regulations or related precedents and legal advice, it was correct that the first-instance court ascertained that the existing evidence was not enough to conclude the issues involved when none of the law of the United States was delivered; according to the Application of Law for Foreign-related Civil Regulations of the People’s Republic of China Article 10, the case should apply the law of the People’s Republic of China. Even if the court applied the laws of the United States, the conclusion could not be reached that the goods should be delivered to the port authority after the arrival of the goods, and in the second trial, ACE also confirmed that the existing law of America had no obligatory provisions on port authority; therefore, it should assume the burden of proof that the failure of delivery to the consignee in straight B/L. 2. Whether it is correct for ACE to assume liability for the incorrect delivery of goods to Fuluote ACE contended that it fulfilled its obligation of delivery when it delivered the goods to the consignee CTA authorized by URBAN legally. The claim of Fuluote to the liability for compensation had facts and a legal basis. The court held that, first of all, the copy of straight B/L issued by ACE Ningbo to Fuluote and the guarantee of telex

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release submitted by Fuluote indicated that the consignee was URBAN, although the company ACE argued that from the existing evidence, URBAN denied that it purchased the goods involved; this case is that the consignee refused to take delivery, but this situation could not absolve them from their obligation to deliver prudently as a carrier. It should be responsible for the burden of proof that the delivery of the goods to CTA was not its fault. Secondly, ACE held that according to the law of the United States, the fact could be presumed that CTA had received the legal authorization of URBAN at the time of delivery to the port authorities, the goods involved had been actually delivered to the customs clearance company specified by consignee, and that ACE delivered the goods was by no mistake. However, ACE failed to submit the letter of authorization of CTA obtained from URBAN, and also failed to prove that the goods should be delivered to the port authorities and taken by the customs clearance company designated by the consignee after their arrival at the port of destination. ACE affirmed that the goods involved were not under the control of the carrier, so it should be liable to the loss of the goods that were not delivered to the straight bill of lading consignee against Fuluote. Thirdly, although ACE held that Fuluote in this case had the suspicion of defrauding export tax rebates, it failed to prove that the goods involved in the sales confirmation and the value specified in the export goods declaration form were false, so the defence was not supported. In addition, although Fuluote claimed to CECIC Ningbo, the first-instance court found out that the claim’s process was not complete, and this case and Fuluote’s insurance claim was not the same legal relationship; the first-instance court was not wrong, and the judgment should be affirmed. To conclude, ACE arranged the shipment after accepting the goods delivered by Fuluote, but did not deliver the goods to the straight bill of lading consignee URBAN, which resulted the loss of payment for goods of Fuluote. ACE should assume liability to pay the compensation for the loss. ACE’s defence that the goods were delivered to the customs clearance company specified by consignee according to the U.S. customs laws and regulations so it should not bear the liability for compensation and Fuluote was suspected of tax fraud did not have sufficient evidence or reasons and could not be supported. The facts were clearly ascertained by the court of first instance, and the application of law was correct. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 12,940 yuan, shall be born by the Appellant, Shanghai ACE Logistics Co., Ltd. The judgment is final. Presiding Judge: KONG Fanhong Acting Judge: ZHENG Enliang Acting Judge: HUO Tong March 31, 2017 Clerk: ZHANG Yu

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The Supreme People’s Court of the People’s Republic of China Civil Ruling Ningbo Yinzhou District Fuluote Clothing Co., Ltd. v. Ningbo Branch of Shanghai ACE Logistics Co., Ltd. et al. (2018) Zui Gao Fa Min Shen No.3919 Related Case(s) This is the ruling of retrial, and the judgment of first instance and the judgment of second instance are on page 897 and page 910 respectively. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower courts’ decision holding defendant NVOCC liable for misdelivery of goods by delivering to someone other than the consignee named on the bill of lading, without checking whether the person taking delivery was authorized by the named consignee to act on its behalf. Summary The Defendant NVOCC arranged carriage of a cargo of clothes from Ningbo to Los Angeles. The goods were delivered to someone other than the named consignee on the bill of lading, without checking that the person taking delivery had authorization from the named consignee to take delivery on its behalf. The named consignee did not pay the plaintiff, the seller of the goods, for the goods. The first instance Court held that the defendant was liable to the plaintiff for misdelivery of the goods. On appeal by the defendant, the appeal Court affirmed the decision of the trial Court, holding that the defendant had failed to provide evidence showing that the value of the goods was incorrect. Further, the defendant did not provide sufficient materials for the court to apply the laws of the United States in this case as it requested. NVOCC made a petition to the Supreme Court of China for retrial. The Supreme Could upheld the lower courts’ decision, by holding that NVOCC failed to provide solid evidence to show that the lower courts were incorrect in deciding the governing law, finding NVOCC’s misdelivery of the goods, or ascertaining the value of the goods.

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Ruling The Claimant of Retrial (the Defendant of first instance, the Appellant of second instance): Shanghai ACE Logistics Co., Ltd. Domicile: Room 802, No. 155, Xueqian Street, Shanghai. Legal representative: XUE Shundi, chairman of the company. Agent ad litem: JI Yufeng, lawyer of Shanghai Huiye Law Firm. The Respondent of Retrial (the Plaintiff of first instance, the Respondent of second instance): Ningbo Yinzhou District Fuluote Clothing Co., Ltd. Domicile: Room 319, No. 2, Lane 728, East Songjiang Road, Yinzhou District, Ningbo, Zhejiang. Legal representative: XU Mingliang, general manager of the company. The Defendant of first instance: Ningbo Branch of Shanghai ACE Logistics Co., Ltd. Domicile: 11th floor, No.88, East Baizhang Road, Jiangdong District, Ningbo, Zhejiang. Representative: CHEN Jianxing, general manager of the branch. With respect to the case arising from dispute over contract of carriage of goods by sea between the Claimant of Retrial, Shanghai ACE Logistics Co., Ltd. (hereinafter referred to as ACE), the Respondent of Retrial, Ningbo Yinzhou District Fuluote Clothing Co., Ltd. (hereinafter referred to as Fuluote), defendant the Defendant of first instance, Ningbo Branch of Shanghai ACE Logistics Co., Ltd., the Claimant of Retrial disagreed with the Zhejiang High People’s Court (hereinafter referred to as the court of second instance) (2017) Zhe Min Zhong No. 52 Civil Judgment, and applied for retrial to the court. The court formed a collegiate panel to conduct the review, and the review has been concluded. ACE claimed that: firstly, the application of law by the court of second instance was wrong. The fact of customs clearance at the destination port occurred in the United States, and the US law should be applied in this case. ACE submitted the customs law part of the US Federal Code to the courts of first and second instances. The courts of first and second instances did not apply because the laws submitted by ACE were incomplete and comprehensive, which was wrong application of law. Secondly, the confirmation of facts by the court of second instance was wrong. 1. Fuluote concluded a foreign trade contract with Dave. The consignee of the goods involved was Dave instead of URBAN SUBURBAN, INC. (hereinafter referred to as Urban). The original judgment determined that the consignee was Urban, which was wrong. ACE fulfilled its statutory obligation to carefully review the consignee’s identity, and delivered the goods involved to CTA with the permission of Dave. There was no wrong delivery of the goods. According to the provisions of the US law, the clearance of goods in the United States required the authorization of the consignee. CTA cleared the goods, and Dave contacted CTA several times to request delivery, indicating that it obtained the authorization of Urban. 2. The court

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of second instance confirmed that ACE should provide proof that CTA obtained the goods involved and obtained the authorization of Urban, and the burden of proof was allocated incorrectly. 3. When Fuluote concluded a trade contract, it did not carefully check the transaction object, change the consignee information on the bill of lading, and did not take measures to control the goods when the consignee’s identity was known, so the loss caused should be born by Fuluote. The trading activities between Fuluote and Dave were suspected of fraudulent insurance. Fuluote settled claims with the insurance company, and the courts of first and second instances made wrong judgments in this case. In conclusion, according to the Civil Procedure Law of the People’s Republic of China Article 200 Sub-paragraph 2 and Sub-paragraph 6, it applied for retrial. After review, the court holds that, the case is the dispute over contract of carriage of goods by sea, according to the retrial application of ACE, the court will review whether there is such conditions in the Civil Procedure Law of the People’s Republic of China Article 200 Sub-paragraph 2 and Sub-paragraph 6. The case is the dispute over contract of carriage of goods by sea, due to the fact that the goods involved were exported to the United States and the delivery of the goods occurred outside China, there were foreign-related factors. The two parties did not agree on the law applicable to the contract, according to the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 41 that “the parties concerned may choose the laws applicable to contracts by agreement. If the parties do not choose, the laws at the habitual residence of the party whose fulfilment of obligations can best reflect the characteristics of this contract or other laws which have the closest relation with this contract shall apply”, and the Maritime Code of the People’s Republic of China Article 269 that “the parties to a contract may choose the law applicable to such contract, unless the law provides otherwise. Where the parties to a contract have not made a choice, the law of the country having the closest connection with the contract shall apply”, both parties in this case are corporate legal persons of China, and the place of our regular residence is located in China. Therefore, in accordance with the principle of the closest relationship, Chinese laws should be applicable to disputes involving transportation contracts. The court of second instance applied Chinese laws to settle the case, which is not inappropriate. ACE claimed that according to the requirements of the US Customs Law, the customs clearer must hold the power of attorney of the consignee, so the facts of customs clearance can presume that the CTA held the power of attorney of the designated consignee Urban, which could prove that ACE fulfilled the obligations of delivery. It can be seen that the purpose of ACE’s assertion of the US Customs Law is to prove the defence of the goods it delivered, and ACE should bear the corresponding burden of proof for its defence. In this case, ACE cannot submit the complete US customs laws and regulations, nor can it prove that the US Customs Law requires customs clearance to submit a power of attorney issued by the consignee that contains the

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matter of extracting the goods. The two parties in this case submitted conflicting evidence on whether the CTA’s withdrawal of goods was authorized by the consignee. Therefore, comprehensively examining the evidence in this case, the evidence submitted by ACE is not enough to prove its defence, and it should bear the adverse legal consequences of insufficient evidence. The court of second instance confirmed that CTA did not obtain the authorization of the designated consignee Urban, which is not inappropriate. The claim of ACE that the application of law was wrong has no factual or legal basis, so the court does not support it. In this case, the copy of the bill of lading issued by the carrier ACE and the letter of guarantee of releasing goods issued by the shipper Fuluote recorded that the consignee was Urban, so it was clear that the consignee of the transportation contract was Urban. Whether Fuluote verified the identity of the buyer in the sales contract and that the phone number recorded in the bond issued by it was not the phone number of Urban, should not result in the change of the consignee under the transportation contract. ACE held that the delivery object was Dave, which cannot be established. In the transportation contract relationship involved, ACE has the contractual obligation to deliver the goods to Urban. The consignee Urban did not take the goods at the port of destination. After knowing the fact, Fuluote refused to change the consignee, which does not violate the obligations under the contract of carriage. Under this circumstance, the carrier ACE can dispose of the goods in accordance with the law, and ask Fuluote to bear the corresponding costs, but it has not to deliver inappropriately. Fuluote did not issue an order to deliver the goods to CTA, and the case did not have sufficient evidence to prove that CTA obtained the authorization of the consignee Urban. Therefore, ACE delivered the goods to CTA, which violates the obligations to deliver the goods. The court of second instance confirmed that it should bear corresponding compensation liability for the loss of goods suffered by the shipper, which is not inappropriate. In addition, ACE claimed that Fuluote and Dave were suspected of fraudulent insurance and did not provide evidence to prove it. The case is the dispute over contract of carriage of goods by sea, the relationship with the cargo transportation insurance contract is not the same legal relationship. There is no evidence that Fuluote obtained insurance compensation and the right to claim against the carrier was transferred to the insurer. Even if there is the fact that Fuluote requested insurance claims, it will not affect the hearing of this case. Therefore, the retrial reason of ACE that it delivered the goods correctly and should not compensate for the loss cannot be established, so the court does not support it. Pulling the threads together, the application of retrial of ACE was inconsistent with the Civil Procedure Law of the People’s Republic of China Article 200. According to the Civil Procedure Law of the People’s Republic of China Article

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204 Paragraph 1, and the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 395 Paragraph 2, the ruling is as follows: Dismiss the application for retrial of Shanghai ACE Logistics Co., Ltd. Presiding Judge: HUANG Xiwu Judge: YU Xiaohan Judge: YANG Honglei September 28, 2018 Judge Assistant: ZHAO Di Clerk: CHEN Hui

Ningbo Maritime Court Civil Judgment Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2016) Zhe 72 Min Chu No.224 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 931. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Defendant carrier held liable to plaintiff cargo-owner for delivery of goods without presentation of original bill of lading; damages calculated by reference to value of cargo at time and place of shipment. Summary The Plaintiff, Paper Creative Limited (PCL), filed suit against Orient Star Transporting LLTD (OST) and OST-Ningbo Branch after OST delivered PCL’s cargo without the proper bill of lading. Since OST-Ningbo Branch was only an agent, the court of first instance determined that the bill of lading was only valid between PCL and OST. Accordingly, the court of first instance held that OST should be liable for its failure to properly deliver the goods and calculated the damages owed to PCL through the fair market value of the goods at the time of shipment. Interest payments, however, would only be calculated from the date that PCL filed suit.

Judgment The Plaintiff: Paper Creative Limited. Domicile: Hong Kong Special Administrative Region. Legal representative: WU Haotian, director of the company. Agent ad litem: ZHENG Faguo, lawyer of Zhejiang Harnest & Garner Law Firm. Agent ad litem: GUI Sicong, lawyer of Zhejiang Harnest & Garner Law Firm. The Defendant: Orient Star Transporting LLTD. Domicile: Hong Kong Special Administrative Region. Legal representative: CHEN Wenbao, director of the company.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_48

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The Defendant: Orient Star Transport (China) Co., Ltd. Ningbo Branch Domicile: Jiangdong District, Ningbo, Zhejiang, the People’s Republic of China. Person in charge: HUANG Haoying, manager of the company. Agent ad litem of above two Defendants: LI Rongcun, lawyer of Wang Jing & Co. Xiamen Branch. Agent ad litem of above two Defendant: BAI Jie, lawyer of Wang Jing & Co. Xiamen Branch. With respect to the case arising from dispute over carriage of goods by sea between the Plaintiff, Paper Creative Limited (hereinafter referred to as “PCL”), the Defendant, Orient Star Transporting LLTD. (hereinafter referred to as “OST”), and the Defendant, Orient Star Transport (China) Co., Ltd. Ningbo Branch (hereinafter referred to as “OST Ningbo”), after the court entertained the case on February 2, 2016, it legitimately constituted the collegiate bench to try the case. During the trial, PCL applied for property preservation on February 3 of the same year, arguing that the two Defendants’ bank deposits of 313,889.45 USD should be frozen, or equivalent property should be sealed up. The court approved this request on the same day. The court held hearing in public twice on May 12, 2016 and September 22, 2016. The legal representative of the Plaintiff PCL, WU Haotian (did not appear in the second hearing), agent ad litem, ZHENG Faguo, and agents ad litem of the two Defendants, LI Rongcun and BAI Jie, appeared in the court to attend the hearings. Now the case has been concluded. The Plaintiff PCL claimed to the court that: the two Defendants should compensate PCL 31,389.45 USD (converted into RMB 195,314.57 yuan according to the exchange rate on February 13, 2015) and pay the interests from benchmark lending rates of bank from February 13, 2015 to the date of actual payment. During the trial, PCL reduced the amount of money requested to 19,425.60 USD. Facts and reasons: in January 2015, PCL booked to OST Ningbo to carry one order of cargo from Ningbo Port China to New York. The transportation was CY-CY. After OST Ningbo accepted the commission, it delivered the whole original bill of lading to PCL. The carrier displayed on the B/L was OST, and its number was NBNYC1520267. Since then, PCL held the whole original B/L mentioned above the entire time. However, the cargo of the B/L was already discharged at the destination port, and PCL still had a payment of 19,425.60 USD to be received. Therefore, PCL filed the lawsuit. The Defendant OST and OST Ningbo both argued that: 1. they confirmed that OST was the carrier of the cargo involved, and the cargo had been delivered to consignee Paper Preserve Inc. (hereinafter referred to as “PPI”) at the destination port without the premise of receiving original B/L. But OST Ningbo was the only agent of OST, not a proper Defendant in this case. 2. There was no evidence to support the claim of OST that it had a loss of cargo according to the record of customs declaration of export. The true value of the cargo involved should be confirmed according to the cost that it actually paid or should be paid. 3. PCL had received the whole payment of the cargo involved and had no real loss. 4. PCL had been compensated by China Export & Credit Insurance Corporation Ningbo Branch

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(hereinafter referred to as “CECIC Ningbo”). Therefore, it had no right to request for compensation for the part it had already been compensated. To conclude, they claimed to the court to reject the claims of PCL. The parties provided evidence about the claim, and the court organized them to exchange and cross-examine it. The court confirmed and proved in the volume the evidence that both parties had no objection. As for the evidence and facts that were under dispute, the court held the opinions as follows: 1. both parties had no objection to evidence 5, intercourse mails between PCL and the consignee provided by PCL, evidence 3, intercourse mails between PCL and the consignee provided by the two Defendants, the bank receipts of payment and testimony of the consignee and the court affirmed it. As for the fact whether the payment involved had been paid off, although PPI indicated in the mails to PCL and the bank receipts of payment that the disbursements were payment for cargo involved in this case and cargo recorded on B/L NBNYC1520086, PCL attributed the items above to their unsettled order before and further required that PPI should affirm the renewed debt of 691,666.18 USD in the mail on August 31, 2015, including arrears of 19,425.60 USD involved. PPI responded clearly to the mail on September 2 of the same year that “the debt of 691,666.18 USD listed in the attachment was correct”. Accordingly, the court held that both parties reached an agreement on the amount of debt, so PPI still needed to pay for the cargo involved. 2. Because there was the original script of all the letters that reserved the right to return indemnity showed by CECIC provided by PCL in evidence 6, the contact letters of returning indemnity in evidence 7, application for funds transfer (domestic) and the cash voucher, its authenticity could be affirmed. The fact that PCL returned indemnity of the cargo involved to CECIC could be proved. The court pulled up short-term export credit insurance renewal insurance policy and list of commissioned matters according to the written application of the two Defendants. Both parties had no objection to it and affirmed it directly. According to the statements of the parties and the evidence confirmed by investigation, the court held the facts as follows: at the end of 2014 and the beginning of 2015, American client PPI ordered 6 orders of cargo from PCL. PCL entrusted Ningbo Blue & Orange Package LLD. (hereinafter referred to as “BO LLD”) to be in charge of booking space and shipping the six orders of cargo mentioned above with OST Ningbo. After OST Ningbo accepted the entrust, it issued original B/L triplicate for the cargo. The number of the invoice involved was PC15P006, and the price was FOB 19,425.60 USD. The title was OST, the number was NBNYC1520267, the carrier showed was PCL, and the consignee and the informant was PPI. Port of loading was Ningbo, and the port of discharge and the delivery place was New York. The name and the number of the ship was BREMENBRIDGE017A. The cargo was paper boxes, glow sticks, and so on. They were loaded in a TEU container whose number was TCLU3151713. The date of loading was February 13, 2015, freight collect. This original B/L triplicate had always been held by PCL. But OST Ningbo confirmed that the cargo involved was delivered to the consignee in the mail on May 8, 2015. Due to unsuccessful negotiations, PCL sued OST and OST Ningbo to the court for the reason that they

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delivered the cargo without the B/L. The value of the cargo recorded on the customs export declaration involved was 31,389.45 USD. PCL insured CECIC Ningbo with a short-term export credit insurance for export trade including the cargo involved in the name of BO LLD. BO LLD filed an insurance claim with CECIC Ningbo on May 28, 2015 for the reason that it did not receive the payment. The declared debtor was The Philadelphia Group (this company and PPI both were the trade name of MBM Industries, Inc.), and the amount of debt of the cargo involved was 19,425.60 USD. CECIC Ningbo compensated 17,483.04 USD to BO LLD and raised a claim against The Philadelphia Group on June 2, 2015. After CPL brought this suit, CECIC Ningbo argued that the loss caused by the carrier’s unauthorized delivery was excluded liability of the insurance and asked BO LLD to refund the compensation mentioned above. After negotiating with CECIC Ningbo, BO LLD returned the insurance compensation to CECIC Ningbo. Ascertained otherwise, OST had registered for the non-vessel operating common carrier qualification. The B/L involved was in the form of its filing B/L. The court held that: the dispute of this case involved the carriage of goods by sea. Both parties confirmed the application of law of the Mainland of the People’s Republic of China. Therefore, this case applied the law of the Mainland China and other related law. The B/L involved was in the form of filing B/L of OST, and OST was clearly recorded on it as the carrier. OST and OST Ningbo confirmed that OST was the carrier of the cargo involved. OST Ningbo was only the agent. Therefore, the carriage contract was only valid between PCL and OST. There was no sufficient facts and reasons to support the claim of PCL that OST Ningbo was the co-carrier of the cargo involved, and the court did not support it. OST had no objection to the basis of PCL’s prosecution and the authenticity of the original B/L triplicate, and it confirmed that the cargo involved was released at the port of destination. Therefore, the act of delivery of cargo without B/L of OST had been established, and OST should compensate against PCL for its loss due to the act. The Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 6 states that, the amount of compensation for the losses caused to the holder of an original bill of lading for a carrier’s delivery of goods without the original bill of lading shall be calculated on the basis of the value of goods at the time of shipment plus freight and insurance premium. The price clause of the cargo involved was FOB. The transportation and insurance were in the charge of the seller. Therefore, the value of the cargo loaded could be affirmed as the loss of PCL. The value of the cargo recorded on the merchandise invoice was 19,425.60 USD, lower than the amount of cargo which recorded on the customs declaration of export. PCL advocated that OST should compensate its payment loss as the amount of the invoice mentioned above. This claim of the value of the cargo is in accordance with that of OST, and the court supported it. OST and OST Ningbo argued that OST had paid off the payment, but they did not submit evidence to prove it. The court did not confirm it. Although PCL had received partial compensation through insuring it with export credit insurance, it returned the insurance

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compensation to CECIC Ningbo during the trial. Therefore, OST should still compensate for all the loss of payment. PCL advocated to convert the payment mentioned above into RMB 120,957.38 according to dollar in RMB, 1:6.2267 on February 13, 2015, the date of shipment. It is lower than the day PCL sued which was February 2, 2016, and the central parity rate was dollar in RMB 1:6.5510, which was favourable for OST. The court supported it. As for interests, there was no basis for the advocation of counting from the shipment day of PCL. The court decided to act at its discretion and count from the day when PCL sued to the court. By way of conclusion, the court supported the rational part of the claims made by PCL. According to the Maritime Code of the People’s Republic of China Article 71, and the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law During the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 2 and Article 6, the judgement is as follows: 1. The Defendant Orient Star Transporting LLTD. shall compensate Paper Creative Limited RMB 120,957.38 yuan for its loss in ten days after the judgment came into effect and should pay interest as per benchmark lending rates for the same period of the People’s Bank of China from February 2, 2016 to the date of actual payment decided by the judgment; 2. Reject other claims of Paper Creative Limited. If the relevant party does not perform its obligation of paying the money within the due time decided by the judgment, it should double pay the debt interest delayed period according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee was originally in amount of RMB 4,380 yuan for this trial. After PCL reduced its claims, the court acceptance fee is changed to RMB 2,720 yuan. Property preservation application fee is in amount of RMB 1,520 yuan. OST shall bear the afore-said fees. If not satisfied with the judgement, the Plaintiff, Paper Creative Limited, or the Defendant, Orient Star Transporting LLTD., within thirty days of the date of the judgment be delivered, or the Defendant, Orient Star Transport (China) Co., Ltd. Ningbo Branch, within fifteen of the date of the judgment be delivered, can submit, together with copies of the original petition, appeal to the Zhejiang High People’s Court. Presiding Judge: CHEN Xiaoming Acting Judge: QIAN Bingbing Acting Judge: LI Gang September 28, 2016 Acting Clerk: ZHU Danying

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Appendix: Relevant Laws 1. Maritime Code of the People’s Republic of China Article 71 A bill of lading is a document which serves as an evidence of the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and based on which the carrier undertakes to deliver the goods against surrendering the same. A provision in the document stating that the goods are to be delivered to the order of a named person, or to order, or to bearer, constitutes such an undertaking. 2. Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in Cases Involving the Delivery of Goods without Original Bill of Lading Article 2 Where a carrier, in violation of laws, delivers goods without the original bill of lading (B/L), thus injuring the original B/L holder's rights under the B/L, the original B/L holder may request the carrier to bear the civil liability for the resultant loss. Article 6 The amount of compensation for the loss caused by a carrier to the holder of an original B/L due to delivery of goods without the original B/L shall be calculated based on the value of the goods plus freight and insurance expenses when the goods are shipped. 3. Civil Procedure Law of the People’s Republic of China Article 253 If the person subjected to execution fails to fulfil his obligations with respect to pecuniary payment within the period specified by a judgment or written order or any other legal document, he shall pay double interest on the debt for the belated payment. If the person subjected to execution fails to fulfill his other obligations within the period specified in the judgement or written order or any other legal document, he shall pay a charge for the dilatory fulfilments.

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Zhejiang High People’s Court Civil Judgment Paper Creative Limited v. Orient Star Transporting LLTD. et al. (2017) Zhe Min Zhong No.251 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 925. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision holding defendant carrier held liable to plaintiff cargo-owner for delivery of goods without presentation of original bill of lading; damages calculated by reference to value of cargo at time and place of shipment. Summary The Plaintiff, Paper Creative Limited (PCL), filed suit against Orient Star Transporting LLTD (OST) and OST-Ningbo Branch after OST delivered PCL’s cargo without the proper bill of lading. Since OST-Ningbo Branch was only an agent, the court of first instance determined that the bill of lading was only valid between PCL and OST. Accordingly, the court of first instance held that OST should be liable for its failure to properly deliver the goods and calculated the damages owed to PCL through the fair market value of the goods at the time of shipment. Interest payments, however, would only be calculated from the date that PCL filed suit. On appeal, the court of second instance affirmed the judgement of first instance.

Judgment The Appellant (the Defendant of first instance): Orient Star Transporting LLTD. Domicile: Hong Kong Special Administrative Region. Legal representative: CHEN Wenbao, director of the company. Agent ad litem: LI Rongcun, lawyer of Wang Jing & Co. Xiamen Branch. Agent ad litem: BAI Jie, lawyer of Wang Jing & Co. Xiamen Branch.

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The Respondent (the Plaintiff of first instance): Paper Creative Limited. Domicile: Hong Kong Special Administrative Region. Legal representative: WU Haotian, director of the company. Agent ad litem: ZHENG Faguo, lawyer of Harnest & Garner Law Firm. Agent ad litem: GUI Sicong, lawyer of Harnest & Garner Law Firm. The Defendant of first instance: Orient Star Transport (China) Co., Ltd. Ningbo Branch. Domicile: Jiangdong District, Ningbo, Zhejiang, the People’s Republic of China. Legal representative: HUANG Haoying, manager of the company. Agent ad litem: LI Rongcun, lawyer of Wang Jing & Co. Xiamen Branch. Agent ad litem: BAI Jie, lawyer of Wang Jing & Co. Xiamen Branch. With respect to the case arising from dispute over carriage of goods by sea between the Appellant, Orient Star Transporting LLTD. (hereinafter referred to as “OST”), the Respondent, Paper Creative Limited (hereinafter referred to as “PCL”), and the Defendant of first instance, Orient Star Transport (China) Co., Ltd. Ningbo Branch (hereinafter referred to as “OST Ningbo”), the Appellant disagreed with the Ningbo Maritime Court (2016) Zhe 72 Min Chu No. 224 Civil Judgment and appealed to the court. After entertaining it on May 8, 2017, the court legitimately constituted the collegiate bench to try the case. Agents ad litem of the Appellant and the Defendant of first instance, LI Rongcun and BAI Jie, and agent ad litem of the Respondent, ZHENG Faguo, attended the investigation and cross-examination held by the court on May 2, 2017. Now the case has been concluded. PCL claimed to the court of first instance that: OST and OST Ningbo should compensate PCL 31,389.45 USD (converted into RMB195,314.57 yuan according to the exchange rate on February 13, 2015) with interest according to the benchmark lending rates of People’s Bank of China from February 13, 2015 to the date of actual payment. During the trial, PCL reduced the amount of money to 19,425.60 USD. Facts and reasons: in January 2015, PCL booked to OST Ningbo to carry one order of cargo from Ningbo Port China to New York. The transportation was CY-CY. After OST Ningbo accepted the commission, it delivered the whole original bill of lading to PCL. The carrier shown on the B/L was OST, and its number was NBNYC1520267. Since then, PCL held the whole original B/L mentioned above the entire time. But the cargo of the B/L was already discharged, and PCL still had a payment of 19,425.60 USD to be received. Therefore, PCL filed the lawsuit to the court of first instance. OST and OST Ningbo both argued that: 1. they confirmed that OST was the carrier of the cargo involved, and the cargo was delivered to the port of destination by Paper Preserve Inc. (hereinafter referred to as “PPI”) without retrieving the whole original B/L. But OST Ningbo was only the agent of OST, so it was not a proper Defendant in this case. 2. There was no evidence to support the claim of PCL that it had loss of cargo according to the record of customs declaration of export. The true value of the cargo involved should be confirmed according to the cost that it actually paid or should be paid. 3. PCL had received the whole payment

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of the cargo involved and had no real loss. 4. PCL had been compensated by China Export & Credit Insurance Corporation Ningbo Branch (hereinafter referred to as “CECIC Ningbo”). Therefore, it had no right to request for compensation for the part it had already been compensated. In conclusion, they claimed to the court to reject the claim of PCL. The court of first instance tried and found that: at the end of 2014 and the beginning of 2015, American client PPI ordered 6 orders of cargo from PCL. PCL entrusted Ningbo Blue & Orange Package LLD. (hereinafter referred to as “BO LLD.”) to be in charge of booking space and shipping the six orders of cargo mentioned above with OST Ningbo. After OST Ningbo accepted the entrustment, it issued original B/L triplicate for the cargo. The number of the invoice involved was PC15P006, and the price was FOB 19,425.60 USD. The title was OST; the number was NBNYC1520267; the carrier showed was PCL; the consignee and the informant was PPI. The port of loading was Ningbo, and the port of discharge and the delivery was New York. The name and the number of the ship was BREMENBRIDGE017A. The cargo was paper boxes, glow sticks, and so on. They were loaded in a TEU container whose number was TCLU3151713. The date of loading was February 13, 2015, freight collect. This original B/L triplicate had always been held by PCL. But OST Ningbo confirmed that the cargo involved was delivered to the consignee in the mail on May 8, 2015. Due to unsuccessful negotiation, PCL sued OST and OST Ningbo to the court for the reason that they delivered the cargo without the B/L. The value of the cargo recorded on the customs export declaration involved was 31,389.45 USD. PCL insured CECIC Ningbo with short-term export credit insurance for export trade including the cargo involved in the name of BO LLD. BO LLD. Filed insurance claims with CECIC Ningbo on May 28, 2015 for the reason that it did not receive the payment. The declared debtor was The Philadelphia Group (this company and PPI both were the trade name of MBM Industries, Inc.), and the amount of debt of the cargo involved was 19,425.60 USD. CECIC Ningbo compensated 17,483.04 USD to BO LLD. And raised a claim against The Philadelphia Group on June 2, 2015. CECIC Ningbo argued that the loss caused by the carrier’s unauthorized delivery had excluded liability of the insurance and asked BO LLD. To refund the compensation mentioned above. After negotiating with CECIC Ningbo, BO LLD. Returned the insurance compensation to CECIC Ningbo. Ascertained otherwise, OST had registered for the non-vessel operating common carrier qualification. The B/L involved was in the form of its filing B/L. The court of first instance held that: the dispute of this case involved the carriage of goods by sea. Both parties confirmed the application of law of the Mainland of the People’s Republic of China. Therefore, this case applied law of the Mainland China and other related law. The B/L involved was in the form of filing B/L of OST, and OST was clearly recorded on it as the carrier. OST and OST Ningbo confirmed that OST was the carrier of the cargo involved. OST Ningbo was only the agent. Therefore, the carriage contract was only valid between PCL and OST. There was no sufficient facts and reasons to support the claim of PCL that OST Ningbo was the co-carrier of the cargo involved, and the court did not support it.

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OST had no objection to the basis of PCL’s prosecution and the authenticity of the original B/L triplicate, and it confirmed that the cargo involved was released at the port of destination. Therefore, the act of delivery of cargo without B/L of OST had been established, and OST should compensate PCL for its loss due to the act. The Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law During the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 6 stated that, the amount of compensation for the losses caused to the holder of an original bill of lading for a carrier’s delivery of goods without the original bill of lading shall be calculated on the basis of the value of goods at the time of shipment plus freight and insurance premium. The price clause of the cargo involved was FOB. The transportation and insurance were in the charge of the seller. Therefore, the value of the cargo loaded could be affirmed as the loss of PCL. The value of the cargo recorded on the merchandise invoice was 19,425.60 USD, lower than the amount of cargo which was recorded on the customs declaration of export. PCL advocated that OST should compensate its payment loss as the amount of the invoice mentioned above. This claim of the value of the cargo was in accordance with that of OST, and the court supported it. OST and OST Ningbo argued that OST had paid off the payment, but they did not submit evidence to prove it. The court did not confirm it. Although PCL had received partial compensation through insuring with export credit insurance, it returned the insurance compensation to CECIC Ningbo during the trial. Therefore, OST should still compensate for all the loss of payment. PCL advocated to convert the payment mentioned above into RMB 120,957.38 yuan, according to dollar in RMB 1:6.2267, on February 13, 2015, the date of shipment. It was lower than the day PCL sued which was February 2, 2016, and the central parity rate was dollar in RMB 1:6.5510, which was favourable for OST. The court supported it. As for interest, there was no basis for counting the date from the shipment day of PCL. The court decided to act at its discretion and count from the day when PCL filed the lawsuit to the court. To conclude, the court of first instance supported the rational claims made by PCL. According to the Maritime Code of the People’s Republic of China Article 71, the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law During the Trial of Cases about Delivery of Goods without an Original Bill of Lading Article 2 and Article 6, the court of first instance made the judgment on November 28, 2016: 1. OST should compensate PCL RMB 120,957.38 yuan for its payment loss in ten days after the judgment came into force and should pay its interests based on the benchmark lending rates for the same period of People’s Bank of China from February 2, 2016 to the date of actual payment decided by the judgment. 2. Reject other claims of PCL. If OST did not perform its obligation of paying the money within the due time appointed by the judgment, it should pay double the debt interest that was delayed according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee of first instance in amount of RMB 4,380 yuan. After PCL reduced its claims, the court acceptance fee was RMB 2,720 yuan. Property preservation application fee in amount of RMB 1,520 yuan. OST should bear all the fee.

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OST was not satisfied with the first judgement and appealed to the court: asking to revoke and amend the judgment to reject all the claims of CPL. 1. The correspondence emails, the bank payment voucher, and the testimony of the person who was in charge of PPI provided by OST during the first trial could prove that the consignee PPI had fulfilled the payment of the cargo involved. OST was not the carrier of the cargo involved, nor the subject of the trade contract. It had no obligation to fulfil the payment. 2. The affirmation “PCL and PPI had reached an agreement on the amount of the debt, therefore, PPI still must pay” made by the first instance was incorrect. (1) PPI had paid for the cargo involved, and PCL also replied that it had received the money. (2) PPI never confirmed the way of debt offset advocated by PCL. PPI declared clearly in the bank payment voucher and emails that the payment was under the cargo involved and the merchandise invoices whose numbers were PC 15P005 and PC 15P006. But PPI never replied to this email. PPI only confirmed the fact that the amount of the debt was USD 691,666.18. But PPI did not confirm the specific debt amount of every trade. The testimony of the person who was in charge of PPI also proved the facts mentioned above. According to the spirit of the National Maritime Trial Work Conference, in cases where the consignor asks the carrier for loss compensation due to delivery of cargo without the B/L, if there was evidence to prove that the consignor had received partial cargo, when confirming the loss compensation amount, the partial payment should be deducted. Since PCL had received all its payment, there was no fact or legal basis to support its request of asking OST to compensate its payment loss. PCL argued that: it was the fact that the cargo involved was released without the B/L. The consignee paid some money after it picked up the cargo to make the carrier get rid of its responsibility. There was an eight-year trading relationship between PCL and PPI. PCL did not confirm the emails that were claimed to be the payment by PPI. After that, PCL emailed to PPI and asked it to confirm the whole debt amount. The attachment listed clearly displayed the payment under every B/L. PPI replied to the email and confirmed it. Therefore, it was very clear of the payment that should be paid and the corresponding cargo between PCL and PPI. PCL did not receive the payment under this case. To conclude, it asked the court to dismiss the appeal and affirm the original judgment. The Defendant of the first instance, OST Ningbo, stated that it agreed to the claim made by OST. During the second instance, neither of the parties provided new evidence. After the second instance, there was corresponding evidence to prove the facts affirmed in the first trial, and the court affirmed them. Ascertained otherwise, PCL emailed to PPI to ask it to confirm the payment that should be made under all invoices listed in the email attachment on August 31, 2015. PPI replied to claim that it had no objection to the payment amount USD 691,666.18 listed in the attachment on November 2, 2015. PPI emailed to PCL on April 10, 2015, claiming that it would make the payment of the two orders of cargo it had just received: (1) number of invoice: PC15P006, number of B/L: NBNYC1520086, amount was USD 22,489.26; (2) number of invoice: PC15P006, number of B/L: NBNYC1520267,

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amount was USD 19,425.60. The total amount was USD 41,914.86. PCL replied to the email and claimed that it had received the payment on April 14, 2015, but it classified its use under the invoices whose numbers were PC14P012, PC12P013, and PC14P014. The total amount was USD 41,904.86. The court held that, according to the request and reasons of appeal and the claims of both parties, the issues of the second instance was: whether OST should take the responsibility of compensation for delivery of cargo without the B/L. The specific analysis was as follows: OST and PCL were both Hong Kong companies. This case had relation with Hong Kong. Both parties had no objection to the apply the law of the Mainland of China in this case during the first instance, and the court confirmed it. According to the facts and evidence ascertained, under the condition where PCL still held the original B/L involved, OST confirmed that the cargo involved was released at the port of destination. Therefore, the act of OST should constitute the act of delivery of cargo without the B/L. Although OST appealed claiming that the consignee PPI had fulfilled the full payment of the cargo involved and therefore it should be eliminated the corresponding compensation responsibility, based on the emails between PCL and PPI, the court could know that because there were many instances of trading between them, and PPI confirmed its many orders of unpaid payment. Neither party made an agreement on the liquidation order. Therefore, according to the Interpretation II of the Supreme People’s Court of Several Issues concerning the Application of the Contract Law of the People’s Republic of China Article 20 “where the debtor’s repayment is not enough to pay off all debts of the same type owed to the same creditor, the repayment shall first offset a due debt; if several debts are all due, it shall first offset the debt for which no guaranty is provided to the creditor or the guaranty provided to the creditor is in the smallest amount; if the amounts of guaranty for the debts are the same, it shall first offset the debt with a heavier debt burden; if the debt burdens are the same, it shall offset the debts in the order of the dates of maturity of the debts; if the dates of maturity of the debts are the same, it shall offset the debts in proportion, unless there is any agreement between the creditor and debtor on the debts to be paid off or on the order of repayment to offset the debts.” The claim of PCL that USD 19,425.60 paid by PPI was the payment before was legal and reasonable. There was no fact or legal basis for the claims of the appeal of OST. The court did not support them. In conclusion, this case was the dispute over carriage of goods by sea. The act of OST constituted delivery of cargo without the B/L, and it should be responsible for the compensation. The facts identified in the first instance were clear, and the dealing of the case was correct. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB 2,720 yuan, shall be born by Orient Star Transporting LLTD. The judgment is final. Presiding Judge: QIU Jianfeng Acting Judge: SUN Yihan Acting Judge: CHU Ningyu November 28, 2017 Clerk: XU Yijing

Guangzhou Maritime Court Civil Judgement PICC Property and Casualty Company Limited Quanzhou Branch v. Zhanjiang Port International Container Terminal Co., Ltd. (2016) Yue 72 Min Chu No. 1428 Related Case(s) None. Cause of Action 241. Dispute over port operation. Headnote Defendant container terminal operator held not liable for damage to containers caused by typhoons because terminal operating agreement provided that defendant was only liable for storm damage in the event of intentional misconduct or gross negligence, which had not been established. Summary The Plaintiff, a subrogated insurer, sued the Defendant terminal operator for damage to containers stored at the Defendant’s terminal. The containers were damaged when two typhoons—Kalmaegi and Rammasun—hit the ports where the containers were stored. The Court held that the Plaintiff’s suit failed on the basis of insufficient evidence to prove the Defendant’s liability in respect of the damaged goods, and further that the Defendant was exempt from liability in accordance with an applicable port operation agreement, which provided that the Defendant could only be liable for storm damage in the event of intentional misconduct or gross negligence, which had not been established.

Judgment The Plaintiff: PICC Property and Casualty Company Limited Quanzhou Branch. Domicile: Quanzhou, Fujian. Principle: WU Zhaohui, general manager of the company. Agent ad litem: WANG Jun, lawyer of Guangdong WANG JING & CO. Agent ad litem: YANG Xueguang, lawyer of Guangdong WANG JING & CO.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_49

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The Defendant: Zhanjiang Port International Container Terminal Co., Ltd. Domicile: Xiashan District, Zhanjiang, Guangdong. Legal representative: LIU Enhuai, chairman of the company. Agent ad litem: JIAN Wentao, male, secretary of the board of directors and legal affairs of the company. Agent ad litem: YUAN Jinsong, lawyer of Guangdong Hengfu Law Firm. With respect to the case arising from dispute over port operation, the Plaintiff PICC Property and Casualty Company Limited Quanzhou Branch (PICC P&C Quanzhou Branch) filed a lawsuit against the Defendant Zhanjiang Port International Container Terminal Co., Ltd. After entertaining this case on October 12, 2016, the court applied to the general procedure in accordance with law. The court organized the two parties to exchange evidence on December 19, 2017 and held hearing in public on February 23, 2017 and March 20, 2017. YANG Xueguang, agent ad litem of the Plaintiff, and JIAN Wentao and YUAN Jinsong, agents ad litem of the Defendant, appeared in court and participated in the action for three times. Now the case has been concluded. The Plaintiff filed a lawsuit with the court: 1. the Defendant should compensate the Plaintiff for the loss of 1,106,719.08 yuan resulting from the insurance accident, and the interest calculated in accordance with the loan interest rate by the People’s Bank of China for the corresponding period from September 17, 2014 to the date of actual payment; 2. the Defendant should bear the costs of the case and other expenses for the case incurred by the Plaintiff. Facts and reasons: the Plaintiff as the insurer signed an insurance cooperation agreement with Quanzhou Antong Logistics Co., Ltd. (hereinafter referred to as Antong Logistics) as the insured and the outsider pursuant to which the Plaintiff underwrites the subjects of insurance such as Antong Logistics and goods, vehicles and containers associated with Antong Logistics. The general cargo agreement in the domestic waterway cargo insurance therein applies to the comprehensive insurance of Waterway Cargo Transportation Insurance Clause (2009 Edition) of the PICC P&C, and the specific insurance prerequisites are stipulated therein. For each and every individual subject of insurance, a domestic cargo transportation insurance policy that applies to the insurance cooperation agreement is issued. Around September 16, 2014, Typhoon “Kalmaegi” passed through the Defendant’s container yard. During the period, the containers and the contents of containers carried by Antong Logistics were stored at the dock of the Defendant. Some of the containers were damaged and the contents of the container suffered damage of dampness. After the accident, Antong Logistics as the insured reported the case to the Plaintiff. The Plaintiff, after inspecting the site and asking the third-party assessment company to assess the loss incurred, argued that where the Plaintiff’s insurance liability was established, the Plaintiff shall compensate the insured for its reasonable loss and legally acquired the right of subrogation. The Plaintiff argued that the Defendant was liable for the loss of Antong Logistics. After the Plaintiff compensates Antong Logistics and acquires the right of subrogation, the Defendant shall compensate the Plaintiff for the loss.

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The Defendant argued that: 1. the Plaintiff did not compensate insurance benefit to the insured Antong Logistics, namely that the Plaintiff did not suffer any loss and shall not be entitled to claim compensation against the Defendant. The insurance cooperation agreement between the Plaintiff and Antong Logistics filed by the Plaintiff could not infer that the goods, vehicles and containers etc. associated with Antong Logistics would automatically become the insurance subjects of the Plaintiff’s insurance. According to the second article of the Agreement, the Plaintiff is only willing to provide preferential treatment for the goods, vehicles, containers and other insurance subjects related to Antong Logistics and the logistics business of Antong, but the agreement clearly stipulates that the Plaintiff needs to issue an insurance policy. The Plaintiff does not provide the insurance policy to prove that it is the insurer of insurance subjects in this case; 2. Antong Logistics did not suffer any loss, and the insured of most insurance subjects was not Antong Logistics. The evidence submitted by the Plaintiff to prove the loss of Antong’s logistics was indemnity bill mostly titled with Renjian Antong. These two were not the same subject, and from the wording of the bill, the agreed amount was not paid and there was no corresponding bank statement to evidence; The Plaintiff claimed to subrogate Antong Logistics, but a large number of booking notes showed that Antong Logistics was only a freight forwarder and shall not bear any responsibility for the loss of the Merchant. Antong Logistics did not actually compensate the Merchant for any losses. Therefore, Plaintiff’s right of subrogation loses foundation; 3. according to Article 13 of the Provisions of the Supreme People’s Court on Several Issues concerning the Trial of Maritime Insurance Dispute Cases: when the insurer exercised the right of subrogation, if it fails to submit the insurance compensation certificate that it has actually paid to the insured to the people’s court in accordance with provisions of the special procedures for litigation, the people’s court shall not accept the case and the accepted shall be rejected. The Plaintiff not only did not provide subrogation form, nor did he provide any certificate that he had actually paid insurance compensation to the insured, so its lawsuit shall be rejected; 4. since the statute of limitations of the case had run, the Plaintiff lost the right of winning the lawsuit. The case shall apply to the one-year limitation period stipulated in Article 136 of the General Principles of Civil Law, and there shall be no suspension or interruption; 5. the Plaintiff had no evidence to prove that the goods involved were piled up at the Defendant’s dock during the landing time of Typhoon “Kalmaegi”, nor did it prove that the goods involved suffered losses during this period; 6. according to the agreement, the Defendant can be exempted from the loss suffered by the Plaintiff due to the typhoon (if any); 7. the Defendant’s port, dock, and yard were all designed, constructed, and inspected in strict accordance with standard of national ministries, which were fully resistant to natural disasters such as typhoons, floods, earthquakes, etc. The Defendant took necessary precautions before the typhoon so there was no fault on its part; 8. the accident was caused by force majeure, and the Defendant shall assume liability to pay compensation in accordance with law. The accident was caused by the storm surge brought by the typhoon. This storm surge was unpredictable and inevitable, which was a force majeure; 9. the Defendant has notified Antong Logistics to take precautions in

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advance in writing. Suppose the goods involved really suffer loss in the Defendant’s container yard, the loss is caused by Antong Logistics’ fault; 10. the loss alleged by the Plaintiff was unreasonable and was not related to the Defendant. The Plaintiff claimed that the cargo damage in the case was caused by the backflow of seawater. The design elevation of the Defendant’s Baoman Container Terminal was 7 m, while the highest tide level of Zhanjiang Port caused by the storm surge was 6.743 m (the figure is calculated by a method that 3.86 m of tide level in the Zhanjiang Port plus 5.15 m of storm surge elevation then minus the difference 2.267 m between Pearl River datum and the theoretical minimum tide surface of Zhanjiang Port), which does not exceed the design elevation of the Baoman Container Terminal. It is unlikely that the seawater encroaches the Baoman Container Terminal. The loss assessment in evaluation report had no foundation. Most of the goods shall be inspected upon arrival at the factory after long-time sea transport, while some of the goods were piled up in other ports affected by the typhoon and then transported by sea to the factory before inspection, which had nothing to do with the Defendant. The parties submitted evidence around the claims in accordance with law. The court organized the parties to exchange evidence and cross-examine. The Plaintiff adduced the following evidence: 1. the insurance cooperation agreement signed between Antong Logistics and The Plaintiff, to prove that there was an insurance contract between the Plaintiff and Antong Logistics in terms of the damaged insurance subjects and that the damage of the goods piled up in the Defendant’s container yard belonged to the insurance liability of the Plaintiff; 2. the cargo transport insurance claims/cost calculation sheet (hereinafter referred to as the cost calculation sheet), to prove the cargo damage of Container No. YYCU0075417 and that the Plaintiff has actually paid the insured reasonable loss of 278 yuan and acquired the right of subrogation; 3. the cargo port operation agreement signed between the Defendant and Antong Logistics, to prove that the Defendant had a custody obligation for the damaged insurance subjects of Antong Logistics; 4. the tide table of September 2014, to prove that the astronomical tide could be accurately forecast; 5. a schedule of Typhoon “Kalmaegi” storm surge, wave warning and measured conditions, to prove that the storm surge and torrential rain caused by the typhoon could be accurately forecast and the National Marine Forecasting Center had issued a warning of storm surge and rainstorm in a timely manner on the typhoon; 6. the settlement agreement signed by the Plaintiff, Antong Logistics and Xiamen Branch of PICC P&C (hereinafter referred to as Xiamen People’s Insurance), to prove that the loss of the insurance subjects involved in the settlement agreement was CNY 499,822.32, and the Plaintiff only compensated 450,830.32 yuan and the Plaintiff’s claim amount was reasonable; 7. the bank receipt issued by the Industrial and Commercial Bank of China Co., Ltd. Fuzhou Branch (hereinafter referred to as ICBC Fuzhou Branch), to prove that the Plaintiff has actually paid the compensation for the damaged insurance subjects and acquired the right of subrogation; 8. the assessment report issued by Shanghai Ejoy Insurance Assessment Co., Ltd. (hereinafter referred to as Ejoy Assessment Company), to prove that the container cargoes piled up in Zhanjiang Port were soaked by seawater during the

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passage of Typhoon “Kalmaegi”, which constituted an insurance accident and caused losses; 9. the indemnity case file (excluding the claim materials listed in the evidence 2), to prove that the Plaintiff has actually paid the reasonable loss to the insured and acquired the corresponding the right of subrogation in respect of the damaged container goods involved; 10. the explanation regarding the indemnity payment situation, to prove that the provincial company subordinate to PICC P&C implemented the centralized financial collection system in which the indemnities each branch company shall pay are uniformly paid by the provincial company’s finance and prove that the insurance indemnity that Xiamen People’s Insurance, who was the cargo insurer of part of damaged cargo involved, paid to the insured was paid by bank account of Fujian Branch of PICC P&C (hereinafter referred to as PICC P&C Fujian Branch), and Xiamen People’s Insurance acquired the right of subrogation from the Merchant in accordance with law; 11. the indemnity intention, receipt and Subrogation Form One (hereinafter referred to as the subrogation form), to prove that the Plaintiff has paid insurance compensation to Antong Logistics in respect of cargo damage involved in the case and acquired the right of subrogation in accordance with law; 12. the Subrogation Form Two obtained by the Plaintiff who compensated Xiamen People’s Insurance on behalf of Antong Logistics, to prove that the Plaintiff has made insurance claims to Xiamen People’s Insurance who obtained merchant subrogation in respect of cargo damage involved in the case, thus acquiring the right of subrogation in accordance with law; 13. the indemnity case file Two, to prove that in respect of the damaged container cargo involved in the case, the Plaintiff has actually paid the insured the reasonable loss and acquired the corresponding right of subrogation; 14. the issuance report issued by Xiamen Zhengdaxing Insurance Assessment Co., Ltd. (hereinafter referred to as Zhengdaxing Assessment Company), to prove that the container cargo piled up in Zhanjiang Port were soaked by seawater during the passage of Typhoon “Kalmaegi”, which constituted an insurance accident and caused loss; 15. The inspection report of Container No. XINU1665505, to prove that the container cargo was soaked by seawater; 16. the instruction regarding payment process of indemnity, to prove that the indemnity involved has been uniformly paid by PICC P&C Fujian Branch, but part of the indemnity had no container code remarked; 17. the insurance policy issued to Antong Logistics by the Plaintiff in respect of the goods involved, to prove that the Plaintiff and Antong Logistics entered into an insurance contract in respect of the goods involved; 18. the record of containers involved in and out of the Defendant’s dock, to prove that the containers involved in the case was stored in the Defendant’s container yard during the passage of Typhoon “Kalmaegi”; the customer-specific receipt of China Construction Bank, to prove that the dock charges of Antong Logistics were all paid to the Defendant’s account rather than Zhanjiang Port (Group) Co., Ltd. (hereinafter referred to as Zhanjiang Port Group), therefore, together with the evidence 1, proving that there was no written operation contract between Antong Logistics and the Defendant, and the agreement of the evidence 1, especially the exemption clause therein, was not binding upon Antong Logistics.

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The Defendant adduced the following evidence: 1. the cargo port operation agreement, to prove that the Defendant may be exempted from liability according to of Article 10.2 of the Agreement; 2. the storm surge I-level warning (Red) issued by National Marine Forecasting Center; 3. the reply regarding retrieving the data of tide level of Zhanjiang Port during the landing time of Typhoon “Kalmaegi”, 4. the news report regarding Typhoon “Kalmaegi” by Nanhai Branch of State Oceanic Administration, to prove that Typhoon “Kalmaegi” and the storm surge brought by it caused the tide level of Zhanjiang Port to reach the highest level in the past 30 years, which greatly exceeded the forecast value and exceed the design elevation of the Defendant’s dock,, and that Typhoon “Kalmaegi” and its storm surge were force majeure, so the Defendant shall not assume responsibility; 5. the notice and receipt regarding the typhoon prevention work, to prove that the Defendant has given sufficient time in advance to inform Antong Logistics to take preventive measures against the typhoon; 6. the berth general layout and completion acceptance certificate of the second-stage construction of Zhanjiang Port, to prove that the dock design of the Defendant complied with the national standards and had passed the acceptance test; 7. the anti-typhoon reinforcement record sheet and photos that the Defendant took anti-typhoon measures against containers, to prove that the Defendant had taken necessary measures to prevent the typhoon; 8. the notice and receipt regarding the inspection on containers in port and the goods therein, to prove that the Defendant immediately notified Antong Logistics in writing to examine the goods at the port after the typhoon and that after receiving the notice, Antong Logistics did not endorse the loss of the goods, indicating that the goods were in good condition; 9. the filing application form of port project trial operation, the port project completion acceptance certificate, the as-constructed drawing of the Baoman container terminal, to prove that the design of Baoman container terminal was in accordance with national standards, the design elevation was 7 m and the drainage system was excellent; 10. the notice regarding the transfer of contract rights and obligations, to prove that the cargo port operation agreement was binding upon the Defendant and Antong Logistics. After the cross-examination, the Defendant confirmed the authenticity of the evidence 1 submitted by the Plaintiff, but the Defendant had an objection to the relevance and probative force thereof. The Defendant held that the agreement had agreed the Plaintiff to issue the insurance policy, but the Plaintiff did not submit. The Plaintiff’s other evidence also indicated that the insured was other outsiders. The goods targeted by the agreement also included Haikou Port affected by the typhoon, therefore, the agreement could not prove that the goods involved were piled up at the Defendant’s dock; in view of the 330 containers that the Plaintiff sued for wet damage of goods, the evidence submitted by the Plaintiff were not classified according to each insurance policy or container, which could not be cross-examined. Before the second court session, the Plaintiff only submitted the general list of damage of damp of container cargo. The Plaintiff paginated and indexed the insurance policy number, the intention to compensate, the receipt and the subrogation form, the bank receipt, the entry and exit record, the type of goods, and the name of the consignor, the assessment report, the waybill, the approved loss

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list, etc. In court, only the No. RAWU2000391 Container with no bank receipt remarks and the No. XYLU1017920, No. ATLU0035056, No. YYCU0016190 and No. TGHU3878553 Container with bank receipt remarks were selected to be cross-examined. The Defendant held that the insurance policies involved in the above container cargo were all copies, which were made by the Plaintiff itself and was not officially issued to the public, so the Plaintiff shall submit the original or duplicate of the insurance policy; the subrogation form involved in No. RAWU2000391 Container was a list which could not prove that the Plaintiff obtained authorization; The bank receipt amount and container number of No. XYLU1017920 Container could not be matched. The evidence 6 had nothing to do with the case, which was an internal agreement between the two branches of PICC P&C and may not act against a third party. There were many accident spots involved in the agreement and it was impossible to know whether they were related to the Defendant. The agreement could not correspond to the container number and the loss amount, so there was no relevance among them. Xiamen People’s Insurance also had no evidence to prove that it had given compensation; the description regarding the indemnity payment condition in the Plaintiff’s evidence 10 and the fact that the indemnity was uniformly paid by the provincial branch that the evidence 16 purported to prove was contradictory to the fact that Xiamen People’s Insurance directly paid the insurance indemnity to the insured which was showed by Page 863 of the evidence; the assessor in Zhengxingda Assessment Company in the evidence 14 did not appear in court to accept the party’s inquiry. The accident spot and the investigation location written in the assessment report had nothing to do with the Defendant, therefore, the loss assessment amount of the assessment report lacked objectivity and authenticity; the insured shipping list in the evidence 13 whose insured was Zhanjiang CIMC Logistics Co., Ltd. (hereinafter referred to as CIMC) had nothing to do with this case; There was no voucher for the rescue cost of No. XYLU1017920 Container, lacking no objective and true basis. The indemnity object of No. ATLU0035056 Container shown in the evidence 7 was Antong Logistics, but Page 333, 342 and 343 of the evidence indicated that Antong Logistics required insurance indemnity to be paid to Zhanjiang Chenming Pulp and Paper Co., Ltd. (hereinafter referred to as Zhanjiang Chenming Company), proving that the Plaintiff did not acquire the right of subrogation; the insured recorded on Page 1054 of the evidence involved in No. YYCU0016190 Container was inconsistent with the insured recorded on Page 528 of the evidence, and the waybill number was also inconsistent. The signatory of compensation information on Page 531 and 535 of the evidence was Shanghai Panhai Logistics Co., Ltd. (hereinafter referred to as Panhai Company) who had nothing to do with the insured in the insurance policy and shipping list. The assessment report regarding the container cargo damage could not reflect the objective loss of the goods, and the reduced price of the goods was not based on any facts. The container equipment handover list recorded on Page 531 and 535 of the evidence was not sealed by the Defendant, so its authenticity shall not be confirmed; The assessment of No. TGHU3878553 Container’s assessment report was unfounded. After the court, the Defendant supplemented and submitted the written cross-examination

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opinions on the Plaintiff’s evidence, holding that the Plaintiff’s evidence 2 was not related to the case and could not prove its proof purpose; According to Article 7.3 of the evidence 3, the goods shall be deemed undamaged. According to Article 10.2, if the goods are damaged, it is also within the agreed exemption; the evidence 4 was not related to this case. The case was mainly caused by storm surge. This evidence could only provide reference because there was a certain error in both tidal hour and tidal height, which was greater under the influence of specific weather such as typhoon and cold anticyclone; the evidence 5 suggested that the landing time and location forecasted by the meteorological department at the initial, intermediate and final stage were inconsistent, which indicated that it was difficult to accurately forecast the typhoon. The storm surge would be affected by the landing location and time of the typhoon and by whether it would be superimposed with the astronomical tide, which was more unpredictable. The storm surge forecasted by website was much smaller than the actual surge; the evidence 6 was not related to the case and no evidence indicated that the accident occurred at the Defendant’s dock. The two parties involved in the agreement are both subsidiaries of PICC P&C Fujian Branch and could not act against the third person. Xiamen Hongxin International Logistics Co., Ltd. (hereinafter referred to as Xiamen Hongxin Company) that was subrogated by Xiamen People’s Insurance only acted as a cargo transporter. There was no evidence to prove that it had suffered loss, and there was no corresponding payment certificate; evidence 7 was not related to the case and could not be linked to the specific insurance policy or goods. The Plaintiff also did not provide evidence to prove payment account belonged to who; the authenticity, legality and relevance of the content of the evidence 8 shall not be confirmed. The assessor Xiepeng, who was applied by Plaintiff to appear in court to accept the inquiry, did not sign where it says “Report Inspector” etc. and could not answer the loss calculation mentioned in the assessment report, which proved the assessor appearing in court was not the inspect and identifier. The report stated that cargo damage occurred at the Defendant’s port, which was lacking in evidence. The port reflected in the general part of part report was Haikou Xiuying Port, not Zhanjiang Port. There was also no basis for the calculation of the loss. The cargo damage assessment of part report was only one page, and all the contents of the sub-reports were not supported by evidence. During the trial, the Plaintiff inquired the assessor whether the water soak caused by the typhoon in the case was a force majeure or whether the dock authority was at fault, which were not within the business scope of the assessment company. The public company did not have the corresponding qualifications; Xiepeng was incapable of answering the aforementioned questions by virtue of his profession and qualification; evidence 9 was made unilaterally by the Plaintiff and there was no corresponding evidence to support it. The accident spot was Haikou Port, which had nothing to do with this case; The formal authenticity of evidence 10 shall be confirmed, but the authenticity of the content shall not be confirmed. The content of the explanation was inconsistent with the bank slip that Xiamen People’s Insurance paid to Hongxin Logistics Group Co., Ltd. (hereinafter referred to as Hongxin Group) in Plaintiff’s evidence 13; evidence 11 to 13 were not related to this case. The accident spot was not Zhanjiang. the date

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of shipment from Zhanjiang stated in part waybills was earlier than the date when Zhanjiang was affected by the typhoon. The port of departure, port of transhipment and port of destination in part waybills did not include Zhanjiang Port. The insured was not Antong Logistics. Antong Logistics only acted as the freight forwarder and was not liable for the loss of the shipper. The Plaintiff also did not provide evidence that Antong Logistics actually paid the compensation. Antong Logistics was not entitled to claim compensation from the Defendant, and the Plaintiff’s subrogation right also lost foundation; the assessor of the evidence 14 did not appear in court to accept the inquiry, and the reported accident spot was not the Defendant’s dock; the evidence 15 and evidence 8 were repeated which had no basis for loss assessment and was not related to the case; the evidence 16 was unilaterally made by the Plaintiff, so the authenticity of the content shall not be confirmed. There was also no other evidence to support, so it was not related to the case; As for the evidence 17, the Plaintiff did not provide the original or copy of the insurance policy and failed to prove its proof purpose, and the content could not match with the waybill; The evidentiary 18 was unilaterally made by the Plaintiff. There was no other evidence to support it, so the authenticity shall not be confirmed. The authenticity, legality and relevance of the evidence 19 shall not be confirmed and it could not prove the Plaintiff’s proof purpose. The Plaintiff confirmed the authenticity of the evidence submitted by the Defendant but held that the contract was binding upon Zhanjiang Port Group rather than the Defendant; the Plaintiff confirmed the formal authenticity of the evidence 2 and 3 but did not confirmed the proven fact. Evidence 2 proved the typhoon and the storm surge brought by it was predictable. The content of evidence 3 was contradictory, so the authenticity thereof shall not be confirmed; if the evidence 4 does not provide the specific website source, the formal authenticity thereof shall not be confirmed, Therefore, the evidence 4 was not related to the case; The Plaintiff confirmed the authenticity of the evidence 5, but the evidence 5 could not prove the Defendant’s claim. When the accident occurred, the containers was completely in the charge of the Defendant, so Antong Logistics could not take any mitigation measures; the Plaintiff confirmed the authenticity of the evidence 6, but the evidence 6 was not related to the case, which was unable to prove the factual state on the day of the accident, and had no direct causal relationship with the cause of the accident; the evidence 7 did not have authenticity and relevance, unable to prove that they was the anti-typhoon measures against the damaged containers and prove the actual damage of the containers at the time of the accident. Furthermore, the anti-typhoon reinforcement was not a reasonable measure to avoid water; the Plaintiff confirmed the formal authenticity of the evidence 8, but the evidence 8 had no relevance. The Defendant tried to use the notice to relieve its responsibility, but it was of no avail. The consignee only performed visual inspection on the surface and seal of the container, but the damage of damp of the goods could not be confirmed by the appearance inspection; the Plaintiff confirmed the formal authenticity and legality of the evidence 9. The acceptance time of the project is October 11, 2016 and it did not indicate the actual state when the accident occurred, which had nothing to do with the case. Even if the drainage system was in good

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condition, it could not explain that the cargo damage involved was not caused by water; the Plaintiff held that it was indeterminate whose handwriting was signed in the evidence 10. The seal was Zhanjiang office of Antong Logistics. The office had no rights and was not qualified to receive or agree to the document on behalf of Antong Logistics. The document was not binding upon Antong Logistics. Upon examination, the court has confirmed the evidence that the parties had no objection to the authenticity thereof. The Plaintiff’s evidence 1, 2, 6, 7, 9, 11, 12, 15 were not different from the original and the evidence 3 was consistent with the evidence 1 submitted by the Defendant, so the court confirmed their authenticity; the evidence 8 matched the original and the assessor of Ejoy Assessment Company appeared in court to accept the inquiry, which was confirmed by the court; The part of the evidence 13 was no different from the original after check. The copies of the claims materials of Xiamen People’s Insurance and Xiamen Hongxin Company were stamped with the official seal of Antong Logistics, which was unable to confirm whether they were consistent with the original and could not prove the facts of the case separately; the original of the evidence 14 and 19 were not submitted for check, and the evidence 16 and 17 were unilaterally made by the Plaintiff which could not prove the facts of the case separately; The evidence 18 was the information inquired on the Defendant’s website. In the trial, the Defendant’s Agent ad litem at first denied that the company had the system and that the company system was networked with clients. After the Plaintiff’s agent ad litem opened the Internet webpage in court, the Defendant acknowledged that the webpage was owned by it. However, entering the webpage for online enquiry in court was inaccessible. When the judge enters the webpage to verify part of the container information after the trial, the webpage did not show the containers’ entry and exit records before 2014. Based on the statement of the parties and the evidence examined and confirmed, the court confirms the facts as follows: 1. Legal relations between Plaintiff and Antong Logistics Antong Logistics signed an insurance cooperation agreement with the Plaintiff pursuant to which the Plaintiff provided the following preferential insurance commitments for Antong Logistics and the insurance subjects such as goods, vehicles, containers, etc. which was related to its business, and Antong Logistics enjoyed the rights stipulated in the contract on the basis of the Plaintiff’s commitment and the obligation to pay insurance premiums in accordance with the contract. Insurance conditions: domestic waterway cargo insurance. The general cargo is applicable to PICC P&C Waterway Cargo Transport Insurance Clause (2009 Edition). Insurance coverage: comprehensive insurance. The container cargo insurance amount is 40,000 yuan, and the deductible franchise of the general cargo is 500 yuan per container; fruit (generally shipped by container): deductibles of 1,000 yuan or 5% of the loss amount, whichever is higher. Glass and sheet goods: the deductible franchise of CNY 800; the salvage charges that occurs alone are excluded from the deductibles. Special agreement: the general cargo is agreed to be insured at 40,000 yuan per container, and the compensation shall be calculated according to the actual loss amount, not deducting the proportion of under

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insurance, but the maximum compensation amount per container shall not exceed 150,000 yuan. Mode of operation: The Plaintiff agrees that Antong Logistics can operate in the following manner when insuring domestic waterway cargo transport insurance: Antong Logistics pre-insures in advance, and sends the pre-insured cargo quantity, name, unit price, number of packages, and insurance amount to the Plaintiff by mail. After the Plaintiff’s confirmation, the insurance contract is established. The number of goods on the insurance application form input by the agent of Antong logistics is allowed to be different from the pre-insurance application form after the ship sails or before the insurance policy is issued. If the number of insured goods changes before the carrying ship arrives, Antong Logistics shall immediately notify the Plaintiff in writing to correct the insurance policy, otherwise, the Plaintiff is entitled not to be liable for compensation. If the insurance is arranged separately, the insurance policy of the customer designated by Antong Logistics who is the insured can be separately issued, and the policy holder is Antong Logistics. After the insurance application form is received, the insurance policy is opened online in real time, and the online printing service of the underwriting list is provided. The Plaintiff provided the issuing account number of client network to Antong Logistics. The agreement is effective from January 1 to December 31, 2014. 2. Legal relations between the Defendant and Antong Logistics On March 3, 2014, Antong Logistics as Party A signed a cargo port operation agreement with the Zhanjiang Port Group and the Defendant as Party B, pursuant to which Party A entrusted Party B to carry out stevedoring, transfer and storage operations at the latter’s dock for the containers of the domestic sailing routes self-run and agented by Party A within Party B’s port area. Article 7.3 of the agreement stipulates that Party A or the agent designated by Party A shall, when receiving the goods, check and accept and confirm with the signature. If the goods are found damaged, lost or short in quantity, they shall immediately report to Party B and both parties shall confirm on the spot and draw up shipping records recording. If no objection is raised in the quantity and quality of the goods when receiving the goods, the Party B shall be deemed to have delivered the goods in accordance with the contract, and be deemed to have fulfilled its obligation to deliver the goods. Article 10.2 stipulates that Zhanjiang area is a natural disaster-prone area, and Party B reminds Party A to purchase property insurance during the port stevedoring operation and during storage and custody period. If the goods suffer losses caused by natural disasters such as earthquakes, tsunamis, typhoons, storms, fires, floods, etc. in Party B’s port area, Party B may be exempted from liability. Article 11 stipulates that the matters concerned that is not covered in this Agreement shall be implemented in accordance with the Port Cargo Operation Rules and the Regulations on Port Charge Rules of the Ministry of Transportation. Article 16 stipulates that the agreement shall be effective from January 1, 2014 to December 31, 2014. Article 19 stipulates that Zhanjiang Port Group intends to inject its assets for container operations into the Defendant and increase the Defendant’s operation qualification. After the Defendant’s port operation

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qualification is modified, Zhanjiang Port Group will notify Party A. In view of this, the parties agree that before the Zhanjiang Port Group notifies Party A in writing, the rights and obligations of this contract shall be enjoyed and performed by Zhanjiang Port Group. After the date of written notice from Zhanjiang Port Group, the rights and obligations of this contract shall be enjoyed and performed by the Defendant. On April 30, Zhanjiang Port Group and the Defendant issued a notice regarding the transfer of contractual rights and obligations to Antong Logistics, saying that due to business development needs, Zhanjiang Port Group had injected the assets for the container operation into the Defendant, and the Defendant had obtained the port operation qualification. From the date of receipt of the notice, the rights and obligations of Zhanjiang Port Group under the above agreement are enjoyed and performed by the Defendant. The Zhanjiang office of Antong Logistics signed for the notice on May 4. The customer-specific receipt of China Construction Bank’s submitted by the Plaintiff showed that Antong Logistics paid the dock charges to the Defendant by transfer during the period from September 2014 to December 2014. 3. The typhoon situation involved in the case The National Ocean Forecasting Center issued a level-I warning (Red) of storm surge on September 15, 2014. It was expected that from the afternoon of September 15 to the noon on the September 16, Guangdong Yangjiang to the east shore of the Leizhou Peninsula would be severely affected and 150 to 400 cm of storm surge would appear. The highest tide level close to the local warning level appeared on the early morning and noon of September 16 at Zhanjiang tide station, and the warning level of storm surge in Zhanjiang City was orange. On March 18, 2015, the Office of the Flood Control and Drought and Wind Prevention of Zhanjiang Municipal People’s Government (hereinafter referred to as the “Three Prevention Command Office”) responded to the reply regarding retrieving the data on the water and tide level of the Zhanjiang Port during the landing time of Typhoon “Kalmaegi”, saying that when the typhoon landed, the center maximum wind was up to Force 13 (40 m per second). Due to its severe impact, heavy rainfall was superimposed with violent storm and roaring waves. The highest tide level of Zhanjiang Port reached 3.86 meters and the surge was up to 5.15 m, which was the highest tide since 1986. 4. The situation of the Defendant’s dock and its measures taken against the typhoon The Defendant’s second-stage construction of Zhanjiang Port passed the preliminary acceptance organized by Zhanjiang Port on December 6, 1994 and passed the completion acceptance of the National Acceptance Committee composed of relevant departments organized by the Ministry of Transportation on December 28, 1994. The design zero point of the project was the datum plane approved by State (the new main 4 elevation of control points, the local zero point was 7010, and the elevation of datum plane approved by State was 6.710). The Defendant’s first-stage construction of Zhanjiang Port Baoman Container Terminal applied to the Ministry of Transportation for trial operation and was approved. The port project completion

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acceptance certificate was obtained on October 11, 2016. The wharf surface elevation of the project was 7 meters. On September 12, 2014, the Defendant issued a notice regarding typhoon prevention, saying that Typhoon “Kalmaegi” (wind level was expected to be 14 or 15) was expected to land in Zhanjiang on September 14 or 15. The climate phenomenon brought by the typhoon may affect the port and container yard. Upon receipt of the notice, the container and cargo piled up in the Defendant’s container yard shall be aggregated and counted, the relevant anti-typhoon protection measures shall be taken, and the container cargos that may be susceptible to water, dampness and humidity shall be withdrawn. Zhanjiang Office of Antong Logistics issued the receipt for receipt of the notice on September 13. On September 17, the Defendant issued a notice regarding the inspection on containers in port and cargo thereof, saying that Typhoon “Kalmaegi” had a certain impact on its port and container yard. To avoid the loss, port business such as shipping companies, shipping agencies, logistics companies, freight forwarders, and cargo owners were requested to promptly inspect and handle containers in port and cargo thereof at the Defendant’s. The Zhanjiang office of Antong Logistics received a reply for receipt of the notice on September 18. The Defendant submitted the anti-typhoon reinforcement record and photos in order to prove that it had adopted reinforced windproof measures for the containers. 5. The Plaintiff’s claim materials The charge calculation sheet attached to the indemnity file submitted by the Plaintiff recorded that the accident spot was Haikou or the location of consignee. Among the insurance and loss notice of domestic cargo transport issued by Antong Logistics, only 7 copies indicated that the accident spot was Zhanjiang or Zhanjiang Port. The insurance policy number was PYDS201435059500E11256/11522/11526/11528/ 11651/11714/11722/12033/12513/12517/10619/10790/12165/10717/10240/10540. The authorization and statement issued by the Principal who entrusted Antong Logistics acting as agent to carry the goods all claimed that the container cargos were affected by Typhoon “Kalmaegi” at the Haikou wharf, resulting in severe damage to the goods, which declared that the logistics has assumed the corresponding liability (including the expenses for handling goods, the compensation for damage or loss, and the transport charges for handling goods. The declarant transferred the claim right and the corresponding rights and interests arising from the damage to the goods to Artong logistics which was subject to the liability that Antong Logistics assumed, then Antong Logistics was entitled to make a claim from the cargo insurer, cargo agent, actual carrier, NVOCC, operator, manager, agent, insurer, terminal operator (owner) and any other interested parties and receive all claim amount. Antong Logistics was entitled to transfer the above rights and interests to other third parties. In addition, the declarant’s irrevocable confirmation and the liability that Antong Logistics assumed was sufficient to make up the total loss of the declarant in this accident of cargo damage. Each entrusting party confirmed in the indemnity receipt with the title of Renjian Antong and Antong Logistics. Upon receipt of the above indemnity, the above-mentioned damages shall

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be settled, and the payee shall not make any claim against Antong Logistics and its insurers for the cargo damage. On July 17, 2015, the Plaintiff, Antong Logistics and Xiamen People’s Insurance signed a settlement agreement in view of the fact that Antong Logistics was entrusted by Xiamen Hongxin Company to transport Wang Laoji drinks by batches from Xiamen Port and Xinsha Port to Haikou, Hainan and Zhanjiang, Guangdong from June to August 2014, however, due to the effect of Typhoon “Rammasun” on July 18 and Typhoon “Kalmaegi” on September 16, the Wang Laoji herbal tea that have been transported to Haikou Dock and Zhanjiang Dock suffered from wet damage. Xiamen People’s Insurance has fulfilled its compensation obligation to the insured Xiamen Hongxin Company regarding the loss of the above goods. The compensation amount was 2,879,280.29 yuan. According to the insurance subrogation right, Xiamen People’s insurance filed a claim with Antong Logistics and proposed to file a lawsuit. The Plaintiff acting as the insurer of Antong Logistics agreed to together participate in the pre-litigation consultation. Antong Logistics agreed to pay Xiamen People’s Insurance a one-off indemnity of 1,439,640 yuan as the final solution for the case, which included all charges and interest. The Plaintiff agreed to assume joint and several liability for the above liability of Antong Logistics, and agreed to pay the settlement amount directly to Xiamen People’s Insurance designated account on August 15, 2015 or within 15 days upon receipt of all evidential materials by the Plaintiff. As for the inspection and evaluation on damaged goods. No. HW-QZ-RB-14805 (1) assessment report of seawater wet damage of Chenming Paper pulp board issued by Ejoy Assessment Company recorded that the assessor went to Zhanjiang Port container yard and branches of Shandong Weifang Shouguang Chenming Paper Factory to conduct investigation and inspection in order to know the details of the accident, ascertain the cause of the accident as well as the range and extent of the damage, and make a reasonable assessment of the direct loss of the accident. The cargo accident spot/port of departure was Zhanjiang Port, the port of transshipment was Haikou and the port of destination was Huangdao and Weifang, Shandong. The nature of cargo damage was seawater dampness. The date on-site inspection was from September 18 to November 4, 2014. Inspection background and on-site inspection: Typhoon “Kalmaegi” landed in conjunction with the astronomical tide, and the storm surge superimposed with the astronomical tide caused seawater intrusion, leading to the fact that the containerized pulp board stacked in Zhanjiang Port were soaked by seawater. The assessor successively conducted inspection at Zhanjiang Port and Shandong Shouguang Chenming Paper Factory (hereinafter referred to as Shandong Chenming). From October 10, 2014 to October 29, 2014, the goods arrived at Shandong Chenming by water after successively passing Qingdao Port and Weifang Port. Two inspectors inspected the goods during the unloading period in the factory. Among 289 containers, the goods in 212 containers were damaged in varying degrees. Among the 212 damaged containers listed in the assessment report, among which there were 162 listed containers and 50 unlisted containers stacked in Zhanjiang Port. There were 34 containers listed on the Zhanjiang inspection date. All containers were shipped to Shandong Chenming for

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unpacking inspection. The inspection of cargo damage: the pulp board was soaked by water and then swelled. The wet pulp board was polluted by sea sediment, and the edges of the wet pulp board were yellowish or had wet trace lines, which were basically uncontaminated inward. Damage assessment: The water content of the pulp board soaked by sea water was not very large. the pulp board was squeezed by one-ton cargo above it and placed in the container for a long time, limiting the water content of seawater. Although the seawater papermaking was not directly used, no theories had yet proven the effect of trace seawater on papermaking. Therefore, the main factor affecting pulp quality was the sediment pollution of seawater. The soaked bottom of the pulp was heavily contaminated and other pulps were relatively less affected by contamination. The contaminated bottom and edges of pulp can be removed manually, and this part of the pulp board can be used for other papermaking purposes. According to the method of manual sorting and removal of pollutants, the loss of goods was assessed as follows: 1. The total number of water-wet and contaminated goods totalled 2,278 pieces with a total weight of 212.32 tons; 2. The weight of 0.5 cm thick pulp at the bottom of each piece was 12.719 tons; 3. The edge-contaminated pulp needed to be removed, accounting for about 5% of the whole pulp board. As for the pulp portion with heavily contaminated bottom, the edge pollution weight was no longer calculated; 4. the uncontaminated pulp board was put into production as normal goods. The contaminated pulp can be used to produce other low-quality papers with a depreciation of 2,000 yuan per ton; 5. The cargo manpower, machinery, site and transportation costs was evaluated at 65 yuan per piece. In summary, the total number of water-wet goods totaled 2,278 pieces, the total weight of 212.32 tons and loss assessment was 193,466 yuan. No. HW-QZ-RB-141236(2) assessment report that the Typhoon “Kalmaegi” caused the cargo damage of Zhanjiang Port container issued by Ejoy Assessment Company recorded the assessor conducted the assessment inspection within Zhanjiang Port, around Zhanjiang City, and in Maoming, Leizhou and Huazhou, Guangdong Province from September 17 to October 1, 2014. For the port environment and conditional factors, it was described as follows: As for the inspection within Zhanjiang port area, it was found that Xiuying Port is surrounded by the sea on three sides, and the container is distributed at the front of the dock and is extended to the container yard. The containers are about four or five meters away from the dock. The area of the port is small, and the container yard and the dock are on the same plane. After the surges and waves come ashore, they can quickly spread over the port area, which increases the depth of the flood mixed with rainwater. Some areas in the port are hollow and they are easy to accumulate water. There are insufficient flood control and drainage facilities or equipment in the port area. Under the influence of the typhoon at that time and large-scale disaster-stricken areas in Zhanjiang, the general flood control and drainage measures were difficult to take effect. Container and cargo data: During the typhoon, Antong Logistics’ containers were stored in the water-soaked containers at the Xiuyinggang container yard. A total of 27 containers were surveyed by Ejoy Assessment Company, 23 of which showed the port of arrival was Zhanjiang and 1

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of which showed the port of arrival was Maoming. The arrival time was from September 1 to September 13; 3 of which showed the port of shipment was Zhanjiang, among which the arrival time of one container was not indicated and the arrival time of the other two was indicated as “September 7”. The amount of the loss was 290,715.50 yuan. XIE Peng, the assessor of Ejoy Assessment Company, appeared in court and accepted the inquiry. No. ZDXWJH-2014177 assessment report that the Typhoon “Kalmaegi” caused the water dampness of Xiamen Hongxin Company Zhanjiang Wang Laoji issued by Zhengdaxing Assessment Company on December 11, 2014 recorded the accident: the accident cause was the typhoon / heavy rain, the accident spot was the Xiashan Port of Zhanjiang, Guangdong Province, the survey time was September 23 and later and the survey location was the warehouse of Zhanjiang in Guangdong and the warehouse of each consignee. The details of the accident: According to the insured, Typhoon “Kalmaegi” hit Zhanjiang on September 16, leading to the flooding of the container yard at the Xiashan Port Dock in Zhanjiang and resulting in the water dampness of varying degrees of goods in containers. It is approved that the loss assessment amount of the goods under the insurance policy PYDS201435020000000332 was 73,515.04 yuan, the loss assessment amount of the goods under the insurance policy /000333 was 204,196.40 yuan, the loss assessment amount of the goods under the insurance policy/000334 was 266,745.92 yuan, the loss assessment amount of the goods under the insurance policy /000340 was 198,241.60 yuan, the loss assessment amount of the goods under the insurance policy/000349 policy was 39,262.88 yuan and the loss assessment amount of the goods under the insurance policy /000379 policy was 195,456.4 yuan, totalling 977,420.32 yuan. According to the regulations on commencement and termination of cover of the Waterway Cargo Transport Insurance Clause, it is recommended that the insurance policy that fails to take delivery of goods in a timely manner within 15 days after arrival of the destination will not be compensated. The recommended amount was 198,241.60 yuan. As for the Plaintiff’s payment of insurance indemnity. The explanation regarding the insurance indemnity issued by PICC P&C Fujian Branch on May 27, 2016 said that when the goods under the shipping insurance policy of the insured Antong logistics that the Plaintiff underwrote suffered loss, Antong Logistic made a claim against PICC P&C Fujian Branch. Due to the need for centralized financial control, the provincial company of PICC P&C implemented financial centralized collection, and the indemnities that each branch should pay were uniformly paid through the provincial company’s finance. Therefore, the indemnities listed in the Appendix were all paid by Fuzhou Hua Lin Branch of Industrial and Commercial Bank of China. Fuzhou Branch of the Industrial and Commercial Bank of China Co., Ltd. (hereinafter referred to as ICBC Fuzhou Branch) issued a list of 3,583 payments paid to Antong Logistics from August 1, 2014 to August 29, 2015. On March 13, 2017, the Plaintiff issued an explanation regarding indemnity payment process, saying that after receiving the notice of insurance, the Plaintiff made the cost calculation sheet which was reviewed by the provincial company personnel. After the review and approval, the financial personnel paid the indemnity according to the

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calculation sheet. The cost calculation book listed the evidence materials related to the damaged subjects and the amount of compensation. The amount of the indemnity was the amount of compensation payable to the insured after the adjustment. Due to the need for centralized financial control, PICC P&C Fijian Branch implemented centralized financial collection, and the indemnities that should be paid by each branch including the Plaintiff were uniformly paid by the provincial company’s finance. PICC P&C Fijian Branch directly paid the insured the amount of the compensation listed in the cost calculation sheet. After the Typhoon “Kalmaegi” caused the loss of the insurance subjects, due to the large number of indemnities, the provincial company’s finance, when paying the indemnities of part insurance subjects, did not remark the relevant information of the insurance subject such as container number so as to shortening payment time, however, the indemnities listed in the cost calculation sheet uploaded by the Plaintiff have been paid. During the trial, the court requested the Plaintiff to provide vouchers to prove the amount of the transfer payment listed in bank payment list has specifically paid which insurance indemnity. The agent ad litem of the Plaintiff said that he needed to go back to check with the Plaintiff, but among the total amount of container cargo wet damage submitted before the second court session, only 4 containers in the list was indicated with bank receipt remarks, and the remaining indemnities of container cargo could not match with the specific bank remittance. The payment list issued by ICBC Fuzhou Branch showed that 15 indemnities have been paid to Xiamen People’s Insurance from August 20 to August 22, 2015, totalling 1,439,640.25 yuan. After an insurance accident, Antong Logistics and Zhanjiang Chenming Company jointly issued a transfer authorization letter to the Plaintiff. Antong Logistics entrusted Zhanjiang Chenming Company to receive indemnity procedures that the insurance accident occurred in the finished paper on September 18, 2014 under insurance policy PYDS201435057500611256/12513/12517/12575 and PYDS201435059500E11256/11522/11526/11528/11651/11714/11722/12033/12513/ 12517. However, the bank payment list submitted by the Plaintiff did not include the indemnity paid to Zhanjiang Chenming Company. As for insurance indemnities paid by Xiamen People’s Insurance. On December 23, 2014, Xiamen People’s Insurance paid the indemnity of 198,241.60 yuan to the Xiamen Hongxin Company through the transfer of Bank of China. The indemnity receipt and subrogation form issued by Xiamen Hongxin Company indicated that it was indemnity of insurance policy PYDS201435020000000340; On June 3, 2015, Xiamen People’s Insurance transferred 183,778.56 yuan to the Hongxin Group through the Bank of China, indicating that it was the indemnity of Xiamen Hongxin Company. Xiamen Hongxin Company issued the indemnity receipt and subrogation form to Xiamen People’s Insurance, saying that Xiamen Hongxin Company received the indemnity under the insurance policy/000333. On the same day, Xiamen People’s Insurance paid the indemnity of 35,336.59 yuan under insurance policy/000349 and the indemnity of 240,071.33 yuan under insurance policy/ 000334 by transfer; on June 4, Xiamen People’s Insurance paid the indemnity of 66,163.54 yuan under insurance policy/000332 by transfer. The insurance claim

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notification of the five above-mentioned indemnities of Xiamen Hongxin Company specified that the insurance subjects were located in Zhanjiang. Affected by the Typhoon “Kalmaegi”, the beverages that was transported from Xiamen to Zhanjiang by Xiamen Hongxin Company were damaged by flooding in the dock. On June 3, Xiamen People’s Insurance paid the indemnity of 96,876.29 yuan under insurance policy/000338, the indemnity of 40,100.26 yuan under insurance policy/ 000336 and the indemnity of 38,712.67 yuan under insurance policy/000339 by transfer to the Hongxin Group; on June 4, Xiamen People’s Insurance paid the indemnity of 54,063.94 yuan under insurance policy/000341, the indemnity of 69,300.79 yuan under the insurance policy/000352, the indemnity of 81,808.85 yuan under the insurance policy/000335 and the indemnity of 88,897.68 yuan under the insurance policy/000337 by transfer to the Hongxin Group. The insurance claim notification of the seven above-mentioned indemnities of Xiamen Hongxin Company specified that the insurance subjects were located in Haikou. Affected by the Typhoon “Kalmaegi”, Haikou Port suffered from sudden downpour, which caused the fact that the containers parked here by Xiamen Hongxin Company was flooded by water and get damaged. The above 12 indemnities paid by Xiamen People’s Insurance to Hongxin Group and Xiamen Hongxin Company totalled 1,193,352.10 yuan. Damages and claims situation of container cargo with bank receipt remarks are as follows: No. XYLU1017920 container booking note showed that the booking client was Xiamen Hongxin Company, and the ATLXMZJ4081104 waterway container cargo waybill issued by the Antong logistics acting as signature agent of the carrier recorded that the sailing time of the cargo was August 21, 2014, the shipper was Xiamen Hongxin Company, the consignee was CIMC, the ship name and voyage was “Haixiang 58”/1414XM, the second-carriage ship name: “Changrong 22”/ 14103 (2014.08.28), the loading port was Xiamen, the port of transhipment was Quanzhou/Haikou, the port of destination was Zhanjiang, and the cargo name was beverage. The insured shipping list sealed and confirmed by Antong Logistics stated that the insured of the container cargos was CIMC, while the insured recorded in the copy of PYDS201435059500E10540 insurance policy submitted by the Plaintiff was Antong Logistics, the name of the insurance subject was board etc. (details as per list), the waybill was ATLXMZJ4081707 etc. (details as per list) and the means of transport was “Haixiang 58”/1414XM, but the Plaintiff did not submit the insurance policy attachment. The agent ad litem of the Plaintiff told the court that the insurance policy covered all goods carried by the voyage and the ship. The insurance policy number that Xiamen Hongxin Company insured Xiamen People’s Insurance for the goods was PYDS201435020000000332. The container information inquired on the Defendant’s website showed that the container was discharged on August 29 and the container was picked on September 25. On October 7, Xiamen Hongxin Company issued a notice of claim to Xiamen People’s Insurance for the loss of insurance subjects under the insurance policy. Xiamen People’s Insurance entrusted Zhengdaxing to surveyed the loss and the No. ZDXWJH-2014177 assessment report issued thereafter confirmed that the loss

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assessment of the whole insurance policy was 73,515.04 yuan, among which the loss of the container cargo was approved as 38,421.92 yuan. Since the goods were not picked up for more than 15 days, the recommended claim amount was 0 yuan. In the audit report of Xiamen People’s Insurance, the indemnity was calculated at 90% of the whole loss assessment amount, totalling 66,163.54 yuan, and Xiamen People’s Insurance paid the indemnity to Hongxin Group by transfer on June 4th. The accident spot stated in Domestic Cargo Transport Insurance and Loss Notice submitted by Antong Logistics to the Plaintiff was Zhanjiang, while the accident spot written in the cost calculation sheet made by the Plaintiff was Haikou, Hainan Province, and the indemnity amount was 245,006.72 yuan. On August 20, 2015, Antong Logistics issued a subrogation form to the Plaintiff, saying that the beverages consigned by Xiamen Hongxin Company, which were transported by Antong Logistics and insured to the Plaintiff, including the above-mentioned container goods, suffered form an accident during the passage of Typhoon “Rammasun” on July 18, 2014 and Typhoon “Kalmaegi” on September 16, 2014. Antong Logistics agreed that 1,439,640 yuan was the final compensation amount of the case identified above. Antong Logistics agreed that after the insurer paid the above indemnity amount, the corresponding right of the damaged insurance subject was attributed to the insurer, and agreed to specify the container loss assessment amount of 17,289.87 yuan in the list attached in the subrogation form. The bank receipt issued by ICBC Fuzhou Branch indicated that it transferred 4,955 yuan on March 12, 2015 and transferred 796 yuan to Antong Logistics on July 31, which was marked as the indemnities of the container. No. ATLU0035056 container booking note showed that the booking client was Zhanjiang Chenming Company, and the ATL8ZJWF01034F waterway container cargo waybill issued by the Antong logistics acting as signature agent of the carrier recorded that the sailing time of the cargo was September 14, 2014, the shipper was Zhanjiang Chenming, the consignee was Shandong Chenming, the ship name and voyage was “Flying 1”/14100, the name of the second-carriage ship name: “Xinhongxiang 56”/1482S (2014.10.13), the port of loading was Zhanjiang, the port of transshipment was Haikou/Jingtang, the port of destination was Weifang and the cargo name was pulp board. The insured shipping list sealed and confirmed by Antong Logistics stated that the insured of the container cargos was Shandong Chenming, while the insured recorded in the copy of PYDS201435059500E12033 insurance policy submitted by the Plaintiff was Antong Logistics, the name of the insurance subject was pulp board etc., the waybill was ATL8ZJWF01670A2 etc., and the means of transport was “‘Flying 1’/14100” agent ad litem of the Plaintiff told the court that the insurance policy covered all goods carried by the voyage and the ship. The container information inquired on the Defendant’s website showed that the container was picked up on September 12 and was confirmed shipped on board on September 13. The HW-QZ-RB-14805(1) Chenming Paper Pulp Board Seawater Wet Damage Report issued by Ejoy assessment Company stated that the container was unpacked and tested in Shandong on October 17 and the loss of goods was checked and ratified as 918 yuan, and the Appendix of indemnity order bill issued by Zhanjiang Chenming Company specified that the actual

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compensation amount was 418 yuan. Antong Logistics and Zhanjiang Chenming Company jointly issued a transfer authorization letter to the Plaintiff. Antong Logistics entrusted Zhanjiang Chenming Company to receive indemnity procedures that the insurance accident occurred in the finished paper on September 18, 2014 under the above-mentioned insurance policy. The authorization and statement issued by Zhanjiang Chenming Company stated that the goods including the abovementioned containers were damaged by Typhoon “Kalmaegi” at Haikou dock, and Antong Logistics had assumed corresponding compensation liabilities in accordance with contact and obtained corresponding right of claim. On August 1, 2015, Antong Logistics issued a subrogation form to the Plaintiff, agreeing that 4,608,563.97 yuan was regarded as the final compensation amount of cargo loss caused by the Typhoon “Kalmaegi” including the above-mentioned container cargos, which was directly paid to Antong Logistics. Antong Logistics agreed that after the insurer paid the above amount of indemnity, the corresponding right of the damaged insurance subjects was attributed to the insurer. The list attached to the subrogation form specified that the container loss assessment amount was 918 yuan, and the adjustment amount was 418 yuan. The bank receipt issued by ICBC Fuzhou Branch stated that on August 26, the transfer 616 yuan was paid to Antong Logistics, which was marked as the indemnity of container. No. YYCU0016190 container booking note showed that the booking client was Panhai Company, and the ATL20SHAZJ1639 waterway container cargo waybill issued by the Antong logistics acting as signature agent of the carrier recorded that the sailing time of the cargo was September 3, 2014, the shipper was Panhai Company, the consignee was Zhen Xianchang, the ship name and voyage was “Ansheng 20/1416, the port of loading was Shanghai, the port of transshipment was Haikou, the port of destination was Zhanjiang and the cargo name was feed additives. The insured shipping list sealed and confirmed by Antong Logistics stated that the insured of the container cargos was Zhen Xianchang, while the insured recorded in the copy of PYDS201435059500E11207 insurance policy submitted by the Plaintiff was Antong Logistics, the name of the insurance subject was Acronal etc. (details as per list), the waybill was ATL20SHAZJ1628 etc. (details as per list) and the means of transport was “Ansheng 20/1416”, but the Plaintiff did not submit the insurance policy attachment. The agent ad litem of the Plaintiff told the court that the insurance policy covered all goods carried by the voyage and the ship. The container information inquired on the Defendant’s website showed the container was discharged to the yard on September 13, the container was picked up out of gate on September 19, the container was returned in gate on September 21 and the container was confirmed shipped on board on September 26. Both the accident spot written in the domestic cargo transport insurance and loss notice submitted to the Plaintiff by Antong logistics and written in the cost calculation sheet made by the Plaintiff was Haikou. The No. HW-SH-RB-141236(2) assessment report that Typhoon “Kalmaegi” caused the wet damage of container fishmeal, which was issued by Ejoy Assessment Company, recorded that six containers of goods including the above container were shipped from Shanghai to Zhanjiang on September 2 and arrived at Zhanjiang

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Baoman container yard on September 14. From September 18 to 20, the goods were transported by trailer to the consignee’s factory (Guandu Industrial Park Guangdong Yuejia Feed Co., Ltd.). When the workers unpacked the box, they found that the 1–2 layers of the bottom of the box were wet and soaked. Therefore, the consignee immediately notified the relevant parties to wait for the inspection after finding goods abnormal for the first time on September 18. The assessor together with the consignee’s representative conducted a site survey of the damaged goods at the consignee’s factory for three consecutive days from September 18 to 20. According to the site, when the container arrived at the scene, the seal was intact. Analysis of the cause of the accident: The four containers that suffered loss were piled up in the container yard of Baoman dock in Zhanjiang from September 12 to September 18. The site survey indicated that the 1–2 layers of cargo at the bottom of the container were soaked by water and the damaged weight of the No. YYCU0016190 container was 5.05 tons. The assessor held that the possible cause of the cargo water-dampness was that Typhoon “Kalmaegi” hit Zhanjiang on September 16. The typhoon caused the seawater to flow backward and inundated the container yard of Zhanjiang Baoman dock, causing the bottom of the container to be soaked and leading to the fact that the cargo in the container was wet and damaged. The direct economic loss was calculated by multiplying 14.2 tons by the depreciation price of 4,800 yuan per ton, totalling 68,160 yuan. The authorization and statement issued by Panhai Company on April 22, 2015 stated that the goods including the above-mentioned container were damaged by the effect of Typhoon “Kalmaegi” at Haikou Dock, and Antong Logistics had assumed corresponding compensation liabilities and acquired corresponding right of claim in accordance with contract. The subrogation form issued to the Plaintiff by Antong Logistics on August 1 confirmed and agreed that 4,608,563.97 yuan was regarded as the final compensation amount of cargo loss caused by Typhoon “Kalmaegi” including the above-mention contain cargo, which was directly paid to Antong Logistics. The list attached to the subrogation form specified that the container loss assessment amount was 24,240 yuan, and the adjustment amount was 23,740 yuan. The bank receipt issued by ICBC Fuzhou Branch stated that on May 18, 2015, the transfer 66,160 yuan was paid to Antong Logistics, which was marked as the indemnity of container. No. TGHU3878553 container booking note showed that the booking client was Fuzhou Zhongrong Logistics Co., Ltd. (hereinafter referred to as Zhongrong Company) and the ATLSTZJ145731 waterway container cargo waybill issued by the Antong logistics acting as signature agent of the carrier recorded that the sailing time of the cargo was September 11, 2014, the shipper was Zhongrong Company, the consignee was Zhanjiang Dingsheng Logistics Co., Ltd., the ship name and voyage was “Ansheng 19”/1430S, the port of loading was Shantou, the port of transhipment was Haikou, the port of destination was Zhanjiang and the cargo name was stone. The insured shipping list sealed and confirmed by Antong Logistics stated that the insured of the container cargos was Zhanjiang Dingsheng Logistics Co., Ltd., while the insured recorded in the copy of PYDS201435059500E11642 insurance policy submitted by the Plaintiff was Antong Logistics, the name of the

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insurance subject was board etc. (details as per list), the waybill was ATLSTZJ145737 etc. (details as per list) and the means of transport was “Ansheng 19”/1430S, but the Plaintiff did not submit the insurance policy attachment. Agent ad litem of the Plaintiff told the court that the insurance policy covered all goods carried by the voyage and the ship. The container information inquired on the Defendant’s website showed the container was full discharged to the yard on September 20, the container was picked up out of gate on September 21, the container was returned in gate empty on the same day. Both the accident spot written in the Domestic Cargo Transport Insurance and Loss Notice submitted to the Plaintiff by Antong logistics and written in the cost calculation sheet made by the Plaintiff was Haikou. No. HW-QZ-RB-141236 (2) assessment report that Typhoon “Kalmaegi” caused the container cargo damage of Zhanjiang Port issued by Ejoy Assessment Company estimated that the direct loss of the container cargo was 4,000 yuan. The authorization and statement issued by Zhongrong Company on May 11, 2015 stated that the goods including the above-mentioned container were damaged by the effect of Typhoon “Kalmaegi” at Haikou Dock, and Antong Logistics had assumed corresponding compensation liabilities and acquired corresponding right of claim in accordance with contract. The subrogation form issued to the Plaintiff by Antong Logistics on August 1 agreed that after the compensation amount was directly paid to Antong Logistics, the corresponding right of the damaged insurance subjects was attributed to the insurer. The list attached to the subrogation form specified that the container loss assessment amount was 4,000 yuan, and the adjustment amount was 3,200 yuan. The bank receipt issued by ICBC Fuzhou Branch stated that on May 18, 2015, the transfer 3,200 yuan was paid to Antong Logistics, which was marked as the indemnity of container. The court holds that the case was a recovery lawsuit filed by the Plaintiff acting as the insurer who compensated the insured for the loss and acquired the right subrogation for the reason that the goods involved in the case was damaged during its storage period at the Defendant’s dock, therefore, the case is a dispute arising from port operation. The Defendant defended that the Plaintiff did not submit an insurance policy with Antong Logistics, which could not prove that there was an insurance relationship between the two parties. According to Article 14 of the Supreme People’s Court’s Provisions on Several Issues concerning the Trial of Maritime Insurance Disputes: “the people’s court that accepts the dispute case in which the insurer exercises the right of subrogation shall hear the legal relationship between the third party causing the insurance accident and the insured.” The Defendant’s relevant defence regarding the legal relationship of the insurance contract is not within the cognizance of this case. Whether the Plaintiff has acquired the subrogation right shall be in accordance with Article 60 Paragraph 1 of the Insurance Law of People’s Republic of China: “if an insured risk occurs due to the damage of the objects insured by a third party, the insurer shall, starting from the date of paying the indemnities, subrogate the insured to exercise the right to indemnities from the liable third party.” Therefore, the acquisition of the insurance subrogation right belongs to the transfer legal right of claim, and the conditions for obtaining it,

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according to the Article 13 of the Supreme People’s Court’s Provisions on Several Issues concerning the Trial of Maritime Insurance Disputes: “if an insurer, when exercising the right of subrogation, fails to comply with the provisions of the Special Maritime Procedure Law to submit the certificate to the people’s court that it has actually paid the insurance compensation to the insured, the people’s court shall not accept it; if the case is accepted, the court shall rule to reject the lawsuit.”, shall be evidenced by the indemnity receipt, bank payment receipt or other payment certificate after the insurer has actually paid the insurance indemnity to the insured. There are two sources of e Plaintiff’s subrogation right in this case. 1. The Plaintiff issues the indemnity bill and the authorization and statement to the booking shipper of Antong Logistics or to the consigner so as to indicate that the indemnity has been received and Antong Logistics has assumed compensation liability and acquired the claim right of cargo damage and corresponding rights and interests in accordance with contract, therefore, the Plaintiff compensates directly to Antong Logistics to acquire the right of subrogation; 2. Since the goods consigned by Xiamen Hongxin Company to Antong Logistics suffer loss, after the insurer Xiamen People’s Insurance compensates Xiamen Hongxin Company, it recovers the compensation from Antong Logistics, therefore, the Plaintiff directly compensates the Xiamen People Insurance in accordance with the insurance contract to acquire the subrogation right. In this case, the Plaintiff argued that there were 330 containers that suffered loss, but the bank payment list submitted by the Plaintiff involved more than 3,000 indemnities. The remittance time was from the typhoon to one year after the end of the typhoon. In addition to the four containers that the Plaintiff claimed to have remarks, the Plaintiff could not explain whether the other remittances were used for compensating the loss of the containers involved. The court’s two postponement gives the Plaintiff sufficient time to supplement evidence so as to prove its remittance were used for compensating the loss in the case. Since the Plaintiff has acquired the right of subrogation, in addition to the explanation made by the Plaintiff itself, the Plaintiff was unable to submit evidence to prove the correspondence between the bank payment list provided by the Plaintiff and the compensation of cargo damage in this case. According to Article 13 of the Supreme People’s Court’s Provisions on Several Issues concerning the Trial of Maritime Insurance Disputes, except for 4 containers that can prove that the insurance indemnity has been paid, the court shall reject the lawsuit regarding other loss. As for the statute of limitations in the case. The Plaintiff sued the Defendant according to a port operation contract, which shall be applicable to the two-year statute of limitations stipulated in the General Principles of the Civil Law of the People’s Republic of China. The cargo damage caused by the Typhoon “Kalmaegi” occurred on September 16, 2014. Although the cargo damage and the time of taking delivery of the goods were found inconsistent, the statute of limitations did not exceed two years until the Plaintiff filed a lawsuit with the court on September 18, 2016. The Plaintiff’s claim against the fact that Typhoon “Kalmaegi” caused damage did not exceed the statute of limitations prescribed by law, so the court shall protect it.

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The cause of the cargo damage accident involves two Typhoons “Rammasun” and “Kalmaegi”. The location of the accident involves Zhanjiang and Haikou. As for the loss of container goods that the Plaintiff directly paid to Antong Logistics and the cost calculation sheet attached to the indemnity file submitted by the Plaintiff, the recorded accident location is Haikou or the location of the consignee. As for the Domestic Cargo Transport Insurance and Loss Notices issued by Antong Logistics, only 7 notices specify that the accident location is Zhanjiang or Zhanjiang Port. The authorization and statement issued by the shipper who booked cargo space from Antong Logistics, or the consigner says that the goods were damaged at Haikou Dock. The description on the port environment and conditions in the assessment report issued by Ejoy Assessment Company has two descriptions: Zhanjiang Port and Xiuying Port, Haikou. However, most of the unpacking inspection of damaged containers were not in the port, but in the consignee’s warehouse etc. Most of the goods had to be transshipped from Haikou. The Plaintiff did not submit the documented freight records when the delivery of goods was taken from the port and did not described whether there was any damage when the delivery of goods was taken from the port, so whether the goods were damaged at Zhanjiang Port could not be verified. Due to the large number of containers for which the Plaintiff claimed compensation, regarding whether each container was stored at the Defendant’s dock during the typhoon, the Plaintiff only provided the public information of all the containers on the Defendant’s website and did not classify and screen the containers. In view of the fact that when the court verified the container information on the Defendant’s website after the trial, the website did not display the containers’ entry and exit records before 2014, according to Article 75 of the Several Provisions on Evidence in Civil Proceedings of Supreme People’s Court: “where there are evidences to prove that a party possesses the evidence but refuses to provide it without good reasons and if the other party claims that the evidence is unfavourable to the possessor of the evidence, it may be deduced that the claim stands”, the court admits and accepts the container network information submitted by the Plaintiff. As for the four containers with notes in the bank payment list, the inquiry record of No. XYLU1017920 Container showed that it was piled up in the Defendant yard during the typhoon. The Defendant, as the port operator, should properly stevedore and take care of goods. If the damage or loss of goods is caused by inappropriate safekeeping, the Defendant should assume compensation liability for damage. 1. The claim for the container cargo. The claims materials show that the container cargo was compensated to the insurer Xiamen People’s Insurance by the Plaintiff on behalf of Antong Logistics. The subrogation form issued by Antong Logistics to the Plaintiff has specified that the Plaintiff was agreed to directly compensate to Xiamen People’s Insurance. The Plaintiff also submitted the bank payment list that he directly compensated to Xiamen People’s Insurance. Now remarks of the bank payment list show that the Plaintiff has separately paid the insurance indemnity of the containers to Antong Logistics, and the compensation amount paid is different from the adjustment and loss assessment amount made by Xiamen People’s Insurance. Since the loss that the insurer subrogates shall be limited to the amount

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actually compensated by the insurer, and the loss assessment amount of the container, the amount of adjustment and the amount actually paid is inconsistent, the basis of the loss alleged by the Plaintiff cannot be confirmed. 2. As for the place where the damage occurred, the accident spot recorded in the accident notice made by Antong Logistics and in the cost calculation sheet made by the Plaintiff is inconsistent. The cargo port operation agreement signed between Antong Logistics and Zhanjiang Port Group and the Defendant stipulates that once the cargo damage is found, it shall be immediately reported to the Plaintiff and both parties confirm the cargo damage on site and document freight record. Similar provisions were also made in the Port Goods Operation Rules that was introduced into the agreement. The cargo port operation agreement is a true and consistent expression of the parties and does not violate the mandatory provisions of the current laws and administrative regulations of China, which is legal and effective. Due to the Defendant’s port operation qualification, the agreement stipulates that the contractual rights and obligations shall be enjoyed and performed by the Defendant after Zhanjiang Port Group notices Antong Logistics in writing. The Defendant has submitted evidence to prove that Zhanjiang Port Group and the Defendant notices Antong Logistics on May 4, 2014 namely before the typhoon, therefore, the cargo port operation agreement is binding upon Antong Logistics and the Defendant. After the Typhoon “Kalmaegi” landed, the Defendant sent a notice to Antong Logistics requesting it to go to the Defendant to inspect the container and cargo in port. The existing evidence cannot prove that Antong Logistics raised an objection to the port operator after the cargo damage occurred. The inspection on the damaged goods were carried out in the Zhanjiang warehouse and each consignee’s warehouse after the goods were out of the Defendant’s control, which cannot prove that the cargo damage was caused during the Defendant’s custody period. 3. As for responsibility ownership of cargo damage. Regarding the cause of the cargo damage, the assessment report stated that it was a typhoon/storm but did not specify the specific reasons, nor did it show that the assessor had carried out seawater test on the cargo, that is, the cargo damage may be caused by two reasons. The cargo port operation agreement stipulates that if the goods are damaged by natural disasters such as earthquakes, tsunamis, typhoons, storms, fires, floods, etc. in the Defendant’s port area, the Defendant can be exempted from liability. The validity of the exception clause is in accordance with Article 53 of the Contract Law of the People’s Republic of China: “the following exculpatory provisions in a contract are invalid: (i) excluding one party’s liability for personal injury caused to the other party; (ii) excluding one party’s liability for property loss caused to the other party by its intentional misconduct or gross negligence.” Judging from the evidence submitted by the parties involved in the case, before the typhoon came, the Defendant sent a letter to notify the relevant parties to carry out the work of preventing the typhoon. The Defendant also carried out reinforcement on the piled-up goods. The goods involved were damaged due to typhoon/storm, and the letter reply that Defendant submitted issued by the Three Prevention Command Office proves that the tidal water and surge brought by the typhoon have exceeded the design elevation of the second-stage construction of the Defendant’s Dock. There is no evidence that the damage

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involved was caused by the Defendant’s intentional misconduct or gross negligence, therefore, the exemption clause stipulated in the port operation agreement is valid. The cargo damage in this case is caused by typhoon/rainstorm, which conforms to the exceptions stipulated in the contract, so the Defendant can be exempted from liability. In addition, according to the entry and exit records, the container arrived at Zhanjiang Port on August 29, 2014, and it has been there for more than 15 days until the typhoon ended. The Defendant sent a notice to Antong Logistics before the typhoon and told Antong Logistics to take measures to take delivery of goods in time, but Antong Logistics did not take measures timely. The assessment report issued by Zhengdaxing Assessment Report recommended that the cargo damage should not be accepted due to the consignee’s failure to take delivery of the goods in time, therefore, Antong Logistics shall also assume corresponding liability for the damage caused thereby. No. YYCU0016190 Container’s entry and exit record showed that the container was stacked in the Defendant container yard during the typhoon. The description of the place where the cargo damage occurred was the same as that of the No. XYLU1017920 Container. The location of the accident spot filled in by Antong Logistics and the Plaintiff was inconsistent, and the No. YYCU0016190 Container was also found damaged at the consignee’s factory. Based on the same reason as the No. XYLU1017920 Container, the court shall not support the Plaintiff’s claim for the container cargo damage. No. ATLU0035056 Container was shipped out before the typhoon on September 13, 2014. No. TGHU3878553 Container was discharged after the typhoon on September 20. During the typhoon, there was no record of two containers that was stacked at the Defendant container yard. There is no evidence that the two containers were damaged by the typhoon due to the Defendant’s inappropriate safekeeping. Therefore, the court shall not support the Plaintiff’s claim for the two containers. As for the insurance indemnity paid by the Plaintiff on behalf of Antong Logistics to Xiamen People’s Insurance. In fact, the Plaintiff acquired the subrogation right from Xiamen Hongxin Company, the insured of Xiamen People’s Insurance. Although the Plaintiff submitted the bank transfer certificate proving that it had paid the insurance indemnity to Xiamen People’s Insurance, the Plaintiff failed to submit all the indemnity certificates proving that Xiamen People’s Insurance had compensated to Xiamen Hongxin Company and acquired the subrogation right form Xiamen Hongxin Company. The Plaintiff submits a total of 12 payment vouchers proving that Xiamen People’s Insurance compensated to Xiamen Hongxin Company, 5 of which notes that the cargo damage occurred in Zhanjiang, and 7 of which notes that the cargo damage occurred in Haikou. But the payment vouchers are only stamped with the seal of Antong Logistics and the originals are not provided to be checked by the court, so the authenticity thereof cannot be confirmed. Therefore, the existing evidences are insufficient to prove whether Xiamen People’s Insurance has acquired the subrogation right from Xiamen Hongxin Company and the Plaintiff’s condition for acquiring the right of subrogation is not satisfied, so the Plaintiff’s lawsuit shall be rejected.

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In summary, the certificates submitted by the Plaintiff proving that the Plaintiff has paid the insurance indemnities are insufficient to prove that it has acquired the subrogation right of all the cargo damages involved. The container goods for which the Plaintiff have paid insurance indemnities failed to prove that they were damaged during the custody of the Defendant and the goods involved were damaged during the custody of the Defendant. However, the cargo damage was caused by the exemptions stipulated in the port operation agreement, and the Defendant shall not be liable for it. The part of the Plaintiff’s lawsuit shall be rejected and the part of claims shall be rejected. According to Article 8 of the Contract Law of the People’s Republic of China, Article 13 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Maritime Insurance Disputes, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The court rejects the claim of the Plaintiff PICC P&C Quanzhou Branch regarding cargo damage compensation of containers numbered XYLU1017920, YYCU0016190, ATLU0035056, and TGHU3878553; 2. Reject the lawsuit of the Plaintiff PICC P&C Quanzhou Branch regarding cargo damage compensation of other 326 containers (excluding the above-mentioned 4 containers in item 1). Court acceptance fee in amount of 916.20 yuan, shall be borne by the Plaintiff. The Plaintiff has prepaid 15,921.39 yuan, and the court refunds 15,005.19 yuan. In case of dissatisfaction with this judgment, the Plaintiff PICC P&C Quanzhou Branch may within 15 days upon the service of this judgment, submit a statement of appeal to the court, together with duplicates in accordance with the number of the opposite parties, so as to lodge an appeal to the Guangdong High People’s Court. Presiding Judge: WEN Jing Judge: CHEN Zhenqing People’s Juror: ZHANG Yun April 12, 2017 Clerk: LI Boman

Wuhan Maritime Court Civil Judgment PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2016) E 72 Min Chu No.2102 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 975. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff cargo insurer, in subrogation of cargo side, lost the lawsuit against Defendant actual carrier for cargo damage, as it chose to sue actual carrier in contract without bringing in contractual carrier. Summary Cargo side contracted with the carrier for cargo transportation. Carrier, through a chain of contracts, engaged Defendant actual carrier to physically move the cargo between ports. The waterway bill issued by carrier incorporated the ministerial rules, which had already been repealed. Cargo was damaged, and Plaintiff cargo insurer, in subrogation of cargo side, sued the actual carrier alone and sued it in contract. Court of first instance rejected Plaintiff’s claim with the following reasons: (i) the ministerial rules, though repealed, were incorporated into the waterway bill, i.e. the transportation contract, between the cargo side and carrier; (ii) the incorporated ministerial rules provided the carrier and actual carrier to be jointly liable for cargo damage but that was not binding on Defendant; (iii) Plaintiff might sue carrier and Defendant together or sue Defendant alone in tort, but, despite of Court’s reminder, it insisted on suing Defendant alone in contract, so its lawsuit failed.

Judgment The Plaintiff: PICC Property and Casualty Company Limited Shanghai Branch. Domicile: No. 700, South Zhongshan Road, Shanghai. Representative: ZHANG Jiaqing, general manager of the company. Agents ad litem: LIU Lina, LI Rui, lawyers of Shanghai SG & CO. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_50

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The Defendant: Tianjin Zhongyun Shipping Group Co., Ltd. Domicile: Room 201, West Area of Cuiheng Square, the 3rd Street, Tianjin Economic and Technological Development Zone. Legal representative: WANG Haijing, chairman of the company. Agent ad litem: LI Yaqiang, lawyer of Beijing Zhonglun Wende (Tianjin) Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff PICC Property and Casualty Company Limited Shanghai Branch (hereinafter referred to as Insurance Company) and the Defendant Tianjin Zhongyun Shipping Group Co., Ltd. (hereinafter referred to as Shipping Group), the Plaintiff filed an action to the court on October 30, 2016. After the case was entertained on November 17, 2016, the court applied the summary procedure in accordance with the law and held a hearing in public on January 16, 2017. Agent ad litem of the Plaintiff Insurance Company, LI Rui, and agent ad litem of the Defendant Shipping Group, LI Yaqiang, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff Insurance Company filed a lawsuit with the court: 1. the Defendant Shipping Group should compensate the loss of RMB (the following are all RMB) 194,285.2 yuan and the corresponding interest loss; 2. the Defendant should bear the case acceptance fee. Facts and reasons: 9 steel coils of Tianjin Taigang Tianguan Stainless Steel Co., Ltd. (hereinafter referred to as Taigang) were transported from Tianjin to Wuxi. M.V. “Haisheng 2” of the Defendant was responsible for the transportation from Tianjin to Jiangyin   waterway. On November 8, 2015, when the goods arrived at Jiangyin Port, the outer packaging was found to be damaged, scattered and severely deformed. The consignee refused to accept the goods. After that, the damaged goods were returned to Taigang for disposal, resulting in a loss of 19,4285.2 yuan. As the insurer of the goods involved, the Plaintiff paid insurance compensation of 194,285.2 yuan after the occurrence of the damage, and obtained the corresponding subrogation. As the carrier, the Defendant is obliged to transport and deliver the goods intact, and shall be liable for damages during the transportation of the goods. During the trial, the Plaintiff Insurance Company clearly stated the suit of the contract. The Defendant Shipping Group argued that, 1. the Plaintiff did not prove that it had actually paid the insurance claims. The payment insurance compensation certificate presented by the Plaintiff is not the Plaintiff’s insured Taigang but the outsider. According to Article 13 of the Supreme People’s Court’s Provisions on Several Issues concerning the Trial of Maritime Insurance Disputes (hereinafter referred to as certain provisions of insurance disputes), “insurers who fail to exercise the right of subrogation for compensation shall not comply with the provisions of the Special Maritime Procedure Law. If the people’s court submits that it has actually paid the insurance compensation certificate to the insured, the people’s court shall not accept it; if it has been accepted, the ruling shall dismiss the lawsuit. The court shall decide to dismiss the Plaintiff’s lawsuit. 2. The Defendant Shipping Group is not eligible for this case. The Plaintiff claimed the loss on the grounds of

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the contract for the carriage of goods in the sea water area, and the Plaintiff’s insured was Taigang, that is, the Plaintiff’s exercise of the subrogation right should be the Defendant who entered into the transportation contract with Taigang, and Shipping Group and Taigang There is no transportation contract between them. 3. The Defendant has no fault in the process of carrying the goods. The goods involved were returned to Tianjin after passing from Jiangyin to Wuxi in Tianjin. The Defendant was only one of the carriers, and the whole transportation changed through various stages and changed various modes of transportation. Transportation at any stage may result in an increase in cargo damage or damage. After the Defendant’s M.V. “Haisheng 2” was loaded with cargo, he had entrusted the professional cargo securing company to carry out stowage and securing of the cargo according to the requirements of the maritime administrative agency, fully satisfying the technical conditions of the voyage. After the Defendant completed the transportation at the stage, he did not receive any statement about the damage. 4. There is a fault when the cargo consigns the goods. When the goods involved are delivered and transported, only one layer of paper is simply packaged, and the strength and frequency of lifting operations are extremely limited, which is quite different from the standard packaging. When the goods are delivered to the Defendant, there is no special requirement for the lifting and stowage of the goods. Therefore, the Defendant should be exempt from liability for damage caused by the packaging of the goods and the fault of the cargo side. 5. The Defendant shall be exempt from liability for damage caused by the quality of the goods themselves. The goods involved are stainless steel coils. In terms of their own characteristics, there should be no rust. The evidence submitted by the Plaintiff has repeatedly mentioned that the cargo is rusted, which should be caused by the quality of the goods themselves and cannot be attributed to the transportation link. 6. The amount of damage claimed by the Plaintiff is unreasonable. The goods involved in the case are widely used in the Yangtze River Delta. Even if they are rusted, they can be sold to other demanders. At the same time, there are many steel mills or inspection agencies in the Yangtze River Delta area, which can handle or test the so-called cargo damage. Therefore, it is not necessary to return the goods involved from the Wuxi consignee warehouse to Tianjin. In summary, the court is requested to decide to reject the Plaintiff’s lawsuit or to reject the Plaintiff’s claims. The Plaintiff Insurance Company submitted the following evidence around the litigation requests: 1. waterway cargo waybill numbered 000,315,110,098, to prove that the Defendant actually performed the goods involved in the transportation from Tianjin to Jiang yin   waterway. 2. Estimate report on the damage caused by the stainless steel coil of Taigang issued by Shanghai Yijian Insurance Appraisal Co., Ltd. (hereinafter referred to as Insurance Appraisal Company), to prove that the goods involved in the case are damaged during the transportation phase in which the Defendant is responsible, and the consignee refuses After receiving, it was returned to the insured Taigang for treatment, resulting in cargo damage and related losses of 194,285.2 yuan. 3. Insurance policy number is PYII201531000000011889 cargo transportation insurance policy and domestic payment service payment

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receipt, to prove that the Plaintiff is the insured of the goods involved, has paid the insurance compensation, and obtained the subrogation right according to law. The Defendant Shipping Group has no objection to the evidence of the Plaintiff’s evidence above: 1. authenticity, relevance and legality. 2. Public assessment report is not recognized. Reasons: the Defendant does not know the damage situation and does not participate in the so-called damage assessment, that is, the public assessment report does not have objectivity; the public assessment report determines that the Defendant is a secondary carrier error, describing the outer packaging of the goods. There are no witnesses for damage, loose parts and severe deformation; the goods are transported several times and in various ways. The public estimate that the damage occurred during the ship’s management of the goods has no basis; even if the goods are damaged, they can be disposed of locally at a discount without any large expenditure. The expenses are transported back to the factory for processing; the 2015 domestic trade transportation agreement between Taigang and Tianjin Shengwutong Transportation Co., Ltd. (hereinafter referred to as Shengwutong) in the Appendix of the appraisal report has nothing to do with the case; the remarks in the annex to the appraisal report In the case of the goods handover list, the Defendant should not be endorsed; the Jiangyin Jiangshun Logistics Co., Ltd. (hereinafter referred to as Jiangshun) in the annex to the assessment report has no originals and is not recognized; Taigang in the Annex of the Public Assessment Report 2016, the contents of the instructions issued are vague and there is no specific standard for the steel coil packaging to be met. The description is not recognized; Taigang in the annex to the assessment report sales of steel products, remarks steel coil packaging are simple packaging, this kind of packaging cannot guarantee steel coils to resist multiple shipping risks; Shengwutong in the Appendix of the appraisal report and Wuqiao County Changxin Transportation Co., Ltd. (hereinafter referred to as Changxin Company), the transportation agreement concluded and the transportation fee issued by Changxin Company are not confirmed by the freight invoice, and the cost of returning the goods to Tianjin is too high, and the agreement and description are not recognized. 3. There is no objection to the insurance policy; the payee on the payment receipt is not the insured Taigang, and the payment receipt is not related to the case. After the trial, the Plaintiff added to the court a power of attorney that authorized Shengwutong to accept insurance claims. The court entrusted the Defendant to entrust the litigation agent LI Yaqiang to agree to take the power of attorney and send it to LI Yaqiang through the WeChat transmission. Its cross-examination opinion: the Plaintiff did not show in court, there may be after-subscription or forgery, and the authenticity and legality of the power of attorney are not recognized. Even if the power of attorney is true, the Plaintiff cannot prove that the Plaintiff has paid insurance compensation to the insured Taigang. The court’s opinion on the above evidence of the Plaintiff: 1. number 000315110098 waterway cargo waybill, confirm its proof. 2. The public assessment report and its attachments, combined with the Defendant’s cross-examination opinion, recorded the Defendant as a secondary carrier in the public assessment

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report, and the statement that Shengwutong entrusted Shipping Group to be responsible for the actual transportation of the Tianjin-Jiangyin   section. There is no evidence to support this. The court does not recognize the order; Jiangshun’s carrier list is not original, and the Defendant does not recognize it. The court does not recognize the waybill; the transportation cost of the goods involved from Wuxi to Tianjin is not certified by the payment certificate or invoice, and is assessed on the public assessment report. The part of the transportation costs will not be recognized by the court; the amount of damages assessed in the public assessment report is 145,241.1 yuan and other attachments, and the court can determine the evidence because the Defendant cannot provide sufficient rebuttal evidence. 3. The power of attorney, payment receipt, and indemnity are all copies that are identical to the original, and the authenticity is confirmed. The Defendant Shipping Group submitted the following evidence around the defense: 1. waterway transportation permit, to prove that the Defendant has the qualification to engage in waterway cargo transportation. 2. Contract of carriage of goods between the Defendant and Guangzhou Fangqiang International Freight Forwarding Co., Ltd. (hereinafter referred to as Fangqiang Company), to prove that the Defendant is accepting the goods entrusted by Fangqiang Company to carry the goods involved. 3. Cargo stowage and securing statement, to prove that the Defendant has entrusted the professional reinforcement company to carry out stowage and securing of the cargo before the start of transportation, in line with the technical conditions for safe navigation. 4. Photo, to prove that Taigang is to be shipped and is similar to the steel coil packaging style of the same type of steel coil involved, and the simple packaging of the steel coil involved is obviously insufficient compared with it, and the strength and frequency of lifting work that can be satisfied are extremely limited. The Plaintiff Insurance Company commented on the above evidence of the Defendant Shipping Group: 1. there is no objection to the transport permit. 2. The transportation contract cannot be verified, and its authenticity, relevancy and legality are not recognized. 3. The surface authenticity of the cargo stowage and securing statement is recognized, but it cannot be proved that the Defendant has not accepted the object of proof despite the goods. 4. The photo has nothing to do with the case. The court’s opinion on the evidence of the Defendant above: 1. it is recognized. 2. Since the Defendant cannot provide the original of the contract of carriage and the Plaintiff does not recognize its authenticity, relevance and legality, it will not be recognized. 3. Confirmation of the authenticity of the cargo stowage and securing statement. 4. Confirm the authenticity of the photo. After the court heard the case, the facts of the case were as follows: On October 31, 2015, Taigang (as the seller) entered into a sales contract for steel products with Yantai Oriental Stainless Steel Industry Co., Ltd. (hereinafter referred to as Oriental Company, as the buyer), stipulating that the seller sold 507.745 tons of stainless steel coils of different specifications to the buyer. The unit price including tax is 2,260 yuan/ton, the payment terms are full payment, payment to delivery, the seller agent transport, the freight seller bears, the goods are simple

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packaging. The sales contract also stipulated other matters. Previously, Shengwutong became the bid-winning enterprise of Taigang in 2015, foreign trade steel road and ship transportation through bidding. To this end, Shengwutong (as Party B) and Taigang (as Party A) entered into the Taigang Steel Corporation’s 2015 Domestic Trade Transportation Agreement on February 9, 2015. Agreement: Party A is responsible for organizing the supply of goods, accurately providing the details of the consignment, the name of the consignor and consignor, the date of shipment, preparing the goods to be shipped according to the agreed time, and handling the loading procedures; Party B shall arrange the vehicles and vessels in a timely and reasonable manner according to the arrangement of Party A. After completing the transportation task, it is necessary to take timely measures to ensure the quality of the transportation. The quality of the transportation shall be guaranteed. After the delivery of the goods to the designated place, Party B shall be responsible for the damage of the goods. Party B shall be transported from door to door, ie from Party A to The customer’s receiving place agreed in advance, after the goods arrive at the designated place, Party B is responsible for handing over the goods with the consignee. The agreement also stipulated other matters. After the above contract was signed, Shengwutong extracted the 199.511 tons of stainless steel coils sold from Taigang to Oriental Company according to the above-mentioned transportation agreement, and then transferred the goods to the transportation. After repeated entrustment, the goods were transported from Tianjin to Jiangyin   Waterway, and the Defendant Shipping Group was responsible. On November 8, 2015, M.V. “Haisheng 2” of the Defendant Shipping Group loaded the goods involved in Tianjin Port and issued a waterway cargo waybill. The waybill records: the name of M.V. “Haisheng 2”, the shipper Tianjin Port Logistics, Shipping Group, the cold name of the goods, the consignee shipping group, the number 9, the weight of 199.511 tons, the carrier, the actual carrier, the shipper The relevant rights and obligations of the consignee shall be governed by the Rules for the Transport of Domestic Waterway Goods. On November 14 of the same year, M.V. “Haisheng 2” round transported the goods to Jiangyin. When the port operator accepted the goods, it approved 9 pieces of goods on the delivery list and the damaged outer packaging, scattered parts, severe deformation, and the Defendant. M.V. “Haisheng 2” steamship is also stamped on the endorsement. Arranged by Shengwutong, the shipment was subsequently transported by land to the D5 library of Wuxi Shuofang Stainless Steel Logistics Park. As the actual consignee refused to accept the shipment, Shengwutong arranged to return the shipment to Taigang. Insurance Appraisal Company has inspected and inspected the damage of the goods in the D5 library of Wuxi Shuofang Stainless Steel Logistics Park and the Taigang, and assessed the cargo damage of 145,241.1 yuan. The goods involved in the case are covered by the Plaintiff Insurance Company to cover the comprehensive insurance of domestic waterway and land cargo transportation. The insurance policy issued by the Plaintiff Insurance Company records: the insured Taigang, the cold rolled stainless steel coil of the insurance goods project, the quantity is 200 tons, and the insurance amount is 2.24 million

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yuan. On June 21, 2016, the Plaintiff paid insurance compensation of 194,285.2 yuan to the bank account of Shengwutong designated by Taigang. The court believes that this case is a dispute over the contract of cargo transportation in the sea area. The Plaintiff Insurance Company shall, after the damage to the insured goods, obtain the right to claim compensation from the insured for the third party within the scope of the insurance compensation amount from the date of payment of the insurance compensation to the account designated by the insurer Taigang. The Defendant Shipping Group proposed that the Plaintiff Insurance Company did not have the defense opinion of the subordinate Taigang to exercise its claim for damages, and this court will not accept it. As for the insurance contract relationship between the Plaintiff Insurance Company and Taigang, the court shall, in accordance with certain provisions of the insurance dispute, Article 14 “the people’s court that accepts the case of the insurer’s right to claim compensation for the right of subrogation shall only be the third party causing the insurance accident. The legal relationship with the insured is tried. The provisions are not reviewed. For the transportation of the goods involved, Taigang is the shipper or the owner of the cargo. The Defendant Shipping Group is the actual carrier. After the Defendant’s M.V. “Haisheng 2” loaded the goods at the port of departure (Tianjin), the waterway cargo waybill issued by the round did not endorse the cargo damage, indicating that the goods were in good condition at the port of departure. However, the ship arrived at the port of destination (Jiangyin) and the port operator and M.V. “Haisheng 2” jointly damaged the goods on the goods handover list. As the Defendant did not prove that the goods accepted at the port of departure (Tianjin) had been damaged, the court determined that the damage occurred during the transportation of the Defendant Shipping Group. Shipping Group has proposed a variety of methods for the transportation of the goods involved. After the goods have been loaded, the company has commissioned the professional cargo securing company to carry out the stowage and securing of the goods, and the goods delivered by the shipper are simple packaging, which is insufficient to prove the damage of the goods. Force majeure, shipper’s fault or other reasons. Therefore, the Defendant Shipping Group cannot be excused from the damage caused by the case. Remarks on the above waterway cargo bill of lading, the relevant rights and obligations of the carrier, the actual carrier, the shipper and the consignee shall be governed by the Rules for the Transport of Domestic Waterways. The parties to the transport relationship shall agree on the rights and obligations of the goods involved in the transport of the goods involved. The agreement is the autonomy of the parties to the goods, does not violate the mandatory provisions of laws and regulations, and is valid according to law. Article 46 of the Rules for the Transport of Domestic Waterway Goods stipulates that: “if both the carrier and the actual carrier are liable for compensation, they shall bear joint and several liability within the scope of responsibility.” The liability of the carrier and the actual carrier as stipulated in this article. The basis is different, the carrier is liable for breach of contract based on the contract, and the actual carrier is actually infringing the interests of the owner and has the tort liability. For the cargo owner, the carrier and the actual carrier are liable for the actual loss of the goods. However, if the owner or the shipper files a claim

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for damages in the contract, the actual carrier shall be liable for damages to the owner of the goods in accordance with the infringement, and shall be based on the carrier’s claim for compensation from the carrier. According to the provisions of this article, the Plaintiff Insurance Company substituting Taigang to exercise the claim for loss of goods by contract lawsuit shall presuppose that the counterparty with the contractual relationship with Taigang is the party, and that the actual carrier is responsible for the fault of the cargo damage. Within the scope of the infringement bear joint responsibility. The Plaintiff Insurance Company directly relies on the contractual claim and the actual carrier that has no contractual relationship with the Defendant Shipping Group, and bears the liability for damages. There is no legal basis, and the court does not support the Plaintiff Insurance Company’s claim. In summary, the Plaintiff Insurance Company subrogated Taigang to make the contractual action against the actual carrier of the goods involved, the Defendant Shipping Group, to claim for damages, but there is no legal basis, and the court does not support. In accordance with Article 60 of the Insurance Law of the People’s Republic of China, and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject the claims of the Plaintiff Insurance Company. Court acceptance fee in amount of 4,186 yuan, which is due to summary procedure reduced to 2,093 yuan, shall be borne by the Plaintiff. If the party disagrees with this judgment, it may submit a copy of the original letter of appeal to the court within 15 days from the date of delivery of the judgment, so as to appeal to the Hubei High People’s Court. The Appellant shall, in submitting the appeal, prepay the appeal case acceptance fee according to the amount of the appeal request against this judgment and Article 13 Paragraph 1 of the Measures for the Payment of Litigation Fees. [Bank of deposit: Agricultural Bank of China Wuhan Donghu Sub-branch; payee: Hubei Provincial Department of Finance non-tax revenue financial account; number: 17    69; please in the bank’s certificate use column mark “Hubei High People’s Court”, so it is convenient for the receiving bank to confirm the use of funds.] If the Appellant has not paid the legal costs of the appeal within seven days after the expiration of the appeal period, the appeal shall be automatically withdrawn. Presiding Judge: ZHOU Da Judge: CAI Si’an Acting Judge: CHEN Lin June 19, 2016 Clerk: ZHAO Biao

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Hubei High People’s Court Civil Judgment PICC Property and Casualty Company Limited Shanghai Branch v. Tianjin Zhongyun Shipping Group Co., Ltd. (2017) E Min Zhong No.2780 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 967. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming first instance Court’s decision holding that Plaintiff cargo insurer, in subrogation of cargo side, lost the lawsuit against Defendant actual carrier for cargo damage, as it chose to sue actual carrier in contract without bringing in contractual carrier. Summary Cargo side contracted with the carrier for cargo transportation. Carrier, through a chain of contracts, engaged Defendant actual carrier to physically move the cargo between ports. The waterway bill issued by carrier incorporated the ministerial rules, which had already been repealed. Cargo was damaged, and Plaintiff cargo insurer, in subrogation of cargo side, sued the actual carrier alone and sued it in contract. Court of first instance rejected Plaintiff’s claim with the following reasons: (i) the ministerial rules, though repealed, were incorporated into the waterway bill, i.e. the transportation contract, between the cargo side and carrier; (ii) the incorporated ministerial rules provided the carrier and actual carrier to be jointly liable for cargo damage but that was not binding on Defendant; (iii) Plaintiff might sue carrier and Defendant together or sue Defendant alone in tort, but, despite of Court’s reminder, it insisted on suing Defendant alone in contract, so its lawsuit failed. Plaintiff appealed. The Court of appeal rejected the appeal by holding that the decision of first instance Court was correct both in respect of finding of facts and application of law.

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Judgment The Appellant (the Plaintiff of first instance): PICC Property and Casualty Company Limited Shanghai Branch. Domicile: No. 700, South Zhongshan Road, Shanghai. Representative: ZHANG Jiaqing, general manager of the company. Agent ad litem: LIU Lina, lawyer of Shanghai SG & CO. The Respondent (the Defendant of first instance): Tianjin Zhongyun Shipping Group Co., Ltd. Domicile: Room 201, West Area of Cuiheng Square, the 3rd Street, Tianjin Economic and Technological Development Zone. Legal representative: WANG Haijing, chairman of the company. Agent ad litem: LI Yaqiang, lawyer of Beijing Zhonglun Wende (Tianjin) Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant PICC Property and Casualty Company Limited Shanghai Branch (hereinafter referred to as PICC Shanghai) and the Respondent Tianjin Zhongyun Shipping Group Co., Ltd. (hereinafter referred to as Shipping Group), the Appellant was dissatisfied with the Wuhan Maritime Court (2016) E 72 Min Chu No. 2102 Civil Judgment, and appealed to the court. After the court entertained the case on September 5, 2017, the collegiate panel was formed in accordance with the law, and the court held a hearing in public on October 10, 2017. Agent ad litem of the Appellant PICC Shanghai, LIU Lina, and agent ad litem of the Respondent Shipping Group, LI Yaqiang, appeared in court to attend the hearing. Now the case has been concluded. PICC Shanghai appealed that: 1. revoke the Wuhan Maritime Court (2016) E 72 Min Chu No. 2102 Civil Judgment, and change that Shipping Group should compensate for PICC Shanghai for loss of RMB (the following are all RMB) 194,285.20 yuan and corresponding interest losses; 2. the litigation costs are borne by Shipping Group. Facts and reasons: 1. the first-instance judgment found the facts, which were wrong. The court of first instance did not support the payment of the goods from Wuxi to Tianjin Taigang Tianguan Stainless Steel Co., Ltd. (hereinafter referred to as Taigang), and the handling errors should be corrected. 2. The first-instance judgment is subject to legal error. (1) The case-related waybill clearly stipulates that the Rules for the Transport of Domestic Waterways (hereinafter referred to as Water Regulations) shall apply, and the people’s courts shall not apply arbitrarily. The court of first instance proposed that such an agreement should be based on the person who sue the owner of the contract of carriage, and that the actual carrier is prosecuted for infringement, which violates the standards and standards of judicial judgment. (2) According to the Water Regulations, the actual carrier’s joint liability is not based on the carrier’s compensation, and it is not based on infringement. (3) The case involved in the case clearly stipulates that the

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actual carrier, shipper, shipper’s rights and obligations apply to the Water Regulations. It is the autonomy of Shipping Group and is an extension of the main body and content of the special contract for domestic waterway transportation. The binding of the agreement to Shipping Group is not affected by the abolition of the Water Regulations. Shipping Group responded that, the appeal should be dismissed and the original judgment should be affirmed. Facts and reasons: 1. the rights and obligations of the parties cannot be determined by the record of the waybill. Although the waybill is agreed to apply the Water Regulations, the Water Regulations have been abolished when the dispute occurred in this case. The shipper, carrier and consignee recorded in the waybill have nothing to do with Taigang, which is subrogated by PICC Shanghai. Therefore, PICC Shanghai or Taigang has no factual basis for obtaining the rights and obligations of the parties with this waybill. The shipping contract cannot be established between Shipping Group and the Taigang subordinated by PICC Shanghai. 2. PICC Shanghai has no legal basis for suing Shipping Group with a contract. First of all, the contract lawsuit must adhere to the principle of “relativeness”. The overall mode of transportation of the goods involved in the case is multimodal transport. The contractual responsibility of Taigang shall be the multimodal transport operator with which the contract is signed. Secondly, Article 46 of the Water Regulations did not break the contractual relativity. This article is only a provision on the manner in which liability is assumed and does not indicate the basis for liability. 3. According to the contract of the cargo transportation contract signed by Shipping Group and the outsider Guangzhou Fangqiang International Freight Forwarding Co., Ltd., if the shipper does not raise any objection to the quantity and quality of the goods when extracting the goods, it is deemed that Shipping Group has already followed the waybill. Document the delivery of the goods. After Shipping Group transported the goods to the port of destination, the shipper did not raise an objection. If the carrier is required to compensate for the contract, Shipping Group shall not be liable under the aforementioned contract of carriage. In addition, this section of the transport by Shipping Group is responsible for insurance matters, if the shipper filed a loss of objection at the time, Shipping Group can also promptly report to PICC Shanghai insured by PICC Shanghai, in any case, Shipping Group will not be liable to the cargo party. The first-instance claims of PICC Shanghai: 1. Shipping Group should compensate for the loss of 194,285.2 yuan and the corresponding interest loss; 2. Shipping Group should bear the case acceptance fee. In the trial of the first instance, PICC Shanghai clearly stated the suit of the contract. The court of first instance found the facts: On October 31, 2015, Taigang (as the seller) entered into a sales contract for steel products with Yantai Oriental Stainless Steel Industry Co., Ltd. (hereinafter referred to as Oriental Company, as the buyer), stipulating that the seller sold 507.745 tons of stainless steel coils of different specifications to the buyer. The unit price including tax is 2,260 yuan / ton, the payment terms are full payment, payment to delivery, the seller agent transport, the freight seller bears, the goods are simple packaging. The sales contract also stipulated other matters. Previously,

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Tianjin Sheng Wutong Transportation Co., Ltd. (hereinafter referred to as Shengwutong) passed the bidding and became the winning bidder of Taigang in 2015, foreign trade steel road and ship transportation. To this end, Shengwutong (as Party B) and Taigang (as Party A) entered into the Taigang Steel Corporation’s 2015 Domestic Trade Transportation Agreement on February 9, 2015. Agreement: Party A is responsible for organizing the supply of goods, accurately providing the details of the consignment, the name of the consignor and consignor, the date of shipment, preparing the goods to be shipped according to the agreed time, and handling the loading procedures; Party B shall arrange the vehicles and vessels in a timely and reasonable manner according to the arrangement of Party A. After completing the transportation task, it is necessary to take timely measures to ensure the quality of the transportation. The quality of the transportation shall be guaranteed. After the delivery of the goods to the designated place, Party B shall be responsible for the damage of the goods. Party B shall be transported from door to door, namely from Party A to the customer’s receiving place agreed in advance, after the goods arrive at the designated place, Party B is responsible for handing over the goods with the consignee. The agreement also stipulated other matters. After the above contract was signed, Shengwutong extracted the 199.511 tons of stainless steel coils sold from Taigang to Oriental Company according to the above-mentioned transportation agreement, and then transferred the goods to the transportation. After repeated entrustment, the shipment was transported from Tianjin to Jiangyin   Waterway, and was handled by Shipping Group. On November 8, 2015, M.V. “Haisheng 2” of Shipping Group was loaded with the goods in Tianjin Port and issued a waterway cargo waybill. The waybill records: the name of M.V. “Haisheng 2”, the shipper Tianjin Port Logistics, Shipping Group, the cold name of the goods, the consignee shipping group, the number 9, the weight of 199.511 tons, the carrier, the actual carrier, the shipper relevant rights and obligations of the consignee shall be governed by the Water Regulations. On November 14 of the same year, M.V. “Haisheng 2” transported the goods to Jiangyin. When the port operator accepted the goods, it approved 9 pieces of goods on the delivery list and the damaged outer packaging, scattered parts, severe deformation, and shipping. The group also stamped M.V. “Haisheng 2” steamship seal on the endorsement. Arranged by Shengwutong, the shipment was subsequently transported by land to the D5 library of Wuxi Shuofang Stainless Steel Logistics Park. As the actual consignee refused to accept the shipment, Shengwutong arranged to return the shipment to Taigang. Insurance Appraisal Company has inspected and inspected the damage of the goods in the D5 library of Wuxi Shuofang Stainless Steel Logistics Park and the Taigang, and assessed the cargo damage of 145,241.1 yuan. The case involving the goods was covered by PICC Shanghai to cover the comprehensive insurance of domestic waterway and land cargo transportation. The insurance policy issued by PICC Shanghai records: the insured Taigang, the cold-rolled stainless steel coil plate of the insurance goods project, the quantity is 200 tons, and the insurance amount is 2.24 million yuan. On June 21, 2016, PICC Shanghai paid insurance claims of 194,285.2 yuan to the bank account of Shengwutong designated by Taigang.

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The court of first instance held that the case was a dispute over the contract of carriage of goods in the sea waters. After the insured goods were damaged, PICC Shanghai obtained the right to claim compensation from the insured for the third party within the scope of the insurance compensation amount from the date of payment of the insurance compensation to the account designated by the insurer. As for the case involving cargo transportation, Shipping Group as the actual carrier, loading the goods at the port of departure (Tianjin), the waterway cargo waybill has not been annotated with cargo damage. However, when the round of arrival at the port of destination (Jiangyin) unloaded the goods, the goods on the delivery list were damaged. Therefore, the cargo damage occurred during the transportation of Shipping Group. Shipping Group proposed a case involving the transportation of goods through various means. After the goods were loaded, the professional cargo securing company was commissioned to carry out the stowage and securing of the goods, and the goods delivered by the shipper were simply packaged, which was insufficient to prove that the goods were damaged. Due to force majeure, shipper’s fault or other reasons. The court of first instance held that Shipping Group could not be excused from the damage caused by the case. Remarks on the bill of lading of the waterway cargo, the relevant rights and obligations of the carrier, the actual carrier, the shipper and the consignee shall be governed by the Water Regulations. The agreement is the autonomy of the parties involved in the carriage of goods, and does not violate the laws and regulations. Sexual provisions are valid according to law. The court of first instance held that Article 46 of the Water Regulations stipulates that: “if both the carrier and the actual carrier are liable for compensation, they shall bear joint and several liability within the scope of responsibility”, the carrier and the actual carrier as specified in the article. The basis of responsibility is different. The carrier bears the liability for breach of contract based on the contract. The actual carrier is actually infringing the interests of the owner and has the tort liability. For the cargo owner, the carrier and the actual carrier are liable for the actual loss of the goods. However, if the owner or the shipper files a claim for damages in the contract, the actual carrier shall be liable for damages to the owner of the goods in accordance with the infringement, and shall be based on the carrier’s claim for compensation from the carrier. According to the provisions of this article, PICC Shanghai substituting Taigang to exercise the claim for damages by contract, shall presuppose that the counterparty with the contractual relationship with Taigang is the party, and that the actual carrier is responsible for the fault of the cargo damage. Within the scope of the infringement bear joint responsibility. PICC Shanghai directly relies on the contractual claims and the actual carrier that has no contractual relationship, namely Shipping Group, bears the liability for damages, lacks legal basis, and does not support the court of first instance for its claims. In summary, in accordance with Article 60 of the Insurance Law of the People’s Republic of China and Article 142 of the Civil Procedure Law of the People’s Republic of China, reject the claims of PICC Shanghai. Court acceptance fee in amount of 4,186 yuan, which is priced at 2,093 yuan in accordance with the

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summary procedure court acceptance fee collection fee, shall be borne by PICC Shanghai. In the second instance, the parties did not submit new evidence. The court found that the facts ascertained by the court were true and confirmed by the court. The court believes that according to the arguments, the issues of second instance can be summarized into two points: firstly, whether the application of the Water Regulations in the case involves the establishment of a contractual legal relationship between the parties in the case; secondly, the case involves the goods. Whether the cost of transporting back to Taigang in Wuxi can be supported. In this regard, the court made the following judgement: For the first issue. The water bill is applicable to the bill of travel. The Water Regulations are departmental regulations that have been abolished. The relevant provisions on civil rights and obligations, if the parties voluntarily agree to apply them, are the parties’ free disposition of their civil rights and obligations and do not violate the law. According to Articles 46 and 47 of the Water Regulations, in the transportation of waterway goods, the “actual carrier” shall bear the responsibility of the carrier only within the scope of responsibility when it is in the responsibility of the carrier. Responsibilities apply to the provisions of the Water Regulations regarding the liability of the carrier. In this case, PICC Shanghai explicitly chose to sue the actual carrier Shipping Group for breach of contract by the lawsuit of the contract, and did not sue the carrier, so that the carrier’s responsibilities were not clear, and it was not clear whether Shipping Group was liable. The state of the law does not create the legal consequences of applying the provisions of the carrier’s liability in the Water Regulations to Shipping Group. The shipper and the carrier are in a contractual relationship, and the shipper and the actual carrier are infringing relations. The nature of this legal relationship is not changed by the Water Regulations. The case involved in the case is governed by the Water Regulations. In fact, the claimant for damages is provided with a legal path that can simultaneously sue the carrier and the actual carrier, without having to sue the carrier by default and sue the actual carrier by infringement. However, PICC Shanghai believes that the application of the Water Regulations will change the nature of the legal relationship between the two parties into a contractual relationship and lack a legal basis. The court of first instance did not support its claim, and the case was handled correctly. Regarding the second issue. PICC Shanghai submitted a transportation agreement with Tianjin Changxin Logistics Co., Ltd. and Wuqiao County Changxin Transportation Co., Ltd. regarding the transportation fee, and it is proposed to prove that the case was shipped to the destination and found to be damaged, and then shipped back to Taigang for payment. Shipping costs. However, PICC Shanghai did not explain the relationship between Tianjin Changxin Logistics Co., Ltd. and Wuqiao County Changxin Transportation Co., Ltd. and Wuqiao County Changxin Transportation Co., Ltd. as the unit issued the situation, in accordance with the provisions of the Civil Procedure Law, the person in charge of the unit and the person who produced the certificate should sign or seal, and affix the unit seal, and the description only The stamp is not in compliance with the law and cannot be

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accepted. PICC Shanghai also failed to submit common notes such as payment vouchers or invoices to prove the actual occurrence of the fee. PICC Shanghai’s claim lacks evidence that the court does not support it. In summary, the appeal of PICC Shanghai cannot be established and should be dismissed; the judgment of the first instance is clear in fact finding and the application of law is correct, which should be affirmed. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 4,186 yuan, shall be borne by the Appellant PICC Shanghai. The judgment is final. Presiding Judge: SU Jiang Judge: OU Haiyan Judge: DAI Qifen November 3, 2017 Clerk: MA Yue

Shanghai Maritime Court Civil Judgment PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2016) Hu 72 Min Chu No.2556 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 995. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Subrogated cargo insurer held entitled to recover damages from carrier for theft of insured cargo during land carriage in country of destination, as evidence failed to establish that the goods had been picked up by consignee at port of destination, so they were still under defendant carrier’s responsibility at time of theft. Summary In 2015, a container of 584 cases of women’s jackets, that were being shipped from Shanghai, were stolen during the inland transportation of the container from the port of destination, La Saloca de Nas in Mexico, to the place of delivery in Mexico City. As the insurer of the stolen goods, the Plaintiff PICC Property and Causality Co. indemnified the owner of the goods in the amount of 103,996 USD. The Plaintiff subsequently exercised its right of subrogation and brought this suit against the carrier of the goods, Defendant Qingdao Hangmei International Logistics Co., seeking compensation for the aforementioned insurance indemnity. The contractual carrier that was hired by the Defendant to arrange the transportation in this case, Aonan Company, and the actual carrier of the goods, Maersk Company, participated in the suit as third parties. The Defendant argued that the actual carrier allowed the consignee to pick up his goods from the port of destination, which violated the contract, so the actual carrier should be liable for the loss of the goods. Ultimately, the court held that as the carrier, the Defendant failed to satisfy its obligation of transporting the goods and was therefore responsible for compensating the Plaintiff for the loss in the amount of 94,542 USD. The Court reasoned

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_51

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that the evidence was not sufficient to prove that the goods involved in the robbery were picked up by the consignee recorded in the bill of lading and were not under the Defendant’s responsibility. Furthermore, the Court determined that the compensation amount was, in fact, 94,542 USD, because that was the actual value of the goods, not 103,996 USD, which was the actual insurance indemnity paid by the Plaintiff.

Judgment The Plaintiff: PICC Property and Casualty Co., Ltd. Shanghai Branch Domicile: No. 700 Zhongshan South Road, Huangpu District, Shanghai, the People’s Republic of China. Legal representative: ZHANG Jiaqing, general manager. Agent ad litem: XIANG Fubin, lawyer of Beijing W&H Law Firm Shanghai Office. Agent ad litem: WU Ting, lawyer of Beijing W&H Law Firm Shanghai Office. The Defendant: Qingdao Hangmei International Logistics Co., Ltd. Domicile: Room 1801, Block A, No. 19 Zhangzhou Second Road, Qingdao Shandong Province, the People’s Republic of China. Legal representative: CUI Hongjun, general manager. Agent ad litem: WANG Wei, lawyer of Shandong Zhaoji Law Firm. The Third Party: Maersk (China) Shipping Co., Ltd. Domicile: Rooms 1705 and 1706, Building B, No. 24 East Third Ring Road, Chaoyang District, Beijing, the People’s Republic of China. Legal representative: SHI Minfu, chairman. Agent ad litem: CAO Fang, lawyer of Shanghai Allbright Law Office. Agent ad litem: CHEN Feiyi, lawyer of Shanghai Allbright Law Office. The Third Party: Shanghai Aonan International Logistics Co., Ltd. Domicile: Y207 District A, No. 925, Yecheng Road, Jiading Industrial District, Shanghai, the People’s Republic of China. Legal representative: ZHOU Shihao, Executive Director Agent ad litem: DAI Yuxin, lawyer of Shanghai Wintell & Co. Agent ad litem: CHEN Liang, lawyer of Shanghai Wintell & Co. This case arose from a dispute over contract of carriage of goods by sea and was filed by the Plaintiff, PICC Property and Casualty Co., Ltd. Shanghai Branch (hereinafter referred to as “Shanghai PICC”) against the Defendant, Qingdao Hangmei International Logistics Co., Ltd., with the court on September 13, 2016. The court entertained the case on the same day and organized a collegial panel in accordance with the law. The court granted the Defendant’s request and notified

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Maersk (China) Shipping Co., Ltd. (hereinafter referred to as “Maersk Company”) and Shanghai Aonan International Logistics Co., Ltd. (hereinafter referred to as “Aonan Company”) to participate in the lawsuit as third parties. The court held two public hearings, one on December 13, 2016, and the other on June 13, 2017. XIANG Fubin and WU Ting, agents ad litem of the Plaintiff, and WANG Wei, agent ad litem of the Defendant, appeared in court and participated in litigation during the first hearing. XIANG Fubin, agent ad litem of the Plaintiff, WANG Wei, as the agent ad litem for the Defendant, CHEN Feiyi, as the agent ad litem for the Third Party Maersk Company, and CHEN Liang, as the agent ad litem for the Third Party Aonan Company, appeared in court and participated in litigation during the second hearing. Now the case has been concluded. The Plaintiff alleged that in September of 2015, the insured, MAVERICK PACIFIC LIMITED (Mawei Trading Company), sold a group of garments with a CIF price of 94,542 USD to Carlos Ruiz Garcia (Carlos Company). The Defendant issued a multimodal transport bill of lading numbered HMSH150xxxxx for the above garments, which recorded that: the port of loading was Shanghai; the port of discharge was Mexico’s La Saloca de Nas; and the place of delivery was Mexico City. The shipping term was CY-DOOR. Later, the Defendant’s Shanghai Branch confirmed that the goods involved were hijacked and lost in the course of shipment from the port of discharge to the destination. Shanghai PICC, as the insurer of the aforementioned goods, paid a 103,996 USD insurance indemnity and has obtained the right of insurance subrogation according to law. Therefore, Plaintiff Shanghai PICC requests that the Defendant compensate for the loss of 103,996 USD plus interest equivalent to the interest amount in RMB from May 25, 2016, to the date that the judgment goes into effect. The interest should be calculated according to the interest rate of the People’s Bank of China for the corresponding period. The court acceptance fee should be borne by the Defendant. The Defendant argued that: After the goods were transported to the port of discharge, the actual carrier failed to deliver them to the consignee’s door according to the contract. Instead, the consignee carried the goods by himself. The goods were stolen and lost in transit, which exceeded the scope of the insurance coverage. Therefore, Shanghai PICC should not have compensated the insured. Shanghai PICC also failed to prove that the insured had transferred the policy to the consignee and that the consignee had made the payment. The actual carrier’s liability period is from the container yard to the consignee’s door. In the absence of a change in responsibility in the instructions, the actual carrier agreed to allow the consignee to pick up his own goods, which was in violation of the contract. Thus, the actual carrier should be responsible for compensating for the loss in this case. The Third-Party Maersk Company stated that: The actual carrier of the goods involved is Maersk Shipping Co., Ltd., and Maersk Company is its signing agent. The actual carrier is solely accountable to the shipper and the consignee under the shipping terms issued. After the goods arrived at the port of destination, the actual carrier delivered the goods to the consignee,

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IGC Company, which was recorded in the Sea Waybill. After that, IGC Company arranged for the delivery of the goods to the final consignee, who arranged for the trailer service by himself. Therefore, the actual carrier’s liability period was changed from CY-DOOR to CY-CY. The actual carrier shall not be liable for the loss of the goods because the loss occurred during the inland transportation from the port of destination, and the goods were not carried by the actual carrier. The Third Party Aonan Company stated that: The shipping list provided by Maersk Company, that is stamped with the signature of IGC Company and Aonan Company’s agent ILS Company, was only used for the purpose of customs clearance and cannot prove that the goods were indeed delivered to the yard at the port of destination. After the loss of the goods, Aonan Company communicated with the actual carrier and the actual carrier’s employee confirmed that the inland transportation of the goods was also arranged by the actual carrier. The actual carrier’s liability period shall be from the loading port yard to the consignee’s factory at the port of destination. Aonan Company never confirmed the change of the liability period with the actual carrier in written. Even if the goods were delivered to the port of destination, they should’ve been delivered to ILS Company because ILS Company was the consignee under Aonan Company’s bill of lading. Thus, Aonan Company fulfilled its obligation of delivery and bears no responsibility. The evidentiary materials submitted by the Plaintiff to support its claims, the cross-examination opinions of the Defendant and the third parties, and the determinations of the court are as follows: 1. The Plaintiff submitted the bill of lading “HMSH150xxxxx”, the form of the bill of lading that the Defendant filed with the Ministry of Communications, and the sea waybill “xxx”, to prove that the port of shipment was Shanghai, the port of discharge was La Saloca de Nas in Mexico, the destination was Mexico City, and the Defendant was the multimodal transport operator of the cargo involved. The Defendant had no objection to the evidence. The third parties Maersk Company and Aonan Company did not see the bill of lading issued by the defendant and had no objection to the authenticity of the other evidence. The court affirms the effect and probative force thereof. 2. The Plaintiff submitted the sales contract, the packing list, the commercial invoice, and the customs declaration, to prove that the value of the goods in the case was 94,542 USD. The Defendant had no objection to the authenticity of the evidence. The third parties Maersk Company and Aonan Company confirmed the authenticity of the customs declaration but did not affirm the authenticity of the other evidence, arguing that the evidence lacked notarial certification. The court affirms that the evidence in this group is original and the bill of lading, the sea waybill, the insurance policy, and the payment vouchers can be mutually corroborated, so the court affirms the effect and probative force thereof. 3. The Plaintiff submitted the situation statement, to prove that the Defendant’s Shanghai Branch confirmed that the goods involved were stolen and lost in transit. The Defendant had no objection to the authenticity of the evidence but

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asserted that the Shanghai Branch did not know about the situation and could not represent the company’s opinion. The Third Party Maersk Company objected to the authenticity of the evidence, asserting that it contradicted the fact that the Defendant had claimed that the actual carrier had not delivered the goods. The Third Party Aonan Company believed that the contents of the statement should be subject to confirmation by the Defendant. The court affirms that this evidence, the Defendant’s evidence, and the testimony given in court can be mutually corroborated, and therefore affirms the effect and probative force thereof. 4. The Plaintiff submitted the insurance policy, authorization, and bank payment vouchers to prove that the Plaintiff, as the insurer of the aforementioned goods, had paid the insurance compensation of 103,996 USD and had obtained the right of subrogation according to law. The Defendant has no objection to the authenticity of the evidence. The Third Party Maersk Company asserted that the power of attorney should be notarized but had no objection to the authenticity of the other evidence. However, Maersk Company argued that the authorization was signed by the overseas consignee and not the insured under the insurance contract, which exceeded the scope of the insurance contract. The Third Party Aonan Company had no objection to the authenticity of the evidence, but asserted that the Plaintiff paid the consignee, not the insured, and it was possible that the consignee did not pay for the goods. The court affirms the effect and probative force thereof. The evidentiary materials submitted by the Defendant to support its claims, the cross-examination opinions of the Plaintiff and the third parties, and the determinations of the court are as follows: The Defendant submitted the email it received from ILS Company, its agent at the port of destination, as well as the email that Aonan Company received from IGC Company, its agent at the port of destination, to prove that the goods were picked up by the consignee. On cross-examination, the Plaintiff confirmed the authenticity of the evidence, but did not confirm the content of the emails, namely that the inland transportation was arranged by the consignee. The third parties Maersk Company and Aonan Company had no objections to the authenticity of the two emails. Maersk Company also affirmed that the email sent by ILS Company was in response to an email from the Defendant on April 11, 2016. As can be seen in the Defendant’s email on April 11, the consignee said that the container was stolen in Mexico and the goods were lost while under the control of the consignee or the other actual importer. The court affirms the effect and probative force of the evidence, which shows that the Defendant and the Third Party Aonan Company communicated with their agents at the port of destination, ILS Company and IGC Company, after the loss of the goods. The evidentiary materials submitted by the Third Party Maersk Company to support its claims, the cross-examination opinions of the Plaintiff, the Defendant, and the Third Party Aonan Company, and the determinations of the court are as follows:

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1. Sea waybill endorsed by IGC Company and ILS Company, 2. Letter issued by IGC Company to Maersk (Mexico) Company, 3. Official investigation report issued by the Mexican authorities with respect to the robbery. The first two pieces of evidence were to prove that the actual carrier completed the delivery of the goods to the consignee recorded in the maritime waybill. IGC Company designated ILS Company’s customs agent as being responsible for handling the follow-up and operational matters for the goods. The clearance agent was also recorded in the Sea Waybill. ICG Company confirmed that all duties and risks relating to the goods had been transferred from the carrier. The third piece of evidence was to prove that the inland transport from the port of destination was arranged by the actual consignee rather than the actual carrier. The actual carrier had never received notification of IGC Company’s request for the goods to be delivered to the final destination. The actual carrier’s transport term changed from CY-DOOR to CY-CY. On cross-examination, the Plaintiff had no objection to the authenticity of evidence 1 but did not confirm the authenticity of evidence 2 and 3, arguing that they are photocopies formed abroad without notarial certification. The Plaintiff also asserted that the contents of the evidence and the facts of the case are not mutually corroborating. The letter of evidence 2 concerns the division of responsibility for the declaration of the goods, not for the carriage of the goods. The report of evidence 3 is merely an instrument for filing a complaint; it contains only the victim’s statements, not the facts ascertained by the Mexican authorities in accordance with the law. Therefore, it cannot serve as a basis for determining the facts of the case. Also, the consignee on the bill of lading, Carlos Company, is not identified as the reporting party in the aforementioned document. The Defendant did not recognize the authenticity of the three pieces of evidence on the basis that they are all photocopies. The Third Party Aonan Company confirmed the authenticity of evidence 1 and 2 but asserted that IGC and ILS Company’s endorsement on the sea waybill was only part of the adherence to Customs formalities and was not the certificate of the transfer of the goods. The division of responsibility outlined in the correspondence was also only for the purpose of Customs clearance. Aonan Company did not recognize the authenticity of evidence 3 on the basis that the document is only a reporting instrument. The content of the report also did not show that the inland transport was arranged by the actual consignee itself. The court holds that evidence 1 is the sea waybill issued by the actual carrier and its authenticity is recognized confirmed. The court affirms the effect and probative force thereof. Evidence 2 and 3 are both copies, formed abroad without notarial certification, as some of the other parties have asserted, so the court doesn’t affirm the effect and probative force thereof. The evidentiary materials submitted by the Third Party Aonan Company to support its claims, the cross-examination opinions of the Plaintiff, the Defendant, and the Third Party Maersk Company, and the determinations of the court are as follows:

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Shipper’s Letter of Instruction, Bill of Lading numbered ANSHSExxx, Sea Waybill, Mail between the actual carrier and Aonan Company.

The first three pieces of evidence were to prove that the Defendant entrusted Aonan Company to arrange the transportation of the goods, and Aonan Company issued its own bill of lading and commissioned Maersk Shipping Co., Ltd. to actually carry the goods involved, and Maersk Company’s period of liability was from the container yard to the consignee’s door. Evidence 4 was to prove that the actual carrier confirmed its arrangement of the inland portion of the transportation for the goods involved. On cross examination, the Plaintiff and the Defendant had no objection to the authenticity of the above evidence. The Third Party Maersk Company asserted that evidence 1 and 2 reflected the transport entrustment relationship between Aonan Company and the Defendant and that the authenticity of these pieces of evidence was not clear. Maersk Company confirmed the authenticity of evidence 3 but asserted that further verification of the authenticity of evidence 4 was required; however, no such verification had been submitted to the court within the specified period. The court holds that the above evidence can be mutually corroborated with other evidence and statements made by the parties and affirms the effect and probative force thereof. The court finds out that: On September 22, 2015, the Defendant issued a multimodal transport bill of lading HMSH150xxxxx, which recorded that: the shipper was MAVERICK PACIFIC LIMITED (Mawei Trading Company); the consignee and notify party was Carlos Ruiz Garcia (Carlos Company); the name of the ship for the voyage was SOVEREIGNMAERSK1511; the port of loading was Shanghai; the port of discharge was Mexico’s La Saloca de Nas; and the delivery place was Mexico City. The goods were packed in a 40-foot-high box numbered GCCU50xxxxx. The box contained 584 cases of women’s jackets. The term of transportation was CY-DOOR. The Defendant entrusted Aonan Company with arranging the transport of the goods. The Third Party Aonan Company issued its own bill of lading, which showed that the consignee was ILS Company and that Maersk Company had been hired to be the actual carrier of the goods involved. The Third Party Maersk Company issued a sea waybill for the goods involved on behalf of the actual carrier, Maersk Shipping Co., Ltd. The sea waybill recorded that the shipper was Aonan Company and the consignee was IGC Company, Aonan Company’s agent at the port of discharge. Aside from this, the notify party, the name of the ship for the voyage, the ports of loading and discharge, the place of delivery, and the cargo information were the same as those recorded in the multimodal transport bill of lading. The term of transport was CY-SD. The goods arrived at the port of discharge on October 12, 2015. On November 27, 2015, IGC Company sent an email to Aonan Company, saying, “the container should have been transported via truck to the consignee in Mexico City; but for

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some unknown reason, the customer’s broker requested not to use the transport provided by the shipping companies and instead used their own trucks to get the container from the container yard. We were told today that the container was not delivered to the final customer, and the empty container has not been returned. When we received the news, the consignee could not be reached for further details.” On April 13, 2016, ILS Company, the Defendant’s agent at the port of discharge and the customs broker agent of the goods involved, sent an email to the Defendant, saying, “regarding the container, please contact the shipper. The customers did not allow Maersk Company to deliver the goods door-to-door and instead transported and delivered the goods on their own. I have requested the relevant documents for the stolen goods in accordance with the law, and I have not yet received the documents.” In March 2016, the actual carrier’s staff and Aonan Company’s employees exchanged a number of mail communications regarding who had arranged the inland transport for the goods involved. On March 21, 2016, Aonan Company’s employees wrote to the actual carrier’s employees, “according to the customer, it was the customer who entrusted the trailer company to arrange the delivery. Would you please confirm again with the agent at the port of destination that the tow trailers were arranged by the trailer company in the attached enclosure I sent to you? This must be clearly identified.” The actual carrier’s employee replied, “the agent at the port of destination and I confirmed that the trailer was arranged by Maersk Company. If the customer has any doubt, please notify me, and I can provide verification regarding the relevant conditions up until the port of destination.” On May 5, 2016, the Defendant’s Shanghai Branch issued a statement that said, “after two containers arrived at the port of destination, including the container involved in the case, shipping companies were needed to perform the inland part of the transportation by carrying the goods via trailer to the consignee’s door. The terms of the shipments were CY-DR. Maersk Company informed us that during the inland transport shipping process, two containers and their cargo were stolen.” With respect to the delivery of the goods at the port of destination and the inland transport situation, the Plaintiff stated in court that the goods were handed over to the Defendant. The Plaintiff only knew that the goods were stolen during inland transportation from the port of destination and the specific situation was not clear. The Defendant stated that the goods should have been sent by the actual carrier to the consignee’s factory from the port of destination, but the actual carrier failed to fulfill the agreement and the goods were stolen during inland transportation. The Third Party Maersk Company stated that it had delivered the goods to IGC Company, the consignee recorded in the sea waybill. IGC Company designated ILS Company as the customs clearance agent, but ILS Company did not send the instructions regarding the inland portion of the transport to the actual carrier. Instead, the final consignee arranged its own transport. The Third Party Aonan Company stated that the actual carrier’s liability period should be from the loading port container yard to the consignee’s factory at the port of destination. Aonan Company had never confirmed in written with the actual carrier about the change in

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transport responsibility. After the accident, the actual carrier also confirmed with Aonan Company that it had arranged the inland transportation of the cargo. The court also finds out that: On September 21, 2015, the Plaintiff issued a cargo insurance policy for the goods involved, which recorded that the insured was MAVERICK PACIFIC LIMITED (Mawei Trading Company); the insured goods were women’s knitted jackets; the packaging and quantity was 584 cases; the insurance amount was 103, 996 USD; the loading and transport vehicles were the same as those in the multimodal bill of lading involved; and the underwritten period of responsibility was from Shanghai to Mexico City via Mexico’s La Saloca de Nas. The risks covered were all risks of China PICC Shipping. According to the trade contract and invoices involved, the value of the goods involved is 94,542 USD. On May 9, 2016, Carlos Company issued a power of attorney to Mawei Trading Company authorizing it to file a claim against the Plaintiff for an insurance indemnity for the loss of the goods. On May 24, 2016, the Plaintiff paid the insurance indemnity of 170,524 USD to Mawei Trading Company, including the 103,996 USD in the case. That is the value of the goods, 94,542 USD, plus 10%. The court holds that this case is the dispute over contract of carriage of goods by sea. The case has a foreign element due to the fact that the destination of the transported cargo is in Mexico. According to the relevant provisions of Chinese law, the parties can choose the expressly applicable law. In view of the fact that the parties in the trial unanimously chose Chinese law, the court allows and confirms the law of the People’s Republic of China as the applicable law to solve the dispute. The main disputes in the first instance of this case are as follows: 1. whether the loss of the goods involved occurred while the goods were under the control of the consignee; 2. whether the Defendant should be liable for the damages and the scope of compensation for the loss of the Plaintiff. With respect to whether the loss of the goods involved occurred while the goods were under the control of the consignee, the court holds the view that the Defendant and the Third Party Aonan Company were the carriers of the goods involved; Maersk Shipping Co., Ltd. was the actual carrier of the goods involved; and the Third Party Maersk Company was the actual carrier’s signing agent. The goods in the case were container goods. The carrier’s liability period was from the time of receiving the goods to the delivery of the goods—the entire period that the goods were under the control of the carrier. The starting place of the carriage according to both the bill of lading and the shipping list was Shanghai, and the place of delivery was Mexico City. The term of transportation was from the container yard to the consignee’s door. All parties confirmed that the goods involved were stolen and lost during inland transport. Although the Defendant and the Third Party Maersk Company argued that the final receiving party arranged its own transport and the loss of the goods occurred while the goods were in the consignee’s custody, they did not provide valid evidence that the consignee recorded in the bill of lading picked up the goods and arranged for the land transport themselves, nor did they prove that there is a situation in which the carrier may not be liable or the actual

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carrier may be exempt from statutory or contractual liability. Although the Third Party Maersk Company provided the relevant reporting materials regarding the robbery of the goods involved during land transport, the reporter was not the consignee recorded in the Defendant’s bill of lading. Considering the fact that the shipping term for the container was from the container yard to the consignee’s door, combined with the relevant statements made in the mail communications between the actual carrier and Aonan Company, the court holds the view that the evidence is not sufficient to prove that the goods involved in the robbery were picked up by the consignee recorded in the bill of lading and were not under the Defendant’s responsibility. Therefore, as the carrier, the Defendant failed to reasonably and prudently fulfill its obligation of transporting and possessing the goods and should assume the liability for the loss of the goods. With respect to whether the Defendant should be liable for the damages and the scope of the compensation for the Plaintiff, the court holds that the Plaintiff has submitted the insurance contract for the transportation of the goods, the insurance indemnity payment certificate, and the transfer of rights and interests, and proves that it is the appropriate party to obtain the right of subrogation in accordance with the law. According to Article 14 of the Supreme People’s Court regarding several issues concerning the trial of maritime insurance disputes, when considering a subrogation claim of an insurer, the People’s Court shall only look to the legal relationship between the insured and the Third Party who caused the accident. Here, the Plaintiff has provided sales contracts, packing lists, invoices, and a powers of attorney proving that Mawei Trading Company was the seller of the goods involved and had the relevant insurance interests. The Plaintiff paid compensation to Mawei Trading Company according to the law, but the Plaintiff has no legal basis to claim for the loss of the goods in accordance with the amount of insurance it pays. In accordance with Article 55 of the Maritime Code of the People’s Republic of China, the amount of compensation for the loss of goods is calculated according to the actual value of the goods, and the compensation for damage to goods is calculated according to the difference between the actual value before and after the damage of the goods or the repair cost of the goods. The actual value of the goods is calculated in accordance with the value of the goods loaded at the time of the insurance plus freight. In this case, the commercial invoices provided by the Plaintiff are priced on a CIF basis and have insurance and freight included. The Plaintiff paid a bonus compensation to Mawei Company, which was part of a commercial arrangement between the Plaintiff and the insured and is unrelated. Accordingly, the amount of damage claimed by the Plaintiff shall be the invoice value of the lost goods, which is 94,542 USD. In regard to the loss of interest argued for by the Plaintiff, according to Article 93 of the special procedure law of maritime litigation of the People’s Republic of China, the insurer has the subrogation right to exercise the right of the insured to claim compensation from third parties within the scope of the insurance compensation. The loss of interest claimed by the Plaintiff exceeds its actual amount of compensation and the scope of the rights of the assignee, so the court of the first instance does not support it.

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In conclusion, in accordance with Article 46 Paragraph 1 and Article 55 Paragraph 1 and Paragraph 2 of the Maritime Code of the People’s Republic of China, Article 113 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant Qingdao Hangmei International Logistics Co., Ltd. shall compensate the Plaintiff PICC Property and Casualty Co., Ltd. Shanghai Branch for the loss of 94,542 U.S. dollars within 10 days of the date that this judgment comes into effect; 2. Not support other claims of the Plaintiff PICC Property and Casualty Co., Ltd. Shanghai Branch. If the Defendant, Qingdao Hangmei International Logistics Co., Ltd., fails to fulfill its obligations during the period specified in this judgment, it shall, in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China, double the payment of interest on the debts during the delay period. Court acceptance fee in amount of RMB10,664 yuan, the Plaintiff PICC Property and Casualty Co., Ltd. Shanghai Branch shall bear RMB 970.42 yuan and the Defendant Qingdao Hangmei International Logistics Co., Ltd. shall bear RMB 9,693.58 yuan. In the event of dissatisfaction with this judgment, the Plaintiff or the Defendant may, within fifteen days of this judgment being served, submit a statement of appeal, with copies corresponding to the number of other parties, to lodge an appeal to the Shanghai High People’s Court. Presiding Judge: ZHANG Shanshan Judge: ZHU Xialing People’s Juror: SONG Kai June 29, 2017 Clerk: NI Mengjie

Appendix: Relevant Laws 1. Maritime Code of the People’s Republic of China Article 46 The carrier’s liability for the shipment of the container is the period when the goods are received from the port of loading to when the goods are brought to the port of discharge, and when the goods are under the control of the carrier. The carrier’s liability period for goods not shipped by container is the whole period that the goods are under the control of the carrier, from the time the goods are loaded aboard to the unloading of the goods from the ship. The carrier shall be liable for

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any loss or damage to the goods during the period of the carrier’s liability, except as otherwise provided in this section. Article 55 The amount of compensation for the loss of the goods is calculated according to the actual value of the goods, and the compensation for damage to the goods is calculated based on the difference between the actual value of the goods before and after the damage or based on the repair costs of the goods. The actual value of the goods is determined in accordance with the value of the goods loaded at the time of the insurance plus freight calculation. 2. Contract law of the People’s Republic of China Article 113 If a party fails to satisfy its contractual obligations or acts in a manner that is otherwise inconsistent with the agreement, the compensation for the loss of the other party shall be equal to the loss caused by the default, including the benefits that could have been obtained after the contract was fulfilled, but shall not exceed any loss foreseen upon the conclusion of the contract or any loss foreseeable in the event of the violation of the contract by one of the parties. 3. Special Maritime Procedure Law of the People’s Republic of China Article 93 If a third person causes an insurance accident and the insurer pays insurance compensation to the insured, the insurer may exercise the right of the insured to claim compensation from the third person within the scope of the insurance compensation. 4. Civil Procedure Law of the People’s Republic of China Article 64 The parties have the responsibility to provide evidence for their claims.

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Shanghai High People’s Court Civil Judgment PICC Property and Casualty Co., Ltd. Shanghai Branch v. Qingdao Hangmei International Logistics Co., Ltd. (2017) Hu Min Zhong No.305 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 983. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters Headnote Affirming lower court decision that subrogated cargo insurer was entitled to recover damages from carrier for theft of insured cargo during land carriage in country of destination, as evidence failed to establish that the goods had been picked up by consignee at port of destination, so they were still under defendant carrier’s responsibility at time of theft. Summary In this case, the Appellant Qingdao Hangmei International Logistics Co. appealed the judgment of the court of first instance, which found the company liable for compensating the Respondent, PICC Property and Causality Co., for losses of 94,542 USD after a container was stolen during transport. As the insurer of the stolen goods, the Respondent indemnified the owner of the goods and subsequently exercised its right of subrogation and brought suit against the carrier of the goods, the Appellant, seeking compensation for the aforementioned insurance indemnity. The court of first instance held that as the carrier, the Appellant failed to satisfy its obligation of transporting the goods and was therefore responsible for compensating for the Respondent’s loss. In this case, the court of the second instance dismissed the appeal and affirmed the verdict of the first instance court. The court reasoned that the Appellant failed to prove its assertion that the consignee in the bill of lading picked up the goods and arranged the land transportation by himself. Furthermore, the court held that the Appellant failed to provide any reason that the carrier should be exempt from liability in this case.

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Judgment The Appellant (the Defendant of first instance): Qingdao Hangmei International Logistics Co., Ltd. Domicile: Room 1801, Block A, No. 19 Zhangzhou Second Road, Qingdao District, Shandong Province, the People’s Republic of China. Legal representative: CUI Hongjun, general manager. Agent ad litem: WANG Wei, lawyer of Shandong Zhaoji Law Firm. The Respondent (the Plaintiff of first instance): PICC Property and Casualty Co., Ltd. Shanghai Branch Domicile: No. 700 Zhongshan Road, Huangpu District, Shanghai, the People’s Republic of China. Legal representative: ZHANG Jiaqing, general manager. Agent ad litem: XIANG Fubin, lawyer of Beijing W&H Law Firm Shanghai Office. Agent ad litem: Zeng Hui, lawyer of Beijing W&H Law Firm Shanghai Office. The Third Party of first instance: Maersk (China) Shipping Co., Ltd. Domicile: Rooms 1705 and 1706, Building B, No. 24 East Third Ring Road, Chaoyang District, Beijing, the People’s Republic of China. Legal representative: SHI Minfu, chairman. Agent ad litem: CAO Fang, lawyer of Shanghai Allbright Law Office. Agent ad litem: CHEN Feiyi, lawyer of Shanghai Allbright Law Office. The Third Party of first instance: Shanghai Aonan International Logistics Co., Ltd. Domicile: Y207 District A, No. 925, Yecheng Road, Jiading Industrial District, Shanghai, the People’s Republic of China. Legal representative: ZHOU Shihao, executive director. Agent ad litem: DAI Yuxin, lawyer of Shanghai Wintell & Co. Agent ad litem: CHEN Liang, lawyer of Shanghai Wintell & Co. This case arose from dispute over contract of carriage of goods by sea and was filed by the Respondent, PICC Property and Casualty Co., Ltd. Shanghai Branch (hereinafter referred to as “Shanghai PICC”) against the Appellant, Qingdao Hangmei International Logistics Co., Ltd. (hereinafter referred to as “Hangmei Company”), involving the Third Parties Maersk (China) Shipping Co., Ltd. (hereinafter referred to as “Maersk Company”) and Shanghai Aonan International Logistics Co., Ltd. (hereinafter referred to as “Aonan Company”). The Appellant disagreed with (2016) Hu 72 Min Chu No. 2556 Civil Judgment rendered by Shanghai Maritime Court. The court entertained the case on entertained 5, 2017, organized a collegial panel in accordance with law, and met with all of the parties on October 17, 2017. Now the case has been concluded.

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The Appellant appealed that: revoke the first item of the judgment of first instance. Facts and reasons: firstly, the loss of the goods involved occurred while the goods were under the consignee’s control, so the loss was beyond the scope of the insurance. The original judgment was incorrect considering the evidence submitted by the parties. Secondly, the actual carrier involved in the transportation was Maersk Company, and the term of transportation was CY-SD. Maersk Company should be ultimately responsible for leaving the goods at the port of destination without authorization, in violation of the contractual agreement. The Respondent argued that: the Respondent confirmed with IGC Company via mail on April 11, 2016 that Maersk Company was responsible for arranging all truck transport. Maersk Company confirmed in its two emails to Aonan Company on March 19, 2016 and March 21, 2016 that the trailer was arranged by Maersk Shipping Company, Ltd. Hangmei Company issued an official statement of the situation, and its employees have confirmed the land transport stage of the shipment was arranged by Maersk Company. Maersk Company clearly confirmed that it arranged for the trailers at the port of destination. The evidence in this case is sufficient to prove that Hangmei Company was liable for the loss of the goods. Therefore, as the carrier, Hangmei Company should be responsible for the compensation in this case. Accordingly, the Respondent requests that the court dismiss this appeal and affirm the first instance judgment. Aonan Company argued that: firstly, in this case, there were three marine bills of lading issued by Maersk Company, Aonan Company, and Hangmei Company, respectively. Based on the shipper and consignee recorded in each of the three bills, Aonan Company did not know whether the final delivery of the goods was at the port of destination or in the yard. Secondly, as a carrier, Maersk Company should be able to submit the equipment handover orders for the containers from the yard to prove that the containers were delivered. If Maersk Company cannot prove this fact, it should bear the consequences of the inadequacy of the evidence. Thirdly, Maersk Company stamped the document which was already stamped by IGC Company and ILS Company, reflecting the delivery of the goods to ILS Company. Aonan Company fulfilled its obligations under the bill of lading, so it should not be responsible for compensation and requested the court render a judgment accordingly. Maersk Company argued that: firstly, Maersk Company was not the carrier of the goods involved, nor was it the freight forwarder of the goods involved, and Shanghai PICC did not file any lawsuit against Maersk Company. Maersk Company participated in the case after being notified by the court, and the judgment of the first instance which affirmed that Maersk Company did not assume liability in this case was completely correct. Secondly, the shipping bill of lading issued by Maersk Company showed that it was solely responsible to the shipper—Aonan Company. The goods involved had been delivered to Aonan Company’s agent at the port of destination, IGC Company. From then on, IGC Company had control of the goods. The consignee’s conduct changed the liability of the actual carrier, Maersk Company, under the term of shipment. Hangmei Company confirmed the fact that the transportation of the goods was subsequently arranged by the consignee

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at the port of destination, and Aonan Company was slow to verify the relevant information with its destination agent and denied the information found in the agent’s response. The information reported by Maersk Company was consistent with the information received by two NVOCC agents at the port of destination. The transportation of the goods from the port of destination was arranged by the consignee. Maersk Company was not instructed by the consignee and the shipper according to Maersk Company’s shipping term. It did not actually carry the goods during the inland transport and was not liable for the loss of goods during this portion of the transportation. Therefore, Maersk Company requested that the court dismiss the appeal of Hangmei Company and affirm the original judgment. Shanghai PICC claimed in the first instance that: in September 2015, the insured MAVERICK PACIFIC LIMITED (Mawei Trading Company) sold a group of garments with a CIF price of 94,542 USD to Carlos Ruiz Garcia (Carlos Company). Hangmei Company issued a multimodal transport bill of lading HMSH150xxxxx for the above garments. The goods involved were hijacked and lost during the course of shipment from the port of discharge to the destination. Shanghai PICC, as the insurer of the aforementioned goods, paid a 103,996 USD insurance indemnity and obtained the right of insurance subrogation according to law. Therefore, Shanghai PICC requested that Hangmei Company compensate it for the loss of 103,996 USD plus interest equivalent to the RMB from May 25, 2016 to the date the judgment came into effect, calculated according to the RMB deposit rate of People’s Bank of China for the same period. Shanghai PICC argued that the acceptance fee should be borne by Hangmei Company. Hangmei Company argued in the first instance that: after the goods were transported to the port of discharge, the actual carrier failed to deliver them to the consignee’s door according to the contract. Instead, the consignee carried the goods by himself. The goods were stolen and lost in transit, which exceeded the scope of the insurance coverage. Therefore, Shanghai PICC should not have compensated the insured. Shanghai PICC also failed to prove that the insured had transferred the policy to the consignee and that the consignee had made the payment. The actual carrier’s liability period was from the container yard to the consignee’s door. In the absence of a change in responsibility in the instructions, the actual carrier agreed to allow the consignee to pick up his own goods, which was in violation of the contract. Thus, the actual carrier should be responsible for compensating for the loss in this case. Maersk Company stated in the first instance that: the actual carrier of the goods involved was Maersk Shipping Company, Ltd., and Maersk Company was its signing agent. The actual carrier was solely accountable to the shipper and the consignee under the shipping terms issued. After the goods arrived at the port of destination, the actual carrier delivered the goods to the consignee, IGC Company, which was recorded in the Sea Waybill. After that, IGC Company arranged for the delivery of the goods to the final consignee, who arranged for the trailer service by himself. Therefore, the actual carrier’s liability period was changed from CY-DOOR to CY-CY. The actual carrier should not be liable for the loss of the

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goods because the loss occurred during the inland transportation from the port of destination, and the goods were not carried by the actual carrier. Aonan Company stated in the first instance that: the shipping list provided by Maersk Company, that was stamped with the signature of IGC Company and Aonan Company’s agent ILS Company, was only used for the purpose of customs clearance and cannot prove that the goods were delivered to the yard at the port of destination. The employee of the actual carrier confirmed that the inland portion of the transport of the goods was also arranged by Maersk Company. The actual carrier’s liability period should be from the loading port yard to the consignee’s factory at the port of destination. Aonan Company never confirmed the change of the liability period with the actual carrier in written. Even if the goods were delivered to the port of destination, they should have been delivered to ILS Company because ILS Company was the consignee under Aonan Company’s bill of lading. Thus, Aonan Company fulfilled its obligation of delivery and bears no responsibility. The court of first instance ascertained that: on September 22, 2015, Hangmei Company issued a multimodal transport bill of lading HMSH150xxxxx, which recorded that the shipper was MAVERICK PACIFIC LIMITED (Mawei Trading Company); the consignee and notify party was Carlos Ruiz Garcia (Carlos Company); the name of the ship for the voyage was SOVEREIGNMAERSK1511; the port of loading was Shanghai; the port of discharge was Mexico’s La Saloca de Nas; and the delivery place was Mexico City. The goods were packed in a 40-foot-high box numbered GCCU50xxxxx. The box contained 584 cases of women’s jackets. The term of transportation was CY-DOOR. Hangmei Company entrusted Aonan Company with arranging the transport of the goods. Aonan Company issued its own bill of lading, which showed that the consignee was ILS Company and that Maersk Company had been hired to be the actual carrier of the goods involved. Maersk Company issued a sea waybill for the goods involved on behalf of the actual carrier, Maersk Shipping Co., Ltd. The sea waybill recorded that the shipper was Aonan Company and the consignee was IGC Company, Aonan Company’s agent at the port of discharge. Aside from this, the notify party, the name of the ship for the voyage, the ports of loading and discharge, the place of delivery, and the cargo information were the same as those recorded in the multimodal transport bill of lading. The term of transport was CY-SD. The goods arrived at the port of discharge on October 12, 2015. On November 27, 2015, IGC Company sent an email to Aonan Company, saying, “the container should have been transported via truck to the consignee in Mexico City; but for some unknown reason, the customer’s broker requested not to use the transport provided by the shipping companies and instead used their own trucks to get the container from the container yard. We were told today that the container was not delivered to the final customer, and the empty container has not been returned. When we received the news, the consignee could not be reached for further details.” On April 13, 2016, ILS Company, Hangmei Company’s agent at the port of discharge and the customs broker agent of the goods involved, sent an email to Hangmei Company, saying, “\regarding the container, please contact the shipper.

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The customers did not allow Maersk Company to deliver the goods door-to-door and instead transported and delivered the goods on their own. I have requested the relevant documents for the stolen goods in accordance with the law, and I have not yet received the documents.” In March 2016, the actual carrier’s staff and Aonan Company’s employees exchanged a number of mail communications regarding who had arranged the inland transport for the goods involved. On March 21, 2016, Aonan Company’s employees wrote to the actual carrier’s employees, “according to the customer, it was the customer who entrusted the trailer company to arrange the delivery. Would you please confirm again with the agent at the port of destination that the tow trailers were arranged by the trailer company in the attached enclosure I sent to you? This must be clearly identified.” The actual carrier’s employee replied, “the agent at the port of destination and I confirmed that the trailer was arranged by Maersk Company. If the customer has any doubt, please notify me, and I can provide verification regarding the relevant conditions up until the port of destination.” On May 5, 2016, Hangmei Company Shanghai Branch issued a statement that said, “after two containers arrived at the port of destination, including the container involved in the case, shipping companies were needed to perform the inland part of the transportation by carrying the goods via trailer to the consignee’s door. The terms of the shipments were CY-DR. Maersk Company informed us that during the inland transport shipping process, two containers and their cargo were stolen.” With respect to the delivery of the goods at the port of destination and the inland transport situation, Shanghai PICC stated in the first instance that the goods were handed over to Hangmei Company. Shanghai PICC only knew that the goods were stolen during inland transportation from the port of destination, and the specific situation was not clear. Hangmei Company stated that the goods should have been sent by the actual carrier to the consignee’s factory from the port of destination, but the actual carrier failed to fulfill the agreement, and the goods were stolen during inland transportation. Maersk Company stated that it had delivered the goods to IGC Company, the consignee recorded in the sea waybill. IGC Company designated ILS Company as the customs clearance agent, but ILS Company did not send the instructions regarding the inland portion of the transport to the actual carrier. Instead, the final consignee arranged its own transport. Aonan Company stated that the actual carrier’s liability period should be from the loading port container yard to the consignee’s factory at the port of destination. Aonan Company had never confirmed in written with the actual carrier about the change of transport responsibility. After the incident, the actual carrier also confirmed with Aonan Company that it had arranged the inland transportation of the cargo. The court of first instance also found out that: On September 21, 2015, Shanghai PICC issued a cargo insurance policy for the goods involved, which recorded that the insured was MAVERICK PACIFIC LIMITED (Mawei Trading Company); the insured goods were women’s knitted jackets; the packaging and quantity was 584 cases; the insurance amount was 103,996 USD; the loading and transport vehicles were the same as those in the

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multimodal bill of lading involved; and the underwritten period of responsibility was from Shanghai to Mexico City via Mexico’s La Saloca de Nas. The risks covered were all risks of China PICC Shipping. According to the trade contract and invoices involved, the value of the goods involved was 94,542 USD. On May 9, 2016, Carlos Company issued a power of attorney to Mawei Trading Company and authorized it to file a claim against Shanghai PICC for an insurance indemnity for the loss of the goods. On May 24, 2016, Shanghai PICC paid the insurance indemnity of 170,524 USD to Mawei Trading Company, including the 103,996 USD in the case. That was the value of the goods, 94,542 USD, plus 10%. The court of first instance held that this case was a dispute over contract of carriage of goods by sea. The case had a foreign element due to the fact that the destination of the transported cargo was in Mexico. According to the relevant provisions of Chinese law, the parties could choose the expressly applicable law. In view of the fact that the parties in the trial unanimously chose Chinese law, the court allowed and confirmed the law of the People’s Republic of China as the applicable law to solve the dispute. The main disputes in the first instance of this case were as follows: 1. whether the loss of the goods involved occurred while the goods were under the control of the consignee; 2. whether Hangmei Company should be liable for the damages and the scope of compensation for the loss of Shanghai PICC. With respect to whether the loss of the goods involved occurred while the goods were under the control of the consignee, the court of first instance held the view that Hangmei Company and Aonan Company were the carriers of the goods involved. Maersk Shipping Co., Ltd. was the actual carrier of the goods involved, and Maersk Company was the actual carrier’s signing agent. The goods in the case were container goods. The carrier’s liability period was from the time of receiving the goods to the delivery of the goods—the entire period that the goods were under the control of the carrier. The starting place of the carriage according to both the bill of lading and the shipping list was Shanghai and the place of delivery was Mexico City. The term of transportation was from the container yard to the consignee’s door. All parties confirmed that the goods involved were stolen and lost during inland transport. Although Hangmei Company and Maersk Company argued that the final receiving party arranged its own transport, and the loss of the goods occurred while the goods were in the consignee’s custody, they did not provide valid evidence that the consignee recorded in the bill of lading picked up the goods and arranged for the land transport themselves, nor did they prove that there is a situation in which the carrier may not be liable or the actual carrier may be exempt from statutory or contractual liability. Although Maersk Company provided the relevant reporting materials regarding the robbery of the goods involved during land transport, the reporter was not the consignee recorded in Hangmei Company’s bill of lading. Considering the fact that the shipping term for the container was from the container yard to the consignee’s door, combined with the relevant statements made in the mail communications between the actual carrier and Aonan Company, the court of first instance held the view that the evidence was not sufficient to prove that the

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goods involved in the robbery were picked up by the consignee recorded in the bill of lading and were not under Hangmei Company’s responsibility. Therefore, as the carrier, Hangmei Company failed to reasonably and prudently fulfill its obligation of transporting and possessing the goods and should assume the liability for the loss of the goods. With respect to whether Hangmei Company should be liable for the damages and the scope of the compensation for Shanghai PICC, the court of first instance held that Shanghai PICC submitted the insurance contract for the transportation of the goods, the insurance indemnity payment certificate, and the transfer of rights and interests, which proved that it was the appropriate party to obtain the right of subrogation in accordance with the law. According to Article 14 of the Supreme People’s Court regarding several issues concerning the trial of maritime insurance disputes, when considering a subrogation claim of an insurer, the People’s Court should only look to the legal relationship between the insured and the Third Party who caused the accident. Here, Shanghai PICC provided sales contracts, packing lists, invoices, and a powers of attorney proving that Mawei Trading Company was the seller of the goods involved and had the relevant insurance interests. Shanghai PICC paid compensation to Mawei Trading Company according to the law and did not increase the liability of Hangmei Company in accordance with the contract of carriage of goods by sea. However, Shanghai PICC had no legal basis to claim for the loss of the goods in accordance with the amount of insurance it paid. In accordance with Article 55 of the Maritime Code of the People’s Republic of China, the amount of compensation for the loss of goods was calculated according to the actual value of the goods, and the compensation for damage to goods was calculated according to the difference between the actual value before and after the damage of the goods or the repair cost of the goods. The actual value of the goods was calculated in accordance with the value of the goods loaded at the time of the insurance plus freight. In this case, the commercial invoices provided by Shanghai PICC were priced on a CIF basis and had insurance and freight included. Shanghai PICC paid a bonus compensation to Mawei Company, which was part of a commercial arrangement between Shanghai PICC and the insured and was unrelated. Accordingly, the amount of damage claimed by Shanghai PICC should be the invoice value of the lost goods, which was 94,542 USD. In regard to the loss of interest argued for by Shanghai PICC, according to Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, the insurer had the subrogation right to exercise the right of the insured to claim compensation from third parties within the scope of the insurance compensation. The loss of interest claimed by Shanghai PICC exceeded its actual amount of compensation and the scope of the rights of the assignee, so the court of first instance did not support it. In conclusion, in accordance with Article 46 Paragraph 1 and Article 55 Paragraph 1 and Paragraph 2 of the Maritime Code of the People’s Republic of China, Article 113 Paragraph 1 of the Contract Law of the People’s Republic of China, Article 93 of the Special Maritime Procedure Law of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment, the judgment was rendered as follows:

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1. Hangmei Company should compensate Shanghai PICC for the loss of 94,542 U. S. dollars within 10 days of the date that this judgment came into effect; 2. not support other claims of Shanghai PICC. Court acceptance fee in amount of RMB 10,664 yuan, Shanghai PICC should bear RMB 970.42 yuan and Hangmei Company should bear RMB 9,693.58 yuan. In the second instance, the parties did not submit new evidence. The court finds out that: the parties failed to provide effective evidence to overturn the facts identified in the first instance, and the court confirms the facts identified in the first instance. The court holds that: This case arose from dispute over contract of carriage of goods by sea. According to Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the parties have the responsibility to provide evidence for their claims. In the first instance, the parties confirmed that the goods involved were stolen and lost during inland transportation. Thus, the main dispute of the parties involved in the second trial was the primary liability for the loss of the goods. Hangmei Company issued NVOCC Bill of lading, which recorded that the shipper was MAVERICK PACIFIC LIMITED (Mawei Trading Company); the consignee and notify party was Carlos Ruiz Garcia (Carlos Company); the port of loading was Shanghai; the port of discharge was Mexico’s La Saloca de Nas; the place of delivery was Mexico City; and the term of transport was CY-DOOR. Later, Aonan Company issued a bill of lading to Maersk Shipping Co., Ltd., and its agent, Maersk Company, issued a bill of lading to Aonan Company. The consignees recorded in the two bills of lading were the agent companies in the port of discharge for Hangmei Company and Aonan Company. They agreed to a CY-DOOR transport term. In the first instance, the evidence submitted by Hangmei Company, Aonan Company, and Maersk Company showed contradictory statements regarding the actual consignee, the actual carrier, and Hangmei Company’s agent at the port of destination, ILS Company. Hangmei Company asserted that the consignee recorded in the bill of lading picked up the goods and arranged the land transportation by himself. However, there is no valid evidence to support this, and Hangmei Company also failed to prove that the carrier may not be liable for compensation or may be exempt from liability for legal or contractual reasons. At the same time, the parties confirmed that Maersk Company is the actual carrier’s signing agent and Hangmei Company has failed to prove the actual situation regarding the inland transportation. In this case, Shanghai PICC also did not file a claim against the actual carrier, Maersk Company. Therefore, according to the NVOCC Bill of lading issued by Hangmei Company, it is not improper for Shanghai PICC to assume that Hangmei Company had the responsibility of the carrier. Hangmei Company’s argument that Maersk Company should bear ultimate liability has no factual or legal basis, so the court does not support it.

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In conclusion, Hangmei Company’s argument on appeal cannot be established, and its appeal should be dismissed. The court of first instance clearly ascertained the facts and correctly applied the law, so the judgment of the first instance is not improper and can be affirmed. According to the Article 169, Article 170 Paragraph 1 Sub-paragraph 1, and Article 175 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, affirm the original judgment. Court acceptance fee of second instance in amount of 10,228.86 yuan, shall be born by the Defendant Qingdao Hangmei International Logistics Co., Ltd. The judgment is final. Presiding Judge: SUN Chenmin Judge: ZHOU Yi Acting Judge: XU Yijin November 15, 2017 Clerk: CHEN Xi

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 169 The People’s Court of the second instance shall form a collegial panel to hold hearings on appeal cases. After the examination, investigation, and questioning of the parties, if there are no new facts, evidence, or reasons, and the collegial panel does not believe that there is a need for a hearing, then the hearing can be closed. Article 170 After hearing the appeal cases, the People’s Court of the second instance shall deal with the following cases respectively according to: (1) If the original judgment and the determination of the facts are clear and the applicable law is correct, the appeal shall be dismissed and the ruling shall maintain the original judgment; Article 175 The judgments and rulings of the People’s Court of the second instance shall be the final judgments and rulings.

Xiamen Maritime Court Civil Judgment Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd.

(2016) Min 72 Min Chu No.960 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1016. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Defendant actual carrier held liable to return freight paid under ad hoc agreement for delivery of plaintiff's goods after contracting carrier ceased operations; defendant not entitled to exercise a lien over plaintiff's goods. Summary The Plaintiff, entrusted Xinminhang Company to carry 16 containers carrying calcium carbonate to Houzhu Port. The containers were loaded onto the Defendant’s ship for carriage. Xinminhang Company stopped operations, so the Defendant required the Plaintiff to sign a Take Delivery Agreement upon Plaintiff’s agreement to pay freight to the Defendant. The Defendant was not satisfied with the amount of freight paid by the Plaintiff, so it did not release the goods, purporting to exercise a lien over them. The Plaintiff sued the Defendant, seeking nullification of the Agreement and return of the money that it had paid. The Defendant argued that the Agreement was valid and it had a right to lien on the goods. The Court held that the Defendant had taken advantage of the Plaintiff’s position and had forced the Plaintiff to sign the Agreement and pay an unreasonable freight so the Agreement should be void. Also, the Defendant had no lien right and did not complete the carriage, so the Defendant had no legal basis to detain the goods. The Defendant therefore had no basis to keep the payment and should pay the money back to the Plaintiff.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_52

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Judgment The Plaintiff: Qinzhou Xiangli Logistics Co., Ltd. Domicile: No. 902, Block 3, Xingye Garden, Qinzhou Port, Qinzhou City, Guangxi Zhuang Autonomous Region. Legal representative: CHEN Yuanxiang, general manager. Agent ad litem: CHEN Qiuyi, lawyer of Guangxi Huanyang Law Firm. Agent ad litem: LIU Yanling, apprentice lawyer of Guangxi Huanyang Law Firm. The Defendant: Xiamen Yichengda Shipping Co., Ltd. Domicile: No. 19, Group 3, Xiaban She, Xiban Village, Maxiang Town, Xiangan District, Xiamen City, Fujian. Legal representative: WU Gangyi. Agent ad litem: YANG Yuejin, lawyer of Fujian Jiuxin Law Firm. Agent ad litem: LIANG Weiling, apprentice lawyer of Fujian Jiuxin Law Firm. With respect to the case arising from dispute over illegal detention of goods loaded on ship between the Plaintiff, Qinzhou Xiangli Logistics Co., Ltd. (hereinafter referred to as Xiangli Company), and the Defendant, Xiamen Yichengda Shipping Co., Ltd (hereinafter referred to as Yichengda Company), the court entertained this case on October 24, 2016. After entertainment, the court legitimately constituted the collegiate bench to try the case and held a session in public on December 13, 2016. Legal representative of the Plaintiff Xiangli Company, CHEN Yuanxiang, agents ad litem, CHEN Qiuyi and LIU Yanling, and agents ad litem of the Defendant Yichengda Company, YANG Yuejin and LIANG Weiling, appeared in the court. Now the case has been concluded. The Plaintiff, Xiangli Company, claimed to the court that: 1. cancel Take Delivery Agreement signed on January 25, 2016; 2. the Defendant should return charge for taking container 72,000 yuan to the Plaintiff and pay the interest calculated at the People’ s Bank of China’ s lending rate for the same period from January 26, 2016 to the date of actual payment; 3. the Defendant should compensate the Plaintiff by terminal storage charge 8,000 yuan at Houzhu Port caused by illegal detention of the Plaintiff’ s goods, container transfer charge 9,600 yuan, container repair charge 1,600 yuan and transshipment freight 28,850 yuan; 4. the Defendant should compensate the Plaintiff by loss of goods 32,000 yuan caused by illegal detention of the Plaintiff’ s goods; 5. court acceptance fee should be borne by the Defendant. Facts and Reasons: in October 2015, the Plaintiff entrusted Guangxi Xinmin Shipping Co., Ltd. (hereinafter referred to as Xinminhang Company) to transport 16 containers. Xinminhang Company arranged to transport the goods on M.V. “YI CHENG 1” owned by Yichengda Company. On November 18, 2015, the Plaintiff received the notice of Xinminhang Company, because it owed freight to Yichengda Company, Yichengda Company did not carry the goods according to ordinary route, it delivered the goods to Quanzhou Houzhu Port. Then, the Plaintiff contacted with the Defendant and requested to take the goods, but the Defendant

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requested the Plaintiff to pay 10,000 yuan per container, which was used to replace the compensation to Yichengda of carriage fee on behalf of Xinminhang Company, meanwhile, the Defendant compelled the Plaintiff to sign an unequal release agreement, otherwise, it did not release the goods. Be compelled against one’ s will, on January 25, 2016, the Plaintiff signed take delivery agreement and paid 4,500 yuan per container to the Defendant to take the goods. The Defendant detained the goods illegally, which resulted to extra terminal storage charge 8,000 yuan of the goods, container transfer charge 9,600 yuan, container repair charge 1,600 yuan and transshipment freight 28,850 yuan. In addition, the goods in containers were calcium carbonate powder, because the goods had been detained for too long time, which resulted to the fact that the goods at the bottom of the container were badly damped and could not be used, so the Plaintiff compensated manufacturer by 32,000 yuan of direct loss. The freight of the goods was counteracted between the Plaintiff and the Defendant, so it did not owe freight. The Defendant, Yichengda Company, argued that: Firstly, Take Delivery Agreement signed by the Plaintiff and the Defendant was real intention of both parties and could not be canceled. On September 30, 2015, the Plaintiff signed an oral consecutive voyage C/P with a person other than involved in the case, Xinminhang Company. The Defendant accepted the delegation of Xinminhang Company, the goods involved were transshipped from Qinzhou Port to Quanzhou Weitou Port according to the order of Xinminhang Company on November 14, 2015. There was no transportation contract relationship between the Plaintiff and the Defendant. On November 18, 2015, the vessel of the Defendant reached to port of destination Weitou Port, but the port did not allow the vessel to berth and unload goods by some reasons, which resulted that the vessel of the Defendant had been anchored at Weitou anchorage for many days and was unable to unload. On November 22, 2015, after Xinminhang Company declared to stop voyage and regroup, the declaration stated that so-called “owners of cargo loaded”, individual owners of cargo (excluding Xiangli Company), demanded that Yichengda Company must unload the goods loaded at the port which had no debt relationship with Xinminhang Company to increase loss, and they willingly and directly paid freight according to 6000 yuan per TEU container to Yichengda Company. In this case, the Defendant only received amount from the Plaintiff according to 4,500 yuan per container. On November 24, 2015, after the goods were unloaded at Quanzhou Houzhu Port, the goods involved were not claimed, and were not applied for relevant legal enforcement measures. Until January 25, 2016, the Plaintiff contended that it was the only subject who had right to take the goods involved, and signed Take Delivery Agreement with the Defendant. Secondly, to say the least, voyage charterer did not pay the freight, the Defendant, as shipowner, had the right to lien the goods. Thirdly, the Defendant should not return the charge for taking container and the loss of its interest to the Plaintiff. Fourthly, the Defendant should not compensate the Plaintiff by terminal storage charge, container transfer charge, container repair charge, transshipment freight or loss of charge.

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To prove its claims, the Plaintiff provided the following evidence: Evidence 1, business license of the Plaintiff, evidence 2, identity certificate of legal representative, evidence 3, qualified subject of the Defendant, to prove the qualified subject of the Plaintiff and the Defendant. Evidence 4, Take Delivery Agreement, to prove that because a person other than involved in the case owed the Defendant freight, the defendant coerced the Plaintiff into signing an unreasonable agreement, and took charge for taking container. Evidence 5, inland waterway cargo consign letter of authorization, to prove that the Plaintiff entrusted a person other than involved in the case, Xinminhang Company, to fulfill inland waterway cargo transportation. Evidence 6, deduction letter, to prove that Xinminhang Company fulfilled inland waterway cargo transportation by M.V. “YI CHENG 1”. Evidence 7, bank receipt (January 25, 2016), to prove that the Plaintiff paid charge for taking container 72,000 yuan to the Defendant. Evidence 8, receipt (January 25, 2016), to prove that the Plaintiff paid storage charge 8,000 yuan. Evidence 9, bank receipt (January 26, 2016), to prove that the Plaintiff paid container transfer charge 9,000 yuan. Evidence 10, cash receipt (January 25, 2016), to prove that the Plaintiff paid container repair charge 1,600 yuan. Evidence 11, bank receipt (March 17, 2016) and invoice, to prove that the Plaintiff paid transshipment freight 28,850 yuan. Evidence 12, proof for loss of cargo and receipt (January 28, 2016), to prove that the amount of loss of cargo caused by lien of cargo by the Defendant was 32,000 yuan. The opinions of cross-examination of the Defendant to evidence provided by the Plaintiff were that: there was no objection to authenticity, legality and relevancy (hereinafter referred to as three nature) of evidence 1, 2 and 3. There was no objection to authenticity and legality of evidence 4, but there was objection to object of proof; Take Delivery Agreement was real intention expression of both parties, there was no evidence to prove that this agreement was fraudulent, coercive or took advantage of the danger of others. There was no objection to authenticity of page 9, 10 and 18 in evidence 5 consign letter of authorization, but there was objection to object of proof; there was objection to authenticity and relevancy of pages 11 to 17. Did not confirm the three nature of evidence 6. Did not confirm the authenticity of evidence 7 because of lake of original copy, if there was original copy, the bank receipt could prove that the Plaintiff and the Defendant fulfilled contractual obligation strictly according to agreement. The authenticity of two receipts of evidence 8, 9 and 10 could not be confirmed, and there was objection to relevancy; and the storage charge and transshipment charge were irrelevant to the Defendant; the Defendant unloaded the goods involved at Quanzhou Houzhu Port according to agreement, the charge for storage of goods and transportation happened after that should be borne by the Plaintiff. Authenticity and relevancy of evidence 11 could not be confirmed because of lake of original copy. Three nature

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of evidence 12 could not be confirmed, the loss of goods was not real; that the loss of cargo was relevant to the behavior of the Defendant could not be proved. To prove its claims, the Defendant provided the following evidence: Evidence 1, logbook, to prove that on November 18, 2015, the vessel of the Defendant had arrived at port of destination Weitou and prepared to unload goods, but the port did not allow it to unload goods by some reasons, which resulted that the vessel had stayed at anchorage ground of Weitou for 6 days. Evidence 2, agency agreement, evidence 3, container operation contract, evidence 4, cash receipt, customer receipt and payment receipt, to jointly prove that the amounts paid by the Defendant on behalf of the Plaintiff were unloading fee 450 yuan per container, Short haul fee 50 yuan per container, transport fee 50 yuan per container, tally commission fee 50 yuan, total amount was 1,800 yuan. The opinions of cross-examination of the Plaintiff to evidence provided by the Defendant were that: there was no objection to authenticity and legality of evidence 1, but there was objection to relevancy, port of destination was Tianjin other than Weitou Port, the 6 days at Weitou anchorage ground proved that the Defendant did not inform the consignee in time. There was no objection to authenticity and legality of evidence 2, 3 and 4, but there was objection to relevancy, which proved that the Defendant unloaded the goods at Houzhu Port and detained the goods illegally without any authorization. After cross-examination, the court held the following opinions of the evidence provided by both parties: The Defendant had no objection to three nature of evidence 1, 2 and 3 provided by the Plaintiff, so the court confirmed those evidence, which could prove the qualified subject of both parties. The Defendant had no objection to authenticity of evidence 4, this evidence could be used as a basis for ascertaining the facts of a case according to law, and could prove that both parties signed Take Delivery Agreement. The Defendant had objection to authenticity of some booking notes in evidence 5, but the object of proof was that the goods in 16 containers were entrusted to carry by Xinminhang Company, then the goods were loaded on the vessel of the Defendant, and the Defendant had not objection, therefore, the court confirmed the evidence that were consistent with number of containers involved, the rest were irrelevant to this case, so there was no need to confirm those. Evidence 6 was the same as original copy, the Defendant had objection but it did not present counter evidence, the court confirmed it according to law, which could prove deduction of freight between the Plaintiff and Xinminhang Company. The Defendant had objection to authenticity of evidence 7, but combined the fact that the Plaintiff stated that it had received 16 containers which were corresponding to 72,000 yuan, the court confirmed authenticity and purpose of proof. Evidence 8 was the same as original copy, the Defendant had objection but it did not present counter evidence, combined with the storage and loading of containers, and the Defendant did not prove it paid the storage charge separately, the court confirm the authenticity of this evidence. The content of evidence 9, 10 and 11 could not reach the conclusion that they were relevant to dispute of this case over taking delivery of goods, so the power of proof could not be confirmed. Even if evidence 12 was true, there

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was no confirmation of loss of goods, reasons of loss of goods or amount of loss of goods by third party neutral body, so the court did not confirmed it. The Plaintiff had no objection to authenticity of evidence provided by the Defendant, so these evidence could be used as a basis for ascertaining the facts of a case according to law, and could prove the ship dynamics and unloading of the voyage involved. After investigation, the court found out that: In October 2015, the Plaintiff entrusted Xinminhang Company to carry 16 TEU containers of goods (calcium carbonate powder), port of loading was Qinzhou, port of discharge was Tianjin, destination was Xiong County, freight and other fees were 1,300 yuan per container. The goods were loaded on M.V. “YI CHENG 1” owned by the Defendant, voyage was YCV15008. On November 14, 2015, M.V. “YI CHENG 1” started its voyage at Qinzhou Port, and arrived at Weitou Port anchorage ground on November 18; on November 24, the goods (including 16 containers of goods) were unloaded at Houzhu Port. On November 24, 2015, the Defendant and Quanzhou Harbour Container Co., Ltd signed Container Operation Contract. According to the contract, unloading fee was 450 yuan per TEU container, on/off vehicle fee was 50 yuan per TEU container, the storage fee was free of charge within three months from the date of unloading. On January 25, 2016, the Plaintiff and the Defendant signed Take Delivery Agreement. The agreement stated that: the Plaintiff commissioned the Defendant to transport 16 containers involved in the case through Xinminhang Company from Qinzhou Port to Quanzhou Port, the goods were loaded on M.V. “YI CHENG 1” voyage 15,008; Xinminhang Company owed the Defendant rent, after multiple exhortation, Xinminhang Company did not fulfill obligation of payment; the Plaintiff agreed to pay freight of goods involved, terminal charges, short haul fee, tally fee, storage fee to the Defendant according the standard that 6,000 yuan per container, total amount 96,000 yuan. During actual fulfillment, 6,000 yuan as agreed changed into 4,500 yuan. On the same day, the Plaintiff paid 72,000 yuan through the personal bank account of CHEN Yuanxiang, its legal representative, to the personal bank account of WU Gangyi, the legal representative of the Defendant. In the trial, the Defendant stated that the hire relationship of M.V. “YI CHENG 1” and Xinminhang Company was the same as the relationship in other case (2016 Min 72 Min Chu No. 563) of M.V. “YI CHENG 12”. In that case, though the name of contract of M.V. “YI CHENG 12” was voyage C/P, hire period was a time period (namely 10 return voyage), other than a specific voyage; the payment was hire other than freight, and was not paid before the end of each voyage. The court held that, this case was dispute over illegal detention of goods loaded. The issues of this case between the Plaintiff and the Defendant were that: 1. whether Take Delivery Agreement signed by the Plaintiff and the Defendant should be canceled; 2. if the agreement should be canceled, how much should the Defendant indemnify the Plaintiff. Firstly, about the issue whether Take Delivery Agreement signed by the Plaintiff and the Defendant should be canceled.

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The court held, according to the Opinions of the Supreme People’s Court on the Implementation of Certain Issues of the General Principles of Civil Law of the People’s Republic of China (Trial) Article 70, “if a party, while the other party is in danger, forces the other party to make an untruthful expression of intent in order to seek illegitimate interests, and seriously damages the interests of the other party, it may be deemed as taking advantage of the danger of others.” In this case, after the Plaintiff entrusted Xinminhang Company to carry container goods, because Xinminhang Company stopped operation, which resulted that it could not receive the goods at Port (place) of destination on schedule, the property rights and interests of the goods were in jeopardy. The Defendant was the shipowner of M.V. “YI CHENG 1”, actually controlled and occupied the goods, in order to obtain own improper interests, the Defendant, taking advantage of the situation in which the Plaintiff was in the aforesaid crisis, forced the Plaintiff to pay a high fee in exchange for the goods, forcing the Plaintiff to sign the agreement and agree to advance the rent of 96,000 yuan (later, 72,000 yuan) in order to take delivery of the goods, which violated the true intention expression of the Plaintiff, therefore, the above behaviour of the Defendant was to take advantage of the danger. So the content stated in agreement involved “the Plaintiff agreed to pay freight and other fees to the Defendant according the standard that 6,000 yuan per container, total amount 96,000 yuan” should be cancelled. On the question of whether the Defendant, Yichengda Company, had a lien on the goods involved in the case and its effect on the agreement. The Defendant, Yichengda Company, held that, it was shipowner under voyage C/P, so it had right to lien goods loaded. The court held that, the Defendant did not submit C/P between it and Xinminhang Company, but the statement in the trial was the same as M.V. “YI CHENG 12” in other case. From the perspective of C/P, hire period was a time period (namely 10 return voyage), other than a specific voyage, the payment was hire other than freight, and was not paid before the end of each voyage, the C/P in this case should be deemed as time C/P. In addition, even as the Defendant Yichengda Company said that it could lien the goods involved, but according to the agreement that the rent of charter was not paid before the end of each voyage, the Defendant Yichengda Company also waived the lien in the contract, which made the lien practically impossible to operate. So as the shipowner of the time C/P, the Defendant Yichengda Company had no right to detain the goods which were not the property of the charterer Xinminhang Company. What’ s more, port of destination of the goods involved was Tianjin, carriage was not finished, even as the actual carrier of the voyage charter, the Defendant had no right to retain the goods involved. Secondly, how much should the Defendant indemnify the Plaintiff. The court held that, as what mentioned before, the content stated in agreement involved “the Plaintiff agreed to pay freight and other fees to the Defendant according the standard that 6,000 yuan per container, total amount 96,000 yuan” should be cancelled, so the Defendant’s actual payment of 72,000 yuan to the Plaintiff had no factual or legal basis, and the payment should be returned. The Defendant claimed that the loading and unloading cost of the cargo involved in the

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case was 8,000 yuan, the Defendant, Yichengda Company, had paid for the cargo to be available to the owner, the cost should therefore be borne by the owner of the goods involved, but the Defendant, Yichengda Company, did not provide evidence that it had actually paid in advance, in the case of the Plaintiff’ s claim to pay a storage fee of 8,000 yuan, it was not required to pay according to the contract between the Defendant and the dock, so if there was actual payment of this fee, it should be loading and unloading fee of the 16 containers. Therefore, the Defendant should return total amount of 72,000 yuan and the interest to the Plaintiff calculated from the date of payment to the date of actual return, according to rate of the People’ s Bank of China for one-year loans in the same period. The Defendant, Yichengda Company, argued that tally commission fee and demurrage of container except charges of loading and unloading at the dock should be borne by the Plaintiff, because the Defendant did not present any evidence to prove that these costs were caused by the Plaintiff, so there was no factual or legal basis for the Defendant Yichengda’s claim that these expenses should be borne by the Plaintiff, the court did not support it. About storage fee 8,000 yuan, transfer container fee 9,600 yuan, container repair fee 1,600 yuan claimed by the Plaintiff, even those were true, those claims should not be supported by the court because the Defendant was not carrier as agreed, the Defendant had no contractual or legal obligation to deliver the goods to the destination specified by the Plaintiff. Even if the transshipment fee claimed by the Plaintiff was resulted from transshipment of goods involved, because the Defendant Yichengda Company was not carrier in the contract, it had no contractual or legal obligation to ship goods to the Plaintiff at port of destination, so the court did not support it. About the compensation for wet damage of goods, the Plaintiff did not provide sufficient evidence to prove that the dampness of the goods was caused by the Defendant and authenticity and legality paid for wet damage in advance; in addition, the Plaintiff also did not prove that even if it took the impairment measures, such as paying in advance to pick up the goods as soon as possible, it was also inevitable that the damage would occur; what’ s more, the Plaintiff did not arrange for transshipment until March 2016, it did not provide evidence to prove that the damage was not caused by the extended loss, so the court did not support the claim of the Plaintiff. Pulling the threads together, the Defendant should compensate the Plaintiff for 72,000 yuan and the interest calculated at the People’ s Bank of China’ s lending rate for the same period from January 26, 2016 to the date of actual payment. The rest claims of the Plaintiff were of no factual and legal basis, which should be rejected. According to the Contract Law of the People’s Republic of China Article 54 Paragraph 2, the Maritime Code of the People’s Republic of China Article 141, the Tort Liability Law of the People’s Republic of China Article 6, Article 15 Paragraph 1 Sub-paragraph 6, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows:

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1. Cancel the contents stated in agreement involved that “the Plaintiff agrees to pay freight and other fees to the Defendant according the standards of 6,000 yuan per container, and total amount 96,000 yuan”. 2. The Defendant, Xiamen Yichengda Shipping Co., Ltd., should compensate the Plaintiff, Qinzhou Xiangli Logistics Co., Ltd., for 72,000 yuan and the interest calculated at the People’s Bank of China’s lending rate for the same period from January 26, 2016 to the date of actual payment. 3. Reject other claims of the Plaintiff, Xiamen Yichengda Shipping Co., Ltd. If the Defendant, Xiamen Yichengda Shipping Co., Ltd., does not fulfill obligation of payment according to the effective judgment, then according to the Civil Procedure Law of the People’s Republic of China Article 253, it should pay double interest on the debt for the delay in performance. Court acceptance fee in amount of 3,374 yuan, the Plaintiff, Qinzhou Xiangli Logistics Co., Ltd., should bear 1,793 yuan, and the Defendant, Xiamen Yichengda Shipping Co., Ltd., should bear 1,581 yuan. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit copies of the original petition so as to appeal to the Fujian High People’s Court. Presiding Judge: DENG Jingang Judge: CHEN Ya Acting Judge: LIN Qian December 27, 2016 Clerk: HONG Dewen

Appendix: Main Legal Provisions Applied in this Case and Enforcement Application Notice 1. Contract Law of the People’s Republic of China Article 54 Contract Subject to Amendment or Cancellation Either of the parties may petition the People’s Court or an arbitration institution for amendment or cancellation of a contract if: (i) The contract was concluded due to a material mistake; (ii) The contract was grossly unconscionable at the time of its conclusion. If a party induced the other party to enter into a contract against its true intention by fraud or duress, or by taking advantage of the other party’s hardship, the aggrieved party is entitled to petition the People’s Court or an arbitration institution for amendment or cancellation of the contract.

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Where a party petitions for amendment of the contract, the People’s Court or arbitration institution may not cancel the contract instead. 2. Tort Liability Law of the People’s Republic of China Article 6 One who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability. One who is at fault as construed according to legal provisions and cannot prove otherwise shall be subject to the tort liability. Article 15 The methods of assuming tort liabilities shall include: (1) (2) (3) (4) (5) (6) (7) (8)

cessation of infringement; removal of obstruction; elimination of danger; return of property; restoration to the original status; compensation for losses; apology; and elimination of consequences and restoration of reputation.

The above methods of assuming the tort liability may be adopted individually or jointly. 3. Maritime Code of the People’s Republic of China Article 141 In case the charterer fails to pay the hire or other sums of money as agreed upon in the charter, the shipowner shall have a lien on the charterer's goods, other property on board and earnings from the sub-charter. 4. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the responsibility to provide evidence in support of its own propositions. For the evidence that cannot be obtained by any parties or their litigation representatives because of some realistic reasons or for the evidence that the people’ s court considers necessary for adjudicating the case, the people’ s court shall investigate and collect such evidence. The people’s court shall, according to the procedure prescribed by law, collect and examine evidence comprehensively and objectively. Article 239 The application period is two years. The suspension or suspension of an application for execution of a limitation shall be governed by the relevant provisions of law concerning the suspension or suspension of the limitation of action. The period prescribed in the preceding paragraph shall be counted from the last day of the period prescribed in the legal instrument for performance; if a legal document stipulates that the performance shall be carried out in instalments, it shall be counted from the last day of the prescribed period of performance; if a legal document does not provide for the period of performance, the period shall be counted from the date of entry into force of the legal document.

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Article 253 If the person subjected to execution fails to perform his obligations for payment of money within the period specified in the judgment, written order or other legal documents, he shall pay double the interest on the debts incurred during the delayed performance. If the person subjected to execution fails to perform other obligations within the period specified in the judgment, written order or other legal documents, he shall pay a deferred payment.

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Fujian High People’s Court Civil Judgment Qinzhou Xiangli Logistics Co., Ltd. v. Xiamen Yichengda Shipping Co., Ltd. (2017) Min Min Zhong No.419 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1005. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Affirming lower court decision that defendant actual carrier was not entitled to exercise a lien over plaintiff's goods under ad hoc agreement for delivery of plaintiff's goods after contracting carrier ceased operations. Summary The Plaintiff, entrusted Xinminhang Company to carry 16 containers carrying calcium carbonate to Houzhu Port. The containers were loaded onto the Defendant’s ship for carriage. Xinminhang Company stopped operations, so the Defendant required the Plaintiff to sign a Take Delivery Agreement upon Plaintiff’s agreement to pay freight to the Defendant. The Defendant was not satisfied with the amount of freight paid by the Plaintiff, so it did not release the goods, purporting to exercise a lien over them. The Plaintiff sued the Defendant, seeking nullification of the Agreement and return of the money that it had paid. The Defendant argued that the Agreement was valid and it had a right to lien on the goods. The first instance Court held that the Defendant had taken advantage of the Plaintiff’s position and had forced the Plaintiff to sign the Agreement and pay an unreasonable freight so the Agreement should be void. Also, the Defendant had no lien right and did not complete the carriage, so the Defendant had no legal basis to detain the goods. The Defendant therefore had no basis to keep the payment and should pay the money back to the Plaintiff. The Defendant appealed, claiming that it had a right to a lien on the goods according to Contract Law instead of Maritime Code. The appeal court held that the Defendant had no lien rights since the charter fee was not due under Contract Law and affirmed the first instance judgment.

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Judgment The Appellant (the Defendant of first instance): Xiamen Yichengda Shipping Co., Ltd. Domicile: No. 19, Group 3, Xiaban She, Xiban Village, Maxiang Town, Xiangan District, Xiamen City, Fujian. Legal representative: WU Gangyi. Agent ad litem: YANG Yuejin, the lawyer of Fujian Jiuxin Law Firm. The Respondent (the Plaintiff of first instance): Qinzhou Xiangli Logistics Co., Ltd. Domicile: No. 902, Block 3, Xingye Garden, Qinzhou Port, Qinzhou City, Guangxi Zhuang Autonomous Region. Legal representative: CHEN Yuanxiang, general manager. The Appellant, Xiamen Yichengda Shipping Co., Ltd. (hereinafter referred to as Yichengda Company), and the Respondent, Qinzhou Xiangli Logistics Co., Ltd (hereinafter referred to as Xiangli Company), disagreed with (2016) Min 72 Min Chu No. 960 Civil Judgment made by Xiamen Maritime Court and appealed to the court. This case was the dispute over illegal detention of goods loaded on ship. After entertaining the case, the court legitimately constituted the collegiate bench to try the case and held a hearing in public. Agent ad litem of the Appellant Yichengda Company, YANG Yuejin, and legal representative of the Respondent Xiangli Company, CHEN Yuanxiang, appeared in the court. Now the case has been concluded. The Plaintiff in first instance, Xiangli Company, claimed to the court of first instance that: 1. cancel Take Delivery Agreement signed between Xiangli Company and Yichengda Company on January 25, 2016; 2. Yichengda Company should return charge for taking container 72,000 yuan to Xiangli Company and pay the interest calculated at the People’s Bank of China’s lending rate for the same period from January 26, 2016 to the date of actual payment; 3. Yichcnegda Company should compensate Xiangli Company by terminal storage charge 8,000 yuan at Houzhu Port caused by illegal detention of Xiangli Company’s goods, container transfer charge 9,600 yuan, container repair charge 1,600 yuan and transshipment freight 28,850 yuan; 5. court acceptance fee should be borne by Yichengda Company. Facts and reasons: in October 2015, Xiangli Company entrusted Guangxi Xinmin Shipping Co., Ltd. (hereinafter referred to as Xinminhang Company) to transport 16 containers. Xinminhang Company arranged to transport the goods on M.V. “YI CHENG 1” owned by Yichengda Company. On November 18, 2015, Xiangli Company received the notice of Xinminhang Company, because it owed freight to Yichengda Company, Yichengda Company did not carry the goods according to ordinary route, it delivered the goods to Quanzhou Houzhu Port. Then, Xiangli Company contacted with Yichengda Company and requested to take the goods, but Yichengda Company requested Xiangli Company to pay 10,000

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yuan per container, which was used to replace the compensation to Yichengda of carriage fee on behalf of Xinminhang Company, meanwhile, Yichengda Company compelled Xiangli Company to sign an unequal release agreement, otherwise, it did not release the goods. Be compelled against one’ s will, on January 25, 2016, Xiangli Company signed take delivery agreement and paid 4,500 yuan per container to Yichengda Company to take the goods. Yichengda Company detained the goods illegally, which resulted to extra terminal storage charge 8,000 yuan of the goods, container transfer charge 9,600 yuan, container repair charge 1,600 yuan and transshipment freight 28,850 yuan. In addition, the goods in containers were calcium carbonate powder, because the goods had been detained for too long time, which resulted to the fact that the goods at the bottom of the container were badly damped and could not be used, so Xiangli Company compensated manufacturer by 32,000 yuan of direct loss. The freight of the goods was counteracted between Xiangli Company and Yichengda Company, so it did not owe freight. Yichengda Company argued that: firstly, Take Delivery Agreement signed by Xiangli Company and Yichengda Company was real intention of both parties and could not be canceled. On September 30, 2015, Xiangli Company signed an oral consecutive voyage C/P with a person other than involved in the case, Xinminhang Company. Yichengda Company accepted the delegation of Xinminhang Company, the goods involved were transshipped from Qinzhou Port to Quanzhou Weitou Port according to the order of Xinminhang Company on November 14, 2015. There was no transportation contract relationship between the Plaintiff and the Defendant. On November 18, 2015, the vessel of Yichengda Company reached to port of destination Weitou Port, but the port did not allow the vessel to berth and unload goods by some reasons, which resulted that the vessel of Yichengda Company had been anchored at Weitou anchorage for many days and was unable to unload. On November 22, 2015, after Xinminhang Company declared to stop voyage and regroup, the declaration stated that so-called “owners of cargo loaded”, individual owners of cargo (excluding Xiangli Company), demanded that Yichengda Company must unload the goods loaded at the port which had no debt relationship with Xinminhang Company to increase loss, and they willingly and directly paid freight according to 6000 yuan per TEU container to Yichengda Company. In this case, In this case, Yichengda Company only received amount from Xiangli Company according to 4,500 yuan per container. On November 24, 2015, after the goods were unloaded at Quanzhou Houzhu Port, the goods involved were not claimed, and were not applied for relevant legal enforcement measures. Until January 25, 2016, Xiangli Company contended that it was the only subject who had right to take the goods involved, and signed Take Delivery Agreement with Yichengda Company. Secondly, to say the least, voyage charterer did not pay the freight, Yichengda Company, as shipowner, had the right to lien the goods. Thirdly, Yichengda Company should not return the charge for taking container and the loss of its interest to Xiangli Company. Fourthly, Yichengda Company should not compensate Xiangli Company by terminal storage charge, container transfer charge, container repair charge, transshipment freight or loss of charge. After investigation, the court of first instance found out that:

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In October 2015, Xiangli Company entrusted Xinminhang Company to carry 16 TEU containers of goods (calcium carbonate powder), port of loading was Qinzhou, port of discharge was Tianjin, destination was Xiong County, freight and other fees were 1,300 yuan per container. The goods were loaded on M.V. “YI CHENG 1” owned by Yichengda Company, voyage was YCV15008. On November 14, 2015, M.V. “YI CHENG 1” started its voyage at Qinzhou Port, and arrived at Weitou Port anchorage ground on November 18; on November 24, the goods (including 16 containers of goods) were unloaded at Houzhu Port. On November 24, 2015, Yichengda Company and Quanzhou Harbour Container Co., Ltd signed Container Operation Contract. According to the contract, unloading fee was 450 yuan per TEU container, on/off vehicle fee was 50 yuan per TEU container, the storage fee was free of charge within three months from the date of unloading. On January 25, 2016, Xiangli Company and Yichengda Company signed Take Delivery Agreement. The agreement stated that: Xiangli Company commissioned Yichengda Company to transport 16 containers involved in the case through Xinminhang Company from Qinzhou Port to Quanzhou Port, the goods were loaded on M.V. “YI CHENG 1” voyage 15,008; Xinminhang Company owed Yichengda Company rent, after multiple exhortation, Xinminhang Company did not fulfill obligation of payment; Xiangli Company agreed to pay freight of goods involved, terminal charges, short haul fee, tally fee, storage fee to Yichengda Company according the standard that 6,000 yuan per container, total amount 96,000 yuan. During actual fulfillment, 6,000 yuan as agreed changed into 4,500 yuan. On the same day, Xiangli Company paid 72,000 yuan through the personal bank account of CHEN Yuanxiang, its legal representative, to the personal bank account of WU Gangyi, the legal representative of Yichengda Company. In the first-instance trial, Yichengda Company stated that the hire relationship of M.V. “YI CHENG 1” and Xinminhang Company was the same as the relationship in other case (2016 Min 72 Min Chu No.563) of M.V. “YI CHENG 12”. In that case, though the name of contract of M.V. “YI CHENG 12” was voyage C/P, hire period was a time period (namely 10 return voyage), other than a specific voyage; the payment was hire other than freight, and was not paid before the end of each voyage. The court held that, this case was dispute over illegal detention of goods loaded. The issues of this case between Xiangli Company and Yichengda Company were that: 1. whether Take Delivery Agreement signed by Xiangli Company and Yichengda Company should be canceled; 2. if the agreement should be canceled, how much should Yichengda Company indemnify Xiangli Company. Firstly, about the issue whether Take Delivery Agreement signed by Xiangli Company and Yichengda Company should be cancelled. The court held, according to the Opinions of the Supreme People’s Court on the Implementation of Certain Issues of the General Principles of Civil Law of the People’s Republic of China (Trial) Article 70, “if a party, while the other party is in danger, forces the other party to make an untruthful expression of intent in order to seek illegitimate interests, and seriously damages the interests of the other party, it

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may be deemed as taking advantage of the danger of others.” In this case, after Xiangli Company entrusted Xinminhang Company to carry container goods, because Xinminhang Company stopped operation, which resulted that it could not receive the goods at Port (place) of destination on schedule, the property rights and interests of the goods were in jeopardy. Yichengda Company was the shipowner of M.V. “YI CHENG 1”, actually controlled and occupied the goods, in order to obtain own improper interests, Yichengda Company, taking advantage of the situation in which Xiangli Company was in the aforesaid crisis, forced Xiangli Company to pay a high fee in exchange for the goods, forcing Xiangli Company to sign the agreement and agree to advance the rent of 96,000 yuan (later, 72,000 yuan) in order to take delivery of the goods, which violated the true intention expression of Xiangli Company, therefore, the above behavior of Yichengda Company was to take advantage of the danger. So the content stated in agreement involved “Xiangli Company agreed to pay freight and other fees to Yichengda Company according the standard that 6,000 yuan per container, total amount 96,000 yuan” should be cancelled. On the question of whether the Yichengda Company, had a lien on the goods involved in the case and its effect on the agreement. Yichengda Company held that, it was shipowner under voyage C/P, so it had right to lien goods loaded. The court held that, Yichengda Company did not submit C/P between it and Xinminhang Company, but the statement in the trial was the same as M.V. “YI CHENG 12” in other case. From the perspective of C/P, hire period was a time period (namely 10 return voyage), other than a specific voyage, the payment was hire other than freight, and was not paid before the end of each voyage, the C/P in this case should be deemed as time C/P. In addition, even as Yichengda Company said that it could lien the goods involved, but according to the agreement that the rent of charter was not paid before the end of each voyage, Yichengda Company also waived the lien in the contract, which made the lien practically impossible to operate. So as the shipowner of the time C/P, Yichengda Company had no right to detain the goods which were not the property of the charterer Xinminhang Company. What’ s more, port of destination of the goods involved was Tianjin, carriage was not finished, even as the actual carrier of the voyage charter, Yichengda Company had no right to retain the goods involved. Secondly, how much should Yichengda Company indemnify Xiangli Company. The court of first instance held that, as what mentioned before, the content stated in agreement involved “Xiangli Company agreed to pay freight and other fees to Yichengda Company according the standard that 6,000 yuan per container, total amount 96,000 yuan” should be canceled, so Yichengda Company’s actual payment of 72,000 yuan to Xiangli Company had no factual or legal basis, and the payment should be returned. Yichengda Company claimed that the loading and unloading cost of the cargo involved in the case was 8,000 yuan, Yichengda Company had paid for the cargo to be available to the owner, the cost should therefore be borne by the owner of the goods involved, but Yichengda Company did not provide evidence that it had actually paid in advance, in the case of Xiangli Company’s claim to pay a storage fee of 8,000 yuan, it was not required to pay

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according to the contract between Yichengda Company and the dock, so if there was actual payment of this fee, it should be loading and unloading fee of the 16 containers. Therefore, Yichengda Company should return total amount of 72,000 yuan and the interest to Xiangli Company calculated from the date of payment to the date of actual return, according to rate of the People’s Bank of China for one-year loans in the same period. Yichengda Company argued that tally commission fee and demurrage of container except charges of loading and unloading at the dock should be borne by Xiangli Company, because Yichengda Company did not present any evidence to prove that these costs were caused by Xiangli Company, so there was no factual or legal basis for Yichengda Company’s claim that these expenses should be borne by Xiangli Company, the court did not support it. About storage fee 8,000 yuan, transfer container fee 9,600 yuan, container repair fee 1,600 yuan claimed by Xiangli Company, even those were true, those claims should not be supported by the court because Yichengda Company was not carrier as agreed, Yichengda Company had no contractual or legal obligation to deliver the goods to the destination specified by Xiangli Company. Even if the transshipment fee claimed by Xiangli Company was resulted from transshipment of goods involved, because Yichengda Company was not carrier in the contract, it had no contractual or legal obligation to ship goods to Xiangli Company at port of destination, so the court did not support it. About the compensation for wet damage of goods, Xiangli Company did not provide sufficient evidence to prove that the dampness of the goods was caused by Yichengda Company and authenticity and legality paid for wet damage in advance; in addition, Xiangli Company also did not prove that even if it took the impairment measures, such as paying in advance to pick up the goods as soon as possible, it was also inevitable that the damage would occur; what’ s more, Xiangli Company did not arrange for transshipment until March 2016, it did not provide evidence to prove that the damage was not caused by the extended loss, so the court did not support the claim of Xiangli Company. Pulling the threads together, Yichengda Company should compensate Xiangli Company by 72,000 yuan and the interest calculated at the People’s Bank of China’s lending rate for the same period from January 26, 2016 to the date of actual payment. The rest claims of Xiangli Company were no actual facts and legal basis, which should be rejected. According to the Contract Law of the People’s Republic of China Article 54 Paragraph 2, the Maritime Code of the People’s Republic of China Article 141, the Tort Liability Law of the People’s Republic of China Article 6, Article 15 Paragraph 1 Sub-paragraph 6, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment was as follows: 1. cancel the content stated in agreement involved that “Xiangli Company agreed to pay freight and other fees to Yichengda Company according the standard that 6,000 yuan per container, total amount 96,000 yuan”; 2. Xiamen Yichengda Shipping Co., Ltd. should compensate Qinzhou Xiangli Logistics Co., Ltd. by 72,000 yuan and the interest calculated at the People’s Bank of China’s lending rate for the same period from January 26, 2016 to the date of actual payment; 3. reject other claims of

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the Plaintiff, Xiamen Yichengda Shipping Co., Ltd. If Xiamen Yichengda Shipping Co., Ltd. did not fulfill obligation of payment according to the effective judgment, according to the Civil Procedure Law of the People’s Republic of China Article 253, it should pay double interest on the debt for the delay in performance. Court acceptance fee in amount of 3,374 yuan, Qinzhou Xiangli Logistics Co., Ltd., should bear 1,793 yuan, Xiamen Yichengda Shipping Co., Ltd., should bear 1,581 yuan. After judging, Yichengda Company disagreed with the judgment and appealed to the court that: 1. the Appellant and Xinminhang Company made oral consecutive voyage C/P (return between Guangxi Qinzhou and Fuzhou, Quanzhou), on November 14, 2015, according to the commission of Xinminhang Company, Yichengda Company shipped the goods from Qinzhou Port to Quanzhou Weitou Port, but the port did not allow the vessel to berth and unload goods by some reasons. On November 18, 2015, after Xinminhang Company declared to stop voyage and regroup, other owners of cargo demanded that Yichengda Company must unload the goods loaded at the port which had no debt relationship with Xinminhang Company to increase loss, and willingly and directly paid freight and other fees according to RMB 6,000 yuan per TEU container to the Appellant. Until January 25, 2016, the Respondent contended that it was the only subject who had right to take the goods involved, and signed Take Delivery Agreement with the Appellant, it did not arrange for transshipment of goods to Tianjin until March 2016. The Respondent did not care about the goods, its property right was not in danger, the Appellant did not lien the goods but kept the goods as a last resort. Finally the Appellant delivered the goods to the Respondent who had no right to take goods, Take Delivery Agreement signed by both parties was real intention expression. The evidence provided by the Appellant could not prove that it had paid freight to contractual carrier Xinminhang Company. What Xinminhang Company and Yichengda Company reached was consecutive multiple voyage C/P other than time C/P. 2. The application of law was wrong, Yichengda had right of lien of cargo. This case was carriage of goods by sea between the ports of China, which should applied for the Contract Law of the People’s Republic of China (hereinafter referred to as Contact Law) other than the Maritime Code of the People’ s Republic of China (hereinafter referred to as Maritime Code). Yichengda Company, as the actual carrier of voyage C/P, according to the Contract Law of the People’s Republic of China Article 315, had right to lien. 3. The Appellant did not obtain undue benefits, the take container fee should not be returned to the Respondent. The take delivery agreement signed by both parties was legal and effective, so it should be fulfilled strictly. The court of first instance judged that the Appellant should returned take delivery fee and interest, which had no legal basis, and should be corrected. Therefore, the Appellant requested the court of second instance to dismiss the original judgment and reject the claims of the Respondent. The Respondent argued that: 1. the agreement for taking delivery of the goods involved in the case was made by the Appellant at his convenience, which should be cancelled. The Appellant used the Respondent’s eagerness to take delivery of the goods to force the Respondent to enter into a so-called pick-up agreement at a price

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more than three times the normal freight rate, which was at convenience and should be cancelled. The Appellant should return take container fee. 2. The application of law in first instance was correct, the Appellant had no right to lien the goods involved. This case should apply the Maritime Code Article 141 other than the Contract Law of the People’s Republic of China Article 315. The Appellant knew that the goods shipped were owned by the Respondent other than Xinminhang Company, but it still detained the goods involved, which was illegal detention. The argument that the it did not lien the goods was contradict to that fact that it forced the Appellant to enter into a pick-up agreement. The Respondent had paid the freight that should be paid, Yichengda Company had no right to detain the goods involved. The Appellant had no reasons to appeal, the Respondent requested the court to affirm the original judgment. During the trial of second instance, two parties did not present any new evidence. Both parties had no objection to the basic facts confirmed by the court of first instance, so the court confirmed those facts. The court of second instance found out that: (2016) Min 72 Min Chu No.563 Civil Judgment made by the court of first instance confirmed that, on February 9, 2015, Xinminhang Company, as party A (charterer) and Yichengda Company, as party B (shipowner), signed C/P. The charter stated that: party A paid 860,000 yuan to party B each return voyage; that Weitou Port-Tianjin Port-Weitou Port was one return voyage, if the vessel needed to arrive at other ports, that should be discussed by both parties; the hire was settled on a return voyage, account reconciliation should be made within 3 days after each return voyage, the hire of the first return voyage should be paid before the end of the fourth voyage, the rest could be done in the same manner; charter period was 10 return voyage. After trial, the issues of second instance were that: firstly, whether the Appellant had right to detain the goods involved; secondly, whether Take Delivery Agreement should be cancelled. The analyses of the above issues were showed by the court as follows: The court held that: Firstly, about the question whether the Appellant had right to detain the goods involved. The Appellant confirmed in the first instance that it signed an oral consecutive voyage C/P with Xinminhang Company, the content was the same as the content of C/P about M.V. “YI CHENG 12”. Therefore, the content of the C/P signed between the Appellant and Xinminhang Company about M.V. “YI CHENG 12” was the basis to confirm the content of C/P in this case. The Appellant contended that it had right to detain the goods according to the Contract Law Article 315, but the rent in this C/P involved was that the rent was settled on a return voyage, account reconciliation should be made within 3 days after each return voyage, the rent of the first return voyage should be paid before the end of the fourth voyage. So the court concluded that the rent for the voyage in question had not yet reached the payment period, the goods involved had no the circumstance that it should have paid the freight in the Contract Law Article 315, Yichengda

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Company contended the right of lien according to that, which could not be supported by the court. Secondly, about the question whether Take Delivery Agreement should be cancelled. The Respondent entrusted Xinminhang Company to carry the goods involved, in the case that Xinminhang Company stopped its operation, the goods involved could not be carried to port of destination by original route, the goods were delivered to other port and unloaded, the relevant right holder also reported the case to the public security organ, which could indicate that the goods were not under the Respondent’ s normal control, it was correct that the court of first instance held that the goods involved was in danger. In this case, the Appellant should make delivery of the goods subject to the execution by the Respondent of a take delivery agreement and payment to the Respondent of a high fee which should not have been paid, which constituted taking advantage of others. It should be supported that the Respondent contended to cancel Take Delivery Agreement involved. It was correct that the court of first instance hereby ordered the Appellant to return the money thus obtained. Pulling the threads together, the appeal reasons of the Appellant Yichengda Company could not be established, so according to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 1,581 yuan, the Appellant Xiamen Yichengda Shipping Co., Ltd. should bear that; court acceptance fee of first instance should be paid according to judgment of first instance. The judgment is final. Presiding Judge: LIN Zexin Judge: HUANG Zhijiang Acting Judge: CHEN Xiaoxia September 25, 2017 Clerk: WU Shichun

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: (1) If the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed;

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(2) If the facts were incorrectly or the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law; (3) If in the original judgment the facts were not clearly ascertained and the evidence was insufficient, the people’s court of second instance shall make a written order to set aside the judgment and remand to case to the original people’s court for retrial, or the people’ s court of second instance may amend the judgment after investigating and clarifying the facts; (4) If there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original people’s court for retrial.

Guangzhou Maritime Court Civil Judgment Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al.

(2016) Yue 72 Min Chu No.1023 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1036. Cause of Action 212. Dispute over voyage charter party. Headnote Plaintiff shipowner successful in recovering unpaid demurrage from defendant charterer; plaintiff was entitled to delay discharge until payment of freight but that time not to count as demurrage time. Summary Plaintiff chartered its ship “Anjieli 3” to the first Defendant for a voyage to carry fly ash from Dalian to Jieyang. Later, the arrival port was changed by agreement to Zhuhai. Total allowed laytime (i.e. reversible laytime) was 6 days. Loading at Dalian took 9 days and 21 h; discharge at Zhuhai took 13 days. Discharge in Zhuhai was delayed by 5 days after arrival in berth because the first Defendant had not paid freight or demurrage in relation to the load port. The first Defendant then paid freight but not demurrage. Plaintiff agreed to discharge the cargo after receiving a guarantee from the second Defendant, Chen Jinping, that the goods would be unloaded within 4 days of opening the holds. Discharge actually took 8 days after opening the holds. Plaintiff sued the Defendants, seeking to recover unpaid demurrage. The Court held: (1) total time for loading and discharging was 24.625 days; (2) the agreed lay time of 6 days, and a further 1.5 days for weather delays (rain) should be deducted; (3) although Plaintiff was entitled to delay discharge at Zhuhai until freight had been paid, those 5 days should not count as demurrage; (4) therefore, total demurrage time was 12.125 days (24.625 minus 6 minus 1.5 minus 5). The first Defendant had already paid CNY 40,000 by way of demurrage, so the Court held that it was obliged to pay a further CNY 81,250. The claim against the second Defendant failed.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_53

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Judgment The Plaintiff: Rizhao Guanshun Logistics Co., Ltd. Domicile: Foshouwan Bay, Lanshantou Street, Lanshan District, Rizhao City, Shandong. Legal representative: CHEN Youxing, manager. Agent ad litem: LI Jianping, lawyer of Guangdong WANG JING & Co. (Nansha). The Defendant: Guangdong Jinlongchang International Logistics Co., Ltd. Domicile: Room 303, Floor 3, Factory Building No.3-1A, Zhuhai Park, Zhuhai-Macao Cross-border Industrial Zone, Zhuhai City, Guangdong. Legal representative: WANG Qiongying, general manager. Agent ad litem: CHEN Xiaozhi, employee. The Defendant: CHEN Jinping, male, born on August 12, 1982, Han, living in Quanzhou, Fujian With respect to the case arising from dispute over voyage charter party between the Plaintiff Rizhao Guanshun Logistics Co., Ltd. and the Defendants, Guangdong Jinlongchang International Logistics Co., Ltd. (hereinafter referred to as Jinlongchang Company) and CHEN Jinping, the case was filed on September 23, 2016, and the court applied the ordinary procedure according to the law and held a hearing in public on December 21, 2016. Agent ad litem of Plaintiff, LI Jianping, and agent ad litem of Defendant Jinlongchang Company, CHEN Xiaozhi, and the Defendant CHEN Jinping, appeared in court and participated in the action. Now the case has been concluded. The Plaintiff filed a lawsuit with the court as follows: 1. the Defendant, Jinlongchang Company and CHEN Jinping, shall be jointly and severally liable to pay the demurrage fee of 160,000 yuan and interest (from July 13, 2016 to the day of actual payment, 160,000 yuan as the principal was calculated. According to the People’s Bank of China loan interest rate for the same period, the total interest is 966.67 yuan until August 31, 2016) under the voyage charter party to the Plaintiff; 2. the two Defendants shall bear the litigation expenses. Facts and reasons: the Plaintiff signed a voyage charter party with the Defendant Jinlongchang Company, which stipulated that the Plaintiff carried the fly ash for the Defendant Jinlongchang Company from the departure port, Dalian Bay Xingang, to the arrival port, Jieyang Hongdong Wharf. Jinlongchang Company paid the freight. The two sides negotiated to change the arrival port to Zhuhai Gaolan Port and its voyage number 1614 of the “Anjieli 3”. At 12:40 on June 14, 2016, the Plaintiff’s M.V. “Anjieli 3” arrived at the anchorage of Dalian Port according to the contractual time limit. The goods were shipped from the berth at 9:00 on June 24 and the loading time lasted 9 days and 21 h. On June 30, it arrived at Zhuhai anchorage, berthed at the dock at 16:00 on July 2 and completed the unloading on July 15. After deducting the 6 days of loading and unloading period specified in the contract, the total demurrage period is 16 days, resulting in a demurrage fee of 160,000 yuan. In the course of the

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lawsuit, the Plaintiff revised the ship demurrage: 10 days for loading, 16 days for unloading, 26 days for total, so the demurrage was 20 days with 200,000 yuan for demurrage fee. Jinlongchang Company has already paid a demurrage of 40,000 yuan but 160,000 yuan was still owing. On July 2nd, the reason why M.V. “Anjieli 3” called at the port without discharging the cargo until July 7 was that Jinlongchang did not pay the freight and demurrage fee. Jinlongchang Company paid the freight on July 5 and July 6 without demurrage after the repeatedly urging by the Plaintiff. The Plaintiff’s salesperson, Miss Dai, sent four business correspondences to the Defendant via WeChat. On July 7, Jinlongchang Company issued a “Settlement Confirmation document” and stamped its seal to the Plaintiff by fax. The Plaintiff stamped the seal but did not return it. CHEN Jinping also made another “Settlement Confirmation document” and faxed it to the Plaintiff. CHEN Jinping is a joint guarantor. He guarantees that the goods involved in this case shall be unloaded all within 4 days from the opening the shipping holds. The actual unloading time exceeded 4 days, so CHEN Jinping shall be jointly and severally liable for the relevant losses. The Defendant Jinlongchang Company argued that the actual freight volume of this voyage was 10,707 ton and the freight rate was 503,299 yuan. Jinlongchang Company paid the freight of 130,000 yuan on July 4, 2016, CNY 300,000 on July 5 and 3,299 yuan on July 6 respectively. The reason for not unloading was that it was raining before July 7. On July 7, the cargo was unloaded when opened the shipping holds and completed the unloading on the morning of July 15. The rainy day is excluded from it in accordance with the terms of contract. According to the weather forecast, there was no demurrage in Jinlongchang Company. It was raining in Dalian Port on June 14, 15, 21, 23, and 24 and the actual loading time was about 4 days. It rained every day from June 30 to July 15. The Defendant unloaded the cargo during the rain stop. Due to excessive rainy days in the two ports, the Plaintiff, the Defendant Jinlongchang Company and CHEN Jinping re-negotiated the contract and reached the agreement in the “Settlement Confirmation document” on July 7. The loading and unloading time of the original contract as well as the relevant terms of the original contract were modified. Jinlongchang Company has paid 40,000 yuan and does not owe the Plaintiff. So it requested the court to reject the claims of the Plaintiff. The Defendant CHEN Jinping defended that CHEN Jinping was the middleman between the Plaintiff and Jinlongchang Company and the Plaintiff promised to give an introduction fee of 5,000 yuan afterwards. The “Settlement Confirmation document” was produced by CHEN Jinping in Fujian on July 7, 2016. The content was determined with the Plaintiff and Jinlongchang Company after consultation by telephone. The Plaintiff asked CHEN Jinping to draft a “Settlement Confirmation document” and scan the identity card and press the fingerprint film. CHEN Jinping faxed it to the Plaintiff and Jinlongchang Company respectively when issued it. The Plaintiff was afraid that he could not get 40,000 yuan. The Defendant was afraid that the Plaintiff did not discharge the cargo when it paid 40,000 yuan to the Plaintiff. Both of them believed CHEN Jinping and let CHEN Jinping guarantee it. On July 15, Jinlongchang Company paid 40,000 yuan to the Plaintiff. As a

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middleman, CHEN Jinping shall only be responsible for CNY40,000. As Jinlongchang Company has paid 40,000 yuan to the Plaintiff, CHEN Jinping has no responsibility. The Plaintiff calculated the demurrage fee on the basis of 16 days. It did not recognize the receipt of CNY40,000 and did not recognize the existence of the Confirmation document. The parties to the contract did not stamp on the Confirmation document. The parties submitted the evidence in accordance with the law in terms of the lawsuit requests and the court organized the parties to exchange the evidence and cross-examination. The evidence of the voyage charter party and Confirmation document and etc. that the parties have no objection which shall be confirmed by the court and certified in the volume. The court found that: In June 2016, the Plaintiff Rizhao Guanshun Logistics Co., Ltd. and the Defendant Jinlongchang Company signed a voyage charter party through the introduction of CHEN Jinping. The contract stipulated that the ship named “Anjieli 3”, the port of loading was Dalian Bay Xingang and the port of arrival was Jieyang Hongdong Wharf; the date of loading on June 14, 2016, the loading and unloading period of the two ports lasted 6 days. The demurrage fee was 10,000 yuan per day. After signing the contract, the shipper pays a deposit of 30,000 yuan to the carrier, and the remaining freight is paid in full after opening the ship holds for inspection in the unloading port. It is appropriate for the shipper shall pay the freight in advance on weekends or holidays. The carrier is entitled to close the ship’s holds without unloading and sell off the cargo for the shipping cost of this voyage. The loading and unloading time is calculated from the time when the ship arrives at the anchorage of loading and unloading port and the time in two ports can be combined. The previous port was congested and other force majeure factors, such as weather and mechanical breakdowns, which caused the delay of ship schedule. The irresistible factors caused by the rain and closure of port are excluded from the 6 loading and unloading days. The carrier guarantees that there is no sundries in the ship’s cabin and the hatch covers have holes that is suitable for the dry powder. If the cargo is damaged, such as leaking in water, during the transportation process, the carrier shall bear the responsibility. The cargo in stock of this voyage is 10,700 ton and the freight rate is 39 yuan per ton. After consultation, the port of arrival was changed into Zhuhai Gaolan Port and the freight rate was changed to 47 yuan per ton. The contract will take effect when the contract is signed and sealed by both parties and the deposit is received. Regarding the boundaries of rights, obligations and the limit of liabilities between the shipper and the carrier, which shall apply to the relevant provisions of the Rules for Waterway Transport and the tariffs. At 12:40 on June 14, 2016, M.V. “Anjieli 3” arrived at the anchorage of Dalian Port. On the same day, the Plaintiff’s employee, Miss Dai, notified CHEN Jinping (the agent of Jinlongchang Company) and port authority of Dalian Port by phone that the ship arrived in Dalian Port. The loading began on June 14. According to the log book of M.V. “Anjieli 3”, the ship sailed from Dalian Port at 10:00 on June 24. At 18:00 on June 30, 2016, M.V. “Anjieli 3” arrived at the anchorage of Zhuhai Gaolan Port. At 18:09 on July 2, M.V. “Anjieli 3” let go starboard anchor. Finished

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with engine at 18:11 was reported to the Zhuhai Maritime Safety Administration Center. On July 2, the Plaintiff's employee, Miss Dai, telephoned CHEN Jinping and the Port Authority of Zhuhai port that the ship arrived at Zhuhai Gaolan Port. The business letter provided by the Plaintiff for Jinlongchang Company on June 30, 2016 that: our ship arrived at Dalian Anchorage at 12:40 on June 14, 2016 and delivered the cargo and left the berth at 09:00 on June 24. The loading time was 9 days and 21 h. Our vessel is expected to arrive at Zhuhai Gaolan Port Anchorage at 16:00 on June 29, 2016. It is expected to be unloaded for 3 days. The time of loading and unloading in two ports lasted for 12 days and 21 h excluded from the 6 days of contract loading and unloading time. The demurrage was 6 days and 21 h with demurrage fee of 68,750 yuan. Please pay the freight and demurrage fee of this voyage immediately after the ship is berthed for inspection. Otherwise, our company has the right to stop the unloading and sell off it for the shipping cost of this voyage. The business letter provided by the Plaintiff for Jinlongchang Company on July 5, 2016 that: our ship arrived at Dalian anchorage at 12:40 on June 14, 2016 and delivered the cargo and left the berth at 09:00 on June 24. The loading time was 9 days and 21 h. It is estimated that the time for unloading would be 8 days. The time of loading and unloading in two ports lasted for 17 days and 21 h excluded from the 6 days of contract agreement. The demurrage was 11 days and 21 h with demurrage fee of 118,750 yuan. The Plaintiff requested to pay 60% of the remaining freight. After receiving this payment, it would communicate with the shipowner to open the ship holds for unloading. In addition, 40% of the remaining freight and demurrage shall be paid before 12:00 on July 6. Otherwise, the Plaintiff has the right to close the ship holds without the unloading and sell off it for the shipping cost of the voyage. The business letter provided by the Plaintiff for Jinlongchang Company on July 7, 2016 that: your company refused to pay the freight on the grounds that the money was tight, which forced our ship to close its holds repeatedly. The overdue freight was paid off until yesterday. The practice of your company violated the terms of contract; In the case of a verbal agreement we reached, your company repented again and again. Your company refused to pay the demurrage through a correspondence. Our company has the right to close the ship holds without the unloading and sell off it for the shipping cost of the voyage. Another business letter provided by the Plaintiff for Jinlongchang Company on July 7, 2016 that: your company shall arrange unloading in time and pay the demurrage. If you do not arrange it, your company will automatically waiver the right of taking delivery of goods. The remaining goods when our ship is away from berth would be sold off to offset demurrage and other expenses. The balance would be paid to your side and please cooperate with us. On June 8, 2016, Jinlongchang Company paid the Plaintiff deposit of 30,000 yuan. It paid the freight of 130,000 yuan on July 4, 300,000 yuan on July 5 and 43,299 yuan on July 6 respectively. The above payments are 503,299 yuan in total. On July 7, 2016, the Defendant CHEN Jinping served the “Settlement Confirmation document” to the Plaintiff, which states: “M.V. ‘Anjieli 3’ NO.

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1614 voyage loaded all the cargo within four days when opening the ship holds except the rainy days and the unloading fee is 40,000 yuan. The voyage is over and the two parties are exempt from all liabilities. Otherwise, Mr. CHEN Jinping shall be jointly and severally liable for the responsibility.” CHEN Jinping put his fingerprint on this document. The Plaintiff and the Defendant did not seal in this document and confirm it. In the trial, CHEN Jinping said that the content of “Settlement Confirmation document” was determined after three parties’ discussion via telephone and then sent it to the Plaintiff. At 18:00 on July 7, 2016, M.V. “Anjieli 3” began to unload the cargo and finished the unloading on July 15. At 18:04 on July 15, Jinlongchang Company paid the Plaintiff 40,000 yuan. According to the log book of M.V. “Anjieli 3”, the ship departed from the berth at 06:00 on July 16. The court delivered a copy of a statement of complaint to the Defendant, Jinlongchang Company, on November 9, 2016. The facts of the disputes between the two parties are as follows: 1. the time when M.V. “Anjieli 3” loaded the cargo in Dalian Port; 2. the “rainy time” in the case; 3. whether M.V. “Anjieli 3” delay or not; 4 whether the two parties change the agreement on the demurrage in the voyage charter party. In terms of controversial evidence and facts, the court has determined as follows: 1. The time when M.V. “Anjieli 3” loaded the cargo in Dalian Port; The Plaintiff believed that the time for loading the goods in Dalian Port was at 09:00 on June 24, 2016. Jinlongchang Company believed that it was the evening of June 23. According to the log book of M.V. “Anjieli 3”, it was departed from Dalian Port at 10:00 on June 24. Based on the circumstances of the case, it was determined that the time for loading the goods in Dalian Port was at 9:00 on June 24, 2016. 2. The “rainy time” in the case; The weather records in the log book is the meteorological phenomenon recorded by the crew in real time. The weather data provided by Jinlongchang Company are not on-site or real-time records from Dalian Meteorological Bureau Archives and Zhuhai Public Meteorological Service Center. Therefore, it is necessary to determine whether it is raining or not based on the logbook records. Although the weather data provided by Jinlongchang Company recorded the precipitation and magnitude, it did not record that it rained all day. According to the log book of M. V. “Anjieli 3”, the rainy weather observed when the ship in Dalian is as follows: it would rain at 22:00 and 24:00 on June 14, 2016; it would rain at 02:00, 04:00, 06:00, and 08:00 on June 15; it would rain at 14:00 and 16:00 on the same day. When the ship was in Zhuhai, the weather forecast showed that it would rain at 14:00, 16:00 and 18:00 on July 4. It would rain at 02:00, 04:00 and 06:00 on July 5 and it would rain at 04:00 and 06:00 on July 10; On July 11, it would rain at 20:00, 22:00 and 24:00; it would rain at 16:00 and 18:00 on July 13. The rainy day in total was observed in 21 times. Because the interval of every observation was 2 hours, the raining time was 42 hours, equivalent to 1.750 days. It was determined that

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M.V. “Anjieli 3” was during the loading port and the port of discharge and 1.750 days was the raining time; The Plaintiff refused to recognize the 1.50 day besides the period of unloading from July 2 to July 7. The Plaintiff’s factual claim that the raining time was 18 hours which was inconsistent with the evidence recorded, so it cannot be established. The irresistible factors, such as the rainy days, caused the failure of loading and unloading that shall be excluded from the time of loading and unloading in accordance with the terms of contract. However, there is no agreement that the rainy weather all day which will not be counted in the loading and unloading time. The goods were unloaded from July 7, 2016 to July 15, 2016, which proves that the Defendant can still unload the goods during the intervals in above-mentioned raining days. The claim made by the Defendant Jinlongchang Company that these days cannot be counted in the loading and unloading time because it was raining on June 14, 15, 21, 23, 24, 30 and July 15, so the claim cannot be established. 3. Whether M.V. “Anjieli 3” delayed or not; In the case, the contract stipulated that the loading and unloading time was calculated from the time when the ship arrived at the anchorage of the port of loading and unloading. Therefore, the goods shall be loaded in Dalian Port from 12:40 on June 14, 2016 to 09:00 on June 24th and it can be concluded that it took the port of loading 9 days and 21 hours, or 9.875 days. Both parties advocated that discharging the goods was finished on July 15 in the court. However, the Plaintiff did not know the exact time of unloading the goods. The Defendant Jinlongchang Company claimed that the time for unloading the goods was the morning of the day. According to the log book of M.V. “Anjieli 3”, it departed from the berth in Zhuhai Gaolan port at 06:00 on July 16. The morning normally refers to the period from 8:00 to 12:00, but neither party provides a record of loading and unloading time. Based on the circumstances of the case, it is determined that the time for unloading is about 12:00 on July 15. The unloading is finished in Zhuhai Gaolan Port from 18:00 on June 30, 2016 to 12:00 on July 15. The port of discharge used 14.75 days. The two ports used a total of 24.625 days. M.V. “Anjieli 3” in this voyage has been deferred. 4. Whether the two parties change the agreement on the demurrage in the voyage charter party. The Plaintiff provided three “Settlement Confirmation documents”. The first “Settlement Confirmation document” was issued by CHEN Jinping who sent it to the Plaintiff. The evidence is the original one and the three parties have confirmed it. The court has adopted the evidence. The content of the second “Settlement Confirmation document” (copy): “the unloading task in M.V. ‘Anjieli 3’ No.1614 voyage shall be finished within 4 days except the rainy days. The total amount for unloading is 40,000 yuan, which shall be paid off in one time and Mr. CHEN Jinping shall be jointly and severally liable for it. In addition, the Defendant Jinlongchang Company sealed it for the contractual purpose.” The content of third “Settlement Confirmation document” (copy) is the same as the second one and it

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was sealed by the Plaintiff for the contractual purpose besides the one sealed by the Defendant. When the Plaintiff received the “Settlement Confirmation document” from the Defendant by fax, it was stamped but not returned. The Plaintiff did not submit the original to check for the last two “Settlement Confirmation documents”. The Defendant Jinlongchang Company did not approve the evidence. Therefore, the court did not confirm the authenticity of the evidence. CHEN Jinping said that he and the Plaintiff and the Defendant Jinlongchang Company had reached a consensus on telephone consultation and confirmed in writing, so it can be concluded that the “Settlement Confirmation document” was the common opinion of three parties. According to the above, the contents of the “Settlement Confirmation document” can be recognized as a supplement to the terms of contract. According to Article 78 of the Contract Law of the People’s Republic of China: “A contract shall be assumed as not having been modified if the content of the modification of the contract is not clearly agreed upon by the parties.” The two parties had great controversy over the nature of 40,000 yuan. The Plaintiff claimed that 40,000 yuan was the demurrage fee in Dalian Port. The Defendant Jinlongchang Company claimed that there was no demurrage in Dalian Port, so the 40,000 yuan did not refer to the demurrage fee in Dalian Port. There was also no indication in the Confirmation document that the original voyage charter party was changed. The claim hold by Defendant Jinlongchang Company that both parties changed the terms of demurrage fee in contract and the demurrage fee of this voyage was 40,000 yuan, which cannot be established. However, in fact, the goods was not unloaded within the time specified in the “Settlement Confirmation document”. Therefore, the conditions to which the agreement applies are not valid. The court believes that this case is about a voyage charter party dispute. The voyage charter party signed between the Plaintiff and the Defendant Jinlongchang Company that was established and valid, so both parties shall perform their obligations according to the contract. It took two ports 24.625 days in total. First of all, the agreed 6-day loading and unloading time and the raining time of 1.50 days were not included in the loading and unloading time. Secondly, although the two parties agreed that the Plaintiff had the right to stop the unloading of the cargo when the Defendant failed to pay the delivery fee exceeded the time limit, the suspension of the unloading was that the Plaintiff exercised the lien upon the ship. Refusing the ship which does not belong to the Defendant during the period of unloading. Therefore, the 5 demurrage days were not calculated from the time when M.V. “Anjieli 3” berthing at 18:11 on July 2 (Finished with engine was reported to the Zhuhai Maritime Safety Administration Center.) to the time of the unloading at 18:00 on July 7. Therefore, the demurrage time is 12.125 days (calculation method: 24.625–6-1.50–5 = 12.125). The demurrage fee totalled 121,250 yuan. The Defendant Jinlongchang Company has already paid a demurrage fee of 40,000 yuan and shall also pay 81,250 yuan. The Defendant Jinlongchang Company shall pay the Plaintiff’s demurrage fee of 81,250 yuan for the time of the overdue use of the ship according to the contract. Since the parties did not agree on the payment time of the demurrage fee, according to Article 62 Paragraph 4

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of the Contract Law of the People’s Republic of China “the creditor may demand the fulfilment at any time while giving the debtor necessary time to make preparations.” The day on which the court served the Defendant Jinlongchang Company with a copy of a statement of complaint, namely, November 9, 2016, was the time required for the Defendant to fulfil its obligations. The necessary time for preparation was 2 days and the interest shall be calculated from November 12, 2016. CHEN Jinping sent the “Settlement Confirmation document” to the Plaintiff which did not indicate that CHEN Jinping shall be jointly and severally liable for the entire debt under the voyage charter party in this case. The contents of the “Settlement Confirmation document” regarding the payment obligation only include paying the 40,000 yuan when the goods are unloaded. However, Jinlongchang Company paid 40,000 yuan on July 15, 2016. The Plaintiff requested CHEN Jinping shall be jointly and severally liable for the demurrage fee under the voyage charter party in accordance with the “Settlement Confirmation document”, which is no contractual and legal basis, so the court does not support it. In summary, according to Article 107 and Article 292 of the Contract Law of the People’s Republic of China, the judgment is as follows: 1. Jinlongchang Company shall pay the demurrage fee of 81,250 yuan and interest to the Rizhao Guanshun Logistics Co., Ltd. (from November 12, 2016 to the date of actual payment, according to the same period of the People’s Bank of China loan interest rate); 2. Reject other claims of Rizhao Guanshun Logistics Co., Ltd. The above obligation to payment shall be fulfilled within 10 days from the date of the effective date of the judgment. If the party cannot fulfil the obligation of payment within the period ascertained by this Judgment, then according to Article 253 of the Civil Procedure Law of the People’s Republic of China, the Defendant shall double pay the interest for the delayed period. Court acceptance fee in amount of 3,519.33 yuan, the Plaintiff shall bear 1,742.90 yuan, and the Defendant shall bear 1,676.43 yuan. With the consent of the Plaintiff, the Plaintiff’s pre-paid litigation fee will not be refunded, so the Defendant will pay its share of court fee to the Plaintiff within 10 days from the effective date of the judgment. In case of dissatisfaction with this judgment, the parties shall submit a statement of appeal to the court within 15 days upon the service of this judgment, together with duplicates in accordance with the number of the opposite parties, so as to lodge an appeal to the Guangdong High People’s Court. Presiding Judge: HAN Haibin Judge: LUO Chun People’s Juror: LIU Kangkang March 20, 2017 Clerk: YANG Nian

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Guangdong High People’s Court Civil Judgment Rizhao Guanshun Logistics Co., Ltd. v. Guangdong Jinlongchang International Logistics Co., Ltd. et al. (2017) Yue Min Zhong No.1544 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1027. Cause of Action 212. Dispute over voyage charter party. Headnote Affirming lower court decision holding that plaintiff shipowner was successful in recovering unpaid demurrage from defendant charterer; plaintiff was entitled to delay discharge until payment of freight but that time not to count as demurrage time; rain delays to be calculated in hours and minutes, not whole days. Summary Plaintiff chartered its ship “Anjieli 3” to the first Defendant for a voyage to carry fly ash from Dalian to Jieyang. Later, the arrival port was changed by agreement to Zhuhai. Total allowed laytime (i.e. reversible lay time) was 6 days. Loading at Dalian took 9 days and 21 h; discharge at Zhuhai took 13 days. Discharge in Zhuhai was delayed by 5 days after arrival in berth because the first Defendant had not paid freight or demurrage in relation to the load port. The first Defendant then paid freight but not demurrage. Plaintiff agreed to discharge the cargo after receiving a guarantee from the second Defendant, Chen Jinping, that the goods would be unloaded within 4 days of opening the holds. Discharge actually took 8 days after opening the holds. Plaintiff sued the Defendants, seeking to recover unpaid demurrage. The first instance Court held: (1) total time for loading and discharging was 24.625 days; (2) the agreed lay time of 6 days, and a further 1.5 days for weather delays (rain) should be deducted; (3) although Plaintiff was entitled to delay discharge at Zhuhai until freight had been paid, those 5 days should not count as demurrage; (4) therefore, total demurrage time was 12.125 days (24.625 minus 6 minus 1.5 minus 5). The first Defendant had already paid CNY 40,000 by way of demurrage, so the first instance Court held that it was obliged to pay a further CNY 81,250. The claim against the second Defendant failed. The first Defendant appealed.

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On appeal, the Appellant argued: (1) The voyage charter party stipulated “The irresistible factors caused by the rain and closure of port were excluded from the 6 loading and unloading days.” The time unit to be deducted for rain delays should be the whole day when rain occurred, not minutes or hours. Calculating rain delays by hours and minutes was not in accordance with the terms of the contract or the ordinary experience of daily life; (2) The logbook submitted by the Respondent, which recorded the duration of the rain delays, was not acceptable as proof because it was an unverified copy, and it was a self-made document for self-proof. The appeal Court rejected these arguments and held that the facts confirmed by the Court of first instance were clear and the applicable law was correct. The appeal was dismissed.

Judgment The Appellant (the Defendant of first instance): Guangdong Jinlongchang International Logistics Co., Ltd. Domicile: Room 303, Floor 3, Factory Building No.3-1A, Zhuhai Park, Zhuhai-Macao Cross-border Industrial Zone, Zhuhai City, Guangdong. Legal representative: WANG Qiongying, general manager. Agent ad litem: CHEN Xiaozhi, employee. The Respondent (the Plaintiff of first instance): Rizhao Guanshun Logistics Co., Ltd. Domicile: Foshouwan Bay, Lanshantou Street, Lanshan District, Rizhao City, Shandong. Legal representative: CHEN Youxing, manager. Agent ad litem: LI Jianping, lawyer of Guangdong WANG JING & Co. Shanghai Branch. The Defendant of first instance: CHEN Jinping, male, born on August 12, 1982, Han, living in Quangang District, Quanzhou, Fujian With respect to the case arising from dispute over voyage charter party between the Appellant Guangdong Jinlongchang International Logistics Co., Ltd. (hereinafter referred to as Jinlongchang Company) and the Respondent Rizhao Guanshun Logistics Co., Ltd. (hereinafter referred to as Guanshun Company) and the Defendant of first instance CHEN Jinping, the Appellant refused to accept (2016) Yue 72 Min Chu No. 1023 Civil Judgment by Guangzhou Maritime Court and appealed to the court. After the case was filed on June 29, 2017, the court organized a collegiate panel to try this case in accordance with law. Agent ad litem of Jinlongchang Company, CHEN Xiaozhi, and agent ad litem of Guanshun Company, LI Jianping, attended the second-instance court investigation. CHEN Jinping did not appear in court under the legal summon of the court. Now the case has been concluded.

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Jinlongchang Company’s appeal requests are as follows: the item one of the first-instance judgment should be revoked according to law and Guanshun Company shall assume the first and second-instance litigation costs of the case. Facts and reasons: the first-instance judgment found that the facts were unclear and the applicable law was wrong. 1. The voyage charter party involved in this case stipulated “the irresistible factors caused by the rain and closure of port are excluded from the 6 loading and unloading days.” The time unit shall be “day” instead of “minute” or “hour”. The object of loading and unloading in this case is a large amount of bulk fly ash. Calculating the rainy days by “minute and hour” is not in accordance with the terms of the contract, nor does it meet the natural laws of ship loading and the rule of thumb of the daily life. 2. Logbook submitted by Guanshun Company was a copy of the original which was unverified by Jinlongchang Company and it was a self-made document for self-proof. In contrast, the official meteorological records provided by the meteorological bureaus in Dalian and Zhuhai were more convinced that the above-mentioned Logbook provided by Guanshun Company. However, the first-instance court adopted the contents of Logbook, which had no legal basis. 3. The “Settlement Confirmation document” was an agreement between Guanshun Company and Jinlongchang Company on the unloading period and responsibility under the condition of the force majeure, such as “rainy days” and Jinlongchang Company has paid the corresponding money to Guanshun Company in full in accordance with the terms of “Settlement Confirmation document”. Therefore, Jinlongchang Company did not have any breach of contract and did not owe any money to Guanshun Company. Guanshun Company argued that the facts of the first-instance judgment were clearly identified and the law was applied correctly and shall be affirmed. 1. the counting unit “day” is inconsistent with the facts. In the shipping practice, during the 24-h period, it rained occasionally and the cargo can still be unloaded during the rainy interval. The shipping will not stop due to rain, so the calculation unit “minute and hour” is more objective. 2. Logbook is a record by the crew, especially the crew manager, according to the real situation and Guanshun Company has submitted the original evidence of Logbook to the first-instance court after the trial. The judges of first-instance judgement checked it according to the law. However, the official meteorological record is just an estimation of possible rain in the entire area but not the proof of actual weather. Therefore, the first-instance court accepted the contents of Logbook as a legal and reasonable evidence. 3. The “Settlement Confirmation document” is a supplementary agreement for the voyage charter party, which is a conditional guarantee clause and it does not change the terms of original main contract. Since the actual unloading time exceeded the agreed date of 4 days, the rights and obligations of both parties shall still be subject to the voyage charter party. The first-instance court confirmed that Guanshun Company exercised the lien upon it from July 2 to July 7, which was excluded from the time of demurrage. In this aspect, Guanshun Company may sue separately, but the amount is not large. Therefore, Guanshun Company can also confirm it in this case.

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CHEN Jinping did not submit the opinion. Guanshun Company filed a lawsuit to the first-instance court: 1. Jinlongchang Company and CHEN Jinping shall be jointly and severally liable to pay the demurrage fee of 160,000 yuan and interest (from July 13, 2016 to the day of actual payment, 160,000 yuan as the principal was calculated. According to the People’s Bank of China loan interest rate for the same period, the total interest is 966.67 yuan until August 31, 2016) under the voyage charter party to Guanshun Company; 2. Jinlongchang Company and CHEN Jinping shall bear the litigation expenses. The first-instance court found the facts: in June 2016, Guanshun Company and Jinlongchang Company signed a voyage charter party through the introduction of CHEN Jinping. The contract stipulated that the ship named “Anjieli 3”, the port of loading was Dalian Bay Xingang and the port of arrival was Jieyang Hongdong Wharf; the date of loading on June 14, 2016, the loading and unloading period of the two ports lasted 6 days. The demurrage fee was 10,000 yuan per day. After signing the contract, the shipper pays a deposit of 30,000 yuan to the carrier, and the remaining freight is paid in full after opening the ship holds for inspection in the unloading port. It is appropriate for the shipper shall pay the freight in advance on weekends or holidays. The carrier is entitled to close the ship’s holds without unloading and sell off the cargo for the shipping cost of this voyage. The loading and unloading time is calculated from the time when the ship arrives at the anchorage of loading and unloading port and the time in two ports can be combined. The previous port was congested and other force majeure factors, such as weather and mechanical breakdowns, which caused the delay of ship schedule. The irresistible factors caused by the rain and closure of port are excluded from the 6 loading and unloading days. The carrier guarantees that there is no sundries in the ship’s cabin and the hatch covers have holes that is suitable for the dry powder. If the cargo is damaged, such as leaking in water, during the transportation process, the carrier shall bear the responsibility. The cargo in stock of this voyage is 10,700 ton and the freight rate is 39 yuan per ton. After consultation, the port of arrival was changed into Zhuhai Gaolan Port and the freight rate was changed to 47 yuan per ton. The contract will take effect when the contract is signed and sealed by both parties and the deposit is received. Regarding the boundaries of rights, obligations and the limit of liabilities between the shipper and the carrier, which shall apply to the relevant provisions of the Rules for Waterway Transport and the tariffs. At 12:40 on June 14, 2016, M.V. “Anjieli 3” arrived at the anchorage of Dalian Port. On the same day, the Plaintiff’s employee, Miss Dai, notified CHEN Jinping (the agent of Jinlongchang Company) and port authority of Dalian Port by phone that the ship arrived in Dalian Port. The loading began on June 14. According to the log book of M.V. “Anjieli 3”, the ship sailed from Dalian Port at 10:00 on June 24. At 18:00 on June 30, 2016, M.V. “Anjieli 3” arrived at the anchorage of Zhuhai Gaolan Port. At 18:09 on July 2, M.V. “Anjieli 3” let go starboard anchor. Finished with engine at 18:11 was reported to the Zhuhai Maritime Safety Administration Center. On July 2, Guanshun Company’s employee, Miss Dai, telephoned CHEN Jinping and the Port Authority of Zhuhai port that the ship arrived at Zhuhai Gaolan Port.

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The business letter provided by Guanshun Company for Jinlongchang Company on June 30, 2016 that: our ship arrived at Dalian Anchorage at 12:40 on June 14, 2016 and delivered the cargo and left the berth at 09:00 on June 24th. The loading time was 9 days and 21 h. Our vessel is expected to arrive at Zhuhai Gaolan Port Anchorage at 16:00 on June 29, 2016. It is expected to be unloaded for 3 days. The time of loading and unloading in two ports lasted for 12 days and 21 h excluded from the 6 days of contract loading and unloading time. The demurrage was 6 days and 21 h with demurrage fee of 68,750 yuan. Please pay the freight and demurrage fee of this voyage immediately after the ship is berthed for inspection. Otherwise, our company has the right to stop the unloading and sell off it for the shipping cost of this voyage. The business letter provided by Guanshun Company for Jinlongchang Company on July 5, 2016 that: our ship arrived at Dalian anchorage at 12:40 on June 14, 2016 and delivered the cargo and left the berth at 09:00 on June 24. The loading time was 9 days and 21 h. It is estimated that the time for unloading would be 8 days. The time of loading and unloading in two ports lasted for 17 days and 21 h excluded from the 6 days of contract agreement. The demurrage was 11 days and 21 h with demurrage fee of 118,750 yuan. Guanshun Company requested to pay 60% of the remaining freight. After receiving this payment, it would communicate with the shipowner to open the ship holds for unloading. In addition, 40% of the remaining freight and demurrage shall be paid before 12:00 on July 6. Otherwise, Guanshun Company has the right to close the ship holds without the unloading and sell off it for the shipping cost of the voyage. The business letter provided by Guanshun Company for Jinlongchang Company on July 7, 2016 that: your company refused to pay the freight on the grounds that the money was tight, which forced our ship to close its holds repeatedly. The overdue freight was paid off until yesterday. The practice of your company violated the terms of contract; In the case of a verbal agreement we reached, your company repented again and again. Your company refused to pay the demurrage through a correspondence. Our company has the right to close the ship holds without the unloading and sell off it for the shipping cost of the voyage. Another business letter provided by Guanshun Company for Jinlongchang Company on July 7, 2016 that: your company shall arrange unloading in time and pay the demurrage. If you do not arrange it, your company will automatically waiver the right of taking delivery of goods. The remaining goods when our ship is away from berth would be sold off to offset demurrage and other expenses. The balance would be paid to your side and please cooperate with us. On June 8, 2016, Jinlongchang Company paid Guanshun Company deposit of 30,000 yuan. It paid the freight of 130,000 yuan on July 4, 300,000 yuan on July 5 and 43,299 yuan on July 6 respectively. The above payments are 503,299 yuan in total. On July 7, 2016, CHEN Jinping served the “Settlement Confirmation document” to Guanshun Company, which states: “M.V. ‘Anjieli 3’ NO. 1614 voyage loaded all the cargo within four days when opening the ship holds except the rainy days and the unloading fee is 40,000 yuan. The voyage is over and the two parties are

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exempt from all liabilities. Otherwise, Mr. CHEN Jinping shall be jointly and severally liable for the responsibility.” CHEN Jinping put his fingerprint on this document. Guanshun Company and Jinlongchang Company did not seal in this document and confirm it. In the trial, CHEN Jinping said that the content of “Settlement Confirmation document” was determined after three parties’ discussion via telephone and then sent it to Guanshun Company. At 18:00 on July 7, 2016, M.V. “Anjieli 3” began to unload the cargo and finished the unloading on July 15. At 18:04 on July 15, Jinlongchang Company paid Guanshun Company 40,000 yuan. According to the log book of M.V. “Anjieli 3”, the ship departed from the berth at 06:00 on July 16. The court delivered a copy of a statement of complaint to Jinlongchang Company on November 9, 2016. The facts of the disputes between the parties were as follows: 1. the time when M.V. “Anjieli 3” loaded the cargo in Dalian Port; 2. the “rainy time” in the case; 3. whether M.V. “Anjieli 3” delay or not; 4 whether the two parties change the agreement on the demurrage in the voyage charter party. In terms of controversial evidence and facts, the court has determined as follows: 1. The time when M.V. “Anjieli 3” loaded the cargo in Dalian Port; Guanshun Company believed that the time for loading the goods in Dalian Port was at 09:00 on June 24, 2016. Jinlongchang Company believed that it was the evening of June 23. According to the log book of M.V. “Anjieli 3”, it was departed from Dalian Port at 10:00 on June 24. Based on the circumstances of the case, it was determined that the time for loading the goods in Dalian Port was at 9:00 on June 24, 2016. 2. The “rainy time” in the case; The weather records in the log book is the meteorological phenomenon recorded by the crew in real time. The weather data provided by Jinlongchang Company are not on-site or real-time records from Dalian Meteorological Bureau Archives and Zhuhai Public Meteorological Service Center. Therefore, it is necessary to determine whether it is raining or not based on the logbook records. Although the weather data provided by Jinlongchang Company recorded the precipitation and magnitude, it did not record that it rained all day. According to the log book of M. V. “Anjieli 3”, the rainy weather observed when the ship in Dalian is as follows: it would rain at 22:00 and 24:00 on June 14, 2016; it would rain at 02:00, 04:00, 06:00, and 08:00 on June 15; it would rain at 14:00 and 16:00 on the same day. When the ship was in Zhuhai, the weather forecast showed that it would rain at 14:00, 16:00 and 18:00 on July 4. It would rain at 02:00, 04:00 and 06:00 on July 5 and it would rain at 04:00 and 06:00 on July 10; On July 11, it would rain at 20:00, 22:00 and 24:00; it would rain at 16:00 and 18:00 on July 13. The rainy day in total was observed in 21 times. Because the interval of every observation was 2 hours, the raining time was 42 hours, equivalent to 1.750 days. It was determined that M. V. “Anjieli 3” was during the loading port and the port of discharge and 1.750 days

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was the raining time; Guanshun Company refused to recognize the 1.50 day besides the period of unloading from July 2 to July 7. Guanshun Company’s factual claim that the raining time was 18 hours which was inconsistent with the evidence recorded, so it cannot be established. The irresistible factors, such as the rainy days, caused the failure of loading and unloading that shall be excluded from the time of loading and unloading in accordance with the terms of contract. However, there is no agreement that the rainy weather all day which will not be counted in the loading and unloading time. The goods were unloaded from July 7, 2016 to July 15, 2016, which proves that Jinlongchang Company can still unload the goods during the intervals in above-mentioned raining days. The claim made by Jinlongchang Company that these days cannot be counted in the loading and unloading time because it was raining on June 14, 15, 21, 23, 24, 30 and July 15, so the claim cannot be established. 3. Whether M.V. “Anjieli 3” delayed or not; In the case, the contract stipulated that the loading and unloading time was calculated from the time when the ship arrived at the anchorage of the port of loading and unloading. Therefore, the goods shall be loaded in Dalian Port from 12:40 on June 14, 2016 to 09:00 on June 24 and it can be concluded that it took the port of loading 9 days and 21 hours, or 9.875 days. Both parties advocated that discharging the goods was finished on July 15 in the court. However, Guanshun Company did not know the exact time of unloading the goods. Jinlongchang Company claimed that the time for unloading the goods was the morning of the day. According to the log book of M.V. “Anjieli 3”, it departed from the berth in Zhuhai Gaolan port at 06:00 on July 16. The morning normally refers to the period from 8:00 to 12:00, but neither party provides a record of loading and unloading time. Based on the circumstances of the case, it is determined that the time for unloading is about 12:00 on July 15. The unloading is finished in Zhuhai Gaolan Port from 18:00 on June 30, 2016 to 12:00 on July 15. The port of discharge used 14.75 days. The two ports used a total of 24.625 days. M.V. “Anjieli 3” in this voyage has been deferred. 4. Whether the two parties change the agreement on the demurrage in the voyage charter party. Guanshun Company provided three “Settlement Confirmation documents”. The first “Settlement Confirmation document” was issued by CHEN Jinping who sent it to the Plaintiff. The evidence is the original one and the three parties have confirmed it. The court has adopted the evidence. The content of the second “Settlement Confirmation document” (copy): “the unloading task in M.V. ‘Anjieli 3’ No. 1614 voyage shall be finished within 4 days except the rainy days. The total amount for unloading is 40,000 yuan, which shall be paid off in one time and Mr. CHEN Jinping shall be jointly and severally liable for it. In addition, the Defendant Jinlongchang Company sealed it for the contractual purpose.” The content of third “Settlement Confirmation document” (copy) is the same as the second one and it was sealed by Guanshun Company for the contractual purpose besides the one

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sealed by Jinlongchang Company. When Guanshun Company received the “Settlement Confirmation document” from Jinlongchang Company by fax, it was stamped but not returned. Guanshun Company did not submit the original to check for the last two “Settlement Confirmation documents”. Jinlongchang Company did not approve the evidence. Therefore, the court did not confirm the authenticity of the evidence. CHEN Jinping said that he and Guanshun Company and Jinlongchang Company had reached a consensus on telephone consultation and confirmed in writing, so it can be concluded that the “Settlement Confirmation document” was the common opinion of three parties. According to the above, the contents of the “Settlement Confirmation document” can be recognized as a supplement to the terms of contract. According to Article 78 of the Contract Law of the People’s Republic of China: “A contract shall be assumed as not having been modified if the content of the modification of the contract is not clearly agreed upon by the parties.” The two parties had great controversy over the nature of 40,000 yuan. Guanshun Company claimed that 40,000 yuan was the demurrage fee in Dalian Port. Jinlongchang Company claimed that there was no demurrage in Dalian Port, so the 40,000 yuan did not refer to the demurrage fee in Dalian Port. There was also no indication in the Confirmation document that the original voyage charter party was changed. The claim hold by Defendant Jinlongchang Company that both parties changed the terms of demurrage fee in contract and the demurrage fee of this voyage was 40,000 yuan, which cannot be established. However, in fact, the goods was not unloaded within the time specified in the “Settlement Confirmation document”. Therefore, the conditions to which the agreement applies are not valid. The court believes that this case is about a voyage charter party dispute. The voyage charter party signed between the Plaintiff and the Defendant Jinlongchang Company that was established and valid, so both parties shall perform their obligations according to the contract. It took two ports 24.625 days in total. First of all, the agreed 6-day loading and unloading time and the raining time of 1.50 days were not included in the loading and unloading time. Secondly, although the two parties agreed that Guanshun Company had the right to stop the unloading of the cargo when Jinlongchang Company failed to pay the delivery fee exceeded the time limit, the suspension of the unloading was that Guanshun Company exercised the lien upon the ship. Refusing the ship which does not belong to Jinlongchang Company during the period of unloading. Therefore, the 5 demurrage days were not calculated from the time when M.V. “Anjieli 3” berthing at 18:11 on July 2 (Finished with engine was reported to the Zhuhai Maritime Safety Administration Center.) to the time of the unloading at 18:00 on July 7. Therefore, the demurrage time is 12.125 days (calculation method: 24.625-6-1.50-5 = 12.125). The demurrage fee totalled 121,250 yuan. Jinlongchang Company has already paid a demurrage fee of 40,000 yuan and shall also pay 81,250 yuan. Jinlongchang Company shall pay Guanshun Company’s demurrage fee of 81,250 yuan for the time of the overdue use of the ship according to the contract. Since the parties did not agree on the payment time

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of the demurrage fee, according to Article 62 Paragraph 4 of the Contract Law of the People’s Republic of China “the creditor may demand the fulfilment at any time while giving the debtor necessary time to make preparations.” The day on which the court served Jinlongchang Company with a copy of a statement of complaint, namely, November 9, 2016, was the time required for Jinlongchang Company to fulfil its obligations. The necessary time for preparation was 2 days and the interest shall be calculated from November 12, 2016. CHEN Jinping sent the “Settlement Confirmation document” to Guanshun Company which did not indicate that CHEN Jinping shall be jointly and severally liable for the entire debt under the voyage charter party in this case. The contents of the “Settlement Confirmation document” regarding the payment obligation only include paying the 40,000 yuan when the goods are unloaded. However, Jinlongchang Company paid 40,000 yuan on July 15, 2016. Guanshun Company requested CHEN Jinping shall be jointly and severally liable for the demurrage fee under the voyage charter party in accordance with the “Settlement Confirmation document”, which is no contractual and legal basis, so the court does not support it. In summary, according to Article 107 and Article 292 of the Contract Law of the People’s Republic of China, the judgment is as follows: 1. Jinlongchang Company shall pay the demurrage fee of 81,250 yuan and interest to Guanshun Company (from November 12, 2016 to the date of actual payment, according to the same period of the People’s Bank of China loan interest rate); 2. reject other claims of Guanshun Company. In the second-instance trial, the parties did not submit new evidence. The appeal of Jinlongchang Company only objected to the calculation method of the rainy days judged by the first-instance court and did not object to other facts ascertained in the first-instance judgement. The court confirmed other facts ascertained in the first-instance trial. The court believes that this case belongs to the voyage charter party dispute. The voyage charter party signed between Guanshun Company and Jinlongchang Company is legal and valid, so both parties shall perform their own obligations according to the contract. The issue in this case is: whether Jinlongchang Company shall pay the ship demurrage fee to Guanshun Company. According to the facts ascertained by the first-instance trial, the ship of the case arrived at the anchorage of Dalian Port at 12:40 on June 14, 2016, loaded goods at 09:00 on June 24 and took 9.875 days at the loading port; The ship arrived at the anchorage of Zhuhai Gaolan Port at 18:00 on June 30, 2016, unloaded the cargo at 12:00 on July 15 and took 14.75 days in the port of discharge. In total, it took 24.625 days in the two ports. The loading and unloading time agreed by the two parties in the voyage charter party was only 6 days. The demurrage caused by Guanshun Company was 5 days. After deducting the aforementioned time, there is still a demurrage in this case. Jinlongchang Company advocated that the rain caused the demurrage. However, in terms of the calculating method of rainy days, both parties did not clearly stipulate the calculation unit in the voyage charter party. The meteorological data submitted by Jinlongchang Company only reflects the rainy days and rainfall in Dalian city and Zhuhai City from June to July 2016 but not the

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situation of rain at all times of the day. The meteorological data recorded that some days were only light rain with low rainfall. Jinlongchang Company also advocated that it was not reasonable to deduct it as rainy days. At the same time, the fact that the goods at the unloading port can still be unloaded during the interval of rainy days in this case, which also shows that the goods can still be loaded and unloaded in part of times during rainy days. Therefore, Jinlongchang Company claimed that there is no contractual basis or factual basis for deducting the raining times by day. Therefore, The court does not confirm it. In addition, Logbook is an significant statutory document for ship, which can be regarded as evidence for People’s court to try the case. According to the “Log book” submitted by Guanshun Company, the first-instance court determined that the deducted raining time shall be legal and reasonable. The court confirm it. Jinlongchang Company cannot submit the contrary evidence to overture the validity of Logbook so that is shall bear the legal consequences of the inability to the burden of proof. Accordingly, the actual loading and unloading time of the cargo in this case exceeded the contractual agreement, which caused the fact that the ship was delayed. Therefore, Jinlongchang Company shall pay the demurrage fee of the vessel according to the contract. The first-instance judged that Jinlongchang Company paid the demurrage fee of 81,250 yuan to Guanshun Company. It is appropriate and shall be maintain it. In addition, since the “Settlement Confirmation document” only made an agreement on the unloading of cargo but the settlement of all demurrage fees was not clearly stipulated in it. In addition, the actual unloading time in this case exceeded the four days agreed in the “Settlement Confirmation document”, which was not in conformity with the applicable preconditions for the “Settlement Confirmation document”. Therefore, the appeal of Jinlongchang Company is that it can be exempt from the responsibility for paying the demurrage fee of the ship based on “Settlement Confirmation document”, which has no basis, so the court does not support it. In summary, Jinlongchang Company’s appeal requests are not valid and shall be rejected. The facts confirmed by first-instance judgement are clear and the application of law is correct, which shall be supported. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 1,831.255 yuan, shall be borne by Guangdong Jinlongchang International Logistics Co., Ltd. The judgement is final. Presiding Judge: ZHONG Jianping Judge: LI Mintao Judge: ZHANG Yiyin December 18, 2017 Judge Assistant: LIU Xiaoming Clerk: LAI Hong

Shanghai Maritime Court Civil Judgment Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu 72 Min Chu No.228 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1058. Cause of Action 471.(1) Contest to enforcement by an outsider. Headnote Plaintiff intervener (“outsider”) held successful in laying claim to entire cargo of nickel ore in possession of defendant. Summary The Plaintiff, Shandong Xinhai Technology Co., Ltd. (hereinafter referred to as “Shandong”) filed lawsuit against Lianyungang China Shipping Logistics Co., Ltd. (hereinafter referred to as “China Shipping”) as an outsider objecting to a court’s ruling on the distrainment of 42,400 tons of nickel ore. Shandong had contracted with China Shipping, a freight forwarder for Jiangsu Mingzhu International Trade Co., Ltd. (hereinafter referred to as “Third Party”) for a certain amount of nickel ore located in one of China Shipping’s warehouses. Shandong argued it was for the entire 55,400 tons in the warehouse while China Shipping argued that it was only for the 13,000 tons delivered to Shandong as requested. The court held that, under the terms of the contract, Shandong is the owner of the 55,400 tons of nickel ore. Accordingly, the court withdrew its previous distrainment order on the goods in question.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_54

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Judgment The Plaintiff: Shandong Xinhai Technology Co., Ltd. Domicile: Junan County Economic Development Region, Linyi, Shandong. Legal representative: WANG Wenlong, chairman of the company. Agent ad litem: TAN Jie, lawyer of Shanghai Goodwell Law Firm. Agent ad litem: ZHANG Tao, lawyer of Shanghai Goodwell Law Firm. Defendant: Lianyungang China Shipping Logistics Co., Ltd. Domicile: Lianyun Region, Lianyungang, Jiangsu. Legal representative: LI Jiahua, chairman of the company Agent ad litem: LI Xing, lawyer of HenanWangbin Law Firm. Agent ad litem: MA Dawei, lawyer of Henan Wangbin Law Firm. The Third Party: Jiangsu Mingzhu International Trade Co., Ltd. Domicile: Jiefang South Road, Xuzhou, Jiangsu. Legal representative: LI Guang, general manager of Company. Agent ad litem: WANG Yong, male, born on August 14, 1985, Han, living in Xuzhou, Jiangsu. With respect to the case arising from dispute over contest to enforcement by outsider in the proceeding between the Plaintiff, Shandong Xinhai Technology Co., Ltd. (hereinafter referred to as “Xinhai Company”), the Defendant, Lianyungang China Shipping Logistics Co., Ltd. (hereinafter referred to as “China Shipping Company”), and the Third Party Jiangsu Mingzhu International Trade Co., Ltd. (hereinafter referred to as “Mingzhu Company”), the Plaintiff filed an action to the court on February 10, 2017. The court entertained the case on February 17, 2017 and organized a collegiate panel in accordance with the law on April 25. TAN Jie, agent ad litem of the Plaintiff, LI Xing, agent ad litem of the Defendant, and WANG Yong, agent ad litem of the Third Party, appeared in court and participated in the hearing. The case has been concluded. The Plaintiff alleged that itself and the Third Party signed Contract for Sale and Purchase of Nickel Ore On August 13, 2014, purchased 55,400 tons of lateritic nickel ore (B/L No.IM/UL-XXXXXXXX) to be transported by M.V. Lucky, and stored it in the warehouse of Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. After the Plaintiff paid the full amount of RMBXXXXXXXX according to the contract, the Third Party issued two powers of attorney to the Defendant, informing it that the goods in question had been transferred to the Plaintiff. On February 18, 2016, the Defendant and the Third Party reconciled the agency fees, including the goods in question, to confirm that the Plaintiff bore the responsibility of stockpiling casts in this case after September 22, 2014. The Defendant was told that the Plaintiff actually extracted 13,000 tons of the goods in question. Therefore, the Defendant knew that the ownership of the goods in question belonged to the Plaintiff, but it still applied to the Shanghai Maritime Court for the seizure of the

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remaining 42,400 tons of cargo due to a dispute over a shipping agency contract with the Third Party. On January 4, 2017, the Plaintiff filed an application for property preservation objection to the court, arguing that the seized 42,400 tons of lateritic nickel ore belonged to the Plaintiff and requested the court to withdraw the distrainment measure. The court made a ruling dismissing the Plaintiff’s objections. The Plaintiff argues that they paid the full amount of RMBXXXXXXXX according to Contract for Sale and Purchase of Nickel Ore, and the ownership of the goods had been transferred to the Plaintiff within five working days after payment. The Defendant’s application to the court for a distrainment measure of the goods is wrongly applied for preservation. The Plaintiff requested the court to confirm that the 42,400 tons of nickel laterite are owned by the Plaintiff, to withdraw the distrainment of those goods, and withdraw the total litigation costs. The Defendant proffered the following defenses: they were indicated as delivery goods by the Third Party. The surplus of goods (42,400 tons) was to stay in the yard and remain undelivered. Therefore, the Plaintiff did not actually have ownership of the goods. According to the contract between the Defendant and the Third Party, the Defendant requested the court to rule that the shipping agency fee was RMBXXXXXXX, and that the application to the court for a seal-up was legitimate. At the same time, the goods in question have already generated about 1,400,000 yuan in port charges and has deducted this part of the cost, so the value of the remaining goods is reduced. The Third Party argues that: the Third Party and the Plaintiff signed the contract regarding the sale and purchase of nickel ore on August 13, 2014, and sold 55,400 tons of laterite nickel ore to the Plaintiff. The total price of the goods was RMBXXXXXXXX. After the Plaintiff paid the full payment for the goods, the Plaintiff obtained ownership of the goods. On November 3, 2014 and June 5, 2015, the Third Party issued two separate powers of attorneys to the Defendant to inform it that the goods in question had been transferred to the Plaintiff. The Plaintiff had also asked the Defendant to extract 13,000 tons of the goods. Therefore, the Defendant’s application to the court for distrainment measures is wrongly applied as the shipping agency contract regarding the Defendant and the Third Party. The evidence submitted by the Plaintiff to support its claims as well as the cross-examination opinions of the Defendant and the Third Party along with the determination of the court are as follows: Contract for Sale and Purchase of Nickel Ore, 25 VAT special invoice, and corresponding payment voucher, to prove that the Third Party sold the goods involved to the Plaintiff, and the Plaintiff paid the purchase price according to the contract and obtained ownership of the goods in question. The Defendant had no objection to the authenticity of the invoice and held that the evidence had no relevance to the case. The Defendant had objection to the authenticity of the contract, since the contract did not seal Mingzhu Company. Further, the fax did not show the fax number in the contract. Even if the contract was authentic and effective, it cannot prove that the ownership of the goods has been transferred to the Plaintiff. The Third Party had no objection to this evidence, and it confirmed that it had signed Contract for the Sale and Purchase of Nickel Ore with the Plaintiff, and

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the Plaintiff had also paid the full payment for the goods. The court holds that Contract for the Sale and Purchase of Nickel Ore was confirmed by the Plaintiff and the Third Party. Further, the total payment of goods was paid by the Plaintiff. Objectively, the content of the contract for the sale, purchase, and invoice agreed with the payment’s subject, amount, and time of the invoice and payment. The facts can be confirmed. The court affirms the effectiveness and probative force thereof. The transfer of ownership of goods will be comprehensively explained below. Two powers of attorney and a statement of account, proving that the Third Party issued power of attorney to the Defendant twice on November 3, 2014 and June 5, 2015 and informed the Third Party that the ownership of the goods involved had been transferred to the Plaintiff. In February 2016, the Defendant and the Third Party checked up on the account, including the goods in the cases, and made clear that the Plaintiff should bear the stockpiling costs of the goods involved after September 22, 2014. The Defendant knew that the ownership of the goods had been transferred to the Plaintiff. The Defendant did not confirm the two powers of attorney and had no objection to the authenticity of the statement of account, but it argues that the letter of check-up had no recordation that the ownership of goods had been transferred to the Plaintiff. The cost of stockpiling by the Plaintiff was only the promise between the Third Party and the Defendant. The Third Party confirms the fact that the power of attorney was sent to the Defendant salesman by fax and e-mail and that a check-up account existed. The court holds that the Plaintiff, the Defendant, and the Third Party had no objection to the statement of account to affirm the effectiveness. Although the Defendant denied the fact of receiving two powers of attorney, the combination of the statements of account records, the agency agreement between the Defendant and the Third Party, and the power of attorney, received by the Defendant when the goods involved were transferred from Jiangsu Deli Metal Minerals Co., Ltd. to a Third Party. The court, therefore, affirms the authenticity of the power of attorney. The Defendant should know the content of the power of attorney. Therefore, the court affirms the effectiveness the above evidence. Delivery detail and extraction of goods notification, proving that the Defendant released 13,000 tons of goods involved to the Plaintiff according to the notice of delivery. The Defendant had no objection to the authenticity of this evidence but argues that the Defendant delivered the goods because of the Third Party indication. The Third Party had no objection to this evidence and argues that it had issued a power of attorney to the Defendant, the specific delivery matters relating to business operations between the Plaintiff and the Defendant. The court holds that the parties had no objections to the fact that 13,000 tons of goods were provided by the Plaintiff, so, the court affirms the effectiveness of the above evidence. Extraction of goods notification on January 3, 2017, proving that the Plaintiff was refused by the Defendant when continuing to take delivery goods. The Defendant denied this notification but had no objection to the fact about the Plaintiff’s request to take delivery of the goods. The Third Party had no objection to this evidence. The court holds that the goods involved have been applied by the Defendant at this point, preservation and seal by the court. Therefore, the court

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affirms the fact that the Plaintiff was refused when requesting to take delivery of the goods. An October 19, 2015 bank slip, proving that the Plaintiff paid a portion of stockpiling costs (500,000 yuan) to the Defendant. The Defendant had no objection to the authenticity of this evidence but argues that the costs were paid by the Plaintiff for the Third Party. The Third Party had no objection to this evidence and denies that the costs were paid by the Plaintiff for the Third Party. The court holds that: the Defendant had no objection to the fact that the Plaintiff paid the stockpiling costs (500,000 yuan) to the Defendant. The Defendant had no evidence to prove that the costs were paid by the Plaintiff for the Third Party, and the Third Party also denies the fact. According to the letter regarding the checked up account comment records, the Defendant had no objection to the fact that the Plaintiff paid stockpiling costs after September 22, 2014, and reduced 500,000 yuan from the Plaintiff’s payment. Therefore, the court affirms the effectiveness the above evidence. The application of preservation objective and (2016) Hu 72 Min Chu No. 2940 Civil Ruling in Shanghai Maritime Court, proving that the Plaintiff applied to the court to withdraw the distrainment of the goods involved, but the court made a ruling which dismissed the application. The Defendant and the Third Party had no objection to the authenticity of this evidence. Therefore, the court affirms the effectiveness the above evidence. The price of Indonesian laterite nickel mine from “My Steel” website on February 18, 2016, on April 25, 2016, on November 22, 2016, and on January 3, 2017. This is offered to prove that the value of the distrainment goods is far more than the shipping agency costs by the Defendant to the Third Party. After the court, the Defendant, and the Third Party had no objection to the authenticity of the price information, the Defendant, nonetheless, argued that there is no excess preservation after the value of the goods involved was deducted from the stockpiling costs. The Plaintiff, the Defendant, and the Third Party had no objection to the price information. The court affirms the authenticity of the price information. Evidence materials provided by the Defendant to support its allegations. The Plaintiff’s and the Third Party’s cross-examination of the Defendant’s evidence as well as the determination of the court are as follows: The bill of lading and translation, delivery order, outbound order, and the power of attorney, proving that the Third Party had the ownership of the goods involved, and the Defendant was the agent for the port business of the goods involved. The Plaintiff had no objection to this evidence but argues that the ownership of goods involved had been transferred to the Plaintiff five working days after the payment was settled. Therefore, the court affirms the effectiveness the above evidence. The agent agreement and supplement agreement signed between the Third Party and the Defendant, proving that the relationship of the agent contract between the Defendant and the Third Party, and the various matters of goods involved was an act of agency by the Defendant in port. It is not feasible for third parties to change the ownership of goods involved in accordance with the above agreement. The Plaintiff had no objection to the authenticity of the agent agreement, and the Defendant’s agency matters, but argues that the agreement on the disbursement and

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settlement of costs between the parties to the agreement did not affect the flow of the ownership of goods and the goods involved can be traded by the commissioning party. The Plaintiff had objection to the authenticity and relevance of the supplement agreement and argues that the supplement agreement lacks the signature of the Defendant, and the contents of the agreement did not involve the question of the ownership of the goods involved. The Third Party confirmed that it signed the agent agreement and supplement agreement between the Third Party and the Defendant. The agreement parties had no objection to the above evidence. Therefore, the court affirms the effectiveness of the above evidence. The Third Party’s payment voucher, e-mail, and attached notice, proving that the Defendant’s release of the goods involved was in accordance with the instructions of the Third Party and was conditional on the payment. Further, the Defendant explicitly told the Third Party to reject delivery of the goods because of the unpaid charge. The Plaintiff and the Third Party had no objection to the payment voucher. However, the Plaintiff argues that there are diverse shipment and numbers of charges between the Defendant and the Third Party. The payment did not prove the mode of operation about how much to pay and how much cargo to include. The Plaintiff and the Third Party denied the receipt of the e-mail and attached notice. The court affirms the effectiveness of the payment voucher. The e-mail and notice had no other evidence to demonstrate, and the Plaintiff and the Third Party did not approve it, so the court cannot affirm the authenticity. (2016) Hu 72 Min Chu No. 2940 Civil Ruling in Shanghai Maritime Court, proving that the Third Party did not to pay the agent fee of the Defendant RMBXXXXXXX. The Plaintiff and the Third Party had no objection to this. Therefore, the court affirms the effectiveness of the above evidence. The single ship operation contract, proving that according to the agreement between the Defendant and the Donglian Port Branch Company on the stockpiling of agent goods fees, and the stockpiling costs of goods involved was RMBXXXXXXXX. After deducting the costs, the value of the goods involved may not be enough to pay the freight forwarding fees owed by the Third Party. The Plaintiff had no objective to the authenticity of this evidence. The court argues that the contract is sealed by both parties, and the Plaintiff and the Third Party have no objection. Therefore, the court affirms the effectiveness of the above evidence. The Third Party did not provide evidence. After cross-examination, combined with investigation in the trial, the court finds the facts as follows: On November 3, 2016, the Defendant applied to the Shanghai Maritime Court for preservation due to a dispute over a shipping agency contract with the Third Party, and request to seal-up 42,400 tons of lateritic nickel ore which was stored in Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch company warehouse. The court made a ruling to allow application and service of a document to the Donglian Port Branch company on November 23 which sealed up the goods involved. On November 3, 2016, the Defendant initiated an action in court to request that the Third Party pay agent costs RMBXXXXXXX and interest. In addition to “M.V. JIXIANG” goods involved, this cost includes the costs of other

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goods it represents for the Third Party. On December 20, 2016, the court made (2016) Hu 72 Min Chu No.2940 Civil Ruling to the Third Party that it should to pay agent costs for the Defendant at RMBXXXXXXX and interest. On January 4, 2017, the Plaintiff applied for preservation objection on the grounds of ownership to the 42,400 tons of lateritic nickel ore. On January 10, 2017, the court made (2016) Hu 72 Min Chu No. 2940 Civil Ruling to dismiss the objection. On February 10, 2017, the Plaintiff provided the outsider execution objection proceeding to the court. After case filing investigation, the court issued its decision of case-filing on February 17, 2017. In addition, the Plaintiff and the Third Party signed the contract for the sale and purchase of nickel ore on August 13, 2014, purchasing 55,400 tons of lateritic nickel ore (B/L No.IM/UL-XXXXXXXX) transported by M.V. Lucky and stored in the warehouse of Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. The contract also stipulated that the goods shall be referred by the buyer and the seller shall assist in the handling of the transportation and the withdrawal of the goods, and the relevant transportation charges shall be borne by the buyer. After the signing of the contract within 40 days, the buyer completes delivery of the goods. The buyer shall bear the cost of the deposit incurred for more than 40 days, and will directly settle with the freight forwarding China Shipping Company; after receiving the full payment, the seller should transfer the right of goods of the corresponding value to the buyer within five working days. If the buyer does not pay the seller or fails to pay the full payment, even if the buyer had been received or had been take delivery of the goods, the ownership of the unpaid part of the goods still belongs to the seller; after the seller receives payment from the buyer, the seller bears all losses, including stockpiling costs that the seller cannot transfer the right of goods to the buyer on time. On the day of signing the contract, the Plaintiff paid a deposit of 6,000,000 yuan to the Third Party. By September 19, 2014, the Plaintiff paid a total of RMBXXXXXXXX, and the Third Party issued a special value-added tax invoice to the Plaintiff. On November 3, 2014 and on June 5, 2015, the Third Party issued the same power of attorney. It stated that the 55,400 tons of lateritic nickel ore from “M.V. JIXIANG” was transferred to Xinhai Company for the car transportation and the deadline on September 22, 2014. The transfer of trains or steamer ships, the increased transportation fees overdue, poundage fees, and storage fees, etc., shall be settled by Xinhai Company directly with the freight forwarding company or the port. On September 23, 2015 and on December 9, 2015, the Third Party paid the freight forwarding fees of 1,500,000 yuan to the Defendant. On October 19, 2015, the Plaintiff contacted the Defendant, and after paying the stockpiling costs of goods involved of RMB 500,000, the Plaintiff took delivery of 13,000 tons of goods from the yard. On February, 2016, the Defendant checked with the Third Party about the business accounts between the two parties. The Defendant made the statement of account and sealed it and sent it to the Third Party. The statement of account was sealed by the Third Party to confirm. According to the statement of account, the agency fee owed by the Third Party for the goods involved was

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RMBXXXXXXX. The remarks column of the statement of account also stated that verbal agreement by our company, Jiangsu Mingzhu, Shandong Xinhai, and the port, after July 5, 2014, stockpiling fees generated by 0.12 yuan/ton day computing, stockpiling costs to dock the actual costs incurred for the final settlement basis. After September 22, 2014, the stockpiling costs were paid by Shandong Xinhai, as of February 18, 2016, stocks of 42,400 tons were generated, resulting in a stockpiling cost of 2,820,000 yuan (3,320,000 yuan minus 500,000 yuan, calculated at 0.12 yuan/ton-day). In January 2017, when the Plaintiff continued to contact the Defendant for delivery, the Plaintiff was refused and was informed that the goods in question had been preserved and sealed-up by the court. It was also found that the consignee represented by the bill of lading in question in the shipment was Jiangsu Huihong International Group Zhongding Holdings Co., Ltd. The company directed the Defendant to deliver the goods in question to Jiangsu Deli Metal Minerals Co., Ltd. by outbound order. The outbound order states that all fees under the goods were borne by Jiangsu Deli Metal Minerals Co., Ltd. After the Defendant received the power of attorney issued by Jiangsu Deli Metal Minerals Co., Ltd. on June 5, 2015, it informed that the goods involved had been transferred to the Third Party. On November, 2013, the Third Party and the Defendant signed the agent agreement and supplement agreement from Lianyun port and Tianjin Port to import bulk nickel ore. According to the agent agreement, the consignor shall affirm the delivery order and the right of goods to the consignee in writing, generally using the signed fax form, accompanying the sample format and the authorized signatory. The supplement agreement also specified the agency’s freight ship, including “M.V. JIXIANG” in question. In accordance with the above agreement, the goods in question were imported by the Defendant. In order to complete the entrusted matters, the Defendant also signed, with “M.V. JIXIANG”, the single ship operation contract with Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch is responsible for the unloading and storage of the goods in question. The court holds that after the court dismissed the Plaintiff’s disputes regarding the property attachment based on substantive rights, the Plaintiff requested the court to confirm ownership of the goods involved in the execution of the court as an outside entity. Further, it requests the court to withdraw the distrainment measure. Therefore, this case is a dispute over an outsider execution objection proceeding. In accordance with Article 102 of the Civil Procedure Law of the People’s Republic of China, the preservation is limited to the scope of the request, or the property related to the case, meaning that the preservation of property should be limited to the property that the Defendant should bear the substantive responsibility or the property of the parties in dispute. In this case, the Defendant applied for court preservation due to a dispute over a maritime freight agent contract with the Third Party, and the purpose was to guarantee the enforcement of the legally effective judgement, rather than having the two parties dispute the goods in question. Therefore, the prerequisite is correct that preservation is the goods in question without the outsider property. At the same time, where the goods in question are an indefinite thing, the value of the preserved goods shall be limited to the amount of

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the liquidated claims and shall not be subject to substantial proofs. Therefore, the key is the ownership of the goods in question and whether it was to be transferred to the Plaintiff. In a case where the ownership of the goods has been transferred to the Plaintiff when taking preserved measure, the court should support the Plaintiff to object, and withdraw the preserved measure. Conversely, the court should not support the Plaintiff to object. Regarding the transfer of ownership, the Plaintiff argued that it has paid full payment as buyer in accordance with the nickel ore sale contract, and the ownership of goods should be transferred to the Plaintiff within five working days. According to the records of the Plaintiff’s account of the storage charge after September 22, 2014, the Plaintiff obtained the ownership of the goods in question on September 22, 2014. The Third Party argued that the Plaintiff has paid payment in full, and the ownership of goods had been transferred to the Plaintiff after the Third Party received the payment in five days. The Third Party informed the Defendant of the transfer of ownership via the power of attorney. The Defendant argued that the ownership of goods has been transferred according to delivery, the Plaintiff did not actually extract the remaining 42,400 tons of goods and the delivery was not completed. The Plaintiff did not obtain confirmation of the Defendant’s transfer of ownership of the goods; the Plaintiff and the Defendant also failed to enter into an agency agreement for the goods in question in accordance with the trading custom. Therefore, this case is not deemed to be delivered. The court argued that the ownership of goods has been transferred to Plaintiff according to finding of facts when the court takes preserved measures to the goods in question. As follows: First of all, the nickel ore sale contract is the genuine intention expressed both by the Plaintiff and the Third Party. Lawfully established contracts are legally binding, genuine, and effective. After both parties issued the contract, the Plaintiff paid the payment of goods and the Third Party should transfer the ownership of goods to the Plaintiff. The Defendant is not a party to the contract, but only a freight forwarder for the goods involved. There is also no requirement for the transfer of ownership of nickel ore sale contract to be confirmed by third parties. Both parties had no objection to the transfer of ownership of goods in question; all argued that the ownership of the goods had been transferred. Therefore, the court does not support the Defendant’s argument that the Plaintiff should obtain the confirmation of the transfer of ownership of the goods without facts and legislative authority. Secondly, the nickel ore sale contract appoints that the goods in port have been piled up in the cargo yard of Lianyungang, and the buyer is responsible for picking up and transportation; the seller assists with transportation and delivery of the goods; the seller transfers the right of goods of the corresponding value to the buyer within five working days after receiving the full payment. After receiving the buyer’s payment, if the seller cannot transfer the right to the buyer on time, this results in all losses such as the accumulation of the cost to be borne by the seller. How to understand the agreement of transfer of the right of delivery of corresponding values to buyers within five working days. Overall, the content of the contract is an agreement about the seller’s contractual obligations. After the seller receives the full payment, it must ensure their right to dispose of the goods to the

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buyer of goods from Third Party claiming rights. Due to the goods in question remaining in the Third Party warehouses, the seller should give appropriate instructions for delivery and negotiate with the freight forwarder to make arrangements for the storage costs, making the connection between the sales contract and the freight forwarding contract. The cost is clear and the parties can confirm the costs, so the goods in question are in the deliverable state. The buyer can pick up the goods from the stockpile in accordance with the usual process. The Third Party issued a power of attorney to the Defendant to inform the transfer of goods to the Plaintiff and made it clear that the deadline was on September 22, 2014. As a result, both the Plaintiff and the Third Party are further clear about the burden on the stockpiling of goods. The Third Party also reconciled with the Defendant. The Defendant confirmed that September 22, 2014 was the finished date. The cost before that date was borne by the Third Party. The subsequent expenses were borne by the Plaintiff. The Third Party’s behaviour is to perform its obligations under the contract. Although the Defendant did not confirm the receipt of the power of attorney, the Defendant should know the fact that it actually delivered part of the goods to the Plaintiff, received the Plaintiff’s payment for the cost of 500,000 yuan, and recorded the reconciliation letter. The content of the power of attorney, that is, the goods in question, shall be delivered to the Plaintiff. Due to the Third Party defaulting on the agency fees and other agency goods expenses incurred before September 22, 2014, the Defendant no longer continued to deliver the remaining goods in question according to the instructions of the Third Party. Therefore, in accordance with the nickel ore sale contract, the seller bore all the losses that the failure of the seller to transfer all losses resulting from the transfer of the corresponding cargo rights to the buyer on time. The Plaintiff may assert against the Third Party that the loss occurred due to the Third Party's failure to collect the goods. However, the Third Party’s agency fees for arrears of the goods in question do not affect the legal ownership of the goods. Finally, although the goods in question were not physically transferred, they can be deemed to be lawfully delivered. The Plaintiff obtained the ownership of goods in question. Delivery generally refers to the actual delivery, but the law also recognizes special delivery forms to replace actual delivery. In accordance with Article 26 of the Property Law of the People's Republic of China, before the real right of movable property is established or transferred, and Third Party has legally possessed the movable property, the person bearing the obligation of delivery may request the Third Party to return the rights over the original object by means of transfer to substitutive delivery. In accordance with the agent agreement and supplement agreement signed between the Third Party and the Defendant, and the single ship operation contract between the Defendant and Donglian Port Branch Company, the goods in question are actually legally occupied by the Defendant. At the time of the signing of the nickel mine sale contract, both parties of the contract already knew that the goods were stored in the warehouse of the Donglian Port Branch, and it was agreed that the Plaintiff would pick it up by itself. The relevant expenses were settled directly by the Plaintiff and the Defendant. When the contract was performed, the Third Party made an instruction to the Defendant for delivery to

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the Plaintiff. The Defendant also delivered part of the goods to the Plaintiff. In conclusion, the Third Party replaced the actual delivery by transferring the right of delivery of the goods in question to the Plaintiff. The Defendant knew this and released the goods according to the instructions. Further, even if the Defendant failed to recognize it, it will not affect the legal transfer of ownership of the goods in question. Therefore, the court supports the Plaintiff’s argument that the ownership of goods in question belonged to the Plaintiff, within facts and legislative authority. In conclusion, the 42,400 tons of lateritic nickel ore cargo involved was owned by the Plaintiff, and the Defendant did not provide effective evidence to prove that the Defendant had factual and legislative authority to support the application. The Plaintiff has in fact enough rights to exclude enforcement of the goods involved. The Defendant applied to distrain the Plaintiff’s goods in accordance with the creditor’s rights to the Third Party, and for the court to withdraw the distrainment measure. Excess preservation issues in the Plaintiff’s claims, due to the withdrawal of the distrainment measures and confirmation to the ownership of the goods in question, necessitates that no action is required. Therefore, in accordance with Article 133 of the Contract Law of the People’s Republic of China, Article 23 and Article 26 of the Property Law of the People’s Republic of China, Article 102 and Article 227 of the Civil Procedure Law of the People’s Republic of China, Article 27 Paragraph 1 of the Provisions of the Supreme People’s Court on Several Issues concerning the Handling of Property Preservation Cases by People’s Courts, and Article 312 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The 42,400 tons of lateritic nickel ore in the warehouse of Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch Company has belonged to the Plaintiff Shandong Xinhai Technology Co., Ltd. 2. (2016) Hu 72 Min Chu No. 2940 Civil Ruling of Shanghai Maritime Court is automatically withdrawn when this judgment comes into force, together with withdrawal of the preservation measure for above goods. Court acceptance fee in amount of 105,752 yuan, the Defendant, Lianyungang China Shipping Logistics Co., Ltd., shall bear all of the fee. In event of dissatisfaction with this judgment, the Plaintiff, Shandong Xinhai Technology Co., Ltd., and the Defendant, Lianyungang China Shipping Logistics Co., Ltd., within fifteen days upon service of this judgment, shall submit a statement of appeal, together with duplicates in terms of the number of other parties, so as to lodge an appeal to the Shanghai High People’s Court. Presiding Judge: SHEN Jun Acting Judge: QIU Hao People’s Juror: LI Youwen June 1, 2017 Clerk: SUN Hai

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Shanghai High People’s Court Civil Judgment Shandong Xinhai Technology Co., Ltd. v. Lianyungang China Shipping Logistics Co., Ltd. et al. (2017) Hu Min Zhong No.298 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1047. Cause of Action 471.(1) Contest to enforcement by an outsider. Headnote Affirming lower court decision holding plaintiff intervener (“outsider”) to be successful in laying claim to entire cargo of nickel ore in possession of defendant. Summary Plaintiff, Shangdong Xinhai Technology Co. (hereinafter “Shangdong”) filed suit against Lianyungang China Shipping (hereinafter “China Shipping”) as an outsider objecting to a court’s ruling on the distrainment of 42,400 tons of nickel ore. Shangdong had contracted with China Shipping, a freight forwarder for Jiangsu Mingzhu International Trade (hereinafter “Third Party”) for a certain amount of nickel ore located in one of China Shipping’s warehouses. Shangdong argues it was for the entire 55,400 tons in the warehouse while China Shipping argues that it was only for the 13,000 tons delivered to Shangdong as requested. The court, however, held that, under the terms of the contract, Shangdong is the owner of the 55,400 tons of nickel ore. Accordingly, the first instance Court withdrew its previous distrainment order on the goods in question. On appeal, the Court of second-instance affirmed all rulings of the Court of first instance.

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Judgment The Appellant (the Defendant of first instance): Lianyungang China Shipping Logistics Co., Ltd. Domicile: Lianyun Region, Lianyungang, Jiangsu. Legal representative: LI Jiahua, chairman of the company. Agent ad litem: LI Xing, lawyer of Henan Wangbin Law Firm. Agent ad litem: MA Dawei, lawyer of Henan Wangbin Law Firm. The Respondent (the Plaintiff of first instance): Shandong Xinhai Technology Co., Ltd. Domicile: Junan County Economic Development Region, Linyi, Shandong. Legal representative: WANG Wenlong, chairman of the company. Agent ad litem: TAN Jie, lawyer of Shanghai Goodwell Law Firm. Agent ad litem: XU shanshan, lawyer of Shanghai Goodwell Law Firm. The Respondent (the Third Party of first instance): Jiangsu Mingzhu International Trade Co., Ltd. Domicile: Jiefang South Road, Xuzhou, Jiangsu. Legal representative: LI Guang, general manager of the company. With respect to the case arising from dispute over contest to enforcement by outsider in the proceeding between the Appellant, Lianyungang China Shipping Logistics Co., Ltd. (hereinafter referred to as “China Shipping Company”), the Respondent, Shandong Xinhai Technology Co., Ltd. (hereinafter referred to as “Xinhai Company”), and the Respondent, Jiangsu Mingzhu International Trade Co., Ltd. (hereinafter referred to as “Mingzhu Company”), the Appellant was not satisfied with (2017) Hu 72 Min Chu No. 228 Civil Judgment made by the Shanghai Maritime Court, and lodged an appeal to the court. After entertaining the case on September 5, 2017, the court organized a collegiate panel and held a hearing in public on October 23, 2017. LI Xing and MA Dawei, agents ad litem of China Shipping Company, and TAN Jie, agent ad litem of Xinhai Company, appeared in court. The Respondent Mingzhu Company did not appear at court after participating in the previous proceeding. The case has been concluded. In the first instance, Xinhai Company alleged that itself and Mingzhu Company signed the contract for sale and purchase of nickel ore on August 13, 2014, purchasing 55,400 tons of lateritic nickel ore (B/L No. IM/UL-XXXXXXXX) transported by M.V. Lucky and stored in the warehouse of Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. After Xinhai Company paid the full amount of RMBXXXXXXXX according to the contract, Mingzhu Company issued two powers of attorney to China Shipping Company, informing them that the goods in question had been transferred to Xinhai Company. On February 18, 2016, China Shipping Company and Mingzhu Company reconciled the agency fees, including the goods in question, to confirm that Xinhai Company bear the costs of stockpiling

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casts in this case after September 22, 2014. China Shipping Company was told that Xinhai Company actually extracted 13,000 tons of the goods in question. Therefore, China Shipping Company knew that the ownership of the goods in question belonged to Xinhai Company, but it still applied to the Shanghai Maritime Court for the seizure of the remaining 42,400 tons of cargo due to a dispute over a shipping agency contract with Mingzhu Company. On January 4, 2017, Xinhai Company filed an application for property preservation objection to the court, arguing that the seized 42,400 tons of lateritic nickel ore belonged to Xinhai Company and requested the court to withdraw the distrainment measure. Shanghai Maritime court made a ruling which dismissed the objection. Xinhai Company argues that they paid the full amount of RMBXXXXXXXX according to the contract for sale and purchase of nickel ore, and the ownership of the goods has been transferred to Xinhai Company within five working days after payment. China Shipping Company’s application to the court for distrainment measure of the goods is incorrectly applied. Xinhai Company requested the court to rule and confirm the goods in question, 42,400 tons of nickel laterite, are owned by Xinhai Company, to withdraw the distrainment of goods in question, 42,400 tons of nickel laterite ore, and have China Shipping bear the total litigation costs. China Shipping Company proffered the following defences in the first instance: they were indicated delivery goods in question by Mingzhu Company. The surplus of goods (42,400 tons) remained in the yard and were not actually delivered. Therefore, Xinhai Company has no ownership of the goods. According to the contract between China Shipping Company and Mingzhu Company, China Shipping Company requested the court to rule that the shipping agency fee is RMBXXXXXXX, and the application to the court for seal-up is legitimate. At the same time, the goods in question have already generated about 1,400,000 yuan in port charges, so the value of the remaining goods should be, accordingly, reduced. Mingzhu Company’s submission of written evidence argues that they and Xinhai Company signed the contract for the sale and purchase of nickel ore on August 13, 2014, and sold 55,400 tons of laterite nickel ore to Xinhai Company. The total price of the goods was RMBXXXXXXXX. Xinhai Company had the ownership of goods after paying the full payment for the goods. On November 3, 2014 and June 5, 2015, Mingzhu Company issued two powers of attorney to China Shipping Company to inform them that the goods in question had been transferred to Xinhai Company. Xinhai Company had also informed China Shipping Company to extract 13,000 tons of the goods. Therefore, China Shipping Company’s application to the court for distrainment measure is wrongly applied to the shipping agency contract between China Shipping Company and Mingzhu Company. The Shanghai Maritime Court determined the facts as follows: on November 3, 2016, China Shipping Company applied to the Shanghai Maritime Court for preservation due to a dispute over a shipping agency contract with Mingzhu Company, and to request to seal-up 42,400 tons of lateritic nickel ore which were stored in Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch company warehouse. The court made a ruling to allow application, and service of a document to the Donglian Port Branch company on November 23 and sealed up the goods

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involved. On November 3, 2016, China Shipping Company initiated an action in court to request Mingzhu Company pay the agent costs of RMBXXXXXXX with interest. In addition to “M.V. JIXIANG” goods involved, the relevant costs includes the costs of other goods it represents for Mingzhu Company. On December 20, 2016, the court made (2016) Hu 72 Min Chu No. 2940 Civil Ruling to Mingzhu Company to pay agent costs for China Shipping Company at RMB XXXXXXX with interest. On January 4, 2017, Xinhai Company applied for preservation objection on the grounds that the ownership of the sealed up 42,400 tons of lateritic nickel ore is improperly applied. On January 10, 2017, the court made (2016) Hu 72 Min Chu No. 2940 Civil Ruling to dismiss the objection. On February 10, 2017, Xinhai Company provided the outsider execution objection proceeding to the court. After a case filing investigation, the court rendered its decision of case-filing on February 17, 2017. In addition, Xinhai Company and Mingzhu Company signed the contract for the sale and purchase of nickel ore on August 13, 2014, purchasing 55,400 tons of lateritic nickel ore (B/L No. IM/UL-XXXXXXXX) transported by M.V. Lucky and stored in the warehouse of Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. The contract also stipulated that the goods shall be referred by the buyer, and the seller shall assist in the handling of the transportation and the withdrawal of the goods, and the relevant transportation charges shall be borne by the buyer. After signing the contract and within 40 days of arrival, the buyer will complete delivery of the goods. The buyer shall bear the cost of the deposit incurred for more than 40 days, and will directly settle with the freight forwarding China Shipping Company. After receiving the full payment, the seller should transfer the right of goods of the corresponding value to the buyer within five working days. If the buyer does not pay the seller or fails to pay the full payment, even if the buyer had been received or had taken delivery of the goods, the ownership of the unpaid part of the goods will still belong to the seller; after the seller receives payment from the buyer, the seller bears all losses, including stockpiling costs, if the seller cannot transfer the right of goods to the buyer on time. On the day of signing the contract, Xinhai Company paid a deposit of 6,000,000 yuan to Mingzhu Company. By September 19, 2014, Xinhai Company paid a total of RMBXXXXXXXX, and Mingzhu Company issued a special value-added tax invoice to Xinhai Company. On November 3, 2014 and on June 5, 2015, Mingzhu Company issued the same power of attorney. It stated that the 55,400 tons of lateritic nickel ore from “M.V. JIXIANG” was transferred to Xinhai Company for the car transportation and the deadline on September 22, 2014. The transfer of trains or steamer ships, the increased transportation fees, poundage fees, and overdue storage fees, etc., shall be settled by Xinhai Company directly with the freight forwarding company or the port. On September 23, 2015 and on December 9, 2015, Mingzhu Company paid the freight forwarding fees of 1,500,000 yuan to China Shipping Company. On October 19, 2015, Xinhai Company contacted China Shipping Company, and after paying the stockpiling costs of the goods involved, 500,000 yuan, Xinhai Company took delivery of 13,000 tons of goods from the yard. On February, 2016, Xinhai

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Company checked with Mingzhu Company about the business accounts between the two parties. Xinhai Company made the statement of account and sealed it and sent it to Mingzhu Company. The statement of account was sealed by Mingzhu Company to confirm. According to the statement of account, the agency fee owed by Mingzhu Company for the goods involved was RMBXXXXXXX. The remarks column of the statement of account also stated that verbal agreement by our company, Jiangsu Mingzhu, Shandong Xinhai, and the port, after July 5, 2014, stockpiling fees generated by 0.12 yuan/ton day computing, stockpiling costs to dock the actual costs incurred for the final settlement basis. After September 22, 2014, the stockpiling costs were paid by Shandong Xinhai. As of February 18, 2016, stocks of 42,400 tons were generated, resulting in stockpiling costs of 2,820,000 yuan (3,320,000 yuan minus 500,000 yuan, calculated at 0.12 yuan/ ton-day). On January, 2017, when Xinhai Company continued to contact China Shipping Company for delivery, Xinhai Company was refused and was informed that the goods in question had been preserved and sealed-up by the court. It was also found that the consignee represented by the bill of lading in question in the shipment was Jiangsu Huihong International Group Zhongding Holdings Co., Ltd. The company directed China Shipping Company to deliver the goods in question to Jiangsu Deli Metal Minerals Co., Ltd. by outbound order. The outbound order stated that all fees under the goods were borne by Jiangsu Deli Metal Minerals Co., Ltd. After China Shipping Company received the power of attorney issued by Jiangsu Deli Metal Minerals Co., Ltd. on June 5, 2015, it informed that the goods involved had been transferred to Mingzhu Company. On November, 2013, the agent agreement and supplemental agreement was signed between Mingzhu Company and China Shipping Company from Lianyun port and Tianjin Port to import goods, and the goods in question were designated as bulk nickel ore. According to the agent agreement, the consignor shall take the delivery order and the right of goods to the consignee in writing, generally using the signed fax form, accompanying the sample format and the authorized signatory. The supplement agreement also specified the agency’s freight ship, including “M.V. JIXIANG” in question. In accordance with the above agreement, the goods in question were imported by the Defendant. In order to complete the entrusted matters, China Shipping Company also signed “M.V. JIXIANG” the single ship operation contract with Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch is responsible for the unloading and storage of the goods in question. Shanghai Maritime court holds that after the court dismissed the Plaintiff’s disputes on the property attachment based on substantive rights, it is proposed to confirm ownership of the goods involved in the execution of the court as an outsider, and requested the court to withdraw the distrainment measure. Therefore, this case is a dispute over an outsider execution objection proceeding. In accordance with Article 102 of the Civil Procedure Law of the People’s Republic of China, the preservation is limited to the scope of the request, or the property related to the case, meaning that the preservation of property should be limited to the property that China Shipping Company should bear the substantive responsibility or the property of the parties in dispute. In this case, China Shipping

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Company applied for court preservation due to a dispute over a maritime freight agent contract with Mingzhu Company, and the purpose was to guarantee the enforcement by the legally effective judgement, rather than allowing the two parties to dispute the goods in question. Therefore, the prerequisite of correct preservation of the goods in question without the outsider property is satisfied. At the same time, where the goods in question are an indefinite thing, the value of the preserved goods shall be limited to the amount of the liquidated claims and shall not be subject to substantial over proofs. Therefore, the key inquiry here involves the ownership of goods in question and whether they were transferred to Xinhai Company. In the case where the ownership of goods had been transferred to Xinhai Company, the court should support Xinhai Company, and withdraw the preserved measure. Conversely, the court should not support Xinhai Company to object. Regarding the transfer of ownership, Xinhai Company argued that Xinhai Company has paid off and fully paid for the goods as buyer in accordance with the nickel ore sale contract, and the ownership of goods should be transferred to Xinhai Company within five working days. According to the records of Xinhai Company’s account of the storage charge after September 22, 2014, Xinhai Company obtained the ownership of the goods in question on September 22, 2014. Mingzhu Company argued that Xinhai Company has paid payment in full, and the ownership of goods had been transferred to Xinhai Company after Mingzhu Company received the payment in five days. Mingzhu Company informed China Shipping Company of the transfer of ownership by the form in the power of attorney. China Shipping Company argued that the ownership of goods has been transferred according to delivery and Xinhai Company did not actually extract the remaining 42,400 tons of goods and the delivery was not completed. Xinhai Company did not obtain confirmation of China Shipping Company’s transfer of ownership of the goods. Xinhai Company and China Shipping Company also failed to enter into an agency agreement for the goods in question in accordance with the trading custom. Therefore, this case is not deemed to be delivered. Shanghai Maritime Court argued that the ownership of goods has been transferred to Xinhai Company according to the facts and findings relevant to preservation matters. The court determined that: First of all, the nickel ore sale contract is the genuine intention expressed by both Xinhai Company and Mingzhu Company, lawfully established contracts, which are legally binding and genuine and effective. After both parties issued the contract, Xinhai Company paid the payment of goods and Mingzhu Company should transfer the ownership of goods to Xinhai Company. China Shipping Company is not a party to the contract, but only a freight forwarder of the goods involved. There is also no requirement for the transfer of the ownership of nickel ore sales contract to be confirmed by Mingzhu company. Both parties had no objective to the transfer of ownership of goods in question, and all argued that the ownership of goods has been transferred. Therefore, the court does not support China Shipping Company’s argument that Xinhai Company should obtain the confirmation of the transfer of ownership of the goods without facts and legislative authority.

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Secondly, the nickel ore sale contract appoints that the goods in port had been piled up in the cargo yard of Lianyungang, and the buyer is responsible for picking up and transport by the buyer, and the seller is to assist with transportation and delivery of the goods; further, the seller transfers the right of goods of the corresponding value to the buyer within five working days after receiving the full payment. After receiving the buyer’s payment, and if the seller cannot transfer the right to the buyer on time, all losses such as the accumulation of the cost shall be borne by the seller. How to understand the agreement of transfer of the right of delivery of corresponding values to buyers within five working days. Overall, the content of contract is an agreement about the seller’s contractual obligations. After the seller receives the full payment, it must ensure their right to dispose of the goods is transferred to the buyer of goods from the Third Party claiming rights. Due to the goods in question remaining in the Third Party’s warehouses, the seller should give appropriate instructions for delivery and negotiate with the freight forwarder to make arrangements for the storage costs, which establishes the connection between the sales contract and the freight forwarding contract here. The cost is clear, and the parties can confirm the costs, so that the goods in question are in the deliverable state. The buyer can pick up the goods from the stockpile in accordance with the usual process. Mingzhu Company issued a power of attorney to China Shipping Company to inform the transfer of goods to Xinhai Company and made it clear that the deadline was on September 22, 2014. As a result, both Xinhai Company and Mingzhu Company are further clear about the burden on the stockpiling of goods. Mingzhu Company also reconciled with China Shipping Company. China Shipping Company confirmed that September 22, 2014 was the finished date. The cost before that date was borne by Mingzhu Company. The subsequent expenses were borne by Xinhai Company. Mingzhu Company’s behaviour is to perform its obligations under the contract. Although China Shipping Company did not confirm the receipt of the power of attorney, China Shipping Company should know the fact that it actually delivered part of the goods to Xinhai Company, received Xinhai Company payment for the cost of RMB 500,000, and recorded the reconciliation letter. The content of the power of attorney, that is, the goods in question, shall be delivered to Xinhai Company. Due to Mingzhu Company’s default on the agency fees and other agency goods expenses incurred before September 22, 2014, China Shipping Company no longer continued to deliver the remaining goods in question according to the instructions of Mingzhu Company. Therefore, in accordance with the nickel ore sale contract, the seller bore all the losses from the failure of the seller to transfer all losses resulting from the transfer of the corresponding cargo rights to the buyer on time. Xinhai Company may claim to Mingzhu Company that the loss occurred due to Mingzhu Company’s failure to collect the goods. However, Mingzhu Company’s agency fees for arrears of the goods in question do not affect the legal ownership of the goods. Finally, although the goods in question were not physically transferred, it can be deemed to be a lawful delivery. Xinhai Company obtained the ownership of goods in question. Delivery generally refers to the actual delivery, but the law also recognizes special delivery forms to replace actual delivery. In accordance with Article

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26 of the Property Law of the People’s Republic of China, before the real right of movable property is established or transferred, a Third Party has legally possessed the movable property, the person bearing the obligation of delivery may request the Third Party to turn the rights over for the original object by means of transfer to substitutive delivery. In accordance with the agent agreement and supplement agreement signed between Mingzhu Company and China Shipping Company, and the single ship operation contract between China Shipping Company and the Donglian Port Branch company, the goods in question are actually legally occupied by China Shipping Company. At the time of the signing of the nickel mine sale contract, both parties of the contract already knew that the goods were stored in the warehouse of the Donglian Port Branch, and it was agreed that Xinhai Company would pick it up by themselves. The relevant expenses were settled directly by Xinhai Company and China Shipping Company. When the contract was performed, Mingzhu Company made an instruction to China Shipping Company for delivery to Xinhai Company. China Shipping Company also delivered part of the goods to Xinhai Company. In conclusion, Mingzhu Company replaced the actual delivery by transferring the right of delivery of the goods in question to Xinhai Company. China Shipping Company knew this and released the goods according to the instructions. Further, even if China Shipping Company failed to recognize it, it will not affect the legal transfer of ownership of the goods in question. Therefore, the court supports Xinhai Company’s argument that the ownership of goods in question belonged to Xinhai Company, within facts and legislative authority. In conclusion, the 42,400 tons of lateritic nickel ore cargo involved was owned by Xinhai Company, and China Shipping Company did not provide effective evidence to prove that China Shipping Company has factual and legislative authority to support its application. Xinhai Company has in fact enough rights to exclude enforcement of the goods involved. China Shipping Company applied for distrain of Xinhai Company’s goods. In accordance with creditor’s right to Mingzhu Company, the court should withdraw the distrainment measure. In accordance with Article 133 of the Contract Law of the People’s Republic of China, and Article 23, Article 26 of the Property Law of the People’s Republic of China, and Article 102, Article 227 of the Civil Procedure Law of the People’s Republic of China, and Article 27 Paragraph 1 of the Provisions of the Supreme People’s Court on Several Issues concerning the Handling of Property Preservation Cases by People’s Courts, and Article 312 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: 1. the 42,400 tons of lateritic nickel ore mined in the warehouse of Jiangsu Lianyungang Port Co., Ltd. Donglian Port Branch Company belonged to Shandong Xinhai Technology Co., Ltd.; 2. (2016) Hu 72 Min Chu No. 2940 Civil Ruling in Shanghai Maritime Court is automatically invalidated when this judgment came into force to withdraw distrainment measures for the above goods. The first-instance court acceptance fee is RMB 105,752 yuan, China Shipping Company shall bear the entirety. China Shipping Company refused to accept the first-instance judgement, and argues that Shanghai Maritime Court found the facts and applicable laws

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incorrectly, and the ownership of goods does not belong to Mingzhu Company since no transfer occurred. Therefore, there was no mistake in applying for the court to seal and preserve the goods under Mingzhu Company. 1. Shanghai Maritime Court does not hold reason for the transfer the ownership of the goods in question. Xinhai Company and Mingzhu Company signed the contract for sale and purchase of nickel ore, but not for the pick up the goods and not for the delivery of the goods in question. Therefore, Xinhai Company has not obtained the ownership of the goods in question. The right of return on the original claim is not equal to the real right; Xinhai Company does not have the ownership of the goods in question in accordance with Article 26 of the Property Law of the People’s Republic of China. Even if Xinhai Company has the right of return on the original claim, China Shipping Company has the right to lien goods and refuse delivery due to Mingzhu Company’s related expenses. Therefore, the right of return on the original claim is unavailable. If Xinhai Company wants to realize ownership, it should pick up the goods itself, or confirm the ownership of the goods with China Shipping Company and establish the freight forwarding relationship. In this case, Xinhai Company did not adopt any of the above methods; therefore, it does not have ownership. At the same time, Mingzhu Company also made its ownership of the goods in question unclear. In conclusion, Xinhai Company did not have the ownership of goods in question. 2. Shanghai Maritime Court did not consider the freight company’s operating costs and interests, and it will lead to confusion in freight forwarding. In conclusion, China Shipping requests that the second-instance court make a written order to set aside the judgement, dismissing Xinhai Company’s request. According to China Shipping Company’s appeal, Xinhai Company argues that in accordance with Article 133 of Contract Law of the People’s Republic of China, ownership of the subject matter is transferred from the moment that subject matter is delivered, except where laws provide otherwise or the parties agree otherwise. In this case, Mingzhu Company and Xinhai Company have explicit agreements on the transfer of ownership. Therefore, regardless of who owns the goods or whether Xinhai Company picks up the goods, it does not affect the determination of ownership. 2. After Mingzhu Company and China Shipping Company issued the notice of transfer of right to the goods, the agent contract was discontinued between China Shipping Company and Mingzhu Company. China Shipping Company has unpaid creditor’s rights under the agency contract which cannot mean that Mingzhu Company has possession of the goods in question. 3. Through the records in the statements of account and related payment rules, Xinhai Company bore the expenses after September 2, 2014, and actually paid 500,000 yuan to pick up 13,000 tons of goods. It can be concluded that China Shipping Company has known that the goods rights have been transferred to Xinhai Company. 4. Whether Mingzhu Company is an arrears cost does not affect the transfer of ownership of goods by Mingzhu Company. 5. China Shipping Company’s application for property preservation to the court is not based on the lien, so the lien is not the focus of the examination. 6. Xinhai Company’s condition for delivery of goods is to settle the costs incurred after September 22, 2014, except that it is not necessary to obtain the prior consent of China Shipping Company for the transfer of ownership, nor

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does it need to establish a separate freight forwarding relationship with China Shipping Company. 7. In the case that Mingzhu Company’s arears of China Shipping Company’s expenses were only 2,817,000 yuan, China Shipping Company’s application for sealed goods with a value exceeding RMB 15,000,000 was obviously an excessive preservation. Xinhai Company reserves the right to sue China Shipping Company for related losses. In conclusion, it requests that the second-instance court dismiss the appeal and affirm the original judgement. Mingzhu Company did not appear in court, nor did it provide any written materials. In the second instance, China Shipping Company provided the reminder of payment from Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. to the court on September 29, 2017, showing that the accumulated storage costs are 17,821,279.40 yuan as of September 30, 2017. Therefore, the goods in question were insufficient for the port costs due to the unjustified litigation of Xinhai Company. The reminder of payment is with the Appellant China Shipping Company, which also represents that the principal is Mingzhu Company, and the ownership of goods still belongs to Mingzhu Company. Xinhai Company had no objection to the authenticity of the evidence above, but had objections to the legality, relevance, and purpose of proof. 1. The reminder of payment is stamped with a freight dedicated seal, so it is not the official seal of Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. 2. China Shipping Company cannot actually expense the settlement in storage with Donglian Port Branch of Jiangsu Lianyungang Port Co., Ltd. According to the record of statement of account in first- instance, the final determination of the storage costs of the deposit requires the parties to negotiate. 3. Due to the erroneous adoption of preservation by China Shipping Company, the continuous increase in the storage costs of the goods in question ensued. 4. The reminder of payment cannot prove the ownership of goods in question still belongs to Mingzhu Company. According to the evidence above, the court holds that it had no objection to the authenticity of this evidence due to Xinhai Company’s confirmation of the authenticity of it; but the court did not display the relevance with dispute over an outsider execution objection proceeding, therefore, the court does not affirm its effectiveness. In the second instance, Xinhai Company and Mingzhu Company did not provide new evidence. The court finds the facts as follows: the court affirms the effectiveness and probative effect in the first-instance. The court holds that this case is a dispute over an outsider execution objection proceeding. The second-instance court confirms the issues as follows: whether Xinhai Company has obtained the ownership of the goods in question and whether its ownership of goods in question is sufficient to confront the preservation of property by China Shipping Company successfully. In accordance with Article 133 of Contract Law of the People’s Republic of China, ownership of the subject matter is transferred from the moment that the subject matter is delivered, except where laws provide otherwise or the

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parties agree otherwise. In this case, the contract for sale and purchase of nickel ore is established and effective between Xinhai Company and Mingzhu Company, and the parties are bound by the contract. Article 9 of contract for sale and purchase of nickel ore regards the ownership agreement, where if the buyer does not pay the purchase price to the seller or fails to pay the full purchase price, even if the buyer has received the goods or, the value of the ownership of part of the non-payment still belongs to the seller. According to this agreement, ownership of goods in question confirmed that the purchase price was paid. Therefore, Xinhai Company and Mingzhu Company have an agreement in transfer of ownership of the goods in question. Since Xinhai Company already paid the full fee to Mingzhu Company according to the agreement, the ownership of goods in question belongs to Xinhai Company after Mingzhu Company affirms the fact that Xinhai Company paid all the fees. Therefore, the court does not support China Shipping Company’s argument that it has the ownership of goods in question and that the ownership of goods in question still belongs to Mingzhu Company. In accordance with Article 102 of the Civil Procedure Law of the People’s Republic of China, preservation shall be limited to the scope under the application or to the property related to the case in question. The dispute between China Shipping Company and Mingzhu Company was caused by Mingzhu Company owing the cost to the freight forwarding agency, and the goods in question is not the dispute-object. Therefore, the ownership of goods in question clearly lies with Xinhai Company. China Shipping Company has no reasonable basis to apply for preservation of the goods in question. In conclusion, the first-instance finding of the facts and judgement are correct. The court should affirm the original judgement. The court does not support the reason for the appeal of China Shipping Company due to the fact that it lacks factual and legal basis. In accordance with Article 144, Article 170 Paragraph 1 Sub-paragraph 1, and Article 175 of the Civil Procedure Law of the People’s Republic of China, the judgement is as follows: Dismiss the appeal, and affirm the original judgement. Court acceptance fee of first instance shall be born as per the judgment of first instance. Court acceptance fee of second instance in amount of RMB105,752, the Appellant, Lianyungang China Shipping Logistics Co., Ltd., shall bear all of the fee. The judgement is final. Presiding Judge: CHEN Zilong Judge: ZHANG Wen Judge: HU Hailong November 27, 2017 Clerk: LUO Gang

Shanghai Maritime Court Civil Judgment Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2016) Hu 72 Min Chu No.2817 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1087. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Paint company that painted ship’s hull with antifouling paint held to be in breach of contract when hull was found to be fouled only 21 months after painting; paint company held liable for cost of removing fouling and repainting, but not for cost of engine repairs that shipowner said were due to extra strain on the engine as a result of the fouling. Summary Defendant paint company agreed to paint the hull of Plaintiff’s ship M. V. “Litian” with antifouling paint. Plaintiff’s quotation stated “antifouling paint shall be equipped with a validity of 36 months, with the ship sailing 0–6,000 nautical miles per month.” Twenty-one months after Defendant painted the ship’s hull, it was discovered that the bottom of the ship was fouled with a large number of marine organisms. A year later, the ship was dry-docked for repairs. An insurance surveyor commissioned by Plaintiff issued a report stating that the fouling was caused by inefficiency of the antifouling paint. Plaintiff sued Defendant, claiming: (1) a full refund for the cost of the antifouling paint; (2) the cost of removing the marine organisms and repainting the hull; (3) the portion of the total period of dry-docking attributable to repainting the hull with antifouling paint; (4) the cost of repairing the main engine, which the surveyor said was attributable to the antifouling paint, which had caused extra strain on the ship’s engine to maintain its warranted speed; (5) loss of hire under a charter party that had been terminated; (6) the cost of extra fuel consumed. The Defendant argued that the term “antifouling paint shall be equipped with a validity of 36 months” meant merely that the paint would last for 36 months, and the ship might still become fouled by reason of many

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_55

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possible factors. The Court held that Defendant was in breach of contract. The bottom of the ship had become fouled in less than 36 months, which was an indicator that the antifouling paint had not worked, and Defendant had not provided any evidence that the fouling had occurred for some other reason. The Court held that items (2) and (3) were due to Defendant’s breach of contract, but items (4), (5) and (6) were not, as Plaintiff had failed to prove a causal link between those losses and the Defendant’s breach of contract. Item (1), the full refund, was also denied because the Contract Law only provides for a reduction in price, and Plaintiff had recovered damages as a result of Defendant’s breach of contract, so there was no need to reduce the price to reflect the value of the contract performance.

Judgment The Plaintiff: Shanghai Anrita Shipping Co., Ltd. Domicile: Room 108, Block 2, No. 955, Chuansha Road, Pudong New District, Shanghai. Legal representative: TIAN Yuchen, general manager of the company. Agent ad litem: Tian Yinxian, staff of the company. Agent ad litem: WANG Xiaoying, lawyer of Shanghai AllBright Law Office. The Defendant: Nippon Paint Marine Coatings (Shanghai) Co., Ltd. Domicile: 10 Floor 3rd, Wanyi Building, No. 39, Jiatai Road, China (Shanghai) Pilot Free Trade Zone. Legal representative: ISHIDA KENICHIRO, chairman of the company. Agent ad litem: YANG Jun, staff of the company. Agent ad litem: ZHANG Bo, lawyer of Shanghai Win Zone Law Firm. With respect to the case arising from dispute over supply of ship stores and spare parts between the Plaintiff Shanghai Anrita Shipping Co., Ltd. and the Defendant Nippon Paint Marine Coatings (Shanghai) Co., Ltd., the Plaintiff filed an action to the court on October 13, 2016, and the court entertained the case on the same day and formed a collegiate panel. On March 15, 2017, the court held a hearing in public. Legal representative of the Plaintiff, TIAN Yuchen, agents ad litem of the Plaintiff, TIAN Yinxian and WANG Xiaoying, and agent ad litem of the Defendant, ZHANG Bo, appeared in court to attend the hearing. The case has now been concluded. The Plaintiff claimed to the court that: the Plaintiff has a sales contract with the Defendant, for the supply of marine paint and on-site technical service for painting from the Defendant to the Plaintiff. According to the agreement between the two parties, the company separately supplies antifouling paint to M.V. Kai Tian, M.V. Fu Tian and M.V. Li Tian. Although the matching quotation clearly states that the anti-fouling paint is valid for 36 months, a large number of marine organisms were

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found on the bottom of the ship after the anti-fouling paint had been painted for less than 36 months. In addition, the Defendant also provided the wrong product in the process of supplying paint to M.V. Kai Tian, which caused the surface paint of the ship’s shell to fall off seriously. In regard to the losses suffered by M.V. Li Tian, the Plaintiff has filed a lawsuit first, and the Shanghai Maritime Count has also made an effective decision, but in that case, the Plaintiff omitted the request for the loss of the public assessment charges. The Plaintiff argued that the antifouling paint provided by the Defendant failed to reached the agreed effect. Therefore, the Plaintiff requests the court to order the Defendant to compensate the three ships of the Plaintiff for a total loss of 1,416,757.14 yuan, USD 136,217.10 and EUR 20,227.28, and to bear the case handling fee in this case. The Defendant argued that: firstly, the Plaintiff failed to effectively prove that there was a causal relationship between the paint quality and the losses suffered by M.V. Kai Tian and M.V. Fu Tian (hereinafter collectively referred to as the “two ships”). Specifically: 1. although the Plaintiff submitted two assessment reports, the two assessment companies did not have paint quality appraisal qualifications, and the appraisers were not paint professionals. Therefore, the assessment report was not sufficient to prove the paint quality problems and the paint quality and various losses had causality; 2. the Plaintiff failed to provide effective evidence to prove that there was a causal relationship between the two ships of host losses and the paint quality. Secondly, the specific loss claimed by the Plaintiff was too high, including: 1. the amount of some items in the assessment report was estimated by the assessors themselves, and the two assessment reports had different estimation methods for the same type of project. Therefore, the assessment report could not be used as the basis for determining the amount of loss; 2. during the two ships of repairs, not only repainting, but also a renewal inspection was carried out. Therefore, the port charges and shipyard dock repair fees should not be born by the Defendant; 3. the loss should be based on the actual amount. Thirdly, when the paint came off on M. V. Kai Tian, the Defendant admitted that the paint was wrong, but said that the paint peeling was caused by the unsuitable environmental conditions during the construction process, and the responsibility for the paint peeling could not be attributed to the Defendant. In addition, In addition, M.V. Fu Tian Korea’s clean-up report materials failed to fully reflect the clean-up area, and the cost was too high. Accordingly, it required the court to reject the claims of the Plaintiff. As to the facts, the providing of evidence by the Plaintiff, the cross-examination of the Defendant and the confirmation of the court are as follows: Firstly, the contractual relationship between the parties and the content of the contract. First group: 1. sales contract, 2. letter from the Plaintiff to the Defendant, to prove that the Plaintiff and the Defendant established a marine paint supply contract relationship, and the Defendant should provide technical services throughout the construction of the antifouling paint. The Defendant recognized the authenticity, legality and relevancy of this set of evidence materials, but claiming that the Defendant providing technical services did not mean that the Defendant could control on-site construction personnel, nor did it mean that the Defendant could

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command on-site construction personnel with the Plaintiff’s authorization. The court confirms the authenticity, legality and relevancy of this set of evidence materials, and confirms the probative force of the set of evidence materials regarding the contractual relationship between the Plaintiff and the Defendant and the content of the contract. However, the specific interpretation of the contract terms and M.V. Kai Tian are confirmed. The liability for the peeling off of the anti-fouling paint of M.V. Kai Tian will be comprehensively determined in combination with other evidence materials and the circumstances of the court hearing. Second group: 1. the Defendant’s publicity materials on the anti-fouling paint involved, 2. the product promotion CD submitted by the Defendant to the Plaintiff, to prove that the Defendant claimed that the anti-fouling paint involved could play various anti-fouling effects against long-term suspension of navigation. Even if the navigation was suspended for 11 months, it could still keep the hull smooth without sea creatures attached, and the time to market and fuel saving of two anti-fouling paint products ALF and LF Situation comparison. The Defendant recognized the authenticity, legality and relevancy of the set of evidence materials, but claimed that LF had not been delisted after 2012, and the anti-pollution products on the promotional materials were not ALF and LF. The court confirms the authenticity, legality, relevancy and probative force of this group of evidence materials. Secondly, losses related to M.V. Kai Tian. Third group: 1. supporting quotation, 2. email sent by the Defendant to the Plaintiff on June 27, 2014, 3. CHEMITEC Docked Paint Inspection Report, to prove that the Defendant promised that the anti-fouling paint would be valid for 36 months; the Defendant admitted that the anti-fouling paint had problems with the supply of paint to M.V. Kai Tian for less than a year, and M.V. Kai Tian had serious peeling of paint on the hull surface and sea creatures covering the phenomenon. The Defendant claimed that it was caused by the Plaintiff’s forcible request for construction due to the lack of construction conditions at the paint construction site, but the Defendant was unable to provide a permit report signed and confirmed by the Plaintiff or a report reflecting the construction process. The Defendant recognized the authenticity, legality and relevancy of the set of evidence materials, and argued that according to the conclusion of the inspection report, the paint peeling was caused by high humidity during construction. Although the Defendant provided technical services, it could not control the construction personnel. The consequences of paint peeling caused by improper construction should not be born by the Defendant. The court confirms the authenticity, legality and relevancy of this set of evidence materials, and confirms the probative force of the set of evidence materials regarding the paint peeling off of M.V. Kai Tian, but regarding the reasons for the paint peeling and whether the Defendant should be held responsible for it, it will be comprehensively determined based on other evidence materials and the situation of the court trial. Fourth group: 1. shipment list, 2. final statement, 3. invoice, 4. (2014) Hu Hai Fa Shang Chu Zi No. 1639 Civil Judgment, to prove that the Defendant admitted that ALF antifouling paint should be supplied to M.V. Kai Tian, but the actual supply was LF antifouling paint, and there was a problem of supplying the wrong paint;

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because the two paints had different construction techniques and different supporting schemes, they used ALF construction technology LF products are the cause of the antifouling paint falling off early. The Defendant had no objection to the authenticity of the set of evidence materials, but claimed that the construction process of the two antifouling paints was the same and that the wrong paint was not the cause of the paint peeling off. The court confirms the authenticity, legality and relevancy of this group of evidence materials, but will comprehensively determine the reason for the paint peeling and whether the Defendant should be held responsible for it, based on other evidence materials and the circumstances of the trial. Fifth group: 1. email sent by the Plaintiff to the Defendant, 2. notification letter and mailing certificate, 3. Shanghai Ejoy Insurance Surveyors & Adjusters Co., Ltd. (hereinafter referred to as Ejoy Company) appraisal bill, 4. two invoices of Ejoy Company, 5. M.V. “TIAN KAI” Ship Anti-fouling Paint Failure Accident Report, 6. two water bills for payment of the inspection and appraisal fee for M.V. Kai Tian, to prove that the Plaintiff notified the Defendant to board the ship for inspection in various ways, but the Defendant refused; the antifouling paint provided by the Defendant failed after one year of use, resulting in serious peeling off of the paint on the surface of M.V. Kai Tian’s hull and a large amount of sea creatures; and the amount of the Plaintiff’s loss. The Defendant recognized the authenticity of evidence 1–4 and 6. As to evidence 5, the Defendant claimed that the assessment company and the assessment personnel did not have professional qualifications, and that the assessment report was made unilaterally by the Plaintiff, so the authenticity of this piece of evidence was not recognized. Regarding the content of this piece of evidence, the Defendant held that, first of all, the analysis of the reasons for the failure of the antifouling paint in the appraisal report was unfounded and could not prove that there were quality problems with the antifouling paint provided by the Defendant. The appraisal report supervised the defendant’s technical personnel on-site, the statement of negligence did not conform to the agreement of the Plaintiff and the Defendant’s sales contract, and the Defendant should not be fully responsible for the anti-fouling paint falling off. Secondly, regarding the loss items and amount recorded in the assessment report, the Defendant held that the cost of redoing the anti-fouling paint should be born according to the Defendant’s proportion of responsibility; the cost of entering and leaving the port should not be born by the Defendant, because the docking of M.V. Kai Tian was to accept mandatory inspection, and the anti-fouling paint inspection was carried out by taking advantage of this mandatory inspection opportunity. The “general service fee” in the dock repair costs of the shipyard was unreasonable, and it was advisable to calculate it according to the actual paint time; the cost of spare parts of the main engine and the labour cost of main engine repair should not be born by the Defendant, because the report could not show the causal relationship between the failure of the anti-fouling paint and the repair of the main engine, and the Plaintiff did not take timely measures to avoid the expansion of the loss after discovering the failure of the anti-fouling paint. The court confirms the authenticity, legality, and relevancy of this group of evidence materials. Regarding this group of evidence

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materials, the Plaintiff notified the Defendant to send personnel to participate in the inspection, the amount of the assessment fee paid by the Plaintiff for this inspection, and the anti-pollution, the proof of paint failure is confirmed, but the proof of the cause of paint failure, the causal relationship between paint failure and various losses, and the amount of loss will be comprehensively determined in combination with other evidence materials and court trial. Sixth group: testimony of witness XIE Jian, to prove the inspection situation and the contents of the inspection report. The Defendant held that the evidence of the witness’ testimony regarding the determination and apportionment of the Plaintiff’s losses was insufficient. The court confirms the authenticity, legality, relevancy and probative force of the test situation of the evidence, but the probative force of the witness’ testimony regarding the Plaintiff’s loss will be comprehensively determined in conjunction with other evidence and the trial situation. Seventh group: the briefing on ALF and LF downloaded from the Defendant’s website in Japan showed that the two products had different requirements for nozzle size and fan angle. Combined with the second set of evidence materials about the different propaganda records of the matching primers used between the two, to prove that the painting process of the two antifouling paints was different. The Defendant used LF instead of ALF to supply, and used ALF primer to spray, indicating the construction the wrong paint was also used in the wrong process, which was also an important reason for the large-scale peeling of the paint after less than a year. The Defendant recognized the authenticity of the set of evidence materials, but claimed that the website materials were only suggestions and did not have to be implemented as such. As long as the paint was painted, the effect was the same. The court confirms the authenticity, legality, and relevancy of this set of evidence materials. The probative force of this set of evidence materials on the cause of the paint peeling off of M.V. Kai Tian will be comprehensively determined in conjunction with other evidence materials and the circumstances of the court hearing. Eighth group: 1. construction report of the antifouling paint for M.V. Kai Tian, 2. emails between employees of both parties on December 22, 2014, to prove that during the construction of M.V. Kai Tian, there was no unsuitable construction conditions. In addition, it was not found from the construction report that the Plaintiff forced the construction under the conditions of the Plaintiff. The Defendant recognized the authenticity of this group of evidence materials. The court confirms the authenticity, legality and relevancy of this set of evidence materials. The probative force of this set of evidence materials on the cause of the paint peeling off of M.V. Kai Tian will be comprehensively determined in conjunction with other evidence materials and the circumstances of the court trial. Ninth group: invoices and payment vouchers for repainting, port service fees, shipyard repair fees, main engine spare parts fees and repair fees, Shanghai Yuanbang Shipping Agency Co., Ltd. (hereinafter referred to as “Yuanbang Company”), Shanghai Haifan Ship Equipment Co., Ltd. (hereinafter referred to as “Haifan Company”) and Shanghai Cenjun Ship Technology Co., Ltd. (hereinafter referred to as “Cenjun Company”) receiving account description issued, to prove

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the amount of loss in M.V. Kai Tian. The Defendant recognized the redo paint payment invoice and payment voucher; regarding the payment of port charges, it recognized the authenticity of Yuanbang Company’s statement, but held that the invoice amount did not match the payment amount; regarding shipyard repair fees, it recognized the authenticity of the first payment voucher, but held that the second payment amount did not match the invoice; regarding the cost of spare parts and repairs for the main engine, the certificate of payment to Haifan Company was approved, and the authenticity of the explanations issued by Haifan Company and Cenjun Company was recognized, but it was advocated that enterprises should not open accounts in their own names and the nature of the payment was unclear. Therefore, the legality and relevancy of the two instructions will not be recognized, nor will the corresponding payment vouchers paid to individuals be recognized. The court holds that, the set of evidence materials submitted by the Plaintiff can be mutually confirmed, so the authenticity, legality, relevance of the set of evidence materials and the probative force regarding the amount of the Plaintiff’s external payments are all confirmed, but the relationship between paint failure and various losses is confirmed. The probative force of the causality and the amount of loss will be comprehensively determined in combination with other evidence materials and court trial. Thirdly, M.V. Fu Tian’s related losses and M.V. Li Tian’s assessment fee loss. Tenth group: 1. supporting quotation, 2. shipment list, 3. final statement, 4. in voice, to prove that the Defendant provided paint to M.V. Fu Tian and promised that the antifouling paint would be valid for 36 months and sail 0–6000 nautical miles per month. The Defendant recognized the authenticity, legality and relevancy of the set of evidence materials. The court confirms the authenticity, legality, relevancy and probative force of this group of evidence materials. Eleventh group: 1. email sent by the Plaintiff to the Defendant on January 10, 2014, 2. the Defendant replied to the Plaintiff’s email on February 12, 2014, to prove that after applying the anti-fouling paint for 13 months, M.V. Fu Tian experienced serious fading on a large area, but the Defendant did not take remedial measures and stated that the fading of the anti-fouling paint was normal. The fading of the anti-fouling paint did not mean that the anti-fouling effect was not good. The Defendant recognized the authenticity, legality and relevancy of the set of evidence materials. The court confirms the authenticity, legality, relevancy and probative force of this group of evidence materials. Twelfth group: 1. email sent by the Plaintiff to the Defendant on November 10, 2014, 2. email sent by the Defendant to the Plaintiff on November 11, 2014, 3. email sent by the Plaintiff to the Defendant on December 8, 2014, 4. M.V. Fu Tian dirt photos, to prove that within 24 months of applying the anti-fouling paint on M. V. Fu Tian, a large area of sea creatures was covered, which caused the speed to drop and the renter was withdrawn; in order to avoid further expansion of the loss, the Plaintiff could only choose the manual removal method to scrape the bottom of M.V. Fu Tian and inform the Defendant of this situation. The Defendant did not reply. The Defendant recognized the authenticity, legality and relevancy of the set of evidence materials, but argued that the probative force of the clean-up situation

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in Korea should be comprehensively determined in conjunction with other evidence materials. The court confirms the authenticity, legality and relevancy of this set of evidence materials and probative that M.V. Fu Tian appeared to have attached marine organisms about 24 months after applying the antifouling paint. Thirteenth group: 1. notification letter and mailing certificate, 2. email sent by the Plaintiff to the Defendant, 3. joint inspection SMS notification, 4. Shanghai Yisheng Insurance Surveyors & Adjusters Co., Ltd. (hereinafter referred to as “Yisheng Company”) statistics on the working hours of assessors, 5. two invoices of Yisheng Company’s assessment fee, 6. two payment vouchers for the assessment fee of M.V. Li Tian and M.V. Fu Tian, 7. inspection report on the failure of anti-fouling paint of M.V. Fu Tian, 8. mail, invoices and water bills with a fee of USD 500 for Korean notarization and certification, 9. translation fee list, invoice, payment voucher, to prove that the Plaintiff requested the Defendant to board the ship to participate in the joint inspection through various methods, but the Defendant did not show up; the assessment confirmed that the anti-fouling paint provided by the Defendant had failed, resulting in a large amount of sea creatures covering the surface of M.V. Fu Tian’s hull, and the amount of loss caused to the Plaintiff; the Plaintiff paid for the assessment and inspection of M.V. Fu Tian and M.V. Li Tian, as well as the amount of notarization and certification fees and translation fees paid for the litigation in this case. The Defendant had no objection to the authenticity of evidence 1–6 and 8–9. Regarding evidence 7, the Defendant claimed that the assessment company and assessors did not have professional qualifications, and that the assessment report was made unilaterally by the Plaintiff, so the authenticity of this piece of evidence was not recognized. Regarding the content of this piece of evidence, the Defendant held that the South Korean pollution clean-up report attached to the assessment report only reflected the partial conditions of the bottom of the ship, and did not reflect the proportion of bottom pollution. Regarding the loss items and amounts listed in the assessment report, the Defendant held that 2–7 items of the clean-up costs in Korea could not be seen as a result of clean-up and should not be born by the Defendant; regarding the dock repair fee of the shipyard, the Defendant recognized the cost of “hull coating and dock repair”, but claimed that because M.V. Fu Tian was docked for the purpose of undergoing a mandatory inspection, the anti-fouling paint inspection was based on the opportunity of this mandatory inspection. Therefore, the allocation of “factory and dock repair service fee” was unreasonable. Specifically, for items 1 to 4, Yisheng Company’s apportionment method was more reasonable than Ejoy Company’s apportionment of the loss of M.V. Kai Tian, item 6 ballast water had nothing to do with the painting project and should not be born by the Defendant, the reasons and proportions for the amortization of items 7–8 and 12 were unknown, so they were not approved, items 18–23 and 28 should not be entirely born by the Defendant; regarding port charges, the Defendant argued that docking was for compulsory inspection and that port charges should not be born by the Defendant; regarding the cost of redoing the anti-fouling paint, the Defendant held that if the responsibility lied with the Defendant, he had no objection to the cost; regarding the loss of rent and fuel, the Defendant held that the repair period of M.V. Fu Tian was

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not within the validity period of the lease, and that fuel costs must be incurred and had nothing to do with the failure of the anti-fouling paint. Therefore, the two losses were not recognized; regarding the main engine spare parts cost, spare parts freight and repair costs, the Defendant held that it should not be born by the Defendant, because the assessment report could not show the causal relationship between the failure of the anti-fouling paint and the main engine repair, and the Plaintiff did not take timely measures to avoid losses after discovering the failure of the anti-fouling paint expand. The court confirms the authenticity, legality and relevancy of this group of evidence materials. Regarding this group of evidence materials, the Plaintiff notified the Defendant to send personnel to participate in the inspection, the Plaintiff’s expenditures for appraisal, notarization, translation fees, and probative force of the failure of the dirty paint was recognized. But the cause of paint failure, the causal relationship between paint failure and various losses, and the probative force of the amount of loss will be comprehensively determined in combination with other evidence materials and court trial. Fourteenth group: testimony of witness HE Jie, to prove the inspection situation and the contents of the inspection report. The Defendant held that the evidence of the witness’ testimony regarding the determination and apportionment of the Plaintiff’s losses was insufficient. The court confirms the authenticity, legality, relevancy and probative force of the test situation of the evidence, but the probative force of the witness’ testimony regarding the Plaintiff’s loss will be comprehensively determined in conjunction with other evidence and the trial situation. Fifteenth group: vouchers of related costs for clean-up in South Korea, repainting, port charges, shipyard repair fees, main engine spare parts fees, freight, repair fee invoices and payment vouchers, fuel loss and lease loss basis, and receiving account description issued by Wusong Shipyard, to prove the amount of loss of M.V. Fu Tian. The Defendant recognized the authenticity of the main engine spare parts payment vouchers and Wusong Shipyard’s statement, and refused to recognize the authenticity of other evidence materials. In addition, regarding items 1 to 5 of Korea’s pollution clean-up related expenses, the Defendant recognized the relevancy, but held that the Defendant should not bear the 2–5 losses, and disagreed with the 6–7 losses, and held that M.V. Fu Tian had no lease agreement at that time, the shipping schedule loss should not be calculated, and the crew’s wages would inevitably occur, so it should not be born by the Defendant. Regarding fuel loss, lease loss, main engine spare parts costs, freight and repair costs, it was held that the Defendant should not be born by the Defendant. The court holds that, the set of evidence materials submitted by the Plaintiff can be mutually confirmed, so the authenticity, legality, relevance of the set of evidence materials and the probative force regarding the amount of the Plaintiff’s external payments are all confirmed, but the relationship between paint failure and various losses is confirmed. The probative force of the causality and the amount of loss will be comprehensively determined in combination with other evidence materials and court trial. Besides, the Plaintiff also submitted the sixteenth group of evidence two rounds of classification certificates to prove that the ship was seaworthy, and the seventeenth group of evidence two ships of lubricating oil reports and related emails to

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prove that the failure of the antifouling paint and the damage to the main engine had causal relationship. The Defendant recognized the authenticity of the two ships of classification certificates, and based on this, claimed that the two ships of docking were for mandatory in-dock inspection, so the relevant expenses incurred in the dock should not be born by the Defendant. The authenticity, legality, relevance and probative force of the two ships oil report and related emails were not recognized. The court confirms the authenticity, legality, relevance and probative force of the two ships of classification certificates, and the two ships of oil reports and emails, because the set of evidence materials are not original and there is no other evidence to support them, and the report and the content contained in the e-mail cannot prove that the wear of the host is directly caused by the failure of the anti-fouling paint. Therefore, the authenticity, legality and relevancy of the two reports and related emails are not confirmed. The Defendant did not submit evidence materials. The court finds out that: There is a sales contract between the Plaintiff and the Defendant. It is agreed that the Defendant will sell marine paint to the Plaintiff, and provide technical services during the construction period, and the sales price includes technical service costs. The Defendant sent M.V. Kai Tian paint matching quotation to the Plaintiff, stating that “antifouling paint is valid for 36 months, sailing 0–6,000 nautical miles per month” in May 2013. In June 2013, M.V. Kai Tian anti-fouling paint painting was carried out. The paint appeared to fall off in May 2014. According to the record of CHEXXXX Docking Inspection Report (hereinafter referred to as May 2014 Inspection Report) issued by the Defendant in May 2014, the abscission area is mainly as follows: a small amount of antifouling paint fell off at the bottom, and about 40% of the antifouling paint fell off on the flat bottom. On the reason of the paint falling off, the Plaintiff maintains that the Defendant is responsible for the wrong anti-fouling paint, and that it has submitted (2014) Hu Hai Fa Shang Chu Zi No. 1639 effective judgment, the publicity materials of the paint products and the Japanese web materials of the Defendant. During the trial of (2014) Hu Hai Fa Shang Chu Zi No. 1639 case, the Defendant confirmed that it had supplied the wrong paint to M.V. Kai Tian, that is it should have provided ALF products but actually provided LF products. In addition, according to the Defendant’s Japanese web page, there are differences between ALF products and LF products in terms of the brushing method and the thickness of the wet film. The Defendant claims that this is due to the site conditions which are unsuitable for construction. According to M.V. Kai Tian Anti-fouling Paint Construction Report and May 2014 Inspection Report, the problem of paint falling off is caused by the tense docking period and the construction being conducted under harsh conditions. Specifically, first, the humidity of the first coat of primer was too high, and the adhesion of the paint was very poor and was easy to fall off; secondly, during the painting of the anti-fouling paint on the flat bottom, dew had been formed on the flat bottom of the ship’s hull. However, both reports were produced unilaterally by the Defendant and were not confirmed by the Plaintiff, and during the first trial of the case, the Defendant failed to submit evidence that although it

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had informed the Plaintiff or its agent that the site conditions were not suitable for construction, the Plaintiff insisted on the construction. Besides, the Defendant also claimed that the paint falling off is due to the use of the old primer before the application of the Nippon paint, but failed to submit documentary evidence to support it, and this claim is different from May 2014 Inspection Report produced by the Defendant. M.V. Kai Tian berthed at Wusong shipyard of Shanghai port, No. 1 dock for repair in June 2016. The Plaintiff commissioned Ejoy Company to investigate the failure of antifouling paint. According to the inspection report issued by Ejoy Company, a large area of marine creature is attached to the hull below the waterline. Ejoy Company concludes that the failure and the falling off of antifouling paint are the cause of the hull being contaminated by marine organisms. The Plaintiff informed the Defendant in advance of the time M.V. Kai Tian entered the dock for repair, but the Defendant did not participate in the inspection. Besides, during the first instance hearing, the Plaintiff confirmed that the ship inspections were also carried out at the dock. Costs associated with the failure of antifouling paint incurred in the repair of the ship are as follows: 1. The cost of repainting is USD 49,084.10, and the actual amount is USD 47,246.14. According to the report of M.V. Kai Tian inspection, the cost of the repainting should be borne entirely by the Defendant. However, according to the invoices submitted by the Plaintiff, the discounted amount of the antifouling products SEAGRANDPRIX660HSLIGHTBROWN and SEAGRANDPRIX660HSBROWN in the redo paint project is USD 24,219. According to the ratio of the actual payment amount to the invoice amount, the court of first instance found that the Plaintiff actually spent USD 23,312.12 to buy new anti-fouling paint. 2. The invoice amount for the charge for entering and leaving port is 84,536 yuan, the cost of items related to the failure of antifouling paint according to M.V. Kai Tian Inspection Report is RMB 73,236 yuan, due to the fact that there was an overvaluation in the invoice during the actual payment process of the Plaintiff, the Plaintiff actually paid USD 12,658.93 in port charges, based on the ratio of the actual amount and the invoice value converted to us dollar (12,658.93/ 12,725.77). The court found that the actual port expenses incurred by the Plaintiff in connection with the ineffective anti-fouling paint were RMB 72,851.34 yuan. 3. The invoice amount for the shipyard dock repair charges, is RMB 688,047 yuan, and the payment certificate submitted by the Plaintiff shows that it has paid the charges. According to the report of M.V. Kai Tian inspection, the dock repair charges are divided into two parts, one is general service charges RMB 376,146 yuan, the other is hull dock repair and painting costs RMB 311,901 yuan. Regarding the general service charges, M.V. Kai Tian Inspection Report apportioned the cost, and the cost that should be borne by the Defendant was RMB 278,083 yuan, however, the surveyors could not explain the specific

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allocation basis during the inquiry process., and there are also big differences in the project allocation standards between the M.V. Fu Tian Inspection Reports issued by Ejoy Company and Yisheng Company, and the Defendant does not agree with this proportion of the cost-sharing ratio, however it is unable to propose a specific criteria for apportionment. For the ship dock repair and coating costs, M.V. Kai Tian Inspection Report found that the cost related to the failure of the antifouling paint is RMB 271,652 yuan, and the company has no objection to the cost of this part. 4. The invoice amount for the cost of mainframe spare parts and labor repair costs, is RMB 708,842 yuan and RMB 185,276 yuan respectively, the payment voucher submitted by the Plaintiff shows that it had paid the full cost of mainframe spare parts and the actual cost of labor was USD 25,126. According to M.V. Kai Tian Inspection Report, due to the failure of the anti-fouling paint, the main engine was overloaded and the mainframe had to be repaired in advance, therefore, the company should bear the cost of mainframe spare parts RMB 230,054 yuan and the repair cost RMB 38,699 yuan. However, M.V. Kai Tian Inspection Report failed to effectively explain the need for the mainframe to be repaired in advance, and the surveyor indicated in the course of inquiry, the only basis for the main engine damage caused by the ineffective paint was that the engine log showed that the exhaust temperature of the main engine was high, and that the engine wear caused by other reasons could not be effectively eliminated. The Defendant sent a M.V. Fu Tian paint quotation to the Plaintiff, stating that “antifouling paint is valid for 36 months, sailing 0–6000 nautical miles per month” in November 2012. From November to December 2012, M.V. Fu Tian was painted antifouling paint provided by the Defendant. The captain of M.V. Fu Tian sent an email to the Plaintiff, reporting that the stern and rudder blades were attached to a large number of marine organisms on November 5, 2014. After the Plaintiff sent photos of the contaminated bottom of the ship to the Defendant, the Defendant replied on November 11, 2014 that it would arrange for personnel on board the ship to investigate, later, it did not actually arrange for the inspection on the ground that the inspection of M.V. Fu Tian in Korea was difficult, and the general staff might not necessarily see the underwater part. In respond to this, the Plaintiff sent an email to the Defendant on December 8, 2014, saying that it would immediately clean the bottom, with an estimated cost of USD 17,000. M.V. Fu Tian docked at an anchorage from November 25, 2014 to December 11. During the period, Amir Marine Service Co., Ltd. (hereinafter referred to as Amir Company) cleaned the bottom of M.V. Fu Tian at Busan Anchorage in South Korea and issued a decontamination report, and the decontamination report recorded the decontamination work and the proportion of the bottom of the ship covered by marine organisms. For this, the Plaintiff paid Amir Company bottom cleaning charges USD 13,307.91. During the docking at the anchorage of M.V. Fu Tian, the anchorage charges (including agency charges) was USD 63,64.57, pilotage dues was USD 69,6.42. According to the report of M.V. Fu Tian inspection issued by

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Yisheng Company, the anchorage charges (including agency charges USD 11,123.17 and pilotage dues USD 69,6.42) should be borne by the Defendant. On the fuel costs arising from the berth shifting, M.V. Fu Tian Inspection Report assessed USD 2,100 for heavy oil charges and USD 3,352.50 for diesel oil charges. In addition, M.V. Fu Tian Inspection Report also estimated the loss of the charter period during the period of cleaning up to be USD 13,650. However M.V. Fu Tian was not engaged in any charter party during the cleaning at the anchorage in Korea. M.V. Fu Tian berthed at Wusong shipyard of Shanghai port, No. 1 dock, for repair from November to December 2015. The Plaintiff commissioned Yisheng Company to inspect the failure of anti-fouling paint. According to M.V. Fu Tian Inspection Report issued by Yisheng Company, a large area of marine organisms were attached to the hull below a certain waterline. Yisheng Company found that the failure of anti-fouling paint is the cause of sea biological fouling. The Plaintiff informed the Defendant in advance of the time M.V. Fu Tian entered the dock for repair, but the Defendant did not take part in the inspection. During the trial of first instance, the Plaintiff confirmed that a ship survey were also carried out at the dock. The shipyard repair costs of M.V. Fu Tian associated with the failure of antifouling paint are as follows: 1. The dock repair charges at the shipyard is RMB 479,503 yuan, including general dock repair service charges RMB 236,502 yuan and coating and dock repair charges RMB 243,001 yuan. With regard to the general service charges for dock maintenance, M.V. Fu Tian Inspection Report apportioned the cost, and considered that the cost to be borne by the Defendant was RMB 206,868 yuan, however, in the course of inquiry, the surveyor was unable to explain the specific basis for the apportionment, and the two inspection reports also differ greatly in the standard of apportionment of each project. Although the Defendant does not agree with the cost-sharing ratio of this part of the share of expenses, it cannot put forward a specific standard for apportionment. As for the cost of dock repair and painting, M.V. Fu Tian Inspection Report found that the cost related to the failure of antifouling paint was RMB 206,301 yuan, and the Defendant has no objection to this part of the cost. 2. The cost of the port is RMB 56,411 yuan, and M.V. Fu Tian Inspection Report considers that the cost of the project related to the antifouling paint is RMB 55,011 yuan. 3. The cost of repainting is USD 36,557. M.V. Fu Tian Inspection Report found the cost of SEAGRANDPRIX660HSLIGHTBROWN and SEAGRANDPRIX660 HSBROWN in the repainting project should be born by the Defendant. The value of the two products is USD 24,883 after discount. 4. As for the hire, fuel loss, M.V. Fu Tian Inspection Report confirmed that M.V. Fu Tian were not engaged in any charter party during the repair in both Busan and Shanghai, but the surveyor thought that the Plaintiff should be compensated for time loss and fuel loss for a total of USD 358,850.

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5. The cost of mainframe spare parts, freight and repair are 187,765.60 euros, 7,476 euros and 21,843.70 dollars respectively. According to M.V. Fu Tian Inspection Report, the main engine was overloaded due to the failure of the antifouling paint, causing the mainframe to be repaired ahead of schedule, therefore the Defendant should pay 19,355.20 euros for mainframe spare parts, 872.08 euros for freight and 40,092.14 yuan for repairs. However, M.V. Fu Tian Inspection Report failed to effectively explain the need for the mainframe to be repaired in advance, and the surveyor indicated in the course of inquiry, the only basis for the damage caused by the failure of the paint is that the engine log showed that the exhaust temperature of the host was high, at the same time, and that the engine wear caused by other reasons could not be effectively eliminated. In addition, to prove the failure and related loss amount of the antifouling paint for M.V. Kai Tian, M.V. Fu Tian and M.V. Li Tian, the Plaintiff paid RMB 14,600 yuan to Ejoy Company and USD 5,725 to Yisheng Company. In the first trial, the Plaintiff also incurred USD 500 for notarization and RMB 2,161 yuan for translation. The court holds that the case is a contractual dispute for the supply of ship’s materials and spare parts. The Defendant sent a matching quotation to the Plaintiff and that constituted an offer, according to which the Plaintiff painted the corresponding antifouling paint which constituted an undertaking. The supply contractual relationship between the two parties is therefore valid. The court of first instance summarized and illustrated the outstanding issues in this case as follows: 1. whether there is a breach of contract by the Defendant; 2. the scope of liability for breach of contract and the amount of compensation. On whether there is a breach of contract in the Defendant. According to the contract, “antifouling paint shall be valid for 36 months, sailing 0–6,000 nautical miles per month”. In addition, the Defendant shall provide technical services during the painting process. The evidence in the case indicates that a large area of marine biological adhesion occurred within 36 months after the bottom of M.V. Fu Tian and M.V. Kai Tian were painted with antifouling paint, which preliminarily proved that the antifouling paint provided by the Defendant failed to achieve the agreed use effect. In addition, with regards to M.V. Kai Tian’s antifouling paint falling off, the Plaintiff submitted materials such as web page data, which preliminarily proved that it was the wrong products supplied by the Defendant that resulted in the use of the wrong process to paint antifouling paint. Although the Defendant claimed that the paint shedding was caused by unqualified construction conditions, it failed to submit effective evidence to prove that there was indeed an unsuitable construction situation, it also failed to prove that the Plaintiff had been informed that the construction conditions were not suitable, therefore, the court of first instance did not support the counterplead of the Defendant. The Defendant failed to provide effective technical services and antifouling paint products to achieve the effect of commitment as agreed in the contract, hence the Defendant breached the contract. On the scope of liability for breach of contract and the amount of compensation. For M.V. Kai Tian, there are four main losses claimed by the Plaintiff, including

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repainting costs, port costs, dock repair costs and mainframe spare parts costs and repair costs. the Defendant agrees to bear the costs of repainting in proportion to its liability, the court of first instance held that the cost of repainting claimed by the Plaintiff included different types of paint, however the loss involved was caused by the failure of antifouling paint, therefore the Defendant should only bear the cost of antifouling paint, and should not bear the cost of other paint products, and M.V. Kai Tian Inspection Report also used this standard to assess the loss. According to the court of first instance, the company should bear the cost of redoing anti-fouling paint which is USD 23,312.12. With regard to port charges, the Defendant claimed that M.V. Kai Tian was docked for compulsory inspection, so that the charge is inevitable and should not be borne by the Defendant. The court of first instance held that the inspection and repainting project were carried out while the ship was entering and leaving the port, therefore, the Plaintiff and the Defendant shall each bear half of the port charges related to the anti-fouling paint, that is, the Defendant will bear RMB 36,425.67 yuan. Regarding the dock repair costs at the shipyard, the Defendant accepts the costs of dock repair and painting costs of the ship as determined in the inspection report of M.V. Kai Tian, which is RMB 271,652 yuan, but argues that apportionment of general service charges is not reasonable. The court of first instance held that the surveyor could not give a clear and reasonable basis for assessing the apportionment of the general service charges, and the Defendant also failed to propose a specific calculation method. Since the ship was involved in many projects such as inspection and repainting at the shipyard, the court of first instance decided that the Plaintiff and the Defendant should each bear half of the costs incurred during that period, that is, RMB 188,073 yuan for general service charges was to be borne by the Defendant. With regard to mainframe spare parts fees and repair fees, the court of first instance held that, first of all, M.V. Kai Tian Inspection Report submitted by the Plaintiff could not effectively prove that the maintenance of the mainframe in advance was really necessary, and that there is an inevitable causal relationship between maintenance of the mainframe in advance and the contaminated bottom of the ship; Secondly, even though the failure of the antifouling paint was related to the wear of the mainframe, then the company did not take reasonable measures to avoid the loss expansion in the event of failure of the known anti-fouling paint, nor should it claim to the Defendant for the expansion of the loss; Thirdly, the damage to the mainframe caused by the failure of the antifouling paint is beyond the scope of the losses foreseen at the time when the Defendant entered into the contract, therefore, the court of first instance does not support the Plaintiff’s claim on the loss of mainframe spare parts fees and repair fees. For M.V. Fu Tian, there are six main losses claimed by the Plaintiff, including decontamination charges in Korea, repainting charges, port charges, dock repair charges at shipyard, mainframe spare parts charges, freight and repair charges, and hire and fuel losses. With regard to the decontamination charges in Korea, the court of first instance held that the Plaintiff had submitted the invoices payment vouchers of the bottom cleaning charges, the anchorage charges (including agency charges), pilotage dues, the evaluation of the heavy oil and diesel oil consumption in the

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anchorage and out of the anchorage is also reasonable in M.V. Fu Tian Inspection Report, and the five costs here mentioned are incurred due to the clean-up of the contaminated bottom of the ship, which is caused by the failure of the antifouling lacquer, therefore, the total of the five costs is approved totalling USD 20,580. However, during the clean-up period, M.V. Fu Tian was not engaged in any charter party, therefore the loss of the charter period claimed by the Plaintiff was not supported. As to dock repair charges at shipyard, the Defendant accepts the dock repair charges and painting charges as determined in the inspection report which is RMB 206,301 yuan, but argues that the apportionment of general service charges is not reasonable. The court of first instance held that the surveyor could not give a clear and reasonable basis for the apportionment of the general service charges, and the Defendant also failed to propose a specific calculation method. Since the ship was involved in many projects such as inspection and repainting at the shipyard, the court of first instance decided that the Plaintiff and the Defendant should each bear half of the costs, that is, RMB 118,251 yuan was to be borne by the Defendant. With regard to port charges, the Defendant believes that M.V. Fu Tian was docked for compulsory inspection, so that the charge is inevitable and should not be borne by the Defendant. The court of first instance held that the inspection and repainting items were carried out while the ship was entering and leaving the port, therefore, the Plaintiff and the Defendant shall each bear half of the port charges related to the anti-fouling paint, that is, the Defendant is to bear RMB27,505.50 yuan. Regarding repainting charges, M.V. Fu Tian Inspection Report found that the cost associated with antifouling paint was USD24,883, which is also recognized by the Defendant, and the court of first instance supported it. With regard to the hire and fuel loss claimed by the Plaintiff, the court of first instance held that the company could not effectively prove the causal relationship between the two losses and the failure of the antifouling paint, and therefore the court did not support the claim. With regard to mainframe spare parts fees, freight and repair fees, the court of first instance held that, first of all, M.V. Fu Tian Inspection Report submitted by the Plaintiff could not effectively prove that the maintenance of the mainframe in advance was really necessary, and that there was an inevitable causal relationship between maintenance of the mainframe in advance and the contaminated bottom of the ship; Second, even though the failure of the antifouling paint was related to the wear of the mainframe, then the company did not take reasonable measures to avoid the loss expansion in the event of failure of the known anti-fouling paint, nor should it claim to the Defendant for the expansion of the loss; Thirdly, the damage to the mainframe caused by the failure of the antifouling paint is beyond the scope of the losses foreseen at the time when the Defendant entered into the contract, therefore, the court did not support the Plaintiff’s claim on the loss of mainframe spare parts fees, freight and repair fees. In addition, in respect of the survey fees, notarization fees and translation fees claimed by the Plaintiff, the court of first instance held that the notarization fee was the necessary expense for the company to carry out the lawsuit, so the court did not support it. With regard to survey fees and translation fees, since the Defendant stated that if the court of first instance accepted the relevant evidential materials,

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they were willing to bear the corresponding part of the survey fees and translation fees, therefore, the Defendant shall bear the estimated cost of RMB 3,650 yuan and USD 1,431.25 for survey fees and RMB 1,080.50 yuan for translation fees. In summary, in accordance with Article 107, Article 113 Paragraph 1, Article 119 Paragraph 3 of the Contract Law of the People’s Republic of China, and Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. The Defendant compensate the USD 70,206.37 2. Not support the

Nippon Paint Marine Coatings (Shanghai) Co., Ltd. shall Plaintiff Shanghai Anrita Shipping Co., Ltd. for damages of and RMB 852,938.67 yuan; Plaintiff Shanghai Anrita Shipping Co., Ltd.’s other claims.

If the Defendant Nippon Paint Marine Coatings (Shanghai) Co., Ltd. fails to perform the payment obligation within the period specified in this judgment, it shall double the interest for payment of the debts during the delayed performance period in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB 26,666.75 yuan, the Plaintiff Shanghai Anrita Shipping Co., Ltd. shall be responsible for RMB 12,434.29 yuan, and the Defendant Nippon Paint Marine Coatings (Shanghai) Co., Ltd. shall be responsible for RMB 14,232.46 yuan. If not satisfied with this judgment, the Plaintiff and the Defendant may submit an appeal petition to this court within 15 days from the date of service of the judgment, together with copies according to the number of the opposing parties, so as to appeal to the Shanghai High People’s Court. Presiding Judge: WANG Lei Judge: XU Wei People’s Juror: MA Jie April 11, 2017 Clerk: WANG Bing

Appendix: Relevant Laws 1. Contract Law of the People’s Republic of China Article 107 If one of the parties fails to perform the contractual obligations or the performance of the contractual obligations does not conform to the agreement, it shall be liable for breach of contract such as continuing to perform, taking remedial measures, or compensating for losses. Article 113 If one of the parties fails to perform the contract obligations or the performance of the contract obligations does not comply with the agreement and

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causes losses to the other party, the compensation for losses shall be equivalent to the losses caused by the breach of contract, including the benefits obtained after the performance of the contract, but shall not exceed the amount when the breaching party concluded the contract. Foresee or should foresee the possible loss due to breach of contract. Article 119 After one party breaches the contract, the other party shall take appropriate measures to prevent the expansion of the loss; if the failure to take appropriate measures causes the expansion of the loss, it shall not seek compensation for the enlarged loss. 2. Civil Procedure Law of the People’s Republic of China Article 64 The party has the responsibility to provide evidence for the claims.

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Shanghai High People’s Court Civil Judgment Shanghai Anrita Shipping Co., Ltd. v. Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (2017) Hu Min Zhong No.211 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1069. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Affirming lower court decision holding paint company that painted ship’s hull with antifouling paint to be in breach of contract when hull was found to be fouled only 21 months after painting; paint company held liable for cost of removing fouling and repainting, but not for cost of engine repairs that shipowner said were due to extra strain on the engine as a result of the fouling. Summary Defendant paint company agreed to paint the hull of Plaintiff’s ships with antifouling paint. Plaintiff’s quotation stated “antifouling paint shall be equipped with a validity of 36 months, with the ship sailing 0–6,000 nautical miles per month.” Twenty-one months after Defendant painted the ships’ hulls, it was discovered that they were fouled with a large number of marine organisms. A year later, the ships were dry-docked for repairs. An insurance surveyor commissioned by Plaintiff issued a report stating that the fouling was caused by inefficiency of the antifouling paint. Plaintiff sued Defendant, claiming: (1) a full refund for the cost of the antifouling paint; (2) the cost of removing the marine organisms and repainting the hull; (3) the portion of the total period of dry-docking attributable to repainting the hull with antifouling paint; (4) the cost of repairing the main engine, which the surveyor said was attributable to the antifouling paint, which had caused extra strain on the ship’s engine to maintain its warranted speed; (5) loss of hire under a charter party that had been terminated; (6) the cost of extra fuel consumed. The Defendant argued that the term “antifouling paint shall be equipped with a validity of 36 months” meant merely that the paint would last for 36 months, and the ship might still become fouled by reason of many possible factors. The first instance Court held that Defendant was in breach of contract. The bottom of the ship had become fouled in less than 36 months, which was an indicator that the antifouling paint had not worked, and Defendant had not provided any evidence that the fouling had occurred for some other reason. The first instance Court held that items

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(2) and (3) were due to Defendant’s breach of contract, but items (4), (5) and (6) were not, as Plaintiff had failed to prove a causal link between those losses and the Defendant’s breach of contract. Item (1), the full refund, was also denied because the Contract Law only provides for a reduction in price, and Plaintiff had recovered damages as a result of Defendant’s breach of contract, so there was no need to reduce the price to reflect the value of the contract performance. Defendant appealed, arguing that the dry-docking and repainting occurred after the 36-month shelf life of the paint, so the ship would have had to be repainted anyway. Plaintiff said that the dry-docking had been delayed because the ships were under charter, and taking them out of service to be repainted would have increased the loss. The appeal court affirmed the first instance judgment.

Judgment The Appellant (the Defendant of first instance): Nippon Paint Marine Coatings (Shanghai) Co., Ltd. Domicile: 10 Floor 3rd, Wanyi Building, No. 39, Jiahai Road, China (Shanghai) Pilot Free Trade Zone. Legal representative: ISHIDA KENICHIRO, chairman of the company. Agent ad litem: YANG Jun, staff of the company. Agent ad litem: ZHANG Bo, lawyer of Shanghai Win Zone Law Firm. The Respondent (the Plaintiff of first instance): Shanghai Anrita Shipping Co., Ltd. Domicile: Room 108, Block 2, No. 955, Chuansha Road, Pudong New District, Shanghai. Legal representative: TIAN Yuchen, general manager of the company. Agent ad litem: WANG Xiaoying, lawyer of Shanghai AllBright Law Office. With respect to the case arising from dispute over supply of ship stores and spare parts between the Appellant Nippon Paint Marine Coatings (Shanghai) Co., Ltd. (hereinafter referred to as Nippon Company) and the Respondent Shanghai Anrita Shipping Co., Ltd. (hereinafter referred to as Anrita Company), the Appellant disagreed with the Shanghai Maritime Court (2016) Hu 72 Min Chu No. 2817 Civil Judgment, and appealed to the court. After entertaining the case on June 13, 2017, the court formed a collegiate panel according to law, and the case was heard in public on July 5, 2017. YANG Jun and ZHANG Bo, agents ad litem of Nippon Company, TIAN Yuchen, legal representative of Anrita Company, and WANG Xiaoying, agent ad litem of Anrita Company, appeared in court and participated in the action. The case has now been concluded. Nippon Company appealed that: revoke the judgment of first instance; reject all claims of Anrita Company. Facts and reasons: 1. M.V. “CHENXXXX” ship anti-fouling paint failure accident report (hereinafter referred to as M.V. Kai Mou

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Inspection Report), M.V. “OSGBXXXX” (M.V. “Fu Mou”) ship Anti-fouling paint failure inspection report (hereinafter referred to as M.V. Fu Mou Inspection Report) not as conclusive evidence. Reasons include surveyors do not have professional qualifications, the two inspection reports about the distribution standard for ship repair costs differ significantly, inspection report did not meet the criteria for signature and seal of the three appraisers required by the judicial appraisal; 2. the judgment of first instance on shipyard dock repair charges, port charge is unfair and unreasonable, the time when the two ships were docked was the routine inspection time required by 1974 Convention on the Safety of Human Life at Sea and it had exceeded the 36-month shelf life of paint, and the ships would have to be repainted anyway, therefore, the general service charges of port charges and shipyard dock repair charges shall not be borne by Nippon Company; 3. the judgment of first instance is based on the invoice value to determine the amount of expenses incurred by Nippon Company, which is a false determination of facts; 4. the judgment of first instance found that Nippon Company was responsible for the general service charges of 118,251 yuan in the cost of dock repair of M.V. Fu Mou’s ship factory was wrong. Anrita Company argued that, the two inspection report were issued by qualified assessors and companies. The inspection of the ship does not have to enter the dock, but repainting of antifouling paint is bound to enter the dock, because of the existence of charter parties for two ships involved in the case. If the ships were arranged for repainting once the anti-fouling paint was found to have quality problems, it would lead to the default of the company, therefore, the time for repainting the antifouling paint was put together with the ship inspection time. The amount actually paid by Anrita Company is within the invoice amount, and the relevant expense details and the actual payment amount have been provided to the court of first instance. In summary, Anrita Company requests the court of second instance to dismiss the appeal and affirm the first-instance judgment. The claim to the first-instance court by Anrita Company: Anrita Company has a sales contract with Nippon Company, for the supply of marine paint and on-site technical service for painting from Nippon Company to Anrita Company. According to the agreement between the two parties, the company separately supplies antifouling paint to M.V. Kai Mou, M.V. Fu Mou and M.V. Li Mou. although the matching quotation clearly states that the anti-fouling paint is valid for 36 months, a large number of marine organisms were found on the bottom of the ship after the anti-fouling paint had been painted for less than 36 months. In addition, Nippon Company also provided the wrong product in the process of supplying paint to M.V. Kai Mou, which caused the surface paint of the ship’s shell to fall off seriously. In regard to the losses suffered by M.V. Li Mou, Anrita Company has filed a lawsuit first, and the Shanghai Maritime Count has also made an effective decision, but in that case, Anrita Company omitted the request for the loss of the public assessment charges. Anrita Company argued that the antifouling paint provided by Nippon Company failed to reached the agreed effect. Therefore, Anrita Company requests the court to order Nippon Company to compensate the three ships of Anrita Company for a total loss of 1,416,757.14 yuan, USD 136,217.10 and EUR 20,227.28, and to bear the case handling fee in this case.

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The court of first instance ascertained the facts: There is a sales contract between Anrita Company and Nippon Company. It is agreed that Nippon Company will sell marine paint to Anrita Company, and provide technical services during the construction period, and the sales price includes technical service costs. Nippon Company sent M.V. Kai Mou paint matching quotation to Anrita Company, stating that “antifouling paint is valid for 36 months, sailing 0–6,000 nautical miles per month” in May 2013. In June 2013, M.V. Kai Mou anti-fouling paint painting was carried out. The paint appeared to fall off in May 2014. According to the record of CHEXXXX Docking Inspection Report (hereinafter referred to as May 2014 Inspection Report) issued by Nippon Company in May 2014, the abscission area is mainly as follows: a small amount of antifouling paint fell off at the bottom, and about 40% of the antifouling paint fell off on the flat bottom. On the reason of the paint falling off, Anrita Company maintains that Nippon Company is responsible for the wrong anti-fouling paint, and that it has submitted (2014) Hu Hai Fa Shang Chu Zi No. 1639 effective judgment, the publicity materials of the paint products and the Japanese web materials of Nippon Company. During the trial of (2014) Hu Hai Fa Shang Chu Zi No. 1639 case, Nippon Company confirmed that it had supplied the wrong paint to M.V. Kai Mou, that is it should have provided ALF products but actually provided LF products. In addition, according to Nippon Company’s Japanese web page, there are differences between ALF products and LF products in terms of the brushing method and the thickness of the wet film. Nippon Company claims that this is due to the site conditions which are unsuitable for construction. According to M.V. Kai Mou Anti-fouling Paint Construction Report and May 2014 Inspection Report, the problem of paint falling off is caused by the tense docking period and the construction being conducted under harsh conditions. Specifically, first, the humidity of the first coat of primer was too high, and the adhesion of the paint was very poor and was easy to fall off; secondly, during the painting of the anti-fouling paint on the flat bottom, dew had been formed on the flat bottom of the ship’s hull. However, both reports were produced unilaterally by Nippon Company and were not confirmed by Anrita Company, and during the first trial of the case, Nippon Company failed to submit evidence that although it had informed Anrita Company or its agent that the site conditions were not suitable for construction, Anrita Company insisted on the construction. Besides, Nippon Company also claimed that the paint falling off is due to the use of the old primer before the application of the Nippon paint, but failed to submit documentary evidence to support it, and this claim is different from May 2014 Inspection Report produced by Nippon Company. M.V. Kai Mou berthed at Wusong shipyard of Shanghai port, No.1 dock for repair in June 2016. Anrita Company commissioned Shanghai Ejoy Insurance Surveyors & Adjusters Co., Ltd. (hereinafter referred to as Ejoy Company) to investigate the failure of antifouling paint. According to the inspection report issued by Ejoy Company, a large area of marine creature is attached to the hull below the

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waterline. Ejoy Company concludes that the failure and the falling off of antifouling paint are the cause of the hull being contaminated by marine organisms. Anrita Company informed Nippon Company in advance of the time M.V. Kai Mou entered the dock for repair, but Nippon Company did not participate in the inspection. Besides, during the first instance hearing, Anrita Company confirmed that the ship inspections were also carried out at the dock. Costs associated with the failure of antifouling paint incurred in the repair of the ship are as follows: 1. The cost of repainting is USD 49,084.10, and the actual amount is USD 47,246.14. According to the report of M.V. Kai Mou inspection, the cost of the repainting should be borne entirely by Nippon Company. However, according to the invoices submitted by Anrita Company, the discounted amount of the antifouling products SEAGRANDPRIX660HSLIGHTBROWN and SEAGRANDPRIX660HSBROWN in the redo paint project is USD 24,219. According to the ratio of the actual payment amount to the invoice amount, the court of first instance found that Anrita Company actually spent USD 23,312.12 to buy new anti-fouling paint. 2. The invoice amount for the charge for entering and leaving port is 84,536 yuan, the cost of items related to the failure of antifouling paint according to M.V. Kai Mou Inspection Report is RMB 73,236 yuan, due to the fact that there was an overvaluation in the invoice during the actual payment process of Anrita Company, Anrita Company actually paid USD 12,658.93 in port charges, based on the ratio of the actual amount and the invoice value converted to us dollar (12,658.93/12,725.77). The court found that the actual port expenses incurred by Anrita Company in connection with the ineffective anti-fouling paint were RMB 72,851.34 yuan. 3. The invoice amount for the shipyard dock repair charges, is RMB 688,047 yuan, and the payment certificate submitted by Anrita Company shows that it has paid the charges. According to the report of M.V. Kai Mou inspection, the dock repair charges are divided into two parts, one is general service charges RMB 376,146 yuan, the other is hull dock repair and painting costs RMB 311,901 yuan. Regarding the general service charges, M.V. Kai Mou Inspection Report apportioned the cost, and the cost that should be borne by Nippon Company was RMB 278,083 yuan, however, the surveyors could not explain the specific allocation basis during the inquiry process., and there are also big differences in the project allocation standards between the M.V. Fu Mou Inspection Reports issued by Ejoy Company and Shanghai Yisheng Insurance Surveyors & Adjusters Co., Ltd. (hereinafter referred to as “Yisheng Company”), and Nippon Company does not agree with this proportion of the cost-sharing ratio, however it is unable to propose a specific criteria for apportionment. For the ship dock repair and coating costs, M.V. Kai Mou Inspection Report found that the cost related to the failure of the antifouling paint is RMB 271,652 yuan, and the company has no objection to the cost of this part.

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4. The invoice amount for the cost of mainframe spare parts and labor repair costs, is RMB 708,842 yuan and RMB 185,276 yuan respectively, the payment voucher submitted by Anrita Company shows that it had paid the full cost of mainframe spare parts and the actual cost of labor was USD 25,126. According to M.V. Kai Mou Inspection Report, due to the failure of the anti-fouling paint, the main engine was overloaded and the mainframe had to be repaired in advance, therefore, the company should bear the cost of mainframe spare parts RMB 230,054 yuan and the repair cost RMB 38,699 yuan. However, M.V. Kai Mou Inspection Report failed to effectively explain the need for the mainframe to be repaired in advance, and the surveyor indicated in the course of inquiry, the only basis for the main engine damage caused by the ineffective paint was that the engine log showed that the exhaust temperature of the main engine was high, and that the engine wear caused by other reasons could not be effectively eliminated. Nippon Company sent a M.V. Fu Mou paint quotation to Anrita Company, stating that “antifouling paint is valid for 36 months, sailing 0–6000 nautical miles per month” in November 2012. From November to December 2012, M.V. Fu Mou was painted antifouling paint provided by Nippon Company. The captain of M.V. Fu Mou sent an email to Anrita Company, reporting that the stern and rudder blades were attached to a large number of marine organisms on November 5, 2014. After Anrita Company sent photos of the contaminated bottom of the ship to Nippon Company, Nippon Company replied on November 11, 2014 that it would arrange for personnel on board the ship to investigate, later, it did not actually arrange for the inspection on the ground that the inspection of M.V. Fu Mou in Korea was difficult, and the general staff might not necessarily see the underwater part. In respond to this, Anrita Company sent an email to Nippon Company on December 8, 2014, saying that it would immediately clean the bottom, with an estimated cost of USD 17,000. M.V. Fu Mou docked at an anchorage from November 25, 2014 to December 11. During the period, Amir Marine Service Co., Ltd. (hereinafter referred to as Amir Company) cleaned the bottom of M.V. Fu Mou at Busan Anchorage in South Korea and issued a decontamination report, and the decontamination report recorded the decontamination work and the proportion of the bottom of the ship covered by marine organisms. For this, Anrita Company paid Amir Company bottom cleaning charges USD 13,307.91. During the docking at the anchorage of M.V. Fu Mou, the anchorage charges (including agency charges) was USD 63,64.57, pilotage dues was USD 69,6.42. According to the report of M.V. Fu Mou inspection issued by Yisheng Company, the anchorage charges (including agency charges USD 11,123.17 and pilotage dues USD 69,6.42) should be borne by Nippon Company. On the fuel costs arising from the berth shifting, M.V. Fu Mou Inspection Report assessed USD 2,100 for heavy oil charges and USD 3,352.50 for diesel oil charges. In addition, M.V. Fu Mou Inspection Report also estimated the loss of the charter period during the period of cleaning up to be USD 13,650.

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However M.V. Fu Mou was not engaged in any charter party during the cleaning at the anchorage in Korea. M.V. Fu Mou berthed at Wusong shipyard of Shanghai port, No. 1 dock, for repair from November to December 2015. Anrita Company commissioned Yisheng Company to inspect the failure of anti-fouling paint. According to M.V. Fu Mou Inspection Report issued by Yisheng Company, a large area of marine organisms were attached to the hull below a certain waterline. Yisheng Company found that the failure of anti-fouling paint is the cause of sea biological fouling. Anrita Company informed Nippon Company in advance of the time M.V. Fu Mou entered the dock for repair, but Nippon Company did not take part in the inspection. During the trial of first instance, Anrita Company confirmed that a ship survey were also carried out at the dock. The shipyard repair costs of M.V. Fu Mou associated with the failure of antifouling paint are as follows: 1. The dock repair charges at the shipyard is RMB 479,503 yuan, including general dock repair service charges RMB 236,502 yuan and coating and dock repair charges RMB 243,001 yuan. With regard to the general service charges for dock maintenance, M.V. Fu Mou Inspection Report apportioned the cost, and considered that the cost to be borne by Nippon Company was RMB 206,868 yuan, however, in the course of inquiry, the surveyor was unable to explain the specific basis for the apportionment, and the two inspection reports also differ greatly in the standard of apportionment of each project. Although Nippon Company does not agree with the cost-sharing ratio of this part of the share of expenses, it cannot put forward a specific standard for apportionment. As for the cost of dock repair and painting, M.V. Fu Mou Inspection Report found that the cost related to the failure of antifouling paint was RMB 206,301 yuan, and Nippon Company has no objection to this part of the cost. 2. The cost of the port is RMB 56,411 yuan, and M.V. Fu Mou Inspection Report considers that the cost of the project related to the antifouling paint is RMB 55,011 yuan. 3. The cost of repainting is USD 36,557. M.V. Fu Mou Inspection Report found the cost of SEAGRANDPRIX660HSLIGHTBROWN and SEAGRANDPRIX 660HSBROWN in the repainting project should be borne by Nippon Company. The value of the two products is USD 24,883 after discount. 4. As for the hire, fuel loss, M.V. Fu Mou Inspection Report confirmed that M.V. Fu Mou were not engaged in any charter party during the repair in both Busan and Shanghai, but the surveyor thought that Anrita Company should be compensated for time loss and fuel loss for a total of USD 358,850. 5. The cost of mainframe spare parts, freight and repair are 187,765.60 euros, 7,476 euros and 21,843.70 dollars respectively. According to M.V. Fu Mou Inspection Report, the main engine was overloaded due to the failure of the antifouling paint, causing the mainframe to be repaired ahead of schedule, therefore Nippon company should pay 19,355.20 euros for mainframe spare parts, 872.08 euros for freight and 40,092.14 yuan for repairs. However, M.V.

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Fu Mou Inspection Report failed to effectively explain the need for the mainframe to be repaired in advance, and the surveyor indicated in the course of inquiry, the only basis for the damage caused by the failure of the paint is that the engine log showed that the exhaust temperature of the host was high, at the same time, and that the engine wear caused by other reasons could not be effectively eliminated. In addition, to prove the failure and related loss amount of the antifouling paint for M.V. Kai Mou, M.V. Fu Mou and M.V. Li Mou, Anrita Company paid RMB 14,600 yuan to Ejoy Company and USD 5,725 to Yisheng Company. In the first trial, Anrita Company also incurred USD 500 for notarization and RMB 2,161 yuan for translation. The court of first instance held that the case was a contractual dispute for the supply of ship’s materials and spare parts. Nippon Company sent a matching quotation to Anrita company and that constituted an offer, according to which Anrita company painted the corresponding antifouling paint which constituted an undertaking. The supply contractual relationship between the two parties is therefore valid. The court of first instance summarized and illustrated the outstanding issues in this case as follows: 1. whether there is a breach of contract by Nippon Company; 2. the scope of liability for breach of contract and the amount of compensation. On whether there is a breach of contract in Nippon Company. According to the contract, “antifouling paint shall be valid for 36 months, sailing 0–6,000 nautical miles per month”. In addition, Nippon Company shall provide technical services during the painting process. The evidence in the case indicates that a large area of marine biological adhesion occurred within 36 months after the bottom of M.V. Fu Mou and M.V. Kai Mou were painted with antifouling paint, which preliminarily proved that the antifouling paint provided by Nippon Company failed to achieve the agreed use effect. In addition, with regards to M.V. Kai Mou’s antifouling paint falling off, Anrita Company submitted materials such as web page data, which preliminarily proved that it was the wrong products supplied by Nippon Company that resulted in the use of the wrong process to paint antifouling paint. Although Nippon Company claimed that the paint shedding was caused by unqualified construction conditions, it failed to submit effective evidence to prove that there was indeed an unsuitable construction situation, it also failed to prove that Anrita Company had been informed that the construction conditions were not suitable, therefore, the court of first instance did not support the counterplead of Nippon Company. Nippon Company failed to provide effective technical services and antifouling paint products to achieve the effect of commitment as agreed in the contract, hence Nippon Company breached the contract. On the scope of liability for breach of contract and the amount of compensation. For M.V. Kai Mou, there are four main losses claimed by Anrita Company, including repainting costs, port costs, dock repair costs and mainframe spare parts costs and repair costs. Nippon Company agrees to bear the costs of repainting in proportion to its liability, the court of first instance held that the cost of repainting

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claimed by Anrita Company included different types of paint, however the loss involved was caused by the failure of antifouling paint, therefore Nippon Company should only bear the cost of antifouling paint, and should not bear the cost of other paint products, and M.V. Kai Mou Inspection Report also used this standard to assess the loss. According to the court of first instance, the company should bear the cost of redoing anti-fouling paint which is USD 23,312.12. With regard to port charges, Nippon Company claimed that M.V. Kai Mou was docked for compulsory inspection, so that the charge is inevitable and should not be borne by Nippon Company. The court of first instance held that the inspection and repainting project were carried out while the ship was entering and leaving the port, therefore, Anrita Company and Nippon Company shall each bear half of the port charges related to the anti-fouling paint, that is, Nippon Company will bear RMB 36,425.67 yuan. Regarding the dock repair costs at the shipyard, Nippon Company accepts the costs of dock repair and painting costs of the ship as determined in the inspection report of M.V. Kai Mou, which is RMB 271,652 yuan, but argues that apportionment of general service charges is not reasonable. The court of first instance held that the surveyor could not give a clear and reasonable basis for assessing the apportionment of the general service charges, and Nippon Company also failed to propose a specific calculation method. Since the ship was involved in many projects such as inspection and repainting at the shipyard, the court of first instance decided that Anrita Company and Nippon Company should each bear half of the costs incurred during that period, that is, RMB 188,073 yuan for general service charges was to be borne by Nippon Company. With regard to mainframe spare parts fees and repair fees, the court of first instance held that, first of all, M.V. Kai Mou Inspection Report submitted by Anrita Company could not effectively prove that the maintenance of the mainframe in advance was really necessary, and that there is an inevitable causal relationship between maintenance of the mainframe in advance and the contaminated bottom of the ship; Secondly, even though the failure of the antifouling paint was related to the wear of the mainframe, then the company did not take reasonable measures to avoid the loss expansion in the event of failure of the known anti-fouling paint, nor should it claim to Nippon Company for the expansion of the loss; Thirdly, the damage to the mainframe caused by the failure of the antifouling paint is beyond the scope of the losses foreseen at the time when Nippon Company entered into the contract, therefore, the court of first instance does not support Anrita Company’s claim on the loss of mainframe spare parts fees and repair fees. For M.V. Fu Mou, there are six main losses claimed by Anrita Company, including decontamination charges in Korea, repainting charges, port charges, dock repair charges at shipyard, mainframe spare parts charges, freight and repair charges, and hire and fuel losses. With regard to the decontamination charges in Korea, the court of first instance held that Anrita Company had submitted the invoices payment vouchers of the bottom cleaning charges, the anchorage charges (including agency charges), pilotage dues, the evaluation of the heavy oil and light oil consumption in the in and out of the anchorage is also reasonable in M.V. Fu Mou Inspection Report, and the five costs here mentioned are incurred due to the

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clean-up of the contaminated bottom of the ship, which is caused by the failure of the antifouling lacquer, therefore, the total of the five costs is approved totalling USD 20,580. However, during the clean-up period, M.V. Fu Mou was not engaged in any charter party, therefore the loss of the charter period claimed by Anrita Company was not supported. As to dock repair charges at shipyard, Nippon Company accepts the dock repair charges and painting charges as determined in the inspection report which is RMB 206,301 yuan, but argues that the apportionment of general service charges is not reasonable. The court of first instance held that the surveyor could not give a clear and reasonable basis for the apportionment of the general service charges, and Nippon Company also failed to propose a specific calculation method. Since the ship was involved in many projects such as inspection and repainting at the shipyard, the court of first instance decided that Anrita Company and Nippon Company should each bear half of the costs, that is, RMB 118,251 yuan was to be borne by Nippon Company. With regard to port charges, Nippon Company believes that M.V. Fu Mou was docked for compulsory inspection, so that the charge is inevitable and should not be borne by Nippon Company. The court of first instance held that the inspection and repainting items were carried out while the ship was entering and leaving the port, therefore, Anrita Company and Nippon Company shall each bear half of the port charges related to the anti-fouling paint, that is, Nippon Company is to bear RMB 27,505.50 yuan. Regarding repainting charges, M.V. Fu Mou Inspection Report found that the cost associated with antifouling paint was USD 24,883, which is also recognized by Nippon Company, and the court of first instance supported it. With regard to the hire and fuel loss claimed by Anrita Company, the court of first instance held that the company could not effectively prove the causal relationship between the two losses and the failure of the antifouling paint, and therefore the court did not support the claim. With regard to mainframe spare parts fees, freight and repair fees, the court of first instance held that, first of all, M.V. Fu Mou Inspection Report submitted by Anrita Company could not effectively prove that the maintenance of the mainframe in advance was really necessary, and that there was an inevitable causal relationship between maintenance of the mainframe in advance and the contaminated bottom of the ship; Second, even though the failure of the antifouling paint was related to the wear of the mainframe, then the company did not take reasonable measures to avoid the loss expansion in the event of failure of the known anti-fouling paint, nor should it claim to Nippon Company for the expansion of the loss; Thirdly, the damage to the mainframe caused by the failure of the antifouling paint is beyond the scope of the losses foreseen at the time when Nippon Company entered into the contract, therefore, the court did not support Anrita Company’s claim on the loss of mainframe spare parts fees, freight and repair fees. In addition, in respect of the survey fees, notarization fees and translation fees claimed by Anrita Company, the court of first instance held that the notarization fee was the necessary expense for the company to carry out the lawsuit, so the court did not support it. With regard to survey fees and translation fees, since Nippon Company stated that if the court of first instance accepted the relevant evidential materials, they were willing to bear the corresponding part of the survey fees and

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translation fees, therefore, Nippon Company shall bear the estimated cost of RMB 3,650 yuan and USD 1,431.25 for survey fees and RMB 1,080.50 yuan for translation fees. In summary, in accordance with Article 107, Article 113 Paragraph 1, Article 119 Paragraph 3 of the Contract Law of the People’s Republic of China, Article 64 Paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: 1. Nippon Company shall compensate Anrita Company for damages of USD 70,206.37 and RMB 852,938.67 yuan; 2. not support Anrita Company’s other claims. The first instance case handling fees is RMB 26,666.75 yuan, and Anrita Company is responsible for RMB 12,434.29 yuan, and Nippon Company is responsible for RMB 14,232.46 yuan. During the second trial of this case, neither party submitted new evidence materials. Upon hearing, the court found that: The facts identified in the first instance of the case are corroborated by relevant evidence and are confirmed by our court. The court holds that this case was a contractual dispute over the supply of ship’s materials and spare parts. This second trial summarizes and illustrates the outstanding issues in this case as follows: 1. whether M.V. Kai Mou Inspection Report and M.V. Fu Mou Inspection Report can be used as evidence to determine the fact of breach of contract by Nippon Company; 2. the scope of liability for breach of contract and the amount of compensation. Regarding the two inspection reports. Nippon Company’s argued that the two inspection reports involved could not be conclusive evidence. The court holds that Ejoy Company and Yisheng Company both have the insurance assessment business licenses, and the surveyors hold the practice certificate for insurance assessment practitioners. In addition, there is no factual or legal basis for Nippon Company’s appeal that the inspection report should be signed and sealed by three surveyors, the court does not support it. According to the facts of this case, the contract stipulated that “antifouling paint shall be valid for 36 months, sailing 0–6,000 nautical miles per month”, the bottom of M.V. Kai Mou and M.V. Fu Mou are all covered with a large area of sea creatures after the antifouling paint is painted within 36 months, and therefore Nippon Company has breached the contract. With regard to the scope of liability for breach of contract and the amount of compensation. Nippon Company contends that the two ships’ docking time is 36 months after the painting, therefore, the repainting at the port is inevitable, and the time is also the ship’s routine inspection time, therefore, the general service charges in port charges and shipyard dock repair charges should not be shared by Nippon Company. Anrita Company claimed that, although the paint had been found fallen off, and it did not immediately arrange the ship to be docked for the repainting of the antifouling paint, however the arrangement was based on the fact that the ship had a charter, and in order to reduce the related expenses such as the loss of the charter, the company chose to repaint the anti-fouling paint during the ship inspection. The court holds that Nippon Company breached the contract first, and shall bear the loss of default arising therefrom. Anrita Company’s arrangement did not enlarge the default loss that Nippon Company should compensate for, but

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rather helped to prevent further expansion of the loss that may result from the breach of the charter, and was in line with the principle of derogation. As Anrita Company confirmed that the two ships that involved in the case carried out ship inspection in addition to the anti-fouling paint repainting during the docking, it also, the court of first instance synthetically considered the fact that the ship was carried out inspection, repainting and other projects at the shipyard, and therefore decided that each of the two parties should bear half the cost of port charges and the general service charges of the shipyard repair fees, which is not inappropriate. The court does not support Nippon Company’s claim that the court of first instance’s decision to apportion the general service charges in the dock repair fees at the shipyard, port charges is unfair and unreasonable. Besides, regarding Nippon Company’s claim that the first-instance judgment determined the amount of expenses borne by Nippon Company on the basis of the invoice amount, is a question of identifying the wrong facts. The court holds that the first-instance judgment in relation to the calculation of the specific amount of money for M.V. Fu Mou and M.V. Kai Mou, was not based on the invoice amount, instead, the ratio of the actual payment amount to the invoice amount was used to determine the expenses incurred by Anrita Company in relation to the failure of the antifouling paint. The court of first instance has calculated in detail one by one and has fully explained it. Nippon Company claimed that the general service charges of the dock repair fees at shipyard should be RMB 206,868 yuan, but the first-instance judgment found that Nippon Company was responsible for RMB 118,251 yuan was a miscalculation. The court holds that, according to M.V. Fu Mou Inspection Report, the inspection report, the actual general service fee incurred is RMB 236,502, and the part of which to be borne by Nippon Company after the apportionment shall be RMB 206,868 yuan, in accordance with M.V. Fu Mou Inspection Report. The court of first instance found that Nippon Company is to bear the half of the actual general service charges which is RMB 118,251 yuan and there was no calculation error. In summary, there is no factual and legal basis for Nippon Company’s appeal, and the court does not support it. In accordance with Article 170 Paragraph 1 Sub-paragraph 1, and Article 175 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB 26,666.75 yuan, shall be borne by the Appellant Nippon Paint Marine Coatings (Shanghai) Co., Ltd. The judgment is final. Presiding Judge: CHEN Zilong Judge: GAO Mingsheng Judge: ZHANG Wen August 18, 2017 Clerk: LUO Gang

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Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: (a) if the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; Article 175 the judgment and order of the people’s court of second instance shall be final.

Xiamen Maritime Court Civil Judgment Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd.

(2016) Min 72 Min Chu No.300 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1111. Cause of Action 212. Dispute over voyage charter party. Headnote Plaintiff shipowner held to be entitled to recover balance of freight and demurrage due under instalment agreement made after defendant charterer failed to pay freight and demurrage under voyage charter parties; instalment agreement did not relieve charterer of obligation to pay demurrage, and interest was to paid from when it came due, not from when instalments under the instalment agreement became overdue. Summary Plaintiff, Shanghai COSCO SHIPPING Tanker, chartered two ships, M.V. “Da Chi” and M.V. “Xing Chi”, to Defendant Dragon Aromatics Co. for three voyages to carry high sulfur naphtha from Gulei to Huizhou. Because Defendant did not pay freight and demurrage immediately, Plaintiff and Defendant entered into an Instalment Repayment Agreement, under which Defendant would pay the amount owing in five separate instalment’s. Defendant made only two instalment payments. Plaintiff sued, seeking payment of the outstanding amount. The Court held for Plaintiff. Defendant did not challenge the amount of freight owing; interest should be calculated from the date that freight became due, and not from when payments became overdue under the Instalment Repayment Agreement. The Instalment Repayment Agreement was not a package settlement agreement relieving Defendant of the obligation to pay demurrage, as Defendant had argued, although the amount of demurrage owing was not exactly as Plaintiff had calculated it.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_56

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Judgment The Plaintiff: Shanghai COSCO SHIPPING Tanker Co., Ltd. Domicile: Room A-529, No. 188, Yesheng Rd., China (Shanghai) Pilot Free Trade Zone. Legal representative: ZHU Maijin, general manager. Agent ad litem: DUAN Qingxi, lawyer of Shanghai Allbright (Beijing) Law Office. The Defendant: Dragon Aromatics (Zhangzhou) Co., Ltd. Domicile: Gulei Peninsula, Zhangpu County, Zhangzhou City, Fujian. Legal representative: HUANG Yaozhi, chairman. Agent ad litem: LIN Chun, female, born on July 26, 1985, Han, staff of the company, living in Siming District, Xiamen City, Fujian. Agent ad litem: GUO Yanling, female, born on May 26, 1991, Hui, staff of the company, living in Shishi City, Fujian. With respect to the case arising from dispute over carriage of goods by sea (later confirmed to be voyage charter party) between the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. (the previous name was China Shipping Tanker Transportation Co., Ltd., and renamed during the lawsuit) and the Defendant Dragon Aromatics (Zhangzhou) Co., Ltd., after entertaining the case on March 10, 2016, the court legitimately applied ordinary procedure to try the case. On March 29, 2016, the Plaintiff applied to the court for preservation of property, requesting for freezing the Defendant’s bank deposit (similarly hereinafter) of 3,751,588.82 yuan or sealing up or seizing other equivalent properties. On the same day, this court granted the motion and approved. The Defendant raised objection to the court’s jurisdiction at the time of submitting a written reply, and upon investigation, this court ordered to reject its objection on April 12, 2016. The Defendant then appealed, and the Fujian High People’s Court rejected the appeal and issued (2016) Min Min Xia Zhong No. 175 Civil Ruling to affirm the court’s jurisdiction on July 19, 2016. The court held hearings in public twice on November 9, 2016 and November 23, 2016. Agent ad litem of the Plaintiff, DUAN Qingxi, and agents ad litem of the Defendant, LIN Chun and GUO Yanling, appeared in the court to attend the hearings. Now the case has been concluded. The Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. claimed to the court that: 1. the Defendant should compensate the Plaintiff freight principal of 3,347,102.84 yuan; 2. the Defendant should compensate the interests of the freight defaulted in accordance with the benchmark lending rates of 4.35% for one year term of People’s Bank of China, the interests based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interests based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interests based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment; 3. the Defendant should compensate demurrage of 196,875 yuan (the Plaintiff lowered its

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claim after the first trial, the previous claim was 229,375 yuan); 4. court acceptance fee, property preservation application fee and so like should be burdened the Defendant. Facts and reasons: according to Waterway Carriage Contract signed by the Plaintiff and the Defendant in 2015, M.V. “DA CHI” and M.V. “XING CHI” owned by the Plaintiff had respectively completed the carriage of naphtha from Zhangzhou to Huizhou for the Defendant on January 12, 2015, January 28, 2015 and February 7, 2015, and incurred freight of 5,578,504.72 yuan. According to the agreement of the contract, the last date of the freight payment for the Defendant should be June 4, 2015. However, the Defendant had only respectively paid 1,115,700.94 yuan on January 15, 2016 and 1,115,700.94 yuan on March 2, 2016, the total amount was 2,231,401.88 yuan, moreover, the Defendant still owed the Plaintiff freight principal of 3,347,102.84 yuan. Furthermore, during the process of the carriage above, voyage 2,015,001 of M.V. “DA CHI” and voyage 2,015,002 of M.V. “XING CHI” had occurred demurrage. The parties had signed Instalment Repayment Agreement by the end of 2015, however, the Defendant failed to perform in accordance with the Agreement, therefore, the right of the Plaintiff laid down in the previous Waterway Carriage Contract should not be affected. The Defendant Dragon Aromatics (Zhangzhou) Co., Ltd. had no objection to the principal of defaulted freight and its interests which calculated in accordance of an annual interest rate of 4.35% but argued that the interest of the freight should be calculated from the second day of every repayment date agreed in the Instalment Repayment Agreement. Moreover, the Instalment Repayment Agreement was a package settlement of the parties, the demurrage had not been agreed in the agreement, therefore, the relevant claim of the Plaintiff should be rejected. In order to prove their claims, the Plaintiff provided the following evidence: evidence 1: Waterway Carriage Contract (No. A15CIM047), to prove the start of counting the loading time and that the parties had carriage contract relationship; evidence 2: Voyage Vessel Carriage Business Order and relevant TIME LOG/ TIME SHEET, to prove that the Plaintiff had accepted the entrustment of the Defendant and carried out three voyages, as well as the time demurrage incurred; evidence 3: Instalment Repayment Agreement, to prove that the Defendant approved the fact of arrears but failed to fully perform the agreement of the agreement; evidence 4: NOR, to prove that it had got ready for install time; evidence 5: No. 572636692663 Sf-Express Express Form, evidence 6: the delivery record of the mail room of the Plaintiff, to prove that the Plaintiff had sent invoice to the Defendant; evidence 7: the mail on April 20, 2015 between the Plaintiff and the Defendant, to prove that business orders of the three voyage involved in this case was sent from the Defendant to the Plaintiff, the Plaintiff sent it back to the Defendant after stamped and finally sent back to the Plaintiff after the Defendant stamped; evidence 8: the mail of March 30, 2016, to prove that the Plaintiff had sent the basis and relevant introduction about the demurrage incurred to the Defendant, the Defendant had not raise any objection after receiving the mail; evidence 9: Shanghai Oriental Notary Public Office (2016) Hu Dong Zheng Jin Zi No. 20038 Notarial Deed, to prove the authenticity of the evidence 7 and 8 of the Plaintiff.

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The Defendant did not provide any evidence. The parties provided evidence with law in accordance with its litigation requests, this court organized the parties putting to the proof and cross examination. Considering that the Defendant had no objection to the authenticity of the evidence of the Plaintiff above, as well as that the evidence above could prove each other and had relevancy with the facts of the case, therefore, this court approved and evidenced in written words. Combining the investigation and the recognition of both parties of the evidence, the court confirmed the facts as follows: The Plaintiff and the Defendant signed Waterway Carriage Contract (contract No. A15CIM047A), period of validity was from January 1, 2015 to December 31, 2015. The Defendant, as the charterer (shipper) entrusted 30,000 tons M.V. “XIN CHI”, M.V. “DA CHI” of the Plaintiff (the shipowner, carrier) to carry high sulfur naphtha, the port of loading was a safe berth in Haiteng Dock of Gulei Port, Zhangzhou, the port of unloading was a safe berth in Shell Dock, Huizhou, which took Voyage Vessel Carriage Business Order as the criterion specifically. The third Article of the contract agreed that: “the total loading and unloading time in the two ports shall be 120 h (each ship), the two ports can be dispensed. For that Haiteng Dock is not allowed for night navigation by the government currently, if M.V. arrived the loading/unloading port agreed in the Business Order between 6:00 and 16:00, the captain or his shipping agent shall inform the charterer or its cargo agent by phone or fax, which means that vessel is readied for all the work of loading/ unloading. At this time, no matter there is a berth or not, the time of loading/ unloading shall be calculated when the information arrived (arrival excluded the time above shall not be counted into the loading and unloading time). The loading time shall be calculated from the time that NOR is sent by the loading port to the time that all the goods are loaded and the pipelines are dismantled; the unloading time shall be calculated from the time that NOR is sent by the unloading port to the time that all the goods are unloaded and the pipelines are dismantled”. The fifth Article of the contract agreed the expense and the way it shall be paid: “1, freight: ……the shipowner shall issue an origin script of legitimate VAT special invoice for carrying trade which can deduct 11% after the vessel finished unloading without arguments about the quality and quantity and send the invoice to the charterer by the way of EMS, within 30 working days after the charterer received invoice, the charterer shall remit the total freight into the designated account of the ship owner. 2, Demurrage rate: the ship volume of 30,000 tons shall be RMB 60,000 yuan/day, proportionately calculated when less than one day (24 h per day). The charterer shall not burden the liability if the demurrage is not caused by the charterer. The demurrage shall be in accordance with the record of the loading and unloading time of the two ports and the logbook. The charterer shall claim reasonable appeal within 15 days after the charterer received the claim of demurrage (by fax) of the ship owner”. Afterwards, the Defendant respectively signed three copies of Voyage Vessel Carriage Business Order numbered 20,150,104, 20,150,120 and 20,150,215 on December 31, 2014, January 15, 2015 and January 25, 2015 with the Plaintiff, the LN carriage from Zhangzhou to Huizhou was carried out by the voyage

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2,015,001 of M.V. “DA CHI”, the voyage 2,015,002 and 2,015,003 of M.V. “XING CHI” of the Plaintiff. Voyage Vessel Carriage Business Order cleared once again that the total loading and unloading time should be 120 h and the demurrge should be 60,000 yuan/day. The three carriage works had respectively completed on January 12, 2015, January 28, 2015 and February 7, 2015 and incurred a total freight of 5,578,504.72 yuan. Otherwise, according to the record of TIME LOG/ TIME SHEET, LAYTIME STATEMENT and NOR, the total loading and unloading time of the voyage 2,015,001 of M.V. “DA CHI” and the voyage 2,015,002 of M.V. “XING CHI” was more than 120 h. Thereinto, the voyage 2,015,001 of M.V. “DA CHI” arrived at Haiteng Dock, Gulei Port, Zhangzhou of the Defendant at 07:00 on January 2, 2015, at 17:00, the same day, it delivered NOR, dismantled oil pipelines and finished loading works at 09:35 on January 7,2015; the vessel arrived at the unloading port, Huizhou at 08:45 on January 9,2015 and it delivered NOR, dismantled oil pipelines and finished unloading works at 18:15 on January 12, 2015. The voyage 2,015,002 of M.V. “XING CHI” arrived at Haiteng Dock, Gulei Port, Zhangzhou and delivered NOR at 20:30 on January 14, 2015, earlier than the loading period previously agreed (January 21, 2015 to January 24, 2015), allfasted at 15:40 on 21 of the same month, at 20:00, the same day, NOR was accepted, at 07:45 on 25th of the same month, the pipelines were dismantled and the loading works were finished; the vessel arrived at the unloading port, Huizhou and delivered NOR at 09:25 of the second day, dismantled oil pipelines and finished unloading works at 10:20 on 28 of the same month. On April 21, 2015, ZHAO Yan, an employee of the financial department of the Plaintiff, sent a file to the Defendant by No. 572636692663 Sf-Express. On December 30, 2015, the Defendant concluded Instalment Repayment Agreement with the Plaintiff for that it failed to pay off three freights under the involving waterway carriage contract by one time, the parties cleared that the Defendant still owed the Plaintiff a freight of 5,578,504.72 yuan and the Defendant should pay in 5 separate instalment’s (respectively paid 1,115,700.94 yuan before January 15, 2016, before January 31, 2016, before February 29, 2016 and before March 15, 2016, pay 1,115,700.96 yuan before March 25, 2016), as well as cleared that “if the Defendant failed to perform in accordance with the agreement, the right of the party A (the Plaintiff) laid down in the previous Waterway Carriage Contract should not be affected”. However, the Defendant had only respectively paid 1,115,700.94 yuan twice on January 15, 2016 and March 2, 2016, hitherto, the Defendant still owed the Plaintiff a principal of the freight of 3,347,102.84 yuan. At 14:13 on March 30, 2016, CHEN Junwei, an employee of the costal operation department of the Plaintiff, sent Demurrage of 2015 to DONG Mingwu, an employee of the Defendant, via e-mail. The Defendant confirmed acceptance but replied that the business personnel had no right to deal with it alone for that the dispute had entered litigation. This court held that, this case was presumed as dispute over carriage of goods by sea when put on record, however, through the trial, the relationship between the Plaintiff and the Defendant was actually voyage charter party, the Plaintiff was the shipowner and the Defendant was the charterer, therefore, this case should be into

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dispute over voyage C/P. The involving Waterway Carriage Contract and Voyage Vessel Carriage Business Orders were real intention of the parties, which should be valid in accordance with law, both sides should strictly perform them. The issues in this case were: 1. the calculation of the interests of the defaulted freight; 2. demurrage. 1. Considering about the interests of the defaulted freight. The carriage of the involving three voyage was respectively completed on January 12, 2015, January 28, 2015 and February 7, 2015, the Defendant had no objection to the amount of the defaulted freight of the three voyage under the Instalment Repayment Agreement signed between the parties by the end of the year and paid part of the freight in accordance with the agreement, the Defendant also had no objection to the claim of the Plaintiff that the annual interest rate of the defaulted freight should be calculated by 4.35% but argued that the interest of the freight should be calculated from the second day of the every instalment repayment day agreed in the Instalment Repayment Agreement and denied that the Plaintiff had sent invoice to the Defendant. This court held the opinion that, considering that the Defendant failed to fully perform the Instalment Repayment Agreement and according to the agreement between the parties that “the right of the party A (the Plaintiff) laid down in the previous Waterway Carriage Contract should not be affected”, the claim of the Plaintiff that expense settlement should be in accordance with Waterway Carriage Contract had facts and legal basis, which should be supported by law. Although the Defendant confirmed the particular time of the completion of three voyage of the Plaintiff and performed the liability for payment for part of the freight, the Defendant denied that the financial personnel of the Plaintiff had sent it invoice on April 21, 2015 and failed to provide evidence to prove that the file sent by the Plaintiff was other financial material by the same period. According to the known facts above and provision of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 93 Paragraph 1 Sub-paragraph 4, the court presumed the claim of the fact of the Plaintiff that it had sent invoice to the Defendant was established. According to Waterway Carriage Contract Article 5 Paragraph 1, the Defendant should pay the total freight to the Plaintiff within 30 working days after receiving the freight invoice of the Plaintiff. Considering that the Plaintiff had sent the freight invoice to the Defendant on April 21, 2015 by express, the invoice should arrived at the second day according to the general speed of the express, therefore, the Defendant should pay the defaulted freight before June 3, 2015. However, the Defendant failed to perform the liability to pay off all the freight according to the contract, which had obviously breached the contract. Deduct the two freight of 1,115,700.94 yuan each respectively paid on January 15, 2016 and March 2, 2016, hitherto, the Defendant still owed the Plaintiff a principal of freight of 3,347,102.84 yuan, which should be paid off instantly. At the same time, the claim of the Plaintiff of the interest loss of the relevant occupied freight should be paid by subsection according to an annual interest rate of 4.35% agreed by the parties which based on the fact that the Defendant

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had paid part of the freight (thereinto the interest based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interest based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interests based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment) had nothing wrong to be accepted, the claim should also be approved by law. 2. The demurrage. The Defendant argued that Instalment Repayment Agreement was a package settlement of the parties, the demurrage had not been agreed in the agreement. This court held the opinion that for the same reasons above, all kinds of expense including the demurrage should be settled according to the provisions agreed in Waterway Carriage Contract and Voyage Vessel Carriage Business Order for that the Defendant failed to fully perform Instalment Repayment Agreement. The reasons of the plea of the Defendant could not be set up, this court do not approve it. According to the facts found out, the total loading and unloading time of the voyage 2,015,001 of M.V. “DA CHI” and the voyage 2,015,002 of M.V. “XING CHI” was more than 120 h agreed in the Contract, which incurred demurrage, the specific circumstances were as follows respectively: 1. the voyage 2,015,001 of M.V. “DA CHI” arrived at Haiteng Dock of the loading port at 07:00 on January 2, 2015, delivered NOR at 17:00 on the same day, dismantled oil pipelines at 09:35 on 7 of the same month; the vessel arrived at the unloading port and delivered NOR at 08:45 on January 9, 2015, it dismantled oil pipelines at 18:15 on 12 of the same month. However, in accordance with the special provision about Haiteng Dock of Waterway Carriage Contract Article 3, the loading time of M.V. “DA CHI” should be counted from 06:00 of the second day namely on January 3, 2015, the actual total loading and unloading time should be 4 days of loading port  24 h + 3 h and 35 min + 3 days of unloading port  24 h + 9.5 h = 181 h and 5 min. After the deduction of 120 h of total loading and unloading time agreed in the contract, the demurrage time of M.V. “DA CHI” should be 61 h and 5 min, which equalled to 2.545 days. Calculated by demurrage rate of 60,000 yuan/ day, the demurrage of M.V. “DA CHI” should be 60,000 yuan/ day  2.545 days = 152,700 yuan. 2. The voyage 2,015,002 of M.V. “XING CHI” arrived at loading port earlier than the loading period previously agreed (from January 21, 2015 to January 24, 2015) for its own liability, though delivered NOR very early, the NOR was accepted until 20:00 of January 21, 2015, after it allfasted, oil pipelines were dismantled at 10:20 on 25 of the same month; the vessel arrived at the unloading port at 09:25 on the second day and delivered NOR, it dismantled oil pipelines at 10:20 on 28 of the same month. However, the Plaintiff claimed that the actual loading time should be calculated from the time the vessel all fasted namely 15:40 of the January 21, 2015, which did not match the agreement of “shall be calculate from the time NOR is delivered” between the parties. Meanwhile, the Defendant did not approve that the liability of the NOR earlier than the loading time previously agreed should be burdened by the Plaintiff, therefore, the actual loading time should be

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calculated from 20:00 of the January 21, 2015 when the NOR was accepted. Therefore, the actual total loading and unloading time of the voyage 2,015,002 of M.V. “XING CHI” should be 3 days of loading port  24 h + 11 h and 45 min + 2 days of unloading port  24 h + 55 min = 132 h and 40 min. After the deduction of 120 h of total loading and unloading time agreed in the contract, the demurrage time of M.V. “XING CHI” should be 12 h and 40 min, which equalled to 0.528 day. Calculated by a demurrage rate of 60,000 yuan/ day, the demurrage of M.V. “XING CHI” should be 60,000 yuan/ day  0.528 day = RMB 31,680 yuan. The total demurrage of the two voyage above was: 152,700 yuan + 31,680 yuan = 184,380 yuan, the Defendant should compensate the Plaintiff instantly. Pulling the threads together, the claims of the Plaintiff basically had factual and legal basis, and the court should support it; part of the calculation of the demurrage did not match the agreement of the contract, and the court should reject it. According to the Contract Law of the People’s Republic of China Article 107, Article 292, and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90, the judgment is as follows: 1. The Defendant, Dragon Aromatics (Zhangzhou) Co., Ltd., shall, within 10 days after the judgement comes into effect, pay the freight of 3,347,102.84 yuan and its interest loss calculated by an annual interest rate of 4.35% to the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. (further, the interest based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interest based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interest based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment); 2. The Defendant, Dragon Aromatics (Zhangzhou) Co., Ltd., shall, within 10 days after the judgement comes into effect, pay the demurrage of 184,308 yuan to the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd.; 3. Reject other claims of the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. Should it fail to perform the obligation to pay within the period required by this judgment, the Defendant Dragon Aromatics (Zhangzhou) Co., Ltd. shall, pursuant to Article 253 of the Civil Procedure Law of the People’s Republic of China, pay double liability interest occurred during the delayed period. Court acceptance fee in amount of 36,500 yuan, property preservation fee in amount of 5,000 yuan, total amount of 41,500 yuan, the Defendant Dragon Aromatics (Zhangzhou) Co., Ltd. should bear 41,000 yuan, the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. should bear 500 yuan. If not satisfy with this judgment, within fifteen days of the date of the judgment be delivered, which can submit copies of the original petitions and appeal to the Fujian High People’s Court.

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Presiding Judge: CAI Fujun Judge: YU Jianlin People’s Juror: GAO Ruihua December 28, 2016 Clerk: LI Yue

Appendix: Main Legal Provisions Applied in this case and Execution Application Notice 1. Main laws applied Contract Law of the People’s Republic of China Article 107 If a party fails to perform its obligations under a contract, or its performance fails to satisfy the terms of the contract, it shall bear the liabilities for breach of contract such as to continue to perform its obligations, to take remedial measures, or to compensate for losses. Article 292 A passenger, a consignor or a consignee shall pay the ticket-fare or freight. Where the carrier fails to carry the passengers or the cargoes via the agreed or customary carriage route, thereby increasing the ticket-fare or freight, the passenger, consignor or consignee may refuse to pay any increased portion thereof. Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China. Article 90 A party shall provide evidence to prove the facts on which his claims are based or to repudiate the facts on which the claims of the opposing party are based, unless it is otherwise prescribed by any law. Where a party fails to provide evidence or the evidence provided is insufficient to support his claims before a judgment is entered, the party bearing the burden of proof shall take the adverse consequences. Article 93 A party need not provide evidence for the following facts: (1) (2) (3) (4) (5) (6) (7)

Natural laws and theorems; Facts known to all; Facts deduced from legal provision; Facts established on the basis of known facts and daily life experience; Facts confirmed by effective rulings issued by people's courts; Facts confirmed by effective awards rendered by arbitration agencies; Facts proven by effective notarization documents.

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The facts mentioned in items (2) through (4) shall be excluded if the party has contrary evidence which suffices to refute, and the facts mentioned in items (5) through (7) shall be excluded if the party has contrary evidence which suffices to overturn. 2. Execution application notice Civil Procedure Law of the People’s Republic of China. Article 239 The application period is two years. The suspension or suspension of an application for execution of a limitation shall be governed by the relevant provisions of law concerning the suspension or suspension of the limitation of action. The period prescribed in the preceding paragraph shall be counted from the last day of the period prescribed in the legal instrument for performance; if a legal document stipulates that the performance shall be carried out in instalment’s, it shall be counted from the last day of the prescribed period of performance; if a legal document does not provide for the period of performance, the period shall be counted from the date of entry into force of the legal document. Article 253 If the person subjected to execution fails to perform his obligations for payment of money within the period specified in the judgment, written order or other legal documents, he shall pay double the interest on the debts incurred during the delayed performance. If the person subjected to execution fails to perform other obligations within the period specified in the judgment, written order or other legal documents, he shall pay a deferred payment.

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Fujian High People’s Court Civil Judgment Shanghai COSCO SHIPPING Tanker Co., Ltd. v. Dragon Aromatics (Zhangzhou) Co., Ltd. (2017) Min Min Zhong No.271 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1101. Cause of Action 212. Dispute over voyage charter party. Headnote Affirming lower court decision holding that plaintiff shipowner was entitled to recover balance of freight and demurrage due under instalment agreement made after defendant charterer failed to pay freight and demurrage under voyage charter parties; instalment agreement did not relieve charterer of obligation to pay demurrage, and interest was to paid from when it came due, not from when instalment’s under the instalment agreement became overdue. Summary Plaintiff, Shanghai COSCO SHIPPING Tanker, chartered two ships, M.V. “Da Chi” and M.V. “Xing Chi”, to Defendant Dragon Aromatics Co. for three voyages to carry high sulfur naphtha from Gulei to Huizhou. Because Defendant did not pay freight and demurrage immediately, Plaintiff and Defendant entered into an Instalment Repayment Agreement, under which Defendant would pay the amount owing in five separate instalment’s. Defendant made only two instalment payments. Plaintiff sued, seeking payment of the outstanding amount. At first instance, the Court held for Plaintiff. Defendant did not challenge the amount of freight owing; interest should be calculated from the date that freight became due, and not from when payments became overdue under the Instalment Repayment Agreement. The Instalment Repayment Agreement was not a package settlement agreement relieving Defendant of the obligation to pay demurrage, as Defendant had argued, although the amount of demurrage owing was not exactly as Plaintiff had calculated it. Defendant appealed. On appeal, neither party presented any new evidence, so the appeal Court confirmed the facts as found by the Court of first instance. The appeal Court affirmed the first instance judgment, rejecting Defendant/Appellant’s arguments that interest should be calculated from the date instalment payments became overdue, and that the Instalment Repayment Agreement relieved it of the obligation to pay demurrage.

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Judgment The Appellant (the Defendant of first instance): Dragon Aromatics (Zhangzhou) Co., Ltd. Domicile: Gulei Peninsula, Zhangpu County, Zhangzhou City, Fujian. Legal representative: HU Dianxuan, general manager. Agent ad litem: LIN Zhanjin, lawyer of Beijing Yingke (Xiamen) Law Firm. The Respondent (the Plaintiff of first instance): Shanghai COSCO SHIPPING Tanker Co., Ltd. Domicile: Room A-529, No. 188, Yesheng Rd., China (Shanghai) Pilot Free Trade Zone. Legal representative: ZHU Maijin, general manager. Agent ad litem: DUAN Qingxi, lawyer of Beijing Zhonglun D&W (Shanghai) Law Firm. The Appellant, Dragon Aromatics (Zhangzhou) Co., Ltd., disagreed with (2016) Min 72 Min Chu No. 300 Civil Judgment made by Xiamen Maritime Court for case of the dispute over voyage charter party with the Respondent, Shanghai COSCO SHIPPING Tanker Co., Ltd., and appealed to the court. This case was confirmed to be the dispute over voyage charter party. After entertaining the case, the court legitimately constituted the collegiate bench to try the case and held a hearing in public. Now the case has been concluded. The claims of the Shanghai COSCO SHIPPING Tanker Co., Ltd. in first instance were that: 1. the Defendant should compensate the Plaintiff freight principal of 3,347,102.84 yuan; 2. the Defendant should compensate the interests of the freight defaulted in accordance with the benchmark lending rates of 4.35% for one year term of People’ s Bank of China, the interests based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interests based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interests based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment; 3. the Defendant should compensate demurrage of 196,875 yuan; 4. court acceptance fee, property preservation application fee and so like should be burdened the Defendant. After investigation, the court of first instance found out that: the Plaintiff and the Defendant signed Waterway Carriage Contract (contract No. A15CIM047A), period of validity was from January 1, 2015 to December 31, 2015. The Defendant, as the charterer (shipper) entrusted 30,000 tons M.V. “XIN CHI”, M.V. “DA CHI” of the Plaintiff (the shipowner, carrier) to carry high sulfur naphtha, the port of loading was a safe berth in Haiteng Dock of Gulei Port, Zhangzhou, the port of unloading was a safe berth in Shell Dock, Huizhou, which took Voyage Vessel Carriage Business Order as the criterion specifically. The third Article of the contract agreed that: “the total loading and unloading time in the two ports shall be

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120 h (each ship), the two ports can be dispensed. For that Haiteng Dock is not allowed for night navigation by the government currently, if M.V. arrived the loading/unloading port agreed in the Business Order between 6:00 and 16:00, the captain or his shipping agent shall inform the charterer or its cargo agent by phone or fax, which means that vessel is readied for all the work of loading/unloading. At this time, no matter there is a berth or not, the time of loading/unloading shall be calculated when the information arrived (arrival excluded the time above shall not be counted into the loading and unloading time). The loading time shall be calculated from the time that NOR is sent by the loading port to the time that all the goods are loaded and the pipelines are dismantled; the unloading time shall be calculated from the time that NOR is sent by the unloading port to the time that all the goods are unloaded and the pipelines are dismantled”. The fifth Article of the contract agreed the expense and the way it shall be paid: “1, freight: …… the shipowner shall issue an origin script of legitimate VAT special invoice for carrying trade which can deduct 11% after the vessel finished unloading without arguments about the quality and quantity and send the invoice to the charterer by the way of EMS, within 30 working days after the charterer received invoice, the charterer shall remit the total freight into the designated account of the ship owner. 2, Demurrage rate: the ship volume of 30,000 tons shall be RMB 60,000 yuan/day, proportionately calculated when less than one day (24 h per day). The charterer shall not burden the liability if the demurrage is not caused by the charterer. The demurrage shall be in accordance with the record of the loading and unloading time of the two ports and the logbook. The charterer shall claim reasonable appeal within 15 days after the charterer received the claim of demurrage (by fax) of the ship owner”. Afterwards, the Defendant respectively signed three copies of Voyage Vessel Carriage Business Order numbered 20,150,104, 20,150,120 and 20,150,215 on December 31, 2014, January 15, 2015 and January 25, 2015 with the Plaintiff, the LN carriage from Zhangzhou to Huizhou was carried out by the voyage 2,015,001 of M.V. “DA CHI”, the voyage 2,015,002 and 2,015,003 of M.V. “XING CHI” of the Plaintiff. Voyage Vessel Carriage Business Order cleared once again that the total loading and unloading time should be 120 h and the demurrge should be 60,000 yuan/day. The three carriage works had respectively completed on January 12, 2015, January 28, 2015 and February 7, 2015 and incurred a total freight of 5,578,504.72 yuan. Otherwise, according to the record of TIME LOG/ TIME SHEET,LAYTIME STATEMENT and NOR, the total loading and unloading time of the voyage 2,015,001 of M.V. “DA CHI” and the voyage 2,015,002 of M.V. “XING CHI” was more than 120 h. Thereinto, the voyage 2,015,001 of M.V. “DA CHI” arrived at Haiteng Dock, Gulei Port, Zhangzhou of the Defendant at 07:00 on January 2, 2015, at 17:00, the same day, it delivered NOR, dismantled oil pipelines and finished loading works at 09:35 on January 7,2015; the vessel arrived at the unloading port, Huizhou at 08:45 on January 9,2015 and it delivered NOR, dismantled oil pipelines and finished unloading works at 18:15 on January 12, 2015. The voyage 2,015,002 of M.V. “XING CHI” arrived at Haiteng Dock, Gulei Port, Zhangzhou and delivered NOR at 20:30 on January 14, 2015, earlier than the loading period previously agreed (January 21,

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2015 to January 24, 2015), allfasted at 15:40 on 21 of the same month, at 20:00, the same day, NOR was accepted, at 07:45 on 25th of the same month, the pipelines were dismantled and the loading works were finished; the vessel arrived at the unloading port, Huizhou and delivered NOR at 09:25 of the second day, dismantled oil pipelines and finished unloading works at 10:20 on 28 of the same month. On April 21, 2015, ZHAO Yan, an employee of the financial department of the Plaintiff, sent a file to the Defendant by No. 572636692663 Sf-Express. On December 30, 2015, the Defendant concluded Instalment Repayment Agreement with the Plaintiff for that it failed to pay off three freights under the involving waterway carriage contract by one time, the parties cleared that the Defendant still owed the Plaintiff a freight of 5,578,504.72 yuan and the Defendant should pay in 5 separate instalment’s (respectively paid 1,115,700.94 yuan before January 15, 2016, before January 31, 2016, before February 29, 2016 and before March 15, 2016, pay 1,115,700.96 yuan before March 25, 2016), as well as cleared that “if the Defendant failed to perform in accordance with the agreement, the right of the party A (the Plaintiff) laid down in the previous Waterway Carriage Contract should not be affected”. However, the Defendant had only respectively paid 1,115,700.94 yuan twice on January 15, 2016 and March 2, 2016, hitherto, the Defendant still owed the Plaintiff a principal of the freight of 3,347,102.84 yuan. At 14:13 on March 30, 2016, CHEN Junwei, an employee of the costal operation department of the Plaintiff, sent Demurrage of 2015 to DONG Mingwu, an employee of the Defendant, via e-mail. The Defendant confirmed acceptance but replied that the business personnel had no right to deal with it alone for that the dispute had entered litigation. This court held that, this case was presumed as dispute over carriage of goods by sea when put on record, however, through the trial, the relationship between the Plaintiff and the Defendant was actually voyage charter party, the Plaintiff was the shipowner and the Defendant was the charterer, therefore, this case should be dispute over voyage charter party. The involving Waterway Carriage Contract and Voyage Vessel Carriage Business Orders were real intention of the parties, which should be valid in accordance with law, both sides should strictly perform them. The issues in this case were: 1. the calculation of the interests of the defaulted freight; 2. demurrage. 1. Considering about the interests of the defaulted freight. The carriage of the involving three voyage was respectively completed on January 12, 2015, January 28, 2015 and February 7, 2015, the Defendant had no objection to the amount of the defaulted freight of the three voyage under Instalment Repayment Agreement signed between the parties by the end of the year and paid part of the freight in accordance with the agreement, the Defendant also had no objection to the claim of the Plaintiff that the annual interest rate of the defaulted freight should be calculated by 4.35% but argued that the interest of the freight should be calculated from the second day of the every instalment repayment day agreed in the Instalment Repayment Agreement and denied that the Plaintiff had sent invoice to the Defendant. This court held the opinion that, considering that the Defendant failed to fully perform the Instalment Repayment Agreement and

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according to the agreement between the parties that “the right of the party A (the Plaintiff) laid down in the previous Waterway Carriage Contract should not be affected”, the claim of the Plaintiff that expense settlement should be in accordance with Waterway Carriage Contract had facts and legal basis, which should be supported by law. Although the Defendant confirmed the particular time of the completion of three voyage of the Plaintiff and performed the liability for payment for part of the freight, the Defendant denied that the financial personnel of the Plaintiff had sent it invoice on April 21, 2015 and failed to provide evidence to prove that the file sent by the Plaintiff was other financial material by the same period. According to the known facts above and provision of the Interpretation of the Supreme People’ s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 93 Paragraph 1 Sub-paragraph 4, this court presumed the claim of the fact of the Plaintiff that it had sent invoice to the Defendant was established. According to Waterway Carriage Contract Article 5 Paragraph 1, the Defendant should pay the total freight to the Plaintiff within 30 working days after receiving the freight invoice of the Plaintiff. Considering that the Plaintiff had sent the freight invoice to the Defendant on April 21, 2015 by express, the invoice should arrived at the second day according to the general speed of the express, therefore, the Defendant should pay the defaulted freight before June 3, 2015. However, the Defendant failed to perform the liability to pay off all the freight according to the contract, which had obviously breached the contract. Deduct the two freight of 1,115,700.94 yuan each respectively paid on January 15, 2016 and March 2, 2016, hitherto, the Defendant still owed the Plaintiff a principal of freight of 3,347,102.84 yuan, which should be paid off instantly. At the same time, the claim of the Plaintiff of the interest loss of the relevant occupied freight should be paid by subsection according to an annual interest rate of 4.35% agreed by the parties which based on the fact that the Defendant had paid part of the freight (thereinto the interest based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interest based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interests based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment) had nothing wrong to be accepted, the claim should also be approved by law. 2. The demurrage. The Defendant argued that Instalment Repayment Agreement was a package settlement of the parties, the demurrage had not been agreed in the agreement. This court held the opinion that for the same reasons above, all kinds of expense including the demurrage should be settled according to the provisions agreed in Waterway Carriage Contract and Voyage Vessel Carriage Business Order for that the Defendant failed to fully perform Instalment Repayment Agreement. The reasons of the plea of the Defendant could not be set up, this court do not approve it. According to the facts found out, the total loading and unloading time of the voyage 2,015,001 of M.V. “DA CHI” and the voyage 2,015,002 of M.V. “XING CHI” was more than 120 h agreed in the Contract, which incurred demurrage, the specific circumstances were as follows

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respectively: 1. the voyage 2,015,001 of M.V. “DA CHI” arrived at Haiteng Dock of the loading port at 07:00 on January 2, 2015, delivered NOR at 17:00 on the same day, dismantled oil pipelines at 09:35 on 7 of the same month; the vessel arrived at the unloading port and delivered NOR at 08:45 on January 9, 2015, it dismantled oil pipelines at 18:15 on 12 of the same month. However, in accordance with the special provision about Haiteng Dock of Waterway Carriage Contract Article 3, the loading time of M.V. “DA CHI” should be counted from 06:00 of the second day namely on January 3, 2015, the actual total loading and unloading time should be 4 days of loading port  24 h + 3 h and 35 min + 3 days of unloading port  24 h + 9.5 h = 181 h and 5 min. After the deduction of 120 h of total loading and unloading time agreed in the contract, the demurrage time of M.V. “DA CHI” should be 61 h and 5 min, which equalled to 2.545 days. Calculated by demurrage rate of 60,000 yuan/ day, the demurrage of M.V. “DA CHI” should be 60,000 yuan/ day  2.545 days = 152,700 yuan. 2. The voyage 2,015,002 of M.V. “XING CHI” arrived at loading port earlier than the loading period previously agreed (from January 21, 2015 to January 24, 2015) for its own liability, though delivered NOR very early, the NOR was accepted until 20:00 of January 21, 2015, after it all fasted, oil pipelines were dismantled at 10:20 on 25 of the same month; the vessel arrived at the unloading port at 09:25 on the second day and delivered NOR, it dismantled oil pipelines at 10:20 on 28 of the same month. However, the Plaintiff claimed that the actual loading time should be calculated from the time the vessel all fasted namely 15:40 of the January 21, 2015, which did not match the agreement of “shall be calculate from the time NOR is delivered” between the parties. Meanwhile, the Defendant did not approve that the liability of the NOR earlier than the loading time previously agreed should be burdened by the Plaintiff, therefore, the actual loading time should be calculated from 20:00 of the January 21, 2015 when the NOR was accepted. Therefore, the actual total loading and unloading time of the voyage 2,015,002 of M.V. “XING CHI” should be 3 days of loading port  24 h + 11 h and 45 min + 2 days of unloading port  24 h + 55 min = 132 h and 40 min. After the deduction of 120 h of total loading and unloading time agreed in the contract, the demurrage time of M.V. “XING CHI” should be 12 h and 40 min, which equalled to 0.528 day. Calculated by a demurrage rate of 60,000 yuan/ day, the demurrage of M.V. “XING CHI” should be 60,000 yuan/ day  0.528 day = RMB 31,680 yuan. The total demurrage of the two voyage above was: 152,700 yuan + 31,680 yuan = 184,380 yuan, the Defendant should compensate the Plaintiff instantly. Pulling the threads together, the claims of the Plaintiff basically had facts and legal basis, the court should support it; part of the calculation of the demurrage did not match the agreement of the contract, the court should reject it. According to the Contract Law of the People’s Republic of China Article 107, Article 292, Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China Article 90, the judgment was as

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follows: 1. the Defendant, Dragon Aromatics (Zhangzhou) Co., Ltd., shall, within 10 days since the judgement comes into effect, pay the freight of 3,347,102.84 yuan and its interest loss calculated by an annual interest rate of 4.35% to the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. (thereinto the interest based on the freight of 5,578,504.72 yuan should be calculated from June 4, 2015 to January 15, 2016, the interest based on the freight of 4,462,803.78 yuan should be calculated from January 16, 2016 to March 2, 2016, the interests based on the freight of 3,347,102.84 yuan should be calculated from March 3, 2016 to the date of actual payment); 2. the Defendant, Dragon Aromatics (Zhangzhou) Co., Ltd., shall, within 10 days since the judgement comes into effect, pay the demurrage of 184,308 yuan to the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd.; 3. reject other claims of the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. Should it fail to perform the obligation to pay within the period required by this judgment, the Defendant Dragon Aromatics (Zhangzhou) Co., Ltd. shall, pursuant to Article 253 of the Civil Procedure Law of the People’s Republic of China, pay double liability interest occurred during the delayed period. Court acceptance fee in amount of 36,500 yuan, property preservation fee in amount of 5,000 yuan, total amount of 41,500 yuan, the Defendant Dragon Aromatics (Zhangzhou) Co., Ltd. should bear 41,000 yuan, the Plaintiff Shanghai COSCO SHIPPING Tanker Co., Ltd. should bear 500 yuan. After judging, Dragon Aromatics (Zhangzhou) Co., Ltd. disagreed with the judgment and appealed to this court that: 1. Instalment Repayment Agreement agreed that the Appellant should pay the defaulted freight in 5 separate instalment’s, therefore, the interest of the freight should be calculated from the second day of every repayment date agreed in Instalment Repayment Agreement. 2. The demurrage should not be burdened by the Appellant. Firstly, Instalment Repayment Agreement was a package agreement to solve the defaulted freight under the terms of the contract No. A15CIM047A of the parties, the demurrage was not included in the agreement. Secondly, the evidence provided by the Respondent could not prove the fact of the demurrage, the Respondent should burden the liability of lack of proof. 3. Despite the fact that the court of first instance held the opinion that the Respondent had provided legitimately valid, true and reliable evidence to prove the fact of the demurrage, the calculation of the demurrage was wrong. In conclusion, the Appellant requested the court of second instance to judge according to the law as follows: 1. dismiss the part of interests loss of the freight of the first term of the original judgement, the part of interests loss should be sentenced as follows: the interest based on 1,115,700.94 yuan should be calculated from February 1, 2016 to March 2, 2016, the interest based on 1,115,700.94 yuan should be calculated from March 1, 2016 to the date of actual payment, the interest based on 1,115,700.94 yuan should be calculated from March 16, 2016 to the date of actual payment, the interest based on 1,115,700.96 yuan should be calculated from March 26, 2016 to the date of actual payment. 2. dismiss the second term of the original judgement. 3. court acceptance fee, should be burdened by the Respondent. Shanghai COSCO SHIPPING Tanker Co., Ltd. argued that: 1. for that the Appellant failed to fully perform the repayment plan agreed in Instalment

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Repayment Agreement, the right of the Respondent laid down in Waterway Carriage Contract should not be affected according to the fifth article of the agreement. Therefore the first ground of appeal of the Appellant should not be established. 2. Considering about the demurrage was a content laid down in the original carriage contract, the Respondent had the right to claim for the demurrage according to the original carriage contract in accordance with the provision of the fifth article of the Instalment Repayment Agreement because the Appellant failed to fully perform the agreement. The calculation of the demurrage of the first judgement was correct. The Respondent requested the court to dismiss the appeal of the Appellant and to affirm the original judgment. After investigation, during the trial of second instance, two parties did not present any new evidence. The court confirmed the facts confirmed by the court of first instance. The court held that the issue of the second instance was as the same as those of the first instance. 1. Considering about the interest of the freight. Although the parties concluded the Instalment Repayment Agreement through consultation after the carriage had all been completed. According to the agreement that “if the agreement was failed to be fully performed, the right of the party A laid down in the previous Waterway Carriage Contract should not be affected” was agreed by the parties, the claim of the Respondent that expense settlement should be in accordance with Waterway Carriage Contract had facts and legal basis, which should be supported. The appeal of the Appellant that the interest should be calculated in accordance with the instalment time agreed in Instalment Repayment Agreement lacked facts and legal basis, this court did not approve it. The Appellant had no objection to the interest of the defaulted freight calculated by the court of first instance, the court affirmed it. 2. Considering about the demurrage. The Appellant claimed that Instalment Repayment Agreement was a package agreement of the parties, the demurrage was not included in the Agreement. For the same reason, all kinds of expense including the demurrage should be settled according to Waterway Carriage Contract and Voyage Vessel Carriage Business Order for that the Appellant failed to fully perform Instalment Repayment Agreement. The original judgement found the demurrage was in total amount of 184,380 yuan by calculation according to the facts found, the Appellant had not provided opposite evidence to deny the result of calculation, therefore, the court affirmed this term of the first instance. Pulling the threads together, facts are clearly ascertained and the law and regulations are correctly applied in the first-instance judgement, which shall be affirmed, and the grounds of appeal of the Appellant lack factual and legal basis, which shall be dismissed. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment.

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Court acceptance fee of second instance in amount of 36,500 yuan, the Appellant should bear that; court acceptance fee and property preservation fee of first instance should be fulfilled according to judgment of first instance. The judgment is final. Presiding Judge: ZHANG Sheng Acting Judge: LIN Wenxun Acting Judge: WEI Zizi May 3, 2017 Clerk: LI Xiaoxu

Appendix: Laws Applied in this Case Civil Procedure Law of the People’s Republic of China. Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: 1. If the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; 2. If the facts were incorrectly or the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law; 3. If in the original judgment the facts were not clearly ascertained and the evidence was insufficient, the people’s court of second instance shall make a written order to set aside the judgment and remand to case to the original people’s court for retrial, or the people’s court of second instance may amend the judgment after investigating and clarifying the facts; 4. If there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original people’s court for retrial

Tianjin Maritime Court Civil Judgment Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd.

(2016) Jin 72 Min Chu No.1044 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1133. Cause of Action 212. Dispute over voyage charter party. Headnote Plaintiff shipowner held to be entitled to recover freight and demurrage from defendant charterer who refused to take delivery at discharge port on account of cargo damage; defendant charterer's counterclaim for cargo damage dismissed. Summary Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (Hua Xin), chartered the ship “M.V. Ding Heng 5” from Plaintiff, Shanghai Dingheng Shipping Co., Ltd. (Dingheng) for a voyage to carry methanol from Tianjin to Dalian. Plaintiff and its consignee buyer, a non-party, refused to take delivery in Dalian, on the ground that the cargo was damaged during carriage, causing Plaintiff to incur demurrage. Defendant refused to pay Plaintiff, arguing that the goods were damaged. Plaintiff sued Defendant for freight and demurrage; Defendant counter-claimed for cargo damage. After trial, the court found for Plaintiff, holding that it was entitled to freight and demurrage. Defendant should have taken delivery of the cargo in Dalian; the cost of storage in shore tanks was less than the cost of the demurrage incurred while Defendant refused to take delivery. There was insufficient evidence to indicate that Plaintiff was responsible for the cargo damage, so Defendant’s counterclaim for cargo damage was dismissed.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_57

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Judgment The Plaintiff: Shanghai Dingheng Shipping Co., Ltd. Domicile: No. A-405, No. 188, Yesheng Road, Shanghai Pilot Free Trade Zone. Legal representative: LI Duozhu, general manager of the company. Agent ad litem: ZHOU Qi, lawyer of Shanghai Sloma Law Firm Agent ad litem: LIU Chong, lawyer of Shanghai Sloma Law Firm The Defendant: Liaoning Hua Xin Petroleum & Chemical Co., Ltd. Domicile: No. 51–2, Qing Nian Avenue, Shenhe District, Shenyang City, Liaoning. Legal representative: ZHAO Ying, board chairman of the company. Agent ad litem: XIAO Wenjun, worker of the company. Agent ad litem: ZHENG Kexin, lawyer of Liaoning Kaiyu Law Firm. With respect to the case arising from the dispute over voyage charter party between the Plaintiff, Shanghai Dingheng Shipping Co., Ltd. (hereinafter referred to as Dingheng Shipping), and the Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (hereinafter referred to as Hua Xin Petrochemical Company), the Plaintiff sued to the court on December 20, 2016, and after entertaining it on the same day, the court tried the case in which the general procedure was followed. The court held a hearing publicly on April 11, 2017, agent ad litem of Dingheng Shipping, LIU Chong, and agents ad litem of Hua Xin Petrochemical Company, XIAO Wenjun and ZHENG Kexin, appeared in the court to attend the hearing. Now the case has been concluded. Dingheng Shipping claimed to the court that: 1. Hua Xin Petrochemical Company should pay Dingheng Shipping the freight 369,557.1 yuan and the interests of the aforementioned money from October 1, 2016 to the actual date of payment (8,037.87 yuan, temporarily calculated to April 1, 2017); 2. Hua Xin Petrochemical Company should pay Dingheng Shipping the demurrage 472,270.83 yuan and the interests of the aforementioned money from October 1, 2016 to the actual date of payment (10,271.89 yuan, temporarily calculated to April 1, 2017); 3. Hua Xin Petrochemical Company should pay Dingheng Shipping the compensation for cargo damage 235,907.8 yuan and the interests of the aforementioned money from October 9, 2016 to the actual date of payment (5,130.99 yuan, temporarily calculated to April 9, 2017); 4. Hua Xin Petrochemical Company should paid Dingheng Shipping counsel fee 272,300 yuan; 5. Hua Xin Petrochemical Company should pay Dingheng Shipping inspection fee 15 thousand yuan; 6. the court acceptance fee should be borne by Hua Xin Petrochemical Company. Facts and reasons: on August 26, 2016, the Plaintiff and the Defendant signed a voyage charter party, stipulating that Hua Xin Petrochemical Company chartered the ship from Dingheng Shipping for freight transport from Tianjin to Dalian. The ship dispatched by the Dingheng Shipping reached the cargo port on September 9 and submitted the shipping order on the same day, and finished loading up on September 11. When the cargo was transported to Dalian Port, Hua Xin Petrochemical Company and consignee refused to receive shipment on grounds that

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cargo was damaged during the shipping, caused that the ship was delayed and did not leave Dalian Port until September 30. The defect of the cargo itself of Hua Xin Petrochemical Company led to the demurrage, Dingheng Shipping bore the compensation for cargo damage, inspection fee and counsel fee due to it, Hua Xin Petrochemical Company should bear the liability of compensation for the loss mentioned above. Dingheng Shipping argued that: 1. there was no objection to the amount of freight, during the performing the voyage charter party, the cargo was inspected disqualified after discharging, Hua Xin Petrochemical Company had reason to suspect that the damage was caused by Dingheng Shipping’s breach of contract, and did not pay the freight temporarily to avoid further loss, if Dingheng Shipping would not bear the liability for cargo damage according to the judgement, Hua Xin Petrochemical Company would agree to pay the freight; 2. Hua Xin Petrochemical Company had no fault in producing demurrage, after the cargo damage accident happened, Hua Xin Petrochemical Company’s multi-inquiry was not accepted by Dingheng Shipping, after Dingheng Shipping’s inquiry, the price of tank in Dalian Port was higher than demurrage, the demurrage was produced by Dingheng Shipping’s improper handling of cargo; 3. the secondary damage was not relevant to Hua Xin Petrochemical Company, the agreement of compensation for cargo damage was signed by Dingheng Shipping and the person other than involved in the case, which was not accepted by Hua Xin Petrochemical Company; 4. as to the inspection fee, the first sampling failed due to the imparity of the person other than involved in the case, the second sampling failed due to Dingheng Shipping’s suspicion on the authenticity of the sample without reason; 5. Dingheng Shipping’s hiring lawyers was self-defence, the subsequent counsel fee was added deliberately by Dingheng Shipping. To prove its claims, Dingheng Shipping submitted 9 evidence in 3 sets altogether. The first set of evidence included 2 evidence, evidence 1, voyage charter party, and evidence 2, certificate for amount/ullage, to prove the voyage charter party relationship between the Plaintiff and the Defendant and the amount of freight; the second set of evidence included 3 evidence, evidence 3, the record of lay time, the record of discharging time, the logbook and the statement of demurrage calculation, evidence 6, analysis report, and evidence 7, email exchanges and lawyer’s letter, to prove that the cargo was damaged before loading, and the specific circumstance of demurrage involved in this case; the third set of evidence included 4 evidence, evidence 4, assessment report, voyage charter party, settlement agreement and receipt of freight, evidence 5, lawyer hiring agreement, evidence 8, supplemental lawyer hiring agreement, receipt of counsel fee, statement of bank transfer, and standard of guiding price, and evidence 9, statement of payment, to prove the cargo damage, counsel fee and inspection fee claimed by Dingheng Shipping. To prove its argument, Hua Xin Petrochemical Company submitted 10 evidence in 4 sets. The first set of evidence included 2 evidence, evidence 1, voyage charter party, and evidence 2, procurement contract, to prove the voyage charter party relationship between the Plaintiff and the Defendant, and the specific circumstance of Hua Xin Petrochemical Company’s sales of methanol; the second set of evidence

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included 3 evidence, evidence 3, analysis report and inspection report, evidence 4, analysis report, and evidence 5, VAT invoice, to prove the damage of cargo transported by Dingheng Shipping and the loss Hua Xin Petrochemical Company suffered; the third set of evidence included 4 evidence, evidence 6, inquiry sheet, evidence 7, handling plan, evidence 8, entrusted bidding contract and correspondence, and evidence 9, sales contract, to prove that Hua Xin Petrochemical Company had no fault in producing demurrage; the fourth set of evidence was evidence 10, analysis report, to prove that the cargo damage claimed by Dingheng Shipping was irrelevant to Hua Xin Petrochemical Company. The court arranged the evidence exchange and cross-examination for the two parties. Evidence 4, assessment report, voyage charter party, settlement agreement and receipt of freight, provided by Dingheng Shipping, was not relevant to the case, the court did not confirm its probative force. According to the statements of the parties and evidence after investigating, the court confirmed the fact as follows: on August 26, 2016, the Plaintiff, Dingheng Shipping, and the Defendant, Hua Xin Petrochemical Company, signed the voyage charter party, stipulating that Dingheng Shipping provided M.V. Ding Heng 5 or an alternative ship to Hua Xin Petrochemical Company for transporting methanol 3,300 ± 5% ton, loading period was from September 2, 2016 to September 8, 2016, ports of loading were two safe berths of Tianjin Lingang Fubao and Lingang Stolt, port of uploading was a safe berth of WEPEC. According to the voyage charter party Article 5, “the total lay time of the two loading and discharging ports are 96 h. When the ship reaches the acknowledged anchorages of loading and discharging ports, the captain or the shipping agency should inform the first party or the cargo agency via telephone or fax, that the ship has made preparations for the loading and discharging. At this moment, whether there is a berth, lay time should be started to calculate when receiving the notification. Loading time is from the time the ship reaches the shipping port anchorage and sent the notice of readiness, to the time the cargo has been loaded and pipelines have been detached. Discharging time is from the time the ship reaches the discharging port anchorage and sends the notice of readiness, to the time the cargo has been unloaded and pipelines have been detached. After the discharging, if the first party require the ship to use the ship pump to pump water to clean the onshore pipelines, the time consumed should be included into the loading and discharging time” (hereinafter referred to as Article of Lay time); according to Article 6 Paragraph 1, “freight is 115 yuan per voyage per ton in cash … the first party should pay it within 3 days of the date of receiving the receipt” (the first party was Hua Xin Petrochemical Company, hereinafter referred to as Article of Freight), according to Article 2, “demurrage is 30,000 yuan per day or pro rata (24 h a day). Demurrage charge is on the basis of lay time record or logbook. The first party should provide reasonable argument within 15 days after receiving the second party’ s claim for demurrage (fax), or it will be regarded as confirmation to the claim and should pay all the money immediately” (the second party was Hua Xin Petrochemical Company, hereinafter referred to as Article of Demurrage).

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The voyage charter contract Article 7 Paragraph 1, “the first party should hire the qualified third-party independent commodity inspection bureau for inspection of trial assembly before loading, and of the quantity and quality of the cargo on the ship after loading, the first party and the second party should confirm the result of inspection” (hereinafter referred to as Article of Ship Inspection); Article 7 paragraph 4, “the quality should be subjected to sampling inspection from the pipeline orifice in the port, and the commodity inspection bureau should seal the sample, contrast with the sample taken from the ship in the discharging port, and issue the quality certificate to show the quality of cargo, sealed samples of commodity inspection should be reserved by the consignor, commodity inspection bureaus of the loading and discharging ports, the second party and consignee. If it is confirmed that the second party caused the cargo damage, the second should bear the liability” (hereinafter referred to as Article of Commodity Inspection); Article 8, “… the cargo should be pumped into the ship’s hold via ship pump, the costs and risk should be borne by the first party; when discharging, the costs and risk of cargo’s pumping out the ship’s hold should be borne by the second party; the risk borne by the second party only covers the discharging risk within the range permanent pipelines in the ship, the risk of delivering should be borne by the fist party or the consignee” (hereinafter referred to as Article of Risk); Article 10, “Liability for breach of contract includes the damage that could be proved and any court acceptance fee and counsel fee” (hereinafter referred to as Article of Liability). At 9:45 on September 9, 2016, M.V. Ding Heng 5 arrived at Tianjin Port anchorage, at the same time, Dingheng Shipping sent the notice of readiness. At 13:20 on M.V. Ding Heng 5 was berthed in No. 6 Berth east of Tianjin Lingang chemical wharf, at 14:25, started to load methanol Hua Xin Petrochemical Company bought from Tianjin Bohua Red Triangle International Trading Co., Ltd. (hereinafter referred to as Red Triangle Trading Company), the person other than involved in the case, and finished loading at 14:30 the next day. The aforementioned cargo was loaded on to No. 1 ship’s hold to No. 4 ship’s hold of M.V. Ding Heng 5, 2,793.841 ton in total. At 15:00 on September 10, M.V. Ding Heng 5 sailed and berthed at Tianjin Lingang Fubao wharf at 13:00 on September 11, started to loaded Hua Xin Petrochemical Company’s own methanol at 14:30, and finished loading at 18:38. The aforementioned cargo was 419.704 ton in total, 200 ton of which was loaded on to two slop tanks of M.V. Ding Heng 5, the other methanol was loaded on to No. 2 to No. 4 ship’s hold. According to the certificate for amount/ullage provided by Dingheng Shipping, the cargo of methanol carried by M.V. Ding Heng 5 was 3,213.54 ton in total. At 9:30 on September 12, M.V. Ding Heng 5 sailed and berthed at Dalian Xingang port at 10:15 on September 13, berthed at Dalian Xingang No. 8 wharf at 15:30 on September 20, the commodity inspection bureau boarded the ship at 16:00, issued commodity inspection report at 17:20, started to discharge at 18:40, paused discharging at 19:15, resumed discharging at 20:00, finished discharging at 1:30 on September 21, issued commodity inspection report at 1:45, removed the pipeline at 2:00. M.V. Ding Heng 5 departed from Dalian Port at 17:06 on September 30.

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SGS-CSTC Standards Technical Services (Tianjin) Co., Ltd. (hereinafter referred to as SGS-CSTC Tianjin Company) issued analysis report on September 5, 2016, the recorded sampling place was Tianjin Lingang Yongli storage farm, the sample resource was tank onshore, the description of sample was methanol, the date of sampling was September 4, 2016, the date of analysis was September 5, 2016, the result of analysis was sample’s quality conformance. SGS-CSTC Tianjin Company issued inspection report of ship’s hold (before loading) on September 11, 2016, recorded inspection time was 13:35–13:55 on September 9, 2016, the hold’s number was No. 1–No. 4, “came into the hold and visual inspected, degree of cleanness was as follows, empty, dry, no other thing retained”, the former cargo was acrylonitrile, the second former cargo was acrylonitrile, the third former cargo was toluene. On the same day, SGS-CSTC Tianjin Company issued sampling report. The sampling report recorded that, the customer was Red Triangle Trading Company, the cargo was methanol, the inspection place was the No. 6 Berth east of Tianjin Lingang chemical wharf. In addition, the sampling report recorded that 3 routine samples were taken before loading, one was reserved by SGS-CSTC Tianjin Company, one was given to the ship, one was used for analysis; 2 samples were taken from the pipeline orifice during the loading, one was reserved by SGS-CSTC Tianjin Company, one was given to the consignee, 1 sample were taken from each of the first inch of No. 1–No. 4 ship’s hold, reserved by SGS-CSTC Tianjin Company; 1 routine sample were taken from each of No. 1–No. 4 ship’s hold, reserved by SGS-CSTC Tianjin Company, 2 composite samples were taken, one was reserved by SGS-CSTC Tianjin Company, one was given to the consignee. SGS-CSTC Standards Technical Services Co., Ltd. Dalian Branch (hereinafter referred to as SGS-CSTC Dalian Branch) issued analysis report on September 14, 2016, the recorded sampling place was Dalian Xingang No. 8, the sample resource was the ship’s hold, the type of sample was mixed sample, the description of sample was methanol, the ship was M.V. Ding Heng 5, the date of sampling was September 13, 2016, the date of analysis was September 14, 2016, the analysis result was that potassium permanganate’ s oxidation time 27, lower than the minimum standard 50. The next day, SGS-CSTC Dalian Branch issued 10 analysis reports, inspected the samples from M.V. Ding Heng 5 ship’s hold No. 1–No. 4 and the two slop tanks respectively, the analysis results of the potassium permanganate’s oxidation time in ship’s hold No. 1–No. 4 were all lower than the minimum standard 50, the analysis results of the potassium permanganate’s oxidation time in slop tanks reached the standard. On September 15, Shanghai Xianghui Insurance Surveying Co., Ltd. (hereinafter referred to as Xianghui Surveying Company) issued 3 analysis reports, recording that the potassium permanganate’s oxidation time in Lingang No. 6 pipeline orifice was lower than 50, the potassium permanganate’s oxidation time in Fubao pipeline orifice was equal to 50, the mixed sample from all the ship’s holds was lower than 50. On December 12, 2016, Hua Xin Petrochemical Company and Dingheng Shipping agreed to choose Shanghai Inspectorate Commodity Inspection Co., Ltd. Tianjin Petrochemical Inspection Branch (hereinafter referred to as Inspectorate Tianjin Petrochemical Branch) to inspected the sample from pipeline orifice. On

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January 12, 2017, the Plaintiff and the Defendant sent out to SGS-CSTC Tianjin Company for pipeline orifice sample, SGS-CSTC Tianjin Company did not withdraw the sample due to its client, Red Triangle Trading Company’s disagreement. On February 9, the Plaintiff and the Defendant sent out to SGS-CSTC Tianjin Company for pipeline orifice sample for the second time, Dingheng Shipping suspected that the pipeline orifice sample had been exchanged, the withdrawal did not be completed. On March 22, 2017, the Plaintiff and the Defendant sent out to SGS-CSTC Tianjin Company for some samples from pipeline orifice during loading for the third time (seal number 1223667), the withdrawal was completed. On the same day, Inspectorate Tianjin Petrochemical Branch issued analysis report, recording that the potassium permanganate’ s oxidation time of aforementioned sample was 18, the entrusted agent of Hua Xin Petrochemical Company, ZHENG Kexin, the entrusted agent of Dingheng Shipping, LIU Chong signed the analysis report at the place of witness’ s signature. Besides, the court found that: the email sent on September 15, 2016 by Ding Heng Shipping to Hua Xin Petrochemical Company recorded “please consult the inspection report attached … the result shows that the cargo in Lingang No. 6 was lower than 50 before loading”. The email sent on September 16 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “the result of our joint inspection shows that the sample in the hold was lower than the standard 50, combined with test result of ITS pipeline orifice, we urge to test the sample of pipeline orifice today in Dalian according yesterday’s email, to distinguish responsibility”. The email sent at 13:21 on September 16 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “we have been urging the lessee from the day before yesterday to fulfil the discharging duty and test the sample of pipeline orifice to distinguish responsibility as soon as possible”. The email sent on September 21 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “M.V. Ding Heng 5 departed from Dalian Anchorage at 10:20 this morning (has finished discharging 4 holds’ of methanol, the rest is 2,360.065 in total), dropped anchor at 11:20 today in Dalian Anchorage. We urged the lessee again to arrange for discharging the rest of cargo on M.V. Ding Heng 5 as soon as possible. Up to 17:00 on September 21, 2016, the voyage has incurred demurrage fee RMB 182,562.5 yuan”. The email sent at 17:00 on September 22 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “Up to 17:00 on September 22, 2016, the voyage has incurred demurrage fee RMB 212,562.5 yuan”. The email sent on September 23 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “Up to 17:00 on September 23, the voyage has incurred demurrage fee RMB 242,562.5 yuan”. On September 22, 2016, “the handling plan on handling the polluted methanol as soon as possible” sent by Hua Xin Petrochemical Company to Dingheng Shipping recorded that, “now we and Tianjin Fuchuan petrochemical Co., Ltd. have preliminarily reached an agreement on the sales of the rest of cargo, about 2300 ton overall, in the ship’s hold, that Tianjin Fuchuan will receive cargo at Jinzhou Port, the sale price is 1250 yuan/ton, all of the storage charge after delivering and putting in storage should be borne by Tianjin Fuchuan, the discharging fee should be paid

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by Dingheng Shipping in advance.” The email sent at 12:43 on September 23 by Dingheng Shipping to Hua Xin Petrochemical Company recorded, “we suggest the lessee to handle it on Bao Pai Website, and sale the cargo in the highest auction price”. The email sent at 14:00 on September 23 by Hua Xin Petrochemical Company to Dingheng Shipping recorded, “we accept your company’s suggestion to entrust auction of damaged methanol on Bao Pai Website”. The lawyer’s letter sent via email on September 26 by Dingheng Shipping to Hua Xin Petrochemical Company recorded, “Due to the need of ship survey, M.V. Ding Heng 5, loading the cargo related to the case, must go into the dock for class maintenance survey before October 8, 2016. I require your company to give Dingheng Shipping definite command of discharging and arrange for discharging and receiving of the cargo involved before 12 at noon on September 27, 2016. Otherwise, Dingheng Shipping will take all reasonable measures in accordance with the law to reduce loss, including but not limited to find proper tank to discharge cargo near the discharging port in Dalian. In addition, your company should pay the freight within 3 days after receiving Dingheng Shipping’ s receipt, and pay the demurrage within 15 days after receiving the claims for demurrage, and compensate Dingheng Shipping for all loss and fees led by your conduct”. Hua Xin Petrochemical Company and Shanghai Bao Pai Auction Co., Ltd. (hereinafter referred to as Bao Pai Company) signed the entrusted bidding contract, stipulating that Hua Xin Petrochemical Company entrusted Bao Pai Company to auction damaged methanol 2,363 ton, the purchaser bore the freight. By the auction of Bao Pai Company, on September 30, Hua Xin Petrochemical Company and Ningbo Ying Yi Petroleum & Chemical Co., Ltd. (hereinafter referred to as Ying Yi Petrochemical Company) signed sales contract, stipulating that Ying Yi Petrochemical Company bought the damaged methanol 2363 ton, unit price 1,585 yuan/ton. Dingheng Shipping and Shanghai Sloma Law Firm (hereinafter referred to as Sloma & Co.) signed the lawyer hiring agreement on November 1, 2016, stipulating that Dingheng Shipping entrusted Sloma & Co. to agent the disputes between Dingheng Shipping and Hua Xin Petrochemical Company caused by M.V. Ding Heng 5, including principle auction and counterclaim. Article 4 in the agreement stipulated that Ding Heng Shipping paid 175,000 yuan to Sloma & Co. in advance as counsel fee of this case. Ding Heng Shipping and Sloma & Co. signed supplemental lawyer hiring agreement on February 10, 2017, stipulating that the charge in the principle auction was adjusted to hourly charge, partner 2,000 yuan/h, lawyer 1,500 yuan/h. Dingheng Shipping paid counsel fee to Sloma & Co. at three different times on February 10, 2017. According to electronic receipt of online-banking, paid for the first stage of Dingheng Shipping’s principle auction 132,800 yuan, paid for the second stage of Dingheng Shipping’s principle auction 69,500 yuan, paid for Dingheng Shipping’s counterclaim 70,000 yuan. Dingheng Shipping paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 9,000 yuan on January 11, 2017, paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 3,000

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yuan on February 8, 2017, paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 3,000 yuan on March 22, 2017. According to the plea opinions and statements of both parties, the issues of this case was that: 1. whether Hua Xin Petrochemical Company should compensate according to Dingheng Shipping’s claims; 2. the money and basis of each claim of Dingheng Shipping. The court held that, this case was a voyage chapter party dispute, the Plaintiff Dingheng Shipping and the Defendant Hua Xin Petrochemical Company signed the voyage chapter party, Dingheng Shipping was shipowner, Hua Xin Petrochemical Company was charterer. The claims of Dingheng Shipping included 5 items, freight and its interests, demurrage and its interests, compensation for cargo damage and its interests, counsel fee, inspection fee. 1. Hua Xin Petrochemical Company should pay the freight Dingheng Shipping provided M.V. Ding Heng 5 to Hua Xin Petrochemical Company for methanol shipping in accordance with the contract, after Dingheng Shipping fulfilling its contract duty, Hua Xin Petrochemical Company should pay Dingheng Shipping the freight in accordance with the contract. According to the Article of Freight, the calculating standard of freightage was 115 yuan per ton, according to certificate for amount/ullage provided by Dingheng Shipping, cargo of methanol loaded by M.V. Ding Heng 5 was 3,213.54 ton in total. The freight should be 1153,213.54=369,557.1 yuan. Hua Xin Petrochemical Company had no objection to the amount of freight, and agreed to pay the freight in the written reply, Dingheng Shipping’s claim for Hua Xin Petrochemical Company’s paying freight 369,557.1 yuan, the court supported it. The Article of Freight stimulated that Hua Xin Petrochemical Company should pay the freight within 3 days of the date of receiving the receipt. The lawyer’s letter sent via email on September 26 by Dingheng Shipping to Hua Xin Petrochemical Company also recorded that, “your company should pay the freight within 3 days after receiving Dingheng Shipping’s receipt”. Up to the end of court debate, Dingheng Shipping had not sent the freight receipt to Hua Xin Petrochemical Company. Receipt sending was Dingheng Shipping’s accessory contract obligation, not sending receipt could not be the ground of defense of Hua Xin Petrochemical Company’s not paying the freight. As to the interests of aforementioned freight, the court judged to be calculated from the date of Dingheng Shipping’s lawsuit, that is December 20, 2016. 2. Hua Xin Petrochemical Company should pay the demurrage The key point of judgement of demurrage was to confirm the reason of demurrage. On the basis of 4 reasons as follows, the court confirmed that Dingheng Shipping had no fault in ship demurrage. The first reason was that, Dingheng Shipping arranged for cargo inspection and inform Hua Xin Petrochemical Company in time. M.V. Ding Heng 5 berthed at Dalian Xingang port at 10:15 on September 13, the next day, SGS-CSTC Dalian Branch issued an analysis report recording that potassium permanganate’ s oxidation time of the hold’ s mixture sample did not

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reach the standard. On September 15, Xianghui Surveying Company entrusted by Dingheng Shipping issued an analysis report, recording that that potassium permanganate’ s oxidation time of the Lingang No. 6 pipeline sample did not reach the standard. On the same day, Dingheng Shipping inform Hua Xin Petrochemical Company the inspection result mentioned above via email. The second day, Dingheng Shipping required Hua Xin Petrochemical Company to joint inspect the pipeline sample reserved in SGS-CSTC Tianjin Company via email. The second reason was that, Dingheng Shipping had required Hua Xin Petrochemical Company to bear discharging liability several times. From September 17, 2016, Dingheng Shipping had required Hua Xin Petrochemical Company to bear discharging liability several times via email. At 18:40 on September 20, started to discharge, at 1:30 on September 21, part of the cargo had been discharged. On the same day, Dingheng Shipping continued to require Hua Xin Petrochemical Company to discharge the rest of the cargo via email, and inform it the demurrage. The third reason was that, Dingheng Shipping’s suggestion of auction on Bao Pai Website was not improper. The handling plan of damaged methanol informed by Hua Xin Petrochemical Company on September 22, 2016 recorded that the sale price was 1,250 yuan/ton. After auction on Bao Pai Website, the final sale price of damaged cargo was 1,585 yuan/ton, higher than the sale price recorded on the aforementioned handling plan, the plan of auction on Bao Pai Website was more reasonable. The fourth reason was that, Hua Xin Petrochemical Company’s not performing discharging duty was to reduce loss. According to the parties’ statements, the Dalian tank storage fee was more than demurrage stimulated by voyage charter party, Hua Xin Petrochemical Company should bear the fee of loss reduced. According to the Article of Demurrage, demurrage was 30,000 yuan per day or pro rata (24 h a day). Demurrage was on the basis of laytime record or logbook. The laytime stimulated by voyage charter party was 96 h. M.V. Ding Heng 5’s actual laytime was 473.817 h, demurrage time 377.817 h. The demurrage was 377.817  30,000  24 = 472,271.2 yuan. Dingheng Shipping’s claim for Hua Xin Petrochemical Company’s paying demurrage 472,270.83 yuan, the court supported it. M.V. Ding Heng 5 departed from Dalian Port at 17:06, on September 30, 2016, fulfilled the voyage of the voyage chapter party involved in the case, Dingheng Shipping claimed that interests of aforementioned demurrage should be calculated from October 1, 2016, the court supported it. 3. About cargo damage compensation, counsel fee and inspection fee Dingheng Shipping shipped the damaged cargo to Ying Yi Petrochemical Company, the purchaser of auction on Bao Pai Website, the water absorption index of aforementioned cargo the inspected by target port did not reach the standard, there was no evidence to prove the relation between the cargo damage that water absorption index below standard and Hua Xin Petrochemical Company, the court did not support the Ding Heng Shipping’s claim for cargo damage compensation.

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Dingheng Shipping and Sloma & Co. signed the lawyer hiring agreement on November 1, 2016. The agreement included all the disputes caused by M.V. Ding Heng 5, including principle auction and counterclaim, the counsel fee was 175,000 yuan. According to the Article of Liability of the voyage charter party, liability for breach of contract includes the counsel fee. The court judged that Hua Xin Petrochemical Company should pay Dingheng Shipping counsel fee 175,000 yuan. Dingheng Shipping and Hua Xin Petrochemical Company entrusted Inspectorate Tianjin Petrochemical Branch together to inspect pipeline sample, they should split the inspection fee. Inspectorate Tianjin Petrochemical Branch charged 15,000 yuan for inspection fee in total, which was paid in advanced by Dingheng Shipping, Hua Xin Petrochemical Company should paid Dingheng Shipping inspection fee 7,500 yuan. Pulling the threads together, there was voyage charter party relationship between Dingheng Shipping and Hua Xin Petrochemical Company, and Dingheng Shipping had fulfilled its duty of shipping cargo, so Hua Xin Petrochemical Company should bear the liability for breach of contract including freight, demurrage, counsel fee and inspection fee. According to the Contract Law of the People’s Republic of China Article 60 and Article 107, the judgment is as follows: 1. The Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd., should pay the freight 369,557.1 yuan and the interest to the Plaintiff, Shanghai Dingheng Shipping Co., Ltd., within ten days from the effective date of this judgment (from December 20, 2016, to the date of actual performance of duty within the period specified in this judgment, calculated in line with loan interest rate of the People’s Bank of China in the same period); 2. The Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd., should pay the demurrage, 472,270.83 yuan and the interest to the Plaintiff, Shanghai Dingheng Shipping Co., Ltd., within ten days from the effective date of this judgment (from October 1, 2016, to the date of actual performance of duty within the period specified in this judgment, calculated in line with loan interest rate of the People’s Bank of China in the same period); 3. The Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd., should pay the counsel fee 175,000 yuan and inspection fee 7,500 yuan to the Plaintiff, Shanghai Dingheng Shipping Co., Ltd., within ten days from the effective date of this judgment 4. Reject the other claims of Shanghai Dingheng Shipping Co., Ltd. If the Defendant has not fulfilled judgment debt within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 17,296.29 yuan, the Plaintiff, Shanghai Dingheng Shipping Co., Ltd., should bear 3,234 yuan, the Defendant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd., should bear 14,062.29 yuan.

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If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit copies of the original petition so as to appeal to the Tianjin High People’s Court. Presiding Judge: YANG Ling Acting Judge: MA Shijun Acting Judge: PEI Daming June 6, 2017 Clerk: LIANG Yan

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Tianjin High People’s Court Civil Judgment Shanghai Dingheng Shipping Co., Ltd. v. Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (2017) Jin Min Zhong No.401 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1121. Cause of Action 212. Dispute over voyage charter party. Headnote Affirming lower court decision holding plaintiff shipowner to be entitled to recover freight and demurrage from defendant charterer who refused to take delivery at discharge port on account of cargo damage; defendant charterer's counterclaim for cargo damage dismissed. Summary The Plaintiff, Shanghai Dingheng Shipping Co., Ltd. (Dingheng), filed suit against Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (Hua Xin) for the various costs associated with their voyage charger party. Hua Xin contracted with Dingheng to transport methanol from Tianjin Lingang Fubao and Lingang Stolt to the berth of WEPEC. The cargo was damaged by the time it reached its destination. For this reason, both the third party buyer and Hua Xin refused to take delivery, causing Dingheng to incur demurrage. Further, Hua Xin refused to compensate Dingheng for the goods delivered in sub-par condition. For this reason, Dingheng filed suit against Hua Xin for (1) the contract price, (2) the demurrage, (3) cargo damage, (4) counsel fee, (5) inspection fee, and (6) court acceptance fee. After trial, the court of first instance found for Dingheng and held that Hua Xin should compensate Dingheng the contract price, the demurrage, the counsel fee, and the inspection fee. The court dismissed Dingheng’s claim for cargo damage and divided the court acceptance fee between both parties. The court of second instance affirmed this judgement.

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Judgment The Appellant (the Plaintiff of first instance): Shanghai Dingheng Shipping Co., Ltd. Domicile: No. A-405, No. 188, Yesheng Road, China (Shanghai) Pilot Free Trade Zone. Legal representative: LI Duozhu, general manager of the company. Agent ad litem: ZHOU Qi, lawyer of Shanghai Sloma Law Firm Agent ad litem: LIU Chong, lawyer of Shanghai Sloma Law Firm The Appellant (the Defendant of first instance): Liaoning Hua Xin Petroleum & Chemical Co., Ltd. Domicile: No. 51–2, Qing Nian Avenue, Shenhe District, Shenyang City, Liaoning. Legal representative: ZHAO Ying, board chairman of the company. Agent ad litem: ZHENG Kexin, lawyer of Liaoning Kaiyu Law Firm. With respect to the case arising from dispute over voyage charter party between the Appellant, Shanghai Dingheng Shipping Co., Ltd. (hereinafter referred to as Dingheng Shipping), and the Appellant, Liaoning Hua Xin Petroleum & Chemical Co., Ltd. (hereinafter referred to as Hua Xin Petrochemical Company), the parties disagreed the (2016) Jin 72 Min Chu No. 1044 Civil Judgment made by Tianjin Maritime Court and an appeal was filed in the court. After registering this case on July 13, 2017, the court legitimately constituted the collegiate bench to try the case, and held a hearing publicly. Agents ad litem of Dingheng Shipping, ZHOU Qi and LIU Chong, and agent ad litem of Hua Xin Petrochemical Company, ZHENG Kexin, appeared in the court to attend the hearing. Now the case has been concluded. Dingheng Shipping appealed to the court that: 1. the third claim of the first instance judgement should be revoked, Dingheng Shipping’s claims for all the counsel fee and inspection fee should be supported, 104,800 yuan in total; 2. Hua Xin Petrochemical Company should bear all the counsel fee paid by Dingheng Shipping during the second instance; 3. the court acceptance fees of the two instances should be borne by Hua Xin Petrochemical Company. During the trial of the second instance, Dingheng Shipping applied to withdraw its second appealing claim. Facts and reasons: 1. counsel fee paid by Dingheng Shipping should all be supported. Firstly, the voyage charter party involved in the case Article 10 stipulated the obligation of counsel fee, Dingheng Shipping’s claim had legal basis. Secondly, in the other case, counsel fee for cargo damage loss was charged by hour, in this case, the counsel fee for freight and demurrage was charged by lump sum, the aforementioned charging models were legal, the charging standards were all lower than the government guidance standards. Dingheng Shipping had paid all the counsel fee. Thirdly, Hua Xin Petrochemical Company’s refusal to cooperate with judicial expertise made the lawyers’ actual working time longer than expected, Dingheng Shipping changed the charging model from hourly charge to lump-sum charge, the added counsel fee should be supported. 2. Inspection fee involved in

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case should all be borne by Hua Xin Petrochemical Company. The written record of coordination inspection in the first instance and the emails of the both parties’ entrusting inspection both recorded that the inspection fee should be confirmed by the result of inspection and the related judgement, so the judgement of the first instance that Dingheng Shipping and Hua Xin Company shared the inspection fee, lacked basis, not tally with the juridical practice. Hua Xin Petrochemical Company argued that Dingheng Shipping’s appeal lacked factual and legal basis, and should be rejected. The main reasons: 1. the supplemental lawyer hiring agreement signed by Dingheng Shipping and the entrusted law firm did not have objective authenticity, rationality and necessity. 2. Dingheng Shipping should bear burden of proof for its claim that the cargo had original damage, the inspection fee involved in the case should be borne by itself. Dingheng Shipping had no reason suspecting that the inspection sample had problem, causing the failure of the second sampling inspection, it should bear the added inspection fee or cost due to it. Hua Xin Petrochemical Company appealed to the court: 1. revoke the first, second and third sentence of the first instance judgement, all the Dingheng Shipping’s claims should be rejected; 2. The court acceptance fee of the two instances should be borne by Dingheng Shipping. Facts and reasons: 1. the main basis of the first instance judgement was Tianjin Maritime Court (2016) Jin 72 Min Chu No.897 Civil Judgement, Hua Xin Petrochemical Company had filed an appeal, so the other case’ s judgement was not effective. According to this, the important fact, as the basis of the first instance judgement, had not been found out, the responsibility subject had not been clarified, the judgement lacked basis. 2. The court of the first instance did not comprehensively review the fact of the case, there was definite error in application of the law, the judgement was obviously unfair. Firstly, the freight and the interest. Hua Xin Petrochemical Company did not pay the freight because it found cargo damage when discharging and had adequate reason to believe that Dingheng Shipping should be liable for cargo damage, it was the reduce of damage and enforcement of unsafe right of defense. In addition, even if Hua Xin Petrochemical Company should pay the freight, it should not pay the interest of freight claimed by Dingheng Shipping. Secondly, demurrage and interest. One, the demurrage of the ship involved in the case was not caused by Hua Xin Petrochemical Company, it had no fault in ship demurrage. Two, after the cargo damage accident, Hua Xin Petrochemical Company suggested several plans to reduce damage, all of which were refused by Dingheng Shipping. On September 23, 2016, Dingheng Shipping suggested the plan of handling the cargo on Bao Pai Website, Hua Xin Petrochemical Company immediately agreed and signed an entrusted auction agreement with Bao Pai Website, there was no delay. Three, Dingheng Shipping had a laissez-faire attitude towards ship demurrage, did not take reasonable measures to avoid increasing demurrage fee. Dingheng Shipping argued that, Hua Xin Petrochemical Company’s appeal had no factual and legal basis, should be rejected. The main reasons were: 1. judicial expertise involved in the case had clarified the cause of cargo damage, Hua Xin Petrochemical Company was the default party under the voyage charter party. 2.

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The freight that should be paid by Hua Xin Petrochemical Company and the cargo damage compensation claimed by it were not the same claim, which could not be counteracted. 3. Whether there was cargo damage, as the charterer, Hua Xin Petrochemical Company bore the obligation of discharging in time. Dingheng Shipping required Hua Xin Petrochemical Company to discharge positively at the target port, Hua Xin Petrochemical Company compelled Dingheng Shipping to bear the liability for cargo damage compensation by not arranging for discharging. Dingheng Shipping claimed to the court of the first instance that: 1. Hua Xin Petrochemical Company should pay Dingheng Shipping the freight 369,557.1 yuan and the interests of the aforementioned money from October 1, 2016 to the actual date of payment; 2. Hua Xin Petrochemical Company should pay Dingheng Shipping the demurrage 472,270.83 yuan and the interests of the aforementioned money from October 1, 2016 to the actual date of payment; 3. Hua Xin Petrochemical Company should pay Dingheng Shipping the compensation for cargo damage 235,907.8 yuan and the interests of the aforementioned money from October 9, 2016 to the actual date of payment; 4. Hua Xin Petrochemical Company should paid Dingheng Shipping counsel fee 272,300 yuan; 5. Hua Xin Petrochemical Company should pay Dingheng Shipping inspection fee 15 thousand yuan; 6. the court acceptance fee should be borne by Hua Xin Petrochemical Company. Facts confirmed by the court of the first instance: on August 26, 2016, Dingheng Shipping and Hua Xin Petrochemical Company, signed the voyage charter party, stipulating that Dingheng Shipping provided M.V. “Ding Heng 5” or an alternative ship to Hua Xin Petrochemical Company for transporting methanol 3300 ± 5% tons, loading period was from September 2, 2016 to September 8, 2016, ports of loading were two safe berths of Tianjin Lingang Fubao and Lingang Stolt, port of uploading was a safe berth of WEPEC. According to the voyage charter party Article 5, “the total lay time of the two loading and discharging ports are 96 h. When the ship reaches the acknowledged anchorages of loading and discharging ports, the captain or the shipping agency should inform the first party or the cargo agency via telephone or fax, that the ship has made preparations for the loading and discharging. At this moment, whether there is a berth, lay time should be started to calculate when receiving the notification. Loading time is from the time the ship reaches the shipping port anchorage and sent the notice of readiness, to the time the cargo has been loaded and pipelines have been detached. Discharging time is from the time the ship reaches the discharging port anchorage and sends the notice of readiness, to the time the cargo has been unloaded and pipelines have been detached. After the discharging, if the first party require the ship to use the ship pump to pump water to clean the onshore pipelines, the time consumed should be included into the loading and discharging time” (hereinafter referred to as Article of Lay time); according to Article 6 Paragraph 1, “freight is 115 yuan per voyage per ton in cash…the first party should pay it within 3 days of the date of receiving the receipt” (the first party was Hua Xin Petrochemical Company, hereinafter referred to as Article of Freight), according to Article 2, “demurrage is 30,000 yuan per day or pro rata (24 h a day). Demurrage is on the basis of lay time record or logbook.

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The first party should provide reasonable argument within 15 days after receiving the second party’ s claim for demurrage (fax), or it will be regarded as confirmation to the claim and should pay all the money immediately” (the second party was Dingheng Shipping, hereinafter referred to as Article of Demurrage). The voyage charter contract Article 7 Paragraph 1, “the first party or the consigner should hire the qualified third-party independent commodity inspection bureau for inspection of trial assembly before loading, and of the quantity and quality of the cargo on the ship after loading, the first party and the second party should confirm the result of inspection” (hereinafter referred to as Article of Ship Inspection); Article 7 Paragraph 4, “the quality should be subjected to sampling inspection from the pipeline orifice in the port, and the commodity inspection bureau should seal the sample, contrast with the sample taken from the ship in the discharging port, and issue the quality certificate to show the quality of cargo, sealed samples of commodity inspection should be reserved by the consignor, commodity inspection bureaus of the loading and discharging ports, the second party and consignee. If it is confirmed that the second party caused the cargo damage, the second should bear the liability” (hereinafter referred to as Article of Commodity Inspection); Article 8, “… the cargo should be pumped into the ship’s hold via ship pump, the costs and risk should be borne by the first party; when discharging, the costs and risk of cargo’s pumping out the ship’s hold should be borne by the second party; the risk borne by the second party only covers the discharging risk within the range permanent pipelines in the ship, the risk of delivering should be borne by the fist party or the consignee” (hereinafter referred to as Article of Risk); Article 10, “Liability for breach of contract includes the damage that could be proved and any court acceptance fee and counsel fee” (hereinafter referred to as Article of Liability). At 9:45 on September 9, 2016, M.V. “Ding Heng 5” arrived at Tianjin Port anchorage, at the same time, Dingheng Shipping sent the notice of readiness. At 13:20 M.V. “Ding Heng 5” was berthed in No.6 Berth east of Tianjin Lingang chemical wharf, at 14:25, started to load methanol Hua Xin Petrochemical Company bought from Tianjin Bohua Red Triangle International Trading Co., Ltd. (hereinafter referred to as Red Triangle Trading Company), the person other than involved in the case, and finished loading at 14:30 the next day. The aforementioned cargo was loaded on to No.1 ship’s hold to No.4 ship’s hold of M.V. “Ding Heng 5”, 2,793.841 tons in total. At 15:00 on September 10, M.V. “Ding Heng 5” sailed and berthed at Tianjin Lingang Fubao wharf at 13:00 on September 11, started to loaded Hua Xin Petrochemical Company’s own methanol at 14:30, and finished loading at 18:38. The aforementioned cargo was 419.704 tons in total, 200 ton of which was loaded on to two slop tanks of M.V. “Ding Heng 5”, the other methanol was loaded on to No.2 to No.4 ship’s hold. According to the certificate for amount/ullage provided by Dingheng Shipping, the cargo of methanol carried by M.V. “Ding Heng 5” was 3,213.54 tons in total. At 9:30 on September 12, M.V. “Ding Heng 5” sailed and berthed at Dalian Xingang port at 10:15 on September 13, berthed at Dalian Xingang No.8 wharf at 15:30 on September 20, the commodity inspection bureau boarded the ship at 16:00, issued commodity inspection

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report at 17:20, started to discharge at 18:40, paused discharging at 19:15, resumed discharging at 20:00, finished discharging at 1:30 on September 21, issued commodity inspection report at 1:45, removed the pipeline at 2:00. M.V. “Ding Heng 5” departed from Dalian Port at 17:06 on September 30. SGS-CSTC Standards Technical Services (Tianjin) Co., Ltd. (hereinafter referred to as SGS-CSTC Tianjin Company) issued analysis report on September 5, 2016, the recorded sampling place was Tianjin Lingang Yongli storage farm, the sample resource was tank onshore, the description of sample was methanol, the date of sampling was September 4, 2016, the date of analysis was September 5, 2016, the result of analysis was sample’s quality conformance. SGS-CSTC Tianjin Company issued inspection report of ship’s hold (before loading) on September 11, 2016, recorded inspection time was 13:35–13:55 on September 9, 2016, the hold’s number was No. 1–No. 4, “came into the hold and visual inspected, degree of cleanness was as follows, empty, dry, no other thing retained”, the former cargo was acrylonitrile, the second former cargo was acrylonitrile, the third former cargo was toluene. On the same day, SGS-CSTC Tianjin Company issued sampling report. The sampling report recorded that, the customer was Red Triangle Trading Company, the cargo was methanol, the inspection place was the No.6 Berth east of Tianjin Lingang chemical wharf. In addition, the sampling report recorded that 3 routine samples were taken before loading, one was reserved by SGS-CSTC Tianjin Company, one was given to the ship, one was used for analysis; 2 samples were taken from the pipeline orifice during the loading, one was reserved by SGS-CSTC Tianjin Company, one was given to the consignee, 1 sample were taken from each of the first inch of No. 1–No. 4 ship’s hold, reserved by SGS-CSTC Tianjin Company; 1 routine sample were taken from each of No. 1–No. 4 ship’s hold, reserved by SGS-CSTC Tianjin Company, 2 composite samples were taken, one was reserved by SGS-CSTC Tianjin Company, one was given to the consignee. SGS-CSTC Standards Technical Services Co., Ltd. Dalian Branch (hereinafter referred to as SGS-CSTC Dalian Branch) issued analysis report on September 14, 2016, the recorded sampling place was Dalian Xingang No.8, the sample resource was the ship’s hold, the type of sample was mixed sample, the description of sample was methanol, the ship was M.V. “Ding Heng 5”, the date of sampling was September 13, 2016, the date of analysis was September 14, 2016, the analysis result was that potassium permanganate’s oxidation time 27, lower than the minimum standard 50. The next day, SGS-CSTC Dalian Branch issued 10 analysis reports, inspected the samples from M.V. “Ding Heng 5”’s hold No. 1–No. 4 and the two slop tanks respectively, the analysis results of the potassium permanganate’s oxidation time in ship’s hold No. 1–No. 4 were all lower than the minimum standard 50, the analysis results of the potassium permanganate’s oxidation time in slop tanks reached the standard. On September 15, Shanghai Xianghui Insurance Surveying Co., Ltd. (hereinafter referred to as Xianghui Surveying Company) issued 3 analysis reports, recording that the potassium permanganate’s oxidation time in Lingang No. 6 pipeline orifice was lower than 50, the potassium permanganate’s oxidation time in Fubao pipeline orifice was equal to 50, the mixed sample from all the ship’s holds was lower than 50.

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On December 26, 2016, Hua Xin Petrochemical Company and Dingheng Shipping agreed to choose Shanghai Inspectorate Commodity Inspection Co., Ltd. Tianjin Petrochemical Inspection Branch (hereinafter referred to as Inspectorate Tianjin Petrochemical Branch) to inspected the sample from pipeline orifice. On January 12, 2017, Dingheng Shipping and Hua Xin Petrochemical Company sent out to SGS-CSTC Tianjin Company for pipeline orifice sample, SGS-CSTC Tianjin Company did not withdraw the sample due to its client, Red Triangle Trading Company’s disagreement. On February 9, Dingheng hipping and Hua Xin Petrochemical Company sent out to SGS-CSTC Tianjin Company for pipeline orifice sample for the second time, Dingheng Shipping suspected that the pipeline orifice sample had been exchanged, the withdrawal did not be completed. On March 22, 2017, Dingheng Shipping and Hua Xin Petrochemical Company sent out to SGS-CSTC Tianjin Company for some samples from pipeline orifice during loading for the third time (seal number was 1,223,667), the withdrawal was completed. On the same day, Inspectorate Tianjin Petrochemical Branch issued analysis report, recording that the potassium permanganate’s oxidation time of aforementioned sample was 18, the entrusted agent of Hua Xin Petrochemical Company, ZHENG Kexin, Agent ad litem of Dingheng Shipping, LIU Chong signed the analysis report at the place of witness’ signature. Besides, the court found that: the email sent on September 15, 2016 by Ding Heng Shipping to Hua Xin Petrochemical Company recorded “please consult the inspection report attached…the result shows that the cargo in Lingang No. 6 was lower than 50 before loading”. The email sent on September 16 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “the result of our joint inspection shows that the sample in the hold was lower than the standard 50, combined with test result of ITS pipeline orifice, we urge to test the sample of pipeline orifice today in Dalian according yesterday’s email, to distinguish responsibility”. The email sent at 13:21 on September 16 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “we have been urging the lessee from the day before yesterday to fulfil the discharging duty and test the sample of pipeline orifice to distinguish responsibility as soon as possible”. The email sent on September 21 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “M.V. Ding Heng 5 departed from Dalian Anchorage at 10:20 this morning (has finished discharging 4 holds’ of methanol, the rest is 2360.065 tons in total), dropped anchor at 11:20 today in Dalian Anchorage. We urged the lessee again to arrange for discharging the rest of cargo on M.V. “Ding Heng 5” as soon as possible. Up to 17:00 on September 21, 2016, the voyage has incurred demurrage RMB 182,562.5 yuan”. The email sent at 17:00 on September 22 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “Up to 17:00 on September 22, 2016, the voyage has incurred demurrage RMB 212,562.5 yuan”. The email sent on September 23 by Dingheng Shipping to Hua Xin Petrochemical Company recorded “Up to 17:00 on September 23, the voyage has incurred demurrage 242,562.5 yuan”. On September 22, 2016, “the handling plan on handling the polluted methanol as soon as possible” sent by Hua Xin Petrochemical Company to Dingheng Shipping

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recorded that, “now we and Tianjin Fuchuan petrochemical Co., Ltd. have preliminarily reached an agreement on the sales of the rest of cargo, about 2300 tons overall, in the ship’s hold, that Tianjin Fuchuan will receive cargo at Jinzhou Port, the sale price is 1250 yuan/ton, all of the storage charge after delivering and putting in storage should be borne by Tianjin Fuchuan, the discharging fee should be paid by Dingheng Shipping in advance.” The email sent at 12:43 on September 23 by Dingheng Shipping to Hua Xin Petrochemical Company recorded, “we suggest the lessee to handle it on Bao Pai Website, and sale the cargo in the highest auction price”. The email sent at 14:00 on September 23 by Hua Xin Petrochemical Company to Dingheng Shipping recorded, “we accept your company’s suggestion to entrust auction of damaged methanol on Bao Pai Website”. The lawyer’s letter sent via email on September 26 by Dingheng Shipping to Hua Xin Petrochemical Company recorded, “Due to the need of ship survey, M.V. “Ding Heng 5”, loading the cargo related to the case, must go into the dock for class maintenance survey before October 8, 2016. I require your company to give Dingheng Shipping definite command of discharging and arrange for discharging and receiving of the cargo involved before 12 at noon on September 27, 2016. Otherwise, Dingheng Shipping will take all reasonable measures in accordance with the law to reduce loss, including but not limited to find proper tank to discharge cargo near the discharging port in Dalian. In addition, your company should pay the freight within 3 days after receiving Dingheng Shipping’s receipt, and pay the demurrage within 15 days after receiving the claims for demurrage, and compensate Dingheng Shipping for all loss and fees led by your conduct”. Hua Xin Petrochemical Company and Shanghai Bao Pai Auction Co., Ltd. (hereinafter referred to as Bao Pai Company) signed the entrusted bidding contract, stipulating that Hua Xin Petrochemical Company entrusted Bao Pai Company to auction damaged methanol 2,363 tons, the purchaser bore the freight. By the auction of Bao Pai Company, on September 30, Hua Xin Petrochemical Company and Ningbo Ying Yi Petroleum & Chemical Co., Ltd. (hereinafter referred to as Ying Yi Petrochemical Company) signed sales contract, stipulating that Ying Yi Petrochemical Company bought the damaged methanol 2,363 tons, unit price 1,585 yuan/ton. Dingheng Shipping and Shanghai Sloma Law Firm (hereinafter referred to as Sloma & Co.) signed the lawyer hiring agreement on November 1, 2016, stipulating that Dingheng Shipping entrusted Sloma & Co. to agent the disputes between Dingheng Shipping and Hua Xin Petrochemical Company caused by M.V. “Ding Heng 5”, including principle auction and counterclaim. Article 4 in the agreement stipulated that Dingheng Shipping paid 175,000 yuan to Sloma & Co. in advance as counsel fee of this case. Dingheng Shipping and Sloma & Co. signed supplemental lawyer hiring agreement on February 10, 2017, stipulating that the charge in the principle auction was adjusted to hourly charge, partner 2,000 yuan/hour, lawyer 1,500 yuan/hour. Dingheng Shipping paid counsel fee to Sloma & Co. at three different times on February 10, 2017. According to electronic receipt of online-banking, paid for the first stage of Dingheng Shipping’s principle auction 132,800 yuan, paid for the second stage of Dingheng Shipping’s principle auction

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69,500 yuan, paid for Dingheng Shipping’s counterclaim 70,000 yuan. Dingheng Shipping paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 9,000 yuan on January 11, 2017, paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 3,000 yuan on February 8, 2017, paid Inspectorate Tianjin Petrochemical Branch Tianjin Petrochemical Branch joint inspection fee 3,000 yuan on March 22, 2017. According to the plea opinions and statements of both parties, the issues of this case were that: 1. whether Hua Xin Petrochemical Company should compensate according to Dingheng Shipping’s claims; 2. the money and basis of each claim of Dingheng Shipping. The court held that, this case was a voyage chapter party dispute, Dingheng Shipping and Hua Xin Petrochemical Company signed the voyage chapter party, Dingheng Shipping was shipowner, Hua Xin Petrochemical Company was charterer. The claims of Dingheng Shipping included 5 items, freight and its interests, demurrage and its interests, compensation for cargo damage and its interests, counsel fee, inspection fee. 1. Hua Xin Petrochemical Company should pay the freight Dingheng Shipping provided M.V. “Ding Heng 5” to Hua Xin Petrochemical Company for methanol shipping in accordance with the contract, after Dingheng Shipping fulfilling its duty of contract, Hua Xin Petrochemical Company should pay Dingheng Shipping the freight in accordance with the contract. According to the Article of Freight, the calculating standard of freight was 115 yuan per ton, according to certificate for amount/ullage provided by Dingheng Shipping, cargo of methanol loaded by M.V. “Ding Heng 5” was 3,213.54 tons in total. The freight should be 1153,213.54=369,557.1 yuan. Hua Xin Petrochemical Company had no objection to the amount of freight, and agreed to pay the freight in the written reply, Dingheng Shipping’ s claim for Hua Xin Petrochemical Company’s paying freight 369,557.1 yuan, the court of the first instance supported it. The Article of Freight stimulated that Hua Xin Petrochemical Company should pay the freight within 3 days of the date of receiving the receipt. The lawyer’ s letter sent via email on September 26 by Dingheng Shipping to Hua Xin Petrochemical Company also recorded that, “your company should pay the freight within 3 days after receiving Dingheng Shipping’ s receipt”. Up to the end of court debate of the first instance, Dingheng Shipping had not sent the freight receipt to Hua Xin Petrochemical Company. Receipt sending was Dingheng Shipping’s accessory contract obligation, not sending receipt could not be the ground of defense that Hua Xin Petrochemical Company did not paying the freight. As to the interests of aforementioned freight, the court of the first instance judged to be calculated from the date of Dingheng Shipping’s prosecution,namely December 20, 2016. 2. Hua Xin Petrochemical Company should pay the demurrage The key point of judgement of demurrage was to confirm the reason of demurrage. On the basis of 4 reasons as follows, the court of the first instance confirmed that Dingheng Shipping had no fault in ship demurrage. The first reason was that,

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Dingheng Shipping arranged for cargo inspection and inform Hua Xin Petrochemical Company in time. M.V. “Ding Heng 5” berthed at Dalian Xingang port at 10:15 on September 13, the next day, SGS-CSTC Dalian Branch issued an analysis report recording that potassium permanganate’s oxidation time of the hold’s mixture sample did not reach the standard. On September 15, Xianghui Surveying Company entrusted by Dingheng Shipping issued an analysis report, recording that that potassium permanganate’s oxidation time of the Lingang No.6 pipeline sample did not reach the standard. On the same day, Dingheng Shipping inform Hua Xin Petrochemical Company the inspection result mentioned above via email. The second day, Dingheng Shipping required Hua Xin Petrochemical Company to joint inspect the pipeline sample reserved in SGS-CSTC Tianjin Company via email. The second reason was that, Dingheng Shipping had required Hua Xin Petrochemical Company to bear discharging liability several times. From September 17, 2016, Dingheng Shipping had required Hua Xin Petrochemical Company to bear discharging liability several times via email. At 18:40 on September 20, started to discharge, at 1:30 on September 21, part of the cargo had been discharged. On the same day, Dingheng Shipping continued to require Hua Xin Petrochemical Company to discharge the rest of the cargo via email, and inform it the demurrage. The third reason was that, Dingheng Shipping’s suggestion of auction on Bao Pai Website was not improper. The handling plan of damaged methanol informed by Hua Xin Petrochemical Company on September 22, 2016 recorded that the sale price was 1,250 yuan/ton. After auction on Bao Pai Website, the final sale price of damaged cargo was 1,585 yuan/ton, higher than the sale price recorded on the aforementioned handling plan, the plan of auction on Bao Pai Website was more reasonable. The fourth reason was that, Hua Xin Petrochemical Company’s not performing discharging duty was to reduce loss. According to the parties’ statements in the trial of the first instance, the Dalian tank storage fee was more than demurrage stimulated by voyage charter party, Hua Xin Petrochemical Company should bear the fee of loss reduced. According to the Article of Demurrage, demurrage was 30,000 yuan per day or pro rata (24 hours a day). Demurrage was on the basis of laytime record or logbook. The laytime stimulated by voyage charter party was 96 hours. M.V. “Ding Heng 5”’s actual laytime was 473.817 hours, demurrage time 377.817 hours. The demurrage was 377.81730,00024=472,271.2 yuan. Dingheng Shipping’s claim for Hua Xin Petrochemical Company’ s paying demurrage 472,270.83 yuan, the court of the first instance supported it. M.V. “Ding Heng 5” departed from Dalian Port at 17:06, on September 30, 2016, fulfilled the voyage of the voyage chapter party involved in the case, Dingheng Shipping claimed that interests of aforementioned demurrage should be calculated from October 1, 2016, the court of the first instance supported it.

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3. About cargo damage compensation, counsel fee and inspection fee Dingheng Shipping shipped the damaged cargo to Ying Yi Petrochemical Company, the purchaser of auction on Bao Pai Website, the water absorption index of aforementioned cargo the inspected by target port did not reach the standard, there was no evidence to prove the relation between the cargo damage that water absorption index below standard and Hua Xin Petrochemical Company, the court of the first instance did not support the Ding Heng Shipping’s claim for cargo damage compensation. Dingheng Shipping and Sloma & Co. signed the lawyer hiring agreement on November 1, 2016. The agreement included all the disputes caused by M.V. “Ding Heng 5”, including principle auction and counterclaim, the counsel fee was 175,000 yuan. According to the Article of Liability of the voyage charter party, liability for breach of contract includes the counsel fee. The court of the first instance judged that Hua Xin Petrochemical Company should pay Dingheng Shipping counsel fee 175,000 yuan. Dingheng Shipping and Hua Xin Petrochemical Company entrusted Inspectorate Tianjin Petrochemical Branch together to inspect pipeline sample, they should split the inspection fee. Inspectorate Tianjin Petrochemical Branch charged 15,000 yuan for inspection fee in total, which was paid in advanced by Dingheng Shipping, Hua Xin Petrochemical Company should pay Dingheng Shipping inspection fee 7,500 yuan. Pulling the threats together, there was voyage charter party relationship between Dingheng Shipping and Hua Xin Petrochemical Company, Dingheng Shipping had fulfilled its duty of shipping cargo, Hua Xin Petrochemical Company should bear the liability for breach of contract including freight, demurrage, counsel fee and inspection fee. According to the Contract Law of the People’s Republic of China Article 60 and Article 107, the judgment was that: 1. Hua Xin Petrochemical Company should pay the freight 369,557.1 yuan and the interests to Dingheng Shipping, within ten days from the effective date of this judgment (from December 20, 2016, to the date of actual performance of duty within the period specified in this judgment, calculate in similar loan interest rate of the People’s Bank of China in the same period); 2. Hua Xin Petrochemical Company should pay the demurrage charge, 472,270.83 yuan and the interests to Dingheng Shipping, within ten days from the effective date of this judgment (from October 1, 2016, to the date of actual performance of duty within the period specified in this judgment, calculate in similar loan interest rate of the People’s Bank of China in the same period); 3. Hua Xin Petrochemical Company should pay the counsel fee 175,000 yuan and inspection fee 7,500 yuan to Dingheng Shipping, within ten days from the effective date of this judgment. 4. Reject the other claims of Dingheng Shipping. If not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 17,296.29 yuan, Dingheng Shipping should bear 3,234 yuan, Hua Xin Petrochemical Company, should bear 14,062.29 yuan.

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The facts that the court of the first instance found out, were backed up related evidences, neither of the two parties had objection to them, during the second trial, they did not submit new evidence materials, the court confirmed the facts identified in the first-instance judgment. The court held that, the case was dispute over voyage charter party, Dingheng shipping had the management qualification for domestic water transport, the voyage charter party signed by Hua Xin Petrochemical Company and it was the real intentions of the two parties, which did not against the compulsory regulations of law and administrative regulations, and should be confirmed legal and effective. According to the two parties’ plea opinions and statements, the court confirmed the issues of the second instance were whether Hua Xin Petrochemical Company should pay Dingheng Shipping the freight, demurrage, counsel fee, inspection fee and the specific amount of each fees. 1. Freight and demurrage As for the freight, Dingheng Shipping had transported the cargo involved in the case to the target port in accordance with the voyage charter party, so Hua Xin Petrochemical Company should pay the freight as promised. With regard to the reasons for not paying the freight given by Hua Xin Petrochemical Company, the court’ s analysis was as followed: firstly, Hua Xin Petrochemical Company was not the party who needed to fulfill obligation first under the voyage charter party involved in the case, the reason it provided to refuse to pay the freight that Dingheng Shipping should be liable for cargo damage, which did not belong to the circumstances of enforcement of unsafe right of defense stipulated by the Contract Law of the People’s Republic of China Article 68, therefore, its claim that not paying freight was enforcement of unsafe right of defense, lacked basis, so it could not be established. Secondly, the major delivery obligations of the voyage charter party involved in the case were Dingheng Shipping’s providing transport service and Hua Xin Petrochemical Company’s paying the freight, Dingheng Shipping’s issuing freight receipt was an accessory contract obligation of the party. In the circumstance that Dingheng Shipping had fulfilled the transporting obligation, Hua Xin Petrochemical Company had no right to refuse to fulfill the party obligation of paying freight due to Dingheng Shipping’s not issuing receipt. According to these, neither of Hua Xin Petrochemical Company’s reasons for defense could be established, it should pay Dingheng Shipping the freight. As for the demurrage, both Dingheng Shipping and Hua Xin Petrochemical Company had no objection to the actual laytime confirmed by the judgement of the first instance, the court confirmed it. Hua Xin Petrochemical Company should pay Dingheng Shipping the demurrage caused by exceeding the promised laytime in accordance to the party. With regard to the reasons for not paying the demurrage charge given by Hua Xin Petrochemical Company, the court’s analysis was as followed: firstly, as the charterer of the voyage charter party involved in the case, Hua Xin Petrochemical Company should pick the cargo in time when receiving the notice of arrival of the cargo, its claimed had no contractual or legal basis that it had no fault in ship demurrage because Dingheng Shipping should be liable for cargo

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damage and the buyer Northeast Petrochina International Co., Ltd., the party not involved in the case, refused to receive the cargo. Secondly, the voyage charter party involved in the case stipulated that “Hua Xin Petrochemical Company enjoys ownership of the cargo entrusted to transport from beginning to end”, Dingheng Shipping also clearly expressed in the trial of the second instance that Hua Xin Petrochemical Company had the right to decide the handling plan of the cargo involved in the case, did not need Dingheng Shipping’s agreement, so Hua Xin Petrochemical Company’ s claim lacked basis and could not be established, that Dingheng Shipping’s disagreement to the handling plan led to extension of demurrage. Besides, Hua Xin Petrochemical Company claimed that it was trade custom stipulated in Contract Law that the handling plan should be agreed by Dingheng Shipping, by it did not provide related evidence in accordance with the Supreme People’s Court Several Issues concerning Application of the Contract Law of the People’s Republic of China Interpretation (2) Article 7 Paragraph 2, with regard to trade custom, the claimant replying on it shall bear the burden of proof, so it should bear the legal consequence due to evidence lack. Moreover, the final sales price of the Bao Pai Website handling plan suggested by Dingheng Shipping was higher than the sales price recorded in the handling plan Hua Xin Petrochemical Company planned to use, so Dingheng Shipping’s suggested plan actually reduce Hua Xin Petrochemical Company’s loss, was better for maintaining Hua Xin Petrochemical Company’s interests. Thirdly, in the trial of the second instance, the two parties admitted that the tank storage fee was higher than the demurrage standard stipulated by the voyage charter party involved in the case, so Hua Xin Petrochemical Company’s claim that Dingheng Shipping’s not discharging the cargo directly belonged to not taking proper measures leading to the occurrence and expansion of demurrage, was in accordance with the fact, and was contrary to Hua Xin Petrochemical Company’s statement in the trial of the first instance that “both of the two parties wanted to discharge, and inquired for price, but the discharging fee was too high. Then the two parties basically reached an agreement to sell it to the second party rather than discharging directly”. In addition, the first instance judgement was not made according to the fact confirmed by another case (2016) Jin 72 Min Chu No.897 Civil Judgement, so whether the other civil judgement was effective had no relation to the trial of this case. Therefore, Hua Xin Petrochemical Company’s reasons for defense could not be established, it should pay Dingheng Shipping the demurrage. As for the amount of money, Hua Xin Petrochemical Company made it clear that if it should pay the freight and demurrage, it had no objection to the amount confirmed by the first instance judgement, so the court confirmed the freight 369,557.1 yuan and demurrage 472,270.83 yuan. As for the interest, Hua Xin Petrochemical Company did not fulfilled the obligation of paying the freight and demurrage, should paid the debt interests for delay in performance. The confirmations related in the first instance judgement was not improper, the court confirmed them.

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2. Counsel fee and inspection fee As for counsel fee, the voyage charter party involved in the case only stipulated that liability for breach of contract includes the damage that could be proved and any court acceptance fee and counsel fee, but did not stipulate the specified standard and amount of the counsel fee, so the first instance judgement judged Hua Xin Petrochemical Company to pay Dingheng Shipping counsel fee 175,000 yuan at its discretion in accordance with the basic facts of the case and the dispute target amount of the two parties, it was not improper. As for inspection fee, the Inspectorate Tianjin Petrochemical Branch’s inspection of pipeline sample was jointly entrusted by Dingheng Shipping and Hua Xin Petrochemical Company, the two parties did not reach an agreement on inspection fee burden, therefore the first instance judgement that the two parties shared the inspection fee in half, was not against the agreement of two parties and the law, and was not improper. Pulling the threads together, Dingheng Shipping and Hua Xin Petrochemical Company’s appeals could not be established, and should be dismissed: the facts were clearly ascertained and the application of the law was right in first instance, and the judgment of the first instance should be maintained. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 16,580 yuan, Dingheng Shipping should bear 2,396 yuan, and Hua Xin Petrochemical Company should bear 14,184 yuan. The judgement is final. Presiding Judge: ZHAO Wei Acting Judge: TANG Na Acting Judge: LI Shanchuan October 11, 2017 Clerk: YU Yinan

Tianjin Maritime Court Civil Judgment Shanghai Jiahang Shipping Co., Ltd. v. Tianjin CCCC BOMESC Marine Industry Co., Ltd.

(2017) Jin 72 Min Chu No.295 Related Case(s) None. Cause of Action 206. Dispute over ship sales and purchases contract. Headnote Plaintiff supplier of VHF radio telephone held to be entitled to recover unpaid purchase price, plus interest, plus penalty interest rate of an extra 50% of the regular interest rate, for long overdue payment. Summary Plaintiff seller supplied a Very High Frequency (VHF) radio telephone to Defendant in 2011. Plaintiff presented a Statement of Account to Defendant in 2015. Defendant did not pay the purchase price so Plaintiff sued. Defendant did not contest that the telephone had been delivered to it, nor did it contest that it had not paid the purchase price. Plaintiff claimed interest from the date of the Statement of Account in 2015, but also claimed that the interest rate should be increased by 50% over the usual rate (which was the loan interest rate of the People’s Bank of China during the same period) as an overdue penalty. The Court held that Defendant should pay the purchase price, plus interest at the rate of 150% of the loan interest rate of the People’s Bank of China during the same period, as an overdue penalty.

Judgment The Plaintiff: Shanghai Jiahang Shipping Co., Ltd. Domicile: D-296 No. 4925 Waiqingsong Road Chonggu Town Qingpu Distract Shanghai. Legal representative: DA Jun, general manager of the company. Agent ad litem: WANG Zihua, lawyer of Join & High Law Office. Agent ad litem: CAO Haina, lawyer of Join & High Law Office. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_58

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The Defendant: Tianjin CCCC BOMESC Marine Industry Co., Ltd. Domicile: Tanggu xingang waterway administration pipeline team Binhai New District Tianjin. Legal representative: LI Zhi, chairman of the company. Agent ad litem: SONG Jianbo, staff of the company. With respect to the case arising from dispute over sales contract of key parts of a ship between the Plaintiff, Shanghai Jiahang Shipping Co., Ltd., and the Defendant, Tianjin CCCC BOMESC Marine Industry Co., Ltd., after entertaining it on April 27, 2017, the court applied summary procedure, and held a hearing in public on May 26, 2017. Agents ad litem of the Plaintiff, WANG Zihua, CAO Haina, and agent ad litem of the Defendant, SONG Jianbo, appeared in the court to attend the hearing. Now the case has been concluded. The Plaintiff claimed to the court that: 1. the Defendant should pay payment for goods RMB 19,200 yuan to the Plaintiff; 2. the Defendant should pay late payment penalty RMB 3,194 yuan (based on RMB 19,200 yuan, according to People’s Bank of China during the same period of lending benchmark interest rates and the overdue penalty rate standards, temporarily calculated to March 31, 2017, up to RMB 3,194 yuan) to the Plaintiff; 3. court acceptance fee should be borne by the Defendant. Then, the Plaintiff changed claims into that: 1. the Defendant should pay payment for goods RMB 19,200 yuan to the Plaintiff; 2. the Defendant should pay late payment penalty (calculated from April 28, 2015 to the date of fulfilment of the Defendant, according to People’s Bank of China during the same period of lending benchmark interest rates and the overdue penalty rate standards); 3. court acceptance fee should be borne by the Defendant. Facts and reasons: on March 30, 2011, the Plaintiff and the Defendant signed the purchases and sales contract of Very High Frequency Radio Telephone and DSC Receiver, the Plaintiff delivered the goods according to the contract, but the Defendant did not pay the payment for goods after being demanded many times. The Defendant argued that: confirm the contract relationship and the amount of payment claimed by the Plaintiff. According to the claims of the Plaintiff and the argument of the Defendant, the court concluded the issues as follows: 1. whether the Defendant should pay payment for goods to the Plaintiff; 2. the amount of payment for goods and the method of calculation. In order to prove its claims, the Plaintiff provided that following evidence: evidence 1, Product Sales Contract, original copy, to prove that the Plaintiff signed an effective contract with the Defendant; evidence 2, bill of receipt, original copy, to prove that the Defendant had received the goods in contract; evidence 3, statement of account, original copy, to prove that the amount owed by the Defendant was 19,200 yuan; evidence 4, letter, copy; 5, bill, copy; evidence 4 to 5 proved the facts that the Plaintiff claimed against the Defendant. The opinion of cross-examination of the Defendant to the evidence provided by the Plaintiff: the Defendant confirmed the authenticity and purpose of proof of all the evidence provided the Plaintiff.

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The opinions of confirmation of the court to the evidence provided by the Plaintiff: the court confirmed authenticity of the 5 evidence provided by the Plaintiff, which could prove that there was purchases and sales contract relationship for key parts of vessel between the Plaintiff and the Defendant, and the Defendant owed to the Plaintiff 19,200 yuan. The Defendant did not submit any evidence. According to the statements of both parties and evidence investigated and confirmed by the court, the court confirms the fact as follows: on March 30, 2011, the Plaintiff and the Defendant signed Product Purchases and Sales Contract, which agreed that the Defendant bought Very High Frequency Radio Telephone from the Plaintiff, amount of the contract was RMB 19,200 yuan. Settlement and time limits was that after signing the contract, the Plaintiff sent the goods to the place appointed by the Defendant in the agreed duration of delivery, after investigation of the Defendant, 95% of the amount should be paid within 30 days after the Defendant signed its name, the rest 5% as quality guarantee deposit should be paid after 12 months of delivery of vessel. In November 2011, the Plaintiff delivered the goods to the Defendant. On April 28, 2015, the Plaintiff presented Statement of Account to the Defendant, the Defendant confirmed that charge for goods 19,200 yuan involved had not been paid by sealing. On November 21, 2016, the Plaintiff sent lawyer’s letter to the Defendant, requesting the Defendant to pay charge for goods involved. Because the Defendant did not pay the charge for goods above to the Plaintiff, so the Plaintiff brought a lawsuit to the court. The court holds that, the dispute of this case is over purchases and sales contract for key parts of vessel, the Plaintiff was seller, the Defendant was buyer. The Plaintiff and the Defendant signed Product Purchases and Sales Contract, the contract was made on the basis of equality and voluntariness of both parties, the content did not violate national laws prohibitive provisions, which was legal and effective. The Plaintiff and the Defendant enjoyed their rights and fulfilled their obligations. As to charge for goods RMB 19,200 yuan claimed by the Plaintiff, because the Defendant confirmed it and sealed on Statement of Account, and confirmed in the trial, so the Defendant should pay charge for goods RMB 19,200 yuan to the Plaintiff. As to the late payment penalty of the amount above claimed by the Plaintiff (calculated from April 28, 2015 to actual payment by the Defendant, according to the People’s Bank of China during the same period loan interest rate and the overdue penalty interest rate standards), the Plaintiff claimed that late payment interest rate should increase 50% above the rate of loan standard. The court holds that, according to the Interpretation of the Supreme People’s Court on the Application of Law in the Trial of Disputes over Contracts for Sale and Purchase Article 24 Paragraph 4 that: “if the seller claims to compensate the overdue payment loss on the grounds of the buyer’ s breach of contract, the people’ s court may, on the basis of the People’s Bank of China’s benchmark interest rate for similar RMB loans in the same period, calculate with reference to the standard of overdue penalty interest.” And according to the Notice of the People’s Bank of China on Issues Relating to the Interest Rate of RMB Loans Article 3 Paragraph 1 that: “on the question of the penalty rate. The penalty interest rate for overdue loans

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(loans not repaid by the borrower on the date specified in the contract) shall be charged at the current rate of interest at the rate of one point per ten thousand per day instead of an additional 30–50% above the loan interest rate specified in the loan contract; if the borrower fails to use the penalty interest rate of the loan for the purpose agreed in the contract, the interest rate of the loan shall be charged at the current rate of five parts per ten thousand per day instead of 50–100% above the loan interest rate specified in the loan contract.” In this case, because the Plaintiff delivered goods involved to the Defendant in November 2011 according to Product Purchases and Sales Contract, but the Defendant did not pay money, so the late payment deposit claimed by the Plaintiff (calculated from April 28, 2015 to actual payment by the Defendant, according to the People’s Bank of China during the same period loan interest rate and referred to the 150% rate of overdue penalty) was appropriate, and the court supported it. Pulling the threads together, there was relationship of purchases and sales contract for key parts of vessel between the Plaintiff and the Defendant. The Plaintiff had fulfilled its obligation of delivery according to Product Purchases and Sales Contract. The Defendant’s late payment constituted a breach of contract, and the Defendant should be liable for breach of contract by continued performance and payment of overdue interest. So the Defendant should pay charge for goods 19,200 yuan to the Plaintiff, and should pay the interest of late payment (calculated from April 28, 2015 to actual payment by the Defendant, according to the People’s Bank of China loan interest rate and referred to the 150% rate of overdue penalty). According to the Contract Law of the People’s Republic of China Article 107, Interpretation of the Supreme People’s Court on the Application of Law in the Trial of Disputes over Contracts for Sale and Purchase Article 24 Paragraph 4, the judgment is as follows: 1. The Defendant, Tianjin CCCC BOMESC Marine Industry Co., Ltd., should pay charge for goods 19,200 yuan to the Plaintiff, Shanghai Jiahang Shipping Co., Ltd., within 10 days after the judgment comes into force; 2. The Defendant, Tianjin CCCC BOMESC Marine Industry Co., Ltd., should pay the interest of late payment deposit to the Plaintiff, Shanghai Jiahang Shipping Co., Ltd., within 10 days after the judgment comes into force (calculated from April 28, 2015 to actual payment by the Defendant, according to 150% of the People’s Bank of China’s loan interest rate for the same period). If The Defendant, Tianjin CCCC BOMESC Marine Industry Co., Ltd., does not fulfill obligation to pay money according to this judgment, it should double the interest on the debt for the delay in performance according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 180 yuan, should be borne by the Defendant, Tianjin CCCC BOMESC Marine Industry Co., Ltd.

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It not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit 4 copies of petition so as to appeal to the Tianjin High People’s Court. Acting Judge: WU Wenzhe July 12, 2017 Clerk: LIANG Yan

Beihai Maritime Court Civil Judgment Shanghai Pan Asia Shipping Co., Ltd. v. Guangxi Wuzhou Bangda International Logistics Co., Ltd.

(2017) Gui 72 Min Chu No.209 Related Case(s) None. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff recovered container demurrage from defendant who had retained containers for more than 200 days. Summary Defendant carrier leased 30 containers belonging to Plaintiff, after dealing with Plaintiff’s agent. Defendant returned only one of the containers on time, and kept the other 29 for over 200 days. Plaintiff sued, seeking payment of container demurrage. Defendant argued that there was no container use contract between it and Plaintiff, because it had dealt with Plaintiff’s agent. Plaintiff sued Defendant, seeking to recover container demurrage and return of the containers. Defendant refused to participate and provided no evidence. The Court held that Defendant was in breach of contract and should pay container demurrage, albeit at a different scale from that claimed by Plaintiff. The Court also ordered Defendant to return the 29 containers.

Judgment The Plaintiff: Shanghai Pan Asia Shipping Co., Ltd. Domicile: 7th Floor, No. 658, Dongdaming Road, Hongkou District, Shanghai. Legal representative: WANG Haimin, chairman. Agent ad litem: LIN Lijia, lawyer of Shanghai WINTELL & CO. (Guangzhou). Agent ad litem: ZHENG Cairong, lawyer of Shanghai WINTELL & CO. (Guangzhou). © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_59

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The Defendant: Guangxi Wuzhou Bangda International Logistics Co., Ltd. Address: Room 101, Unit 4, Building 10, No. 19, Xidi 2nd Road, Wuzhou, Guangxi Zhuang Autonomous Region. Legal representative: YANG Xiaohong, chairman. Agent ad litem: WANG Peng, male, born on March 13, 1979, Han, general manager of the company, living in Sifang District, Qingdao, Shandong. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff Shanghai Pan Asia Shipping Co., Ltd. and the Defendant Guangxi Wuzhou Bangda International Logistics Co., Ltd., after the case was filed on June 1, 2017, Judge LIANG Yiming applied the summary procedure to hear the case. The case was originally scheduled to be heard in court on July 12. Agents ad litem of the Plaintiff, LIN Lijia and ZHENG Cairong, and agent ad litem of the Defendant, WANG Peng, were supposed to attend the hearing. As the Plaintiff increased the litigation request in court, the court re-designated the time limit for further proof according to the request of the party. The court held a hearing in public on July 27. Agent ad litem of the Plaintiff, LIN Lijia, appeared in court to attend the hearing. The Defendant Guangxi Wuzhou Bangda International Logistics Co., Ltd. was legally summoned by the court but refused to participate in the lawsuit without proper reasons. The court tried the case by default according to law. Now the case has been concluded. The Plaintiff claimed that, from November 13, 2016, the Defendant repeatedly passed the Plaintiff’s agent, South China COSCO Shipping Container Transportation Co., Ltd. (formerly Huanan Zhongyuan International Freight Co., Ltd., hereinafter referred to as South China COSCO), to book the Plaintiff and extract empty containers. Loading. From December 23, 2016 to January 2, 2017, the Defendant took away 30 containers belonging to the Plaintiff at Zijin Port, Yinzhou Port, Guangxi, and 29 of them have not been returned. The demurrage fee payable by the Defendant shall be calculated according to the China Southern Regional Rate Standard (5) and the South China Regional Rate Standard of the “Contracted Charges for Detained Boxes” issued by the Plaintiff’s website, until July 12, 2017. The demurrage fee of 1,073,830 yuan has been incurred. The Defendant’s actions have constituted a breach of contract and shall be liable for breach of contract in accordance with the law. To this end, the Plaintiff requested that: 1. the Defendant should pay the Plaintiff demurrage fee of 1,073,830 yuan (from the date of picking up the suitcase until July 12, 2017); 2. the Defendant should return 29 containers immediately; 3. the costs of litigation in this case should be borne by the Defendant. The Defendant argued in written that there was no container use contract relationship between the Plaintiff and the Defendant, and the Plaintiff requested the Defendant to pay the demurrage fee, which lacked basis. The Plaintiff submitted the following evidence to the court to support its claims: Evidence 1, procurement letter of consignment of domestic trade container cargo;

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Evidence 2, the back clause of the consignment letter of domestic trade container cargo; Evidence 3, 30 container terminal exit orders; Evidence 4, description of the situation; Evidence 1–4, to prove that the Defendant took away 30 containers belonging to the Plaintiff, and there are still 29 cases of unreturned and overdue use of the facts of breach of contract; Evidence 5, settlement agreement for coastal freight transportation costs, to prove that there is a contractual relationship between the Defendant and the agent of the Plaintiff, Huanan COSCO, and the fact that the company has booked and settled the freight to the Plaintiff; Evidence 6, calculation table of demurrage fee; Evidence 7, calculation standard for demurrage fee; Evidence 6–7, to prove the fact that the demurrage fee of 754,830 yuan has been incurred as of May 17, 2017; Evidence 8, for 30 container descriptions such as box number CCLU3957390, to prove that South China COSCO Company is the agent of the Plaintiff. The agent’s business includes accepting the shipper’s entrusted booking, managing the container, and issuing empty containers to the shipper and the shipper’s agent. The matter, the Defendant through the company to book the Plaintiff and take the empty box, the law should be responsible to the Plaintiff; Evidence 9, calculation of the demurrage fee is based on the fact that the Defendant should pay the Plaintiff’s demurrage fee of 10,738,830 yuan as of July 12, 2017; Evidence 10, announcement on the company’s name change, to prove that the Plaintiff’s agent changed the name of the company from “South China COSCO International Freight Co., Ltd.” to “South China COSCO Shipping Container Transportation Co., Ltd.”; Evidence 11, (2014) Da Hai Shang Chu Zi No. 34 Civil Judgment, to prove that it is an industry practice for container providers to collect container overdue fees. The Defendant should pay the Plaintiff a demurrage fee according to industry practice; Evidence 12, summary of the demurrage fees of major shipping companies, to prove that the charges for the same type of demurrage for major shipping companies in the same period are 150–340 yuan, which can be used as a reference for market prices; Evidence 13, standard of demurrage of COSCO Container Lines Co., Ltd., to prove that the container involved in the case is 20 GP box type, and the demurrage fee is calculated according to the fact that the suitcase is calculated at 200 yuan/day for more than 22 days. Evidence 14, e-mail screenshots, to prove that the Plaintiff sent the mail to the Defendant twice to claim the demurrage fee after the Defendant overdue the container. The Defendant did not provide any evidence to the court.

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The court believes that in accordance with the relevant provisions of the Civil Procedure Law of the People’s Republic of China, the parties have the right to reply and to cross-examine the evidence submitted by the other party. The Defendant was legally summoned by the court, refused to participate in the lawsuit without proper reasons, and did not submit relevant evidence, as it had waived the legal rights of litigation and other legal rights. The evidence provided by the Plaintiff is legal and objective and true. Therefore, the court will confirm it, which can be used as the basis for determining the facts of the case. However, the calculation standard for the demurrage fee and the total amount of calculation should be analysed and confirmed by the comprehensive case of the court. The court found out: South China COSCO is the general agent of the container ships operated by the Plaintiff in the South China region. The agency business includes accepting the consignor's entrusted booking, managing the container, and issuing empty containers to the shipper and the shipper’s agent. September 26, 2016, South China COSCO signed Coastal Freight Water Transport Fee Settlement Agreement on the business and its agents accused the Plaintiff, the Plaintiff’s bank account as one of the designated account both the financial settlement, the staff of the Plaintiff, DU Haitian, XU Li, as a contact Plaintiff informed the Defendant of the capital account, valid from September 1, 2016 until August 31, 2017. From December 23, 2016 to January 1, 2017, the Defendant negotiated with South China COSCO to book the booking and took the 30 20 GP container shipments of the Plaintiff at Zijin Port in Wuzhou, Guangxi, with the specific removal time and container number. As follows: December 23, 2016, CSLU2294930, CCLU3497356, CBHU4188480, TCKU2514226, CBHU4379487, IPXU3367047; FCIU5445350 was taken on December 24; TEMU3085877, CSLU1640772, CSLU1745325, CBHU5578122, CCLU3618205 were removed on December 25; December 30 Take CBHU3906710, MAGU2142117, FCIU6073344, CSLU2446205; on December 31, take CSLU2443211, TEMU3137137, CSLU1385159, CBHU4278603, IPXU3274181, BSIU2951686, CCLU3933254, CCLU3869474, UETU2184249, GSLU1129119, DFSU1046268, CSLU2435793. On January 1, 2017, CCLU3957390 and CSLU1454715 were taken. On January 22, 2017, the Defendant issued Case Description to South China COSCO, stating that the above 30 containers were transported due to unpaid freight to the fleet of transport containers. The fleet deducts the goods and deducts the goods, and the resulting expenses such as overdue fees, damage to the boxes, and loss of losses are borne by them. In addition to returning the container with the container number CCLU3618205 on March 17, the Defendant did not return the containers. On April 20 and April 26, LIN Zhanhong, a staff member of Zhaoqing Branch of South China COSCO, sent two emails to the Defendant employee WANG Peng to inform them that the detained box had incurred demurrage and urged the Defendant to return the container as soon as possible. On July 7, South China COSCO issued Notes on 30 Containers Such as Box No. CCLU3957390, indicating that it is the general agent of the domestic shipping routes operated by the Plaintiff in the South China region. The 30 containers involved

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are owned by the Plaintiff. As an agent, he accepted the Defendant’s entrusted booking and issued the above 30 empty containers to the Defendant. The court also found out that: 1. On November 1, 2016, South China COSCO announced its name change. The company name was changed from “South China COSCO International Freight Co., Ltd.” to “South China COSCO Shipping Container Transportation Co., Ltd.”, and the industrial and commercial change registration was completed on December 5; 2. The Plaintiff stated in Proxy Power of Attorney for Domestic Containers issued by the company’s website that the (5) agreement states that “from the date the shipper picks up the empty container, the ordinary box must be shipped within 7 days under normal circumstances; the shipper who arranges the shipment must bear the overdue demurrage fee and the overdue terminal storage fee. The shipper agrees to pay the demurrage fee announced immediately by the carrier and Pan Asia Shipping for the payment of the overdue demurrage fee and the overdue terminal storage fee. The fee for the deposit fee is enforced.” The Plaintiff posted the demurrage fee for 20 GP containers in the South China region from January 1, 2014 on the company's website: 1–7 days free, 8– 14 days for 68 yuan/day, and 15–21 days for 135 yuan/day. More than 22 days for 200 yuan/day; Guangxi region from January 1, 2014 to December 31, 2016, 20 GP container demurrage fee standard: 1–14 days free, 15–21 days for 68 yuan/day 22–28 days for 235 yuan / day, 29 days for 200 yuan/day; 3. South China COSCO released the 20 GP container demurrage fee standard on its website: 1–7 days free, 8–14 days for 68 yuan/day, 15–21 days for 135 yuan/day, 22 days for 200 yuan/day; 4. The standard (maximum amount) of the 20 GP container demurrage fee for each major shipping company published online is between RMB 150 yuan and RMB 340 yuan per day. The court believes that this case is a dispute over the contract of carriage of goods at sea and through waters. As the general agent of the Plaintiff’s domestic trade route in South China, South China COSCO accepted the Defendant’s booking and issuing empty containers according to the agency right. The contract took effect and has been fulfilled, but the two parties did not make a written agreement on the rate standard for container demurrage. According to Article 61 of the Contract Law of the People’s Republic of China (hereinafter referred to as the Contract Law) after the contract takes effect, the parties concerned may not agree on the quality, price or remuneration, place of performance, etc., or the agreement is not clear. If the supplementary agreement cannot be reached, according to the relevant provisions of the contract or the trading habits, the container shall be returned to the empty container after the end of the free use period. It is an industry practice to pay the demurrage fee for overdue use. This trading practice does not violate the law and administrative regulations prohibit the sexual provisions, so the Defendant is obliged to return the empty container to the Plaintiff or his agent after the end of the

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free use period according to the trading practice, and the demurrage fee should be paid for the overdue use. However, after the Defendant took the suitcase, it far exceeded the free use period. It neither paid the demurrage fee nor returned the entire container. It constituted a breach of contract and should bear the corresponding liability for breach of contract. The Defendant was legally summoned by the court to refuse to participate in the lawsuit without justifiable reasons, and was deemed to have waived the right of defensed in accordance with the law. The Plaintiff failed to provide evidence to prove that the agency relationship between him and the South China COSCO should be regarded as the Defendant. know. According to Article 403 Paragraph 1 of the Contract Law, when the trustee concludes a contract with a third party in his own name, if the third party does not know the agency relationship between the trustee and the principal, the trustee shall The reason for the three persons does not fulfil the obligation to the client. The trustee shall disclose the third party to the client. The client may therefore exercise the rights of the trustee to the third party, but if the third party and the trustee enter into a contract, they shall know the principal. As long as the contract will not be concluded, the Plaintiff, as the principal, can exercise the rights of the trustee, Huanan COSCO, to the Defendant. The Plaintiff requested to calculate the demurrage fee according to the standard of the demurrage fee published on the company’s website. The reason is sufficient, the court supports it, but the rate standard of the Guangxi region is clearly defined in the demurrage fee standard issued by the Plaintiff's website, and the performance of the contract in this case is fulfilled. The land is in Guangxi, so the case should be applied to the rate standard in Guangxi. The Plaintiff advocates applying the rate standard in South China to calculate the demurrage fee. The court does not support it. According to Article 107 of the Contract Law, if one of the parties fails to perform the contractual obligations or fulfils the contractual obligations and does not comply with the contract, it shall undertake the provisions of continuing to perform, take remedial measures or compensate for losses and other breach of contract, and the regional container rate standard in Guangxi. It is free for 1–14 days, 68 yuan/day for 15–21 days, 135 yuan/day for 22–28 days, and 200 yuan/day for 29 days or more. The price and the Plaintiff provide the bargaining fees for major shipping companies published online. The market price is lower than the price of 150 yuan–340 yuan per day. Therefore, the case of the Guangxi regional container rate published by the Plaintiff's website can be used as the basis for calculating the price of the demurrage fee in this case. The Defendant booked with the South China COSCO and took away 30 containers from the Plaintiff. The demurrage fee was counted until July 12, 2017. On December 23, 2016, the time for picking up 6 boxes was 202 days, and the demurrage fee was 217,326. Yuan [(68  7) + (135  7) + (200  174)]  6; on December 24, the time for picking up one box is 201 days, and the demurrage fee is 36,021 yuan [(68  7) + (135  7) + (200  173)]  1; 5 boxes will be taken on December 25, and 1 box will be returned on March 17, 2017. The 4 boxes will be 200 days, 1 box time. For 83 days, the demurrage fee is 155,705 yuan {[(68  7) + (135  7) + (200  172)]  4} + {[(68  7) + (135  7) + (200)

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55)]  1]}; on December 30, 4 boxes were taken for 195 days, and the demurrage fee was 139,284 yuan [(68  7) + (135  7) + (200  167)]  4 On December 31, 12 boxes were taken for 194 days, and the demurrage fee was 415,452 yuan [(68  7) + (135  7) + (200  166)]  12; on January 1, 2017 The time for walking 2 boxes is 193 days, and the demurrage fee is 68,842 yuan [(68  7) + (135  7) + (200  165)]  2. Therefore, the Defendant should pay the Plaintiff a total of 1,032,630 yuan (217,326 yuan + 36,021 yuan + 155,705 yuan + 139,284 yuan + 415,452 yuan + 68,842 yuan). The Plaintiff requested the Defendant to pay the demurrage fee of 10,738,830 yuan as of July 12, 2017. Based on the shortage, the excess will not be supported by this court. The Defendant took the Plaintiff and returned 30 containers and only returned one. The remaining 29 boxes have not been returned for more than 200 days. It obviously constitutes a breach of contract. The Plaintiff requested the Defendant to return 29 containers for sufficient reasons. The court supported this law. The Defendant argued that the Plaintiff had no contractual relationship with him and had no right to claim the detention fee. The reason was not sufficient and the basis was insufficient. In accordance with Article 61, Article 107, and Article 403 of the Contract Law of the People’s Republic of China and Article 144 of the Civil Procedure Law of the People’s Republic of China (if the defedant summoned, refuses to attend the hearing without justifiable reason or leaves the hearing without the court’s permission, the court can make default judgment), the judgment is as follows: 1. The Defendant Guangxi Wuzhou Bangda International Logistics Co., Ltd. shall pay the Plaintiff Shanghai Pan Asia Shipping Co., Ltd. for the demurrage of 1,032,630 yuan as of July 12, 2017; 2. The Defendant Guangxi Wuzhou Bangda International Logistics Co., Ltd. shall return 29 containers to Shanghai Pan Asia Shipping Co., Ltd. within 10 days from the effective date of the judgment of the case (the container number is as follows: xxx); 3. Reject the other claims of Shanghai Pan Asia Shipping Co., Ltd. Court acceptance fee in amount of 7,232 yuan (the Plaintiff prepaid half according to the summary procedure), the Defendant Guangxi Wuzhou Bangda International Logistics Co., Ltd. shall pay 6,695 yuan, and the Plaintiff Shanghai Pan Asia Shipping Co., Ltd. 277 yuan. For the above-mentioned monetary payment obligation, the obligor shall fulfill the performance within 10 days from the effective date of the judgment of the case. If it is overdue, the debt interest shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. If the obligor fails to perform the obligation in the period specified in the effective judgment, the right holder may apply to the court for execution within two years from the last day of the performance period determined by the effective judgment. If the party disagrees with this judgment, it may submit an appeal letter to the court within 15 days from the date of service of the judgment, together with copies according to the number of the other parties, so as to appeal to the Guangxi Zhuang

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Autonomous Region High People’s Court, and within 7 days of expiration of the appeal period, make advance payment of appeal fee (receipt unit: Guangxi Zhuang Autonomous Region High People’s Court; account number: 20    77; bank: Nanning Wanxiang Branch of Agricultural Bank of China). If the payment is not made and the application for late payment is not submitted within the time limit, the appeal shall be withdrawn automatically. Judge: LIANG Enming August 17, 2017 Clerk: ZHOU Lin

Tianjin Maritime Court Civil Judgement Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin 72 Min Chu No.55 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1167. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff carrier entitled to payment from defendant cargo owner because it had performed its obligation and delivered the goods, even though it had not performed the subsidiary obligation of providing defendant with an expense check list. Summary The Defendant, Qinghai Sunglow Magnesium Co., Ltd (Shipper), contracted with the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd.’s ship (Carrier) to carry goods to Strathroy, Canada. The Carrier performed its obligation and delivered the goods to the consignee. The Plaintiff Carrier sued the Defendant Shipper because the Defendant Shipper never made payments according to the contract. The Defendant Shipper argued that the Plaintiff Carrier did not fulfill its obligation by submitting the expense checklist. The Court rejected the Defendant Shipper’s argument because the Plaintiff Carrier had a contractual and legal right to payment after it delivered the goods. Failure to comply with the expense confirmation procedure did not excuse the Defendant Shipper’s payment obligation. Judgment was given for the Plaintiff.

Judgment The Plaintiff: Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch. Domicile: *Unit, Floor **, Tianxinghepan Square No. **, Shiyijing Road, Dedong District, Tianjin. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_60

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Representative: SHENG Yongming, manager of the company. Agent ad litem: HAN Xu, lawyer of Grandall (Tianjin) Law Firm. Agent ad litem: LIU Chenyu, lawyer of Grandall (Tianjin) Law Firm. The Defendant: Qinghai Sunglow Magnesium Co., Ltd. Domicile: No.**, Jinqiao Road, Xining Economic Development Zone, Qinghai. Legal representative: ZHU Jun, chairman and general manager of the company. Agent ad litem: ZONG Haiying, lawyer of Qinghai Shuren Law Firm. Agent ad litem: LA Chenglin, lawyer of Qinghai Shuren Law Firm. With respect to the case arising from dispute over contract for carriage of goods by sea between the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch and the Defendant, Qinghai Sunglow Magnesium Co., Ltd, after entertaining it on January 17, 2017, the court decided to apply summary procedure. The Plaintiff applied to the court for property preservation on February 10, 2017, the court permitted it in accordance with the law. The Defendant lodged a jurisdictional objection during the submission of the defence, the court rejected it in accordance with the law. The Defendant was not satisfied with that decision and appealed to Tianjin High People’s Court, which made a ruling to dismiss the appeal and affirm the original ruling. Due to the complexity of the case, the case was transferred to general procedure. This court held hearings in public on June 13, 2017 and August 23, 2017. Agent ad litem of the Plaintiff, HAN Xu, and agents ad litem of the Defendant, ZONG Haiying (attended the first hearing), LA Chenglin (attended the second hearing), appeared in the court to attend the hearings. Now the case has been concluded. The Plaintiff claimed to the court that: 1. the Defendant should pay the overdue port surcharge 10,683.46 yuan and ocean freight 21,230 dollars; 2. the Defendant should pay the interests of the above fee (from January 11, 2017 to the date of payment determined by the judgement, RMB was calculated based on the loan interest rate for the same period and dollar was calculated based on the deposit interest rate for the same period); 3. the Defendant should bear court acceptance fee. Facts and reasons: from June 15, 2017, the Plaintiff and the Defendant began to cooperate. The Plaintiff provided related services such as ocean transportation for the Defendant’s export goods. In March, 2016, the Defendant booked space with the Plaintiff, commending the Plaintiff to deliver a shipment of goods, port of destination was STRATHROY, ON, N7G3J6. After accepting the commission, the Plaintiff transported the goods for the Defendant according to the contract and issued a bill of lading to the Defendant. After finishing the transportation, the Defendant never paid related fee to the Plaintiff. The Defendant argued that: the Plaintiff did not fully perform the contractual obligation, it did not send expense confirming list to the Defendant and did not obtain the Defendant’s confirmation of expense. Without the Defendant’s confirmation of expense, the fact that the Plaintiff consigned the goods constituted a breach of contract. It had factual and legal basis that the Defendant refused to pay

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ocean freight. The charge claimed by the Plaintiff, occupancy expense, belonged to the loss caused by itself, so the Defendant should not bear it. In order to prove the claims, the Plaintiff provided the following evidence: evidence 1. copy of bill of lading, to prove that the Defendant commended the Plaintiff to transport the goods. Evidence 2. original copy of invoice that was issued by the Plaintiff to the Defendant, to prove that the Defendant should pay freight to the Plaintiff. Evidence 3. copy of bill of lading involved in normal outbound business and original copy of invoice, to prove that the Defendant ever commended the Plaintiff to transport the goods and paid fee normally, and to prove that the trading habits of both parties. Evidence 4. original copies of container loading charge invoice and payment instruments, to prove that the Plaintiff had paid container loading charge involved in promissory note service to the person other than involved in the case. Evidence 5. original copy of the securing charge invoice and check stub, to prove that the Plaintiff had paid the securing charge involved in promissory note service to the person other than involved in the case. Evidence 6. original copy of manifest fee invoice and bank slip, to prove that the Plaintiff had paid the manifest fee involved in promissory note service to the person other than involved in the case. Evidence 7. original copy of customs declaration fee invoice and payment instruments, to prove that the Plaintiff had paid customs declaration fee involved in promissory note service to the person other than involved in the case. Evidence 8. original copy of insurance charge invoice and payment instruments, to prove that the Plaintiff had paid insurance charge involved in promissory note service to the person other than involved in the case. Evidence 9. original copy of ocean freight invoice and payment instruments and port surcharge invoice and payment instruments, to prove that the Plaintiff had paid ocean freight and port surcharge involved in promissory note service to the person other than involved in the case. Evidence 10. charge case, to prove the condition that the Plaintiff paid lump sum charge to China Tianjin Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Penavico Company). Evidence 11. charge circumstance, to prove the condition that the Plaintiff paid securing charge to Tianjin Tanggu Yitong Pingqi Industry and Trade Co., Ltd. (hereinafter referred to as Yitong Pingqi Company). Evidence 12. charge circumstance statement, to prove the condition that the Plaintiff paid unloading charge to Tianjin Sinotrans Container Development Co., Ltd. (hereinafter referred to as Sinotrans Company). Evidence 13. charge circumstance statement, to prove the condition that the Plaintiff paid the container loading charge to Sinotrans Company. Evidence 14. email, to prove the condition that the Plaintiff paid foreign cost to the foreign agent. Evidence 15. the NVOCC business qualification certificate, to prove that the Plaintiff had the NVOCC business qualification. Evidence 16. ocean freight explanation of American President Lines (China) Co., Ltd. Tianjin Branch, to prove the condition that the actual carrier charged the ocean freight involved in the case. As for the evidence of the Plaintiff, the Defendant’s cross-examination opinions were that: there was no objection to evidence 1. No objection to the authenticity of evidence 2, but there was contradiction between amount of invoice issued by the Plaintiff to the Defendant and the amount claimed by the Plaintiff. According to the

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agreement of contract, the Plaintiff should post the bill of lading and invoice to the Defendant before delivering the goods, then after receiving the invoice, the Defendant just paid fee. Evidence 3 had no relationship to this case, but the Defendant had no objection to the contractual relationship. There was objection to the authenticity of evidence 4–9. The amount claimed by the Plaintiff included contentious freight in this case and other freight, and the payment instruments provided by the Plaintiff were not enough to prove how much freight and miscellaneous expenses had been incurred for the business involved in the case claimed by the Plaintiff. There was no objection to authenticity of evidence 10 to 13 and 15. There was objection to evidence 14. There was no objection to authenticity of evidence 16. The court’s certification opinions on the Plaintiff’s evidence were that: the Defendant had no objection to authenticity of evidence 1, 2 and 16, the court confirmed the effect of proof of the evidence. Evidence 3 had no relationship to this case, the court did not ascertain the effect of proof of the evidence. Evidence 4–13 and 15 were the original copies, the court confirmed authenticity of the evidence and mutually evidenced fact that the Plaintiff had paid. The Defendant did not recognize authenticity of evidence 14, and the Plaintiff did not provide the original copy of evidence, then the court did not confirm its effect of proof. In order to prove its defence, the Defendant provided the following evidence: international freight forwarding contract, to prove the related agreement of international freight forwarding service between the Plaintiff and the Defendant. As for the Defendant’s evidence, the Plaintiff’s cross-examination opinions were that: no objection to authenticity, but the reason why the Plaintiff could not provide a part of evidence was that the Defendant was unwilling to perform the agreement, and the Plaintiff did not pursue the Defendant’s obligation in the actual business. So the breaching party was the Defendant, not the Plaintiff. The court’s certification opinions on the Defendant’s evidence were that: the Plaintiff had no objection to authenticity of the Defendant’s evidence, the court confirmed its effect of proof, and it could prove the fact that the Defendant commended the Plaintiff to handle international freight forwarding service. According to the statement of parties and evidence after investigating, combining the trail survey, the court confirmed the fact as follows: on the April 2, 2015, the Plaintiff and the Defendant signed No. SG-PD2015001 international freight forwarding contract, and both parties came to an agreement on which the Defendant commended the Plaintiff to handle international freight forwarding business related issue. The contractual agreement about fee was that: the preferential market rate provided by the Plaintiff to the Defendant was the basis for cooperation between the two parties. Ocean freight and RMB fee were separately determined according to each bill of lading business. Before sailing, the plaintiff faxed Expense Confirming List (or other written expense bills, etc.) of the RMB fee and ocean freight of the goods stowed by the defendant or shipper appointed by the Defendant or supplier appointed by the Defendant to the Defendant. After the person designated by the Defendant ascertained the sign or seal of Expense Confirming List, the Defendant returned it to the Plaintiff. Expense Confirming List, as an integral part of the

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agreement, was binding on the parties. Releasing bill of lading, the Plaintiff issued the invoice of freight according to Expense Confirming List, then posted the invoice and B/L to the Defendant. Within 30-day after sailing, the Defendant had paid off all ocean freight and RMB fee that the Plaintiff should obtain according to the bill. The contractual agreement about validity was that: the contract came into effect since it was signed. After the valid date for one year since the contract was signed, the original freight forwarding agreement between the two parties was automatically terminated. In February 2016, the Defendant booked space to the Plaintiff, commending the Plaintiff to transport the goods involved in this case, port of destination was STRATHROY, ON, N7G3J6. After accepting the delegation, the Plaintiff handled the customs clearance and transportation of goods involved in the case and so on. American President Lines Co., Ltd. (hereinafter referred to as American President Company) issued No. APLU070459740 ocean bill of lading on March 6, 2016, on the same day, the Plaintiff issued No. PDTJITAP102000 NVOCC B/L, the sailing day was on March 6,2016. The consignee had taken the goods involved in the case. The Plaintiff paid involved fee including Sinotrans Company container loading charge 2,150 yuan and unloading charge 968 yuan; paid Yitong Pingqi Company securing charge 1,000 yuan; paid Penavico Company local charge 225 yuan. The above port surcharge in total was 4,343 yuan. The actual carrier, American President Company, charged the ocean freight 6,310 dollars and 4,250 yuan. The court also found out that the Plaintiff had NVOCC shipping business qualification certificate. The court held that this case was dispute over contract for carriage of goods by sea. The Plaintiff was carrier, the Defendant was shipper, the Plaintiff accepted the Defendant’s delegation and handled customs clearance, transportation and encasement of goods involved in the case and so on. The contentious issues in this case were that: 1. whether it constituted a breach of contract that the Plaintiff did not send cost confirmation; 2. whether the Defendant owed the Plaintiff ocean freight and port surcharge; 3. the specific amount of overdue payment. In this case, each party held own opinions on the reason that the plaintiff did not send the expense confirming list to the Defendant. But the Plaintiff had finished the customs clearance, encasement and transportation of goods involved in the case, etc. and paid related fee. According the contractual agreement and legal provision, the Defendant should pay the ocean freight and advanced port surcharge to the Plaintiff. The fact that the Plaintiff did not send the expense confirming list could not become the reason that the Defendant did not pay the fee. There was no agreement about specific amount of the contract, the Plaintiff never issued the invoice, the Defendant disagreed the amount claimed by the Plaintiff. The court ascertained the amount was that: the actual carrier charged the ocean freight was 6,310 dollars and 4,250 yuan charged by American President Company, actually paid port surcharge 4,343 yuan that could be proved by the Plaintiff’s evidence. The court did not support the amount that was disagreed by the Defendant and could not be proved by the effective evidence provided by the Plaintiff. The interest calculated

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from the day of lawsuit claimed by the Plaintiff, which did not break the legal provisions, so the court supported it. Pulling the threads together, according to the Maritime Code of the People’s Republic of China Article 69, the Contract Law of the People’s Republic of China Article 112, Article 398, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. The Defendant, Qinghai Sunglow Magnesium Co., Ltd., within ten days from the effective date of this judgment, should pay port surcharge 4,343 yuan, ocean freight 6,310 dollars and 4,250 yuan to the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch; 2. The Defendant, Qinghai Sunglow Magnesium Co., Ltd., should pay the interests of the above sums to the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch (from January 11, 2017 to the date of fulfillment as judged by this judgment, the interest that will be paid regarding RMB sums should be calculated as the same-period loan interest rate of the People’s Bank of China, and interest that will be paid regarding dollar should be calculated as the same-period dollar deposit interest rate of the People’s bank of China); 3. Reject other claims of the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch. If the Defendant, Qinghai Sunglow Magnesium Co., Ltd., does not fulfil payment obligation within the time limit specified in this judgment, interest on debt incurred during the delay in performance should be doubled according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 3,466 yuan, the Defendant, Qinghai Sunglow Magnesium Co., Ltd., should bear 1,149 yuan, and the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch should bear 2,317 yuan. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit one original petition and five copies to this court so as to appeal to the Tianjin High People’s Court. Presiding Judge: LI Zengqiang Judge: CHEN Jianpeng Acting Judge: WANG Huiran September 22, 2017 Clerk: MA Sai

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Tianjin High People’s Court Civil Judgment Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch v. Qinghai Sunglow Magnesium Co., Ltd. (2017) Jin Min Zhong No. 580 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1161. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision holding that plaintiff carrier was entitled to payment from defendant cargo owner because it had performed its obligation and delivered the goods, even though it had not performed the subsidiary obligation of providing defendant with an expense check list. Summary The Defendant, Qinghai Sunglow Magnesium Co., Ltd. (Shipper), contracted with the Plaintiff, Shanghai Pudong International Freight Forwarding Co., Ltd.’s ship (Carrier) to carry goods to Strathroy, Canada. The Carrier performed its obligation and delivered the goods to the consignee. The Plaintiff Carrier sued the Defendant Shipper because the Defendant Shipper never made payments according to the contract. The Defendant Shipper argued that the Plaintiff Carrier did not fulfill its obligation by submitting the expense checklist. The first instance Court rejected the Defendant Shipper’s argument because the Plaintiff Carrier had a contractual and legal right to payment after it delivered the goods. Failure to comply with the expense confirmation procedure did not excuse the Defendant Shipper’s payment obligation. Judgment was given for the Plaintiff. The Shipper appealed and raised the same claims without submitting new evidence. The appeal Court dismissed the appeal because submitting the expense checklist is a subsidiary contractual obligation only. Even if it breached such subsidiary obligation, the Plaintiff Carrier still had a right to payments.

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Judgment The Appellant (the Defendant of first instance): Qinghai Sunglow Magnesium Co., Ltd. Domicile: No.**, Jinqiao Road, Xining Economic Development Zone, Qinghai. Legal representative: ZHU Jun, chairman and general manager of the company. Agent ad litem: LA Chenglin, lawyer of Qinghai Shuren Law Firm. Agent ad litem: ZONG Haiying, lawyer of Qinghai Shuren Law Firm. The Respondent (the Plaintiff of first instance): Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch. Domicile: *Unit, Floor**, Tianxinghepan Square No.**, Shiyijing Road, Hedong District, Tianjin. Representative: SHENG Yongming, manager of the branch. Agent ad litem: HAN Xu, lawyer of Grandall (Tianjin) Law Firm. Agent ad litem: LIU Chenyu, lawyer of Grandall (Tianjin) Law Firm. The Appellant, Qinghai Sunglow Magnesium Co., Ltd. (hereinafter referred to as Sunglow Magnesium Company), along with the Respondent, Shanghai Pudong International Freight Forwarding Co., Ltd. Tianjin Branch (hereinafter referred to as Pudong Freight Tianjin Branch), disagreed with (2017) Jin Min Chu No. 55 Civil Judgment made by Tianjin Maritime Court (hereinafter referred to as the court of first instance) and an appeal was filed in the court. The case was caused form a dispute concerning contract for carriage of goods by sea. After registering this case on November 6, 2017, the court legitimately constituted the collegiate bench to try the case, and held a hearing in pubic. Agent ad litem of the Appellant Sunglow Magnesium Company, LA Chenglin, and agent ad litem of the Respondent Pudong Freight Tianjin Branch, HAN Xu, appeared in the court to attend the hearing. Now the case has been concluded. Sunglow Magnesium Company appealed that: revoke the first-instance judgment, and reject all the first-instance claims of Pudong Freight Tianjin Branch; the court acceptance fee of two trials were borne by Pudong Freight Tianjin Branch. Facts and reasons: the facts confirmed in the first-instance judgment and the law applied were wrong. 1. Contract for International Freight Forwarding signed by two parties clearly stipulated that Pudong Freight Tianjin Branch accepted the delegation of Sunglow Magnesium Company, booked the space with shipping company and handled the issue of freight, before sailing, Sunglow Magnesium Company should confirm the fee, but Pudong Freight Tianjin Branch did not deliver the expense confirming list to Sunglow Magnesium Company, then it carried out transportation matters without performing the obligation of informing the transportation cost, which had constituted breach of contract. Sunglow Magnesium Company was due to refuse to pay fee. 2. The loss of interests claimed by Pudong Freight Tianjin Branch was caused by its own breach, so the loss should not be borne by Sunglow Magnesium Company. The fact that court of first instance

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applied clauses of commission contract to judge which Sunglow Magnesium Company borne the interests belonged to wrong application of law. Pudong Freight Tianjin Branch argued that: the grounds of Sunglow Magnesium Company lacked factual and legal basis and should be rejected. 1, During the process of performing the contract, shipment of each consignment of goods would get the Sunglow Magnesium Company’s consent and obtain the expense confirmation. Based on the consideration of two parties’ trading practice and simplifying the operation procedure, Pudong Freight Tianjin Branch did not insist on issuance of the expense confirmation procedures by Sunglow Magnesium Company. 2, The goods involved in the case had normally been shipped, and the consignee extracted the goods at the port of destination. Pudong Freight Tianjin Branch had fulfilled the contractual obligation. Proposed by Pudong Freight Tianjin Branch, the reason that refused to pay freight was untenable. The claims lodged by Pudong Freight Tianjin Branch to the court of first instance were that: 1. Sunglow Magnesium Company should pay the overdue port surcharge 10,683.46 yuan and ocean freight 21,230 dollars; 2. Sunglow Magnesium Company should pay the interests of the above fee (from January 11, 2017 to the date of payment determined by the judgement, RMB was calculated based on the loan interest rate for the same period and dollar was calculated based on the deposit interest rate for the same period); 3. Sunglow Magnesium Company should bear court acceptance fee. The facts ascertained by the court of first instance were that: on the April 2, 2015, Pudong Freight Tianjin Branch and Sunglow Magnesium Company signed No. SG-PD2015001 international freight forwarding contract, and both parties came to an agreement on which Sunglow Magnesium Company commended Pudong Freight Tianjin Branch to handle the issue related to international freight forwarding business. The contractual appointment about fee was that: the preferential market rate provided by Pudong Freight Tianjin Branch to Sunglow Magnesium Company was the basis for cooperation between the two parties. Ocean freight and RMB fee were separately determined according to each bill of lading business. Before sailing, Pudong Freight Tianjin Branch faxed Expense Confirming List (or other written expense bills, etc.) of the RMB fee and ocean freight of the goods stowed by Sunglow Magnesium Company or shipper appointed by Sunglow Magnesium Company or supplier appointed by Sunglow Magnesium Company to Sunglow Magnesium Company. After the person designated by Sunglow Magnesium Company ascertained the sign or seal of Expense Confirming List, Sunglow Magnesium Company returned it to Pudong Freight Tianjin Branch. Expense Confirming List, as an integral part of the agreement, was binding on the parties. Releasing bill of lading, Pudong Freight Tianjin Branch issued the invoice of freight according to Expense Confirming List, then posted the invoice and B/L to Sunglow Magnesium Company. Within 30-day after sailing, Sunglow Magnesium Company had paid off all ocean freight and RMB fee that Pudong Freight Tianjin Branch should obtain according to the bill. The contractual appointment about validity was that: the contract came into effect since it was signed. After the valid

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date for one year since the contract was signed, the original freight forwarding agreement between the two parties was automatically terminated. In February 2016, Sunglow Magnesium Company booked space to Pudong Freight Tianjin Branch, commending Pudong Freight Tianjin Branch to transport the goods involved in this case, port of destination was STRATHROY, ON, N7G3J6. After accepting the delegation, Pudong Freight Tianjin Branch handled the customs clearance and transportation of goods involved in the case and so on. American President Lines Co., Ltd. (hereinafter referred to as American President Company) issued No. APLU070459740 ocean bill of lading on March 6, 2016, on the same day, Pudong Freight Tianjin Branch issued No. PDTJITAP102000 NVOCC B/L, the sailing day was March 6, 2016. The consignee had taken the goods involved in the case. Pudong Freight Tianjin Branch paid involved fee including: pay Tianjin Sinotrans Container Development Co., Ltd. container loading charge 2,150 yuan and unloading charge 968 yuan; pay Tianjin Tanggu Yitong Pingqi Industry and Trade Co., Ltd. securing charge 1,000 yuan; pay China Tianjin Ocean Shipping Agency Co., Ltd. lump sum 225 yuan. The above port surcharges in total was 4,343 yuan. The actual carrier, American President Company, charged the ocean freight 6,310 dollars and 4,250 yuan. Pudong Freight Tianjin Branch had the NVOCC shipping business qualification. The court of first instance held that this case was dispute over contract for carriage of goods by sea. Pudong Freight Tianjin Branch was carrier, Sunglow Magnesium Company was shipper, Pudong Freight Tianjin Branch accepted Sunglow Magnesium Company’s delegation and handled customs clearance, transportation and encasement of goods involved in the case and so on. The contentious issues in this case were that: 1. whether it constituted a breach of contract that Pudong Freight Tianjin Branch did not send cost confirmation; 2. whether Sunglow Magnesium Company owed Pudong Freight Tianjin Branch’s ocean freight and port surcharge; 3. the specific overdue payment. In this case, each party held own opinions on the reason that Pudong Freight Tianjin Branch did not send the expense confirming list to Sunglow Magnesium Company. But Pudong Freight Tianjin Branch had finished the customs clearance, encasement and transportation of goods involved in the case, etc. and paid related fee. According the contractual agreement and legal provision, Sunglow Magnesium Company should pay the ocean freight and advanced port surcharge to Pudong Freight Tianjin Branch. The fact that Pudong Freight Tianjin Branch did not send the expense confirming list could not become the reason that Sunglow Magnesium Company did not pay the fee. There was no agreement about specific amount of the contract, Pudong Freight Tianjin Branch never issued the invoice, Sunglow Magnesium Company disagreed the amount claimed by Pudong Freight Tianjin Branch. The court of first instance ascertained the amount was that: the actual carrier charged the ocean freight was 6,310 dollars and 4,250 yuan charged by American President Company; actually paid port surcharge 4,343 yuan that could be proved by Pudong Freight Tianjin Branch’s evidence. The court did not support the amount that was denied by Sunglow Magnesium Company and could not be proved by the effective evidence provided by Pudong Freight Tianjin Branch. The

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interest calculated from the day of lawsuit claimed by Pudong Freight Tianjin Branch, which did not break the legal provisions, so the court supported it. According to the Maritime Code of the People’s Republic of China Article 69, the Contract Law of the People’s Republic of China Article 112, Article 398, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the court of first instance judged that: 1. Qinghai Sunglow Magnesium Company, within ten days from the effective date of this judgment, should pay port surcharge 4,343 yuan, ocean freight 6,310 dollars and 4,250 yuan to Pudong Freight Tianjin Branch; 2. Qinghai Sunglow Magnesium Company should pay the interests of the above fee to Pudong Freight Tianjin Branch (from January 11, 2017 to the date of fulfilment within term judged by this judgment, the interests that will be paid by RMB should be calculated as the same time loan interest rate of the People’s Bank of China, and interests that will be paid by dollar should be calculated as the same time dollar deposit interest rate of the People’s bank of China); 3. reject other claims of Pudong Freight Tianjin branch. If Qinghai Sunglow Magnesium Company, does not fulfil payment obligation within the time limit specified in this judgment, interest on debt incurred during the delay in performance should be doubled according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee of first instance in amount of 3,466 yuan, Qinghai Sunglow Magnesium Company should bear 1,149 yuan, Pudong Freight Tianjin Branch should bear 2,317 yuan. During the second trial, the two parties did not submit additional evidence. The fact ascertained in the first instance had been proved by related evidence, the court confirmed it. The court held that: Contract for International Freight Forwarding signed by Sunglow Magnesium Company with Pudong Freight Tianjin branch was effective according to the law. Pudong Freight Tianjin Branch accepted Sunglow Magnesium Company’s commission and handled the freight forwarding issue related to the transportation of goods by sea. According to the Provisions of the Supreme People’s Court on Several Issue about the Trail of Case concerning Marine Freight Forwarding Disputes Article 2, the different legal relations of agency, transportation and so on that Pudong Freight Tianjin Branch because of handling ocean freight forwarding issue formed with the client, Sunglow Magnesium Company should respectively apply related legal provisions. The contentious issues in the case were that: 1, whether Sunglow Magnesium Company should pay the ocean freight and port surcharge to Pudong Freight Tianjin Branch and the specific amount of fee; 2, whether Sunglow Magnesium Company should pay the interest of above fee to Pudong Freight Tianjin Branch. 1. About the ocean freight claimed by Pudong Freight Tianjin Branch. Pudong Freight Tianjin Branch had the NVOCC shipping business qualification, issued the bill of lading on its behalf and formed the contractual relationship of carriage of goods by sea with Sunglow Magnesium Company. Two parties should perform carrier and shipper’s rights and obligations. The Maritime Code of the People’s Republic of China Article 69 Paragraph 1 stipulated that: “the shipper

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should pay freight to the carrier according to the appointment.” Pudong Freight Tianjin Branch had completed the transportation of goods involved in the case, Sunglow Magnesium Company also confirmed that the consignee had taken the goods at the port of destination. The claim that Pudong Freight Tianjin Branch requested Sunglow Magnesium Company to pay the freight had the legal basis and should be supported. About the contradiction proposed by Sunglow Magnesium Company that Pudong Freight Tianjin Branch broke the appointment, did not carry out expense confirmation in advance, so Sunglow Magnesium Company should not pay the freight, the court held that in the legal relation of goods transportation contract, the fact that carrier transported the goods from the point of shipment to the agreed place and the fact that shipper paid freight constituted mutual payment obligation. The appointment about expense confirmation in the freight forwarding agreement did not belong to the main contractual obligation of which carrier performed the transportation contract. Under the condition that Pudong Freight Tianjin Branch, as the carrier, had safely and punctually transported the goods involved in the case to the port of destination and delivered the goods to the consignee, Pudong Freight Tianjin Branch did not lose the right of charging the freight because of the noncompliance of performing the freight forwarding agreement, so the defensed of Sunglow Magnesium Company could not be established and be supported by the court. Sunglow Magnesium Company in the court hearing recognized the ocean freight ascertained by the court of first instance, although claimed that Pudong Freight Tianjin Branch should provide the preferential market rate, did not clarify the specific amount of preferential market rate, did not prove the irrationality of which Pudong Freight Tianjin Branch charged the fee. For this reason, as for the amount of ocean freight ascertained by the court of first instance, the court confirmed it. 2. About the port surcharge involved in the case. Pudong Freight Tianjin Branch accepted the commission of Sunglow Magnesium Company and handled the freight forwarding issue. The documented evidence showed that: in order to handle the commission issue, Pudong Freight Tianjin Branch paid the container loading charge and other expenses in amount of 4,343 yuan to the person other than involved in the case. This fee was the necessary expense paid by Pudong Freight Tianjin Branch for Sunglow Magnesium Company and this fee should be paid by Sunglow Magnesium Company. Sunglow Magnesium Company had no objection to amount of this fee and the court confirmed this fee. 3. About the interest of above fee. Sunglow Magnesium Company did not perform the contractual obligation of paying the ocean freight and port surcharge to Pudong Freight Tianjin Branch, and should assume the liability for breach of contract for late payment and pay the interest of related fee. Now Pudong Freight Tianjin Branch claimed that the starting point of interest was date of bringing suit in the case, which belonged to the party disposed own rights and did not break legal provisions. The court allowed it.

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Pulling the threads together, the court would not approve the Sunglow Magnesium Company’s appeal because of being lack of legal basis. The judgment of first instance clearly ascertained the facts, and correctly applied the law and should be maintained. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 1,149 yuan, the Appellant, Qinghai Sunglow Magnesium Co., Ltd., should bear all the fee. The judgment is final. Presiding Judge: ZHANG Yuemin Judge: ZHAO Qingquan Acting judge: ZHANG Xin Acting judge: TANG Na Acting judge: LI Shanchuan December 28, 2017 Clerk: YU Yinan

Ningbo Maritime Court Civil Judgment Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2016) Zhe 72 Min Chu No.1710 Related Case(s) This is the judgment of first instance and the ruling of second instance is on page 1181. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Holding that plaintiff shipper could not recover damages from defendantcarrier regarding delivery of cargo without presentation of the original bill of lading,due to insufficient evidence. Summary Shaoxing Shang Da Textile Co., Ltd. (“Shang Da”) filed suit against CMA CGM S.A. & CMA CGM (China) Co., Ltd. Ningbo Branch (“CMA Ningbo”) for the payment of goods it entrusted CMA Ningbo to ship textile fabric from Ningbo Port to Algeria. Though the goods arrived at their destination, Shang Da alleged that it never received payment for the goods. CMA Ningbo argued that, since the consignee and Shang Da were long-time trade partners, it was possible that Shang Da was, in fact, compensated and permitted to retain possession of the original B/L. Without presenting evidence to refute CMA Ningbo’s claims, the court found that Shang Da did not meet its burden of proof in its suit, rejecting the company’s claim for relief.

Judgment The Plaintiff: Shaoxing Shang Da Textile Co., Ltd. Domicile: Yuecheng District, Shaoxing, Zhejiang, the People’s Republic of China. Legal representative: ZHANG Xianfeng, general manager of the company. Agent ad litem: YUAN Bin, lawyer of Beijing Dentons (Ningbo) Law Firm. Agent ad litem: WEN Li, lawyer of Beijing Dentons (Ningbo) Law Firm. The Defendant: CMA CGM S.A. Domicile: 4, quaid’ Arenc, 13,002 Marseille, France. Legal representative: Farid T. SALEM, general manager of the company. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_62

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The Defendant: CMA CGM (China) Co., Ltd. Ningbo Branch. Domicile: Jiangdong District, Ningbo, Zhejiang, the People’s Republic of China. Person in charge: CHEN Jingjuan, general manager of the branch. Agent ad litem of the two Defendants: XU Quanzhong, lawyer of Shanghai Wintell & Co. Agent ad litem of the two Defendants: WU Ganjie, lawyer of Shanghai Wintell & Co. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff, Shaoxing Shang Da Textile Co., Ltd. (hereinafter referred to as “Shang Da”), and the Defendant, CMA CGM S.A. (hereinafter referred to as “CMA”), and the Defendant, CMA CGM (China) Co., Ltd. Ningbo Branch (hereinafter referred to as “CMA Ningbo”), after entertaining it on August 8, 2016, the court legitimately constituted the collegiate bench to try the case. Defendant CMA raised challenge of jurisdiction on the series of cases in the court, but was rejected by the court. Then CMA submitted an appeal, and Zhejiang High People’s Court dismissed the appeal on January 19, 2017. The court held a hearing in public on May 2, 2017. Agents ad litem of the Plaintiff, YUAN Bin and WEN Li, and agent ad litem of the Defendant, WU Ganjie, appeared in the court to attend the hearing. Now the case has been concluded. Shang Da claimed to the court that: 1. the two Defendants should compensate the Defendant 91,667.68 USD with interest (according to dollar in RMB, 1:6.6472, on July 4, 2016, converted into RMB from the benchmark lending rate for the same period of the People’s Bank of China to the date of actual payment); 2. litigation fee should be burdened by the two Defendants. Facts and reasons: in January 2016, the Plaintiff booked to CMA Ningbo to carry textile fabric from Ningbo Port China to Skikda Algeria. On January 19, 2016, CMA Ningbo issued a bill of lading as agent. The carrier displayed on the B/L was CMA, and its number was NBYE119531. The value of the cargo involved was 91,667.68 USD; the method of payment was D/P. The Plaintiff held the whole original B/L, but the cargo was delivered at the destination port. The Plaintiff held that CMA was the carrier, and CMA Ningbo should bear joint liability as the scope of the delegated authority was not clear. CMA and CMA Ningbo argued that: 1. there was no evidence to prove that the Plaintiff had a right of suit except through the holding of the B/L; 2. the Plaintiff had no abundant evidence to prove the authenticity of the loss of cargo, and perhaps the Plaintiff had received the payment of cargo; 3. the Plaintiff and the consignee on the B/L had a long-term trading cooperation relationship. The reason of the dispute could not exclude the possibility that the joint intentional act of the Plaintiff and its consignee led to the delivery of the goods without the original B/L, so the Plaintiff was at fault but not the Defendant; 4. there were no facts or legal basis that CMA Ningbo had to bear joint liability as claimed by the Plaintiff.

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In order to prove its claims, Shang Da provided the following materials: 1. Original B/L triplicate, to prove that the Plaintiff still held the whole B/L issued by CMA. 2. Container transfer record, to prove that one of the containers involved had been delivered and received by the consignee. 3. Merchandise invoice, packing list, Customs prerecord, and paperless release notice, to prove the loss of cargo of the Plaintiff. In order to prove their pleas, CMA and CMA Ningbo provided the copy of two-way B/L of the cargo involved, to prove that the consignor of the two-way cargo was the Plaintiff. By the application of the two Defendants, the court pulled up record of container cargo which number was INKU6145030 in Customs. After cross-examination, the two Defendants had no objection to the authenticity of evidence 1 and 2 provided by the Plaintiff, but held that the merchandise invoice and packing list contradicted the record pulled up by the court, so this evidence could not prove the true loss of cargo. They had no objection to the authenticity of customs prerecord and paperless release notice. The Plaintiff held that the authenticity of the evidence provided by the two Defendants could not be confirmed, and the date of the evidence and the date of B/L issued was the same day, which meant that the Plaintiff was at fault. The Plaintiff and the Defendants had no authenticity of the evidence pulled up by the court. After investigating the evidence of both parties, because the money recorded on the merchandise invoice provided by the Plaintiff was different from that on customs declaration, the authenticity of that could not be confirmed. Although the two-way B/L was a copy, the B/L was issued by the Defendant, and it was the same as the statement of the Plaintiff, so the authenticity of that could be confirmed. Both parties had no objection to the other evidence, so the court affirmed this evidence. Combining the investigation and the recognition of both parties of the evidence, the court finds out the facts as follows: On January 16, 2016, in order to perform the trading contract between Shang Da and the buyer (AVON GENERAL TRADING CO., LLC, hereinafter referred to as “AVON”), Shang Da entrusted CMA Ningbo to be in charge of the carriage of polyester elastic woven dyed fabric from Ningbo China to Algeria. On January 19, 2016, CMA Ningbo, as the agent of CMA, issued the B/L involved in this case (No. NBYE119531). What was recorded on this B/L were as follows: the shipper was Shang Da; the carrier was CMA; the consignee was AVON; the name of the ship was M.V. CMA CGM MEDEA; the loading port was Ningbo China; the discharging port was Skikda Algeria; the numbers of the two containers were respectively INKU6145030 and CMAU4327906; and it was advanced freight. According to the material of customs No.310120160519839262 declared by Ningbo Jian Yun Transport Declaration Agent Co., Ltd. entrusted by Shang Da, the FOB value of the container No.INKU6145030 was 91,667.68 USD. The invoice attached to the contract showed that the way of settlement was TT. The Plaintiff

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confirmed that it did not pay the freight, and it had received a tax refund for receipt of proceeds. After the cargo was shipped, Shang Da presumed that the cargo in the container, No.INKU6145030 was accepted by another party for the reason that Shang Da did not receive the payment for goods in that container, and this container was used in the new transport. Then Shang Da initiated legal proceedings, claiming that the two Defendants should compensate for the loss of payment for goods. Ascertained otherwise, on January 19, 2016, CMA issued B/L, No.NBYE119531, in Dubai. The consignor of this B/L was Shang Da; EURLMACOTISSCITESI SSAOUI was consignee; the numbers of the two containers were respectively INKU6145030 and CMAU4327906; the cargoes in the two containers involved in the case were taken by this B/L. The court held that the dispute of this case was delivery of goods without original bill of lading of carriage of goods by sea. CMA was the overseas company, so this case had civil relations with foreign elements. The Plaintiff and the Defendants could not agree on application of law. The Defendants advocated to apply French law, but they could not provide that law, according to the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 10, so this case would apply law of the People’s Republic of China. According to the opinion of both parties, the issues of this case involved the legal relation of the Plaintiff and the Defendants, and whether the loss of the Plaintiff was true or not. The Defendants held that the Plaintiff could not prove that it had the right of suit except through holding the B/L. The court held that the Plaintiff was the shipper recorded on the B/L, and was the company shown on the material of customs about container INKU6145030, so the Plaintiff as shipper had right to claim compensation from the Defendants as carrier. The fact that CMA Ningbo, acting as agent of CMA, issued B/L not only recorded in the B/L involved, but also the Plaintiff recognized that CMA Ningbo was the agent, so CMA Ningbo was not a proper Defendant in this case. The Defendants claimed that the Plaintiff and the consignee on the B/L had a long-term trading cooperation relationship. The consignor recorded on two-way B/ L was the Plaintiff, and the reason of dispute could not exempt the possibility that joint intentional act of the Plaintiff and its consignee led to delivery of goods without the original B/L. The Plaintiff was at fault, and the loss was doubtful. The court held that the Defendants could not prove that the two-way B/L issued was controlled by the Plaintiff, so the Defendants should burden the liability to deliver the goods to the Plaintiff for the same cargo. Although the Plaintiff held original B/ L, considering that there were many times of trading between the Plaintiff and the buyer, if the Plaintiff claimed damage compensation for breach of contract or compensation for damage by holding B/L, it should bear the burden of proof for the loss declared. In the hearing, the Plaintiff confirmed that it had finished the rolling cancellation after verification and tax reimbursement for export proceeds in this case, and it explained that it was the primary export enterprise, so there was no need to complete the cancellation after verification after receiving payment of goods, so it rejected to offer evidence about the other way of cancellation after

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verification. As a result, there were two containers in the B/L involved; the Plaintiff could not explain why it only chose one of the containers to claim compensation, and the material of customs showed that the way of payment of goods in this case was TT; two-way B/L showed that consignor was the Plaintiff, so the possibility that the consignee had paid the money to the Plaintiff by TT could not be excluded. For both of these reasons, the court held that the Plaintiff, who was liable to the burden of proof, could not prove the authenticity of his loss and should bear the unfavorable consequences; the court did not confirm the loss declared by the Plaintiff. By way of conclusion, the evidence for the claim of the Plaintiff was insufficient, and the court could not support it. According to the Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 10 Paragraph 1, the Provisions of the Supreme People’s Court concerning Several Issues of Law Applicable to the Trial of Cases Involving Delivery of Goods without Original Bill of Lading Article 3 Paragraph 1, the Interpretation of the Supreme People’s Court on the Application of Civil Procedure Law of the People’s Republic of China Article 90, the judgment is as follows: Reject all claims of Shaoxing Shang Da Textile Co., Ltd. Court acceptance fee in amount of RMB9,890 yuan, shall be born by the Plaintiff, Shaoxing Shang Da Textile Co., Ltd. If unsatisfied with this judgment, Shang Da and CMA Ningbo, within fifteen days of the date of the judgment be delivered, CMA, within thirty days of the date of the judgment be delivered, which can submit copies of the original petitions and appeal to the Zhejiang High People’s Court. Presiding Judge: HU Liqiang Acting Judge: KONG Yu Acting Judge: SHAN Yajuan May 16, 2017 Acting Clerk: XIN Yi

Appendix: Relevant Laws 1. Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China Article 10 Paragraph 1 Foreign laws applicable to foreign-related civil relations shall be ascertained by the people’s court, arbitral authority or administrative organ. If any party chooses the applicable foreign laws, he shall provide the laws of this country.

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2. Civil Procedure Law of the People’s Republic of China Article 259 The provisions of this Part shall be applicable to civil proceedings within the territory of the People’ s Republic of China in regard to cases involving foreign element. Where it is not covered by the provisions of this Part, other relevant provisions of this Law shall apply. 3. Provisions of the Supreme People’s Court concerning Several Issues of Law Applicable to the Trial of Cases Involving Delivery of Goods Without Original Bill of Lading Article 3 Paragraph 1 Where the carrier has delivered the goods without the original bill of lading and caused losses to the holder of the original bill of lading, the holder of the original bill of lading may require the carrier to be liable for breach of contract or for tort. 4. Interpretation of the Supreme People’s Court on the Application of Civil Procedure Law of the People’s Republic of China Article 90 The parties shall provide evidence to prove the facts on which their own claims are based or the facts on which they refute the claims of the other party, unless otherwise provided by law. If a party fails to provide evidence or evidence is insufficient to prove his factual claim before making a judgment, the party responsible for providing evidence shall bear adverse consequences.

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Zhejiang High People’s Court Civil Ruling Shaoxing Shang Da Textile Co., Ltd. v. CMA CGM S.A. et al. (2017) Zhe Min Zhong No.421 Related Case(s) This is the ruling of second instance and the judgment of first instance is on page 1175. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote By reversing lower court decision holding that plaintiff shipper could not recover damages from defendant carrier regarding delivery of cargo without presentation of the original bill of lading, allowing plaintiff and defendant to reach a settlement agreement and withdraw the appeal case. Summary Shaoxing Shang Da Textile Co., Ltd. (“Shang Da”) filed suit against CMA CGM S.A. & CMA CGM (China) Co., Ltd. Ningbo Branch (“CMA Ningbo”) for the payment of goods it entrusted CMA Ningbo to ship textile fabric from Ningbo Port to Algeria. Though the goods arrived at their destination, Shang Da alleged that it never received payment for the goods. CMA Ningbo argued that, since the consignee and Shang Da were long-time trade partners, it was possible that Shang Da was, in fact, compensated and permitted to retain possession of the original B/L. Without presenting evidence to refute CMA Ningbo’s claims, the court found that Shang Da did not meet its burden of proof in its suit, rejecting the company’s claim for relief. On appeal, Shang Da pleaded that the court of second instance abrogate the holding of the court of first instance, considering that the parties have, since, reached a settlement agreement. The court of second instance found this to be proper and abrogated the holding of the court of first instance, leaving Shang Da liable for only half of the court fees.

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Ruling The Appellant (the Plaintiff of first instance): Shaoxing Shang Da Textile Co., Ltd. Domicile: Yuecheng District, Shaoxing, Zhejiang, the People’s Republic of China. Legal representative: ZHANG Xianfeng, general manager of the company. Agent ad litem: YUAN Bin, lawyer of Beijing Dentons (Ningbo) Law Firm. Agent ad litem: WEN Li, lawyer of Beijing Dentons (Ningbo) Law Firm. The Respondent (the Defendant of first instance): CMA CGM S.A. Domicile: 4, quaid’ Arenc, 13,002 Marseille, France. Legal representative: Farid T. SALEM, general manager of the company. The Respondent (the Defendant of first instance): CMA CGM (China) Co., Ltd. Ningbo Branch Domicile: Jiangdong District, Ningbo, Zhejiang, the People’s Republic of China. Person in charge: CHEN Jingjuan, general manager of the company. Agent ad litem of the two Respondents: XU Quanzhong, lawyer of Shanghai Wintell & Co. Agent ad litem of the two Respondents: WU Ganjie, lawyer of Shanghai Wintell & Co. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant, Shaoxing Shang Da Textile Co., Ltd. (hereinafter referred to as “Shang Da”) and the Respondents, CMA CGM S.A. (hereinafter referred to as “CMA”), CMA CGM (China) Co., Ltd. Ningbo Branch (hereinafter referred to as “CMA Ningbo”), the Appellant was not satisfied with (2016) Zhe 72 Min Chu No.1710 Civil Judgment made by the Ningbo Maritime Court of the People’s Republic of China, and it lodged an appeal to the court. During the proceedings, Shang Da applied for withdrawal of the appeal because both parties had reached an out-of-court settlement on November 7, 2017. The court held the opinion that it was not illegal that Shang Da applied for withdrawal of charges during the second instance proceedings, and it did not damage the benefit of the country, public interest, and legitimate rights and interests of others. CMA and CMA Ningbo both agreed to withdraw the charges, so the court gave its permission. In view of withdrawal of charges in the second instance proceedings by Shang Da, according to the Supreme People’s Court Interpretation of Application of the Civil Procedure Law of the People’s Republic of China Article 338 Paragraph 1, the judgment of first instance should be revoked. By way of conclusion, according to the Civil Procedure Law of the People’s Republic of China Article 154 Paragraph 1 Sub-paragraph 5, and the Supreme People’s Court Interpretation of Application of the Civil Procedure Law of the People’s Republic of China Article 338 Paragraph 1, the ruling is as follows:

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1. Revoke the Ningbo Maritime Court of the People’s Republic of China (2016) Zhe 72 Min Chu No.1710 Civil Judgment. 2. Allow Shaoxing Shang Da Textile Co., Ltd. to withdraw the lawsuit against CMA CGM S.A. and CMA CGM (China) Co., Ltd. Ningbo Branch. 3. Court acceptance fee of first and second instances in the amount of RMB9,890 yuan respectively, each reduced by half to be RMB4,945 yuan, due to settlement shall be born by Shaoxing Shang Da Textile Co., Ltd. The ruling is final. Presiding Judge: MIAO Qing Judge: HUANG Qing Judge: WU Yunhui November 20, 2017 Clerk: DING Lin

Guangzhou Maritime Court Civil Judgment Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2015) Guang Hai Fa Chu Zi No.1081 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1189. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Plaintiff NVOCC held to be entitled to recover unpaid freight despite not issuing bill of lading to Defendant shipper because it had completed the carriage of goods, rejecting Defendant shipper’s claim that it had merely acted as agent. Summary Shenzhen Chinatrans International Co., Ltd. (Chinatrans) filed a lawsuit against Zhongshan Ouke Electronics Co., Ltd. (Ouke Electronics) after Ouke Electronics refused to pay the shipping costs incurred after it tasked Chinatrans with transporting a batch of audio equipment to India. Ouke Electronics refused to pay, stating that it was merely an agent of a larger music company. The court, however, found no evidence supporting Ouke Electronics’ claim and held that it is liable to Chinatrans for the cost of shipping the goods.

Judgment The Plaintiff: Shenzhen Chinatrans International Co., Ltd. Domicile: Shenzhen, Guangdong. Legal representative: FANG Mandi, chairman of the company. Agent ad litem: ZHANG hao, lawyer of Shanghai Haosheng Law Firm. Agent ad litem: BAO Gengsheng, lawyer of Shanghai Haosheng Law Firm. The Defendant: Zhongshan Ouke Electronics Co., Ltd. Domicile: Zhongshan, Guangdong. Legal representative: Michael Jimmy Wang Yuen Tien, chairman of the company. Agent ad litem: WEI Yuhan, staff of the company. Agent ad litem: SONG Ruiqing, staff of the company. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_63

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With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiff Shenzhen Chinatrans International Co., Ltd. and the Defendant Zhongshan Ouke Electronics Co., Ltd., the court entertained the case on October 14, 2015. The court held a hearing in public according to the general procedure. Agent ad litem of the Plaintiff, ZHANG Hao, and agents ad litem of the Defendant, WEI Yuhan and SONG Ruiqing, appeared in court to attend the hearing. Now the case has been concluded. The Plaintiff claimed to the court that: firstly, the Defendant should give the Plaintiff the amount of 3,000 dollars under the bill of lading of the ZSEF14080072 NVOCC and 1,004 dollars for the cover fee, totally 25,473.05 yuan under the RMB of the Defendant’s charge. Secondly, the cost of the lawsuit should be borne by the Defendant. Facts and reasons: in July 2014, the Defendant sold a batch of audio equipment to Dhanashree Electronics Ltd., which were to be transported from Zhongshan, China to Calcutta, India by sea. On July 23, the Defendant sent an email of the shipping note to inform the Plaintiff to transport the goods from Zhongshan to Calcutta, India. The Defendant did not show the identity of his agent. The Plaintiff provided the Defendant with cargo services such as booking and trailers. Both sides agreed that the freight should be paid. The Plaintiff is entrusted by the Defendant to as the carrier and delivers the goods to the actual carrier, Orient Overseas Container Shipping Co., Ltd. The Plaintiff issued the ZSEF14080072 NVOCC bill to the Defendant and mailed the bill of lading to Miss Huang of the Defendant’s transport department. The Defendant argued that the Defendant was an agent of Music Group Business Company (hereinafter referred to as “Music Company”) and traded with the Plaintiff in the name of Music Company. There is no name of the Defendant in the book cargo space. The Defendant did not receive the NVOCC bill of lading sent by the Plaintiff. The Defendant’s goods were exported through Macao Music Company. The parties submitted evidence in accordance with the law, and the parties conducted evidence exchange and cross examination. The court shall confirm the evidence, such as emails and booking documents, which are not objected to by the parties. The court concluded that: on July 23, 2014, the Defendant clerk ordered the Plaintiff clerk LI Weidong to book the cargo space by e-mail. The contents of the mail are: “please check the booking form, help to book a 40 foot and 20 foot ordinary container, and give us the shipping order. Please check with the shipping company and deliver the manifest to us as soon as possible.” According to the trade term, a shipping company is required to provide a certificate, a large bill of lading and a Zhongshan port export. Attached to the mail is that the shipper is a music company, and the consignee is instructed by the Federal Bank of India. The name of the goods is 563 boxes of audio equipment. If the freight is chosen to be paid, the booking agent will not be exempted from paying the freight charges unless the booking party proves that the consignee has paid the freight. On August 18, 2014, the Plaintiff issued ZSEF14080072 bill of lading in Shenzhen. The bill of lading recorded: the shipper was Music Company; the

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consignee was instructed by the Federal Bank of India; and the name of the goods was 539 boxes of sound equipment. Shipment of vessel “JINLONG368”; loading port Zhongshan port; destination port Calcutta, India; and freight collect. The Defendant did not raise any objection to the fact that the Plaintiff presented the goods to the Orient Overseas Container Shipping (China) Co., Ltd. for the delivery of the goods to the consignee. The amount of the freight. The Plaintiff argued that the two sides did not agree on the amount of freight. The cost of the request included the payment of the cost of Orient Overseas Container Shipping (China) Co., Ltd., and the profit of the Plaintiff. The Plaintiff provided the invoice to Shenzhen branch of Orient Overseas Container Shipping (China) Co., Ltd. on August 26, 2014. The invoice value of the agency freight was 756,582.07 yuan. The agent revised the bill of lading data, export documents, and other 2 invoices, amounting to 79,970 yuan and 187,965 yuan respectively, and the agent provided a copy of the related payment vouchers. The original invoice and the payment voucher can be confirmed to each other. It can be proved that the Plaintiff paid the actual carrier as a NVOCC, and the Defendant did not disagree on the amount of the freight. Accordingly, the freight amount is estimated to be 3,000 dollars for ocean freight and 1,004 dollars for lump sum, amounting to 4,004 dollars. For the disputed evidence and facts, the court determines that: 1. Whether the was Defendant entrusted by Music Company as its agent to entrust the Plaintiff to transport? The Defendant provided a certificate issued by Music Company and Macao Music Company, without a certification procedure, and the two pieces of evidence did not indicate that the company entrusted the Defendant to consignment to the Plaintiff in its name. The Defendant’s argument that it was an agent of Music Company cannot be established. 2. Whether does the Plaintiff delivered the bill of lading to the Defendant? The Plaintiff failed to provide evidence that he delivered the original bill of lading to the Defendant. The Plaintiff said that it had delivered it to the consignee. The original bill of lading should be recovered, but the original bill of lading was not provided to the court. The evidence was not sufficient to prove that the original bill of lading had been delivered to the Defendant. The court thinks that: this case is a dispute over the contract of maritime transport. The Defendant issued a booking form to the Plaintiff and negotiated the carriage of goods from Zhongshan to Calcutta, India, China, and agreed on the place of transportation and stop, and the relationship between the two parties was established. The contract is not in violation of the mandatory law, so it should be recognized as effective. The Plaintiff, as the carrier who completed the transportation, has the right to demand the Defendant to pay the freight. Although the two sides have not clearly agreed on the amount of the freight, the Plaintiff has completed the transport as the carrier, and has the right to require the consignee to pay 3,000 US dollars for marine

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freight and 1,004 dollars, a total of 4,004 dollars. When the consignee instructed by the Federal Bank of India refused to pay the payment, the Plaintiff required that the Defendant, as the shipper, pay 4,004 dollars for the freight, and it should be supported. Summarizing all the above-mentioned, in accordance with Article 69 Paragraph 1 of the Maritime Code of the People’s Republic of China, the judgment is as follows: The Defendant Zhongshan Ouke Electronics Co., Ltd. shall pay the Plaintiff Shenzhen Chinatrans International Co., Ltd. ocean freight 3,000 US dollars and 1,004 US dollars, a total of 4,004 US dollars. The above obligation to pay money shall be fulfilled within ten days from the date when the judgment comes into force. If the payment of money obligation is not fulfilled during the period specified in this judgment, the interest of the debt shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of RMB436.82 yuan, shall be borne by the Defendant. With the consent of the Plaintiff, the Plaintiff's prepaid litigation fee which will not be refunded, and the Defendant shall pay the Plaintiff's acceptance fee of RMB436.82 yuan within ten days from the date when the judgment comes into force. If the judgment is not accepted, the appeal letter may be submitted to the court within fifteen days from the date of the service of the judgment, together with copies in accordance with the number of other parties, so as to appeal to the Guangdong High People’s court. Presiding Judge: HAN Haibin Judge: LUO Chun People’s Juror: LI Jiaping October 12, 2016 Clerk: YANG Nian

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Guangdong High People’s Court Civil Judgment Shenzhen Chinatrans International Co., Ltd. v. Zhongshan Ouke Electronics Co., Ltd. (2017) Yue Min Zhong No.822 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1185. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Affirming lower court decision holding plaintiff NVOCC to be entitled to recover unpaid freight despite not issuing bill of lading to defendant shipper because it had completed the carriage of goods, rejecting defendant shipper’s claim that it had merely acted as agent. Summary Shenzhen Chinatrans International Co., Ltd. (Chinatrans) filed a lawsuit against Zhongshan Ouke Electronics Co., Ltd. (Ouke Electronics) after Ouke Electronics refused to pay the shipping costs incurred after it tasked Chinatrans with transporting a batch of audio equipment to India. Ouke Electronics refused to pay, stating that it was merely an agent of a larger music company. The court, however, found no evidence supporting Ouke Electronics’ claim and held that it is liable to Chinatrans for the cost of shipping the goods. On appeal, the court of second instance affirmed the determination of first instance, costs of the appeal should be borne by Ouke Electronics.

Judgment The Appellant (the Defendant of first instance): Zhongshan Ouke Electronics Co., Ltd. Domicile: Zhongshan, Guangdong. Legal representative: Michael Jimmy Wang Yuen Tien, chairman of the company. Agent ad litem: WEI Yuhan, staff of the company. Agent ad litem: SONG Ruiqing, staff of the company.

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The Respondent (the Plaintiff of first instance): Shenzhen Chinatrans International Co., Ltd. Domicile: Shenzhen, Guangdong. Legal representative: FANG Mandi, chairman of the company. Agent ad litem: ZHANG hao, lawyer of Shanghai Haosheng Law Firm. Agent ad litem: BAO Gengsheng, lawyer of Shanghai Haosheng Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Appellant Zhongshan Ouke Electronics Co., Ltd. (hereinafter referred to as “Ouke”) and the Respondent Shenzhen Chinatrans International Co., Ltd. (hereinafter referred to as “Huayun”), the Appellant refused to accept (2015) Guang Hai Fa Chu Zi No.1081 Civil Judgment made by Guangzhou Maritime Court and lodged an appeal to the court. After entertaining the case on April 11, 2017, the court formed a collegiate panel and appealed. Agents ad litem of the Appellant, WEI Yuhan and SONG Ruiqing, and agent ad litem of the Respondent, BAO Gengsheng, participated the trial. Now the case has been concluded. Ouke appealed that, revoke the judgment of first instance, change the judgment or send it back to retry, litigation fees of first and second instances should be born by Huayun. Facts and reasons: firstly, the first instance judgement certifying that there was carriage of goods by sea contract relationship between Ouke and Huayun has no factual basis. This case is due to the contract relationship between Dhanashree Electronics Ltd. and Music Group Business Company (hereinafter referred to as “Music Company”). According to the booking note and bill of lading submitted by Huayun, the trade mode between the buyer and the seller was EXW, and the shipping costs and related procedures are all responsible for Dhanashree Electronics Ltd. Dhanashree Electronics Ltd. and its shipping agent SB Shipping (India) PVT. Ltd. (hereafter referred to as “SB Company”) are Indian companies, and the goods are in China. Dhanashree Electronics Ltd or SB Company has entrusted Huayun to handle the shipping. The first instance court, based on a booking note sent by Ouke to Huayun company by mail (and a clear shipper to the shipper music company), affirmed the contract relationship between Ouke and Huayun on the contract of carriage of goods by sea, which is a serious deviation from the facts. Secondlly, There is a mistake in the first-instance procedure. The first-instance claim of Huayun is freight. According to the agreement on freight payment recorded by the NVOCC bill of lading, and the normal maritime transport process, Huayun needed to receive the freight paid by SB Company or Dhanashree Electronics Ltd. could release the bill of lading to the actual carrier, and then pick up the goods. Therefore, adding SB Company and Dhanashree Electronics Ltd. was the key to discovering whether the Huayun eventually received the freight. The court of first instance did not add the necessary joint litigants in accordance with the law, which is neither conducive to finding out the truth or contrary to the provisions of the law. Thirdly, the application of legal error in the first instance should be revoked. All the evidence submitted by the Huayun, whether it is the booking note or the bill of lading, has not been named by Ouke, and Ouke is not a shipper involved in the carriage of

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goods by sea. Besides, according to the 2000 INCOTERMS, “EXW works” (… The designated place) means that when the seller delivers the goods to the buyer at their location or other designated places (such as a factory or warehouse), that is to complete the delivery of the goods, and the seller does not handle the customs clearance procedures or puts the goods in any means of transportation. The bill of lading submitted by the Huayun clearly stated that the mode of trade was EXW (factory delivery). Therefore, the freight should be the obligation of the buyer Dhanashree Electronics Ltd. Ouke is neither the seller nor the buyer in the contract for the carriage of goods by Music Company and Dhanashree Electronics Ltd, so that it is not allowed to pay the payment obligation. Huayun defensed that: firstly, the legal relationship between Ouke and Huayun was established. The relationship between the contract of carriage of goods by sea and the contract of international trade are two different legal relations which are neither connected, nor cross, and have nothing overlapping, and their respective contracts and applicable legal provisions are different. During the first instance, Ouke has no objection to the fact that the company sent the mail of the reservation content to Huayun. Ouke did not disclose its identity to Huayun As far as the contract of carriage of goods in the sea is concerned, Ouke is the shipper. The company has provided e-mails to the court as evidence to prove that Ouke had asked the Chinese shipping company to issue a full set of original bills of lading, and to make instructions to Huayun on the modification of the bill and material. In the first instance judgement, Ouke had no objection to the fact that the consignee received the goods. This proves that Ouke’s view that he did not intervene in the transport contract is not true. Secondly, in regard to whether the necessary joint litigants should be added to the case, Huayun believes that Ouke’s proposal cannot be tenable. Dhanashree Electronics Ltd. and SB Company, the shipping agent of Dhanashree Electronics Ltd., are not the other party in the contract of carriage of goods by sea, and there is no legal basis for the necessary joint action. Thirdly, regarding problems related to law application, the shipper on the bill of lading record was indicated by Ouke which delivered the goods into the container and asked for the original bill of lading to Huayun. The legal status of Ouke shall be identified as the actual shipper in accordance with the provisions of the eighth article of the Supreme People's Court on cases of disputes over maritime freight shippers. Ouke’s appeal should be dismissed, and the original judgment should be affirmed. Huayun claimed to the court of first instance: Ouke should pay USD3,000 for shipping charges under the bill of lading of ZSEF14080072 NVOCC to Huayun, USD1,004 for the cover fee, totally RMB25,473.05 yuan, and Ouke shall bear the cost of the case. The court of first instance found that, on July 23, 2014, Ouke’s employees made a booking to the staff of Huayun, LI Weidong, by e-mail. The mail implied that please check the booking form, help to reserve a 40 foot and 20 foot container, and send us the shipping form. Please check with the shipping company first and deliver the manifest to us as soon as possible, then Ex works. According to the letter of credit, we need a certificate from the shipping company; big ship bill of lading,

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Zhongshan port export, ordinary car. The booking space attorney letter attached to the mail notes: The shipper is a music company, and the consignee is instructed by the Federal Bank of India. The name of the goods is 563 boxes of audio equipment. If the freight is chosen to be cash on delivery, the booking agent will not be exempted from paying the freight charges unless the booking party proves that the consignee has paid the freight. The letter of attorney does not record the place of transportation. On August 18, 2014, Huayun issued ZSEF14080072 bill of lading in Shenzhen. It recorded that the shipper is a music company; the consignee is instructed by the Federal Bank of India; the name of the goods is 539 boxes of audio equipment. The shipment vessel is “JINLONG368”; loading port Zhongshan port; destination port is Calcutta, India with cash on delivery. Ouke had no objection to the fact that the goods were delivered to the consignee by the shipment and that delivery of the goods to Orient Overseas Container Shipping (China) Co., Ltd. occurred. Huayun maintained that the two sides have not agreed on the freight. The cost of the request includes the payment of Orient shipping (China) Co., Ltd. and the profit of Huayun and Huayun provided 756,582.07 yuan freight invoice of the agency Shenzhen branch of Orient Overseas Container Shipping (China) Co., Ltd. on August 26, 2014. The agent modified 2 bills of lading and export documents. The amount is RMB79,970 yuan, RMB187,965 yuan respectively, and a copy of related payment vouchers is provided. The shipping documents of checking form provided by Huayun include 2,780 US dollars and 3,040 yuan. Regarding the invoice from Guangdong Branch of Sinotrans Zhongshan Co., Ltd., the freight agency service fee is RMB1,510 yuan. Ouke had not objected to the amount of the freight. The original invoice and the payment voucher can be confirmed to each other. It can be proved that the company has paid the cost to the actual carrier as a NVOCC, and Ouke has not objected to the amount of the freight. On these ground, the freight amount is estimated to be USD3,000 for ocean freight and USD1,004 for lump sum, amounting to 4,004 dollars. The court of the first instance determined that: Firstly, is Ouke authorized by Music Company as its agent to entrust Huayun? Ouke provided the certificates issued by Music Company and Macao Music Company, without a certification procedure, and the two pieces of evidence did not show that the company commissioned Ouke to ship the goods to Huayun in its name. The company’s claim that it is the agent of Music Company cannot be established. Secondly, did Huayun deliver the bill of lading to Ouke? Huayun did not provide evidence that it delivered the original bill of lading to Ouke. Huayun argued that it had delivered the goods to the consignee, and the original bill shall be recovered, which was not provided to the court. The evidence was not sufficient to prove that it had delivered the original bill of lading to Ouke. The court of first instance held that the case was a dispute over maritime transport contracts. The Ouke issued a booking form to the Huayun and negotiated

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the shipping of cargo from Zhongshan to Calcutta, India, and agreed on the place of transportation. So the contract relationship between the two parties was established. As a carrier, Huayun has the right to require Ouke to pay the freight. Although the two sides did not specify the amount of the freight, the Huayun has completed the transport as a carrier, and it has the right to require the consignee to pay 3,000 dollars for marine freight and 1,004 dollars, a total of 4,004 dollars. In case of the refusal of the consignee instructed by the Federal Bank of India to pay the payment. It should be supported that as a consignor Ouke is required to pay 4,004 dollars for the freight. Summarizing all the above-mentioned, according to Article 69 Paragraph 1 of the Maritime Code of the People’s Republic of China, the court of first instance judged that: Ouke should pay 1,004 dollars as the shipping cost to Huayun and 1,004 dollars for lump sum, totaling 4,004 dollars. Court acceptance fee of first instance in amount of RMB436.82 yuan, which should be borne by Ouke. The facts identified by the court of first instance are proved by evidence, and the court affirmed the facts in the first instance. The second instance also found that, in the course of the transport, Ouke and Huayun kept their business contacts through e-mail exchanges, determined ship names, ship times, confirmed the issuing of bill of lading information, and followed up the transport dynamics. In an email sent to Huayun on August 14, 2014, Ouke said, “… Shipper is our company, the final consignee is Dhanashree Electronics Ltd., but the terms are not the same, so we have to separate two orders, please confirm it, thank you!”. In the second instance, Ouke submitted an application to court, requesting additional third companies including SB Company and Music Company, to take part in the case. The court considers that this case is a contract for carriage of goods by sea. The goods involved are transported from Zhongshan Port of Guangdong to Calcutta, India. This case has foreign related factors. In the second instance, the parties concerned had no objection to the application of the law of the People’s Republic of China to the dispute in this case, which was confirmed by the court in accordance with the law. According to the appeals and pleading opinions of the parties, combined with the investigation of the court, the issues of the second instance of this case are whether Ouke was a shipper for the transport involved, and whether the court of first instance has not added the error of the litigation of Dhanashree Electronics Ltd., SB Company, and Music Company in this case and whether Ouke should undertake the case. The liability for the payment of the freight. Ouke sent the shipping order to Huayun, booking cargo for the involved goods, and Ouke as booking carrier. The shippers in the booking and bill of lading are Music Company, and Ouke also claims to be the agent of Music Company, not the shipper, and has submitted a certificate issued by Music Company and Macao Music Company. The two documents proved to be formed in Macao region and Mainland of China; they have the original verification, but they did not have a notarial authentication procedure, and the two certifies that the goods were sold to Music Company after the purchase of the Macao Music Company to Ouke, and

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Music Company resold them to Dhanashree Electronics Ltd. The transaction is EXW. The company is responsible for the transportation costs, but both Music Company and the Macao Music Company have not confirmed that they are the clients of Ouke. Ouke is on behalf of them to carry on the shipments of the goods involved, and the shipper of the goods involved in the case. Therefore, the two certificates are not sufficient to confirm Ouke’s claim. EXW trade terms are used in the sale of goods involved in the case, but what trade terms indicate the legal relationship between the parties to the goods trade does not necessarily determine the rights and obligations under the contract of transport; the transport carrier, as the third party of the trade contract, does not need to be constrained by the language of the trade. According to the trade mode of the goods involved, Ouke does not advocate that the shipper cannot be established. Ouke is engaged in shipping the goods to China, accepting the bill of lading, the whole course of following up the transport of the goods involved, and confirming that it is Shipper during the booking process, so the case should be identified as the shipper of the goods involved in the case of Ouke. The booking order is subject to the payment of the freight, and states that “the freighter chooses to pay, the booking party does not waive the responsibility for paying the freight, unless the booking party proves that the consignee has paid the freight.” The case has been found that the goods involved in the shipment arrived at the destination port and were delivered to the consignee, Dhanashree Electronics Ltd., but it did not deliver the freight to the carrier. According to Article 69 of the Maritime Code of the People’s Republic of China, “the shipper shall pay the freight according to the carrier”, and the contract of the booking. The company is the booking party and shipper of the cargo involved in the case. It has an obligation to pay the freight to the carrier Huayun. The first-instance judgment found that the freight and packaged fees involved in the case totaled 4,004 dollars. Second instance confirmed that the amount was the quotation of Huayun to SB Company for the transportation involved. Huayun has paid the actual carrier the freight and the package fee, so Ouke should pay Huayun and the package fee of 4,400 dollars. The case is related to the relationship of the transportation contract between Ouke and Huayun. SB Company, Dhanashree Electronics Ltd., or Music Company are not directly involved. There is no additional SB Company, and the necessity of Dhanashree Electronics Ltd. or Music Company to participate in the lawsuit in this case, the court of first instance did not agree that the additional application of the company, which was not improper. For the same reason, the court does not permit the additional application filed by Ouke in the second instance. In summary, the court of first instance found the facts clearly, the application of law was correct, and the results were appropriate. The judgment of first instance should be affirmed. Ouke’s appeal was improper and should be dismissed. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of RMB436.82 yuan, shall be borne by the Appellant Zhongshan Ouke Electronics Co., Ltd. The judgment is final. Presiding Judge: DU Yixing Judge: MO Fei Judge: GU Enzhen December 29, 2017 Judge Assistant: GAO Jing Clerk: PAN Wanqin

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: (1) If the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; (2) If the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law; (3) If in the original judgment the facts were incorrectly or not clearly ascertained and the evidence was insufficient, the people’s court of second instance shall make a written order to set aside the judgment and remand to case to the original people’s court for retrial, or the people’s court of second instance may amend the judgment after investigating and clarifying the facts; or (4) If there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original people’s court for retrial. The parties concerned may appeal against the judgment or written order rendered in a retrial of their case.

Guangzhou Maritime Court Civil Judgment Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2016) Yue 72 Min Chu No.384 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1203. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Default judgment for bunker supplier, which was held to be entitled to recover cost of bunkers from contract counterparty but not from owner of ship to which bunkers were supplied. Summary The Plaintiff Shenzhen Maritime Logistics Co., Ltd. (Shenzhen Maritime Logistics) filed lawsuit against Guangxi Fangchenggang Ruifenlong Shipping Co., Ltd. (Ruifenglong) and Wuhan Zhongtaixin Marine Development Co., Ltd. (Zhongtaixin) for the price of unpaid fuel costs plus interest. In trial, the court held that only Ruifenglong should be liable to Shenzhen Maritime Logistics for the unpaid fuel costs, finding that Shenzhen Maritime Logistics failed to prove assent to the contract or unjust enrichment from Zhongtaixin.

Judgment The Plaintiff: Shenzhen Maritime Logistics Co., Ltd. Domicile: Room 721, Zhaogang Building, Shekou Port 3, Shekou, Nanshan District, Shenzhen, Guangdong. Legal representative: QU Donglin, general manager of the company. Agent ad litem: YU Fei, lawyer of Guangdong Junqiang Law Firm. Agent ad litem: FU Jieshun, lawyer of Guangdong Junqiang Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_64

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The Defendant: Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. Domicile: Room 301, Building H5, Yuexiu Xianglongyuan Community, Xiwan Square North Road, Fangchenggang Port, Fangcheng Port, Guangxi Zhuang Autonomous Region. Legal representative: ZHANG Min. The Defendant: Wuhan Zhongtaixin Marine Development Co., Ltd. Domicile: Room 515, 5th Floor, Hubei Modern Hardware & Electrical City Complex, Wujieshan New City 12th Road, Wuhan, Hubei. Legal representative: XIE Bin. With respect to the case arising from ship stores and spare parts supply contract between the Plaintiff Shenzhen Maritime Logistics Co., Ltd. (hereinafter referred to as Maritime Logistics), the Defendant Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. (hereinafter referrd to as Ruifenglong Company), and the Defendant Wuhan Zhongtaixin Marine Development Co., Ltd. (hereinafter referrd to as Zhongtaixin Company), after the court entertained the case on May 23, 2016, the court applied general procedure and held a hearing in public on September 8. Agent ad litem of the Plaintiff, FU Jieshun, appeared in court to attend the hearing. After legal summons, the Defendant Ruifenglong Company and Zhongtaixin Company did not appear in court without justified reasons, so the court tired the case by default. Now the case has been concluded. Marine Logistics claimed to the court that: Ruifenglong Company and Zhongtaixin Company should jointly pay M.V. “Zhongtaixin 366” refueling amount of RMB69,500 yuan (the following is not specifically stated in RMB) with interest (since 2014) from October 21 of the year to the date of actual performance, according to the benchmark interest rate of similar loans announced by the People’s Bank of China in the same period, and should bear the acceptance fee of the case. Facts and reasons: on October 18, 2014, Ruifenglong Company entrusted Maritime Logistics to add 10 tons of light diesel oil to M.V. “Zhongtaixin 366” under the name of Zhongtaixin Company. Ruifenglong Company and Maritime Logistics agreed that the aforementioned refueling amount would be deducted from the freight of M.V. “Zhongtaixin 366”. After accepting the entrustment of Ruifenglong Company, Maritime Logistics arranged for Shenzhen Brother Energy Co., Ltd. (hereinafter referred to as “Brother Energy Company”) to add 10 tons of light diesel oil to M.V. “Zhongtaixin 366”, and the refueling amount was 69,500 yuan. Maritime Logistics paid the aforementioned fueling fee to Brother Energy. Later, because Maritime Logistics did not actually arrange M.V. “Zhongtaixin 366” vessel for transportation, Ruifenglong Company and Zhongtaixin Company did not have freight claims to offset the refueling. Maritime Logistics has repeatedly urged Ruifenglong Company and Zhongtaixin Company to pay the refueling payment to them, but neither company fulfilled its payment obligations. Maritime Logistics believes that it has fulfilled its obligation to refuel and pay for fueling in accordance with the terms of the entrustment agreement. As a trustee, Zhongtaixin Company and Ruifenglong Company shall jointly pay RMB 69,500 to M.V. “Zhongtaixin 366” of refueling with interest on the aforementioned amount.

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Ruifenglong Company and Zhongtaixin Company were absent and were deemed to waive their rights to give evidence, cross-examine, and defend in court. Maritime Logistics submitted a power of attorney about adding oil for M.V. “Zhongtaixin 366” that Ruifenglong Company sent to the company in accordance with the law. The company sent a letter of entrustment to Brother Energy Company, the fuel certificate issued by Brother Energy Company, the electronic return receipt of the Bank of Communications, and the special invoice for value-added tax. The court conducted the evidence materials submitted by Maritime Logistics in accordance with the Several Provisions of the Supreme People’s Court on Evidence in Civil Proceedings and the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China (hereinafter referred to as the “Civil Procedure Law”). After reviewing, the above-mentioned evidentiary materials can be mutually verified, and their certification powers can be identified. According to the statement of Maritime Logistics and the evidence confirmed by the court, the court found the facts of the case as follows: On October 18, 2014, Ruifenglong Company sent a power of attorney to Maritime Logistics by fax. The power of attorney states that the company entrusted Maritime Logistics to refuel 10 tons of the company’s ship “Zhongtai Xin 366,” with a unit price of 7,100 yuan/ton, a total of 71,000 yuan. The above oil materials agreed to be deducted from the freight of M.V. “Zhongtaixin 366”. After receiving the power of attorney, Maritime Logistics issued a power of attorney to Brother Energy Company by fax, entrusting Brother Energy Company to add 10 tons of light diesel oil to M.V. “Zhongtaixin 366”. The unit price is 6,950 yuan, totaling 69,500 yuan, and the refueling time is October 18. On October 18, the fuel fee was paid by Maritime Logistics to Brother Energy Company. On October 18, Brother Energy Company added 10 tons of light diesel oil to M.V. “Zhongtaixin 366” in Shenzhen Mawan. On the refueling certificate of Brother Energy Company, the “Signature of Oil Tanker” column was stamped with “Zhongtai Xinhai Shipping Development Co., Ltd. M.V. Zhongtaixin 366” ship’s seal, and signed by WANG Haizhi. On October 20, Maritime Logistics remitted M.V. “Zhongtaixin 366” refueling to Brother Energy Company through the Bank of Communication, 69,500 yuan. On the same day, Brother Energy Company issued a special invoice for Shenzhen VAT to Maritime Logistics for a total amount of 69,500 yuan. Maritime Logistics said in the trial that on October 20, 2014, ZHOU Xianmei, the shareholder of Ruifenglong Company, verbally requested the refueling of this case, but it did not provide relevant evidence. The court believes that the unilateral statement of Maritime Logistics has no other evidence to support and is not sufficient to prove its claim. The court determined that after ZHOU Xianmei refueled, Maritime Logistics did not claim refueling from Ruifenglong Company. On June 7, 2016, the court delivered a copy of the bill of complaint, the notice of responding, the notice of proof, the summons, and other legal documents to the company. The court believes that Maritime Logistics has advocated its establishment of a contractual relationship with Ruifenglong Company, which sued the trustee of the

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company for the payment of the entrustment contract of Ruifenglong Company and demanded that Ruifenglong Company paid the refueling amount to the case. According to the Interpretation of Civil Procedure Law Article 91 Sub-paragraph 1, “parties who advocate the existence of legal relations, shall bear the burden of proof for the basic facts that produce the legal relationship”, and establish a commission contract with Maritime Logistics and Ruifenglong Company. The burden of proof shall be borne by Maritime Logistics. According to the facts of this case, when Ruifenglong sent a fax to Maritime Logistics on October 18, 2014, it clearly indicated that it was an offeror as an oil demander. The content of the offer was to ask Maritime Logistics to ship the company. M.V. “Zhongtaixin 366” refueling. Maritime Logistics accepted the offer of Ruifenglong Company and entrusted Brother Energy Company to implement the refueling behavior for M.V. “Zhongtaixin 366”, which is a commitment to Ruifenglong Company’s offer and performance of the contract. Judging from the rights and obligations embodied in the contract’s offer, commitment, and performance process, Maritime Logistics and Ruifenglong Company are not in a contractual relationship, but more accurately, a ship material supply contract relationship. Ruifenglong Company is the oil demander. Maritime Logistics is the oil supplier. The ship material supply contract does not violate the prohibition provisions of laws and administrative regulations, and it is legal and valid. Ruifenglong Company and Maritime Logistics shall enjoy the rights to perform their obligations in accordance with the contract or the law. As a supplier of oil, Maritime Logistics fulfilled its obligation to refuel 10 tons for M.V. “Zhongtaixin 366” and paid 69,500 yuan to Brother Energy Company. Ruifenglong Company as the oil demander should be in M.V. “Zhongtaixin 366”. After M.V. “Zhongtaixin 366” refueled, the above-mentioned refueling payment was paid to Maritime Logistics. Since Ruifenglong Company and Maritime Logistics did not agree to pay the refueling amount, according to Article 62 of the Contract Law of the People’s Republic of China, “if the performance period is not clear, the debtor may perform at any time, and the creditor may also. The requirement to perform, but should give the other party the necessary preparation time.” Maritime Logistics may request Ruifenglong Company to pay 69,500 yuan to it. As Maritime Logistics did not prove that it had claimed the above rights to Ruifenglong Company, the court issued the copy of the complaint in this case and sent it to Ruifenglong Company on August 7, 2016 as Maritime Logistics requested. On the day when Ruifenglong Company fulfilled its debts, in view of the necessary preparation time for Ruifenglong Company to fulfill its debts, the court determined that the final date of payment of the aforementioned fuel payment by Ruifenglong Company to Maritime Logistics was August 31, 2016. If Ruifenglong Company fulfills its obligations later than this day, according to Article 107 of the Contract Law of the People’s Republic of China, “one party that fails to perform its contractual obligations or fulfills its contractual obligations does not meet the agreement, it shall undertake to continue to perform and take remedial measures or Provisions for compensation for damages and other liability for breach of contract.” Maritime Logistics has the right to request Ruifenglong Company to compensate for the loss of overdue payment, which can be calculated from September 1, 2016

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to the date when Ruifenglong Company actually fulfills its payment obligations, based on the unpaid refueling amount. The People’s Bank of China announced the calculation of the benchmark interest rate for similar loans during the same period. Regarding the legal responsibility of Zhongtaixin Company. Maritime Logistics, with Zhongtaixin Company stamped the seal on the oil tanker. The company belongs to the unprofitable main body of the 10 tons of light diesel oil in this case, and it asked Zhongtaixin Company and Ruifenglong Company to jointly pay the case to them. The obligation to refuel. According to the Interpretation of Civil Procedure Law, Article 91 Sub-paragraph 1, “parties who advocate the existence of legal relations, shall bear the burden of proof for the basic facts that produce the legal relationship.” The behavior of Zhongtaixin Company constitutes the unjust enrichment. The burden of proof shall be borne by Maritime Logistics. If the Shenzhen Maritime Company fails to provide evidence, it shall explain Article 90 Paragraph 2, in accordance with the Interpretation of Civil Procedure Law. “After making a judgment, if the party fails to provide evidence or the evidence is insufficient to prove its factual claim, the party responsible for the burden of proof shall be The provisions that bear the unfavorable consequences.” The court believes that the case has been found that M.V. “Zhongtaixin 366” stamped the “Wuhan Zhongtaixin Maritime Development Co., Ltd. M.V. Zhongtaixin 366” seal at the oil tanker when receiving the refueling. Even if Zhongtaixin Company, it is the ship owner or ship operator registered in M.V. “Zhongtaixin 366”. The vessel accepting refueling is also based on the agreement of the ship material supply contract between Maritime Logistics and Ruifenglong Company in this case, which has a legal basis. The behavior of Zhongtaixin Company cannot be recognized as unjust enrichment as stipulated in Article 92 of the General Principles of the Civil Law of the People’s Republic of China. Therefore, Maritime Logistics’s argument that Zhongtaixin Company as an unscrupulous profitable person, should jointly bear the claim of returning 69,500 yuan of fuel for this case with Ruifenglong Company has no factual and legal basis and no support is given. In summary, the lawsuit request of Maritime Logistics was partially established. In accordance with Article 62 Sub-paragraph 4, Article 107 of the Contract Law of the People’s Republic of China, Article 144 of the Civil Procedure Law of the People’s Republic of China, and Article 90 Paragraph 2, and Article 91 Sub-paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows. 1. The Defendant Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. shall pay M.V. “Zhongtaixin 366” refueling amount of 69,500 yuan and overdue payment interest to the Plaintiff Shenzhen Maritime Logistics Co., Ltd. (based on 69,500 yuan, from September 1, 2016 to the date of the actual performance, calculated according to the benchmark interest rate of the People’s Bank of China for the same period);

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2. Reject other claims from the Plaintiff Shenzhen Maritime Logistics Co., Ltd. The above obligation to pay money shall be fulfilled within 10 days from the date of the effective date of this judgment. If the obligation to pay money is not fulfilled in the period specified in this judgment, the interest on the debt during the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 1,705.45 yuan, shall be borne by the Defendant Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. As the Plaintiff has already paid the acceptance fee, the Defendant Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. will pay the fee to the Plaintiff, and the court will not return the fee to the Plaintiff. If any party disagrees with this judgment, it can submit within 15 days from the date of delivery of the judgment, together with copies according to the number of the other parties, so as to appeal to the Guangdong High People’s Court. Presiding Judge: CHANG Weiping Judge: ZHAI Xin Acting Judge: XU Chunlong November 16, 2016 Clerk: DAI Wenchao

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Guangdong High People’s Court Civil Judgment Shenzhen Maritime Logistics Co., Ltd. v. Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. et al. (2017) Yue Min Zhong No.679 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1197. Cause of Action 225. Dispute over contract for marine stores and spare parts supply. Headnote Affirming lower court default judgment holding bunker supplier to be entitled to recover cost of bunkers from contract counterparty but not from owner of ship to which bunkers were supplied. Summary Plaintiff, Shenzhen Maritime Logistics Co., Ltd., arranged for bunkers to be supplied to the ship “Zhongtaixin 366” at the request of Defendant Guangxi Fangchenggang Ruifenlong Shipping Co., Ltd. (Ruifenlong) on the understanding that the cost would be deducted from freight to be paid by Plaintiff to Defendant Ruifenlong. Plaintiff paid a supplier for the bunkers that were delivered to the ship but Plaintiff did not actually charter the ship from Defendant Ruifenlong, as they had originally planned. Plaintiff claimed the cost of the bunkers from Defendant Ruifenlong and also from Defendant Wuhan Zhongtaixin Marine Development Co., Ltd. (Zhongtaixin), the owner of “Zhongtaixin 366,” which had acknowledged receipt of the bunkers. Neither Defendant appeared at trial. The Court of first instance held that Defendant Ruifenlong was liable to Plaintiff for the unpaid fuel, but Defendant Zhongtaixin was not, as there was no contract between Plaintiff and Defendant Zhongtaixin, nor any unjust enrichment of Defendant Zhongtaixin in receiving the bunkers. On appeal by Plaintiff, none of the parties introduced new evidence. The appeal Court affirmed the judgment of the Court of first-instance, holding that it had correctly determined the parties’ obligations.

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Judgment The Appellant (the Plaintiff of first instance): Shenzhen Maritime Logistics Co., Ltd. Domicile: Room 721, Zhaogang Building, Shekou Port 3, Shekou, Nanshan District, Shenzhen, Guangdong. Legal representative: QU Donglin, general manager of the company. Agent ad litem: ZHONG Shengyang, lawyer of Guangdong Junqiang Law Firm. Agent ad litem: WEI Ming, intern lawyer of Guangdong Junqiang Law Firm. The Respondent (the Defendant of first instance): Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. Domicile: Room 301, Building H5, Yuexiu Xianglongyuan Community, Xiwan Square North Road, Fangchenggang Port, Fangcheng Port, Guangxi Zhuang Autonomous Region. Legal representative: ZHANG Min. The Respondent (the Defendant of first instance): Wuhan Zhongtaixin Marine Development Co., Ltd. Domicile: Room 515, 5th Floor, Hubei Modern Hardware & Electrical City Complex, Wujiashan New City 12th Road, Wuhan, Hubei. Legal representative: XIE Bin. With respect to the case arising from dispute over ship stores and spare parts supply contract between the Appellant Shenzhen Maritime Logistics Co., Ltd. (hereinafter referred to as Maritime Logistics) and the Respondents Guangxi Fangchenggang Ruifenglong Shipping Co., Ltd. (hereinafter referred to as Ruifenglong Company) and Wuhan Zhongtaixin Marine Development Co., Ltd. (hereinafter referred to as Zhongtaixin Company), the Appellant refused to accept the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.384 Civil Judgment and appealed to the court. After the case was filed on March 31, 2017, the court formed a collegiate panel to hear the case. Agents ad litem of Maritime Logistics, ZHONG Shengyang and WEI Ming, participated in the investigation of second instance. Ruifenglong Company and Zhongtaixin Company were legally summoned by the court but did not attend the court of second instance. Now the case has been concluded. Maritime Logistics appealed that: 1. the first-instance judgment should be revoked, and Ruifenglong Company and Zhongtaixin Company should jointly pay the oil fee of 69,500 yuan and overdue interest of 755.8 yuan to Maritime Logistics (the interest was based on 69,500 yuan, calculated according to the same period of the People’s Bank of China loan interest rate, since September 1, 2019 to the date of payment, the temporary amount is 755.8 yuan on November 30, 2016); 2. the expenses of the first and second instances shall be borne by Ruifenglong Company and Zhongtaixin Company. Facts and reasons: the court of first instance found that the facts were unclear and the law was improperly applied, which should be corrected. 1. The contract between Maritime Logistics and Ruifenglong Company was

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not fulfilled due to the agreement, and the contract was not established. In this case, Ruifenglong Company issued an offer to Maritime Logistics by fax, and entrusted Maritime Logistics to refuel 10 tons to M.V. “Zhongtaixin 366”, with a unit price of 7,100 yuan/ton. After Maritime Logistics issued a power of attorney to the outsider Brother Energy Company, the unit price was changed to 6,950 yuan/ton, and the oil price claimed by Maritime Logistics was 69,500 yuan in the first instance, according to Article 30 of the Contract Law of the People’s Republic of China. It is stipulated that Maritime Logistics has changed the substantive content (oil price) of the offer, but Ruifenglong Company did not respond to the new offer after the change, so the ship supply between Maritime Logistics and Ruifenglong Company. The agreement was not finalized and the contract was not established. 2. As the contract was not established, according to the facts ascertained by the review, Zhongtaixin Company stamped the fueling certificate and is the counterpart of the ship material and spare parts supply contract. Refer to the Civilian Court of the Zhejiang High People’s Court. And the identification rules of the contract counterparties in the supply contract, the corresponding materials shall be paid by Zhongtaixin Company. 3. Ruifenglong Company made a false statement about the owner of M.V. “Zhongtaixin 366” ship registration, and Ruifenglong Company and Zhongtaixin Company intend to evade the oil supply, deliberately not arranging the above-mentioned ship to carry the goods of Maritime Logistics. It makes Maritime Logistics unable to deduct the oil payment in the freight. Ruifenglong Company as the entrusting party and the actual receiving party Zhongtaixin Company shall jointly bear the obligation to pay the oil. 4. Zhongtaixin Company either obtains the ship’s oil based on the actual counterpart of the contract, or obtains the ship’s oil without legal basis, which is unjustly profitable, and the court of first instance considered that Zhongtaixin Company accepted the oil based on Maritime Logistics and Ruifenglong Company. The contract between Fenglong Company does not apply to the relevant provisions of unjust enrichment, which is an error of application of law. Ruifenglong Company and Zhongtaixin Company did not submit a reply. Maritime Logistics claimed to the court of first instance that: 1. Ruifenglong Company and Zhongtaixin Company should jointly pay M.V. “Zhongtaixin 366” refueling amount of 69,500 yuan and interest to Maritime Logistics (according to the similar loan benchmark announced by the People’s Bank of China in the same period Interest rate calculation, from October 21, 2014 to the actual performance date). 2. Ruifenglong Company and Zhongtaixin Company should bear the litigation costs of this case. The court of first instance found the facts: on October 18, 2014, Ruifenglong Company sent a power of attorney of adding oil to Maritime Logistics by fax. The power of attorney states that the company entrusted Maritime Logistics to refuel 10 tons of the company’s ship M.V. “Zhongtaixin 366”, with a unit price of 7,100 yuan/ton, totaling 71,000 yuan. The above oil materials agreed to be deducted from the freight of M.V. “Zhongtaixin 366”. After receiving the power of attorney, Maritime Logistics issued a power of attorney to Brother Energy Company by fax, entrusting Brother Energy Company to add 10 tons of light diesel oil to M.V.

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“Zhongtaixin 366”, the unit price is 6,950 yuan, totaling 69,500 yuan, and the refueling time is October 18, the fuel fee was paid by the Maritime Logistics to the Brother Energy Company. On October 18, Brother Energy Company added 10 tons of light diesel oil to M.V. “Zhongtaixin 366” in Shenzhen Mawan. On the refueling certificate of Brother Energy Company, the “Signature of Oil Tanker” column was stamped with “Zhongtai Xinhai Shipping Development Co., Ltd. M.V. Zhongtaixin 366” ship’s seal, and signed by WANG Haizhi. On October 20, Maritime Logistics remitted M.V. “Zhongtaixin 366” of refueling to Brother Energy Company through the Bank of Communications for 69,500 yuan. On the same day, Brother Energy Company issued a special invoice for Shenzhen VAT of 69,500 yuan to Maritime Logistics. The court of first instance held that Maritime Logistics claimed that it had established a contractual relationship with Ruifenglong Company, and that the trustee used to pay the bill filed a lawsuit against Ruifenglong Company, requesting Ruifenglong Company to pay the case for the case. According to Article 91 Paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, “the party claiming the existence of a legal relationship shall bear the burden of proof for the basic facts that produce the legal relationship.” Therefore, the burden of proof of the establishment of the entrustment contract between Maritime Logistics and Ruifenglong Company shall be borne by Maritime Logistics. According to the facts of this case, when Ruifenglong sent a fax to Maritime Logistics on October 18, 2014, it clearly indicated that it was an offeror as an oil demander. The content of the offer was to ask Maritime Logistics to M.V. “Zhongtaixin 366” refueling. Maritime Logistics accepted the offer of Ruifenglong Company and entrusted Brother Energy Company to implement the refueling behavior for M.V. “Zhongtaixin 366”, which is a commitment to Ruifenglong Company’s offer and performance of the contract. Judging from the rights and obligations embodied in the contract’s offer, commitment and performance, Maritime Logistics and Ruifenglong Company are not contractual relationship, but the ship material supply contract relationship. Ruifenglong Company is the oil supplier and Maritime Logistics is the oil supplier. The ship material supply contract does not violate the prohibition provisions of laws and administrative regulations, and is legal and valid. Ruifenglong Company and Maritime Logistics shall enjoy the rights to perform their obligations in accordance with the contract or the law. As a fuel supplier, Maritime Logistics fulfilled its obligation to refuel 10 tons for M.V. “Zhongtaixin 366” and paid a refueling amount of 69,500 yuan to the brother energy company. Ruifenglong Company as the oil demander should be in M.V. “Zhongtaixin 366” After M.V. “Zhongtaixin 366” refueling, the above-mentioned refueling payment was paid to Maritime Logistics. Since Ruifenglong Company and Maritime Logistics did not agree to pay the refueling amount, thus according to Article 62 of the Contract Law of the People’s Republic of China (if the performance period is not clear, the debtor may perform at any time, and the creditor may also request for performance at any time), Maritime Logistics may request Ruifenglong Company to pay 69,500 yuan to it at any time provided that the necessary preparation time should be given to the other party. As Maritime

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Logistics did not prove that it had claimed the above rights to Ruifenglong Company, the court of first instance issued the copy of the complaint in this case to the company of Ruifenglong Company on August 7, 2016 as Maritime Logistics requested Ruifenglong Company to fulfill its debts. In view of the necessary preparation time for Ruifenglong Company to fulfill its debts, the court of first instance determined that the final date for Ruifenglong Company to pay the aforementioned refueling amount to Maritime Logistics was August 31, 2016. If Ruifenglong Company fulfills its obligations later than that day, in accordance with Article 107 of the Contract Law of the People’s Republic of China, “if one of the parties fails to perform the contractual obligations or fulfills the contractual obligations and fails to comply with the contract, it shall undertake to continue to perform and take remedial measures. Or compensation for damages and other liability for breach of contract.” Maritime Logistics has the right to request Ruifenglong Company to compensate for the loss of its overdue payment. The loss can be calculated from September 1, 2016 to the date when Ruifenglong Company actually fulfills its payment obligation, based on the unpaid fueling amount. The People’s Bank of China announced the calculation of the benchmark interest rate for similar loans during the same period. Regarding the legal responsibility of Zhongtaixin Company. Maritime Logistics, with Zhongtaixin Company stamped the seal on the oil tanker, the company belongs to the unprofitable main body of the 10 tons of light diesel oil in this case, and asked Zhongtaixin Company and Ruifenglong Company to jointly pay the case to them. The obligation to refuel. According to Article 91 Sub-paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the party concerned with the existence of a legal relationship shall bear the burden of proof for the basic facts that produce the legal relationship. The provisions of the Chinese Taixin company’s behavior constitutes improper proof of the burden of proof of responsibility by Maritime Logistics. If Maritime Logistics cannot provide evidence, it shall be based on Article 90 Paragraph 2, of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China. “The party fails to provide evidence or evidence before the judgment is made. In the case of proving the factual claim, the party that bears the burden of proof to bear the unfavorable consequences bears the unfavorable legal consequences.” The court of first instance held that the case has been found that M.V. “Zhongtaixin 366” stamped the seal of “Wuhan Zhongtaixin Marine Development Co., Ltd. M.V. Zhongtaixin 366” at the oil tanker when receiving the refueling, even if Zhongtaixin Company. It is the ship owner or ship operator registered in M.V. “Zhongtaixin 366”. The ship accepting refueling is also based on the agreement of the ship material supply contract between Maritime Logistics and Ruifenglong Company in this case, which has a legal basis. The actions of Zhongtaixin Company cannot be recognized as unjust enrichment as stipulated in Article 92 of the General Principles of the Civil Law of the People’s Republic of China. Therefore, Maritime Logistics said that Zhongtaixin Company, as an unscrupulous profitable person, should

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jointly bear the claim of returning the 69,500 yuan refueling amount with Ruifenglong Company. There is no factual and legal basis and no support is given. In summary, the lawsuit request of Maritime Logistics was partially established. The court of first instance is in accordance with Article 62 Sub-paragraph 4, Article 107 of the Contract Law of the People’s Republic of China, and Article 144 of the Civil Procedure Law of the People’s Republic of China, the Supreme People's Court on the Application of China The interpretation of the Civil Procedure Law of the People's Republic of China, Article 90 Paragraph 2, and Article 91 Sub-paragraph 1 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, the judgment of first instance was as follows: 1. Ruifenglong Company should pay M. V. “Zhongtaixin 366” refueling payment 69,500 and overdue payment interest (based on 69,500 yuan) from Maritime Logistics to the actual performance date from September 1, 2016. In accordance with the benchmark interest rate of similar loans of the People’s Bank of China in the same period); 2. reject the other claims of Maritime Logistics. In second instance, the parties did not submit new evidence, nor did they object to the facts ascertained, and the court confirmed the facts ascertained. The court believes that Ruifenglong Company entrusted Maritime Logistics to refuel its M.V. “Zhongtaixin 366”. According to its entrustment, Maritime Logistics completed the entrustment of refueling the ship involved in the case through the outsider Brother Energy Company. A fuel payment of 69,000 yuan was paid. In accordance with Article 396 of the Contract Law of the People’s Republic of China on the entrustment contract, it can be concluded that the entrustment contract between Maritime Logistics and Ruifenglong Company was established according to law, so the case should be a contract dispute, the court of first instance If it is determined that the ship material supply contract is improper, the court will correct it. Maritime Logistics filed the lawsuit in the case of a contractual dispute, but at the time of the appeal, it denied the establishment of a contractual relationship with Ruifenglong Company on the grounds that it did not have any ship material supply between Ruifenglong Company and the facts of the case. There is no legal basis and no legal basis. The court does not support it. The above-mentioned entrustment contract does not violate the prohibition provisions of laws and administrative regulations, and should be deemed to be legal and valid. Both Ruifenglong Company and Maritime Logistics shall enjoy rights or perform obligations in accordance with the contract or legal provisions. According to Article 298 of the Contract Law of the People’s Republic of China, “the principal shall prepay the expenses for handling the entrusted affairs. The trustee shall reimburse the expenses and interest on the necessary expenses for the advancement of the entrusted affairs.” Ruifenglong Company shall pay the entrusted fee to Maritime Logistics, which shall be 69,000 yuan. The first-instance judgment supported Maritime Logistics’ claims that Ruifenglong Company should return the above amount, and the court will affirm them. Regarding whether Zhongtaixin Company should bear the obligation of repayment. Although Zhongtaixin Company is the owner of the actual refueling

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ship. However, due to the arrangement of the shipping company of Maritime Logistics for the case, it was based on the entrustment of Ruifenglong Company, and Zhongtaixin Company was not the party to the entrustment contract. Therefore, Maritime Logistics requires Zhongtaixin Company to undertake the repayment obligation without contractual basis, and the ship’s refueling in this case is not without legal basis. Therefore, Maritime Logistics believes that the reason for Zhongtaixin Company’s improper profit is not established, and the court does not support it. As for whether Zhongtaixin Company and Ruifenglong Company have false statements and evade payment of oil, the existing evidence is not sufficient to prove that the court will not accept the letter. In summary, the appeal of Maritime Logistics cannot be established and should be dismissed. The facts confirmed by the first-instance judgment were clear, the application of law was correct, and the results were appropriate, and the court affirms them according to law. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 1,556.39 yuan, shall be borne by Shenzhen Maritime Logistics Co., Ltd. The judgment is final. Presiding Judge: HOU Xianglei Judge: LI Mintao Judge: ZHANG Yiyin October 31, 2017 Judge Assistant: LIU Xiaoming Clerk: LAI Hong

Guangzhou Maritime Court Civil Judgment Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No.1527 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1226. Cause of Action 224. Dispute over tally contract. Headnote Chinese subsidiary of Korean shipping company held liable to plaintiff tally operator for unpaid tally fees and also for unpaid agency fees owned to ship’s agent that had assigned its rights to plaintiff; Chinese subsidiary was party to the contracts not merely as agent for Korean parent; subsidiary’s local branch was not liable as it did not have independent legal personality. Summary Plaintiff made a tally contract with the first Defendant (Han Jin China) to provide tallying services in relation to ships operated by the first Defendant’s Korean parent company Han Jin Shipping. Much of the business contact with Plaintiff was made by the second Defendant (Han Jin Shenzhen). Similarly, non-party, Shenzhen Foreign Agency made a ship’s agency contract with the First Defendant (Han Jin China) in relation to ships operated by the first Defendant’s Korean parent company Han Jin Shipping, and much of the business contact with Shenzhen Foreign Agency was made by second Defendant (Han Jin Shenzhen). Shenzhen Foreign Agency assigned to Plaintiff its creditor’s rights for amounts owing by the first Defendant. Plaintiff sued the first and second Defendants to recover the amounts owed to it under its own tally contract, and the amounts owing to Shenzhen Foreign Agency under the ship agency contract. The Defendants argued that they had merely acted as agents for the parent company Han Jin Shipping, which was the proper party to the tally contract and the ship agency contract. The Court held: (1) the first Defendant was party to both the tally contract and the ship agency contract; (2) the second Defendant was merely a branch of the first Defendant, without independent legal personality, so it was not jointly liable with the first Defendant; (3) the transfer of creditor’s rights from Shenzhen Foreign Agency to Plaintiff was valid and effective; and (4) the first Defendant was liable for the outstanding sums under both contracts.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_65

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Judgment The Plaintiff: Shenzhen Ocean Shipping Tally Co., Ltd. Domicile: Nanshan District, Shenzhen, Guangdong. Legal representative: HUANG Shusong, chairman of the company. Agent ad litem: WANG Xiaochun, lawyer of Guangdong Langzheng Law Firm. Agent ad litem: CHEN Yingxuan, trainee lawyer of Guangdong Langzheng law Firm. The Defendant: Han Jin Shipping (China) Co., Ltd. Domicile: Pudong New District, Shanghai. Legal representative: OH MOO KYOON, chairman of the company. The Defendant: Han Jin Shipping (China) Co., Ltd. Shenzhen Branch Domicile: Luohu District, Shenzhen, Guangdong. Person in charge: YUN YOUNG KUK, manager of the branch. Agent ad litem of the two Defendants: YANG Guodong, lawyer of Beijing Zhonglun Law Firm. With respect to the case arising from disputes over tally contract and ship agency contract between the Plaintiff, Shenzhen Ocean Shipping Tally Co., Ltd. (hereinafter referred to as Shenzhen Zhongli), and the Defendant, Han Jin Shipping (China) Co., Ltd. (hereinafter referred to as Han Jin China), and the Defendant, Han Jin Shipping (China) Co., Ltd. Shenzhen Branch (hereinafter referred to as Han Jin Shenzhen), after entertaining it on November 14, 2016, the court applied general procedure to try the case in accordance with the law. The Defendant, Han Jin China, applied for the addition of Han Jin Shipping Co., Ltd. (hereinafter referred to as Han Jin Shipping) as co-Defendant of the case, which was not permitted by the court according to law. The court heard the case in public on March 15, 2017. Agents ad litem of the Plaintiff, WANG Xiaochun and CHEN Yingxuan, and joint agent ad litem of the two Defendants, YANG Guodong, appeared in court to attend the hearing. Now the case has been concluded. Shenzhen Zhongli claimed to the court that: 1. Han Jin China and Han Jin Shenzhen should jointly pay RMB 420,681.50 yuan in overdue tally fee (hereinafter referred to as RMB) and the liquidated damages for overdue payment of the said amount (from October 15, 2016 to the date of actual payment by Han Jin China and Han Jin Shenzhen, the amount of arrears should be calculated daily according to the standard of 1‰ per day); 2. Han Jin China and Han Jin Shenzhen should jointly pay Shenzhen Zhongli owed RMB 3,249,199.47 yuan and the interest (from October 1, 2016 to the date of actual payment by Han Jin China and Han Jin Shenzhen, interest should be calculated at the People’s Bank of China benchmark interest rate on similar RMB loans for the same period); 3. Han Jin China and Han Jin Shenzhen should jointly bear the application fee for the preservation before action of 5,000 yuan and bear the court acceptance fee. Facts and reasons: Han Jin China was a wholly owned company established by South Korea in China, which specialized in

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the provision of port services for the ships registered in the Chinese port by South Korea; Han Jin Shenzhen was a branch of Han Jin China in Guangdong, which was responsible for carrying out the business of Han Jin China in South China. Han Jin China, Han Jin Shenzhen, through entrusting domestic shipping agents and tally companies and other related companies, to finished the port service works of operation ship of Han Jin Shipping. In early 2016, Han Jin China and Shenzhen Zhongli concluded a contract for entrusted tally contract (hereinafter referred to as the tally contract), it was agreed that Han Jin China would entrust Shenzhen Zhongli to handle cargo handling business in all container loading and unloading ships of all routes at ports in western Shenzhen (including shekou chiwan shovel). The two parties agreed in accordance with lump sum as 11.5 yuan/TEU, payment should be made within 45 days after the end of the tally. The actual tally business was all through the Han Jin Shenzhen and Shenzhen Zhongli’s contact operation. As of the end of August 2016, Han Jin China and Han Jin Shenzhen were in arrears with Shenzhen Zhongli’s tally charge of 420,681.50 yuan. According to the contract of the tally, Han Jin China delayed paying the tally fee that should be paid to Shenzhen Zhongli surcharge for overdue tax payment of overdue payment portion 1‰ per day. On October 24, 2016, Shenzhen Zhongli and China Shenzhen Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Shenzhen Foreign Agency) concluded a creditor’s rights transfer agreement, and accepted transfer the creditor’s rights of Han Jin China, Han Jin Shenzhen with the principal amount of 3,249,199.47 yuan. Shenzhen Foreign Agency informed Han Jin China and Han Jin Shenzhen on the transfer of the above claims. Shenzhen Zhongli held that the amount of the tally fee and the amount of the assigned creditor’s rights owed by Han Jin China to Shenzhen Zhongli was clear, and was recognized by both parties, Han Jin China should fulfill the obligations to pay in accordance with the contract, but Han Jin China refused to perform, which constituted breach of contract, it should bear the obligation to pay the corresponding amount to Shenzhen Zhongli. The debts involved were all arising from the specific entrustment of Han Jin Shenzhen, and Han Jin Shenzhen, as a branch of Han Jin China, did not have independent legal person status, did not have independent property rights, the property should be owned by Han Jin China, therefore, Han Jin Shenzhen should be jointly and severally liable to Shenzhen Zhongli for property under its control. Han Jin China and Han Jin Shenzhen jointly argued that: firstly, Han Jin China was only the agent of Han Jin Shipping, and Shenzhen Zhongli was well aware of this, according to Article 402 of the Contract Law of the People’s Republic of China (hereinafter referred to as Contract Law), the other party under the tally contract and the ship agency contract in this case were both Han Jin Shipping, having nothing to do with Han Jin China and Han Jin Shenzhen, Shenzhen Zhongli had no right to claim the relevant rights under the contract from Han Jin China and Han Jin Shenzhen; secondly, Shenzhen Zhongli failed to prove that it had legally accepted the creditor’s rights of Shenzhen Foreign Agency and had no right to claim the rights against Han Jin China and Han Jin Shenzhen. This case also did not have Han Jin China and Han Jin Shenzhen to fulfill the payment obligation condition. In summary, they requested to reject claims of Shenzhen Zhongli.

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The parties submitted evidence in accordance around claims in accordance with the law. To support its claims, Shenzhen Zhongli submitted the following evidence: 1. contract of tally between Shenzhen Zhongli and Han Jin China; 2. checked the bill to confirm the mail and list; 3. partial tally document; 4. email and list of Han Jin China confirmation of expenses owed to Shenzhen Foreign Agency; 5. certificate of assignment of creditor’s rights issued by Shenzhen Foreign Agency; 6. notification of transfer of creditor’s rights and email sent by Shenzhen Foreign Agency; 7. notarization of the aforesaid e-mail and the Chinese translation of the English email; 8. ship agency agreement and translation between Shenzhen Foreign Agency and Han Jin China; 9. description of the situation of the legal relationship between Shenzhen Foreign Agency and Han Jin China, the foregoing evidence was used to prove that Han Jin China and Han Jin Shenzhen owed to Shenzhen Zhongli tally fee and Shenzhen Zhongli legally accepted the transfer of the creditor’s right of transfer of Shenzhen Foreign Agency. Han Jin China and Han Jin Shenzhen should pay the bill of goods to Shenzhen Zhongli, accept the transfer of the claim, and the agreed late payment and interest. To support the pleas, Han Jin China and Han Jin Shenzhen submitted the following evidence: 1. agency agreement between Han Jin China and Han Jin Shipping; 2. notice of relevant internal training materials and contract conclusion requirements in the Contract Law; 3. industrial and commercial registration of Han Jin China; 4. indictment of Shanghai Mingdong Container Terminals Co., Ltd. and other companies to sue Han Jin Shipping into the sea, the list of evidence and court action notice; 5.industrial and commercial publicity information of Shenzhen Zhongli and Shenzhen Foreign Agency, the foregoing evidence was used to prove that Shenzhen Zhongli and Shenzhen Foreign Agency had no contractual relationship with Han Jin China and Han Jin Shenzhen, and had no right to claim against Han Jin China and Han Jin Shenzhen for the expenses claimed by Shenzhen Zhongli. The court organized the exchange and cross-examination of evidence between the parties and organized written cross-examination of the evidence submitted by Shenzhen Zhongli after the trial. Han Jin China and Han Jin Shenzhen did not recognize the identity of Han Jin China or Han Jin Shenzhen employee using AnnaJIANG@ cn.hanjin.com e-mail to communicate with Shenzhen Zhongli and Shenzhen Foreign Agency, But they recognized that “@ cn.hanjin.com” was the email suffix used by Han Jin China and Han Jin Shenzhen; the authenticity of the tally documents submitted by Shenzhen Zhongli could not be recognized; the authenticity of other evidence submitted by Shenzhen Zhongli should be recognized, but the purpose of proof was not accepted. Letter of authorization entrust submitted by Shenzhen Zhongli to Han Jin China and Han Jin Shenzhen, internal training materials on the Contract Law, notice of contract signing requirement, the indictment by Shanghai Mingdong Container Terminals Co., Ltd. to Han Jin Shipping, the authenticity of the evidence catalogue and the court’s notice of response should not be recognized; they recognized the authenticity of other evidence submitted by Han Jin China and Han Jin Shenzhen, but did not approve the

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purposes of proof. The evidence that the parties recognized the authenticity mentioned above was related to the fact that the case was contested, and collection principal part, source in accordance with the law, the court confirms and corroborates the evidence. About evidence with objection between the parties, the court concludes as follows: About the identity of “Anna JIANG”. “Anna JIANG” had the content of e-mail with Shenzhen Zhongli and Shenzhen Foreign Agency or related to the tally business between Shenzhen Zhongli and Han Jin China, or related to the shipping agency business of Shenzhen Foreign Agency and Han Jin China; Han Jin China and Han Jin Shenzhen recognized that “Anna JIANG” was the e-mail suffix used by Han Jin China and Han Jin Shenzhen; “Anna JIANG” displayed at the e-mail signature file as “HANJINSHIPPINGSHANGHAI, TEL:021-28995418”. In combination with the foregoing, Shenzhen Zhongli completed the certification of “Anna JIANG” for the Korean into China employees, the initial burden of proof of Han Jin China by its behavior representative, Han Jin China and Han Jin Shenzhen argued that “Anna JIANG” was not an employee of Han Jin China or Han Jin Shenzhen, who should bear the burden of proof for submit to the contrary evidence, but Han Jin China and Han Jin Shenzhen in addition to unilateral statements, failure to submit sufficient rebuttal evidence. Therefore, the court determines that “Anna JIANG” in the email involved was a person who was in business contact with Shenzhen Zhongli and Shenzhen Foreign Agency on behalf of Han Jin China, its behavior represented Han Jin China. Regarding the tally documents submitted by Shenzhen Zhongli. This document was checked the original by court after hearing, and it can confirm the authenticity and probative force with the relevant contents shown in the notarized email. Regarding the letter of attorney submitted by Han Jin China and Han Jin Shenzhen, the relevant internal training materials of the Contract Law and the notice of contract conclusion requirements are copies of the original check, and the authenticity is confirmed. Regarding indictment filed by Han Jin China and Han Jin Shenzhen against Han Jin Shipping by Shanghai Mingdong Container Terminal Co., Ltd., list of evidence and court notice, the foregoing evidence is not relevant to the dispute in this case, and the probative force is not confirmed. According to the statement of the parties and the evidence of the examination and confirmation in the court, the court confirms the facts as follows: Shenzhen Zhongli was established on June 5, 1981. The business scope included international freight forwarding business; shipping goods on international and domestic routes and tally of container; container loading and unpacking for tally; monitoring loading and unloading; issuance of tally documents and tally reports, etc. Shenzhen Foreign Agency was established on December 18, 1992, the business scope included agent inspection and reporting business; international freight forwarding by sea; forwarding import and export goods; deal with booking, chartering, storage, agency shipping, customs declaration, international shipping agency, etc. Han Jin China was established on March 15, 1995, the department of Han Jin Shipping in China set up a foreign legal entity wholly-owned company, the scope

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of business was providing goods for the ship owned or operated by Han Jin Shipping, preparing and issuing bills of lading, to collect and remit freight, and concluding service contracts. On January 1, 2015, Han Jin China, for Han Jin Shipping, to provide all general cargo agent services, Han Jin China and Han Jin Shipping in Shanghai concluded an agency agreement. Agreement on the status of the two parties, Han Jin China should act as an independent party to third parties on behalf of the personal interests, and maintain its legal existence independent for Han Jin Shipping. Han Jin China and Han Jin Shipping further definitive agreed, between the parties and third parties, shareholding for Han Jin China, or subsidiaries, employees, contractors, or any other enterprise that had any commercial relationship with Han Jin China of any nature, should not or was considered to be the representative of Han Jin Shipping, staff or other enterprises having commercial relations of any nature with Han Jin Shipping. Agreement on services related to ship operation provided by Han Jin China, Han Jin China should be based on the agreed status of both parties and prior written consent of Han Jin Shipping, arrange, supervise, and agree to provide related services as appropriate port agent appointed by Han Jin Shipping representative. Related ship operation services include ship arrival, berthing, departure, tugboat, ship maintenance, handling of containers and cargo related services. In terms of accounting procedures, Han Jin China should be based on the prior decision of Han Jin Shipping, expenditure on all and any reasonable amount due to the performance of Han Jin Shipping business from the bank account established for the Han Jin Shipping charges, if the account was underfunded, Han Jin China should pay its own funds and provide necessary documents for reimbursement to Han Jin Shipping; if Han Jin China failed to take reasonable action on the freight charges not charged for the extended period, Han Jin Shipping had the right to deduct such money from the remittance payable to Han Jin China. Agreement on the duration of the agreement, the agency agreement should start from January 1, 2015, unless termination was submitted in accordance with the terms of the agreement, valid until December 31, 2016. The letter of authorization submitted by Han Jin China was clear, whereas Han Jin China as Han Jin Shipping in the Chinese area, it hereby authorized Han Jin China to carry out the following matters in China on behalf of Han Jin Shipping: 1. on behalf of Han Jin Shipping and shipping services related companies to conclude the relevant contracts; 2. representing Han Jin Shipping settlement port operations and ancillary services and other related expenses, or designate other agency settlement related expenses. On January 1, 2015, Shenzhen Foreign Agency concluded the shipping agency agreement with Han Jin China, which agreed that Han Jin China, as the entrusting party, would appoint Shenzhen Foreign Agency as its shipping agent, provided agency services for ships owned, chartered or operated by Han Jin China berthing Yantian, Chiwan, Shekou, Dashao Bay or Nansha Port; Agency services included shipping agency services (mainly including arranging pilotage and berths, arranging incoming formalities, arranging tugs, handling quarantine and Customs declaration procedures); pay shipping port charges; arrange the supply of fuel, fresh water, food

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and materials, arrange ship maintenance and inspection; collection of ship collision and accident information; assist in arranging crew repatriation and medical treatment; deliver IMGD code list of dangerous goods to the captain, on behalf of Han Jin China to handle claims), cargo agency services (mainly including arranging and coordinating handling workers, terminals and other operational matters; arrangement of announcements and issuing unberthing notifications; on behalf of Han Jin China to prepare and issue the arrival notice, bill of lading and other import goods documents; on behalf of Han Jin China to prepare and issue shipping bill and container list and other export documents), local services in Shenzhen and South Australia (mainly including advance arrival and departure reports; update of advance arrival information; berthing window and pilotage plan monitoring; large draft ship application channel) and other services such as the containers belonged to who, cargo owners and other information; Shenzhen Foreign Agency should to provide voyage bill within 30 days of departure from port; Han Jin China was required to pay the voyage fee within 30 days of receipt of the bill. The attachment to the agreement set out the rates for agency services such as basic agency fee, container customs declaration fee. The term of the contract stipulated in the aforesaid ship agency agreement was from January 1 to December 31, 2015. On January 9, 2015, Han Jin China on its internal set up the department (offices), the branches of the company issued a strict external signing of business related contract requirements notice. The notice was based on the agency agreement concluded by Han Jin China and Han Jin Shipping and the authorization issued by Han Jin Shipping to Han Jin China, Han Jin China was a Korean Shipping in China area. For this reason, when the relevant departments (offices) or branches concludes the relevant business contracts in the name of Han Jin China or branches, the fact that Han Jin China was the agent of the Korean Shipping China area should be disclosed or communicated to the third person who was related to the contract. When Han Jin China’s internal training, it also trained the Articles 36 of the General Principles of Civil Law of the People’s Republic of China, Articles 402 and Article 403 of the Contract Law, and other legal system involving agency relations. In 2016, Shenzhen Zhongli and Han Jin China concluded a tally contract for matters relating to tally in Guangdong. It was agreed that Han Jin China would entrust Shenzhen Zhongli to handle cargo handling business in all container loading and unloading ships of all routes at ports in Shenzhen western (including shekou chiwan shovel); after loading and unloading at the port, Shenzhen Zhongli should handle the handover and visa formalities with the shipping party, and timely supply to Han Jin China tally certificate, and submit the goods tally report to the customs for record; Shenzhen Zhongli agreed to give special discount to Han Jin China tally fee; from January 1, 2016 to December 31, 2017 container tally fee was collected according to lump sum as 11.5 yuan/TEU; free of car fare, documentary fee, night shift and holiday surcharge; Han Jin China should pay the tally fee to Shenzhen Zhongli within 45 days after the end of the tally; if Han Jin China had overdue payment, the part of late payment fee of 1‰ per day should be paid to Shenzhen Zhongli; the tally contract should come into effect on January 1, 2016 and expire on December 31, 2017 for a period of two years.

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After Shenzhen Zhongli concluded the tally contract with Han Jin China, compliance provided relevant tally service for Han Jin China. August 9, 2016, Han Jin China informed Shenzhen Zhongli by email, bill was approved, please Shenzhen Zhongli to issue invoices at 179,607 yuan; on August 30, Han Jin China informed Shenzhen Zhongli by email, bill was approved, please Shenzhen Zhongli to issue invoices at 140,748.50 yuan; on September 14, Han Jin China informed Shenzhen Zhongli by email, please Shenzhen Zhongli to issue the invoice for August tally fee, the amount was 100,326 yuan. The aforementioned 3 charges of handling goods confirmed by Shenzhen Zhongli amount to 420,681.50 yuan. Han Jin China and Han Jin Shenzhen failed to provide evidence that the mentioned earlier payments had been made to Shenzhen Zhongli. After the expiry of the ship agency agreement concluded between Shenzhen Foreign Agency and Han Jin China in 2015, a number of consultations between the two parties, but no written ship agency agreement was concluded. Both parties were still in accordance with the rights and obligations stipulated in the ship agency agreement of 2015 and the relevant rates, Han Jin China usually paid the shipping agency fee to Shenzhen Foreign Agency about a month after the reconciliation. On September 22, 2016, Shenzhen Foreign Agency sent an email to Han Jin China, claiming that after deducting the difference between the old and the new rates, as of September 22, 2016, Han Jin China Company still owed 7,225,819.10 yuan to Shenzhen Foreign Agency. The email came with the ship commissioned by Han Jin China to provide shipping agency services to Shenzhen Foreign Agency and voyage names, settlement amount, bill number, bill date, bill delivery date. On September 23, Han Jin China replied by email, confirming the aforementioned unpaid list and rate change deduction amount, please issue the deductible and September invoice as soon as possible on behalf of Shenzhen Foreign Agency. On October 23, 2016, Han Jin China informed Shenzhen Foreign Agency by email that it had confirmed receipt of a bill 523,380.37 yuan. On October 24, 2016, Shenzhen Foreign Agency sent an email to Han Jin China, which was also copied to Han Jin Shenzhen. In the email, Shenzhen Foreign Agency recognized that it had received the ship agency fee of 4.5 million yuan from Han Jin China on October 24, 2016. As of the same day, Han Jin China still owed the principal amount of accounts receivable of Shenzhen Foreign Agency to 3,249,199.47 yuan. Shenzhen Foreign Agency transferred 3,249,199.47 yuan creditor’s rights to Shenzhen Zhongli. The attachment of this email was the notice of assignment of the creditor’s rights issued by Shenzhen Foreign Agency. The receiver listed in the notice was Han Jin China, Han Jin Shenzhen and Han Jin Shipping, and other stakeholders, the contents of which were as of October 24, 2016, Han Jin China and Han Jin Shenzhen were still in arrears on the principal amount of 3,249,199.47 yuan owed by Shenzhen Foreign Agency (7,225,819.10 yuan in Yantian Port, 523,380.37 yuan in Nansha Port—paid 4,500,000 yuan = 3,249,199.47 yuan). Now Shenzhen Foreign Agency transferred all the creditor’s rights to Shenzhen Zhongli (Unified Social Credit Code: 440301105616361). The obligor was requested to perform its payment obligations directly to Shenzhen Zhongli, which was the transferee of the creditor’s rights; Shenzhen Zhongli should

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claim the aforementioned creditor’s rights from the relevant responsible parties according to law. Shenzhen Foreign Agency should no longer enjoy the above creditor’s rights and the right of recourse. On October 27, 2016, Shenzhen Zhongli took Han Jin China and Han Jin Shenzhen as the respondent before filing the lawsuit, apply to our court for pre-litigation property preservation, applied for freezing the bank deposit of the Defendant and Han Jin Shenzhen 4 million yuan. The court accepted the case, case file number was (2016) Yue 72 Cai Bao No.107, permission for Shenzhen Zhongli to apply for property preservation, and two RMB bank deposit accounts of Han Jin Shenzhen were frozen, Shenzhen Zhongli paid 5,000 yuan preservation application fee. As the balance of two bank accounts of Han Jin Shenzhen provided by Shenzhen Zhongli was less than 4 million yuan, the court froze the above two bank accounts upon application by Shenzhen Zhongli. On November 1, 2016, YUN YOUNG KUK, representative of Han Jin Shenzhen, sent an email to Shenzhen Zhongli, stating in particular that the email was sent on behalf of Han Jin Shipping. The mail said that Shenzhen Zhongli froze Han Jin Shenzhen two bank accounts 4 million yuan deposit. Shenzhen Zhongli should know, amount owed of outstanding Shenzhen Zhongli was about 400,000 yuan, the creditor’s rights of Shenzhen Foreign Agency transferred by Shenzhen Zhongli was 3.2 million. Therefore, it should understand the Shenzhen Zhongli freezing 4 million yuan behavior. However, the company at that date was received the court Civil Ruling. Because a ship would dock in Yantian Port container loading and unloading operation, worried that Shenzhen Zhongli would apply for arrest of the ship, Since Shenzhen Zhongli froze more than 4 million yuan in bank deposits, YUN YOUNG KUK asked Shenzhen Zhongli to recognize that it would not apply for arrest of the ship in China. On November 2, 2016, YUN YOUNG KUK again sent an email to Shenzhen Zhongli, saying he received the Civil Ruling sent by court. After learning that Shenzhen Zhongli froze the accounts of Han Jin Shenzhen, the company sent an e-mail on November 1 for information, but it did not get a reply. Meanwhile, the payment of Han Jin Shenzhen and Shenzhen Zhongli was about 4 million yuan, but each account frozen by Shenzhen Zhongli had 4 million yuan. So he requested Shenzhen Zhongli to relieve one of the account’s seal up. On the same day, after inquiry by the court, Han Jin Shenzhen’s balance met 4 million yuan of an account to continue to freeze, while another bank account should be lifted frozen. The court holds that Shenzhen Zhongli is the tally operator, Han Jin China is the contract relative party, and Han Jin Shenzhen is the actual operator who should bear joint and several liability, so this case is a tally contract dispute. Meanwhile, Shenzhen Zhongli brought a lawsuit against Han Jin China and Han Jin Shenzhen as the transferee of the creditor’s rights under the ship agency agreement on behalf of Shenzhen Foreign Agency, therefore, this case is also a ship agency contract dispute. On the basis of the arguments of both parties and in conjunction with the investigation of the trial, the court summarizes and illustrates the issues in this case as follows: firstly, legal relationship between Shenzhen Zhongli and Han Jin China

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under the goods tally contract; secondly, legal liability of Han Jin China and Han Jin Shenzhen under the tally contract; thirdly, legal relationship between Shenzhen Foreign Agency and Han Jin China under the ship agency agreement; fourthly, whether the transfer of creditor’s rights advocated by Shenzhen Zhongli is established; fifthly, if the transfer of creditor’s rights is established, the legal liability of Han Jin China and Han Jin Shenzhen after the transfer of creditor’s rights; sixthly, whether the property preservation application fee of Shenzhen Zhongli before litigation is established. Firstly, legal relationship between Shenzhen Zhongli and Han Jin China under tally contract. Although the scope of business registered by Han Jin China indicated that it could provide services for vessels owned or operated by Han Jin Shipping for the conclusion of service contracts, but the business scope is not the authorized letter of attorney, the contents recorded are not necessarily consistent with the scope of the authorization given by Han Jin Shipping to Han Jin China; in this case, there is also no evidence that Han Jin China submitted to Shenzhen Zhongli the agency agreement and the letter of authorization that proved the agency relationship between it and Han Jin Shipping when they entered into the contract of handling goods involved with Shenzhen Zhongli, therefore, the registered business scope of Han Jin China, the agency agreement between Han Jin China and Han Jin Shipping and the authorization issued by Han Jin Shipping are not effective against Shenzhen Zhongli. When Han Jin China failed to submit other evidence to prove that it entered into a contract for tally with Shenzhen Zhongli, Shenzhen Zhongli was aware of the agency relationship between Han Jin China and Han Jin Shipping. This case does not have a factual basis for the application of Article 402 of the Contract Law. Although Han Jin China disclosed Han Jin Shipping to Shenzhen Zhongli in the lawsuit, however, according to the Article 403 Paragraph 2 of the Contract Law, if the trustee fails to perform its obligations to a third party because of the reason of the trustor, the trustee shall disclose the trustor to the third party, the third party may therefore choose the trustee or the principal as a relative party to claim its rights, but that the third party may not change the selected counterpart, Shenzhen Zhongli has the right to choose Han Jin China as the contract relative party to the tally contract. Therefore, the parties to the tally contract in this case should be regarded as Shenzhen Zhongli and Han Jin China, not Shenzhen Zhongli and Han Jin Shipping. The Defense of Han Jin China that the parties to the contract mentioned above were Shenzhen Zhongli and Han Jin Shipping has no factual and legal basis, so the court does not support it. Secondly, legal liability of Han Jin China under tally contract. The tally contract concluded between Han Jin China and Shenzhen Zhongli does not violate the mandatory provisions of laws and administrative regulations, effective establishment according to law, both parties shall exercise their rights and perform their obligations in accordance with the agreement or law. According to the facts, Shenzhen Zhongli fulfilled the relevant tally obligation according to the contract and has the right to request Han Jin China to pay the tally fee according to law. According to the confirmation of Han Jin China from August 9 to September 14, 2016, Han Jin China owed Shenzhen Zhongli a total tally fee of 420,681.50 yuan,

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and Han Jin China should pay Shenzhen Zhongli the said amount. According to the tally contract, if Han Jin China delayed in payment of the aforementioned tally fee, it should pay the overdue fee of 1‰ per day to Shenzhen Zhongli. The overdue fee is a calculation method for the amount of damages voluntarily agreed by both parties. According to Article 114 Paragraph 1 of the Contract Law, the parties may agree that a party shall pay a certain amount of liquidated damages to the other party in the event of a breach of contract, or may agree on the method of calculating the amount of compensation for losses arising from the breach of contract, when Han Jin China delayed the payment of 420,681.50 yuan of the preceding bill of goods to Shenzhen Zhongli, it has the right to request Han Jin China to pay the late payment of overdue payment in accordance with the agreement between the two parties. Shenzhen Zhongli completed the tallying activity of 420,681.50 yuan of tallying fee up to the end of August, 2016. According to the tally contract, the latest date for Han Jin China to pay the tally fee to Shenzhen Zhongli is 45 days after the end of the tally. Therefore, Shenzhen Zhongli has the right to request Han Jin China to pay according to the standard of 1‰ per day in arrears of 420,681.50 yuan daily tally fee from October 15, 2016, which complies with both parties’ agreement and legal provisions and should be supported. About Han Jin Shenzhen’s legal liability under tally contract. As a branch established by Han Jin China, Han Jin Shenzhen is not a party to the contract of tally, though it has business contacts with Shenzhen Zhongli on behalf of Han Jin China. Only according to the instructions of Han Jin China to engage in related business. The claim of Shenzhen Zhongli that Han Jin Shenzhen and Han Jin China should jointly and severally pay the tally fee involved in the case has no factual or legal basis and should not be supported. Thirdly, legal relationship between Shenzhen Foreign Agency and Han Jin China. Shenzhen Zhongli, acting as the transferee of the creditor’s rights of Shenzhen Foreign Agency, claimed that Han Jin China should pay to it the shipping agency fees due to Shenzhen Foreign Agency under the ship agency agreement involved, and Han Jin China argued that it was only an agent of Han Jin Shipping and does not have to pay. Before confirming whether the transfer of creditor’s rights is established or not and the legal liability of Han Jin China, it is necessary to examine whether Han Jin China is a suitable party to the contract under the ship agency agreement involved. With regard to the legal relationship between Shenzhen Zhongli and Han Jin China under the contract of tally, The court has decided that Han Jin China is the agent of Han Jin Shipping according to law. The defense of Article 402 of the Contract Law should be applied in this case without facts or legal basis, The defense of Han Jin China is not supported. Although the Shenzhen Foreign Agency and Han Jin China did not conclude a written ship agency agreement in 2016, the two parties did business with each other in the shipping agency. The rights and obligations, such as rate calculation, are still implemented in accordance with the relevant provisions of the written ship agency agreement signed by both parties in 2015, with the establishment of a de facto ship agency contract between the parties. In fact, though the contract of ship agency is different from the main body and the rights and obligations of Shenzhen Zhongli and Han Jin

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China, the two contracts have the same quality at the level of legal relationship. Accordingly, the parties to the contract under the ship's agency agreement do not need to elaborate otherwise. Briefly, the parties to the contract under the ship agency agreement are Han Jin China and Shenzhen Foreign Agency. Fourthly, whether the transfer of creditor’s rights advocated by Shenzhen Zhongli is established. The agreement on the agency of the ship involved was established between Shenzhen Foreign Agency and Han Jin China. The agreement does not violate the mandatory provisions of the laws and administrative regulations and is legal and effective. The parties to the contract shall exercise their rights and perform their obligations in accordance with the agreement and the law. On September 23, 2016, Han Jin China recognized by email that Shenzhen Foreign Agency’s debt under the ship agency agreement involved amounted to 7,225,819.10 yuan as of September 22, 2016. Therefore, Shenzhen Foreign Agency is the appropriate creditor under the ship agency agreement involved, and can freely dispose of its rights within the scope of the law. According to Shenzhen Foreign Agency sent the notice of assignment of creditor’s rights to Han Jin China on October 24, 2016 and copied to Han Jin Shenzhen, Shenzhen Foreign Agency transferred its claim to Han Jin China under the ship agency agreement to Shenzhen Zhongli, and informed Han Jin China by e-mail. In accordance with Article 80 Paragraph 1 of the Contract Law, the obligor shall be notified of the assignment of rights by creditors. Without notice, the assignment has no effect on the obligor, the aforesaid transfer of creditor’s rights on behalf of Shenzhen Foreign Agency is legally established. Fifthly, legal liability of Han Jin China after the transfer of creditor’s rights. Shenzhen Foreign Agency transferred the principal of the debt of 3,249,199.47 yuan to Shenzhen Zhongli, Shenzhen Zhongli obtained the right to claim against Han Jin China in accordance with law. According to Article 82 of the Contract Law, upon receipt of the notice of assignment of the obligee’s right, the obligor may, in respect of the assignee, avail itself of any defense it has against the assignor. Han Jin China’s defense against Shenzhen Foreign Agency can also claim against Shenzhen Zhongli. Han Jin China argued that according to the agreement on agency of the ship involved, the payment obligation of Han Jin China was subject to conditions, namely only within 30 days of receipt of the bill issued by Shenzhen Foreign Agency. However, according to the facts found out, the agency agreement for the ship involved only stipulated that Han Jin China would pay the voyage fee within 30 days of receipt of the bill. The clause only provides for the latest time limit for Han Jin China to pay the shipping agency fees to Shenzhen Foreign Agency, and does not stipulate that Han Jin China should have the right not to pay the bill without receiving the bill. Therefore, the clause does not belong to attached condition or conditional time period. There is no factual and legal basis for Han Jin China’s defense against the obligation to fulfill its obligation to pay. The court does not support it. Han Jin China shall pay the principal of the aforesaid creditor’s rights 3,249,199.47 yuan to Shenzhen Zhongli. According to Article 81 of the Contract Law, where a creditor assigns a right, the transferee acquires a subordinate right relating to the creditor’s rights, except where the subordinate right is exclusively

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owned by the creditor itself, if Shenzhen Zhongli is granted a subordinate right subordinate to the principal amount of the said creditor’s rights from Shenzhen Foreign Agency and the subordinate right is not exclusively owned by Shenzhen Foreign Agency, Shenzhen Zhongli shall also enjoy the right of such subordination. Shenzhen Zhongli advocated that Han Jin China should pay interest on the said principal amount to Shenzhen Zhongli on October 1, 2016 within 30 days of the last shipping agency business arising out of the said last principal amount of debt. However, there is no agreement in the shipping agency agreement that Han Jin China delayed payment of shipping agency fees, the company should pay interest to Shenzhen Foreign Agency at the benchmark interest rate of the People’s Bank of China for similar renminbi loans within 30 days of the final date of the shipping agency business. Therefore, Shenzhen Zhongli claimed that Han Jin China should pay it 3,249,199.47 yuan interest on the assigned creditor’s rights according to the above-mentioned loan interest rate, there is no factual or legal basis, and it is not supported. However, according to Article 112 of the Contract Law, if the party does not fulfil the contractual obligation or fulfil the contractual obligation, it does not conform to the agreement, and if the other party has other losses after the execution of the obligation or the remedial measures, the party shall compensate for the loss. After Shenzhen Zhongli claimed against Han Jin China, if Han Jin China refused to perform its obligations, then its behavior constitutes a breach of contract and shall compensate Shenzhen Zhongli for the loss of fruits suffered by Shenzhen Zhongli. Since Han Jin China refused to pay the aforesaid 3,249,199.47 yuan, it should compensate Shenzhen Zhongli for the loss of the fruits of the said sum. Considering the time limit for the performance of Han Jin China the fruits can be calculated from the date of March 15, 2017, on the date of the open trial of this case, to the date of the actual payment of the preceding sum of money by Han Jin China in March 15, 2017, in accordance with the same period of similar RMB deposit rate of the People’s Bank of China. The legal liability of Han Jin Shenzhen after the transfer of the creditor’s rights Han Jin Shenzhen is not a party to the ship agency agreement involved. Even if the ship agency business is in contact with Shenzhen Foreign Agency, it is based on the fulfillment of the instructions of Han Jin China as the branch of Han Jin China. No matter whether or not the claims under the ship agency agreement are transferred to Shenzhen Zhongli, Han Jin Shenzhen shall not be liable to Shenzhen Foreign Agency or Shenzhen Zhongli. Sixthly, whether the claims of Shenzhen Zhongli for preservation application fee before litigation are established. According to the regulations of the State Council Article 38 Paragraph 3 of the Approach to Pay the Cost of Litigation, the application fee stipulated in article tenth (two) of this method shall be born by the applicant. If the applicant files an action, the application fee may be included in the litigation claim, Shenzhen Zhongli has the right to include the application fee of 5,000 yuan for property preservation before litigation in this case. The property preservation application fee is the necessary and reasonable expenses incurred by

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Shenzhen Zhongli in order to safeguard its legitimate rights and interests when Han Jin China defaulted, according to Article 107 of the Contract Law, one party to which the party does not fulfil the obligation of the contract or fulfil the contractual obligation is not in conformity with the agreement, it shall bear the provisions of the continuing performance, remedial measures or damages. The aforesaid 5,000 yuan before litigation property preservation application fee shall be born by Han Jin China. Based on the mentioned earlier on the legal liability of Han Jin Shenzhen, Han Jin Shenzhen shall not bear the obligation to pay the said property preservation application fee to Shenzhen Zhongli. Pulling the threads together, in accordance with the provisions of Article 80 Paragraph 1, Article 107, Article 112, Article 403 Paragraph 2 of the Contract Law of the People’s Republic of China and Article 38 Paragraph 3 of the Approach to Pay the Cost of Litigation, the judgment is as follows: 1. The Defendant, Han Jin Shipping (China) Co., Ltd., shall pay a tally fee of 420,681.50 yuan and liquidated damages for late payment of the foregoing amount to the Plaintiff, Shenzhen Ocean Shipping Tally Co., Ltd. (from October 15, 2016 to the date of actual payment by the Defendant, Han Jin Shipping (China) Co., Ltd., the amount of liquidated damages shall be calculated on a daily basis according to the standard of 1‰ per day); 2. The Defendant, Han Jin Shipping (China) Co., Ltd., shall pay the Plaintiff, Shenzhen Ocean Shipping Tally Co., Ltd., 3,249,199.47 yuan and the interest (from March 15, 2017 to the date of actual payment by the Defendant, Han Jin Shipping (China) Co., Ltd., based on the benchmark interest rate of the People’s Bank of China for similar RMB deposits for the same period); 3. The Defendant, Han Jin Shipping (China) Co., Ltd., shall pay the Plaintiff, Shenzhen Ocean Shipping Tally Co., Ltd., pre-litigation property preservation application fee of 5,000 yuan; 4. Reject other claims of the Plaintiff Shenzhen Ocean Shipping Tally Co., Ltd. The above payment obligation shall be fulfilled within 10 days from the effective date of this judgment. If the obligation to pay money is not fulfilled during the period specified in this judgment, the interest on the debt for the period of delay in performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 36,339.49 yuan, shall be born by the Defendant, Han Jin Shipping (China) Co., Ltd. Because the Plaintiff has already paid court acceptance fee in advance, the Defendant, Han Jin Shipping (China) Co., Ltd. shall directly pay court acceptance fee to the Plaintiff, and the court shall not return the advancement to the Plaintiff.

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If the judgment is not accepted, the parties may within 15 days upon the service of this Judgment, submit a statement of appeal to the court, together with duplicates in accordance with the number of the opposite parties, so as to lodge an appeal to the Guangdong High People’s Court. Presiding Judge: XU Chunlong Judge: XIE Huicheng Judge: ZHAI Xin June 29, 2017 Clerk: HUANG Fang

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Guangdong High People’s Court Civil Judgment Shenzhen Ocean Shipping Tally Co., Ltd. v. Han Jin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No.2330 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1211. Cause of Action 224. Dispute over tally contract. Headnote Affirming lower court decision holding Chinese subsidiary of Korean shipping company liable to plaintiff tally operator for unpaid tally fees and also for unpaid agency fees owned to ship’s agent that had assigned its rights to plaintiff; Chinese subsidiary was party to the contracts not merely as agent for Korean parent; subsidiary’s local branch was not liable as it did not have independent legal personality. Summary Plaintiff made a tally contract with the first Defendant (Han Jin China) to provide tallying services in relation to ships operated by the first Defendant’s Korean parent company Han Jin Shipping. Much of the business contact with Plaintiff was made by the second Defendant (Han Jin Shenzhen). Similarly, non-party, Shenzhen Foreign Agency made a ship’s agency contract with the First Defendant (Han Jin China) in relation to ships operated by the first Defendant’s Korean parent company Han Jin Shipping, and much of the business contact with Shenzhen Foreign Agency was made by second Defendant (Han Jin Shenzhen). Shenzhen Foreign Agency assigned to Plaintiff its creditor’s rights for amounts owing by the first Defendant. Plaintiff sued the first and second Defendants to recover the amounts owed to it under its own tally contract, and the amounts owing to Shenzhen Foreign Agency under the ship agency contract. The Defendants argued that they had merely acted as agents for the parent company Han Jin Shipping, which was the proper party to the tally contract and the ship agency contract. The first instance Court held: (1) the first Defendant had not acted merely as agent for Hanjin Shipping and was party to both the tally contract and the ship agency contract; (2) the second Defendant was merely a branch of the first Defendant, without independent legal personality, so it was not jointly liable with the first Defendant; (3) the transfer of creditor’s rights from Shenzhen Foreign Agency to Plaintiff was valid and effective; and (4) the first Defendant was liable for the outstanding sums under both contracts.

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Plaintiff appealed, arguing that the second Defendant should be made jointly and severally liable; the first Defendant cross-appealed, arguing that the first instance judgment should be set aside. The appeal Court dismissed both the appeal and the cross-appeal and affirmed the first instance judgment. Although the second Defendant had made most of the business contacts and paid the bills, it was merely a branch and the contracts were with the first Defendant, not with either the second Defendant or the Korean parent company Han Jin Shipping.

Judgment The Appellant (the Plaintiff of first instance): Shenzhen Ocean Shipping Tally Co., Ltd. Domicile: Nanshan District, Shenzhen, Guangdong. Legal representative: HUANG Shusong, chairman of the company. Agent ad litem: WANG Xiaochun, lawyer of Guangdong Langzheng Law Firm. Agent ad litem: CHEN Yingxuan, trainee lawyer of Guangdong Langzheng law Firm. The Appellant (the Defendant of first instance): Han Jin Shipping (China) Co., Ltd. Domicile: Pudong New District, Shanghai. Legal representative: OH MOO KYOON, chairman of the company. Agent ad litem: YANG Guodong, lawyer of Beijing Zhonglun Law Firm. The Respondent (the Defendant of first instance): Han Jin Shipping (China) Co., Ltd. Shenzhen Branch Domicile: Luohu District, Shenzhen, Guangdong. Person in charge: YUN YOUNG KUK, manager of the branch. Agent ad litem: YANG Guodong, lawyer of Beijing Zhonglun Law Firm. With respect to the case arising from disputes over tally contract and ship agency contract between the Appellant, Shenzhen Ocean Shipping Tally Co., Ltd. (hereinafter referred to as Shenzhen Zhongli), the Appellant, Han Jin Shipping (China) Co., Ltd. (hereinafter referred to as Han Jin China), the Respondent, Han Jin Shipping (China) Co., Ltd. Shenzhen Branch (hereinafter referred to as Han Jin Shenzhen), Shenzhen Zhongli and Han Jin China disagreed with the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.1527 Civil Judgment and appealed to the court. After entertaining the case it on September 1, 2017, the court formed a collegiate panel according to law to try the case. Due to the application of the parties, the court tried the case in writting. Now the case has been concluded.

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Shenzhen Zhongli appealed that: affirm the first, second and third items of the judgment of first instance, add to judge that Han Jin Shenzhen to be jointly and severally liable for the above responsibilities of Han Jin China, and the litigation fee should be jointly born by Han Jin China and Han Jin Shenzhen. Facts and reasons: Han Jin Shenzhen, as the branch and actual operator of Han Jin China, should jointly undertake the payment obligation to Shenzhen Zhongli with Han Jin China. According to the facts found in first-instance judgment, though the contract party involved in the business involved was Han Jin China, Han Jin Shenzhen, as a non-independent legal person branch of the company, was part of the company and should also be regarded as a contract party. Moreover, Han Jin Shenzhen also actually operated and implemented the business involved. According to the past practice, Han Jin Shenzhen actually paid for the related business. Therefore, the phenomenon that Han Jin China was responsible for concluding the contract and Han Jin Shenzhen was responsible for implementing the contract was similar to “the different departments of the same company are responsible for signing/ implementing the contract”, both companies should be considered as parties to the contract and in the same legal position, and should not be treated differently. Whereas Han Jin Shenzhen had relatively independent property rights, and all of its property belonged to the parent company, Han Jin China. Therefore, Han Jin Shenzhen should jointly undertake the payment obligations in the contract with Han Jin China. Han Jin China and Han Jin Shenzhen did not submit argument opinions. Han Jin appealed that: revoke the judgment of first instance, change to judge that the claims of Shenzhen Zhongli should be rejected, and the litigation fees of first and second instances should be born by Shenzhen Zhongli. The facts confirmed by the court of first instance and the application of law were wrong, Han Jin China was not the eligible subject of the case. The court of first instance judged that Han Jin China should pay the tally fee and shipping agency fee, which had no factual or legal basis. Firstly, Agency Agreement concluded by Han Jin China and its shareholder Han Jin Shipping Co., Ltd. (hereinafter referred to as Han Jin Shipping) and the authorization issued by Han Jin Shipping could prove that Han Jin China was an agent of Han Jin Shipping. According to Han Jin China’s internal requirements for concluding external contracts and the fact that Ship Agency Agreement of the contract involved had actually been concluded, Han Jin China had orally informed the agency relationship between it and Han Jin Shipping when the contract was concluded. China Shenzhen Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Shenzhen Foreign Agency), the contracting party of the management company and Ship Agency Agreement, should be known. According to the business scope of Han Jin China’s business license and business registration information, Han Jin China was established and survives as an agent of Han Jin Shipping, and the subject of rights involved in the ship under the contract was Han Jin Shipping, regardless of whether based on common sense or general industry experience, both Shenzhen Zhongli and Shenzhen Foreign Agency should clearly know the agency relationship between Han Jin China and Han Jin Shipping. The court of first instance held that Shenzhen Zhongli and Shenzhen Foreign Agency did not know the agency

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relationship between Han Jin China and Han Jin Shipping, which was wrong confirmation of fact. Secondly, according to the Contract Law of the People’s Republic of China Article 402, Han Jin China’s contract with Shenzhen Zhongli and Shenzhen Foreign Agency in its own name should directly bind Shenzhen Zhongli and Shenzhen Foreign Agency and Han Jin Shipping. Han Jin China was not obliged to pay for tally fees and shipping agency fees. The court of first instance judged that Han Jin should undertake and pay the tally fee and shipping agency fee involved to Shenzhen Zhongli, which was wrong application of law. Thirdly, regarding the claim of Shenzhen Zhongli to transfer its shipping agency fee to Shenzhen Foreign Agency, Section D and E of Article IV of Ship Agency Agreement involved clearly stipulated that, Shenzhen Foreign Agency should provide voyage bills within 30 days after the ship left the port, Han Jin China should pay the voyage freight within 30 days after receiving the bill, the agreement was conditional or term clause. In this case, Shenzhen Zhongli did not provide evidence to prove that Han Jin China received the voyage bill provided by Shenzhen Foreign Agency, so Han Jin China did not need to pay shipping agency fee to Shenzhen Foreign Agency. The first-instance judgment disregarded Ship Agency Agreement of both parties and directly determined that Han Jin China should pay the ship agency fee involved, which was wrong confirmation of fact. Shenzhen Zhongli did not submitted argument opinions. Han Jin Shenzhen did not submit opinions in written. Shenzhen Zhongli claimed to the court that: 1. Han Jin China and Han Jin Shenzhen should jointly pay RMB420,681.50 yuan in overdue tally fee (hereinafter referred to as RMB) and the liquidated damages for overdue payment of the said amount (from October 15, 2016 to the date of actual payment by Han Jin China and Han Jin Shenzhen, the amount of arrears should be calculated daily according to the standard of 1‰ per day); 2. Han Jin China and Han Jin Shenzhen should jointly pay Shenzhen Zhongli owed RMB3,249,199.47 yuan and the interest (from October 1, 2016 to the date of actual payment by Han Jin China and Han Jin Shenzhen, interest should be calculated at the People’s Bank of China benchmark interest rate on similar RMB loans for the same period); 3. Han Jin China and Han Jin Shenzhen should jointly bear the application fee for the preservation before action of 5,000 yuan and bear the court acceptance fee. Facts and reasons: Han Jin China was a wholly owned company established by South Korea in China, which specialized in the provision of port services for the ships registered in the Chinese port by South Korea; Han Jin Shenzhen was a branch of Han Jin China in Guangdong, which was responsible for carrying out the business of Han Jin China in South China. Han Jin China, Han Jin Shenzhen, through entrusting domestic shipping agents and tally companies and other related companies, to finished the port service works of operation ship of Han Jin Shipping. In early 2016, Han Jin China and Shenzhen Zhongli concluded a contract for entrusted tally contract (hereinafter referred to as the tally contract), it was agreed that Han Jin China would entrust Shenzhen Zhongli to handle cargo handling business in all container loading and unloading ships of all routes at ports in western Shenzhen (including shekou chiwan shovel). The two parties agreed in accordance with lump sum as 11.5 yuan/TEU, payment

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should be made within 45 days after the end of the tally. The actual tally business was all through the Han Jin Shenzhen and Shenzhen Zhongli’s contact operation. As of the end of August 2016, Han Jin China and Han Jin Shenzhen were in arrears with Shenzhen Zhongli’s tally charge of 420,681.50 yuan. According to the contract of the tally, Han Jin China delayed paying the tally fee that should be paid to Shenzhen Zhongli surcharge for overdue tax payment of overdue payment portion 1‰ per day. On October 24, 2016, Shenzhen Zhongli and China Shenzhen Ocean Shipping Agency Co., Ltd. (hereinafter referred to as Shenzhen Foreign Agency) concluded a creditor’s rights transfer agreement, and accepted transfer the creditor’s rights of Han Jin China, Han Jin Shenzhen with the principal amount of 3,249,199.47 yuan. Shenzhen Foreign Agency informed Han Jin China and Han Jin Shenzhen on the transfer of the above claims. Shenzhen Zhongli held that the amount of the tally fee and the amount of the assigned creditor’s rights owed by Han Jin China to Shenzhen Zhongli was clear, and was recognized by both parties, Han Jin China should fulfill the obligations to pay in accordance with the contract, but Han Jin China refused to perform, which constituted breach of contract, it should bear the obligation to pay the corresponding amount to Shenzhen Zhongli. The debts involved were all arising from the specific entrustment of Han Jin Shenzhen, and Han Jin Shenzhen, as a branch of Han Jin China, did not have independent legal person status, did not have independent property rights, the property should be owned by Han Jin China, therefore, Han Jin Shenzhen should be jointly and severally liable to Shenzhen Zhongli for property under its control. The court of first instance confirmed the facts as follows: Shenzhen Zhongli was established on June 5, 1981. The business scope included international freight forwarding business; shipping goods on international and domestic routes and tally of container; container loading and unpacking for tally; monitoring loading and unloading; issuance of tally documents and tally reports, etc. Shenzhen Foreign Agency was established on December 18, 1992, the business scope included agent inspection and reporting business; international freight forwarding by sea; forwarding import and export goods; deal with booking, chartering, storage, agency shipping, customs declaration, international shipping agency, etc. Han Jin China was established on March 15, 1995, the department of Han Jin Shipping in China set up a foreign legal entity wholly-owned company, the scope of business was providing goods for the ship owned or operated by Han Jin Shipping, preparing and issuing bills of lading, to collect and remit freight, and concluding service contracts. On January 1, 2015, Han Jin China, for Han Jin Shipping, to provide all general cargo agent services, Han Jin China and Han Jin Shipping in Shanghai concluded an agency agreement. Agreement on the status of the two parties, Han Jin China should act as an independent party to third parties on behalf of the personal interests, and maintain its legal existence independent for Han Jin Shipping. Han Jin China and Han Jin Shipping further definitive agreed, between the parties and third parties, shareholding for Han Jin China, or subsidiaries, employees, contractors, or any other enterprise that had any commercial relationship with Han Jin China of

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any nature, should not or was considered to be the representative of Han Jin Shipping, staff or other enterprises having commercial relations of any nature with Han Jin Shipping. Agreement on services related to ship operation provided by Han Jin China, Han Jin China should be based on the agreed status of both parties and prior written consent of Han Jin Shipping, arrange, supervise, and agree to provide related services as appropriate port agent appointed by Han Jin Shipping representative. Related ship operation services include ship arrival, berthing, departure, tugboat, ship maintenance, handling of containers and cargo related services. In terms of accounting procedures, Han Jin China should be based on the prior decision of Han Jin Shipping, expenditure on all and any reasonable amount due to the performance of Han Jin Shipping business from the bank account established for the Han Jin Shipping charges, if the account was underfunded, Han Jin China should pay its own funds and provide necessary documents for reimbursement to Han Jin Shipping; if Han Jin China failed to take reasonable action on the freight charges not charged for the extended period, Han Jin Shipping had the right to deduct such money from the remittance payable to Han Jin China. Agreement on the duration of the agreement, the agency agreement should start from January 1, 2015, unless termination was submitted in accordance with the terms of the agreement, valid until December 31, 2016. The letter of authorization submitted by Han Jin China was clear, whereas Han Jin China as Han Jin Shipping in the Chinese area, it hereby authorized Han Jin China to carry out the following matters in China on behalf of Han Jin Shipping: 1. on behalf of Han Jin Shipping and shipping services related companies to conclude the relevant contracts; 2. representing Han Jin Shipping settlement port operations and ancillary services and other related expenses, or designate other agency settlement related expenses. On January 1, 2015, Shenzhen Foreign Agency concluded the shipping agency agreement with Han Jin China, which agreed that Han Jin China, as the entrusting party, would appoint Shenzhen Foreign Agency as its shipping agent, provided agency services for ships owned, chartered or operated by Han Jin China berthing Yantian, Chiwan, Shekou, Dashao Bay or Nansha Port; Agency services included shipping agency services (mainly including arranging pilotage and berths, arranging incoming formalities, arranging tugs, handling quarantine and Customs declaration procedures); pay shipping port charges; arrange the supply of fuel, fresh water, food and materials, arrange ship maintenance and inspection; collection of ship collision and accident information; assist in arranging crew repatriation and medical treatment; deliver IMGD code list of dangerous goods to the captain, on behalf of Han Jin China to handle claims), cargo agency services (mainly including arranging and coordinating handling workers, terminals and other operational matters; arrangement of announcements and issuing unberthing notifications; on behalf of Han Jin China to prepare and issue the arrival notice, bill of lading and other import goods documents; on behalf of Han Jin China to prepare and issue shipping bill and container list and other export documents), local services in Shenzhen and South Australia (mainly including advance arrival and departure reports; update of advance arrival information; berthing window and pilotage plan monitoring; large

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draft ship application channel) and other services such as the containers belonged to who, cargo owners and other information; Shenzhen Foreign Agency should to provide voyage bill within 30 days of departure from port; Han Jin China was required to pay the voyage fee within 30 days of receipt of the bill. The attachment to the agreement set out the rates for agency services such as basic agency fee, container customs declaration fee. The term of the contract stipulated in the aforesaid ship agency agreement was from January 1 to December 31, 2015. On January 9, 2015, Han Jin China on its internal set up the department (offices), the branches of the company issued a strict external signing of business related contract requirements notice. The notice was based on the agency agreement concluded by Han Jin China and Han Jin Shipping and the authorization issued by Han Jin Shipping to Han Jin China, Han Jin China was a Korean Shipping in China area. For this reason, when the relevant departments (offices) or branches concludes the relevant business contracts in the name of Han Jin China or branches, the fact that Han Jin China was the agent of the Korean Shipping China area should be disclosed or communicated to the third person who was related to the contract. When Han Jin China’s internal training, it also trained the Articles 36 of the General Principles of Civil Law of the People’s Republic of China, Articles 402 and Article 403 of the Contract Law, and other legal system involving agency relations. In 2016, Shenzhen Zhongli and Han Jin China concluded a tally contract for matters relating to tally in Guangdong. It was agreed that Han Jin China would entrust Shenzhen Zhongli to handle cargo handling business in all container loading and unloading ships of all routes at ports in Shenzhen western (including shekou chiwan shovel); after loading and unloading at the port, Shenzhen Zhongli should handle the handover and visa formalities with the shipping party, and timely supply to Han Jin China tally certificate, and submit the goods tally report to the customs for record; Shenzhen Zhongli agreed to give special discount to Han Jin China tally fee; from January 1, 2016 to December 31, 2017 container tally fee was collected according to lump sum as 11.5 yuan/TEU; free of car fare, documentary fee, night shift and holiday surcharge; Han Jin China should pay the tally fee to Shenzhen Zhongli within 45 days after the end of the tally; if Han Jin China had overdue payment, the part of late payment fee of 1‰ per day should be paid to Shenzhen Zhongli; the tally contract should come into effect on January 1, 2016 and expire on December 31, 2017 for a period of two years. After Shenzhen Zhongli concluded the tally contract with Han Jin China, compliance provided relevant tally service for Han Jin China. August 9, 2016, Han Jin China informed Shenzhen Zhongli by email, bill was approved, please Shenzhen Zhongli to issue invoices at 179,607 yuan; on August 30, Han Jin China informed Shenzhen Zhongli by email, bill was approved, please Shenzhen Zhongli to issue invoices at 140,748.50 yuan; on September 14, Han Jin China informed Shenzhen Zhongli by email, please Shenzhen Zhongli to issue the invoice for August tally fee, the amount was 100,326 yuan. The aforementioned 3 charges of handling goods confirmed by Shenzhen Zhongli amount to 420,681.50 yuan. Han Jin China and Han Jin Shenzhen failed to provide evidence that the mentioned earlier payments had been made to Shenzhen Zhongli.

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After the expiry of the ship agency agreement concluded between Shenzhen Foreign Agency and Han Jin China in 2015, a number of consultations between the two parties, but no written ship agency agreement was concluded. Both parties were still in accordance with the rights and obligations stipulated in the ship agency agreement of 2015 and the relevant rates, Han Jin China usually paid the shipping agency fee to Shenzhen Foreign Agency about a month after the reconciliation. On September 22, 2016, Shenzhen Foreign Agency sent an email to Han Jin China, claiming that after deducting the difference between the old and the new rates, as of September 22, 2016, Han Jin China Company still owed 7,225,819.10 yuan to Shenzhen Foreign Agency. The email came with the ship commissioned by Han Jin China to provide shipping agency services to Shenzhen Foreign Agency and voyage names, settlement amount, bill number, bill date, bill delivery date. On September 23, Han Jin China replied by email, confirming the aforementioned unpaid list and rate change deduction amount, please issue the deductible and September invoice as soon as possible on behalf of Shenzhen Foreign Agency. On October 23, 2016, Han Jin China informed Shenzhen Foreign Agency by email that it had confirmed receipt of a bill 523,380.37 yuan. On October 24, 2016, Shenzhen Foreign Agency sent an email to Han Jin China, which was also copied to Han Jin Shenzhen. In the email, Shenzhen Foreign Agency recognized that it had received the ship agency fee of 4.5 million yuan from Han Jin China on October 24, 2016. As of the same day, Han Jin China still owed the principal amount of accounts receivable of Shenzhen Foreign Agency to 3,249,199.47 yuan. Shenzhen Foreign Agency transferred 3,249,199.47 yuan creditor’s rights to Shenzhen Zhongli. The attachment of this email was the notice of assignment of the creditor’s rights issued by Shenzhen Foreign Agency. The receiver listed in the notice was Han Jin China, Han Jin Shenzhen and Han Jin Shipping, and other stakeholders, the contents of which were as of October 24, 2016, Han Jin China and Han Jin Shenzhen were still in arrears on the principal amount of 3,249,199.47 yuan owed by Shenzhen Foreign Agency (7,225,819.10 yuan in Yantian Port, 523,380.37 yuan in Nansha Port—paid 4,500,000 yuan = 3,249,199.47 yuan). Now Shenzhen Foreign Agency transferred all the creditor’s rights to Shenzhen Zhongli (Unified Social Credit Code: 440,301,105,616,361). The obligor was requested to perform its payment obligations directly to Shenzhen Zhongli, which was the transferee of the creditor’s rights; Shenzhen Zhongli should claim the aforementioned creditor’s rights from the relevant responsible parties according to law. Shenzhen Foreign Agency should no longer enjoy the above creditor’s rights and the right of recourse. On October 27, 2016, Shenzhen Zhongli took Han Jin China and Han Jin Shenzhen as the respondent before filing the lawsuit, apply to our court for pre-litigation property preservation, applied for freezing the bank deposit of Han Jin China and Han Jin Shenzhen 4 million yuan. The court accepted the case, case file number was (2016) Yue 72 Cai Bao No.107, permission for Shenzhen Zhongli to apply for property preservation, and two RMB bank deposit accounts of Han Jin Shenzhen were frozen, Shenzhen Zhongli paid 5,000 yuan preservation application fee. As the balance of two bank accounts of Han Jin Shenzhen provided by

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Shenzhen Zhongli was less than 4 million yuan, the court froze the above two bank accounts upon application by Shenzhen Zhongli. On November 1, 2016, YUN YOUNG KUK, representative of Han Jin Shenzhen, sent an email to Shenzhen Zhongli, stating in particular that the email was sent on behalf of Han Jin Shipping. The mail said that Shenzhen Zhongli froze Han Jin Shenzhen two bank accounts 4 million yuan deposit. Shenzhen Zhongli should know, amount owed of outstanding Shenzhen Zhongli was about 400,000 yuan, the creditor’s rights of Shenzhen Foreign Agency transferred by Shenzhen Zhongli was 3.2 million. Therefore, it should understand the Shenzhen Zhongli freezing 4 million yuan behavior. However, the company at that date was received the court Civil Ruling. Because a ship would dock in Yantian Port container loading and unloading operation, worried that Shenzhen Zhongli would apply for arrest of the ship, Since Shenzhen Zhongli froze more than 4 million yuan in bank deposits, YUN YOUNG KUK asked Shenzhen Zhongli to recognize that it would not apply for arrest of the ship in China. On November 2, 2016, YUN YOUNG KUK again sent an email to Shenzhen Zhongli, saying he received the Civil Ruling sent by court. After learning that Shenzhen Zhongli froze the accounts of Han Jin Shenzhen, the company sent an e-mail on November 1 for information, but it did not get a reply. Meanwhile, the payment of Han Jin Shenzhen and Shenzhen Zhongli was about 4 million yuan, but each account frozen by Shenzhen Zhongli had 4 million yuan. So he requested Shenzhen Zhongli to relieve one of the account’s seal up. On the same day, after inquiry by the court, Han Jin Shenzhen’s balance met 4 million yuan of an account to continue to freeze, while another bank account should be lifted frozen. The court of first instance held that Shenzhen Zhongli was the tally operator, Han Jin China was the contract relative party, and Han Jin Shenzhen was the actual operator who should bear joint and several liability, so this case was a tally contract dispute. Meanwhile, Shenzhen Zhongli brought a lawsuit against Han Jin China and Han Jin Shenzhen as the transferee of the creditor’s rights under the ship agency agreement on behalf of Shenzhen Foreign Agency, therefore, this case was also a ship agency contract dispute. On the basis of the arguments of both parties and in conjunction with the investigation of the trial, the court of first instance summarized and illustrated the issues in this case as follows: firstly, legal relationship between Shenzhen Zhongli and Han Jin China under the goods tally contract; secondly, legal liability of Han Jin China and Han Jin Shenzhen under the tally contract; thirdly, legal relationship between Shenzhen Foreign Agency and Han Jin China under the ship agency agreement; fourthly, whether the transfer of creditor’s rights advocated by Shenzhen Zhongli was established; fifthly, if the transfer of creditor’s rights was established, the legal liability of Han Jin China and Han Jin Shenzhen after the transfer of creditor’s rights; sixthly, whether the property preservation application fee of Shenzhen Zhongli before litigation was established. Firstly, legal relationship between Shenzhen Zhongli and Han Jin China under tally contract. Although the scope of business registered by Han Jin China indicated that it could provide services for vessels owned or operated by Han Jin Shipping for

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the conclusion of service contracts, but the business scope was not the authorized letter of attorney, the contents recorded were not necessarily consistent with the scope of the authorization given by Han Jin Shipping to Han Jin China; in this case, there was also no evidence that Han Jin China submitted to Shenzhen Zhongli the agency agreement and the letter of authorization that proved the agency relationship between it and Han Jin Shipping when they entered into the contract of handling goods involved with Shenzhen Zhongli, therefore, the registered business scope of Han Jin China, the agency agreement between Han Jin China and Han Jin Shipping and the authorization issued by Han Jin Shipping were not effective against Shenzhen Zhongli. When Han Jin China failed to submit other evidence to prove that it entered into a contract for tally with Shenzhen Zhongli, Shenzhen Zhongli was aware of the agency relationship between Han Jin China and Han Jin Shipping. This case did not have a factual basis for the application of Article 402 of the Contract Law. Although Han Jin China disclosed Han Jin Shipping to Shenzhen Zhongli in the lawsuit, however, according to the Article 403 Paragraph 2 of the Contract Law, if the trustee failed to perform its obligations to a third party because of the reason of the trustor, the trustee shall disclose the trustor to the third party, the third party could therefore choose the trustee or the principal as a relative party to claim its rights, but that the third party could not change the selected counterpart, Shenzhen Zhongli had the right to choose Han Jin China as the contract relative party to the tally contract. Therefore, the parties to the tally contract in this case should be regarded as Shenzhen Zhongli and Han Jin China, not Shenzhen Zhongli and Han Jin Shipping. The Defense of Han Jin China that the parties to the contract mentioned above were Shenzhen Zhongli and Han Jin Shipping had no factual and legal basis, so the court does not support it. Secondly, legal liability of Han Jin China under tally contract. The tally contract concluded between Han Jin China and Shenzhen Zhongli did not violate the mandatory provisions of laws and administrative regulations, effective establishment according to law, both parties should exercise their rights and perform their obligations in accordance with the agreement or law. According to the facts, Shenzhen Zhongli fulfilled the relevant tally obligation according to the contract and had the right to request Han Jin China to pay the tally fee according to law. According to the confirmation of Han Jin China from August 9 to September 14, 2016, Han Jin China owed Shenzhen Zhongli a total tally fee of 420,681.50 yuan, and Han Jin China should pay Shenzhen Zhongli the said amount. According to the tally contract, if Han Jin China delayed in payment of the aforementioned tally fee, it should pay the overdue fee of 1‰ per day to Shenzhen Zhongli. The overdue fee was a calculation method for the amount of damages voluntarily agreed by both parties. According to Article 114 Paragraph 1 of the Contract Law, the parties could agree that a party should pay a certain amount of liquidated damages to the other party in the event of a breach of contract, or could agree on the method of calculating the amount of compensation for losses arising from the breach of contract, when Han Jin China delayed the payment of 420,681.50 yuan of the preceding bill of goods to Shenzhen Zhongli, it had the right to request Han Jin China to pay the late payment of overdue payment in accordance with the agreement between the

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two parties. Shenzhen Zhongli completed the tallying activity of 420,681.50 yuan of tallying fee up to the end of August, 2016. According to the tally contract, the latest date for Han Jin China to pay the tally fee to Shenzhen Zhongli was 45 days after the end of the tally. Therefore, Shenzhen Zhongli had the right to request Han Jin China to pay according to the standard of 1‰ per day in arrears of 420,681.50 yuan daily tally fee from October 15, 2016, which complied with both parties’ agreement and legal provisions and should be supported. About Han Jin Shenzhen’s legal liability under tally contract. As a branch established by Han Jin China, Han Jin Shenzhen was not a party to the contract of tally, though it had business contacts with Shenzhen Zhongli on behalf of Han Jin China. Only according to the instructions of Han Jin China to engage in related business. The claim of Shenzhen Zhongli that Han Jin Shenzhen and Han Jin China should jointly and severally pay the tally fee involved in the case had no factual or legal basis and should not be supported. Thirdly, legal relationship between Shenzhen Foreign Agency and Han Jin China. Shenzhen Zhongli, acting as the transferee of the creditor’s rights of Shenzhen Foreign Agency, claimed that Han Jin China should pay to it the shipping agency fees due to Shenzhen Foreign Agency under the ship agency agreement involved, and Han Jin China argued that it was only an agent of Han Jin Shipping and did not have to pay. Before confirming whether the transfer of creditor’s rights was established or not and the legal liability of Han Jin China, it was necessary to examine whether Han Jin China was a suitable party to the contract under the ship agency agreement involved. With regard to the legal relationship between Shenzhen Zhongli and Han Jin China under the contract of tally, The court of first instance had decided that Han Jin China was the agent of Han Jin Shipping according to law. The defense of Article 402 of the Contract Law should be applied in this case without facts or legal basis, The defense of Han Jin China was not supported. Although the Shenzhen Foreign Agency and Han Jin China did not conclude a written ship agency agreement in 2016, the two parties did business with each other in the shipping agency. The rights and obligations, such as rate calculation, were still implemented in accordance with the relevant provisions of the written ship agency agreement signed by both parties in 2015, with the establishment of a de facto ship agency contract between the parties. In fact, though the contract of ship agency was different from the main body and the rights and obligations of Shenzhen Zhongli and Han Jin China, the two contracts had the same quality at the level of legal relationship. Accordingly, the parties to the contract under the ship’s agency agreement did not need to elaborate otherwise. Briefly, the parties to the contract under the ship agency agreement were Han Jin China and Shenzhen Foreign Agency. Fourthly, whether the transfer of creditor’s rights advocated by Shenzhen Zhongli was established. The agreement on the agency of the ship involved was established between Shenzhen Foreign Agency and Han Jin China. The agreement did not violate the mandatory provisions of the laws and administrative regulations and was legal and effective. The parties to the contract should exercise their rights and perform their obligations in accordance with the agreement and the law. On

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September 23, 2016, Han Jin China recognized by email that Shenzhen Foreign Agency’s debt under the ship agency agreement involved amounted to 7,225,819.10 yuan as of September 22, 2016. Therefore, Shenzhen Foreign Agency was the appropriate creditor under the ship agency agreement involved, and could freely dispose of its rights within the scope of the law. According to Shenzhen Foreign Agency sent the notice of assignment of creditor’s rights to Han Jin China on October 24, 2016 and copied to Han Jin Shenzhen, Shenzhen Foreign Agency transferred its claim to Han Jin China under the ship agency agreement to Shenzhen Zhongli, and informed Han Jin China by e-mail. In accordance with Article 80 Paragraph 1 of the Contract Law, the obligor should be notified of the assignment of rights by creditors. Without notice, the assignment had no effect on the obligor, the aforesaid transfer of creditor’s rights on behalf of Shenzhen Foreign Agency was legally established. Fifthly, legal liability of Han Jin China after the transfer of creditor’s rights. Shenzhen Foreign Agency transferred the principal of the debt of 3,249,199.47 yuan to Shenzhen Zhongli, Shenzhen Zhongli obtained the right to claim against Han Jin China in accordance with law. According to Article 82 of the Contract Law, upon receipt of the notice of assignment of the obligee’s right, the obligor could, in respect of the assignee, avail itself of any defense it had against the assignor. Han Jin China’s defense against Shenzhen Foreign Agency could also claim against Shenzhen Zhongli. Han Jin China argued that according to the agreement on agency of the ship involved, the payment obligation of Han Jin China was subject to conditions, namely only within 30 days of receipt of the bill issued by Shenzhen Foreign Agency. However, according to the facts found out, the agency agreement for the ship involved only stipulated that Han Jin China would pay the voyage fee within 30 days of receipt of the bill. The clause only provided for the latest time limit for Han Jin China to pay the shipping agency fees to Shenzhen Foreign Agency, and did not stipulate that Han Jin China should have the right not to pay the bill without receiving the bill. Therefore, the clause did not belong to attached condition or conditional time period. There was no factual and legal basis for Han Jin China’s defense against the obligation to fulfill its obligation to pay. The court of first instance did not support it. Han Jin China should pay the principal of the aforesaid creditor’s rights 3,249,199.47 yuan to Shenzhen Zhongli. According to Article 81 of the Contract Law, where a creditor assigned a right, the transferee acquired a subordinate right relating to the creditor’s rights, except where the subordinate right was exclusively owned by the creditor itself, if Shenzhen Zhongli was granted a subordinate right subordinate to the principal amount of the said creditor’s rights from Shenzhen Foreign Agency and the subordinate right was not exclusively owned by Shenzhen Foreign Agency, Shenzhen Zhongli should also enjoy the right of such subordination. Shenzhen Zhongli advocated that Han Jin China should pay interest on the said principal amount to Shenzhen Zhongli on October 1, 2016 within 30 days of the last shipping agency business arising out of the said last principal amount of debt. However, there was no agreement in the shipping agency agreement that Han Jin China delayed payment of shipping agency fees, the company should pay interest to Shenzhen Foreign Agency at the

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benchmark interest rate of the People’s Bank of China for similar renminbi loans within 30 days of the final date of the shipping agency business. Therefore, Shenzhen Zhongli claimed that Han Jin China should pay it 3,249,199.47 yuan interest on the assigned creditor’s rights according to the above-mentioned loan interest rate, there was no factual or legal basis, and it was not supported. However, according to Article 112 of the Contract Law, if the party did not fulfil the contractual obligation or fulfil the contractual obligation, it did not conform to the agreement, and if the other party had other losses after the execution of the obligation or the remedial measures, the party should compensate for the loss. After Shenzhen Zhongli claimed against Han Jin China, if Han Jin China refused to perform its obligations, then its behavior constituted a breach of contract and should compensate Shenzhen Zhongli for the loss of fruits suffered by Shenzhen Zhongli. Since Han Jin China refused to pay the aforesaid 3,249,199.47 yuan, it should compensate Shenzhen Zhongli for the loss of the fruits of the said sum. Considering the time limit for the performance of Han Jin China the fruits could be calculated from the date of March 15, 2017, on the date of the open trial of this case, to the date of the actual payment of the preceding sum of money by Han Jin China in March 15, 2017, in accordance with the same period of similar RMB deposit rate of the People’s Bank of China. The legal liability of Han Jin Shenzhen after the transfer of the creditor’s rights Han Jin Shenzhen was not a party to the ship agency agreement involved. Even if the ship agency business was in contact with Shenzhen Foreign Agency, it was based on the fulfillment of the instructions of Han Jin China as the branch of Han Jin China. No matter whether or not the claims under the ship agency agreement were transferred to Shenzhen Zhongli, Han Jin Shenzhen should not be liable to Shenzhen Foreign Agency or Shenzhen Zhongli. Sixthly, whether the claims of Shenzhen Zhongli for preservation application fee before litigation were established. According to the regulations of the State Council Article 38 Paragraph 3 of the Approach to Pay the Cost of Litigation, the application fee stipulated in article tenth (two) of this method should be born by the applicant. If the applicant filed an action, the application fee could be included in the litigation claim, Shenzhen Zhongli had the right to include the application fee of 5,000 yuan for property preservation before litigation in this case. The property preservation application fee was the necessary and reasonable expenses incurred by Shenzhen Zhongli in order to safeguard its legitimate rights and interests when Han Jin China defaulted, according to Article 107 of the Contract Law, one party to which the party did not fulfil the obligation of the contract or fulfil the contractual obligation was not in conformity with the agreement, it should bear the provisions of the continuing performance, remedial measures or damages. The aforesaid 5,000 yuan before litigation property preservation application fee should be born by Han Jin China. Based on the mentioned earlier on the legal liability of Han Jin Shenzhen, Han Jin Shenzhen should not bear the obligation to pay the said property preservation application fee to Shenzhen Zhongli. Pulling the threads together, in accordance with the provisions of Article 80 Paragraph 1, Article 107, Article 112, Article 403 Paragraph 2 of the Contract Law

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of the People’s Republic of China and Article 38 Paragraph 3 of the Approach to Pay the Cost of Litigation, the judgment was as follows: 1. Han Jin China should pay a tally fee of 420,681.50 yuan and liquidated damages for late payment of the foregoing amount to Shenzhen Zhongli (from October 15, 2016 to the date of actual payment by Han Jin China, the amount of overdue payment should be calculated on a daily basis according to the standard of 1‰ per day); 2. Han Jin China should pay Shenzhen Zhongli 3,249,199.47 yuan and the interest (from March 15, 2017 to the date of actual payment by Han Jin China, based on the benchmark interest rate of the People’s Bank of China for similar RMB deposits for the same period); 3. Han Jin China should pay Shenzhen Zhongli pre-litigation property preservation application fee of 5,000 yuan; 4. reject other claims of Shenzhen Zhongli. The above payment obligation should be fulfilled within 10 days from the effective date of this judgment. If the obligation to pay money was not fulfilled during the period specified in this judgment, the interest on the debt for the period of delay in performance should be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee of first instance in amount of 36,339.49 yuan, should be born by Han Jin China. The facts confirmed by the court of first instance can be proved by relevant evidence, and the parties had no objection, so the court confirms them. The court holds that, the case is the dispute over ship agency and tally contract. According to the appeal opinions of the parties, the court confirms the issues in second instance are: whether Han Jin China is a party to the tally contract and ship agency agreement, whether the payment conditions of the agency fees involved have been fulfilled and whether Han Jin Shenzhen should be jointly and severally liable for the costs involved. Han Jin China claimed that as the agent of Han Jin Shipping, it concluded the tally contract and ship agency agreement, which was not the party to the contract in this case, nor was it a qualified Defendant in this case. After investigation, the tally contract and ship agency agreement involved were concluded by Han Jin China and Shenzhen Zhongli and Shenzhen Foreign Agency, respectively, Han Jin China asserted that the contract involved directly bound Han Jin Shipping and Shenzhen Zhongli and Shenzhen Foreign Agency according to the Contract Law of the People’s Republic of China Article 402 that if the trustee concluded a contract with a third party within the scope of the client’s authorization in his own name, and the third party knew the agency relationship between the trustee and the client when the contract was concluded, the contract directly bound the client and the third person, except where there was clear evidence that the contract only bound the trustee and the third person, it shall provide evidence to prove that Shenzhen Zhongli and Shenzhen Foreign Agency knew that there was an agency relationship between Han Jin Shipping and Han Jin China in the business involved when concluding the contract. According to the circumstances ascertained in this case, Agency Agreement concluded between Han Jin China and Han Jin Shipping stipulated that “Han Jin China shall act as an independent agreement party to act on behalf of its personal interests to a third party and maintain its legal existence independent of Han Jin Shipping.” Moreover, Han Jin China did not have any evidence to prove

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that it confirmed the identity as Han Jin Shipping Agent to Shenzhen Zhongli and Shenzhen Foreign Agency when entering into the contract. Han Jin China advocated that the contract involved should directly restrain Han Jin Shipping and Shenzhen Zhongli and Shenzhen Foreign Agency, which lacks basis, it cannot be established. Han Jin China is an independent legal person registered in China with independent rights and behaviors. It concluded a tally contract and a ship agency agreement with Shenzhen Zhongli and Shenzhen Foreign Agency in its own name. According to the principle of contract relativity, this case should identify Han Jin China as the party to the agreement involved. The tally contract and shipping agency agreement involved are the true intentions of both parties, and do not violate the mandatory provisions of laws and administrative regulations. Both parties shall perform fully in accordance with the contract. Han Jin China had no objection to the payment of the fees under the tally contract and the liquidated damages, which should be confirmed by the court. Han Jin China had objection to the transfer of the creditor’s rights of Shenzhen Zhongli on the grounds that the fulfillment of the conditions had not been achieved. After investigation, the ship agency agreement concluded between Han Jin China and Shenzhen Foreign Agency stipulated that Shenzhen Foreign Agency provided the voyage bill within 30 days of the ship’s departure. Han Jin China should pay the voyage freight within 30 days after receiving the bill. Shenzhen Foreign Agency sent an email to Han Jin China on September 22, 2016, stating that Han Jin China still owed a fee of 7,225,819.10 yuan. The email was accompanied by the name of the ship and voyage, settlement amount, bill number, bill date and the outgoing date, Han Jin China also wrote back to confirm the aforementioned fees. On October 23, Han Jin sent an email to Shenzhen Foreign Agency to confirm receipt of the 523,380.37 yuan. Han Jin China had recognized the agency fees of the ship involved, and did not indicate in the reply email that it did not receive the bill of 7,225,819.10 yuan. In the litigation, it refused to pay the fee based on the failure to receive the bill, which lacks factual or legal basis, and cannot be established. It is correct that the first-instance judgment judged that Han Jin China should pay the aforesaid 3,249,199.47 yuan fee and interest to the creditor assignee Shenzhen Zhongli, so the court affirms it. Shenzhen Zhongli appealed that Han Jin Shenzhen should be jointly and severally liable for Han Jin China’s debts involved. However, the contract involved was concluded by Han Jin China with Shenzhen Zhongli and Shenzhen Foreign Agency, and Han Jin China was the party involved in the contract. Although Han Jin Shenzhen actually carried out related business during the contract execution process, Han Jin Shenzhen as a branch of Han Jin China did not allow Han Jin Shenzhen to obtain the legal status of the parties to the contract. Shenzhen Zhongli claimed that Han Jin Shenzhen was a branch of Han Jin China and that it should be regarded as a party to the contract, which lacks legal basis, so the court does not support the claim. Pulling the threads together, the facts confirmed by the court of first instance are clear, and the application of law is correct, which should be affirmed. The appeals of Han Jin China and Shenzhen Zhongli cannot be established, which should be

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dismissed. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 72,678.98 yuan, the Appellant, Shenzhen Ocean Shipping Tally Co., Ltd., and the Appellant, Han Jin Shipping (China) Co., Ltd., shall bear 36,339.49 yuan respectively. The judgment is final. Presiding Judge: DU Yixing Judge: MO Fei Judge: GU Enzhen December 28, 2017 Judge Assistant: GAO Jing Clerk: PAN Wanqin

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: (1) if the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; (2) if the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law; (3) if in the original judgment the facts were incorrectly or not clearly ascertained and the evidence was insufficient, the people’s court of second instance shall make a written order to set aside the judgment and remand to case to the original people’s court for retrial, or the people’s court of second instance may amend the judgment after investigating and clarifying the facts; or (4) if there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original people's court for retrial. The parties concerned may appeal against the judgment or written order rendered in a retrial of their case.

Guangzhou Maritime Court Civil Judgment Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2016) Yue 72 Min Chu No.1585 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1258. Cause of Action 241. Dispute over port operation. Headnote Plaintiff forwarder held to be entitled to recover underpaid fees from Chinese subsidiary of Korean principal, as Chinese subsidiary had contracted in its own name and not merely as agent for foreign principal. Summary Hanjin Shipping Co., Ltd (hereinafter referred to as “Hanjin Shipping”) appointed Hanjin Shipping (China) Co., Ltd. (hereinafter referred to as “Hanjin China”) to perform contracts with third parties and to act as its agent to arrange and supervise the appointment of a suitable port agent. The agreement provided that any enterprises having a commercial relationship with Hanjin China should not be considered a representative of Hanjin Shipping. Hanjin China and the Plaintiff, Shenzhen West United Logistics Co., Ltd, made two agreements (service and maintenance) with the effect that the Plaintiff would provide inspection, transportation, repair and maintenance services for equipment controlled, managed or held by Hanjin China. When it was not paid in full for its services, the Plaintiff sued Hanjin China and Hanjin Shipping, claiming that they were jointly and severally responsible for the underpaid amount. Hanjin Shipping did not appear. Hanjin China argued that it was not responsible, because it was party to the service and maintenance agreements, which were between the Plaintiff and Hanjin Shipping. The Court rejected that argument and held that Hanjin China had contracted as principal, not agent for Hanjin Shipping, so Plaintiff was entitled to be paid by Hanjin China but not Hanjin Shipping.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_66

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Judgment The Plaintiff: Shenzhen West United Logistics Co., Ltd. Domicile: 12H, Seaview Plaza, Taizi Road, Nanshan District, Shenzhen, Guangdong, the People’s Republic of China. Legal representative: SHI Hongsheng, general manager. Agent ad litem: NIE Lihua, employee. Agent ad litem: JIAO Chunshan, lawyer of Guangdong Haili Law Firm. The Defendant: Hanjin Shipping (China) Co., Ltd. Domicile: Floor 25-26, Zhongrong Hengrui International Building (East Building), No.620 Zhangyang Road, China (Shanghai) Pilot Free Trade Zone, the People’s Republic of China. Legal representative: OHMOOKYOON, chairman. Agent ad litem: YANG Guodong, lawyer of Beijing Zhonglun Law Firm. The Defendant: Hanjin Shipping Co., Ltd. Domicile: 25th floor of Hanjin Shipping Building, 2nd Street, International Finance Road, Yeongdeungpo-gu, Seoul, Republic of Korea. With respect to the case arising from dispute over port operation between the Plaintiff, Shenzhen West United Logistics Co., Ltd. (hereinafter referred to as Western Logistics Company), and the Defendants Hanjin Shipping (China) Co., Ltd. (hereinafter referred to as Hanjin China), Hanjin Shipping Co., Ltd. (hereinafter referred to as Hanjin Shipping), the case was filed with the court on November 30, 2016. The case was applied by the general procedure and it was publicly heard on March 15, 2017. Legal representative of the Plaintiff, SHI Hongsheng, and agents ad litem NIE Lihua and JIAO Chunshan, and agent ad litem of the Defendant Hanjin China, YANG Guodong, appeared in court and participated in the action. The Defendant Hanjin Shipping was summoned but did not appear in court to participate in the lawsuit without justifiable reasons. Now the case has been concluded. Western Logistics Company filed a lawsuit with the court as follows: 1. Hanjin China and Hanjin Shipping should jointly pay 642,1972.55 yuan including container warehousing and storage fees, hoisting fees, repair fees, transportation costs, etc. from August 2015 to August 2016 (If the following is not specified, all refers to the RMB) and its interest (from October 8, 2016 to the date when Hanjin China and Hanjin Shipping actually paid off, according to the same RMB loan benchmark interest rate of the People’s Bank of China in the same period); 2. Hanjin China and Hanjin Shipping should jointly pay to Western Logistics Company from August 31, 2016 to the date when 1,174 containers were disposed, auctioned and they were delivered from Western Logistics Company yard wherein the container storage fee, hoisting fee and interest of 2.3 million yuan expected to occur in the field; 3. confirm that Western Logistics Company had a lien on the 1,174 containers held by the company in this case and it shall be given preferential subrogated rights for the auctioned containers in terms of storage fee, hoisting charges, repairs and other

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payments paid by Hanjin China and Hanjin Shipping. 4. Hanjin China and Hanjin Shipping should jointly pay 5,000 yuan of application fee in property preservation before litigation and case acceptance fee to Western Logistics Company. Facts and reasons: Hanjin China and Western Logistics Company signed on June 15, 2015 and renewed the container yard service agreement outside of port (ODCYSERVICE AGREEMENT, hereinafter referred to as service agreement) and equipment repair and maintenance on June 1, 2016. The agreement (hereinafter referred to as the maintenance agreement) stipulates that Hanjin China, as the carrier, entrusts Western Logistics Company to provide container yards, loading, unloading, repairing and transportation services. From August 1, 2015 to August 31, 2016, Western Logistics Company provided related services according to the entrustment of Hanjin China Co., Ltd., resulting in sum of 6,421,972.55 yuan in storage, hoisting, repair, transportation etc. combined with following interest. However, Hanjin China did not pay the aforementioned fees to Western Logistics Company. From August 31, 2016 to the date when the container in question is disposed, auctioned and delivered from the storage yard operated by Western Logistics Company, the aforementioned storage and other expenses will continue to be generated. As a contract counterpart, Hanjin China shall pay the aforementioned fees to Western Logistics Company. Hanjin China is a one-person limited liability company established by Hanjin Shipping in China. According to Article 63 of the Company Law of the People’s Republic of China (hereinafter referred to as the Company Law), the shareholders of a one-person limited liability company cannot prove that the company’s property is independently separated form its own. In this case, they shall be jointly and severally liable for the company’s debts. Hanjin Shipping shall be jointly and severally liable for the debts owed by Hanjin China to Western Logistics Company. According to the Contract Law of the People’s Republic of China (hereinafter referred to as the Contract Law) and the Property Law of the People’s Republic of China, the Guaranty Law of the People’s Republic of China (hereinafter referred to as the Guaranty Law) and other relevant laws and regulations, Western Logistics Company is entitled to have a lien on the 1,174 containers that are in the custody and repaired by it in accordance with the law and the preferentially subrogated right to receive the proceeds of 1,174 containers which are auctioned. Hanjin China argued that: firstly, Hanjin China is only an agent of Hanjin Shipping and Western Logistics Company is clearly aware of this. According to the provisions of Article 402 of the Contract Law, the contractual relation on port operation in this case is directly established between Western Logistics Company and Hanjin Shipping and it has nothing to do with Hanjin China. Therefore, Hanjin China shall not have to pay off the expenses for Western Logistics Company. Secondly, Western Logistics Company and Hanjin Shipping established a contract relationship of port operation. It can only retain all the containers of Hanjin Shipping according to the contract and cannot extend the scope of the retention to the container delivered by Hanjin China to Western Logistics Company. A lien also cannot be exercised on all containers that are not owned by Hanjin Shipping. Request to reject the litigation requests of Western Logistics Company.

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Hanjin Shipping did not defend. Western Logistics Company and Hanjin China submitted evidence in accordance with their lawsuits. Hanjin Shipping did not submit evidence and was deemed to have waived the right to provide evidence and cross-examination. In order to support its claims, Western Logistics Company adduced the following main evidence: the service agreement, maintenance agreement signed by Western Logistics Company and Hanjin China, and the business registration information of Hanjin China; Western Logistics Company and Hanjin China received reconciliation confirmation expenses email related to the container-related services provided Hanjin China by Western Logistics Company in Qianhai Yard for August 2015 and January-August 2016; A reconciliation confirmation e-mail for the relevant expenses incurred by Hanjin China for the container-related services provided by Western Logistics Company in Yantian Yard on November 2015 and January-August 2016; the notarization of the above-mentioned e-mail; the records related maintenance services provided by Western Logistics Company which are registered in the system of Hanjin Shipping from November 2015 to August 2016; Shenzhen Penghai Electronic Data Interchange Co., Ltd. (hereinafter referred to as Penghai Shipping Company) issued an EDI confirmation certificate; maintenance expense invoice; Western Logistics Company Invoice for container transportation expenses from Yantian Yard to the Qianhai Yard; Western Logistics Company provides SF Express Courier and Invoice for Hanjin China Co., Ltd. and Hanjin Shipping (China) Co., Ltd., a subsidiary of Hanjin China in Shenzhen, Guangdong Province (hereinafter referred to as Hanjin Shenzhen Branch); Statistics Table of Accounts Patable by Hanjin China and Hanjin Shipping from September 1, 2016 to March 14, 2017. After the trial, Western Logistics Company added the post-bill and the receipt of the bill which number is 930135755105 from SF Express Company to prove that Western Logistics Company has sent the invoice concerned with the storage fee and hoisting fee to Hanjin China from September 1, 2016 to March 14, 2017. In order to support its defense, Hanjin China submitted the following evidence: agency agreement between Hanjin China and Hanjin Shipping; internal training materials related to the Contract Law; notice of contract signing requirements; industrial and commercial registration information of Western Logistics Company; Shanghai Mingdong Container Terminal Co., Ltd. and other companies sued Hanjin Shipping for indictment, evidence list and court response notice. Western Logistics Company applied to the court for transferring the mailing and delivery records of No.134753045869 and No.134753045878 waybills from SF Express Co., Ltd. (hereinafter referred to as SF Express Company). The court granted to transfer the records of the two aforementioned waybills in accordance with the law. Western Logistics Company and Hanjin China organized by the court exchanged the evidence and cross-examination, and conducted a written cross-examination of the evidence submitted by Western Logistics Company after the trial. Hanjin China confirmed the authenticity of other evidence submitted by Western Logistics Company except for the authenticity of the relevant records in the Hanjin Shipping

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System submitted by Western Logistics Company. Western Logistics Company does not confirm the authenticity of the agency agreement between Hanjin China and Hanjin Shipping submitted by Hanjin China, the internal training materials related to the Contract Law, and the notification of the contract signing requirements. The court believes that the service agreement and maintenance agreement submitted by Western Logistics Company and the reconciliation confirmation mail between Western Logistics Company and Hanjin China and the electronic confirmation certificate issued by Peng Shipping Company can be mutually confirmed with data provided by Hanjin shipping system which is submitted by Western Logistics Company and its authenticity should be confirmed; the agency agreement between Hanjin China and Hanjin Shipping submitted by Hanjin China, the internal training materials related to the Contract Law, and the notification of the contract signing requirements shall be all checked a copy that is identical to the original and shall be confirmed for its authenticity. The above-mentioned parties and the evidence of authenticity confirmed by the court are all related to the facts of the case and the main body and source of the collection are in compliance with the law. The court will confirm the proof and prove it in the volume. As to whether it can prove the litigation claims of both parties, it needs to be comprehensively determined according to the trial. As for the indictment, evidence list and court responding notice of Shanghai Mingdong Container Terminal Co., Ltd. and other companies filed by Hanjin China, it is not related to the dispute in this case. Therefore, the court did not confirm to its proof. In terms of the statements of the parties to the court and the evidence confirmed by the court, the court found the facts as follows: Hanjin China was established on March 15, 1995. It was a foreign-invested company wholly-owned by Hanjin Shipping. Its business scope was to canvass cargo, produce and issue bills of lading for vessels owned or operated by Hanjin Shipping, collect and remit shipping costs and sign service contracts. On January 1, 2015, Hanjin China and Hanjin Shipping signed an agency agreement in Shanghai for all general freight forwarder services provided by Hanjin China for Hanjin Shipping. According to the agreement on the status of the two parties, Hanjin China, as an independent agreement party, shall act for the third party for its own interests and maintain its legal independence from Hanjin Shipping. Hanjin China and Hanjin Shipping further expressly agree that Hanjin China’s shareholding or subsidiaries, employees, contractors or any other enterprises which have commercial relationship with Hanjin China between the two parties and the third party which should not be considered to be representatives of Hanjin Shipping, employees or other companies with any kind of commercial relationship with Hanjin Shipping. In terms of related agreement on ship operation services, Hanjin China shall arrange, supervise and agree to appoint a suitable port agent who was to provide related services as a representative of Hanjin Shipping based on the agreed status of Hanjin Shipping and the prior written consent of Hanjin Shipping. Those services cover ship entry, berthing, departure, tugboat, ship repair, container handling and cargo related services. As far as the accounting procedures are concerned, Hanjin China shall, in accordance with the prior decision

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of Hanjin Shipping, pay all and any reasonable amount due to implementation services of Hanjin Shipping from the bank account which is established for Hanjin Shipping expenses. If the funds in the account is insufficient, Hanjin China shall pay for it by its own funds and provide relevant documents necessary for reimbursement to Hanjin Shipping; if there is a situation in which Hanjin China is negligent in taking reasonable action on the overdue freight charges, Hanjin Shipping has the unilateral right to deduct the money from the remittances that should be paid to Hanjin China. As agreed during the term, the agency agreement come into effect on January 1, 2015 and will expire until December 31, 2016 unless the termination is submitted in accordance with the provisions of the agreement. The authorization letter submitted by Hanjin China to the court stated that Hanjin China was located in China. Therefore, Hanjin China was authorized to carry out the following matters on behalf of Hanjin Shipping in China: 1. Hanjin China signed the relevant contracts with other companies which were specialized in shipping service on behalf of Hanjin Shipping; 2. Hanjin China was to settle the expenses of port operations and ancillary or designate other agencies to settle related expenses on behalf of Hanjin Shipping. On January 9, 2015, Hanjin China issued a notice to its internal departments (rooms) and branches which shall strictly comply with the contractual requirements for signing business. The notice stated that Hanjin China was an agent of Hanjin Shipping in China based on the agency agreement signed by Hanjin China and Hanjin Shipping and the authorization letter issued by Hanjin Shipping to Hanjin China. To this end, when each relevant department (room) or each branch company sign the business-related contract in the name of Hanjin China or branch office, they shall truthfully disclose or inform the third party concerned of the fact that Hanjin China was an agent of Hanjin Shipping in China. During the internal training in Hanjin China, it shall include the legal system about the agency relationship, such as Article 63 of the General Principles of the Civil Law of the People’s Republic of China and Article 402 and Article 403 of the Contract Law. Western Logistics Company was founded on March 21, 2003 which was a legal person-owned company affiliated with Zhongcheng Pan Asia (Holdings) Co., Ltd. in China. Its business scope covered the storage, safekeeping, cleaning, repair and testing of international shipping containers; storage, consolidation and distribution of container goods. On June 1, 2016, Western Logistics Company signed a service agreement with Hanjin China. The main contents of the agreement were as follows: Western Logistics Company as a service provider offered Hanjin China, as a carrier, container transportation services, hoisting services, storage services, empty containers or custody services for cargo containers, receipt of goods, visual inspection, packing and unpacking, and ancillary services attached to the aforementioned services between container berth and Container Yard or Container Freight Station of Western Logistics Company. Those services were subject to the rates and tariff attached to the agreement. Western Logistics Company agreed to provide other services which were not covered in this Agreement at the most favorable rates at the request of Hanjin China. Western Logistics Company shall open a detailed invoice

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monthly in the format agreed by Hanjin China and submit the invoice to the designated office of Hanjin China in Shenzhen. If Hanjin China requested to explain any item on the invoice, Western Logistics Company shall provide sufficient evidence and explanation for Hanjin China. Hanjin China agrees to pay the rates and fees described in the annex to this Agreement for the services provided by Western Logistics Company, which was deemed as full and final remuneration. Hanjin China should pay within 45 days after receiving the invoice issued by Western Logistics Company. All payments should be settled in RMB or USD unless otherwise agreed by both parties. The contract was effective as of January 1, 2016 and shall remain in force unless the parties cancel it in accordance with the agreed termination clause. Attachment 2 of the contract stipulated the empty container storage service, hoisting cost, empty container shipping, etc., and it was also an annex to the agreement. On the same day, Western Logistics Company signed a maintenance agreement with Hanjin China. The main contents of the agreement were as follows: Western Logistics provided inspection, transportation, repair and maintenance services for equipment controlled, managed or held by Hanjin China. According to the instructions of Hanjin China, Western Logistics Company would provide an invoice to Hanjin China on such a fee each month before the last day of the next month of the month in which the due expenses were incurred under this Agreement. Hanjin China would pay the fee within 30 days from the date of receipt of the invoice. If Hanjin China had an objection to the invoice amount, it would pay the no-objection within 30 days and explain the reasons for the dispute of its balance. The agreement would take effect from January 1, 2016 and expire on December 31, 2016. Unless the parties agreed otherwise on this agreement before the expiration date, either party shall notify the other party in writing before the first 3 months of expiry of the agreement if it terminated the agreement. The annex to the maintenance agreement stipulated specific rates for cleaning, pre-cooling, and modification of various types of containers. During the trial, Western Logistics Company stated that it had signed a service agreement and a maintenance agreement with Hanjin China on June 15, 2015. The two agreements were the same as the service agreement and maintenance agreement signed in 2016 except for the contract period. The main rights and obligations (the rights and obligations of both parties, the type of port operation service provided by Western Logistics Company, the rate standard for Western Logistics Company, and the time and method of payment by Hanjin China) are identical to that signed in June 1, 2016 in this case. The service agreement and maintenance agreement signed in 2016 in this case were the renewal of the above two agreements. Hanjin China did not raise any objection to Western Logistics Company’s claim and the court confirmed the facts claimed by Western Logistics Company. Hanjin China did not submit evidence to prove that it clearly notified Western Logistics Company of the fact that Hanjin China was an agent of Hanjin Shipping in China when Hanjin China signed the aforementioned service agreement and maintenance agreement with Western Logistics Company.

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After the signing of the aforementioned service agreement and maintenance agreement, Western Logistics Company provided port operations services such as container transportation, hoisting, storage, safekeeping and maintenance for Hanjin China in its Yantian Depot and Qianhai Depot. The operation services include 1232 containers. Among them, 1,174 containers, such as HJCU4076434, were in good condition or could be used normally after repair and the other 58 containers are worn-out containers that could not be used normally after repair. From August 2015 to August 2016, the above-mentioned containers generated a total of 6,207,172.55 yuan in hoisting fees, storage fees, dry and reefer container maintenance fees, and towage fees in two container yards operated by Western Logistics Company where hoisting fee was 410,713 yuan, storage costs 273,919.79 yuan, maintenance costs 398,638.56 yuan, reefer costs 34,234.20 yuan and the yard towage fee 1,501,919 yuan. The total fee confirmed by Hanjin China by e-mail was 5,722,764.03 yuan. On August 23, 2016, Western Logistics Company mailed the bill and expense invoice under the service agreement to Hanjin China through SF Express No.134753045869 and mailed the bill and expense invoice under the maintenance agreement to Hanjin Shenzhen Branch through SF No.134753045878. On August 24, the aforementioned invoices and expense invoices were signed by Hanjin China and Hanjin Shenzhen Branch respectively. In early September 2016, Western Logistics Company transported 950 containers operated by Hanjin China to Qianhai Yard in Yantian Yard in order to facilitate centralized management. For this purpose, Western Logistics Company paid the transportation fee of 214,800 yuan to Shenzhen Haoyuanjun Logistics Co., Ltd. On September 20, 2016, Western Logistics Company filed a pre-indictment property preservation application with the court that sealing up all 515 containers, such as No.HJCU4076434. Hanjin China and Hanjin Shipping were deemed as the respondent in this application. The ruling was approved. All 515 containers, such as HJCU4076434, were sealed in the Qianhai Storage Yard of Western Logistics Company located in the Shanhehai Comprehensive Logistics Park in Qianhai Free Trade Zone, Nanshan District, Shenzhen, Guangdong. Western Logistics Company paid the pre-litigation property preservation application fee 5,000 yuan. From September 1, 2016 to March 14, 2017, Hanjin China shall pay the total fee 159,103.89 yuan for Western Logistics Company, including the container hoisting fee of 9,037 yuan and the storage fee of 1,581,998.89 yuan. On March 15, 2017, Western Logistics Company sent six invoices of the aforementioned hoisting and storage charges to Hanjin China through the SF Express No.930135755105. On March 17, Hanjin China received the email. During the trial, Hanjin China stated that although the company is a one-person limited liability company established by Hanjin Shipping in China, it acts as an agent of Hanjin Shipping in China. In addition to the agency fee as an agent, Hanjin China also regarded the leasing rent of company’s own real estate and other incomes as the company’s operating income. The court believes that Western Logistics Company, as the operator, filed the lawsuit for the fact that Hanjin China is the contract counterpart and Hanjin

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Shipping as the shareholder of the one-person limited liability company that shall jointly and severally liable for this case and Hanjin Shipping is a foreign legal person. Therefore, this case is a port operation dispute with foreign factors. According to the arguments of both parties, when the case involves the agency relationship between Hanjin China and Hanjin Shipping, whether the two parties should be jointly and severally liable to Western Logistics Company. Therefore, the dispute involved the legal application of the port operation contract dispute and the legal application of agency relations. According to Article 126 Paragraph 1 of the Contract Law, the parties to a foreign-related contract choose to apply the law applicable to the contract dispute, except as otherwise provided by law. Where there are no choice, the law of the country with which the contract is most closely related shall apply. In this case, the parties did not choose the law on the disputes involved because Hanjin Shipping did not appear in court. The service agreement and maintenance agreement involved in this case were concluded between Western Logistics Company and Hanjin China. Western Logistics Company and Hanjin China are both corporate legal persons in China and the service agreements and maintenance agreements in this case were implemented in China. Therefore, our China has the most closely relation with the contract in this case so that the disputes under the service agreement and maintenance agreement involved in this case shall be governed by the laws of the People’s Republic of China. According to Article 16 of the Law of the People’s Republic of China on the Application of Foreign-related Civil Relations Law, in terms of agent, the parties concerned may choose the law applicable to the entrustment of agency by agreement. If the parties do not choose, the laws at the locality of agency act shall apply to agency, but the laws at the locality of agency relation shall apply to the civil relations between the principal and the agent. In this case, the agency agreement between Hanjin China and Hanjin Shipping did not stipulate the applicable law of the agency. The agent’s act in this case occurred within the territory of China. Therefore, the agency disputes involved in this case also apply to the laws of the People’s Republic of China. According to the arguments of both parties and the trial investigation, the issues are that: (1) the legal relationship between Western Logistics Company and Hanjin China; (2) the legal responsibility of Hanjin China; (3) the legal responsibility of Hanjin Shipping; (4) whether Western Logistics Company has a lien on the 1,174 containers that Hanjin China delivered to the company for port operations services. (1) The legal relationship between Western Logistics Company and Hanjin China. Western Logistics Company advocates that the company and Hanjin China are contract parties for the service agreement and maintenance agreement while Hanjin China argues that it is only located in China. In addition, Western Logistics Company has clearly notified the fact that Hanjin China is merely an agent of Hanjin Shipping when it signed the service agreement or maintenance agreement with Hanjin China in this case. According to Article 402 of the Contract Law, the contractual party of the service agreement and the maintenance agreement are Western Logistics Company and Hanjin Shipping. Hanjin China is an agent of Hanjin Shipping but not the counterparts of the contract.

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Therefore, Hanjin China does not need to bear the legal responsibility for paying the relevant fees to Western Logistics Company under the contract involved. The court believes that although the business scope of Hanjin China registration indicates that it can provide signing contract services for vessels owned or operated by Hanjin Shipping, its business scope is not a power of attorney. And the contents recorded are not necessarily the same as the scope of authorization of Hanjin China given by Hanjin Shipping; there is no evidence in this case that Hanjin China submitted the agency agreement and the power of attorney which can enough prove the agency relationship with Hanjin Shipping to Western Logistics Company when it entered into a service agreement and maintenance agreement with Western Logistics Company. Therefore, the registered business scope of Hanjin China, the agency agreement between Hanjin China and Hanjin Shipping, and the authorization issued by Hanjin Shipping are not effective against Western logistics companies. Hanjin China explain the agency relationship between Hanjin China and Hanjin Shipping when it failed to submit other evidence to prove that Western Logistics Company had entered into a service agreement and maintenance agreement with the company, this case did not have the factual basis of applicable Article 402 of the Contract Law. Although Hanjin China disclosed Hanjin Shipping to Western Logistics Company in the lawsuit, according to Article 403 Paragraph 2 of the Contract Law (if the trustee shall not perform the obligations to the third party due to the principal’s reasons, the trustee shall disclose the principal to the third party, and the third party may choose the trustee or the principal as the other party to the contract to claim its rights, but the third party may not change the selected counterpart), Western Logistics Company has the right to choose Hanjin China as the contractual party of the service agreement and the maintenance agreement. Therefore, the parties to the service agreement and the maintenance agreement shall be identified as Western Logistics Company and Hanjin China but not Western Logistics and Hanjin Shipping. The defense claimed by Hanjin China Company against the parties to the aforementioned agreement contract which are Western Logistics Company and Hanjin Shipping, which has no factual and legal basis. So the court shall not support the allegation. (2) Legal responsibility of Hanjin China. The nature of the service agreement and maintenance agreement signed by Western Logistics Company and Hanjin China is a port operation contract that includes the rights and obligations such as contracting and custody. The aforementioned contract does not violate the prohibition of laws and administrative regulations and it is legal and valid. Both parties shall enjoy their rights and perform their obligations in accordance with the law. The hoisting fees, maintenance fees, chiller fees, and towage fee in the yards under the aforementioned service agreements and maintenance agreements are all generated by Western Logistics Company that using its own equipment, technology and labor to provide contract services for Hanjin China. The cost of the deposit which is generated by Western Logistics Company that using its legally operated yard to provide custodial services for Hanjin China. According to Article 263 of the Contract Law, “the ordering party shall pay

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remuneration in accordance with the time limit agreed by the parties in the contract. Where there is no agreement in the contract as to the time limit for payment of remuneration or such agreement is unclear, nor can it be determined according to Article 61 of this Law, the ordering party shall pay it at the same time when the results of the work are delivered; where only part of the work results is delivered, the ordering party shall make corresponding payment.” And Article 366 of the Contract law “the storing party shall, according to the terms of the contract, pay to the safekeeping party the storage fee. Where there is no agreement in the contract regarding the storage fee, or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this law, the storage shall be free.” And the agreed service agreement and maintenance agreement involved in the case that Hanjin China shall pay within 45 days after receiving the invoice issued by Western Logistics Company, Western Logistics Company fulfilled its contractual obligations and custody obligations in accordance with the law and it had the right to request Hanjin China to pay the contract fees and storage fees according the agreement when Hanjin China received the invoice issued by Western Logistics Company within the 45 days. The case has been ascertained that Hanjin China received an invoice from Western Logistics Company for its contracted expenses and storage expenses from August 2015 to March 14, 2017, which exceeded the agreed 45 days, and Hanjin China also did not submit contrary evidence to prove that the fees stated in the invoice issued by Western Logistics Company were inconsistent with the actual contracting and storage services provided by the company. Therefore, Hanjin China should pay 6,207,172.55 yuan to Western Logistics Company for the contracting and storage costs from August 2015 to August 31, 2016 and the contracting and storage costs of September 1, 2016 to March 14, 2017 are 1,591,033.89 yuan. Western Logistics also requested Hanjin China to pay interest on the contracted and storage fees from August 2015 to August 31, 2016. According to the facts ascertained, Hanjin China received an invoice for the contracting and custody expenses from August 2015 to August 31, 2016 from Western Logistics Company on August 24, 2016. According to the service agreement between the two parties, Hanjin Chinese company shall pay within 45 days after receiving the invoice issued by Western Logistics Company. If Hanjin China fails to pay according to the agreed time limit, its behavior constitutes a breach of contract. According to Article 107 of the Contract Law, “where one party to a contract fails to perform the contract obligations or its performance or its performance fails to satisfy the terms of the contract, the party shall bear such liabilities for breach of contract as to continue to perform its obligations, to take remedial measures, or to compensate for losses.” Hanjin China shall undertake the liability for the interest due to breach of contract besides the foregoing fees. For the amount of interest of contracting and storage expenses of 6,207,172.55 yuan for the period from August 2015 to August 31, 2016, the request by Western Logistics Company that Hanjin China shall pay

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the interest to Western Logistics Company based on the interest rate of the same RMB loan interest rate of the People’s Bank of China for the same period from October 8, 2016, which shall be supported due to its contractual and legal basis. Due to the needs of the yard operation, Western Logistics Company transported 950 containers that had served Hanjin China at Yantian Yard to the Qianhai Depot, resulting in transportation cost of 214,800 yuan. However, the expenses incurred by the transportation between the aforementioned yards are not the type of fees stipulated in the service agreement. Western Logistics Company failed to prove that the transportation between the aforementioned yards had been approved by Hanjin China and it cannot prove that Hanjin China confirmed the reasonableness of the aforementioned expenses. Therefore, the above-mentioned expenses incurred by Western Logistics Company based on its own operational needs shall not be borne by Hanjin China. There is no factual and legal basis where Western Logistics Company’s claim to require Hanjin China to pay the aforementioned transportation fee of 214,800 yuan among the yards. The service agreement signed by Western Logistics Company and Hanjin China on June 1, 2016 did not stipulate the termination period. When neither Western Logistics Company nor Hanjin China proposed to terminate the contract, the agreement was still legal and valid. However, Western Logistics Company did not prove the specific amount of due expenses incurred by Hanjin China after March 15, 2017, such as the storage fees. Therefore, The litigation claim for port operating expense that Hanjin China shall pay for Western Logistics Company after March 15, 2017, which shall not be supported. The maintenance agreement signed by Western Logistics Company and Hanjin China on June 1, 2016 that stipulated the contract period lasted on December 31, 2016, when the parties did not sign a new contract or a supplementary contract for the renewal of the contract and did not reach a supplementary agreement, After January 1, 2017, if Western Logistics Company provides inspection, repair or maintenance operations for the containers delivered by Hanjin China, and the expenses incurred by the above operations are reasonable, Western Logistics Company shall claim rights to Hanjin China on the basis of the rate agreed by the aforementioned maintenance agreement. However, in this case, Western Logistics Company did not submit evidence that Hanjin China requested Western Logistics Company to continue to provide the above-mentioned repairs, and did not prove that the company provided inspections, repair or maintenance operations for the containers delivered to Hanjin China after January 1, 2017. Therefore, the request of Western Logistics Company is that Hanjin China shall pay the inspection, repair and maintenance costs for it after January 1, 2017, which shall not be supported without factual basis. According to Article 38 (Paragraph 3 of the State Council’s Measures for the Payment of Litigation Fees (the application fee provided for in Article 10 Sub-paragraph 2 of these Measures shall be borne by the applicant; where the applicant brings an action, the application fee may be incorporated into the claim), Western Logistics Company has the right to include the pre-litigation property preservation application fee of 5,000 yuan in the case. The preservation application

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fee is the necessary reasonable fee for Western Logistics Company to maintain its legal rights and interests when Hanjin China defaults. According to Article 107 of the Contract Law, “where one party to a contract fails to perform the contract obligations or its performance or its performance fails to satisfy the terms of the contract, the party shall bear such liabilities for breach of contract as to continue to perform its obligations, to take remedial measures, or to compensate for losses.” so the above-mentioned 5,000 yuan pre-litigation property preservation application fee shall be borne by Hanjin China. (3) Legal responsibility of Hanjin Shipping. Western Logistics Company advocates that Hanjin Shipping, as the sole shareholder of Hanjin China, shall be jointly and severally liable for the legal responsibility of Hanjin China to Western Logistics Company. The court believes that the mixture of property system between shareholder and one-person limited liability company specified in Article 63 of the Company Law that shall be strictly grasped in the judicial determination as a system that denies the limited liability of the sole legal person shareholder. When the sole legal person shareholder does not attend the litigation, it is reasonable to determine the possibility of the mixture of the objective and existing shareholders and the one-person limited liability company. It is not appropriate to simply rely on the distribution of the burden of proof and the foreign legal person shareholder who has not appeared in court fails to complete the burden of proof. In light of this, it is presumed that the property of the sole legal person shareholder is confused with the property of a one-person limited liability company. As far as this case is concerned, although Hanjin China is a one-person limited liability company established by Hanjin Shipping in China as the sole legal person shareholder, Hanjin China and Hanjin Shipping belong to legal persons of different countries. There are apparent differences in business scope and operating income. There are obvious differences in the financial system, the taxation system and other property systems involving legal persons. The differences in the subjective ability and financial system of such different national legal persons should be general knowledge of the industry. There was no change because Hanjin Shipping did not give evidence in the absence of trial. The above-mentioned obvious property independence of Hanjin China and Hanjin Shipping can also be confirmed from the statement of Hanjin China in the trial and the actual operation of Hanjin China for many years. Therefore, in summary of this case, it is not appropriate to identify the mixture property of Hanjin Shipping and Hanjin China. There is no factual basis for the application of Article 63 of the Company Law. The court does not support the claim raised by Western Logistics Company that Hanjin Shipping and Hanjin China shall bear joint and severally liabilities to Western Logistics Company. (4) Regarding whether Western Logistics Company has a lien on 1,174 containers. Western Logistics Company provides contracting business and storage services for Hanjin China and enjoys the right to request contracting fees and storage fees according to law. If Hanjin China fails to pay the contracting fees and

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storage fees to Western Logistics Company according to the terms of the contract, then according to Article 264 of the Contract Law (where the ordering party fails to pay the remuneration or the price for materials and etc., the contractor shall have the right to lien upon the results of the work, except as otherwise agreed upon by the parties), Article 380 of the Contract Law (where a storing party fails to pay the storage fee and other expenses according to the terms of the contract, the safekeeping party is entitled to lien on the stored article, except as otherwise agreed upon by the parties), Article 82 of the Guaranty Law (the lien described in the law refers to the acts of the creditor, in line with Article 84 of this law, to own the debtor’s movable property in accordance with the arrangements of the contract and if the debtor fails to pay the debts before the agreed deadline, the creditor has the right to take the property and convert it into money, or auction or sell off the property, and use the proceeds to be paid off preferentially according to provisions of this Law), Article 84 of the Guaranty Law (if the debtor fails to pay the debts incurred during the execution of storage contracts, transport contracts and processing contracts, the creditor has the right of lien. Other contracts that can take lien according to law are also governed by the stipulations in the previous paragraph. The parties can exclude items that cannot be taken lien in the contract), and Article 108 of the Interpretation of the Relevant Issues by Supreme People’s Court on the Application of the Guaranty Law of the People’s Republic of China (when a creditor legally possesses the movable property delivered by the debtor and the debtor is not aware of the right to dispose of the movable property, the creditor may, in accordance with Article 82 of the Guaranty Law, exercise the lien), Western Logistics Company and Hanjin China have agreed to exercise the lien by Western Logistics Company in the port operation agreement. When Western Logistics Company legally possesses 1,174 containers, such as HJCU4076434, for its storage and contracting services, regardless of whether Hanjin China is the owner of the 1,174 containers, Western Logistics Company can enjoy the lien in accordance with the law on the above 1,174 containers (see the attached table for the specific container number) and have the right to be preferentially compensated for the above-mentioned container auction or sale proceeds. In summary, according to Article 107, Article 263, Article 264, Article 366, Article 380 and Article 403 Paragraph 2 of the Contract Law of the People’s Republic of China, Article 82 and Article 84 of the Guaranty Law of the People’s Republic of China, Article 108 of the Interpretation of the Relevant Issues by Supreme People’s Court on the Application of the Guaranty Law of the People’s Republic of China, Article 38 Paragraph 3 of the Measures for the Payment of Litigation Costs and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows:

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1. The Defendant, Hanjin Shipping (China) Co., Ltd., shall pay 6,207,172.55 yuan of the contracting and storage costs from August 2015 to August 31, 2016 and interest to the Plaintiff, Shenzhen West United Logistics Co., Ltd., with interest to be calculate based on the interest rate of the same RMB loan interest rate of the People’s Bank of China for the same period from October 8, 2016 to the date when Hanjin Shipping (China) Co., Ltd. actually pays the principal; 2. The Defendant, Hanjin Shipping (China) Co., Ltd., shall pay 1,591,103.89 yuan of the contracting and storage expenses to the Plaintiff, Shenzhen West United Logistics Co., Ltd., from September 1, 2016 to March 14, 2017; 3. The Defendant, Hanjin Shipping (China) Co., Ltd., shall pay 5,000 yuan of the preservation application fee to the Plaintiff, Shenzhen West United Logistics Co., Ltd.; 4. The Plaintiff, Shenzhen West United Logistics Co., Ltd., has a lien on the above 1,174 containers, such as HJCU4076434, (see the attached table for the specific container number) and has the right to be preferentially compensated from the above-mentioned container auction or sale proceeds. 5. Reject other claims of the Plaintiff, Shenzhen West United Logistics Co., Ltd. The above obligation to pay money shall be fulfilled within 10 days from the date of the effective date of this judgment. If the Defendant Hanjin Shipping (China) Co., Ltd fails to fulfill the obligation of payment within the period ascertained by this Judgment, according to Article 253 of the Civil Procedure Law of the People’s Republic of China, the Defendant shall double pay the interest for the delayed period. Court acceptance fee in amount of 74,949.55 yuan, the Plaintiff Shenzhen West United Logistics Co., Ltd. shall bear 10,118.19 yuan and the Defendant Hanjin Shipping (China) Co., Ltd. shall bear 64,831.36 yuan. Since the Plaintiff has prepaid the case acceptance fee, the Defendant Hanjin Shipping (China) Co., Ltd. will pay its share of court fee to the Plaintiff. The court will not refund. In case of dissatisfaction with this judgment, the Defendant Hanjin Shipping Co., Ltd. may within 30 days upon the service of this judgment, the Plaintiff Shenzhen West United Logistics Co., Ltd. and the Defendant Hanjin Shipping (China) Co., Ltd. may within 15 days upon the service of this judgment, submit a statement of appeal to the court, together with duplicates in accordance with the number of the opposite parties or representative, so as to lodge an appeal with Guangdong High People’s Court. Presiding Judge: XU Chunlong Judge: XIE Huicheng Judge: ZHAI Xin May 17, 2017 Clerk: HUANG Fang

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Guangdong High People’s Court Civil Judgment Shenzhen West United Logistics Co., Ltd. v. Hanjin Shipping (China) Co., Ltd. et al. (2017) Yue Min Zhong No.1885 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1243. Cause of Action 241. Dispute over port operation. Headnote Plaintiff forwarder held to be entitled to recover underpaid fees from Chinese subsidiary of Korean principal, as Chinese subsidiary had contracted in its own name and not merely as agent for foreign principal. Summary Hanjin Shipping Co., Ltd (hereinafter referred to as “Hanjin Shipping”) appointed Hanjin Shipping (China) Co., Ltd. (hereinafter referred to as “Hanjin China”) to perform contracts with third parties and to act as its agent to arrange and supervise the appointment of a suitable port agent. The agreement provided that any enterprises having a commercial relationship with Hanjin China should not be considered a representative of Hanjin Shipping. Hanjin China and the Plaintiff, Shenzhen West United Logistics Co., Ltd, made two agreements (service and maintenance) with the effect that the Plaintiff would provide inspection, transportation, repair and maintenance services for equipment controlled, managed or held by Hanjin China. When it was not paid in full for its services, the Plaintiff sued Hanjin China and Hanjin Shipping, claiming that they were jointly and severally responsible for the underpaid amount. Hanjin Shipping did not appear. Hanjin China argued that it was not responsible, because it was party to the service and maintenance agreements, which were between the Plaintiff and Hanjin Shipping. The first instance Court rejected that argument and held that Hanjin China had contracted as principal, not agent for Hanjin Shipping, so Plaintiff was entitled to be paid by Hanjin China but not Hanjin Shipping. On appeal by the Plaintiff and cross-appeal by Hanjin China, neither party submitted new evidence, so the appeal Court proceeded on the basis of the facts ascertained by the Court of first instance. The appeal Court affirmed the decision of the Court of first instance, holding that Hanjin Shipping was independent from Hanjin China, despite being the sole shareholder. Both the appeal and the cross-appeal were dismissed.

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Judgment The Appellant (the Plaintiff of first instance): Shenzhen West United Logistics Co., Ltd. Domicile: 12H Seaview Plaza, Taizi Road, Nanshan District, Shenzhen, Guangdong, the People’s Republic of China. Legal representative: SHI Hongsheng, general manager. Agent ad litem: SHI Chunping, employee. Agent ad litem: JIAO Chunshan, lawyer of Guangdong Haili Law Firm. The Appellant (the Defendant of first instance): Hanjin Shipping (China) Co., Ltd. Domicile: Floor 25-26, Zhongrong Hengrui International Building (East Building), No.620 Zhangyang Road, China (Shanghai) Pilot Free Trade Zone, the People’s Republic of China. Legal representative: OHMOOKYOON, chairman. Agent ad litem: YANG Guodong, lawyer of Beijing Zhonglun Law Firm. The Respondent (the Defendant of first instance): Hanjin Shipping Co., Ltd. Domicile: 25th floor of Hanjin Shipping Building, 2nd Street, International Finance Road, Yeongdeungpo-gu District, Seoul, Republic of Korea. With respect to the case arising from dispute over port operation between the Appellant Shenzhen West United Logistics Co., Ltd. (hereinafter referred to as Western Logistics Company), the Appellant Hanjin Shipping (China) Co., Ltd. (hereinafter referred to as Hanjin China) and the Respondent Hanjin Shipping Co., Ltd. (hereinafter referred to as Hanjin Shipping), both Western Logistics Company and Hanjin China refused to accept (2016) Yue 72 Min Chu No.1585 Civil Judgement by Guangzhou Maritime Court and appealed to the court. After the case was filed on July 21, 2017, the court organized a collegiate panel to try this case in accordance with law. Agents ad litem of Western Logistics Company, JIAO Chunshan and SHI Chunping, and agent ad litem of Hanjin China, YANG Guodong, attended the lawsuit. Now the case has been concluded. Western Logistics Company appealed that: 1. change the item one, item two and item three of the first-instance judgement. Hanjin China and Hanjin Shipping shall be jointly and severally liable for the cost of 7,798,208.44 yuan of contracting and storage expenses and 214,800 yuan of transportation costs between the yards from August 2015 to March 14, 2017; 2. Hanjin China and Hanjin Shipping shall bear all the litigation costs in this case. Facts and reasons: (1) Hanjin China and Hanjin Shipping shall bear jointly and severally liability for the litigation request of Western Logistics Company. Hanjin China signed a contract with Western Logistics Company. When signing the contract, Western Logistics Company did not know the relationship between Hanjin China and Hanjin Shipping. In fact, the invoice of Western Logistics Company was issued to Hanjin China and the corresponding payment was made by Hanjin China, and Hanjin China confirmed the

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reconciliation. Even if there was an agency relationship between Hanjin China and Hanjin Shipping, according to Article 403 of the Contract Law of the People’s Republic of China, Western Logistics Company had the option. When Western Logistics Company selecting Hanjin China, Hanjin China was a wholly-owned enterprise of Hanjin Shipping. According to Article 58 and Article 60 of the Company Law of the People’s Republic of China, if there is no contrary evidence, Hanjin Shipping shall be jointly and severally liable for the debts of Hanjin China. (2) The transportation cost in the yards is 214,800 yuan, which is the behavior of Western Logistics Company reduce losses. Hanjin China defend that Western Logistics Company advocated the transportation fee of 214,800 yuan for the yard, which the court of first instance did not support due to its factual and legal basis. The reason for this expense is its own operational need of Western Logistics Company, which does not belong to the content under the agreement of the two parties, nor with the consent of Hanjin China. Therefore, it is requested to dismiss the appeal of Western Logistics Company. Hanjin China appealed that: 1. revoke the first-instance judgment, and reject all the claims of Western Logistics Company according to law; 2. Western Logistics Company should bear all the litigation costs of the first instance and second instance of this case. Facts and reasons: (1) Hanjin China signed Agency Agreement with Hanjin Shipping and Power of Attorney issued by Hanjin Shipping, which could prove that Hanjin China was the agent of Hanjin Shipping. There was a content in Agency Agreement that required Hanjin China to make an external contract in its own name, but this content was only the division of internal responsibility of Hanjin China as an agent who failed to perform agency duties according to the agency agreement. And it had not changed the agency relationship that determined by Agency Agreement and Power of Attorney between Hanjin China and Hanjin Shipping. The first-instance judgment negated the actual meaning of Agency Agreement and the agency relationship between Hanjin China and Hanjin Shipping in part of the clause contents of Agency Agreement, which was unclear. (2) Regarding the agency relationship between Hanjin China and Hanjin Shipping, according to the requirements of the above-mentioned external contract of Hanjin China and the fact that Container Yard Service Agreement had actually been signed, Western Logistics Company should have already know the agency relationship between Hanjin China and Hanjin Shipping. According to the business license of Hanjin China and the business scope indicated by the business registration information, Hanjin China was established and survived as an agent of Hanjin Shipping. The relevant subject matter of the relevant container/goods under the contract in this case was Hanjin Shipping. As a freight forwarding company established for many years, Western Logistics Company should be aware of the agency relationship between Hanjin China and Hanjin Shipping whether based on common sense or general industry experience. According to Article 402 of the Contract Law of the People’s Republic of China, the contract signed by Hanjin China with Western Logistics Company in its own name. Western Logistics Company and Hanjin Shipping should be directly bound by this contract. (3) Container Yard Service Agreement clearly stipulated that the contracting and storage expenses shall be paid

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within 45 days after receipt of the invoice issued. Namely the premise or condition for the payment of the contract and storage fees was that Hanjin China received the invoice issued by Western Logistics Company. However, Western Logistics Company did not submit sufficient evidence to prove that Hanjin China actually received an invoice from Western Logistics Company for the contracting and storage expenses from September 1, 2016 to March 14, 2017 and to prove the condition of such payment has been existed. According to Article 2 of the Supreme People’s Court on Certain Provisions on Evidence in Civil Proceedings, Western Logistics Company shall bear the legal consequences of the inability to provide evidence. Western Logistics Company defend that (1) when Western Logistics Company and Hanjin China signed Container Yard Service Agreement and related accessories, Western Logistics Company did not know that Hanjin China was the agent of Hanjin Shipping. The agreement clarified that the carrier was Hanjin China but not Hanjin Shipping. In performing the contract, Western Logistics Company issued an invoice to Hanjin China, and Hanjin China paid the relevant service fee to Western Logistics Company. Western Logistics Company believed that the carrier that signed the contract was Hanjin China. According to Article 403 of the Contract Law of the People’s Republic of China, Western Logistics Company had the right to choose Hanjin China as the contractual counterpart. (2) According to the evidence and the relevant bills has submitted by Western Logistics Company, Hanjin China cannot provide the feedback to Hanjin Shipping due to its own reasons. In summary, it requested that dismissing the appeal of Hanjin China. Western Logistics Company filed a lawsuit with the first-instance court as follows: 1. Hanjin China and Hanjin Shipping should jointly pay 642,1972.55 yuan including container warehousing and storage fees, hoisting fees, repair fees, transportation costs, etc. from August 2015 to August 2016 (If the following is not specified, all refers to the RMB) and its interest (from October 8, 2016 to the date when Hanjin China and Hanjin Shipping actually paid off, according to the same RMB loan benchmark interest rate of the People’s Bank of China in the same period); 2. Hanjin China and Hanjin Shipping should jointly pay to Western Logistics Company from August 31, 2016 to the date when 1,174 containers were disposed, auctioned and they were delivered from Western Logistics Company yard wherein the container storage fee, hoisting fee and interest of 2.3 million yuan expected to occur in the field; 3. confirm that Western Logistics Company had a lien on the 1,174 containers held by the company in this case and it shall be given preferential subrogated rights for the auctioned containers in terms of storage fee, hoisting charges, repairs and other payments paid by Hanjin China and Hanjin Shipping. 4. Hanjin China and Hanjin Shipping should jointly pay 5,000 yuan of application fee in property preservation before litigation and case acceptance fee to Western Logistics Company. Facts and reasons: Hanjin China and Western Logistics Company signed on June 15, 2015 and renewed the container yard service agreement outside of port (ODCYSERVICE AGREEMENT, hereinafter referred to as service agreement) and equipment repair and maintenance on June 1, 2016. The agreement (hereinafter referred to as the maintenance agreement) stipulates that

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Hanjin China, as the carrier, entrusts Western Logistics Company to provide container yards, loading, unloading, repairing and transportation services. From August 1, 2015 to August 31, 2016, Western Logistics Company provided related services according to the entrustment of Hanjin China Co., Ltd., resulting in sum of 6,421,972.55 yuan in storage, hoisting, repair, transportation etc. combined with following interest. However, Hanjin China did not pay the aforementioned fees to Western Logistics Company. From August 31, 2016 to the date when the container in question is disposed, auctioned and delivered from the storage yard operated by Western Logistics Company, the aforementioned storage and other expenses will continue to be generated. As a contract counterpart, Hanjin China shall pay the aforementioned fees to Western Logistics Company. Hanjin China is a one-person limited liability company established by Hanjin Shipping in China. According to Article 63 of the Company Law of the People’s Republic of China (hereinafter referred to as the Company Law), the shareholders of a one-person limited liability company cannot prove that the company’s property is independently separated form its own. In this case, they shall be jointly and severally liable for the company’s debts. Hanjin Shipping shall be jointly and severally liable for the debts owed by Hanjin China to Western Logistics Company. According to the Contract Law of the People’s Republic of China (hereinafter referred to as the Contract Law) and the Property Law of the People’s Republic of China, the Guaranty Law of the People’s Republic of China (hereinafter referred to as the Guaranty Law) and other relevant laws and regulations, Western Logistics Company is entitled to have a lien on the 1,174 containers that are in the custody and repaired by it in accordance with the law and the preferentially subrogated right to receive the proceeds of 1,174 containers which are auctioned. The first-instance court confirmed the fact that, Hanjin China was established on March 15, 1995. It was a foreign-invested company wholly-owned by Hanjin Shipping. Its business scope was to canvass cargo, produce and issue bills of lading for vessels owned or operated by Hanjin Shipping, collect and remit shipping costs and sign service contracts. On January 1, 2015, Hanjin China and Hanjin Shipping signed an agency agreement in Shanghai for all general freight forwarder services provided by Hanjin China for Hanjin Shipping. According to the agreement on the status of the two parties, Hanjin China, as an independent agreement party, shall act for the third party for its own interests and maintain its legal independence from Hanjin Shipping. Hanjin China and Hanjin Shipping further expressly agree that Hanjin China’s shareholding or subsidiaries, employees, contractors or any other enterprises which have commercial relationship with Hanjin China between the two parties and the third party which should not be considered to be representatives of Hanjin Shipping, employees or other companies with any kind of commercial relationship with Hanjin Shipping. In terms of related agreement on ship operation services, Hanjin China shall arrange, supervise and agree to appoint a suitable port agent who was to provide related services as a representative of Hanjin Shipping based on the agreed status of Hanjin Shipping and the prior written consent of Hanjin Shipping. Those services cover ship entry, berthing, departure, tugboat, ship

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repair, container handling and cargo related services. As far as the accounting procedures are concerned, Hanjin China shall, in accordance with the prior decision of Hanjin Shipping, pay all and any reasonable amount due to implementation services of Hanjin Shipping from the bank account which is established for Hanjin Shipping expenses. If the funds in the account is insufficient, Hanjin China shall pay for it by its own funds and provide relevant documents necessary for reimbursement to Hanjin Shipping; if there is a situation in which Hanjin China is negligent in taking reasonable action on the overdue freight charges, Hanjin Shipping has the unilateral right to deduct the money from the remittances that should be paid to Hanjin China. As agreed during the term, the agency agreement come into effect on January 1, 2015 and will expire until December 31, 2016 unless the termination is submitted in accordance with the provisions of the agreement. The authorization letter submitted by Hanjin China to the court stated that Hanjin China was located in China. Therefore, Hanjin China was authorized to carry out the following matters on behalf of Hanjin Shipping in China: 1. Hanjin China signed the relevant contracts with other companies which were specialized in shipping service on behalf of Hanjin Shipping; 2. Hanjin China was to settle the expenses of port operations and ancillary or designate other agencies to settle related expenses on behalf of Hanjin Shipping. On January 9, 2015, Hanjin China issued a notice to its internal departments (rooms) and branches which shall strictly comply with the contractual requirements for signing business. The notice stated that Hanjin China was an agent of Hanjin Shipping in China based on the agency agreement signed by Hanjin China and Hanjin Shipping and the authorization letter issued by Hanjin Shipping to Hanjin China. To this end, when each relevant department (room) or each branch company sign the business-related contract in the name of Hanjin China or branch office, they shall truthfully disclose or inform the third party concerned of the fact that Hanjin China was an agent of Hanjin Shipping in China. During the internal training in Hanjin China, it shall include the legal system about the agency relationship, such as Article 63 of the General Principles of the Civil Law of the People’s Republic of China and Article 402 and Article 403 of the Contract Law. Western Logistics Company was founded on March 21, 2003 which was a legal person-owned company affiliated with Zhongcheng Pan Asia (Holdings) Co., Ltd. in China. Its business scope covered the storage, safekeeping, cleaning, repair and testing of international shipping containers; storage, consolidation and distribution of container goods. On June 1, 2016, Western Logistics Company signed a service agreement with Hanjin China. The main contents of the agreement were as follows: Western Logistics Company as a service provider offered Hanjin China, as a carrier, container transportation services, hoisting services, storage services, empty containers or custody services for cargo containers, receipt of goods, visual inspection, packing and unpacking, and ancillary services attached to the aforementioned services between container berth and Container Yard or Container Freight Station of Western Logistics Company. Those services were subject to the rates and tariff attached to the agreement. Western Logistics Company agreed to provide other services which were

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not covered in this Agreement at the most favorable rates at the request of Hanjin China. Western Logistics Company shall open a detailed invoice monthly in the format agreed by Hanjin China and submit the invoice to the designated office of Hanjin China in Shenzhen. If Hanjin China requested to explain any item on the invoice, Western Logistics Company shall provide sufficient evidence and explanation for Hanjin China. Hanjin China agrees to pay the rates and fees described in the annex to this Agreement for the services provided by Western Logistics Company, which was deemed as full and final remuneration. Hanjin China should pay within 45 days after receiving the invoice issued by Western Logistics Company. All payments should be settled in RMB or USD unless otherwise agreed by both parties. The contract was effective as of January 1, 2016 and shall remain in force unless the parties cancel it in accordance with the agreed termination clause. Attachment 2 of the contract stipulated the empty container storage service, hoisting cost, empty container shipping, etc., and it was also an annex to the agreement. On the same day, Western Logistics Company signed a maintenance agreement with Hanjin China. The main contents of the agreement were as follows: Western Logistics provided inspection, transportation, repair and maintenance services for equipment controlled, managed or held by Hanjin China. According to the instructions of Hanjin China, Western Logistics Company would provide an invoice to Hanjin China on such a fee each month before the last day of the next month of the month in which the due expenses were incurred under this Agreement. Hanjin China would pay the fee within 30 days from the date of receipt of the invoice. If Hanjin China had an objection to the invoice amount, it would pay the no-objection within 30 days and explain the reasons for the dispute of its balance. The agreement would take effect from January 1, 2016 and expire on December 31, 2016. Unless the parties agreed otherwise on this agreement before the expiration date, either party shall notify the other party in writing before the first 3 months of expiry of the agreement if it terminated the agreement. The annex to the maintenance agreement stipulated specific rates for cleaning, pre-cooling, and modification of various types of containers. During the trial, Western Logistics Company stated that it had signed a service agreement and a maintenance agreement with Hanjin China on June 15, 2015. The two agreements were the same as the service agreement and maintenance agreement signed in 2016 except for the contract period. The main rights and obligations (the rights and obligations of both parties, the type of port operation service provided by Western Logistics Company, the rate standard for Western Logistics Company, and the time and method of payment by Hanjin China) are identical to that signed in June 1, 2016 in this case. The service agreement and maintenance agreement signed in 2016 in this case were the renewal of the above two agreements. Hanjin China did not raise any objection to Western Logistics Company’s claim and the court confirmed the facts claimed by Western Logistics Company. Hanjin China did not submit evidence to prove that it clearly notified Western Logistics Company of the fact that Hanjin China was an agent of Hanjin Shipping in China when Hanjin China signed the aforementioned service agreement and maintenance agreement with Western Logistics Company.

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After the signing of the aforementioned service agreement and maintenance agreement, Western Logistics Company provided port operations services such as container transportation, hoisting, storage, safekeeping and maintenance for Hanjin China in its Yantian Depot and Qianhai Depot. The operation services include 1232 containers. Among them, 1,174 containers, such as HJCU4076434, were in good condition or could be used normally after repair and the other 58 containers are worn-out containers that could not be used normally after repair. From August 2015 to August 2016, the above-mentioned containers generated a total of 6,207,172.55 yuan in hoisting fees, storage fees, dry and reefer container maintenance fees, and towage fees in two container yards operated by Western Logistics Company where hoisting fee was 410,713 yuan, storage costs 273,919.79 yuan, maintenance costs 398,638.56 yuan, reefer costs 34,234.20 yuan and the yard towage fee 1,501,919 yuan. The total fee confirmed by Hanjin China by e-mail was 5,722,764.03 yuan. On August 23, 2016, Western Logistics Company mailed the bill and expense invoice under the service agreement to Hanjin China through SF Express No.134753045869 and mailed the bill and expense invoice under the maintenance agreement to Hanjin Shenzhen Branch through SF No.134753045878. On August 24, the aforementioned invoices and expense invoices were signed by Hanjin China and Hanjin Shenzhen Branch respectively. In early September 2016, Western Logistics Company transported 950 containers operated by Hanjin China to Qianhai Yard in Yantian Yard in order to facilitate centralized management. For this purpose, Western Logistics Company paid the transportation fee of 214,800 yuan to Shenzhen Haoyuanjun Logistics Co., Ltd. On September 20, 2016, Western Logistics Company filed a pre-indictment property preservation application with the court that sealing up all 515 containers, such as No.HJCU4076434. Hanjin China and Hanjin Shipping were deemed as the respondent in this application. The ruling was approved. All 515 containers, such as HJCU4076434, were sealed in the Qianhai Storage Yard of Western Logistics Company located in the Shanhehai Comprehensive Logistics Park in Qianhai Free Trade Zone, Nanshan District, Shenzhen, Guangdong. Western Logistics Company paid the pre-litigation property preservation application fee 5,000 yuan. From September 1, 2016 to March 14, 2017, Hanjin China shall pay the total fee 159,103.89 yuan for Western Logistics Company, including the container hoisting fee of 9,037 yuan and the storage fee of 1,581,998.89 yuan. On March 15, 2017, Western Logistics Company sent six invoices of the aforementioned hoisting and storage charges to Hanjin China through the SF Express No.930135755105. On March 17, Hanjin China received the email. During the trial, Hanjin China stated that although the company is a one-person limited liability company established by Hanjin Shipping in China, it acts as an agent of Hanjin Shipping in China. In addition to the agency fee as an agent, Hanjin China also regarded the leasing rent of company’s own real estate and other incomes as the company’s operating income. The court of first instance believed that Western Logistics Company, as the operator, filed the lawsuit for the fact that Hanjin China is the contract counterpart

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and Hanjin Shipping as the shareholder of the one-person limited liability company that shall jointly and severally liable for this case and Hanjin Shipping is a foreign legal person. Therefore, this case is a port operation dispute with foreign factors. According to the arguments of both parties, when the case involves the agency relationship between Hanjin China and Hanjin Shipping, whether the two parties should be jointly and severally liable to Western Logistics Company. Therefore, the dispute involved the legal application of the port operation contract dispute and the legal application of agency relations. According to Article 126 Paragraph 1 of the Contract Law, the parties to a foreign-related contract choose to apply the law applicable to the contract dispute, except as otherwise provided by law. Where there are no choice, the law of the country with which the contract is most closely related shall apply. In this case, the parties did not choose the law on the disputes involved because Hanjin Shipping did not appear in court. The service agreement and maintenance agreement involved in this case were concluded between Western Logistics Company and Hanjin China. Western Logistics Company and Hanjin China are both corporate legal persons in China and the service agreements and maintenance agreements in this case were implemented in China. Therefore, China has the most closely relation with the contract in this case so that the disputes under the service agreement and maintenance agreement involved in this case shall be governed by the laws of the People’s Republic of China. According to Article 16 of the Law of the People’s Republic of China on the Application of Foreign-related Civil Relations Law, in terms of agent, the parties concerned may choose the law applicable to the entrustment of agency by agreement. If the parties do not choose, the laws at the locality of agency act shall apply to agency, but the laws at the locality of agency relation shall apply to the civil relations between the principal and the agent. In this case, the agency agreement between Hanjin China and Hanjin Shipping did not stipulate the applicable law of the agency. The agent’s act in this case occurred within the territory of China. Therefore, the agency disputes involved in this case also apply to the laws of the People’s Republic of China. According to the arguments of both parties and the trial investigation, the issues of first instance are that: (1) the legal relationship between Western Logistics Company and Hanjin China; (2) the legal responsibility of Hanjin China; (3) the legal responsibility of Hanjin Shipping; (4) whether Western Logistics Company has a lien on the 1,174 containers that Hanjin China delivered to the company for port operations services. (1) The legal relationship between Western Logistics Company and Hanjin China. Western Logistics Company advocates that the company and Hanjin China are contract parties for the service agreement and maintenance agreement while Hanjin China argues that it is only located in China. In addition, Western Logistics Company has clearly notified the fact that Hanjin China is merely an agent of Hanjin Shipping when it signed the service agreement or maintenance agreement with Hanjin China in this case. According to Article 402 of the Contract Law, the contractual party of the service agreement and the maintenance agreement are Western Logistics Company and Hanjin Shipping. Hanjin

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China is an agent of Hanjin Shipping but not the counterparts of the contract. Therefore, Hanjin China does not need to bear the legal responsibility for paying the relevant fees to Western Logistics Company under the contract involved. The court believes that although the business scope of Hanjin China registration indicates that it can provide signing contract services for vessels owned or operated by Hanjin Shipping, its business scope is not a power of attorney. And the contents recorded are not necessarily the same as the scope of authorization of Hanjin China given by Hanjin Shipping; there is no evidence in this case that Hanjin China submitted the agency agreement and the power of attorney which can enough prove the agency relationship with Hanjin Shipping to Western Logistics Company when it entered into a service agreement and maintenance agreement with Western Logistics Company. Therefore, the registered business scope of Hanjin China, the agency agreement between Hanjin China and Hanjin Shipping, and the authorization issued by Hanjin Shipping are not effective against Western logistics companies. Hanjin China explain the agency relationship between Hanjin China and Hanjin Shipping when it failed to submit other evidence to prove that Western Logistics Company had entered into a service agreement and maintenance agreement with the company, this case did not have the factual basis of applicable Article 402 of the Contract Law. Although Hanjin China disclosed Hanjin Shipping to Western Logistics Company in the lawsuit, according to Article 403 Paragraph 2 of the Contract Law (the trustee shall not perform the obligations to the third party due to the principal’s reasons, the trustee shall disclose the principal to the third party, and the third party may choose the trustee or the principal as the other party to the contract to claim its rights, but the third party may not change the selected counterpart), Western Logistics Company has the right to choose Hanjin China as the contractual party of the service agreement and the maintenance agreement. Therefore, the parties to the service agreement and the maintenance agreement shall be identified as Western Logistics Company and Hanjin China but not Western Logistics and Hanjin Shipping. The defense claimed by Hanjin China Company against the parties to the aforementioned agreement contract which are Western Logistics Company and Hanjin Shipping, which has no factual and legal basis. So the court shall not support the allegation. (2) Legal responsibility of Hanjin China. The nature of the service agreement and maintenance agreement signed by Western Logistics Company and Hanjin China is a port operation contract that includes the rights and obligations such as contracting and custody. The aforementioned contract does not violate the prohibition of laws and administrative regulations and it is legal and valid. Both parties shall enjoy their rights and perform their obligations in accordance with the law. The hoisting fees, maintenance fees, chiller fees, and towage fee in the yards under the aforementioned service agreements and maintenance agreements are all generated by Western Logistics Company that using its own equipment, technology and labor to provide contract services for Hanjin China. The cost of the deposit which is generated by Western Logistics Company that using its legally operated yard to provide custodial services for Hanjin China.

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According to Article 263 of the Contract Law, “the ordering party shall pay remuneration in accordance with the time limit agreed by the parties in the contract. Where there is no agreement in the contract as to the time limit for payment of remuneration or such agreement is unclear, nor can it be determined according to Article 61 of this Law, the ordering party shall pay it at the same time when the results of the work are delivered; where only part of the work results is delivered, the ordering party shall make corresponding payment.” And Article 366 of the Contract law “the storing party shall, according to the terms of the contract, pay to the safekeeping party the storage fee. Where there is no agreement in the contract regarding the storage fee, or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this law, the storage shall be free.” And the agreed service agreement and maintenance agreement involved in the case that Hanjin China shall pay within 45 days after receiving the invoice issued by Western Logistics Company, Western Logistics Company fulfilled its contractual obligations and custody obligations in accordance with the law and it had the right to request Hanjin China to pay the contract fees and storage fees according the agreement when Hanjin China received the invoice issued by Western Logistics Company within the 45 days. The case has been ascertained that Hanjin China received an invoice from Western Logistics Company for its contracted expenses and storage expenses from August 2015 to March 14, 2017, which exceeded the agreed 45 days, and Hanjin China also did not submit contrary evidence to prove that the fees stated in the invoice issued by Western Logistics Company were inconsistent with the actual contracting and storage services provided by the company. Therefore, Hanjin China should pay 6,207,172.55 yuan to Western Logistics Company for the contracting and storage costs from August 2015 to August 31, 2016 and the contracting and storage costs of September 1, 2016 to March 14, 2017 are 1,591,033.89 yuan. Western Logistics also requested Hanjin China to pay interest on the contracted and storage fees from August 2015 to August 31, 2016. According to the facts ascertained, Hanjin China received an invoice for the contracting and custody expenses from August 2015 to August 31, 2016 from Western Logistics Company on August 24, 2016. According to the service agreement between the two parties, Hanjin Chinese company shall pay within 45 days after receiving the invoice issued by Western Logistics Company. If Hanjin China fails to pay according to the agreed time limit, its behavior constitutes a breach of contract. According to Article 107 of the Contract Law, “where one party to a contract fails to perform the contract obligations or its performance or its performance fails to satisfy the terms of the contract, the party shall bear such liabilities for breach of contract as to continue to perform its obligations, to take remedial measures, or to compensate for losses.” Hanjin China shall undertake the liability for the interest due to breach of contract besides the foregoing fees. For the amount of interest of contracting and storage expenses of 6,207,172.55 yuan for the period from August 2015 to August

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31, 2016, the request by Western Logistics Company that Hanjin China shall pay the interest to Western Logistics Company based on the interest rate of the same RMB loan interest rate of the People’s Bank of China for the same period from October 8, 2016, which shall be supported due to its contractual and legal basis. Due to the needs of the yard operation, Western Logistics Company transported 950 containers that had served Hanjin China at Yantian Yard to the Qianhai Depot, resulting in transportation cost of 214,800 yuan. However, the expenses incurred by the transportation between the aforementioned yards are not the type of fees stipulated in the service agreement. Western Logistics Company failed to prove that the transportation between the aforementioned yards had been approved by Hanjin China and it cannot prove that Hanjin China confirmed the reasonableness of the aforementioned expenses. Therefore, the above-mentioned expenses incurred by Western Logistics Company based on its own operational needs shall not be borne by Hanjin China. There is no factual and legal basis where Western Logistics Company’s claim to require Hanjin China to pay the aforementioned transportation fee of 214,800 yuan among the yards. The service agreement signed by Western Logistics Company and Hanjin China on June 1, 2016 did not stipulate the termination period. When neither Western Logistics Company nor Hanjin China proposed to terminate the contract, the agreement was still legal and valid. However, Western Logistics Company did not prove the specific amount of due expenses incurred by Hanjin China after March 15, 2017, such as the storage fees. Therefore, The litigation claim for port operating expense that Hanjin China shall pay for Western Logistics Company after March 15, 2017, which shall not be supported. The maintenance agreement signed by Western Logistics Company and Hanjin China on June 1, 2016 that stipulated the contract period lasted on December 31, 2016, when the parties did not sign a new contract or a supplementary contract for the renewal of the contract and did not reach a supplementary agreement, After January 1, 2017, if Western Logistics Company provides inspection, repair or maintenance operations for the containers delivered by Hanjin China, and the expenses incurred by the above operations are reasonable, Western Logistics Company shall claim rights to Hanjin China on the basis of the rate agreed by the aforementioned maintenance agreement. However, in this case, Western Logistics Company did not submit evidence that Hanjin China requested Western Logistics Company to continue to provide the above-mentioned repairs, and did not prove that the company provided inspections, repair or maintenance operations for the containers delivered to Hanjin China after January 1, 2017. Therefore, the request of Western Logistics Company is that Hanjin China shall pay the inspection, repair and maintenance costs for it after January 1, 2017, which shall not be supported without factual basis. According to Article 38 Paragraph 3 of the State Council’s Measures for the Payment of Litigation Fees (the application fee provided for in Article 10 Sub-paragraph 2 of these Measures shall be borne by the applicant; where the applicant brings an action, the application fee may be incorporated into the claim), Western Logistics Company has the right to include the pre-litigation property

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preservation application fee of 5,000 yuan in the case. The preservation application fee is the necessary reasonable fee for Western Logistics Company to maintain its legal rights and interests when Hanjin China defaults. According to Article 107 of the Contract Law, “where one party to a contract fails to perform the contract obligations or its performance or its performance fails to satisfy the terms of the contract, the party shall bear such liabilities for breach of contract as to continue to perform its obligations, to take remedial measures, or to compensate for losses.” so the above-mentioned 5,000 yuan pre-litigation property preservation application fee shall be borne by Hanjin China. (3) Legal responsibility of Hanjin Shipping. Western Logistics Company advocates that Hanjin Shipping, as the sole shareholder of Hanjin China, shall be jointly and severally liable for the legal responsibility of Hanjin China to Western Logistics Company. The court believes that the mixture of property system between shareholder and one-person limited liability company specified in Article 63 of the Company Law that shall be strictly grasped in the judicial determination as a system that denies the limited liability of the sole legal person shareholder. When the sole legal person shareholder does not attend the litigation, it is reasonable to determine the possibility of the mixture of the objective and existing shareholders and the one-person limited liability company. It is not appropriate to simply rely on the distribution of the burden of proof and the foreign legal person shareholder who has not appeared in court fails to complete the burden of proof. In light of this, it is presumed that the property of the sole legal person shareholder is confused with the property of a one-person limited liability company. As far as this case is concerned, although Hanjin China is a one-person limited liability company established by Hanjin Shipping in China as the sole legal person shareholder, Hanjin China and Hanjin Shipping belong to legal persons of different countries. There are apparent differences in business scope and operating income. There are obvious differences in the financial system, the taxation system and other property systems involving legal persons. The differences in the subjective ability and financial system of such different national legal persons should be general knowledge of the industry. There was no change because Hanjin Shipping did not give evidence in the absence of trial. The above-mentioned obvious property independence of Hanjin China and Hanjin Shipping can also be confirmed from the statement of Hanjin China in the trial and the actual operation of Hanjin China for many years. Therefore, in summary of this case, it is not appropriate to identify the mixture property of Hanjin Shipping and Hanjin China. There is no factual basis for the application of Article 63 of the Company Law. The court does not support the claim raised by Western Logistics Company that Hanjin Shipping and Hanjin China shall bear joint and severally liabilities to Western Logistics Company. (4) Regarding whether Western Logistics Company has a lien on 1,174 containers. Western Logistics Company provides contracting business and storage services for Hanjin China and enjoys the right to request contracting fees and storage

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fees according to law. If Hanjin China fails to pay the contracting fees and storage fees to Western Logistics Company according to the terms of the contract, according to Article 264 of the Contract Law, “where the ordering party fails to pay the remuneration or the price for materials and etc., the contractor shall have the right to lien upon the results of the work, except as otherwise agreed upon by the parties” and Article 380 “where a storing party fails to pay the storage fee and other expenses according to the terms of the contract, the safekeeping party is entitled to lien on the stored article, except as otherwise agreed upon by the parties” and in conjunction with Article 82 of the Guaranty Law “the lien described in the law refers to the acts of the creditor, in line with Article 84 of this law, to own the debtor’s movable property in accordance with the arrangements of the contract and if the debtor fails to pay the debts before the agreed deadline, the creditor has the right to take lieu of the property and convert it into money, or auction or sell off the property, and use the proceeds to be paid off preferentially according to provisions of this Law), and Article 84 of the Guaranty Law “if the debtor fails to pay the debts incurred during the execution of storage contracts, transport contracts and processing contracts, the creditor has the right of lien. Other contracts that can take lieu according to law are also governed by the stipulations in the previous paragraph. The parties can exclude items that cannot be taken lien in the contract. And Article 108 of the Interpretation of the Relevant Issues by Supreme People’s Court on the Application of the Guaranty Law of the People’s Republic of China “when a creditor legally possesses the movable property delivered by the debtor and the debtor is not aware of the right to dispose of the movable property, the creditor may, in accordance with Article 82 of the Guaranty Law, exercise the lien.” Western Logistics Company and Hanjin China have not agreed to exercise the lien on Western Logistics Company in the port operation agreement. When Western Logistics Company legally possesses 1,174 containers, such as HJCU4076434, for its storage and contracting services, regardless of whether Hanjin China is the owner of the 1,174 containers, Western Logistics Company can enjoy the lien in accordance with the law on the above 1,174 containers (see the attached table for the specific container number) and have the right to be preferentially compensated for the above-mentioned container auction or sale proceeds. In summary, according to Article 107, Article 263, Article 264, Article 366, Article 380 and Article 403 Paragraph 2 of the Contract Law of the People’s Republic of China, Article 82 and Article 84 of the Guaranty Law of the People’s Republic of China, Article 108 of the Interpretation of the Relevant Issues by Supreme People’s Court on the Application of the Guaranty Law of the People’s Republic of China, Article 38 Paragraph 3 of the Measures for the Payment of Litigation Costs and Article 144 of the Civil Procedure Law of the People’s Republic of China, the judgment was as follows: 1. Hanjin China should pay 6,207,172.55 yuan of the contracting and storage costs from August 2015 to August 31, 2016 and its interest to Western Logistics Company based on the interest rate of

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the same RMB loan interest rate of the People’s Bank of China for the same period from October 8, 2016 to the date when Hanjin China actually paid the principal; 2. Hanjin China should pay 1,591,103.89 yuan of the contracting and storage expenses to Western Logistics Company from September 1, 2016 to March 14, 2017; 3. Hanjin China should pay 5,000 yuan of the preservation application fee to Western Logistics Company; 4. Western Logistics Company has a lien on the above 1174 containers, such as HJCU4076434, (see the attached table for the specific container number) and has the right to be preferentially compensated for the above-mentioned container auction or sale proceeds. 5. reject other claims of Western Logistics Company. In the second-instance trial, the parties did not submit new evidence. The court confirmed the ascertained facts of first instance. The court believes that this case is port operation dispute. According to the appeals and defense opinions of both parties, the issues are summarized as follows: 1. whether Hanjin China shall assume the obligation that paying the contracting and storage fees to Western Logistics Company; 2. whether Hanjin China shall bear the responsibility of paying the transportation costs to Western Logistics Company between yards; 3. Whether Hanjin Shipping and Hanjin China shall pay jointly the above-mentioned expenses to Western Logistics Company. Regarding issue 1, whether Hanjin China shall assume the obligation that paying the contracting and storage fees to Western Logistics Company. Hanjin China signed Agreement on Port Container Storage Service and Equipment Repair and Maintenance Agreement with Western Logistics Company. The two agreements did not violate the mandatory provisions of laws and administrative regulations so it shall be legal and valid. Western Logistics Company has provided relevant services for Hanjin China in accordance with the terms of agreement, but Hanjin China did not pay the corresponding contracting and storage fees by agreement. Hanjin China argued that it signed the service agreement and maintenance agreement with Western Logistics Company as an agent of Hanjin Shipping and Western Logistics Company clearly knew that it was an agent of Hanjin Shipping when signing the agreement. Therefore, according to Article 402 of the Contract Law, Hanjin Shipping shall bear the responsibility to pay the contracting and storage costs. Hanjin China submitted its business license and business registration information, its agency agreement with Hanjin Shipping and the authorization letter issued by Hanjin Shipping to prove its claim. The business license submitted by Hanjin China is only to indicate its business scope. It is not clear that Hanjin China is the agent of Hanjin Shipping. When signed the contract and subsequent implementation of the agreement, Hanjin China did not present the agency agreement with Hanjin Shipping and the letter of authorization issued by Hanjin Shipping. Hanjin China did not submit any other evidence to prove that it had disclosed to Western Logistics Company that Hanjin China was an agent of Hanjin Shipping during signing and performing the agreement. According to the trial statement of Hanjin China, domestic port operation contracts are not all signed by Hanjin China and Hanjin Shipping also signed. Therefore, even if Western Logistics Company is a freight forwarding company established for many years, it cannot be determined

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that it shall know that Hanjin Shipping authorized Hanjin China to sign a service agreement and maintenance agreement with it. Therefore, Hanjin China disclosed to Western Logistics Company that it was an agent of Hanjin Shipping until the process of lawsuit. According to provisions of Article 403 Paragraph 2 of the Contract Law (if the trustee shall not perform the obligations to the third party due to the principal’s reasons, the trustee shall disclose the principal to the third party, and the third party may choose the trustee or the principal as the other party to the contract to claim its rights, but the third party may not change the selected counterpart), Western Logistics Company has the right to choose Hanjin China to bear the corresponding responsibility as the contractual party of the service agreement and the maintenance agreement in this case. The appeal claim for the parties to the service agreement and maintenance agreement that are Western Logistics Company and Hanjin Shipping by Hanjin China, which is no factual or legal basis, so the court does not support it. Hanjin China shall pay the contracting and storage fees to Western Logistics Company. The first-instance judgment confirmed it was correct, so the court supports it. The appeal of Hanjin China also stated that Western Logistics Company did not corresponding invoices for contracting and custody fees in accordance with the agreement, so the conditions for payment of contracting and storage fees were not fulfilled. However, Western Logistics Company has submitted the corresponding invoices and postal bill and receipts in this case, which can prove that Western Logistics Company has send the invoices to Hanjin China for the storage and hoisting charges from September 1, 2016 to March 4, 2017. Therefore, the conditions for Hanjin China to pay the contracting and storage fees to Western Logistics Company which have been fulfilled. Therefore, Hanjin China shall pay the contracting and storage fees to Western Logistics Company. The above-mentioned claims of Hanjin China do not stand up, so the court does not support it. Regarding issue 2, whether Hanjin China shall bear the responsibility of paying the transportation costs to Western Logistics Company between yards. Western Logistics Company transported 950 containers that had served Hanjin China at Yantian Yard to the Qianhai Depot, resulting in transportation cost of CNY214,800. The act did not ask the consent of Hanjin China, and Western Logistics Company also had no evidence to prove that this payment is for the loss. Therefore, Western Logistics Company’s appeal on the fee has no factual and legal basis, so the court does not support it. The first- instance judgement confirmed it was correct, so the court maintained it. Regarding issue 3, whether Hanjin Shipping and Hanjin China shall pay jointly the above-mentioned expenses to Western Logistics Company. Western Logistics Company maintains that Hanjin Shipping is the sole shareholder of Hanjin China. Therefore, it shall be jointly and severally liable for the debts of Hanjin China in accordance with Article 58 of the Company Law of the People’s Republic of China. However, as stated in the first-instance judgment, considering the actual operation of Hanjin China and Hanjin Shipping in China for many years, the property independence between them can be confirmed, which is inconsistent with Article 58

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of the Company Law of the People’s Republic of China that the property mixture of shareholders and company’s assets. Therefore, the first-instance judgment rejected Western Logistics Company’s claim that Hanjin Shipping and Hanjin China shall be jointly and severally liable to Western Logistics Company, which is not improper. The court supports it. The above-mentioned claims and reasons of Western Logistics Company are not established, so the court does not support it. In summary, the appeals of Western Logistics Company and Hanjin China are untenable and shall be rejected. The facts confirmed by first-instance judgement are clear and the application of is correct, which shall be supported. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 74,949.55 yuan, Western Logistics Company shall bear 10,118.19 yuan, and Hanjin China shall bear 64,831.36 yuan. Since Western Logistics Company has prepaid 67,891.05 yuan, the court will refund 57,772.86 yuan to it. The judgement is final. Presiding Judge: HOU Xianglei Judge: WANG Fang Judge: LI Mintao November 1, 2017 Judge Assistant: ZHOU Jin Clerk: LAI Hong Clerk: LIU Bihua

Guangzhou Maritime Court Civil Judgment Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2016) Yue 72 Min No.991 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1282. Cause of Action 216. Dispute over undertaking contract of fishing ships. Headnote Owner of five tourist fishing vessels held to be entitled to terminate charter contract for charterer’s failure to pay hire as promised, but owner not entitled to recover full amount of damages claimed. Summary The Plaintiff, Shenzhen Xiasha Tourism Service Co., Ltd. (Xiasha), signed Cooperation Agreement for Leisure and Sightseeing Fishing Vessel Project with the Defendant, Shenzhen Dapeng Bay Tourism Development Co., Ltd. (Dapeng), where Dapeng rented five fishing vessels from Xiasha. Due to Dapeng’s mounting overdue payments, Xiasha filed lawsuit against Dapeng to (1) dissolve the contract, and (2) recover the payment it claims Dapeng owes. After hearing the case, the court of first instance held that (1) Xiasha is entitled to terminate the contract according to the provisions established in the contract, but (2) Xiasha did not sufficiently support its claims regarding the money it claims it is owed. Therefore, apart from supporting Xiasha’s request to terminate the contract, the court of first instance rejected other claims of the Plaintiff Xiasha.

Judgment The Plaintiff: Shenzhen Xiasha Tourism Service Co., Ltd. Domicile: No.118, Jinsha Road, Xiasha, Dapeng Street, Longgang District, Shenzhen, Guangdong, China. Legal representative: CHEN Yuwang, chairman of the company. Agent ad litem: LIU Haigang, lawyer of Guangdong Yudian Law Firm. Agent ad litem: LI Song, lawyer of Guangdong Guanhao Law Firm.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_67

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The Defendant: Shenzhen Dapeng Bay Tourism Development Co., Ltd. Address: No.2 Renmin Road, Dapeng Street, Dapeng New District, Shenzhen, Guangdong, China. Legal representative: ZHANG Hongyu, general manager of the company. Agent ad litem: ZHANG Xiaodong, lawyer of Guangdong Pengzheng Law Firm. Agent ad litem: ZHOU Haifeng, intern attorney of Guangdong Pengzheng Law Firm. With respect to the case arising from dispute over fishing ship undertaking contract between the Plaintiff, Shenzhen Xiasha Tourism Service Co., Ltd., and the Defendant, Shenzhen Dapeng Bay Tourism Development Co., Ltd., after the case was filed on September 6, 2016, the court applied the general procedure according to law and held a hearing in public on November 8. Agent ad litem of the Plaintiff, LIU Haigang, and agents ad litem of the Defendant, ZHANG Xiaodong and ZHOU Haifeng, appeared in court to attend the hearing. The case was reconvened on February 14, 2017. Agent ad litem of the Plaintiff, LIU Haigang, and legal representative of the Defendant, ZHANG Hongyu, agent ad litem of the Defendant, ZHANG Xiaodong, appeared in court to participate in the cross-examination. Now the case has been concluded. The Plaintiff filed a lawsuit to the court: 1. the Defendant should pay the Plaintiff a contract fee of 128,526.12 yuan (temporary calculation until June 10, 2016); 2. the Defendant should pay the liquidated damages of 300,000 yuan to the Plaintiff; 3. the Defendant should pay the Plaintiff a late payment fee of 1,001.45 yuan. (According to the daily delinquent of the total contracted fee of 5 million to the 10th of June 2016); 4. the court should relieve the “leisure and sightseeing fishing boat project cooperation agreement signed between the original and the Defendant”; 5. court acceptance fee, property preservation application fee, and announcement fee should be borne by the Defendant. Facts and reasons: on June 15, 2013, the Plaintiff and Defendant signed Cooperation Agreement for Leisure and Sightseeing Fishing Vessel Project. The Defendant rented five plain fishing boats for the Plaintiff. The cooperation period was from June 17, 2013 to December 31, 2019. The contracting fee was 150,000 yuan per boat per year, increasing by 5,000 yuan every two years. During the performance of the contract, the Defendant repeatedly owed the contracting fee. The Plaintiff urged the Defendant to pay the Plaintiff a contract fee of 338,000 yuan from 2014 to 2016, and the outstanding debt of 128,526.12 yuan was not paid, causing huge losses to the Plaintiff. The Defendant argued that: 1. the Defendant has paid the full amount of the fishing vessel contracting fee and late payment fee to the Plaintiff, and there is no fact that the contracting fee is 128,526.12 yuan nor that the late payment fee is 1,001.45 yuan; 2. the expiration date of Cooperative Tourism Boat Project Cooperation Agreement is on December 31, 2019. There was no legal cause for the early termination of the contract. The Defendant did not breach the contract and did not have to pay the Plaintiff for liquidated damages. In the process of cooperation between the two parties, the Plaintiff did not fulfill the obligation of “responsible for coordinating the pick-up and drop-off points and terminals used by the Defendant”

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and “the foreign vessel responsible for driving the business activities in the Da’ao Bay area”. The Defendant was suspended for nearly three months, and the Plaintiff defaulted. In summary, the Plaintiff’s claims should be rejected. The court organized the parties to carry out the evidence exchange and cross-examination. The Plaintiff submitted 8 sets of evidence and the Defendant submitted 2 sets of evidence. The evidence of non-controversy between the parties shall be confirmed by the court and supported in the volume. For controversial evidence, the court has ascertained as follows: 1. regarding a number of dunning letters at different times submitted by the Plaintiff, although the multiple dunning letters were not originals, the Defendant’s reply to the Plaintiff’s letter of May 5, 2014 and the fact that the Plaintiff had repeatedly dubbed the money on May 7, 2015, and the payment of the contracting fee submitted by the Defendant were sufficient. The payment time recorded on the receipt is also indirectly verified. The Defendant did not file a rebuttal of evidence and confirmed its probative force. 2. The copy of the 4 photos submitted by the Defendant has no clear location identification, and it cannot be proved that it is in the sea area of Shenzhen Dayao Bay as agreed in the agreement, so its proof will not be confirmed. Whether the evidence submitted by the two parties can prove their respective claims will be comprehensively determined based on the trial situation and the confirmed evidence. Based on the above-mentioned evidence, court trial, and supplementary cross-examination, the court found the facts as follows: On June 15, 2013, the Plaintiff and the Defendant signed Cooperation Agreement for Leisure Tourism Boat Project. According to the agreement, the Plaintiff contracted the management rights of the five sightseeing fishing vessels (Yuelonggang Yuxiu 8801, 8815, 8816, 8818, and 8819) to the Defendant, and the Defendant operated and managed them independently. The Defendant was to pay the Plaintiff an annual contract fee of 150,000 yuan per contract, and the contracting fee would be increased by 5,000 yuan every two years. The annual contract fee for each ship in the first and second years is 150,000 yuan, and the third and fourth year of each ship is annual. The contracting fee is 155,000 yuan. The contracting fee for each ship in the fifth and sixth years is 160,000 yuan per year. The annual contracting fee for the first and second years is paid within 10 days of the quarterly (3 months), and the third to sixth year contracting fees are the average monthly payment that is made monthly, and the monthly contract fee is paid before the 10th of each month. If the overdue payment is not paid within 10 days, the Plaintiff should notify the Defendant through effective contact. The Defendant pays the late payment fee to the Plaintiff according to the amount of the arrears, which is overdue for 3 months unpaid, the Plaintiff has the right to cancel the agreement unilaterally, recover the vessel, and recover the loss from the Defendant. The two sides also agreed that the Plaintiff is responsible for coordinating the relevant functional departments, ensuring that the business of the Defendant's lawful operation can be carried out smoothly, and coordinating the handling of related issues arising from vicious competition. The Plaintiff was responsible for expelling the foreign vessels operating in the Da’ao Bay waters. The Plaintiff was responsible for coordinating the pick-up and drop-off points and docks used by the Defendants as “the landing

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point for the tourists of the Da’ao Bay Beach.” The Defendant should be unconditionally obeyed. The right to use the sea area extended by the pick-up and drop-off point to the sea belongs to the other party. If the sea area cannot be stopped, the Plaintiff shall provide the sea area where the Defendant has parked. Otherwise, the Defendant has the right to terminate the contract. The observant party has the right to attach the indemnity party to pay the liquidated damages of 300,000 yuan and to compensate the other party’s losses. The term of the agreement is from June 17, 2013 to December 31, 2019. The contract for the transfer of the fishing vessel will be handled on the day after the contract is signed (the delivery date of Yuelonggang Yuxiu No.8801 is July 1, 2013). The agreement is stamped with the official seal of the Plaintiff and the Defendant. The Plaintiff had no objection to the full payment of the accused contract fees and late fees before 2014. According to the agreement, in 2014, the Defendant should pay the Plaintiff a contract fee of 187,500 yuan for 5 ships per quarter. On October 9, 2014, the Defendant paid the Plaintiff a contract fee of 187,500 yuan from January to March of that year. On November 10 and 11 of the same year, the Defendant paid the Plaintiff twice the total contract fee of 187,500 yuan from April to June of that year. On December 30 of the same year, the Defendant paid the Plaintiff the contract fee of 187,500 yuan from July to September of that year. On April 3 and 8, 2015, the Defendant paid the Plaintiff twice the contracting fee and the late payment fee of 199,733.76 yuan from October to December 2014, deducting the contract fee of 187,500 yuan and the late payment fee of 7,366.88 yuan from October to December. 4,866.88 yuan for multi-payment offset the future contract fees. On June 30, July 2, and July 29, 2015, the Defendant paid the Plaintiff the contract fee and late payment fee of 190,133.12 yuan from January to March of that year. On October 23, the Defendant paid the Plaintiff the contract fee and the late payment fee of 200,000 yuan from April to June of that year. According to the agreement, the contract fees for July 2015 and beyond will be paid monthly. The annual contracting fee for each ship is 155,000 yuan, and the monthly contracting fee for 5 ships is 64,583.33 yuan. On February 1, 2016, the Defendant paid 50,000 yuan to the Plaintiff twice (partial contracting fee for July 2015). On February 29, the Defendant paid 50,000 yuan to the Plaintiff (the contractual fee in July 2015 and the partial contracting fee in August). On March 12, the Defendant paid 150,000 yuan to the Plaintiff (the contract payment in August 2015, the contracting fee in September, and the partial contracting fee in October). On March 14, the Defendant paid 82,437.01 yuan to the Plaintiff (the contract payment in October 2015, the late payment fee from July to October, and the partial contract fee in November). The Defendants paid a total of 130,000 yuan to the Plaintiff on April 8, May 9, May 23, May 30, and May 31 (the contract fee for the November 2015 contract and the contract fee for December). On June 1, 2016, the Defendant paid the Plaintiff 149,000 yuan (contract from January to March 2016). On June 3, the Defendant paid the Plaintiff 79,000 yuan (the contract fee and late payment fee for April of that year). On September 18, the Defendant paid the Plaintiff 195,000 yuan (the contract fee for the period from May to July of that year). In addition to the above payment, the Defendant transferred the

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money to the Plaintiff through the bank on September 18, 2016, and all the Plaintiffs issued a receipt to the Defendant with the seal of the Plaintiff company. After the signing of the agreement, the Plaintiff’s notices were sent on January 23, May 5, June 16, December 23, March 10, April 14, May 25, and October 8, 2014, respectively. The dunning notice and the letter of intent were issued to the Defendant several times. The Defendant filed an application for the delay of the contracting fee with the Plaintiff on December 31, 2013 and January 7, 2015, and informed the Plaintiff on May 7, 2015. The letter will reply. On May 30, 2016, the Plaintiff entrusted Guangdong Guanhao Law Firm to issue a lawyer's letter to the Defendant, stating that the Defendant had been in default for the performance of the contract and repeatedly breached the performance commitment. If the Defendant did not pay the contract fee, liquidated damages, and late payment fee in the future, the legal responsibility for the termination of the cooperation agreement for the leisure and fishing vessel project between the two parties shall be borne by the Defendant. The Defendant confirmed that he received the lawyer’s letter, but said that he did not default on the contract fee and late payment fee. The court held that the case was a dispute over the contract of a fishing vessel based on the cause of action and the claim of the Plaintiff. Cooperation Agreement for Leisure and Sightseeing Fishing Vessels signed by the original and the Defendant is a true sense of the parties. It does not violate the mandatory provisions of laws and administrative regulations, and it is legal and valid. Both parties should legally enjoy its rights and perform in accordance with the stipulations and laws. According to the arguments of both parties and the court investigation, the issues are that: 1. as of June 10, 2016, whether the Defendant still owes the Plaintiff a contract fee of 128,526.12 yuan and late payment fee of 1,001.45 yuan; 2. whether the Plaintiff and the Defendant have a breach of contract and whether the Defendant needs to pay liquidated damages of 300,000 yuan; 3. whether Cooperative Agreement for Leisure and Fishing Vessels Project is lifted. Regarding whether the Defendant still owes the Plaintiff’s contract fees and late fees, according to the supplementary cross-examination, according to the details of the unpaid contract fees, and late payment fees submitted by the Plaintiff from July 2015 to June 2016, the total amount of the contract fees and late payment fees that the Defendant should pay during the above period but did not pay is 820,000.58 yuan, submitted according to the Defendant. According to the receipts issued by the Plaintiff and the bank transfer receipts, the Defendant paid the Plaintiff the contract fees and late payment fees from July 2015 to June 2016 totaling 885,473.01 yuan, including the remarks of the bank transfer return on September 18, 2016, which were also included. In July, the contracting fee was deducted from the contractual fee of 64,583.33 yuan in July. The Defendant paid a total of 820,889.68 yuan to the Plaintiff, exceeding the 82,000.58 yuan listed in the Plaintiff's details. The Defendant had paid the full amount from July 2015 to June 2016. The contracting fee and the late payment fee are confirmed by the Plaintiff in the supplementary cross-examination.

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Regarding whether the Plaintiff and the Defendant were in breach of contract, the copy of the four photos submitted by the Defendant did not have a clear location mark. It could not prove that the vessel was in the waters of Da’ao Bay based on the photo. The Defendant stated in the reply letter that there was no safe berthing and boarding and landing. In other safety and environmental protection facilities, the Defendant was issued a rectification notice by the Guangdong Provincial Fishery Corps Dapeng Brigade. The Defendant did not submit the rectification notice, and the parties agreed in the agreement that the Plaintiff is responsible for coordinating the use of the pick-up and drop-off points and terminals used by the Defendant. The Da’ao Bay beach visitors did not explicitly agree on the attachment conditions of the pick-up and drop-off points and the docks. Therefore, the Defendant’s claim that the Plaintiff breached the contract was not accepted. According to the agreement, the annual contract fees for the first and second years shall be paid to the Plaintiff within 10 days of the quarterly (3 months). The third to sixth year contract fees shall be paid monthly. Before the 10th of the month, the Defendant shall pay the contractual fee for the current month. If the overdue payment is not paid within 10 days, the Plaintiff shall notify the Defendant through effective contact. The Defendant shall pay the late payment fee to the Plaintiff according to the amount of the arrears, and the Plaintiff has the right to collect the late payment for 3 months. The agreement was unilaterally cancelled, the vessel was recovered, and the loss was recovered from the Defendant. On October 9, 2014, the Defendant paid the Plaintiff a contract fee of 187,500 yuan from January to March 2014. According to the agreement, the contract fee should be paid within 10 days of the end of March of that year. The Defendant actually paid the contracting fee, overdue for 3 months. The contractor’s claim for the Plaintiff’s lawsuit was tentatively scheduled for June 10, 2016. The Defendant’s payment to the Plaintiff on September 18, 2016 included the contract fee for June 2016. According to the agreement, the contract fee for June 2016 should be the payment made before June 10, and the time the Defendant actually paid the contract fee was overdue for 3 months. It can be seen from the payment time recorded by the Defendant's contract fee receipt, the remarks and the time of the bank transfer return, and the remarks. The Defendant’s payment time has been overdue for 3 months, which constitutes a breach of contract. The Defendant claimed that the deferred act was approved by the Plaintiff, but the Defendant did not submit sufficient evidence to prove this, nor did it submit evidence to prove that the two parties changed the payment method and time limit of the contract fee. The Defendant’s argument is not accepted. The Plaintiff requested the Defendant to pay a claim for liquidated damages of 300,000 yuan. Since the Plaintiff did not provide evidence of the relevant losses, the Plaintiff did not support its claim. Whether the Plaintiff has the right to terminate the contract. Article 5.1 of Cooperative Agreement for Leisure and Fishing Vessels Project stipulates that: “…, if the payment is overdue for 3 months, the Plaintiff has the right to cancel the agreement unilaterally, recover the vessel and recover the loss from the Defendant.” According to the second paragraph of Article 93 of the Contract Law of the People’s Republic of China, “the parties may agree on the conditions for the party

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to terminate the contract. When the conditions for the termination of the contract are completed, the right of the right to terminate the contract.” In this case, the Defendant is sufficient. The contract payment was paid from 2014 to June 2016, but the payment period was overdue for 3 months. The Plaintiff was entitled to the contract cancellation according to law. According to the first paragraph of Article 96 of the Contract Law of the People’s Republic of China, “if the parties claim to terminate the contract in accordance with Article 93 Paragraph 2, and Article 94 of this Law, they shall notify the other party. The contract shall arrive from the notice. If the other party disagrees, the other party may object to the people’s court or the arbitration institution to confirm the validity of the contract.” After the Plaintiff has filed a lawsuit with the court, the Plaintiff explicitly requests the dissolution of the leisure and fishing boat project between the original and the Defendant. Cooperation Agreement, when the court held the hearing on the case on November 8, 2016, the Defendant responded to the defense and clearly stated that the Plaintiff’s intention to terminate the contract indicated that the contract for the fishing vessel involved was released according to law on November 8, 2016. The Plaintiff requested the Defendant to bear the application fee for the property preservation and the announcement fee. Since the above fees have not yet occurred, they will not be supported. In summary, the Plaintiff’s claim was partially established. In accordance with Article 93 Paragraph 2, and Article 96 Paragraph 1 of the Contract Law of the People’s Republic of China, the judgment is as follows: 1. The Plaintiff Shenzhen Xiasha Tourism Service Co., Ltd. and the Defendant Shenzhen Dapeng Bay Tourism Development Co., Ltd.’s Cooperative Agreement for Leisure and Fishing Boat Project shall be dissolved on November 8, 2016; 2. Reject other claims of the Plaintiff, Shenzhen Xiasha Tourism Service Co., Ltd. Court acceptance fee in amount of 7,742.91 yuan, shall be borne by the Plaintiff Shenzhen Xiasha Tourism Service Co., Ltd. If any party disagrees with this judgment, it can submit an appeal petition to the court within 15 days from the date of delivery of the judgment, together with copies according to the number other parties, so as to appeal to the Guangdong High People’s Court. Presiding Judge: CHANG Weiping Judge: XU Chunlong Judge: ZHAI Xin March 2, 2017 Clerk: DAI Wenchao

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Guangdong High People’s Court Civil Judgment Shenzhen Xiasha Tourism Service Co., Ltd. v. Shenzhen Dapeng Bay Tourism Development Co., Ltd. (2017) Yue Min Zhong No.1343 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1275. Cause of Action 216. Dispute over undertaking contract of fishing ships. Headnote Affirming lower court decision holding owner of five tourist fishing vessels to be entitled to terminate charter contract for charterer’s failure to pay hire as promised, as owner had not waived right to terminate. Summary The Plaintiff, Shenzhen Xiasha Tourism Service Co., Ltd. (Xiasha), signed Cooperation Agreement for Leisure and Sightseeing Fishing Vessel Project with the Defendant, Shenzhen Dapeng Bay Tourism Development Co., Ltd. (Dapeng), where Dapeng rented five fishing vessels from Xiasha. Due to Dapeng’s mounting overdue payments, Xiasha filed lawsuit against Dapeng to (1) dissolve the contract, and (2) recover the payment it claims Dapeng owes. After hearing the case, the court of first instance held that (1) Xiasha is entitled to terminate the contract according to the provisions established in the contract, but (2) Xiasha did not sufficiently support its claims regarding the money it claims it is owed. Therefore, apart from supporting Xiasha’s request to terminate the contract, the court of first instance rejected other claims of the Plaintiff Xiasha. Dapeng appealed the judgment of first instance, arguing that Xiasha has no right to terminate the contract. The court of second instance, however, affirmed the judgment of first instance.

Judgment The Appellant (the Defendant of first instance): Shenzhen Dapeng Bay Tourism Development Co., Ltd. Domicile: No.2 Renmin Road, Dapeng Street, Dapeng New District, Shenzhen, Guangdong, China. Legal representative: ZHANG Hongyu, general manager of the company.

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Agent ad litem: ZHANG Xiaodong, lawyer of Guangdong Pengzheng Law Firm. Agent ad litem: WANG Zhan, intern lawyer of Guangdong Pengzheng Law Firm. The Respondent (the Plaintiff of first instance): Shenzhen Xiasha Tourism Service Co., Ltd. Domicile: No.118, Jinsha Road, Xiasha, Dapeng Street, Longgang District, Shenzhen, Guangdong, China. Legal representative: CHEN Yuwang, chairman of the company. Agent ad litem: LIU Haigang, lawyer of Guangdong Guanhao Law Firm. Agent ad litem: LI Song, lawyer of Guangdong Guanhao Law Firm. With respect to the case arising from dispute over fishing ship undertaking contract between the Appellant, Shenzhen Dapeng Bay Tourism Development Co., Ltd. (hereinafter referred to as “Dapeng”), and the Respondent, Shenzhen Xiasha Tourism Service Co., Ltd. (hereinafter referred to as “Xiasha”), the Appellant disagreed with the Guangzhou Maritime Court (2016) Yue 72 Min Chu No.991 Civil Judgment and appealed to the court. After the case was entertained on June 13, 2017, the court formed a collegiate panel to conduct trial. Now the case has been concluded. Dapeng appealed that: 1. the first item of the first-instance judgment should be revoked, and Cooperation Agreement for Leisure and Sightseeing Fishing Vessel Project signed by Dapeng and Xiasha (hereinafter referred to as Cooperation Agreement) should be changed to continue; 2. court acceptance fee should be borne by Xiasha. Facts and reasons: firstly, the first-instance judgment found the facts incorrectly. (1) The first-instance judgment found that the reason for the company’s failure to breach the contract was wrong. First of all, in the fourth part of Cooperation Agreement, the rights, obligations, and responsibilities of the company are not detailed in the terms of the pick-up and drop-off, but the cooperation agreement clearly stipulates that the company will coordinate The downwind passengers and docks used by Dapeng and the obligation to ensure the smooth operation of all businesses legally operated by Dapeng shall be arranged by the Xiasha as soon as possible to arrange the pick-up and drop-off points and docks to meet the needs of the lawful and normal operation of Dapeng. This proves that the pick-up and drop-off point and the terminal are indispensable conditions for Xiasha to operate the leased ship. Failure to meet the relevant conditions or meet the requirements will definitely cause the operation of Dapeng to be seriously affected, and the economic interests will be impaired. In the first instance, the parties did not make detailed agreement on the details, and rejected the validity of the relevant provisions of Cooperation Agreement, exempting the contractual obligations of the company, which is neither legal nor reasonable. The realization of the contractual purpose of Dapeng depends on Xiasha’s proper performance of this obligation, and the exemption of the contractual obligations of Xiasha will result in the inability to achieve the contractual purpose, which is contrary to the principle of honesty and credit and the original intention of the parties to sign the contract. Secondly, after

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the trial of the first instance, Dapeng found new evidence such as Reform Notice and Dapeng New District Dapeng Office Beach Management Contract, which proved that Xiasha did not coordinate the up and down passengers used by Dapeng in time, and it did not drive out the foreign vessels as agreed, coordinate the handling of related issues, so there is a breach of contract. Finally, because the company did not deal with the pick-up and drop-off points and the docks in a timely manner, the Dapeng had been stagnant for a long time due to Revision Notice issued by the Guangdong Provincial Fishery Corps Dapeng Brigade. The losses were serious. Afterwards, although Dapeng barely resumed its business, Dapeng had to solve it by itself because the company had not perfected the terminal matters for a long time, which greatly increased the operating costs. In addition, according to the contract, Xiasha also had “external vessels that drive business activities in the Da’ao area”, “coordinated handling of related problems caused by vicious competition” and “ensure that no more tourist fishing boats, yachts or speedboats will be added”. Contractual obligations to operate. In the course of the operation of Dapeng, there has always been a problem of vicious competition from foreign vessels. Dapeng communicated with Xiasha several times and requested Xiasha to coordinate and deal with the related issues, but Xiasha did not effectively solve it, which seriously interfered with and affected the normal operation of Dapeng. (2) The first-instance judgment found that the Dapeng had always had errors in breach of contract. The default behavior of Xiasha caused Dapeng Bay to fail to operate normally or even stop its operation, which seriously hindered the purpose of the contract signed by Dapeng. According to the law, before the company fulfilled its contractual obligations properly, Dapeng had the right to refuse to fulfill its obligation to pay the contracting fee. Therefore, the first-instance judgment found that Dapeng had always had a breach of contract. (3) The first-instance judgment found that Xiasha always enjoyed the wrongness of the agreed cancellation right. Although Dapeng had been in a situation where the delivery contract fee has been overdue for 3 months, it has been fulfilling the contractual obligation to deliver the contracting fee and has paid the late payment fee according to the contract. Xiasha also accepted the overdue performance of the Dapeng and issued the receipt, which has never advocated the exercise of the right to terminate the agreement, and has never raised any objection to the continued performance. From the fact that Xiasha received the contract payment and issued the receipt when the Dapeng was overdue, and the external performance that the Xiasha never claimed to terminate the contract relationship, there was a real intention to continue to perform the contract, and the right to terminate the contract was waived. That is, the right to cancel the agreement previously enjoyed by Xiasha has been eliminated. 2. The first-instance judgment was improperly applied. “Conflict Resolution” in Cooperation Agreement signed by Dapeng and Xiasha had a clear agreement, and both parties should try to resolve it through friendly negotiation. Xiasha did not negotiate with Dapeng on the overdue performance of Dapeng before bringing the lawsuit the court. The direct lawsuit to the court for the termination of the contract did not provide any room for negotiation, and it violated the dispute resolution clause of the contract. Therefore,

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the first-instance judgment terminating the contract violated the principle of autonomy of will, and it is neither reasonable nor legal. Xiasha argued that the first-instance judgment found that the facts clearly, the evidence was sufficient, and the applicable law was correct, so the appeal should rejected and the original judgment was upheld. Facts and reasons: 1. after the signing of Cooperation Agreement, Dapeng almost failed to pay the contracting fee on time, and again defaulted on the contracting fee during the litigation period, causing the company to sue Dapeng in another case. 2. The beaches and docks in Dapeng New District were owned by the state. The up and down points and terminals agreed by both parties are not owned and managed by Xiasha. The rectification notice issued by the Dapeng Brigade of Guangdong Fishery Corps was aimed at the terminal facilities, and the terminal construction has all been handed over to the government. The Xiasha is not a property owner. After the Xiasha communicated with the fishery administration department, the Dapeng did not stop operating and was punished for the rectification notice. 3. Xiasha was not obliged to forcibly expel other legally operated ships without law enforcement rights and to protect the monopoly of Dapeng. Xiasha filed a lawsuit to the court of first instance that: 1. Dapeng paid the contracting fee of 128,526.12 yuan to the sand company (temporary calculation until June 10, 2016); 2. Dapeng paid the liquidated damages of 300,000 yuan to the company; 3 the Dapeng paid a late payment fee of 1,001.45 yuan to the company (according to the daily delinquency of the total contracted fee of 5 million to the end of June 10, 2016); 4. lifting Cooperation Agreement signed between Dapeng and Xiasha; 5. court acceptance fee, property preservation application fee, and announcement fee shall be borne by Dapeng. The court of first instance found the following facts: on June 15, 2013, Xiasha and Dapeng signed Cooperation Agreement for Leisure Tourism Boat Project. According to the agreement, Xiasha contracted the management rights of the five sightseeing fishing vessels (Yuelonggang Yuxiu 8801, 8815, 8816, 8818, and 8819) to Dapeng, and Dapeng operated and managed them independently. Dapeng was to pay Xiasha an annual contract fee of 150,000 yuan per contract, and the contracting fee would be increased by 5,000 yuan every two years. The annual contract fee for each ship in the first and second years is 150,000 yuan, and the third and fourth year of each ship is annual. The contracting fee is 155,000 yuan. The contracting fee for each ship in the fifth and sixth years is 160,000 yuan per year. The annual contracting fee for the first and second years is paid within 10 days of the quarterly (3 months), and the third to sixth year contracting fees are the average monthly payment that is made monthly, and the monthly contract fee is paid before the 10th of each month. If the overdue payment is not paid within 10 days, Xiasha should notify Dapeng through effective contact. Dapeng pays the late payment fee to Xiasha according to the amount of the arrears, which is overdue for 3 months. Unpaid, Xiasha has the right to cancel the agreement unilaterally, recover the vessel, and recover the loss from Dapeng. The two sides also agreed that Xiasha is responsible for coordinating the relevant functional departments, ensuring that the business of Dapeng’s lawful operation can be carried out smoothly, and coordinating the handling of related issues arising from vicious competition. Xiasha was

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responsible for expelling the foreign vessels operating in the Tai O Bay waters. Xiasha was responsible for coordinating the pick-up and drop-off points and docks used by Dapeng as “the landing point for the tourists of the Da’ao Beach”. Dapeng should be unconditionally obeyed. The right to use the sea area extended by the pick-up and drop-off point to the sea belongs to the other party. If the sea area cannot be stopped, Xiasha shall provide the sea area where Dapeng has parked. Otherwise, Dapeng has the right to terminate the contract. The observant party has the right to attach the indemnity party to pay the liquidated damages of 300,000 yuan and to compensate the other party’s losses. The term of the agreement was from June 17, 2013 to December 31, 2019. The contract for the transfer of the fishing vessel will be handled on the day after the contract was signed (the delivery date of Yuelonggang Yuxiu No.8801 was July 1, 2013). The agreement is stamped with the official seal of Xiasha and Dapeng. Xiasha had no objection to the full payment of the accused contract fees and late fees before 2014. According to the agreement, in 2014, Dapeng should pay Xiasha a contract fee of 187,500 yuan for 5 ships per quarter. On October 9, 2014, Dapeng paid Xiasha a contract fee of 187,500 yuan from January to March of that year. On November 10 and 11 of the same year, Dapeng paid Xiasha twice the total contract fee of 187,500 yuan from April to June of that year. On December 30 of the same year, Dapeng paid Xiasha the contract fee of 187,500 yuan from July to September of that year. On April 3 and 8, 2015, Dapeng paid Xiasha twice the contracting fee and the late payment fee of 199,733.76 yuan from October to December 2014, deducting the contract fee of 187,500 yuan and the late payment fee of 7,366.88 yuan from October to December. 4,866.88 yuan for multi-payment offset the future contract fees. On June 30, July 2, and July 29, 2015, Dapeng paid Xiasha the contract fee and late payment fee of 190,133.12 yuan from January to March of that year. On October 23, Dapeng paid Xiasha the contract fee and the late payment fee of 200,000 yuan from April to June of that year. According to the agreement, the contract fees for July 2015 and beyond would be paid monthly. The annual contracting fee for each ship was 155,000 yuan, and the monthly contracting fee for 5 ships was 64,583.33 yuan. On February 1, 2016, Dapeng paid 50,000 yuan to Xiasha twice (partial contracting fee for July 2015). On February 29, Dapeng paid 50,000 yuan to Xiasha (the contractual fee in July 2015 and the partial contracting fee in August). On March 12, Dapeng paid 150,000 yuan to Xiasha (the contract payment in August 2015, the contracting fee in September, and the partial contracting fee in October). On March 14, Dapeng paid 82,437.01 yuan to Xiasha (the contract payment in October 2015, the late payment fee from July to October, and the partial contract fee in November). Dapeng paid a total of 130,000 yuan to Xiasha on April 8, May 9, May 23, May 30, and May 31 (the contract fee for the November 2015 contract and the contract fee for December). On June 1, 2016, Dapeng paid Xiasha 149,000 yuan (contract from January to March 2016). On June 3, Dapeng paid Xiasha 79,000 yuan (the contract fee and late payment fee for April of that year). On September 18, Dapeng paid Xiasha 195,000 yuan (the contract fee for the period from May to July of that year). In addition to the above payment, Dapeng

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transferred the money to Xiasha through the bank on September 18, 2016, and all Xiasha issued a receipt to Dapeng with the seal of Xiasha. After the signing of the agreement, Xiasha’s notices were sent on January 23, May 5, June 16, December 23, March 10, April 14, May 25, and October 8, 2014, respectively. The dunning notice and the letter of intent were issued to Dapeng several times. Dapeng filed an application for the delay of the contracting fee with Xiasha on December 31, 2013 and January 7, 2015, and informed Xiasha on May 7, 2015. The letter will reply. On May 30, 2016, Xiasha entrusted Guangdong Guanhao Law Firm to issue a lawyer’s letter to Dapeng, stating that Dapeng had been in default for the performance of the contract and repeatedly breached the performance commitment. If Dapeng did not pay the contract fee, liquidated damages, and late payment fee in the future, the legal responsibility for the termination of the cooperation agreement for the leisure and fishing vessel project between the two parties shall be borne by Dapeng. Dapeng confirmed that he received the lawyer’s letter, but said that he did not default on the contract fee and late payment fee. The court of first instance held that the case was a dispute over the contract of a fishing vessel based on the cause of action and the claim of Xiasha. Cooperation Agreement signed by Xiasha and Dapeng was a true sense of the parties. It did not violate the mandatory provisions of laws and administrative regulations, and it was legal and valid. Both parties should legally enjoy its rights and perform in accordance with the stipulations and laws. According to the arguments of both parties and the court investigation, the issues of the case were that: 1. as of June 10, 2016, whether Dapeng still owed Xiasha a contract fee of 128,526.12 yuan and late payment fee of 1,001.45 yuan; 2. whether Xiasha and Dapeng had a breach of contract and whether Dapeng needed to pay liquidated damages of 300,000 yuan; 3. whether Cooperative Agreement for Leisure and Fishing Vessels Project was lifted. Regarding whether Dapeng still owed Xiasha’s contract fees and late fees, according to the supplementary cross-examination, according to the details of the unpaid contract fees, and late payment fees submitted by Xiasha from July 2015 to June 2016, the total amount of the contract fees and late payment fees that Dapeng should pay during the above period but did not pay was 820,000.58 yuan, submitted according to Dapeng. According to the receipts issued by Xiasha and the bank transfer receipts, Dapeng paid Xiasha the contract fees and late payment fees from July 2015 to June 2016 totaling 885,473.01 yuan, including the remarks of the bank transfer return on September 18, 2016, which were also included. In July, the contracting fee was deducted from the contractual fee of 64,583.33 yuan in July. Dapeng paid a total of 820,889.68 yuan to Xiasha, exceeding the 82,000.58 yuan listed in Xiasha's details. Dapeng had paid the full amount from July 2015 to June 2016. The contracting fee and the late payment fee were confirmed by Xiasha in the supplementary cross-examination. Regarding whether Xiasha and Dapeng were in breach of contract, the copy of the four photos submitted by Dapeng did not have a clear location mark. It could not prove that the vessel was in the waters of Da’ao Bay based on the photo.

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Dapeng stated in the reply letter that there was no safe berthing and boarding and landing. In other safety and environmental protection facilities, Dapeng was issued a rectification notice by the Guangdong Provincial Fishery Corps Dapeng Brigade. Dapeng did not submit the rectification notice, and the parties agreed in the agreement that Xiasha was responsible for coordinating the use of the pick-up and drop-off points and terminals used by Dapeng. The Da’ao Bay beach visitors did not explicitly agree on the attachment conditions of the pick-up and drop-off points and the docks. Therefore, Dapeng’s claim that Xiasha breached the contract was not accepted. According to the agreement, the annual contract fees for the first and second years shall be paid to Xiasha within 10 days of the quarterly (3 months). The third to sixth year contract fees shall be paid monthly. Before the 10th of the month, Dapeng shall pay the contractual fee for the current month. If the overdue payment is not paid within 10 days, Xiasha shall notify Dapeng through effective contact. Dapeng shall pay the late payment fee to Xiasha according to the amount of the arrears, and Xiasha has the right to collect the late payment for 3 months. The agreement was unilaterally cancelled, the vessel was recovered, and the loss was recovered from Dapeng. On October 9, 2014, Dapeng paid Xiasha a contract fee of 187,500 yuan from January to March 2014. According to the agreement, the contract fee should be paid within 10 days of the end of March of that year. Dapeng actually paid the contracting fee, overdue for 3 months. The contractor’s claim for Xiasha’s lawsuit was tentatively scheduled for June 10, 2016. Dapeng’s payment to Xiasha on September 18, 2016 included the contract fee for June 2016. According to the agreement, the contract fee for June 2016 should be the payment made before June 10, and the time Dapeng actually paid the contract fee was overdue for 3 months. It can be seen from the payment time recorded by Dapeng’s contract fee receipt, the remarks and the time of the bank transfer return, and the remarks. Dapeng’s payment time has been overdue for 3 months, which constitutes a breach of contract. Dapeng claimed that the deferred act was approved by Xiasha, but Dapeng did not submit sufficient evidence to prove this, nor did it submit evidence to prove that the two parties changed the payment method and time limit of the contract fee. Dapeng’s argument was not accepted. Xiasha requested Dapeng to pay a claim for liquidated damages of 300,000 yuan. Since Xiasha did not provide evidence of the relevant losses, Xiasha did not support its claim. Whether Xiasha had the right to terminate the contract. Article 5.1 of Cooperative Agreement for Leisure and Fishing Vessels Project stipulated that: “…, if the payment is overdue for 3 months, Xiasha has the right to cancel the agreement unilaterally, recover the vessel and recover the loss from Dapeng.” According to Article 93 Paragraph 2 of the Contract Law of the People’s Republic of China, “the parties may agree on the conditions for the party to terminate the contract. When the conditions for the termination of the contract are completed, the right of the right to terminate the contract.” In this case, Dapeng was sufficient. The contract payment was paid from 2014 to June 2016, but the payment period was overdue for 3 months. Xiasha was entitled to the contract cancellation according to law. According to Article 96 Paragraph 1 of the Contract Law of the People’s

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Republic of China, “if the parties claim to terminate the contract in accordance with the provisions of Article 93 Paragraph 2, and Article 94 of this Law, they shall notify the other party. The contract shall arrive from the notice. If the other party disagrees, the other party may object to the people’s court or the arbitration institution to confirm the validity of the contract.” After Xiasha had filed a lawsuit with the court, Xiasha explicitly requested the dissolution of the leisure and fishing boat project between Xiasha and Dapeng. Cooperation Agreement, when the court of first instance held the hearing on the case on November 8, 2016, Dapeng responded to the defense and clearly stated that Xiasha’s intention to terminate the contract indicated that the contract for the fishing vessel involved was released according to law on November 8, 2016. Xiasha requested Dapeng to bear the application fee for the property preservation and the announcement fee. Since the above fees had not yet occurred, they would not be supported. In summary, Xiasha’s claim was partially established. In accordance with Article 93 Paragraph 2, and Article 96 Paragraph 1 of the Contract Law of the People’s Republic of China, the judgment was as follows: 1. Xiasha and Dapeng’ contract Cooperative Agreement for Leisure and Fishing Boat Project should be dissolved on November 8, 2016; 2. reject other claims from Xiasha. Court acceptance fee of first instance in amount of 7,742.91 yuan, should be borne by Xiasha. During the second instance, Dapeng submitted two new pieces of evidence: 1. Beach Management Contract signed by Shenzhen Dapeng New District Dapeng Office and Shenzhen Dapeng Xiasha Cooperative Company in 2015–2017. Shenzhen Dapeng Xiasha Co., Ltd. (hereinafter referred to as “Xiasha Co., Ltd.”), the parent company of Xiasha, was authorized by Shenzhen Dapeng New District Office to manage Da’ao Bay Beach from 2015 to 2017; namely Xiasha had the ability to perform the obligations in the Cooperation Agreement. 2. Notary, under the supervision of notary public, the agent of Xiasha took photos of the boats at Da’ao Bay Beach and Da’ao Bay. At the same time, the agent of Xiasha, under the supervision of the notary public, purchased a yacht consumption service and conducted a yacht consumption. It is proposed to prove that because the company has not fulfilled its obligations to drive out the foreign crew members operating in the Da’ao waters, many illegal vessels operating in the Da’ao Bay waters have caused difficulties in the operation of the Dapeng, and thus they are unable to pay the fishing vessel contract fees in a timely manner. Xiasha held that Beach Management Contract had no originals and did not recognize its authenticity, legality, and relevancy. Although Xiasha was a subsidiary of Xiasha Co., Ltd. the two companies have the relationship of shareholders and independent legal persons. Xiasha is not a contract party, and the contract has nothing to do with Xiasha, so Xiasha has no rights and obligations to manage the beach. Regarding the authenticity and legality of the Notarial Certificate, there is no objection to the purpose of the certificate. It is considered that the business subject involved is Shenzhen Xia Nan Tourism Service Co., Ltd. Xiasha Branch, which has legal business qualifications, and Xiasha. It has nothing to do with Xiasha Co., Ltd., and it cannot prove that Xiasha has the right and obligation to drive the ships legally operating in the sea area involved.

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As soon as the facts examined were confirmed, there was relevant evidence to support the evidence. The parties have not raised any objections, and the court confirms the facts ascertained. The court believes that this case is a fishing vessel contract dispute. According to the arguments of Dapeng and Xiasha, the issues of the case are that: 1. whether there is any breach of contract in the process of implementing Cooperation Agreement by Xiasha; 2. whether Cooperation Agreement should be lifted. 1. Whether there is any breach of contract in the process of implementing Cooperation Agreement by Xiasha. Cooperation Agreement signed by Xiasha and Dapeng on June 18, 2013 is the true meaning of the two parties. The content does not violate the mandatory provisions of laws and administrative regulations, and should be valid according to law. Both parties shall fully perform their obligations in accordance with the contract. According to the agreement of Cooperation Agreement, Dasha’s obligations in Cooperation Agreement involve coordinating relevant functional departments, ensuring that the various businesses legally operated by Dapeng can be smoothly carried out, and coordinating the handling of vicious competition. Relevant issues it is responsible for include coordinating the pick-up and drop-off points and terminals used by the Dapeng as “the landing point for the tourists of the Da’ao Beach” and the foreign vessels responsible for driving the business activities in the Tai O Bay waters. Judging from the above contents of the Cooperation Agreement, Xiasha is only responsible for coordinating the related matters that may be encountered by Dapeng in the course of its operation, and it is not reflected in the effect agreement that it should be achieved in fulfilling its obligations. Because the agreement did not stipulate the standards that Xiasha should fulfill its obligations, Dapeng did not provide evidence that Xiasha could not operate because of its non-performance obligations. Therefore, it was not unreasonable for the first instance to determine that Xiasha did not violate the contract. The lack of sufficient correlation between the evidence provided by Dapeng in the second instance and the facts of the company to be verified is not sufficient to prove that the company has breached the contract. The Dapeng appealed that the company had no evidence of breach of contract in the performance of the contract, and the court did not support it. The first trial was found to be appropriate, and the court will affirm it. 2. Whether Cooperation Agreement should be lifted. According to the agreement of Cooperation Agreement, Xiasha has the right to terminate the contract if Dapeng fails to pay the contract fee for three months. Dapeng confirmed the fact that it had not paid the contract fee for over three months during the cooperation period, but it believed that the company had accepted the contract fee and late payment fee of the Dapeng during the implementation of the agreement and did not report to Dapeng Bay before the lawsuit. Therefore, it alleges that the company has lost the right to terminate. According to Article 95 of the Contract Law of the People’s Republic of China on the elimination of the right to

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cancel, Cooperation Agreement of this case does not first have the time limit for the exercise of the right of rescission as stipulated by law or agreement; secondly, the right to waive should have a clear meaning. Xiasha accepts that Dapeng fulfills its contractual rights in accordance with the agreement, and it cannot presume that it has waived the right of dismissal in the agreement. The reasons for Dapeng’s appeal regarding the dismissal of the company’s right to dismiss the company are not supported due to the lack of facts and legal basis. As for Dapeng, it is claimed that due to the breach of contract by Xiasha, it enjoys the right of defense at the same time, so its failure to pay the contract on time does not constitute a breach of contract. After investigation, the parties exercising the right to defend at the same time must be based on the interdependence and mutual consideration between the rights and obligations of the parties. However, there is no such relationship between the breach of contractual obligations of the company under the Dapeng and the contractual payment due. The Dapeng does not violate the contract by exercising its right to defend at the same time. The reason why the agreement should not be lifted lacks facts and legal basis. The court does not support it. It is not inappropriate to terminate Cooperation Agreement signed by both parties. In summary, the reasons and requests for appeal of Dapeng are not valid and should be rejected. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 7,742.91 yuan, shall be borne by Dapeng. The judgment is final. Presiding Judge: HOU Xianglei Judge: LI Mintao Judge: WANG Fang September 7, 2017 Judge Assistant: LI Junsong Clerk: HUANG Haiyan

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China Article 170 The people’s courts of the second instance shall, in the case of appeals, be dealt with separately according to the following circumstances: (1) If the original judgment or ruling determines that the facts are clear and the applicable law is correct, the appeal shall be rejected by judgment or ruling, and the original judgment or ruling shall be upheld;

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(2) Where the original judgment or ruling determines that the facts are wrong or the law is wrong, the judgment, ruling shall be changed, revoked or changed according to law; (3) If the original judgment determines that the basic facts are unclear, the ruling shall be revoked and sent back to the people’s court of the original trial for retrial, or the facts shall be found and the judgment shall be changed; (4) If the original judgment omits the party or the illegal default judgment and other serious violations of the legal procedures, the ruling shall be revoked and sent back to the people’s court of the original trial for retrial. After the people’s court of the original trial makes a judgment on the case for which the retrial is sent back, if the party appeals, the second-instance people’s court may not send it back for retrial.

Wuhan Maritime Court Civil Judgment SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E 72 Min Chu No.376 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1299. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Claim by insured shipowner for reimbursement from insurer of compensation paid to deceased crew member’s family failed because court held that deceased crew member was not working on the insured ship when he died, but on another ship part-owned by the same shipowner. Summary Plaintiff, owner of the self-unloading sand ship M.V. “Fu Qiang 2”, paid compensation to the family of a crew member, SHU Mou (who happened to be Plaintiff’s sibling) after SHU Mou was killed in an explosion. SHU Mou was the captain of M.V. “Fu Qiang 2”, and was listed as a crew member in the crew member liability insurance that Plaintiff had bought from Defendant. The explosion occurred on the life boat of a dredger, “Jiangyue”. The life boat had loaded fuel on shore and was being used to refuel “Jiangyue” when the explosion occurred. Plaintiff was co-owner of “Jiangyue”, as well as being sole owner of “Fu Qiang 2”. After compensating SHU Mou’s family, Plaintiff made a claim on his crew member insurance policy with Defendant, which denied cover, so Plaintiff sued. The Court held that Plaintiff’s claim failed, because SHU Mou’s job description was as captain of “Fu Qiang 2”, and the insurance policy did not cover him when doing work for “Jiangyue” from its life boat. Although he was co-owner and operator of “Jiangyue”, Plaintiff had not bought crew member liability insurance for “Jiangyue”.

Judgment The Plaintiff: SHU Shiyun Agent ad litem: LI Houming, lawyer of Sichuan Changsong Law Firm. © The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_68

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The Defendant: PICC Property and Casualty Company Limited Luzhou Branch Domicile: Jiangyang District, Luzhou, Sichuan Province. Unified Social Credit Code: 915105009047030323. Representative: WANG Min, general manager. Agent ad litem: HE Yongzhong, lawyer of Sichuan Cijian Law Firm. With respect to the case arising from dispute over marine insurance contract between SHU Shiyun and PICC Property and Casualty Company Limited Luzhou Branch (hereinafter referred to as Luzhou PICC), after the court entertaining it on March 2, 2017, the court applied the summary procedure in accordance with the law and tried the case in public hearing on March 21, 2017. Agent ad litem of SHU Shiyun, LI Houming, and agent ad litem of Luzhou PICC, HE Yongzhong, appeared in court to attend the hearing. After the hearing, the court organized mediation, and the mediation failed because of differences. Now the case has been concluded. SHU Shiyun filed a lawsuit with the court: firstly, Luzhou PICC should compensate SHU Shiyun shipowner for the crew liability insurance compensation RMB (the following are RMB) 540,000 yuan; secondly, Luzhou PICC shall bear the legal fees of this case. Facts and reasons: SHU Shiyun is the shipowner of M.V. FU QIANG 2. SHU Shiyun purchased all risks of marine inland vessel in Luzhou PICC on March 20, 2014. At 16:00 p.m. on January 23, 2015, when the crew member SHU Mou went to the life boat attached to “Jiangyue” (hereinafter referred to as the life boat) which was parked in the Yangtze river of Jiangyang district, Luzhou to contact with the crew members about sand and stones unloading, the life ship exploded and the engine room burned, resulting in the death of SHU Mou and another crew member of “Jiangyue”. After SHU Mou died of work, SHU Shiyun compensated his direct relatives for 919,200 yuan. In February 2015, SHU Shiyun proposed the application for shipowner’s compensation for crew liability insurance to Luzhou PICC who refused to settle the claim. SHU Shiyun filed a lawsuit to protect his legal rights and interests. Luzhou PICC argued that: firstly, the facts of SHU Shiyun’s lawsuit were not true. At the time of the incident, SHU Mou did not drove M.V. FU QIANG 2, but instead drove the life boat “Jiangyue”, performing duties on “Jiangyue”; secondly, after SHU Mou died, the operator of “Jiangyue” instead of the shipowner of M.V. FU QIANG 2 who also has no liability to compensate in accordance with the law compensated SHU Mou’s family; thirdly, SHU Mou’s death is not within the scope of insurance liability. So Luzhou PICC should not pay compensation. The parties submitted evidence in accordance with the law, and the court organized parties to exchange evidence and cross-examination. SHU Shiyun submitted the following evidence to the court: 1. All Risks Insurance Policy of Marine Inland Vessel, 2. Certificate of Ship Nationality, Certificate of Ship Ownership, Seaworthiness Certificate for Inland River Ships, Certificate of Inspection for Inland River Ship, Certificates of Seamen on Inland River Ships, 4. Investigation Record of Fire Scene, 5. Written Confirmation of Fire Accident, Fire Accident Identification Record, 6. seven copies of Inquiry Record of Luzhou branch of Changjiang Shipping

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Public Security Bureau, 7. Certificate of Household Registration Cancellation, 8. Compensation Agreement for Work Dead, 9. Receipt issued by the family of the deceased, 10. Receipt issued by Luzhou PICC in the relevant information of the insurance claim. Luzhou PICC submitted the following evidence in accordance with the law: 1. Joint Investigation Report on “1.23” of the Yangtze Wild Boar Cliff-bucket Dredger (Mud-mining Vessel) and its Affiliated Ships issued by the local marine department of Naxi District and Jiangyang District, 2. Yangtze River Wild boar Cliff Waters “Jiangyue” Quarry Ship “1.23” General Explosion Accident Investigation Report issued by Jiangyang District Accident Investigation Team, 3. Compensation Agreement for Work Injury, 4. Chinese People’s Property Insurance Company Limited Coastal Inland River Ship Additional Shipowners to the Crew Liability Insurance Clause (2009 edition) (hereinafter referred to as Shipowners’ Liability Insurance Clause for Crew Members). After the corss-examination, Luzhou PICC and SHU Shiyun have no objection to the authenticity of the evidence submitted by the other party. The court confirms and corroborates it. The court will make a comprehensive determination after the judgment based on the facts of the case to confirm whether the above evidence meets the purpose of proving by the parties. In accordance with the parties’ statement and the evidence confirmed by the review, the court comfirms the facts as follows: M.V. FU QIANG 2 was the self-unloading sand ship, and the shipowner and operator was SHU Shiyun in accordance with the ship certificate. The relationship between SHU Mou and SHU Shiyun is sibling. SHU Mou served as the captain in M.V. FU QIANG 2 who held the second class captain certificate. “Jiangyue” was a dredger. The ship registered owner was LI Cheng. The actual owner was LIU Guangxuan (accounting for 40% of the ship’s shares) SHU Shiyun (accounted for 40%), LI Shanghua (accounted for 20%), and the operators of the ship were SHU Shiyun and LI Shanghua. “Jiangyue” dredger had no power which was equipped with 6 crew members, all of whom hold qualified and valid crew service books. “Jiangyue” was also equipped with a life boat, which was mainly used to transport the production materials and daily necessities for it and transports diesel oil for “Jiangyue” with a concealed oil conservator installed in the fore deck. The life boat was equipped with 1 crew member who held the second class captain certificate. On March 20, 2014, SHU Shiyun purchased All Risks of Marine Inland Vessel in Luzhou PICC that issued Insurance Policy to SHU Shiyun. Insurance Policy stated: the name of the ship was M.V. FU QIANG 2, the type of insurance was all risks of marine inland vessel, the additional insurance was the shipowner’s liability insurance for the crew. The amount of the additional insurance was 2.4 million yuan. Insurance conditions and special agreements: 1. for each insurance accident, the insurer in accordance with the terms of the agreement to calculate compensation based on the deductible 1,000 yuan or 10% free of the odds, whichever higher prevail; 2. adding shipowner’s liability insurance for the crew members, the number of insured crew is 4 and the maximum compensation limit for each person is 600,000 yuan; 3. the insurer shall determine the amount of compensation in accordance with the reimbursement standard for the basic medical expenses of

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urban employees in Luzhou; 4. crew list: LIU Zhengbin, SHU Mou, WU Kaifu, XIANG Shulun; insurance period was from 0 o’clock on March 30, 2014 to 24 o’clock on March 29, 2015; applicable to Chinese People’s Property Insurance Company Limited Coastal River Ship Insurance Provisions (2009 edition) and Shipowners’ Liability Insurance Clause for Crew Members, among them, Article 2 of Shipowners’ Liability Insurance Clause for Crew Members: if the crew members is dead or disabled on the board when the insured ship during navigation or berthing, the shipowner (insured) shall bear the medical expenses, hospitalization expenses and disability and death compensation fees for the crew in accordance with the labor contract or law and Article 3 Paragraph 5 stipulates: excluding the liability of the insurer for death or disability on shore. At around 13:00 p.m. on January 23, 2015, in accordance with SHU Shiyun’s arrangement, SHU Mou and ZHANG Tiangui, the crew of “Jiangyue”, drove the life boat of “Jiangyue” to Luzhou xx area wild Deer Creek Shore Diesel to refueling. After refueling 7 tons, the two returned to “Jiangyue” at around 14:00 p.m. and leaned such life boat to the tail of the port side of “Jiangyue” and refueling the fuel tank at the end of “Jiangyue”. Around 15:30, after the tail tank was full, SHU Mou and WANG Tianfu moved the life boat to the port side of “Jiangyue” to refuel the oil storage tank on the roof of “Jiangyue”. During the refueling process, WANG Tianfu pulled the welding torch line to the lifeboat stern and opened the electric welding machine to repair the cracked seam on the top of the oil storage tank of the life ship. After the air of storage tank of the life ship was mixed with the volatile diesel gas, the explosion occurred at the spot welding place of the electric welding fire, which caused the death of SHU Mou, the injury of ZHONG Huailun, and the death of WANG Tianfu after fell into the Yangtze River. On January 26 of the same year, SHU Shiyun, LI Shanghua and SHU Mou’s father SHU Zhaohua, his mother ZHANG Kezhen, his wife HU Yueyan, his son SHU Xuanqiu and SHU Xuanbo reached an agreement on compensation for work and death. SHU Shiyun and LI Shanghua shall compensate the above relatives of SHU Mou for 612,800 yuan and 306,400 yuan for the funeral expenses, one-off work injury subsidies, and the relatives pension before January 26, 2015. In February of the same year, SHU Shiyun submitted the claim of the shipowner’s liability insurance for crew members to Luzhou PICC for the above compensation. On April 20, 2016, SHU Zhaohua, ZHANG Kezhen, HU Yueyan, and SHU Xuanqiu issued a receipt, and accepted the above compensations from SHU Shiyun and LI Shanghua. In February 2017, SHU Shiyun filed a lawsuit for the failure of Luzhou PICC to reply to his claim for compensation. The court holds that this case is a dispute over marine insurance contract. Article 6 of the Insurance Law of the People’s Republic of China (hereinafter referred to as the Insurance Law) stipulates that: “insurance interest refers to the legally recognized benefit of the policy holder or the insured on the subject matter of the insurance.” Article 12 Paragraph 1 stipulates that: “the policy holder of life insurance shall have insurable interest to the insured when concluding an insurance contract.” Article 31 Paragraph 1 Sub-paragraph 4 stipulates that: “the policy holder has an insurable interest on the workers who have labor relations with him.”

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Paragraph 3 stipulates that: “if the policy holder has no insurable interest on the insured when entering into a contract, such contract will be invalid.” As the owner and operator of M.V. FU QIANG 2, SHU Shiyun has insurance interest on the subject matter of the insurance when insuring the shipowner’s liability insurance for his hired crew members to Luzhou PICC. The insurance contract signed by SHU Shiyun and Luzhou PICC was the true intention of both parties which did not violate the prohibition of laws and administrative regulations, established in accordance with the law and binding on both parties. Both parties should exercise civil rights strictly in accordance with the contract and legal provisions, and perform civil obligations in good faith. Luzhou PICC was the insurer, SHU Shiyun was the policy holder and SHU Mou was the insured crew. In accordance with the claims of the both parties, the claims of this case is whether the accident is an insurance accident, and whether Luzhou PICC is liable for the death of SHU Mou. Article 65 Paragraph 4 of the Insurance Law stipulates that: “liability insurance refers to the insurance that the insured’s liability for the third party is the subject matter.” The shipowner’s liability insurance for the crew is the insurance that the liability of the shipowner to the crew in accordance with the law is the subject matter, which belongs to the additional insurance of the ship. The premise of its establishment must be based on the existence of the main insurance and can not exist independently from the main insurance. The main insurance of this case was all risks of marine inland vessel, the insured vessel was M.V. FU QIANG 2, and the shipowner’s liability for the crew was also an additional insurance based on all risks of M.V. FU QIANG 2. Whether SHU Mou’s death should be compensated or not depends on whether the accident leading to SHU Mou’s death is an insurance accident. Article 16 Paragraph 7 of the Insurance Law stipulates that: “insurance accident refers to the accident within the scope of insurance liability agreed in the insurance contract.” Article 2 of the insurance liability of Shipowners’ Liability Insurance Clause for Crew Members stipulates that: if the death or disability of the crew on board of an insured vessel during the voyage or mooring, the shipowner (insured) shall, in accordance with the labor contract or law, be liable for the medical expenses, hospitalization expenses, disability and death compensation fees. In accordance with the above agreement, the scope of insurance liability includes three aspects, 1. the accident of the insured crew in the insured ship during the navigation or berthing, 2. on duty, 3. the liability that the shipowner shall be liable for the crew members in accordance with the labor contract or law. Three of them are indispensable. Only when the insured crew suffers death or casualties during the period of duty and casualties occur on the insured ship, such accident belongs to insurance liability accident in accordance with the liability of the shipowner as required by law. When SHU Shiyun insured shipowner’s liability for crew members to Luzhou PICC, Shu was the crew of M.V. FU QIANG 2 in the list of insured crew members. SHU Shiyun failed to explain to Luzhou PICC that SHU Mou also provided services to “Jiangyue” and its life boat. SHU Mou was not insured for performing such work. Therefore, in accordance with the agreement of the contract, Shu’s job position was M.V. FU QIANG 2 and the duty he should perform was as the captain of M.V. FU QIANG 2 while sailing the “Jiangyue” life boat to refueling

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“Jiangyue” was not his job position as agreed in the insurance contract. Before the accident, SHU Mou sailed “Jiangyue” life boat to refuel on the diesel tanker at the Bank of wild deer River in the xxx District of Luzhou. After returning, he added the diesel on the life boat to “Jiangyue”. When the accident happened, SHU Mou was refueling “Jiangyue”. That is to say, before and after the accident, SHU Mou was not on M.V. FU QIANG 2, not on the job position as stipulated in the insurance contract, nor did he perform his duties for M.V. FU QIANG 2. Although SHU Shiyun was one of the owner and operator of “Jiangyue”, he did not insured additional shipowner’s liability for crew members for SHU Mou of such vessel. So the death of SHU Mou caused by the explosion of “Jiangyue” does not belong to the insurance liability as agreed in the insurance contract. Luzhou PICC shall not be liable for the death of SHU Mou. The court shall not support the claim of SHU Shiyun. In summary, in accordance with Article 16 Paragraph 7 of the Insurance Law of the People’s Republic of China, and Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Reject all the claims of the Plaintiff SHU Shiyun. Court acceptance fee in amount of 9,200 yuan, which fee was reduced to 4,600 yuan, shall be borne by the Plaintiff SHU Shiyun. If refusing to accept the judgement, the Plaintiff and the Defendant may within 15 days of receiving the written judgement, together with copies in accordance with the number of the parties, appeal to the Hubei High People’s Court. Judge: KONG Linggang June 2, 2017 Clerk: NIU Ben

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Hubei High People’s Court Civil Judgment SHU Shiyun v. PICC Property and Casualty Company Limited Luzhou Branch (2017) E Min Zhong No.2778 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1293. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Affirming lower court decision that claim by insured shipowner for reimbursement from insurer of compensation paid to deceased crew member’s family failed because the deceased crew member was not working on the insured ship when he died, but on another ship part-owned by the same shipowner. Summary Plaintiff, owner of the self-unloading sand ship M.V. “Fu Qiang 2”, paid compensation to the family of a crew member, SHU Mou (who happened to be Plaintiff’s sibling) after SHU Mou was killed in an explosion. SHU Mou was the captain of M.V. “Fu Qiang 2”, and was listed as a crew member in the crew member liability insurance that Plaintiff had bought from Defendant. The explosion occurred on the life boat of a dredger, “Jiangyue”. The life boat had loaded fuel on shore and was being used to refuel “Jiangyue” when the explosion occurred. Plaintiff was co-owner of “Jiangyue”, as well as being sole owner of “Fu Qiang 2”. After compensating SHU Mou’s family, Plaintiff made a claim on his crew member insurance policy with Defendant, which denied cover, so Plaintiff sued. The first instance Court held that Plaintiff’s claim failed, because SHU Mou’s job description was as captain of “Fu Qiang 2”, and the insurance policy did not cover him when doing work for “Jiangyue” from its life boat. Although he was co-owner and operator of “Jiangyue”, Plaintiff had not bought crew member liability insurance for “Jiangyue”. Plaintiff appealed. Despite the fact that Plaintiff presented new evidence showing that the life boat of “Jiangyue” was being operated by crew members other than SHU Mou, the appeal Court held that SHU Mou had been operating the life boat of “Jiangyue” when the explosion occurred, and that he had not been working as a crew member of “Fu Qiang 2” at that time. Accordingly, the appeal Court dismissed Plaintiff’s appeal.

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Judgment The Appellant (the Plaintiff of first instance): SHU Shiyun Agent ad litem: LI Houming, lawyer of Sichuan Changsong Law Firm. . The Respondent (the Defendant of first instance): PICC Property and Casualty Company Limited Luzhou Branch Domicile: Jiangyang District, Luzhou, Sichuan Province. United Social Credit Code: 915105009047030323. Person in charge: WANG Min, general manager. Agent ad litem: HE Yongzhong, lawyer of Sichuan Cijian Law Firm. With respect to the case arising from dispute over marine insurance contract between the Appellant SHU Shiyun and PICC Property and Casualty Company Limited Luzhou Branch (hereinafter referred to as Luzhou PICC), the Appellant was dissatisfied with the Wuhan Maritime Court (2017) E 72 Min Chu No.376 Civil Judgment, and appealled to the court. After the case was filed on September 5, 2017, the court constituted a collegiate panel, and the hearing was held in public on October 27, 2017. Agent ad litem of the Appellant SHU Shiyun, LI Houming, and agent ad litem of the Respondent Luzhou PICC, HE Yongzhong, appeared in court to attend the hearing. Now the case has been concluded. SHU Shiyun appealed that: firstly, revoke (2017) E 72 Min Chu No.376 Civil Judgement and change to judge that the Respondent shall be liable for SHU Mou’s death; secondly, court acceptance fee of first and second instance shall be borne by the Respondent. Facts and reasons: 1. the judgement of the first instance was wrong. The Respondent had no witness and testimony to prove that SHU Mou was driving “Jiangyue” to refuel when the accident happened. The joint investigation report issued by the local maritime bureau of Luzhou, Sichuan and Jiangyang District, Luzhou, Sichuan in the first instance was not valid for which was the copy instead of the original; 2. after the accident, the investigation of ZHONG Mou, ZHANG Mou and other witnesses by the Luzhou Branch of the Changhang Public Security Bureau and the local maritime safety administration of Luzhou, Sichuan showed that “Jiangyue” was driven by ZHONG Mou and ZHANG Mou, while SHU Mou went to “Jiangyue” to borrow living tools; 3. SHU Mou, the captain of M.V. FU QIANG 2, who died on duty when he went to “Jiangyue” to borrow living tools should be compensated by the Respondent, PICC Luzhou Branch. Luzhou PICC argued: 1. SHU Mou was not an insured person on “Jiangyue”. The maritime department has made the accident report. Before the facts found in the two reports have not been revoked, such two reports should be regarded as the basis for determining the facts. Moreover, the Appellant did not object to the two reports during the cross-examination in the first instance. 2. The investigation by the Changhang Public Security Bureau was about the reason of the fire. The investigation of witness and testimony was seven or eight days after the accident. Whether these investigations are consistent or not cannot be used as the basis for identifying the ship accident, which could only be used as the basis for identifying the fire. 3.

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The final compensation for death was made by the owner of “Jiangyue”, proving that the accident was not covered by insurance. The court of first instance confirmed the facts as follows: M.V. FU QIANG 2 was the self-unloading sand ship, and the ship owner and operator was SHU Shiyun in accordance with the ship certificate. The relationship between SHU Mou and SHU Shiyun is sibling. SHU Mou served as the captain in M.V. FU QIANG 2 who held the second class captain certificate. “Jiangyue” was a dredger. The ship registration owner was LI Cheng. The actual owner was LIU Guangxuan (accounting for 40% of the ship's shares) SHU Shiyun (accounted for 40%), LI Shanghua (accounted for 20%), and the operators of the ship were SHU Shiyun and LI Shanghua. “Jiangyue” dredger had no power which was equipped with 6 crew members, all of whom hold qualified and valid crew service books. “Jiangyue” was also equipped with a life boat, which was mainly used to transport the production materials and daily necessities for it and transports diesel oil for “Jiangyue” with a concealed oil conservator installed in the fore deck. The life boat was equipped with 1 crew member who held the second class captain certificate. On March 20, 2014, SHU Shiyun purchased All Risks of Marine Inland Vessel in Luzhou PICC that issued Insurance Policy to SHU Shiyun. Insurance Policy stated: the name of the ship was M.V. FU QIANG 2, the type of insurance was all risks of marine inland vessel, the additional insurance was the shipowner’s liability insurance for the crew. The amount of the additional insurance was 2.4 million yuan. Insurance conditions and special agreements: 1. for each insurance accident, the insurer in accordance with the terms of the agreement to calculate compensation based on the deductible 1,000 yuan or 10% free of the odds, whichever higher prevail; 2. adding shipowner’s liability insurance for the crew members, the number of insured crew is 4 and the maximum compensation limit for each person is 600,000 yuan; 3. the insurer shall determine the amount of compensation in accordance with the reimbursement standard for the basic medical expenses of urban employees in Luzhou; 4. crew list: LIU Zhengbin, SHU Mou, WU Kaifu, XIANG Shulun; insurance period was from 0 o’clock on March 30, 2014 to 24 o’clock on March 29, 2015; applicable to Chinese People’s Property Insurance Company Limited Coastal River Ship Insurance Provisions (2009 edition) and Shipowners’ Liability Insurance Clause for Crew Members, among them, Article 2 of Shipowners’ Liability Insurance Clause for Crew Members: if the crew members is dead or disabled on the board when the insured ship during navigation or berthing, the shipowner (insured) shall bear the medical expenses, hospitalization expenses and disability and death compensation fees for the crew in accordance with the labor contract or law and Article 3 Paragraph 5 stipulates: excluding the liability of the insurer for death or disability on shore. At around 13:00 p.m. on January 23, 2015, in accordance with SHU Shiyun’s arrangement, SHU Mou and ZHANG Tiangui, the crew of “Jiangyue”, drove the life boat of “Jiangyue” to Luzhou xx area wild Deer Creek Shore Diesel to refueling. After refueling 7 tons, the two returned to “Jiangyue” at around 14:00 p.m. and leaned such life boat to the tail of the port side of “Jiangyue” and refueling the fuel tank at the end of “Jiangyue”. Around 15:30, after the tail tank was full, SHU

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Mou and WANG Tianfu moved the life boat to the port side of “Jiangyue” to refuel the oil storage tank on the roof of “Jiangyue”. During the refueling process, WANG Tianfu pulled the welding torch line to the lifeboat stern and opened the electric welding machine to repair the cracked seam on the top of the oil storage tank of the life ship. After the air of storage tank of the life ship was mixed with the volatile diesel gas, the explosion occurred at the spot welding place of the electric welding fire, which caused the death of SHU Mou, the injury of ZHONG Huailun, and the death of WANG Tianfu after fell into the Yangtze River. On January 26 of the same year, SHU Shiyun, LI Shanghua and SHU Mou’s father SHU Zhaohua, his mother ZHANG Kezhen, his wife HU Yueyan, his son SHU Xuanqiu and SHU Xuanbo reached an agreement on compensation for work and death. SHU Shiyun and LI Shanghua shall compensate the above relatives of SHU Mou for 612,800 yuan and 306,400 yuan for the funeral expenses, one-off work injury subsidies, and the relatives pension before January 26, 2015. In February of the same year, SHU Shiyun submitted the claim of the shipowner’s liability insurance for crew members to Luzhou PICC for the above compensation. On April 20, 2016, SHU Zhaohua, ZHANG Kezhen, HU Yueyan, and SHU Xuanqiu issued a receipt, and accepted the above compensations from SHU Shiyun and LI Shanghua. In February 2017, SHU Shiyun filed a lawsuit for the failure of Luzhou PICC to reply to his claim for compensation. The court of first instance held that this case is a dispute over the contract of insurance for the sea. Article 6 of the Insurance Law of the People’s Republic of China (hereinafter referred to as the Insurance Law) stipulates that: “insurance interest refers to the legally recognized benefit of the policy holder or the insured on the subject matter of the insurance.” Article 12 Paragraph 1 stipulates that: “the policy holder of life insurance shall have insurable interest to the insured when concluding an insurance contract.” Article 31 Paragraph 1 Sub-paragraph 4 stipulates that: “the policy holder has an insurable interest on the workers who have labor relations with him.” Paragraph 3 stipulates that: “if the policy holder has no insurable interest on the insured when entering into a contract, such contract will be invalid.” As the owner and operator of M.V. FU QIANG 2, SHU Shiyun has insurance interest on the subject matter of the insurance when insuring the shipowner’s liability insurance for his hired crew members to Luzhou PICC. The insurance contract signed by SHU Shiyun and Luzhou PICC was the true intention of both parties which did not violate the prohibition of laws and administrative regulations, established in accordance with the law and binding on both parties. Both parties should exercise civil rights strictly in accordance with the contract and legal provisions, and perform civil obligations in good faith. Luzhou PICC was the insurer, SHU Shiyun was the policy holder and Shu was the insured crew. In accordance with the claims of the both parties, the claims of this case is whether the accident is an insurance accident, and whether Luzhou PICC is liable for the death of SHU Mou. Article 65 Paragraph 4 of the Insurance Law stipulates that: “liability insurance refers to the insurance that the insured’s liability for the third party is the subject matter.” The shipowner’s liability insurance for the crew is the insurance that the

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liability of the shipowner to the crew in accordance with the law is the subject matter, which belongs to the additional insurance of the ship. The premise of its establishment must be based on the existence of the main insurance and can not exist independently from the main insurance. The main insurance of this case was all risks of marine inland vessel, the insured vessel was M.V. FU QIANG 2, and the shipowner’s liability for the crew was also an additional insurance based on all risks of M.V. FU QIANG 2. Whether SHU’s death should be compensated or not depends on whether the accident leading to SHU’s death is an insurance accident. Article 16 Paragraph 7 of the Insurance Law stipulates that: “insurance accident refers to the accident within the scope of insurance liability agreed in the insurance contract.” Article 2 of the insurance liability of Shipowners’ Liability Insurance Clause for Crew Members stipulates: if the death or disability of the crew on board of an insured vessel during the voyage or mooring, the shipowner (insured) shall, in accordance with the labor contract or law, be liable for the medical expenses, hospitalization expenses, disability and death compensation fees. In accordance with the above agreement, the scope of insurance liability includes three aspects, 1. the accident of the insured crew in the insured ship during the navigation or berthing, 2. on duty, 3. the liability that the shipowner shall be liable for the crew members in accordance with the labor contract or law. Three of them are indispensable. Only when the insured crew suffers death or casualties during the period of duty and casualties occur on the insured ship, such accident belongs to insurance liability accident in accordance with the liability of the shipowner as required by law. When SHU Shiyun insured shipowner’s liability for crew members to Luzhou PICC, SHU Mou was the crew of M.V. FU QIANG 2 in the list of insured crew members. SHU Shiyun failed to explain to Luzhou PICC that Shu also provided services to “Jiangyue” and its life boat. SHU Mou was not insured for performing such work. Therefore, in accordance with the agreement of the contract, SHU Mou’s job position was M.V. FU QIANG 2 and the duty he should perform was as the captain of M.V. FU QIANG 2 while sailing “Jiangyue” life boat to refueling “Jiangyue” was not his job position as agreed in the insurance contract. Before the accident, SHU Mou sailed “Jiangyue” life boat to refuel on the diesel tanker at the Bank of wild deer River in the xxx District of Luzhou. After returning, he added the diesel on the life boat to “Jiangyue”. When the accident happened, SHU Mou was refueling “Jiangyue”. That is to say, before and after the accident, SHU Mou was not on M.V. FU QIANG 2, not on the job position as stipulated in the insurance contract, nor did he perform his duties for M.V. FU QIANG 2. Although SHU Shiyun was one of the owner and operator of “Jiangyue”, he did not insured additional shipowner’s liability for crew members for SHU Mou of such vessel. So the death of SHU Mou caused by the explosion of “Jiangyue” does not belong to the insurance liability as agreed in the insurance contract. Luzhou PICC shall not be liable for the death of SHU Mou. The court of first instance did not support the claim of SHU Shiyun. In summary, in accordance with Article 16 Paragraph 7 of the Insurance Law of the People's Republic of China, Article 64 Paragraph 1 and Article 142 of the Civil Procedure Law of the People’s Republic of China, the court of first instance rejected

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all claims of SHU Shiyun. Court acceptance fee in amount of 9,200 yuan, and the fee was reduced by 4,600 yuan, which was borne by the Plaintiff SHU Shiyun. In the second instance, the parties submitted new evidence to prove their claims and the court arranged new cross-examination. The Appellant SHU Shiyun submitted new evidence: the first and second evidence: Luzhou Changhang Public Security made an investigation note of ZHANG Mou the day after the incident. ZHANG Mou said that after breakfast, he and ZHONG Mou drove a ship to transport oil. The third evidence: the investigation records of LUO Jichao, a gold prospector, made by local maritime safety administration of Luzhou on the day of the accident stated that LUO Jichao said that ZHONG Mou took him on board on the life boat of “Jiangyue”, which was usually drove by ZHONG Mou to buy vegetables and transport personnel. The fourth evidence: the investigation record of ZHONG Jian jointly made by Luzhou Shipping Administration and Changhang Public Security confirmed that SHU Mou sometimes helped to drive “Jiangyue” and sometimes borrow tools from “Jiangyue”. SHU Mou drove the life boat to M.V. FU QIANG 2 three or four days before the accident, but on the day of the incident, SHU Mou did not sailed the life boat to the river side to refuel. The fifth evidence: the investigation materials of SHU Shiyun on the day after the incident made by local maritime bureau in Naxi proved that he was only arranged ZHONG Mou to refuel on the day of the incident. The sixth evidence: the investigation records of SHU Shiguang, the crew of M.V. FU QIANG 2 made by Luzhou Shipping Administration and local maritime safety administration recorded that SHU Shiguang said after lunch, he and SHU Mou docked the boat to “Jiangyue”. The above evidence intends to prove that it was ZHONG Mou and ZHANG Mou went to the shore to pull oil on the day of the incident instead of SHU Mou who went to “Jiangyue” to borrow tools. The cross-examination of the Respondent Luzhou PICC: there is no objection to the authenticity of the above evidence, but it is not clear whether these materials reflect the overall situation of the case and the Respondent believes that the above materials cannot change the facts identified in the investigation report. The court holds that the above evidence are the records of the investigation of the crew of the relevant department involved in the incident, and the parties have no objection, so the court approves it. The Respondent Luzhou PICC failed to submit new evidence. As to the fact that whether SHU Mou participated in the refueling of diesel oil vehicles along the Banks of wild deer creek in xx district of Luzhou, the court holds that: although the Yangtze River Wild boar Cliff Waters “Jiangyue” Quarry Ship “1.23” General Fire Accident Investigation Group issued Yangtze River Wild boar Cliff Waters “Jiangyue” Quarry Ship “1.23” General Explosion Accident Investigation Report and identified “at around 13:00 on January 23, 2015, in accordance with SHU Shiyun’s arrangement, SHU Mou and ZHANG Tiangui, the crew of “Jiangyue”, drove the life boat of “Jiangyue” to Luzhou xx area wild Deer Creek Shore Diesel to refueling.” But in accordance with the record of the relevant investigation authorities who asked the crew members: ZHANG Mou said it was him and ZHONG Mou sailed life boat to refuel on the diesel tanker at the Bank of

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wild deer River in the xxx District of Luzhou City. Such words are consistent with the records of Zhong, LUO Jichao and SHU Shiyun. In addition, Zhang, LUO Jichao, and Zhang are all fellow passengers when they come to the shore to refuel. The testimony can be mutually confirmed. The records of Zhong Jian, LI Shanghua and others showed that Shu often drove the life boat but did not showed that it was Shu sailed boat to refuel on the diesel tanker at the Bank of wild deer River in the xxx District of Luzhou City in the morning on the day of the incident. So the testimony of Zhong, LUO Jichao and ZHANG Mou who participated in the refueling shall be taken as the basis for determining the facts. That is to say, it was ZHONG Mou and ZHANG Mou instead of SHU Mou who sailed life boat to refuel on the diesel tanker at the Bank of wild deer River in the xxx District of Luzhou. The Appellant SHU Shiyun can established in the grounds of appeal and the court corrected it. The court found other facts identified in the first instance were true and confirmed it. The court holds that the focus issues of the parties in the second instance: firstly, was SHU Mou working for “Jiangyue” or for M.V. FU QIANG 2 when he died; secondly, SHU Mou was died on the life boat of “Jiangyue” sand dredger, so whether the insurer should pay compensation. The analyses are as follows: Firstly, was SHU Mou working for “Jiangyue” or for M.V. FU QIANG 2 when he died. Investigation report of the investigation team and witness proved: the accident happened when the lifeboat was refueling to “Jiangyue”. It was SHU Mou who was driving the life boat and caused the death of SHU Mou who was on the attached life boat. During the investigation of the Changzhou Shipping Public Security Bureau Zhangzhou Branch, ZHONG Jian, the crew of “Jiangyue” once proved that SHU Mou’s purpose of coming to “Jiangyue” sand dredger was unclear on that day but he sometimes come to “Jiangyue” to borrow tools; ZHONG Mou once proved during the investigation that the purpose for SHU Mou’s coming to “Jiangyue” was to borrow tools but did not know which kind of tools he borrowed; on the contrary, ZHONG Mou said in his inquiry transcript on January 25, 2015 that when the explosion happened, he and WANG Tianfu and SHU Mou were refueling “Jiangyue” sand dredger. SHU Mou was responsible for moving the life boat from the stern of the dredger to the refueling position at the bow of the dredger. ZHONG Mou also described the detailed work arrangements before and after the accident. Three people were injured in the accident. Among them, ZHONG Mou was injured and comatose, WANG Tianfu and SHU Mou died. It can be proved that such three people were closest to the site of accident and they were most likely to be refueling operators. Combined with the testimony of the refueling operator and the accident survivor ZHONG Mou, it can be concluded that SHU Mou was refueling for “Jiangyue” sand dredger instead of working for M.V. FU QIANG 2. The investigation report of the accident investigation team confirmed SHU Mou’s participation in refueling “Jiangyue” and should be approved. Secondly, SHU Mou was died on the life boat of “Jiangyue” sand dredger, so whether the insurer should pay compensation. The court holds that the insurance involved was all risks and shipowner’s liability for crew members of M.V.

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FU QIANG 2, in accordance with Article 2 of Chinese People’s Property Insurance Company Limited Coastal River Ship Insurance Provisions (2009 edition) and Shipowners’ Liability Insurance Clause for Crew Members stipulates: “in accordance with the labor contract and law, if the crew is dead or disabled on board the ship during navigation or berthing, the shipowner (insured) shall bear the medical expenses, hospitalization expenses and disability and death compensation fees for the crew. The insurer shall be liable for compensation.” This is the agreed coverage of both parties. Regarding whether SHU Mou was the “on duty crew” and working for M.V. FU QIANG 2 when he died, first, SHU Mou was the captain of M.V. FU QIANG 2 which was an insured vessel; and the crew of “Jiangyue” and SHU Shiyun proved that SHU Mou often drove the life boat of “Jiangyue” sand dredger. Therefore, in general, SHU Mou was the captain of M.V. FU QIANG 2 and often drove the life boat of “Jiangyue”. Secondly, SHU Mou participated in the refueling operation of “Jiangyue” oil storage tank, and died of injury during the refueling operation. Such action cannot be regarded as fulfilling the duties of crew for M.V. FU QIANG 2 and the death of SHU Mou also cannot be considered as the death caused by accidents in the preparatory or finishing work related to work in the workplace before and after the working hours of M.V. FU QIANG 2. As a result, SHU Mou was died in an accident which was not related to M.V. FU QIANG 2, so such accident was not within the coverage of the insurance policy. There is no legal basis for SHU Shiyun’s appeal to claim Luzhou PICC to bear the insurance liability, and the court shall not support it. To sum up, although SHU Shiyun’s appeal request is partly justified, it does not affect the judgment of the first instance. The judgement of the first instance was basically correct in legal procedure, appropriate in application of law and proper in case handling, and the court will affirm the original judgement. In accordance with Article 170 Paragraph 1 Sub-paragraph 1 of the Civil Procedure Law of the People’s Republic of China, the judgment is as follows: Dismiss the appeal, and affirm the original judgment. Court acceptance fee of second instance in amount of 9,200 yuan, shall be borne by the Appellant SHU Shiyun. The judgment is final. Presiding Judge: SU Jiang Judge: OU Haiyan Judge: DAI Qifen December 1, 2017 Judge Assistant: FAN Sitan Clerk: MA Yue

Xiamen Maritime Court Civil Judgment Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2015) Xia Hai Fa Shi Chu Zi No.102 Related Case(s) This is the judgment of first instance and the judgment of second instance is on page 1319. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Defendant carriers held to have illegally detained plaintiff's containers by demanding payment for delivering them to plaintiff even after court had ordered them to do so. Summary Plaintiff leased 974 containers to Shanghai Hongsheng Gangtai Shipping Co., Ltd (Gangtai). Gangtai suddenly went out of business, so Plaintiff demanded return of the containers. Some of the containers were on board the second Defendant’s ship “Henghui 2”, which was bareboat chartered to the first Defendant, and which had been time chartered to Gangtai. Plaintiff asked the Defendants to deliver the containers in Humen, Guangdong, but the Defendants discharged the containers at Quanzhou. Plaintiff obtained an injunction from the Court ordering the Defendants to deliver the containers to Plaintiff, but Defendants demanded that Plaintiff pay 2,000 yuan for each container before they would make delivery. Plaintiff reluctantly paid 35,633 yuan, reserving its rights. Plaintiff then paid another carrier to carry the containers from Quanzhou to Humen. Plaintiff then sued the Defendants for return of the 35,633 yuan and the cost of the freight paid to the other carrier. The Court held that the Defendants had illegally retained the containers by demanding payment before returning them, after the Court had ordered their return. Both Defendants were jointly and severally liable as co-operators.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_69

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Judgment The Plaintiff: Sinotrans Guangdong Co., Ltd. Freight Branch Domicile: 602, 6th floor, No.233, Guangyuan Road, Baiyun District, Guangzhou City, Guangdong. Representative: LI Siming, general manager. Agent ad litem: ZHOU Chongyu, lawyer of Guang Yu & Co. Agent ad litem: LI Yu, lawyer of Guang Yu & Co. The Defendant: Shishi Hengtong Shipping Co., Ltd. Domicile: 2nd floor, No.97, Xiangnong Wharf Road, Xiangzhi Town, Shishi City, Fujian. Legal representative: CAI Qingshan, general manager. The Defendant: CAI Yanbo, male, Han, born on September 14, 1968, living in Shishi Fujian Joint agents ad litem: WANG Darong, lawyer of Beijing Dentons (Xiamen) Law Office. Joint agents ad litem: CAI Lihong, lawyer of Beijing Dentons (Xiamen) Law Office. After entertaining the case, which was submitted to the court on November 5, 2015, arising from dispute over damage caused by illegal detention of goods on board between the Plaintiff, Sinotrans Guangdong Co., Ltd. Freight Branch (hereinafter referred to as Guangdong Shipping Company), and the Defendants, Shishi Hengtong Shipping Co., Ltd. (hereinafter referred to as Hengtong Company) and CAI Yanbo, the court legitimately constituted the collegiate bench to try the case. The court held the hearing in public on December 23, 2015. Agents ad litem of the Plaintiff Guangdong Shipping Company, ZHOU Chongyu and LI Yu, and agent ad litem of the Defendants, Hengtong Company and CAI Yanbo, WANG Darong and CAI Lihong, appeared in the court to attend the hearing. Now the case has been concluded. The Plaintiff claimed to the court that: On June 1, 2014, the Plaintiff signed the container leasing agreement with Shanghai Hongsheng Gangtai Shipping Co., Ltd. (hereinafter referred to as Gangtai Company) which stipulated that the Plaintiff would lease a batch of containers to Gangtai Company for the use of operating domestic routes and that Gangtai Company should pay for the corresponding rent. After the contract was signed, the Plaintiff delivered 974 containers to Gangtai Company. Gangtai Company suddenly discontinued its operation on February 8, 2015. Therefore, the Plaintiff terminated the contract with Gangtai Company and required Gangtai Company to give back the rented containers. M.V. “Henghui 2” was a container liner between Tianjin port and Humen Port, Guangdong. Upon the Plaintiff’s examination, M.V. “Henghui 2” was loaded with 55 containers leased by the Plaintiff to Gangtai Company. The Defendant Hengtong Company, as the bareboat charterer and ship operator of M.V. “Henghui 2”, the Defendant CAI Yanbo, as the owner of the ship, should transport

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the containers and the goods safely to the prescribed destination and deliver them. But the Defendant refused to complete the transportation and unloaded all the containers and goods at Xiaocuo Port Quanzhou City and Pacific Container Terminal. On account that the containers were unloaded halfway, the Plaintiff applied for maritime injunction to Xiamen Maritime Court to minimize the loss and avoid the loss of containers, the injunction costing 5,000 yuan (RMB, similarly hereinafter). On March 27, 2015, Xiamen Maritime Court made the maritime injunction (2015) Xia Hai Fa Qiang Zi No.6, demanding the Defendant to deliver 55 containers to the Plaintiff. However, the Defendant refused to enforce the injunction and required the Plaintiff to pay 2,000 yuan for each container. The Plaintiff did not agree to the requirement, reckoning that the Defendant’s claim had no factual or legal bases. But to avoid any further loss, the Plaintiff paid 35,633 yuan to pick up the containers involved according to the Defendant’s requirement, yet in the case of the statement of reservation for its right. The Plaintiff entrusted Fujian Jinma Logistics Co., Ltd. to send part of the containers to the port and load them on board, paying 3,180 yuan. Because Humen Port, Guangdong was the original destination of the containers, after picking up the containers, the Plaintiff paid 7,802 yuan to Shanghai Zhonggu Xinliang Industrial Co., Ltd. to ship part of the containers from Quanzhou to Humen Port, Guangdong. The Plaintiff applied the court to sentence: 1. the Defendant should return the Plaintiff the expense of 35,633 yuan paid for picking up the containers and its interest (interest should be calculated from June 6, 2015 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period). 2. The Defendant should indemnify the Plaintiff for the economic loss of 10,982 yuan and its interest (interest should be calculated from May 26, 2015 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period) caused by the Defendant’s suspension of the transportation of illegally retained containers. 3. The Defendant should assume all the court acceptance fee. The two Defendants argued that: 1. They, respectively as the operator and the shipowner, were in no contract of carriage with the Plaintiff. It was not their obligation to transport the goods to the destination, so the Plaintiff had no right to require them to shoulder any responsibility of the cost paid to transport the good to Guangdong. 2. It was according to the lessee, Gangtai Company’s direction that they berthed at Quanzhou port and then unloaded the goods, which did not constitute any inappropriate deeds or default to the Plaintiff. It was because on February 5, 2015 when the Defendant received the lessee’s verbal instruction to suspend that they actually followed the instruction the next day and anchored outside the Shihu port, waiting for further directions. On February 13, they received the lessee’s formal written notice which required them to berth the ship involved at Quanzhou port and unload the goods. 3. After the containers were discharged at Quanzhou port, the Plaintiff could manage to transport the empty containers to Guangdong according to his own needs, which had nothing to do with them, nor did they have anything to do with the detention of the containers. Therefore, the relevant expense incurred should not be afforded by the Plaintiff. 4. The fees paid by the Plaintiff were all the charges for storage and

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unloading of the containers at Quanzhou port and storage yard, respectively 11,633 yuan for storage and unloading at Xiaocuo Port and 24,000 yuan for storage at Shihu storage yard. These two fees were charged by the Defendant and were actually paid to the interested party, so the Plaintiff had no right to ask for paying back. 5. CAI Yanbo should not take any responsibility just in account of his identification of shipowner or the guarantor of the agreement of port operation. CAI Yanbo did not have any negotiation with the cargo party including the Plaintiff about the delivery and any matter involved from beginning to the end. Moreover, CAI Yanbo had not been regarded as the ship’s representative in the negotiation of any maritime injunction as determined in the judgment of another case, nor had he ever been present at the scene. To say the least, even if CAI Yanbo took part in the implementation of the maritime injunction, it was only because he was the respondent to the relevant maritime injunction that he was forced to, which could not prove that CAI Yanbo was related to the illegal detention of containers involved and his signature on the involved agreement. 6. The calculation of the interest that the Plaintiff claimed did not have any bases. In conclusion, the Plaintiff had no facts or legal bases and the request should be rejected according to the law. In order to prove its claims, the Plaintiff Guangdong Shipping Company provided the following evidence: Evidence 1, container leasing agreement, to prove that on June 1, 2014, the Plaintiff and Gangtai Company signed on the agreement prescribing that the Plaintiff would lease containers to the Gangtai Company according to the agreement; after signing the contract, the applier delivered 974 containers to Gangtai Company (including 55 involved containers on M.V. “Henghui 2”). Evidence 2, the letter about requiring M.V. “Henghui 2” accordingly to transport the goods to Humen Port, to prove that on February 8, 2015, M.V. “Henghui 2” suddenly shut down the ship’s AIS signal and didn’t transport the goods in the containers to the port of destination Humen according to the waybill; On March 3, 2015, the Plaintiff sent a letter to the Defendant to require M.V. “Henghui 2” to transport thee containers to Humen Port as the waybill stipulated. Evidence 3, application for maritime injunction, to prove that it was because M. V. “Henghui 2” tended to unload all the containers and the goods at Quanzhou port that the Plaintiff applied for maritime injunction to Xiamen Maritime Court, which demanded the Defendant to deliver 55 containers to the Plaintiff. Evidence 4 and 5, Civil Ruling (2015) Xia Hai Fa Qiang Zi No.6 and the maritime injunction, jointly to prove that on March 27, 2015, the court made the maritime injunction (2015) Xia Hai Fa Qiang Zi No.6, ordering the Defendant to deliver the containers to the Plaintiff. Evidence 6, 7 and 8, the letters on March 17, 19 and 25, 2015 about requiring M. V. “Henghui 2” to immediately deliver the containers and the goods. The letter was used to prove that the Defendant refused to enforce the injunction, refused to deliver the containers and the Plaintiff sent letters to the Defendant for several time, respectively on March 17, 19 and 25, 2015, to ask for immediate delivery; the Plaintiff proposed a payment plan to reduce the loss and stated at the same time that this payment was not an acknowledgement of the Defendant’s right to collect

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expenses, the Plaintiff still had the right to ask for compensation through legal actions. Evidence 9, the letter to the Defendant sent by the Plaintiff on April 17, 2015, to prove that in order to avoid loss expansion, the Plaintiff sent the letter about the plan of payment and acquiring of the containers, stating again that this payment was not an acknowledgement of the Defendant’s right to collect expenses, which did not influence the Plaintiff’s right. Evidence 10, the notice of receipt bank account, to prove that in the circumstance of the Plaintiff’s statement about reservation for right, the Plaintiff paid 35,633 yuan for the container stuffing charge as the Defendant asked. Evidence 11, the invoices, to prove that Fujian Jinma Company was entrusted by the Plaintiff to transport part of the containers to the port and load them, which costed 3,180 yuan; after the Plaintiff picked up the containers, it spent 7,802 yuan to entrust Shanghai Zhonggu company to transport part of the containers from Quanzhou to Humen Port, Guangdong. Evidence 12, the container leasing certificate, to prove that Gangtai Company affirmed that the involved 55 containers were part of the ones rent by the Plaintiff. Evidence 13, the agreement on picking up the containers, on which were written the account number of the Defendant, to prove that the Plaintiff signed the agreement in order to pick up the containers. Evidence 14 and 15, consignment letter of entrustment and waybill, to prove that after picking up the containers, because the destination port was Humen Port, the Plaintiff entrusted Shanghai Zhonggu company to transport 8 containers from Quanzhou port to Humen Port. The two Defendants, after cross-examination, argued about the Plaintiff’s evidence that: There was no objection to authenticity of evidence 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12 and 13. But there was objection to authenticity, legality and relevancy of evidence 11, 14 and 15, which had no relationship with the Defendant but was the agreements between the Plaintiff and parties not involved in the case. In order to prove their claims, the two Defendants provided the following evidence: Evidence 1, shipping contract, to prove that the ship involved in the case was chartered by the Defendant to Gangtai Company at that period, which had no relationship on contract with the Plaintiff. Evidence 2, the letter of entrustment, to prove that the Defendant’s berthing at Quanzhou port was subject to instructions from the time charterer, Gangtai Company, which was not the misconduct against the Plaintiff, nor did it constitute a lien on the Plaintiff’s goods. Evidence 3, lawyer’s letter, to prove that the Plaintiff did not contact the Defendant orally until March 23, 2015 to ask for the delivery of the containers but it delayed to handle the procedure of taking the containers and the Defendant did not conduct any lien on the Plaintiff’s containers. Evidence 4, the statement of account at Xiaocuo Port and evidence 5, yard receipt, to prove that the fees charged to the Plaintiff by the Defendant were the

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actual costs incurred by the containers at the port and the yard in the case, which were collected by the Defendant on behalf of the port and the yard. Evidence 6, certificate of bareboat charter registration, to prove that the Defendant, CAI Yanbo, as shipowner, had leased the bareboat to the Defendant, Hengtong Company. The Defendant, Hengtong Company, was actually responsible for operating the bareboat and CAI Yanbo was not involved in this case. The Plaintiff, after cross-examination, argued about the two Defendants’ evidence that: There was no objection to the formal authenticity of evidence 1, but it could not prove that the contract was true. The authenticity, legality and relevancy of evidence 2, 4 and 6 were all disputed. There was no objection to the authenticity of evidence 3 and 5, but there was objection to the content of the evidence. Through cross- examination, the court’s confirmation about all the evidence was as follows: According to the Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 72 Paragraph 1, the two Defendants had no objection to the authenticity of the Plaintiff’s evidence 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12, 13, which could serve as the bases to affirm the facts of this case, to prove the facts that the costs for rending and transporting the involved containers, the Plaintiff’s application for maritime injunction were paid by the Plaintiff. The Defendant had objection to the authenticity of evidence 11, 14 and 15, but the facts these evidence reflected were consistent with the fact that the goods involved in the case were time chartered, which affirmed the authenticity of these evidence. According to the Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures Article 72 Paragraph 1, the Plaintiff had no objection to the authenticity of the Defendant’s evidence 3 and 5, which could serve as the bases to affirm the facts of this case, to prove the facts of the negotiation about conflict between the two parties and the circumstance of the storage cost of the containers involved. After checking, evidence 1 and 2 were the same as the originals. Although the Defendant had objections, it did not raise counter-evidence to deny them, thus their authenticity could be affirmed which could prove the related facts like the leasing of involved containers. The Defendant had objection to the authenticity of evidence 4 and 6, but the facts reflected were consistent with the circumstance of the storage of the involved containers and the storage cost in the series of cases of dispute over illegal detention on involved goods and the leasing of involved bare boat. Therefore, their authenticity could be affirmed and these evidence could prove the condition of the storage cost of the involved containers and the leasing of the involved bareboat. Upon investigation, the court finds out that: In 2014, Guangdong Shipping Company, as party A, signed the container leasing agreement with Gangtai Company, as party B, prescribing that party A should lease 2000 containers to party B. After the contract was signed, Guangdong Shipping Company delivered 417 FEU and 557 TEU, including the 55 containers involved in the case.

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The letter of entrustment, whose closing time was February 13, 2015, recorded that, about the affairs on handling the goods loaded on M.V. “Henghui 2” voyage 1502S and the freight collection, Gangtai Company entrusted Hengtong Company to berth M.V. “Henghui 2” and unload the goods at Quanzhou port and to collect relevant freight and the deposit for heavy containers from customers and owners of the goods and to arrange for the picking and delivery of relevant goods. On March 27, 2015, Xiamen Maritime Court made the maritime injunction (2015) Xia Hai Fa Qiang Zi No.6, demanding the Defendant to deliver 55 containers to the Plaintiff. Hereafter, this maritime injunction was delivered to Hengtong Company but Hengtong Company did not deliver the containers as the injunction demanded. As the owner of the relevant goods paid and took delivery according to the requirements of Hengtong Company, 30 of the 55 containers mentioned above had been actually removed from the control of Hengtong Company after taking delivery. Until May 12, 2015, there were 5 TEU empty involved containers, and 3 FEU empty involved containers stored at Xiaocuo Port. The storage fee generated from the goods being picked up by the owner to the empty container before transportation was 10,544 yuan, the transportation and shipping fee was 1,089 yuan, and the freight from Xiaocuo to Humen, Guangdong was 4,473 yuan. 16 empty containers in the involved containers were stored at Shihu Jiashun storage yard, under the control of Hengtong Company, after the owner of the goods picked them; before the Plaintiff took the containers, according to the statement of Hengtong Company, a total storage fee of 24,000 yuan was generated. On June 5, 2015, Guangdong Shipping Company paid 35,633 yuan through bank account to the designated account of CAI Jingmi by Hengtong Company in Shishi Haofu branch of Agricultural Bank of China. After paying the funds mentioned above, Guangdong Shipping Company picked 16 empty containers in Shihu Jiashun storage yard. Upon investigation additionally, the court finds out that: M.V. “Henghui 2”, container ship, class CCS, total tonnage 42,323, net tonnage 17,675, date of construction December 1, 1993, shipowner CAI Yanbo, operator Hengtong Company, speed 12 knots. The certificate of bareboat charter registration dated September 3, 2014 recorded: name of vessel was “Henghui 2”; shipowner was CAI Yanbo; the charterer of the ship was Hengtong Company, whose rent was 5,000,000, with a lease term of 5 years, from September 1, 2014 to August 31, 2019. On September 25, 2014, Hengtong Company as party B signed the M.V. “Henghui 2” shipping contract with Shanghai Xinou Shipping Co., Ltd. (hereinafter referred to as Shanghai Shipping Company). The contract stipulated: “the contract period is 3 + 3 months, and the commencement date of the ship is October 10, 2014. The freight should be 2.2 million yuan per month. If the period is less than one month, the freight should be calculated in proportion to the days of the month. On 26th and 10th of each month, party A receives the freight invoice provided by party B to pay the freight for half a month. If party A fails to pay the freight on time, party B has the right to stay on the ship's containers and its goods, and at the same

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time has the right to terminate the contract. Party A should be responsible for the command, dispatch, booking and stowage, and should ensure the safe berthing at the port and berth during the whole term of the contract, and should pay the expenses related to the business, such as port dispatch fee, pilotage fee, tug fee and ship agency fee.” On the same day, as party A and Shanghai Shipping Company as party B, also signed M.V. “Henghui 2” ship transport contract, which was the same as the previous contract. On February 2, 2015, M.V. “Henghui 2” left Tianjin port, which was expected to arrive at Guangzhou port on February 9, leave for Quanzhou port on February 11 and unload the goods by the port around February 14. In the course of series of other cases, the Defendant Hengtong Company stated that the actual sailing condition of M.V. “Henghui 2” leaving Tianjin port was: M.V. “Henghui 2” arrived at and anchored at Shihu’s joint inspection anchorage of Fujian province on February 6 and bore off until March 8. Later it berthed at Xiaocuo Port, Quanzhou, to unload 578 containers; left Xiaocuo Port to anchor at Jian Island anchorage on March 13; on March 23, left to anchor at Shihu’s joint inspection anchorage; on March 24, the ship berthed at Shihu port and unloaded 922 containers. On March 8, 2015, Hengtong Company, as party B, Fujian Quanzhou Xiaocuo Port Co., Ltd. (hereinafter referred to as Xiaocuo company), as party A, signed the contract for the operation of container liner for internal trade at port. The contract stipulated that party B entrusted party A to provide handling and storage of 578 containers. The consignee should go to party A to collect the goods at the port with party B's bill of lading affixed with the official seal of M.V. “Henghui 2”. The container handling and drying fee was 378 yuan for a TEU ordinary heavy container and 496 yuan for a 40-foot ordinary heavy container. Container storage fee was free within 7 days. During the period from day 8 to day 15, the FEU ordinary heavy container would cost 4 yuan per day and the 40-foot ordinary heavy container would cost 8 yuan per day. On March 23, 2015, Hengtong Company, as party B (the operator of M.V. “Henghui 2”), Quanzhou Pacific Container Terminal Co., Ltd., as party A, and CAI Yanbo, as party C (shipowner of M.V. “Henghui 2”), signed the agreement of port operation. The agreement stipulated that: “party B entrusts party A to load, unload and stack the existing 922 containers (865 of 20 ft and 75 of 40 ft) on M.V. “Henghui 2. Party A should release the goods according to party B’s instructions, and party B or its designated consignee should take delivery of the goods from party A based on the bill of lading affixed by party B; otherwise, party A has the right to refuse to release the goods. Party B should pay a lump sum of 550,000 yuan to party A as party A’s charter and unloading fee of the above 922 container cargoes. The container storage fee is free within 15 days. From day 16 to day 30, the TEU container costs 10 yuan per day and the FEU container 20 yuan per day. Party C agrees to provide party A with joint and several liability guarantees for all the responsibilities and obligations of party B under this agreement. If party B fails to fulfill its obligations under this agreement, party C should jointly and severally indemnify party A for its personal property within the scope of party B’s obligations and responsibilities.”

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On March 24, 2015, CAI Jingmi paid 550,000 yuan to Quanzhou Pacific Container Terminal Co., Ltd., through her account in Quanzhou Shishi Lingxiu branch of CMBC. During the trial, the two Defendants’ agents stated that they had never conducted a lien on the containers in the case. The court held that, the cause of action of this case was dispute over liability for damage of illegal detention of the goods on board. Since this case was actually involved with the containers themselves, to be more exact, the cause of action of this case should be dispute over liability for damage of illegal detention of the containers on board. The issues of this case were that: 1. whether the two Defendants had any illegal detention of the involved containers; 2. whether there was a legal basis for the container stuffing fee charged by the Defendants; 3. whether the loss caused by the Plaintiff’s continued shipment of 8 containers should be borne by the Defendants; 4. whether the Defendant CAI Yanbo should be liable for the Plaintiff’s request. 1. Regarding to the question whether the two Defendants had any illegal detention of the involved containers The court held that, firstly, from the identified facts of the movements of the ship that, M.V. “Henghui 2” arriving at the port on February 6, 2015 of Shihu anchorage, not leaving until March 8, even if considering Gangtai Company suddenly lost in contact, which caused the shipowner CAI Yanbo and the operator Hengtong Company’s need on reducing the loss, the two Defendants should timely deliver the involved containers to the Plaintiff after getting the goods out of them. But the Defendants did not fulfill their obligation of delivery in time. Secondly, from the condition of the publishing and performance of the maritime injunction, after receiving the maritime injunction, the Defendants still refused to deliver the containers involved, which proved the fact that to collect the amount of money requested, the Defendants illegally retained the containers involved in the case. Thirdly, of the 55 containers involved in the case, 16 were released after the Plaintiff paid the money on June 5, 2015, which also proved the fact that the two Defendants had illegally retained the containers. Therefore, it could be affirmed that the two Defendants had illegally retained the containers. 2. Regarding to the question whether there was a legal basis for the container stuffing fee charged by the Defendants In the opinion of the Defendants, the fee was negotiated by both parties. The Plaintiff voluntarily paid the fee, and the fee was charged on behalf of the dock and the storage yard. In the opinion of the Plaintiff, it paid the fee to the Defendants to withdraw the containers in time to avoid the loss expansion, not voluntarily. The court held that, of the charges of 35,633 yuan for the handling of the containers involved in the case, there was 10,544 yuan for storage at Xiaocuo Port, 1,089 yuan for the transportation and shipment of 8 containers and 24,000 yuan for storage at Shihu Jiashun storage yard. However, there was no written contract between the two parties to confirm the payment of the delivery fee, nor was there

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any fact of the payment by the Plaintiff. According to the circulation of the containers involved, the transfer and loading fee of 1,089 yuan was paid by the Defendants in accordance with the requirements of the Plaintiff for the circulation of the containers, so the Defendants had the right to claim against the Plaintiff; as for the storage cost, the storage fee of empty containers did not occurred after the delivery of the maritime injunction in the case, which was caused by the two Defendants’ refusal to fulfill the delivery obligation of the maritime injunction. Therefore, after deducting 1,089 yuan for the transportation and shipment of 8 empty containers, the Defendants should return the rest to the Plaintiff. 3. Regarding to the question whether the loss caused by the Plaintiff’s continued shipment of 8 empty containers should be borne by the Defendants The court held that, the Defendants were not the carriers of the contract of carriage of goods involved in the case, and the Plaintiff, as the consigner, had no right to advocate the third parties of the contract of carriage to bear the obligations of the contract. Under the circumstances that the loss of Gangtai Company’s contact had caused the damage of the Defendants’ interest, the Defendants had the right to suspend the performance of the regular charter ship contract and take measures to reduce the damage in accordance with the uneasy right of defense in the performance of the contract. Therefore, the Plaintiff required the Defendants to bear the transportation expenses incurred by the containers involved in the case of continued shipment without facts and legal bases, which could not be supported by law. 4. Regarding to the question whether the Defendant CAI Yanbo should be liable for the Plaintiff’s request The court held that, according to the fact of M.V. “Henghui 2” bareboat charter and time leasing contract, the annual rent of the bareboat rent was 1 million yuan, while the annual rent of time leasing was 26.4 million yuan, it was doubtful whether the bareboat charter contract was the true declaration of will of both parties. Under the condition that the Defendant CAI Yanbo could not prove that his annual interest from the ship was only this rent of 1 million yuan, the Defendant CAI Yanbo should be identified as the co-operator of the ship. That was to say, CAI Yanbo was one of the actual controllers of the ship and was involved in the detention of the goods and containers in the case. Moreover, from the documented evidence of port operation agreement and the implementation of maritime injunction of this involved voyage of M.V. “Henghui 2”, the Defendant Cai Yanbo as the shipowner and the respondent of the maritime injunction by the applicant, in knowing that the cargoes’ owner or containers’ owner had advocated to take delivery or the containers, still, through signing the port operation agreement with Hengtong Company, continued to control the goods or the containers in order to ask for delivery fee or container stuffing charge, which more vividly reflected the Defendant CAI Yanbo’s identification as one of the actual controllers, who jointly participated in the illegal detention of containers and goods in the them. Therefore, the Defendant CAI

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Yanbo should be jointly and severally liable for the amount of damages the Defendant Hengtong Company had to pay to the Plaintiff. Pulling the threads together, the Defendants jointly illegally detained the containers on the ship, resulting in the loss of 34,544 to the Plaintiff, and should make compensation according to the law. The other claims of the Plaintiff had no factual and legal bases and should be rejected according to law. According to the Tort Liability Law of the People’s Republic of China Article 6 Paragraph 1, Article 8 and Article 15 Paragraph 1 Sub-paragraph 6, and the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment is as follows: 1. The Defendant Hengtong Company should pay the compensation to the Plaintiff 34,544 yuan within 7 days from the effective date of this judgment and the interest of the compensation calculated from June 6, 2015 to the date of accomplishment of actual payment and according to benchmark lending rates for the same period of People’s Bank of China; 2. The Defendant CAI Yanbo should be jointly and severally liable for the aforementioned obligations of the Defendant Hengtong Company; 3. Reject the rest claims of the Plaintiff Sinotrans Guangdong Co., Ltd. Freight Branch. If the payment obligation is not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 965 yuan, the Plaintiff Sinotrans Guangdong Co., Ltd. Freight Branch should bear 250 yuan, the Defendant, Shishi Hengtong Shipping Co., Ltd. and the Defendant, CAI Yanbo, should jointly bear 715 yuan. If not satisfied with this judgment, within fifteen days of the date of the judgment be delivered, the parties can submit copies of the original petition so as to appeal to the Fujian High People’s Court. Presiding Judge: ZHOU Chengyou Judge: DENG Jingang Acting Judge: YOU Caimo March 1, 2016 Clerk: HONG Dewen

Appendix: Relevant Laws 1. Tort Liability Law of the People’s Republic of China Article 6 One who is at fault for infringement upon a civil right or interest of another person shall be subject to the tort liability.

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One who is at fault as construed according to legal provisions and cannot prove otherwise shall be subject to the tort liability. Article 8 Where two or more persons jointly commit a tort, causing harm to another person, they shall be liable jointly and severally. Article 15 The methods of assuming tort liabilities shall include: 1. 2. 3. 4. 5. 6. 7. 8.

cessation of infringement; removal of obstruction; elimination of danger; return of property; restoration to the original status; compensation for losses; apology; and elimination of consequences and restoration of reputation.

The above methods of assuming the tort liability may be adopted individually or jointly. 2. Civil Procedure Law of the People’s Republic of China Article 64 A party shall have the responsibility to provide evidence in support of its own propositions. For the evidence that cannot be obtained by any parties or their litigation representatives because of some realistic reasons or for the evidence that the people’s court considers necessary for adjudicating the case, the people’s court shall investigate and collect such evidence. The people’s court shall, according to the procedure prescribed by law, collect and examine evidence comprehensively and objectively. Article 239 The application period is two years. The suspension or suspension of an application for execution of a limitation shall be governed by the relevant provisions of law concerning the suspension or suspension of the limitation of action. The period prescribed in the preceding paragraph shall be counted from the last day of the period prescribed in the legal instrument for performance; if a legal document stipulates that the performance shall be carried out in installments, it shall be counted from the last day of the prescribed period of performance; If a legal document does not provide for the period of performance, the period shall be counted from the date of entry into force of the legal document. Article 253 If the person subjected to execution fails to perform his obligations for payment of money within the period specified in the judgment, written order or other legal documents, he shall pay double the interest on the debts incurred during the delayed performance. If the person subjected to execution fails to perform other obligations within the period specified in the judgment, written order or other legal documents, he shall pay a deferred payment.

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Fujian High People’s Court Civil Judgment Sinotrans Guangdong Co., Ltd. Freight Branch v. Shishi Hengtong Shipping Co., Ltd. et al. (2016) Min Min Zhong No.875 Related Case(s) This is the judgment of second instance and the judgment of first instance is on page 1307. Cause of Action 201. Dispute over illegal lien on ship, cargoes carried by ship, bunkers and stores of ship. Headnote Affirming lower court decision that defendant carriers had illegally detained plaintiff's containers by demanding payment for delivering them to plaintiff even after court had ordered them to do so. Summary Plaintiff leased 974 containers to Shanghai Hongsheng Gangtai Shipping Co., Ltd (Gangtai). Gangtai suddenly went out of business, so Plaintiff demanded return of the containers. Some of the containers were on board the second Defendant’s ship “Henghui 2”, which was bareboat chartered to the first Defendant, and which had been time chartered to Gangtai. Plaintiff asked the Defendants to deliver the containers in Humen, Guangdong, but the Defendants discharged the containers at Quanzhou. Plaintiff obtained an injunction from the Court ordering the Defendants to deliver the containers to Plaintiff, but Defendants demanded that Plaintiff pay 2,000 yuan for each container before they would make delivery. Plaintiff reluctantly paid 35,633 yuan, reserving its rights. Plaintiff then paid another carrier to carry the containers from Quanzhou to Humen. Plaintiff then sued the Defendants for return of the 35,633 yuan and the cost of the freight paid to the other carrier. The first instance Court held that the Defendants had illegally retained the containers by demanding payment before returning them, after the Court had ordered their return. Both Defendants were jointly and severally liable as co-operators. The Defendants appealed. The appeal Court affirmed the first instance judgment. The appeal Court held that (1) the Defendants asserted that they could not deliver the goods, but they did not submit the corresponding evidence to prove it; (2) the main cause of the expenses was the first Defendant; (3) the second Defendant, as owner of M.V. “Henghui 2,” took part in the illegal detention of the goods with the first Defendant.

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Judgment The Appellant (the Plaintiff of first instance): Sinotrans Guangdong Co., Ltd. Freight Branch Domicile: 602, 6th floor, No.233, Guangyuan Road, Baiyun District, Guangzhou City, Guangdong. Representative: LI Siming, general manager. Agent ad litem: ZHOU Chongyu, lawyer of Guang Yu & Co. Agent ad litem: LI Yu, lawyer of Guang Yu & Co. The Appellant (the Defendant of first instance): Shishi Hengtong Shipping Co., Ltd. Domicile: 2nd floor, No.97, Xiangnong Wharf Road, Xiangzhi Town, Shishi City, Fujian. Legal representative: CAI Qingshan, general manager. Agent ad litem: WANG Darong, lawyer of Beijing Dentons (Xiamen) Law Office. Agent ad litem: CAI Lihong, lawyer of Beijing Dentons (Xiamen) Law Office. The Appellant (the Defendant of first instance): CAI Yanbo, male, Han, born on September 14, 1968, living in Shishi Fujian Agent ad litem: WANG Darong, lawyer of Beijing Dentons (Xiamen) Law Office. Agent ad litem: CAI Lihong, lawyer of Beijing Dentons (Xiamen) Law Office. The Appellant, Shishi Hengtong Shipping Co., Ltd. (hereinafter referred to as Hengtong Company), the Appellant, CAI Yanbo, and the Appellant, Sinotrans Guangdong Co., Ltd. Freight Branch (hereinafter referred to as Guangdong Shipping Company) disagreed with the (2015) Xia Hai Fa Shi Chu Zi No.102 Civil Judgment made by Xiamen Maritime Court and an appeal was filed to the court. The case arose from a dispute concerning liability for damage of illegal detention of goods on board. After registering this case, the court legitimately constituted the collegiate bench to try the case. Now the case has been concluded. The claims lodged by Guangdong Shipping Company to the court of first instance were showed as follows: on June 1, 2014, Guangdong Shipping Company signed the container leasing agreement with Shanghai Hongsheng Gangtai Shipping Co., Ltd. (hereinafter referred to as Gangtai Company) which stipulated that Guangdong Shipping Company would lease a batch of containers to Gangtai Company for the use of operating domestic routes and that Gangtai Company should pay for the corresponding rent. After the contract signing, Guangdong Shipping Company delivered 974 containers to Gangtai Company. Gangtai Company suddenly discontinued its operation on February 8, 2015. Therefore, Guangdong Shipping Company terminated the contract with Gangtai Company and required Gangtai Company to give back the rented containers. M.V. “Henghui 2” was a container liner between Tianjin port and Humen Port, Guangdong. Upon Guangdong Shipping Company’s examination, M.V. “Henghui 2” was loaded with 55 containers leased by Guangdong Shipping Company to Gangtai Company.

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Hengtong Company, as the bareboat charterer and ship operator of M.V. “Henghui 2”, and CAI Yanbo, as shipowner, should transport the containers and the goods safely to the prescribed destination and deliver them. But Guangdong Shipping Company and CAI Yanbo refused to complete the transportation and unloaded all the containers and goods at Xiaocuo Port Quanzhou City and Pacific Container Terminal. On account that the containers were unloaded halfway, Guangdong Shipping Company applied for maritime injunction to Xiamen Maritime Court to minimize the loss and avoid the loss of containers, the injunction costing 5,000 yuan (RMB, similarly hereinafter). On March 27, 2015, Xiamen Maritime Court made the maritime injunction (2015) Xia Hai Fa Qiang Zi No.6, demanding Hengtong Company and CAI Yanbo to deliver 55 containers to Guangdong Shipping Company. However, Hengtong Company and CAI Yanbo refused to enforce the injunction and required Guangdong Shipping Company to pay 2,000 yuan for each container. Guangdong Shipping Company didn’t agree to the requirement, reckoning that Hengtong Company and CAI Yanbo’s claim had no factual or legal bases. But to avoid any further loss, Guangdong Shipping Company paid 35,633 yuan to pick up the containers involved according to Hengtong Company and CAI Yanbo’s requirement, yet in the case of the statement of reservation for its right. Guangdong Shipping Company entrusted Fujian Jinma Logistics Co., Ltd. to send part of the containers to the port and load them on board, paying 3,180 yuan. Because Humen Port, Guangdong was the original destination of the containers, after picking up the containers, Guangdong Shipping Company paid 7,802 yuan to Shanghai Zhonggu Xinliang Industrial Co., Ltd. to ship part of the containers from Quanzhou to Humen Port, Guangdong. Guangdong Shipping Company applied the court to judge: 1. Hengtong Company and CAI Yanbo should return Guangdong Shipping Company the expense of 35,633 yuan paid for picking up the containers and its interest (interest should be calculated from June 6, 2015 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period). 2. Hengtong Company and CAI Yanbo should indemnify Guangdong Shipping Company for the economic loss of 10,982 yuan and its interest (interest should be calculated from May 26, 2015 to the date of actual payment according to the loan interest rate published by the People’s Bank of China in the same period) caused by Hengtong Company and CAI Yanbo’s suspension of the transportation of illegally retained containers). 3. Hengtong Company and CAI Yanbo should assume all the cost of the case. Hengtong Company and CAI Yanbo argued in the first instance that: 1. they, respectively as the operator and shipowner, were in no contract of carriage with Guangdong Shipping Company. It was not their obligation to transport the goods to the destination, so Guangdong Shipping Company had no right to require them to shoulder any responsibility of the cost paid to transport the good to Guangdong. 2. It was according to the lessee, Gangtai Company’s direction that they berthed at Quanzhou port and then unloaded the goods, which did not constitute any inappropriate deeds or default to Guangdong Shipping Company. It was because on February 5, 2015 when Hengtong Company and CAI Yanbo received the lessee’s verbal instruction to suspend that they actually followed the instruction the next day

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and anchored outside the Shihu port, waiting for further directions. On February 13, they received the lessee’s formal written notice which required them to berth the ship involved at Quanzhou port and unload the goods. 3. After the containers were discharged at Quanzhou port, Guangdong Shipping Company could manage to transport the empty containers to Guangdong according to his own needs, which had nothing to do with them, nor did they have anything to do with the detention of the containers. Therefore, the relevant expense incurred should not be afforded by it. 4. The fees paid by Guangdong Shipping Company were all the charges for storage and unloading of the containers at Quanzhou port and storage yard, respectively 11,633 yuan for storage and unloading at Xiaocuo Port and 24,000 yuan for storage at Shihu storage yard. These two fees were charged by Hengtong Company and CAI Yanbo and were actually paid to the interested party, so Guangdong Shipping Company had no right to ask for paying back. 5. CAI Yanbo shouldn’t take any responsibility just in account of his identification of the owner of the ship or the guarantor of the agreement of port operation. CAI Yanbo did not have any negotiation with the cargo party including Guangdong Shipping Company about the delivery and any matter involved from beginning to the end. Moreover, CAI Yanbo has not been regarded as the ship’s representative in the negotiation of any maritime injunction as determined in the judgment of another case, nor has he ever been present at the scene. To say the least, even if CAI Yanbo took part in the implementation of the maritime injunction, it was only because he was the respondent to the relevant maritime injunction that he was forced to, which could not prove that CAI Yanbo was related to the illegal detention of containers involved and his signature on the involved agreement. 6. The calculation of the interest that Guangdong Shipping Company claimed did not have any bases. In conclusion, Guangdong Shipping Company had no facts or legal bases and the request should be rejected according to the law. The court of first instance found out that: In 2014, Guangdong Shipping Company, as party A, signed the container leasing agreement with Gangtai Company, as party B, prescribing that party A should lease 2000 containers to party B. After the contract was signed, Guangdong Shipping Company delivered 417 FEU containers and 557 TEU containers, including the 55 containers involved in the case. The letter of entrustment, whose closing time was February 13, 2015, recorded that, about the affairs on handling the goods loaded on M.V. “Henghui 2” voyage 1502S and the freight collection, Gangtai Company entrusted Hengtong Company to berth M.V. “Henghui 2” and unload the goods at Quanzhou port and to collect relevant freight and the deposit for heavy containers from customers and owners of the goods and to arrange for the picking and delivery of relevant goods. On March 27, 2015, Xiamen Maritime Court made the maritime injunction (2015) Xia Hai Fa Qiang Zi No.6, demanding the respondent Gangtai Company, CAI Yanbo and Hengtong Company to deliver 55 containers to Guangdong Shipping Company. Hereafter, this maritime injunction was delivered to Hengtong Company but Hengtong Company did not deliver the containers as the injunction demanded.

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As the owner of the relevant goods paid and took delivery according to the requirements of Hengtong Company, 30 of the 55 containers mentioned above had been actually removed from the control of Hengtong Company after taking delivery. Until May 12, 2015, there were 5 TEU empty involved containers, and 3 FEU empty involved containers stored at Xiaocuo Port. The storage fee generated from the goods being picked up by the owner to the empty container before transportation was 10,544 yuan, the transportation and shipping fee was 1,089 yuan, and the freight from Xiaocuo to Humen, Guangdong was 4,473 yuan. 16 empty containers in the involved containers were stored at Shihu Jiashun storage yard, under the control of Hengtong Company, after the owner of the goods picked them; Before Guangdong Shipping Company took the containers, according to the statement of Hengtong Company, a total storage fee of 24,000 yuan was generated. On June 5, 2015, Guangdong Shipping Company paid 35,633 yuan through bank account to the designated account of CAI Jingmi by Hengtong Company in Shishi Haofu branch of Agricultural Bank of China. After paying the funds mentioned above, Guangdong Shipping Company picked 16 empty containers in Shihu Jiashun storage yard. Upon additional investigation in the court of first instance: M.V. “Henghui 2”, container ship, class CCS, total tonnage 42,323, net tonnage 17,675, date of construction December 1, 1993, shipowner CAI Yanbo, operator Hengtong Company, speed 12 knots. The certificate of bareboat charter registration dated September 3, 2014 recorded: Boat’s name was M.V. “Henghui 2”; shipowner was CAI Yanbo; the charterer of the ship was Hengtong Company, whose rent was 5,000,000 yuan, with a lease term of 5 years, from September 1, 2014 to August 31, 2019. On September 25, 2014, Hengtong Company as party B signed the “Henghui 2” shipping contract with Shanghai Xinou Shipping Co., Ltd. (hereinafter referred to as Shanghai Shipping Company). The contract stipulated: “the contract period is 3 + 3 months, and the commencement date of the ship is October 10, 2014. The freight should be 2.2 million yuan per month. If the period is less than one month, the freight should be calculated in proportion to the days of the month. On 26th and 10th of each month, party A receives the freight invoice provided by party B to pay the freight for half a month. If party A fails to pay the freight on time, party B has the right to stay on the ship's containers and its goods, and at the same time has the right to terminate the contract. Party A should be responsible for the command, dispatch, booking and stowage, and should ensure the safe berthing at the port and berth during the whole term of the contract, and should pay the expenses related to the business, such as port dispatch fee, pilotage fee, tug fee and ship agency fee.” On the same day, as party A and Shanghai Shipping Company as party B, also signed M.V. “Henghui 2” ship transport contract, which was the same as the previous contract. On February 2, 2015, M.V. “Henghui 2” left Tianjin port, which was expected to arrive at Guangzhou port on February 9, leave for Quanzhou port on February 11 and unload the goods by the port around February 14. In the course of series of other cases, Hengtong Company stated that the actual sailing condition of M.V.

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“Henghui 2” leaving Tianjin port was: M.V. “Henghui 2” arrived at and anchored at Shihu’s joint inspection anchorage of Fujian on February 6 and bore off until March 8. Later it berthed at Xiaocuo Port, Quanzhou, to unload 578 containers; left Xiaocuo Port to anchor at Jian Island anchorage on March 13; on March 23, left to anchor at Shihu’s joint inspection anchorage; on March 24, the ship berthed at Shihu port and unloaded 922 containers. On March 8, 2015, Hengtong Company, as party B, Fujian Quanzhou Xiaocuo Port Co., Ltd. (hereinafter referred to as Xiaocuo Company), as party A, signed the contract for the operation of container liner for internal trade at port. The contract stipulated that party B entrusted party A to provide handling and storage of 578 containers. The consignee should go to party A to collect the goods at the port with party B’s bill of lading affixed with the official seal of M.V. “Henghui 2”. The container handling and drying fee was 378 yuan for a TEU ordinary heavy container and 496 yuan for a FEU ordinary heavy container. Container storage fee was free within 7 days. During the period from day 8 to day 15, the TEU ordinary heavy container would cost 4 yuan per day and the 40-foot ordinary heavy container would cost 8 yuan per day. On March 23, 2015, Hengtong Company, as party B (the operator of M.V. “Henghui 2”), Quanzhou Pacific Container Terminal Co., Ltd., as party A, and CAI Yanbo, as party C (the owner of M.V. “Henghui 2”), signed the agreement of port operation. The agreement stipulated that: “party B entrusts party A to load, unload and stack the existing 922 containers (865 of 20 feet and 75 of 40 feet) on M.V. “Henghui 2”. Party A should release the goods according to party B’s instructions, and party B or its designated consignee should take delivery of the goods from party A based on the bill of lading affixed by party B; otherwise, party A has the right to refuse to release the goods. Party B should pay a lump sum of 550,000 yuan to party A as party A's charter and unloading fee of the above 922 container cargoes. The container storage fee is free within 15 days. From day 16 to day 30, the TEU container costs 10 yuan per day and the 40-ft container 20 yuan per day. Party C agrees to provide party A with joint and several liability guarantees for all the responsibilities and obligations of party B under this agreement. If party B fails to fulfill its obligations under this agreement, party C should jointly and severally indemnify party A for its personal property within the scope of party B’s obligations and responsibilities.” On March 24, 2015, CAI Jingmi paid 550,000 yuan to Quanzhou Pacific Container Terminal Co., Ltd., through her account in Quanzhou Shishi Lingxiu branch of CMBC. During the trial of the first instance, Hengtong Company and CAI Yanbo’s agents stated that Hengtong Company and CAI Yanbo had never conducted a lien on the containers in the case. The court of first instance held that, the cause of action of this case was dispute over liability for damage of illegal detention of the goods on board. Since this case was actually involved with the containers themselves, to be more exact, the cause of action of this case should be dispute over liability for damage of illegal detention of the containers on board. The issues of this case were that: 1. whether Hengtong

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Company and CAI Yanbo had any illegal detention of the involved containers; 2. whether there was a legal basis for the container stuffing fee charged by Hengtong Company and CAI Yanbo; 3. whether the loss caused by Guangdong Shipping Company’s continued shipment of 8 containers should be borne by Hengtong Company and CAI Yanbo; 4. whether CAI Yanbo should be liable for the request of Guangdong Shipping Company. 1. Regarding to the question whether Hengtong Company and CAI Yanbo had any illegal detention of the involved containers The court of first instance held that, firstly, from the identified facts of the movements of the ship that, M.V. “Henghui 2” arriving at the port on February 6, 2015 of the Shihu anchorage, not leaving until March 8, even if considering Gangtai Company suddenly lost in contact, which caused the ship’s owner CAI Yanbo and the operator Hengtong Company’s need on reducing the loss, Hengtong Company and CAI Yanbo should timely deliver the involved containers to Guangdong Shipping Company after getting the goods out of them. But Hengtong Company and CAI Yanbo did not fulfill their obligation of delivery in time. Secondly, from the condition of the publishing and performance of the maritime injunction, after receiving the maritime injunction, Hengtong Company and CAI Yanbo still refused to deliver the containers involved, which proved the fact that to collect the amount of money requested, Hengtong Company and CAI Yanbo illegally retained the containers involved in the case. Thirdly, of the 55 containers involved in the case, 16 were released after Guangdong Shipping Company paid the money on June 5, 2015, which also proved the fact that Hengtong Company and CAI Yanbo had illegally retained the containers. Therefore, it could be affirmed that Hengtong Company and CAI Yanbo had illegally retained the containers. 2. Regarding to the question whether there was a legal basis for the container stuffing fee charged by Hengtong Company and CAI Yanbo In the opinion of Hengtong Company and CAI Yanbo, the fee was negotiated by both parties. Guangdong Shipping Company voluntarily paid the fee, and the fee was charged on behalf of the dock and the storage yard. In the opinion of Guangdong Shipping Company, it paid the fee to Hengtong Company and CAI Yanbo to withdraw the containers in time to avoid the loss expansion, not voluntarily. The court of first instance held that, of the charges of 35,633 yuan for the handling of the containers involved in the case, there was 10,544 yuan for storage at Xiaocuo Port, 1,089 yuan for the transportation and shipment of 8 containers and 24,000 yuan for storage at Shihu Jiashun storage yard. However, there was no written contract between the two parties to confirm the payment of the delivery fee, nor was there any fact of the payment by Guangdong Shipping Company. According to the circulation of the containers involved, the transfer and loading fee of 1,089 yuan was paid by Hengtong Company and CAI Yanbo in accordance with

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the requirements of Guangdong Shipping Company for the circulation of the containers, so Hengtong Company and CAI Yanbo had the right to claim against Guangdong Shipping Company; as for the storage cost, the storage fee of empty containers did not occurred after the delivery of the maritime injunction in the case, which was caused by Hengtong Company and CAI Yanbo’s refusal to fulfill the delivery obligation of the maritime injunction. Therefore, after deducting 1,089 yuan for the transportation and shipment of 8 empty containers, Hengtong Company and CAI Yanbo should return the rest to Guangdong Shipping Company. 3. Regarding to the question whether the loss caused by Guangdong Shipping Company's continued shipment of 8 empty containers should be borne by Hengtong Company and CAI Yanbo The court of first instance held that, Hengtong Company and CAI Yanbo were not the carriers of the contract of carriage of goods involved in the case, and Guangdong Shipping Company, as the consigner, had no right to advocate the third parties of the contract of carriage to bear the obligations of the contract. Under the circumstances that the loss of Gangtai Company’s contact had caused the damage of the interest of Hengtong Company and CAI Yanbo, Hengtong Company and CAI Yanbo had the right to suspend the performance of the regular charter ship contract and take measures to reduce the damage in accordance with the uneasy right of defense in the performance of the contract. Therefore, Guangdong Shipping Company required Hengtong Company and CAI Yanbo to bear the transportation expenses incurred by the containers involved in the case of continued shipment without facts and legal bases, which could not be supported by law. 4. Regarding to the question whether CAI Yanbo should be liable for Guangdong Shipping Company’s request The court of first instance held that, according to the fact of M.V. “Henghui 2” bareboat charter and time leasing contract, the annual rent of the bareboat rent was 1 million yuan, while the annual rent of time leasing was 26.4 million yuan, it was doubtful whether the bareboat charter contract was the true declaration of will of both parties. Under the condition that CAI Yanbo could not prove that his annual interest from the ship was only this rent of 1 million-yuan, CAI Yanbo should be identified as the co-operator of the ship. That was to say, CAI Yanbo was one of the actual controllers of the ship and was involved in the detention of the goods and containers in the case. Moreover, from the documented evidence of port operation agreement and the implementation of maritime injunction of this involved voyage of M.V. “Henghui 2”, Cai Yanbo as the shipowner and the respondent of the maritime injunction by the applicant, in knowing that the cargoes’ owner or containers’ owner had advocated to take delivery or the containers, still, through signing the port operation agreement with Hengtong Company, continued to control the goods or the containers in order to ask for delivery fee or container stuffing charge, which more vividly reflected Cai Yanbo’s identification as one of the actual controllers, who

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jointly participated in the illegal detention of containers and goods in the them. Therefore, CAI Yanbo should be jointly and severally liable for the amount of damages Hengtong Company had to pay to the Guangdong Shipping Company. Pulling the threads together, Hengtong Company and CAI Yanbo jointly illegally detained the containers on the ship, resulting in the loss of 34,544 to Guangdong Shipping Company, and should make compensation according to the law. The other claims of Guangdong Shipping Company had no factual and legal bases and should be rejected according to law. According to the Tort Liability Law of the People’s Republic of China Article 6 Paragraph 1, Article 8 and Article 15 Paragraph 1 Sub-paragraph 6, the Civil Procedure Law of the People’s Republic of China Article 64 Paragraph 1, the judgment was as follows: 1. Shishi Hengtong Shipping Co., Ltd. should pay the compensation for Sinotrans Guangdong Co., Ltd. Freight Branch 34,544 yuan with 7 days from the effective date of this judgment and the interest of the compensation from June 6, 2015 to the date of accomplishment of actual payment, according to the interests of benchmark lending rates for the same period of People’s Bank of China; 2. CAI Yanbo should be jointly and severally liable for the aforementioned obligations of Hengtong Company; 3. Reject the rest claims provided by Sinotrans Guangdong Co., Ltd. Freight Branch. If the payment obligation was not fulfilled within the period specified in this judgment, the interest of the debt for the delay in performance should be paid double according to the Civil Procedure Law of the People’s Republic of China Article 253. Court acceptance fee in amount of 965 yuan, Sinotrans Guangdong Co., Ltd. Freight Branch should bear 250 yuan, Shishi Hengtong Shipping Co., Ltd. and CAI Yanbo should jointly bear 715 yuan. After the judgment of the first instance, Guangdong Shipping Company, Hengtong Company and CAI Yanbo disagreed with the judgment and an appeal was filed in the court. Guangdong Shipping Company appealed that: Hengtong Company and CAI Yanbo had the obligation to complete the transportation contract involved in the case. There were no factual or legal bases for the so-called right to exercise the right of uneasy defense and take measures to reduce damages. The loading charge of 1,089 yuan (included in the picking up charge of 35,633 yuan) and carriage charge of 10,982 yuan in connection with the reshipment of empty containers in the case by Guangdong Shipping Company should be compensated by Hengtong Company and CAI Yanbo. The loading charge of 1,089 yuan (included in the picking up charge of 35,633 yuan) and carriage charge of 10,982 yuan in connection with the reshipment of empty containers in the case were caused by the illegal detention of the loaded goods by Hengtong Company and CAI Yanbo, which had a causal relationship with the joint tort of Hengtong Company and CAI Yanbo and should be jointly and severally compensated by them. Therefore, request to support the claims in the court of first instance.

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Hengtong Company and CAI Yanbo appealed that: 1. it was wrong that the court of first instance held that Hengtong Company and CAI Yanbo had the illegal detention on involved goods. It was wrong that the judgment of first instance held that Hengtong Company and CAI Yanbo did not perform the obligation of delivery from the movements of the ship. It had no legal bases to affirm the fact that Hengtong Company and CAI Yanbo illegally detained the involved containers from the publishing and implementation of the maritime injunction. It was wrong that the judgment of first instance held that 16 empty containers were released after the payment was made on June 5, 2015 by Guangdong Shipping Company. 2. The judgment of first instance should be corrected because there were mistakes in the determination of the scope of compensation for losses. The behavior of Hengtong Company and CAI Yanbo during the period from when Gangtai Company lost its contact to the berth at the port, had constituted the fact of negotiorum gestio. It was wrong that the judgment of first instance held that the storage fee should be paid by Hengtong Company and CAI Yanbo, which should, on the contrary, paid by Guangdong Shipping Company. 4. The interest recognized in the court of first instance lacked factual and legal bases. Request to revoke the judgment of first instance and adjust to reject the claims in first instance of Guangdong Shipping Company. Neither party submitted any written reply to the other party’s appeal. During the second trial, neither of the parties submitted new evidence materials except the ones each party objected in the appeal petition. The fact of relevant objection should be ascertained in combination with analysis of issue of the dispute in this case. After trial, the issues of the second instance were so follows: 1. whether Hengtong Company and CAI Yanbo illegally detained the involved goods; 2. whether the first instance correctly affirmed the scope of loss; whether CAI Yanbo should be reliable for Guangdong Shipping Company’s request. The court held that: 1. Regarding to the question whether Hengtong Company and CAI Yanbo illegally detained the involved goods. Guangdong Shipping Company entrusted Gangtai Company to carry the goods involved in the case. This voyage was expected to arrive at the port of destination on February 9, 2015, but all the shareholders of Gangtai Company lost in contact and the ship involved was controlled by the operator Hengtong Company, which bogged down on the waters around Quanzhou port. The ship arrived at Shihu joint inspection anchorage of Fujian province on February 6, 2015 and anchored until March 8, 2015. In this period, on the condition that no agreement was reached between the interested parties and Hengtong Company, the court of first instance issued a maritime injunction upon the application of the relevant interested parties and took the measures of property preservation and prior execution before litigation, but the enforcement failed. After that, Hengtong Company voluntarily directed the ship involved to leave Xiaocuo Port and berth at Quanzhou Pacific Container Terminal Co., Ltd. (Shihu) port. On June 5, 2015, Guangdong Shipping Company paid Hengtong Company with the delivery fee and the loading fee before the related goods were

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picked. Hengtong Company and CAI Yanbo reckoned that they could not deliver the goods, but they did not submit the corresponding evidence to prove it. So, it was not appropriate of the first instance to affirm the illegal detention of the involved goods by Hengtong Company and CAI Yanbo. 2. Regarding to the question whether the first instance correctly affirmed the scope of loss. Firstly, it was about the delivery charge. Gangtai Company as a liner operator, to transport the goods safely to the prescribed location according to the promise was its contractual obligations. In the case of Hong Kong company shareholders’ losing contact, Hengtong Company as the actual operator, CAI Yanbo as the ship’s owner, out of consideration for the security of the goods, should fulfill the duty of good administrators and in a reasonable way deal with the related issues, including delivering the goods loaded on board to the owner of the goods. The reasonable expenses paid for it should be borne by the beneficiary according to the principle of equitableness and reasonableness. But the delivery fees that Hengtong Company and CAI Yanbo claimed, which included the loss of rent, attorney fee, tug fee, fuel surcharge, etc., were not simply to the owner’s interest. In addition, the main reason for the expenses was also caused by Hengtong Company. So, the delivery fee claimed could not be supported. Secondarily, it was about the terminal charge. When Hengtong Company lost contact, Hengtong Company as the operator of the involved ship, should take proper measures to ensure the safety of the ship and the cargo on board and the relevant reasonable expenses could be claimed. Although the continued navigation of the ship involved in the case and the completion of the transport task could maximize the interests of the owner, the deed of Hengtong Company, as the operator of the ship, to berth and unload at the nearest port on the condition that Gangtai Company lost contact, was beneficial to the safety of the goods on board, whose purpose could be affirmed as for the benefits of the goods’ own and the corresponding unloading fee should be paid by the owner. As for the illegal detention after unloading, it could not be the reason for the owner not to bear the cost of discharging. Thirdly, it was about the storage fee. At the time of the delivery of the maritime injunction in the case, the storage fee was not incurred, which was caused by the refusal to fulfill the obligation of delivery under the maritime injunction and should be borne by Hengtong Company itself. Therefore, it was correct for the first instance to confirm that the delivery fee should be returned to Guangdong Shipping Company after deducting the loading fee. Fourthly, it was about the cost of reshipment. As analyzed above, Hengtong Company and CAI Yanbo was not the carrier of the involved cargo shipment contract, who did not have the contractual obligation to transport the goods to the port of destination. In the case that the carrier Gangtai Company lost in contact, Hengtong Company berthed at the nearest port and unloaded the goods, which was not apparently inappropriate. Therefore, the cost of reshipment after unloading should not be paid by Hengtong Company or CAI Yanbo and the first instance affirmed it correctly. Lastly, it was about the interests. Guangdong Shipping Company claimed for the interests of the fund

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occupied by Hengtong Company through illegal detention of the goods, which was in line with the principle of fairness and rationality and should be supported. 3. Regarding to the question whether CAI Yanbo should be reliable for Guangdong Shipping Company’s request. CAI Yanbo as the owner of M.V. “Henghui 2”, together with Hengtong Company, signed the port operation agreement with Quanzhou Pacific Container Terminal Co., Ltd., which suggested that he not only knew about the condition of the shipment of the involved goods but also took part in the illegal detention of the goods. CAI Yanbo, as one of the respondents of the maritime injunction, failed to fulfill his obligations of the maritime injunction but contrarily participated in the detention of the involved goods, which infringed the interests of Guangdong Shipping Company. So, it’s correct for the first instance to hold that CAI Yanbo should be jointly and severally liable for the loss with Hengtong Company. In conclusion, the grounds of appeal of the Appellants Guangdong Shipping Company, Hengtong Company, and CAI Yanbo could not be established. According to the Civil Procedure Law of the People’s Republic of China Article 170 Paragraph 1 Sub-paragraph 1, the judgment is as follows: Dismiss the appeal and affirm the original judgment. Court acceptance fee of second instance in amount of 965 yuan, Guangdong Shipping Company should bear 250 yuan, Hengtong Company and CAI Yanbo should jointly bear 715 yuan. Court acceptance fee of first instance should be enforced according to the judgment of first instance. The judgment is final. Presiding Judge: LIN Zexin Judge: HUANG Zhijiang Acting Judge: CHEN Xiaoxia January 19, 2017 Clerk: XIE Zhenqi

Appendix: Relevant Laws Civil Procedure Law of the People’s Republic of China. Article 170 After trying a case on appeal, the people’s court of second instance shall, in the light of the following situations, dispose of it accordingly: 1. If the facts were clearly ascertained and the law was correctly applied in the original judgment, the appeal shall be rejected in the form of a judgment and the original judgment shall be affirmed; 2. If the facts were incorrectly or the application of the law was incorrect in the original judgment, the said judgment shall be amended according to the law;

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3. If in the original judgment the facts were not clearly ascertained and the evidence was insufficient, the people’s court of second instance shall make a written order to set aside the judgment and remand to case to the original people’s court for retrial, or the people’s court of second instance may amend the judgment after investigating and clarifying the facts; 4. If there was violation of legal procedure in making the original judgment, which may have affected correct adjudication, the judgment shall be set aside by a written order and the case remanded to the original people’s court for retrial.

Guangzhou Maritime Court Civil Judgment SUMPU INTERNATIONAL LIMITED et al. v. Pacific Container Service (China) Limited Guangzhou Branch et al. (2014) Guang Hai Fa Chu Zi No.507 Related Case(s) None. Cause of Action 202. Dispute over contract of carriage of goods by sea or sea-connected waters. Headnote Cargo claim raising issues of: identity of proper plaintiff; possible misdescription of goods on loading; perils of the sea; limitation of liability. Summary A shipment of bras was damaged during carriage from China to Ghana when a storm struck the carrying ship. The bras were packaged in bags and shipped in containers. Plaintiff cargo owner sued Defendant carrier. The issues in this case were: (1) whether the Plaintiff company was a proper Plaintiff when its agent and sole director concluded the contract for carriage of goods before the company came into existence; (2) whether the Plaintiff could prove the loss of the goods when the port terminal incorrectly recorded the contents of the container as “mechanical parts” but when the bill of lading was issued, it recorded the contents of the container as “underwear”; (3) whether the Defendant was excused from all liability under a “perils of the sea” defense because of a storm of 5–6 on the Beaufort Scale; and (4) whether the Defendant could claim limitation of liability. The Court held: (1) Under Chinese law, a company’s sole director can act for a non-existent company and bind it if the company later ratifies the act; (2) the bill of lading recording the containerized merchandise as “underwear” was sufficient to prove the container contained bras because the port terminal did not inspect the inside of the container to see if it matched the merchandise listed in the bill of lading; (3) the Defendant could not claim perils of the sea because a 5–6 Beaufort storm was not uncommon for the area at that time of the year; and (4) the Defendant was entitled to limitation of its liability because the loss was not caused by its negligence or recklessness.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_70

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Judgment The Plaintiff: SUMPU INTERNATIONAL LIMITED Domicile: RM 230,923/F HO KING. COMM CTR 2-16 FAYUEN ST MONGKOK KLN, HONG KONG, CHINA. Representative: CHEN Yuyu, director of the company. The Plaintiff: CHEN Yuyu, female, born on August 18, 1974, Han, living in Yuexiu District, Guangzhou, Guangdong, the People’s Republic of China Agent ad litem of the above two Plaintiffs: ZHOU Chongyu, lawyer of Guangdong Haijian Law Firm. Agent ad litem of the above two Plaintiffs: LIN Xiaomei, lawyer of Guangdong Haijian Law Firm. The Defendant: Pacific Container Service (China) Limited Guangzhou Branch Domicile: RM 901, No.30, North Tianhe Road, Tianhe District, Guangzhou, Guangdong, the People’s Republic of China. Representative: FENG Xiaoyun, general manager of the branch. The Defendant: Pacific International Lines (China) Limited Guangzhou Branch Domicile: RM 3601, 3602, Citic Plaza, No.233, North Tianhe Road, Tianhe District, Guangzhou, Guangdong, the People’s Republic of China. Representative: SUN Jianliang, senior general manager of the branch. The Defendant: PACIFIC INTERNATIONAL LINES (PRIVATE) LIMITED Domicile: 140 Cecil Street, #03-00, PIL BUILDING, SINGAPORE 069540. Representative: WILLIAM TAY KIAN PHUAN, executive director of the company. Agent ad litem of the above three Defendants: ZHANG Xinwei, lawyer of Shanghai GLINKS (Guangzhou) Law Firm. Agent ad litem of the above three Defendants: YUAN Yuan, lawyer of Shanghai GLINKS (Guangzhou) Law Firm. With respect to the case arising from dispute over contract of carriage of goods by sea between the Plaintiffs SUMPU INTERNATIONAL LIMITED (hereinafter referred to as Sumpu Company), CHEN Yuyu, and the Defendants Pacific Container Service (China) Limited Guangzhou Branch (hereinafter referred to as Pacific Container Guangzhou Branch), Pacific International Lines (China) Limited Guangzhou Branch (hereinafter referred to as Pacific Lines Guangzhou Branch), Pacific International Lines (Private) Limited (hereinafter referred to as Pacific Lines Company), the case was filed on July 14, 2014, the court applied the general procedure in accordance with the law, convened all parties to exchange evidence on October 14, 2014 and tried the case in public hearings on October 14, 2014,

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October 19, 2015, May 6, 2016 and November 30, 2016. ZHOU Chongyu and LIN Xiaomei, agents ad litem of Sumpu Company and CHEN Yuyu, participated in the exchange of evidence and the first, second and third court hearings. LIN Xiaomei attended the fourth hearing. ZHANG Xinwei, agent ad litem of Pacific Container Guangzhou Branch, Pacific Lines Guangzhou Branch and Pacific Lines Company, attended the court to exchange evidence and hearings. SU Heming and LIN Shaoxian, the witnesses, attended the court first hearing. LIAO Yindi, the witness, attended the court third hearing. Now the case has been concluded. Plaintiff Sumpu Company and CHEN Yuyu filed a lawsuit with the court: firstly, three Defendants were ordered to bear jointly and severally liability to jointly compensate the two Plaintiffs for the loss of goods of 1,876,735.08 yuan and interests (from January 16, 2014 to the date of the judgment to determine the payment, calculated in accordance with the loan interest rate announced by the People’s Bank of China for the same period); secondly, the court should order three Defendants to jointly bear the costs of the case. During the trial, the two Plaintiffs claimed that Sumpu Company was the first right holder of the lawsuit of this case and CHEN Yuyu was the second right holder. If the claim of Sumpu Company can not be established, the claim in this case is claimed by CHEN Yuyu. Facts and reasons: CHEN Yuyu arranged LIAO Yindi to consign the goods on January 3, 2014 which indicates that the shipper was Sumpu Company, the port of loading was Uchong of Whampoa, China, the destination was TEMA GHANA. The goods were packed and delivered for transportation on January 5. Pacific Container Guangzhou Branch informed CHEN Yuyu that the goods were lost in the South China Sea on January 16. CHEN Yuyu paid 4,091 US Dollars for freight to Pacific Container Guangzhou Branch on January 22. Pacific Container Guangzhou Branch issued a receipt to Sumpu Company and delivered a set of original bill of lading to CHEN Yuyu. The bill of lading was issued by Pacific Lines Guangzhou Branch, the agent of Pacific Lines Company. Pacific Lines Company is the owner and operator of the involved cargo carrier vessel “COTA GANDING”. The loss of goods was 300,701 US Dollars, including 296,610 US Dollars for goods and 4,091 US Dollars for freight losses. The total amount was 1,876,735.08 yuan in accordance with the exchange rate of 1 US Dollars to 6.2412 yuan on June 4, 2014. CHEN Yuyu was the legal representative of Sumpu Company who handled the cargo transportation and payment of freight for the interest of Sumpu Company. Sumpu Company was the shipper of the goods. Pacific Container Guangzhou Branch accepted the commission of Sumpu Company and charged the freight. Pacific Container Guangzhou Branch was the carrier of carriage of the goods by sea. Pacific Lines Company was the actual carrier. Pacific Lines Guangzhou Branch shall be liable for compensation to Sumpu Company if it fails to prove that it has obtained legal authorization. The three Defendants shall be jointly and severally liable for the loss of the goods because such loss occurred during the period of carrier’s responsibility. The three Defendants, Pacific Container Guangzhou Branch, Pacific Lines Guangzhou Branch and Pacific Lines Company, argued that: first, the contract of the carriage of the goods in this case was invalid because of civil disability of Sumpu Company when the contract was concluded. As the Plaintiff, Sumpu

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Company was not qualified and did not have the right to claim compensation against the three Defendants based on the lawsuit for the contract of carriage of goods by sea. Secondly, as the Plaintiff, CHEN Yuyu was not qualified and did not have the right to claim for compensation. Thirdly, Pacific Container Guangzhou Branch was the booking agent of Pacific Lines Company. As the agent of Pacific Lines Company, Pacific Lines Guangzhou Branch issued the bill of lading on behalf it. Therefore, neither Pacific Container Guangzhou Branch nor Pacific Lines Guangzhou Branch were the carriers involved in the contract of the carriage of goods by sea. So they were not required to assume any legal liability for the loss of goods under the contract of carriage of goods by sea. Fourthly, the reason for the loss of the goods was bad weather during the voyage, and there was no causal relationship with the conduct of Pacific Lines Company. Pacific Lines Company fulfilled its duty of seaworthiness, proper transportation and cargo handling diligently and conscientiously, and was not liable for the loss of goods involved; fifthly, the goods involved are subject matter under the international trade contract between Sumpu Company and the consignee. The evidence provided by Sumpu Company was not sufficient to prove that its ownership of the goods involved. The evidence submitted by the two Plaintiffs on the value of the goods involved in this case indicated that their trade practices were contrary to the practice of customary trade operations and cannot support their claims on the value of the goods involved. Sixth, even if the liability of breach of contract is true and the actual value of the goods involved exceeds the carrier’s liability limits, Pacific Lines Company still has the right to limit its liability and only liable for 163,334.15 Special Drawing Rights of 245 goods. The exchange rate of Special Drawing Rights to RMB is the exchange rate announced on the day of the accident, namely, January 13, 2014. The parties submitted evidence in accordance with the law, and the parties have conducted evidence exchange and cross-examination. If the evidence that the parties have no objection to, the court will confirm and certify in the volume. For the evidence that the parties have controversy, the determination of the court are as follows: the three Defendants have no objection to the authenticity of the registration information of Pacific Container Guangzhou Branch, the registration information of “KOTA GANDING”, booking note, the confirmation of the bill of lading, the fee confirmation, the notice of the loss of the goods and the receipt submitted by the two Plaintiffs, the court confirms its authenticity. As to whether the claim of the two Plaintiffs on the relationship of the transport contract can be proved, the court will combine other evidence to make a comprehensive determination. The court will confirm its proof force of the container loading paper submitted by the two Plaintiffs if the three Defendants fail to submit the opposite evidence. The court will confirm the authenticity of the testimony and statement of LIAO Yindi submitted by the two Plaintiffs, the letter signed “Kelly”and the booking note when the if the three Defendants fail to submit the opposite evidence. The court will confirm its credibility because the facts statement stated by Miangang Trading Co., Ltd. (hereinafter referred to as Miangang Company), two copies of export goods declaration form are consistent with the contents of the two copies of export goods declarations collected by the court from the customs. The

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court will confirm the authenticity of the agent declaration, packing list, contract and invoice from the customs investigation. The court will confirm the credibility of the three sets of evidence because the certificate of arrival submitted by the two Plaintiffs is consistent with the email issued by the three Defendants and the electronic information exchange data issued by the terminal and the time, box number, and weight of the container cargo when entering into the terminal recorded in container cargo records involved in the case. The court will confirm its credibility if the number of the container in the cargo packing photo submitted by the two Plaintiffs is consistent with the number of the container involved in the case recorded in the bill of lading. The court will confirm the credibility of the name, quality and value of the goods if two purchase contracts, LIN Shaoxian’s testimony and fact statement and SU Heming’s testimony and fact statement submitted by the two Plaintiffs are consistent with the declaration form, bill of lading, the weight of the container entering the terminal and the data obtained from the court. The court will confirm its authenticity if the container specification record and the container production certificate submitted by the three Defendants are consistent with the information recorded in the bill of lading. As to whether the defense claims of the Defendant can be proved, the court will confirm it with other evidences. The court shall not confirm its credibility because the registration information of TOP SPEED TRADING LIMITED is inconsistent with the name of the buyer in the contract investigated by the court. The court ascertains that: Firstly, the information about the parties and the vessel. “KOTA GANDING” is a Singapore-owned steel container ship, built in 2012, the ship owner is Pacific Lines Company with a total tonnage of 29,015. This vessel holds the ship's continuous summary document issued on June 10, 2013, Safety Management Certificate issued on December 11, 2013, compliance certificate issued on January 19, 2012, International Oil Pollution Prevention Certificate issued on July 4, 2013, International Load Line Certificate issued on July 4, 2013, Minimum Safe Manning Certificate issued on June 10, 2013. This vessel had 22 crew members on January 15, 2014. Pacific Container Guangzhou Branch was established in Guangzhou on December 29, 2003 which is affiliated to Pacific Container Transportation Service (China) Co., Ltd. The scope of business includes non-vessel shipping business, booking cargo space, issuing cargo receipt, collecting freight charges and other authorized services. The public information of Pacific Container Guangzhou Branch on China Shipping website records that it has no bill of lading and uses the bill of lading of Pacific Container Transportation Service (China) Co., Ltd. Pacific Lines Guangzhou Branch was established in Guangzhou on August 28, 2000 which is affiliated to Pacific International Lines (China) Limited. The scope of business is to collect goods, issue bill of lading, settle freight and sign service contracts for Pacific Lines Company. Sumpu Company was registered as a limited company in Hong Kong region on January 17, 2014. The data of the company which was filed with the Hong Kong

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Companies Registry on April 17, 2014 recorded that its founding members were CHEN Yuyu and FOFANA AMADOU, and CHEN Yuyu was the sole director. Secondly, facts about the transportation involved. CHEN Yuyu hired LIAO Yinxi in the name of Sumpu Company to book and arrange transportation of foreign trade goods from March 2012 to May 2014. LIAO Yindi (Kelly) issued a booking note to Mr. Xie of Pacific Container Guangzhou Branch in the name of Sumpu Company on January 3, 2014. The beginning of the booking note was “SUMPU INTERNATIONAL LIMITED”, address was 16D, Taixing Pavilion, Guolong Building, No.276 Huanshi Middle Road, Guangzhou, telephone number was (0086-20) 8361526, Fax was (0086-20) 83229609. This booking note recorded that the shipper was SUMPU INTERNATIONAL LIMITED, the consignee was MissK, the port of loading was Uchong of Whampoa, China, the destination was Ghana Tema, the name of goods was underwear, a 40-ft container, designated shipping route PIL, the trailer was arranged for self-hauling and self-declaration, the contact person was Miss. Liao, requesting a bill of lading and the booking company was Sumpu Company. LIAO Yindi received the container loading paper of Pacific Lines Guangzhou Branch issued by Pacific Container Guangzhou Branch on January 3 which recorded that the bill of lading number was LWCKTEMP1415026, a 40-ft container, the ship voyage was WK02-SWS, export terminal was Uchong. LIAO Yindi informed the trailer company to extract the empty container of No.PCIU8004321 for the goods under bill of lading No.LWCKTEMP1415026 and go to the warehouse for loading on January 4. The loading photo showed that the container of No.PCIU8004321 was loaded into goods packed in fiber bags. The container of No.PCIU8004321 was completed and loaded into the Guangdong Sinotrans Huangpu Warehouse Co., Ltd. on January 5. The container weights 3,850 kg with a volume of 73.33 cubic meters. The dead weight of the container was 15,920 kg when entered the terminal. Deducting the weight of the box, the weight of the goods in the box was about 12,070 kg. The container list produced by Guangdong Sinotrans Huangpu Warehouse Co., Ltd. on January 6, 2014 showed that the cargo container of No. PCIU8004321 entered such terminal on January 5 and the internal cargo was mechanical parts with a weight of 15,920 kg. Pacific Lines Company stated that the name of the goods on the container list was the record formed by the terminal in accordance with the statement of trailer. The terminal only checked the condition of the container when the container entered with the goods, and did not verify whether the declared goods are consistent with the bill of lading. The cargo container of No. PCIU8004321 was loaded on January 7. Pacific Container Guangzhou Branch issued a confirmation of bill of lading to LIAO Yindi who confirmed it on January 10 and sent it back to Pacific Container Guangzhou Branch. The confirmation of bill of lading stated: the shipper was Sumou Company, the bill of lading number was LWCKTEMP1415026, the container number was PCIU8004321, the seal number was V546099, the period of transportation responsibility was the yard to yard, the quantity was 248 packages, the total weight was 6,520 kg, and the ship voyage was “WUCHONGKOU (VIA CNNSA) 140107”.

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On the morning of January 13, during the voyage from Nansha to Singapore, “KOTA GANDING” suffered from a bad weather of 5 to 6 in the vicinity of the South China Sea (east of Vietnam). At 1355 local time on January 13, three 40-ft containers located in row 34, column 11 fell into the water, including container of No. PCIU8004321. On January 14, the fee confirmation issued by Pacific Container Guangzhou Branch to the e-mail address named “[email protected]” used by LIAO Yindi stated: the bill of lading number was LWCKTEMP1415026, the port of discharge was TEMA, The sailing date was January 7, 2014, and the “agency freight” was 4,067 US Dollars. On January 16, Pacific Container Guangzhou Branch issued a notice of loss of goods of Pacific Lines Guangzhou Branch to LIAO Yindi, notifying the loss of the goods of container of No. PCIU8004321 carried by GND011 voyage of “KOTA GANDING”. On January 22, after receiving the freight of 4,091 US Dollars, Pacific Container Guangzhou Branch issued the receipt with the payer of Sumpu Company and delivered the original bill of lading of No.LWCKTEMP1415026 to CHEN Yuyu. The issue date of bill of lading was January 7, 2014, the beginning was Pacific Lines Company, the shipper was Sumpu Company, the consignee was KELVINKWEKU, the ship voyage was “YUE GUANG ZHOU HUO 0918”, the container number was PCIU8004321, description of goods was general merchandise and underwear, the seal number was V546099, the package was 248 boxes (pieces), gross weight was 6,520 kg, size was 71.5 cubic meters. The goods was packed, stowed, counted and sealed by the shipper with the freight prepaid. Pacific Lines Guangzhou Branch issued the bill of lading acting as the agent of the carrier, Pacific Lines Company. CHEN Yuyu did not object to the carrier and other matters recorded on the bill of lading when accepting the bill of lading. The original bill of lading was held by two Plaintiffs in this case. Thirdly, the situation of the accident on the sea. “KOTA GANDING” GND011 set sail from Dalian and stopped at Nansha on the way. On January 12, 2014, such ship sailed from Nansha to Singapore. All decks were tied, verified and reinforced before departure. The captain of the ship stated: on January 13, 2014, the ship encountered a bad weather of 5 to 6 in Beaufort in the vicinity of the South China Sea (to the east of Vietnam). Due to very large waves and severe northeast strong surges, the ship used different power and speed in accordance with my instructions in order to reduce the ship’s shaking degree. At 1335 local time on January 13, 2014, at a position of 15° 31′ 70″ north latitude and 110° 19′ 23″ east longitude, a very high northeast strong surge hit the port side stern, resulting in 25 40-ft container in row 34 collapsed and damaged as well as 3 40-ft container in row 34 column 11 fell into the water. Fourthly, the value of goods in the case. On December 15, 2013, CHEN Yuyu entered into a product order contract with private enterprise owners LIN Shaoxian and SU Heming in the name of Sumpu Company, and purchased 90,000 pieces of bras of No.62210090020 from LIN Shaoxian with a unit price of 1.63 US Dollars for a total of 146,700 US Dollars and 571,000 pieces of bras of No.6212109039 from SU Heming with a unit price of 2.63 US Dollars for a total of 149,910 US Dollars.

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CHEN Yuyu contacted Miangang Company and entrusted it to conduct export declaration formalities. On January 6, Guangzhou Dongyang Customs Service Co., Ltd. applied for the customs declaration for the container of No.PCIU8004321 to the Huangpu Laogang Customs with the Miangang Company as the operating and delivery unit. The total value of the declared goods was 296,610 US Dollars, and the contract, packing list and invoice were submitted. The customs declaration forms of export goods of No.520140514005438 and No.520140514005448 recorded that the business unit was Miangang Company, the name of the goods was bra, the arrival country was Ghana, the port of destination was Tema, the transaction method was FOB, and the container number was PCIU8004321. The customs declaration forms of No.520120140514005438 recorded that the bill of lading number was LWCKTEMP1415026A, the commodity number was 6212109020, the quantity was 90,000 pieces, the unit price was 1.63 US Dollars, the value was 146,700 US Dollars. The customs declaration forms of No.520120140514005448 recorded that the bill of lading number was LWCKTEMP1415026B, the commodity number was 6212109039, the quantity was 57,000 pieces, the unit price was 2.63 US Dollars, the value was 149,910 US Dollars. The contract recorded that the seller was Miangang Company, the buyer was TOPSPEED TRADING LTD. The issuer recorded in the invoice was Miangang Company, the buyer was TOPSPEED TRADING LTD. The name, quantity and money of goods are the same as the two above customs declaration forms. On November 10, 2015, the court organized parties to No.23 Xizhou Middle Road, Zengcha Road, Guangzhou to do the inspection. The staff of the office confirmed that it was the warehouse used by SU Heming. The warehouse stored a lot of full-filled fiber bags. And the court randomly selected a package to open for measurement, weighing and counting. The court found that the package was 1.25 m long, 0.94 m wide and 0.28 m high, and the weight of the whole package was 46 kg. The bag was filled with the bra of No.9890 in brand Bingnisi, with a total of 600 pieces. On December 10, 2015, the court organized parties to Guangdong Tianhe Bus Terminal, No.15 Guangdong Expressway Warehouse to do the inspection. The staff of the office confirmed that it was the warehouse used by LIN Shaoxian. The warehouse stored a lot of full-filled fiber bags, and the court randomly selected a package for weighing and counting and found that the package contains 600 pieces brand Golden Chang bra, and the weight of the whole package was 47 kg. Whether the goods involved are the goods claimed by the two Plaintiffs and the value of the goods involved, the two Plaintiffs claimed that the goods involved were bras. The three Defendants thought the evidence of the contract of the carriage of goods by sea in this case were not related to the goods procurement contract and the evidence of the goods export declaration, so it cannot prove the true signing and performance of the product procurement contract, cannot prove that the goods under the product procurement contract conducted export declaration, the relevance between the goods under the product procurement contract and the goods in this case, the relevance between the goods under export declaration and the goods in this case. The buyers and sellers of the goods involved in the contract of the goods

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attached to declaration form were different from those of the two Plaintiffs. The Customs did not check the goods involved in the case. The container list provided by the terminal showed that the goods in the box were mechanical parts, and the data obtained by the parties to the same kind of goods showed that the weight of the 245-pack bra was 11,420 kg and the total volume was about 80,395 cubic meters which are inconsistent with the weight of 12,070 kg when entering the terminal and the volume of the container involved in the case of 76.33 cubic meters. Therefore, the facts about the goods argued by the two Plaintiffs cannot be established. The court thinks that the two Plaintiffs claim of the cargo in container of No. PCIU8004321, including 147,000 bras, should be accepted. The reasons are: (1) the goods recorded in the customs declaration and bill of lading are underwear, bra belongs to underwear. The relationship between bra and underwear are type and attribute which are not contradictory; (2) the goods recorded in the customs declaration are the export goods approved by the customs. Article 28 of the Maritime Code of the People’s Republic of China stipulates that: “import and export goods shall be checked by the Customs”. Article 2 of the Administrative Measures for Customs Import and Export Inspection of the People’s Republic of China stipulates that: “the inspection of import and export goods in these Measures refers to Customs enforcement of legal inspection of import and export goods in accordance with the law to determine whether the contents declared by the consigner and the consignee of the goods to the Customs are consistent with the actual situation of the import and export goods, or to determine the classification, price, origin of the goods, etc.” Article 5 of the Administrative Measures for Customs Import and Export Inspection of the People’s Republic of China stipulates that: “customs inspections can be thoroughly inspected or spot-checked. In accordance with the operation mode, the inspection can be divided into manual inspection and machine inspection, and manual inspection includes shape inspection and unpacking inspection. Customs can determine the specific inspection method in accordance with the cargo situation and the actual law enforcement needs.” The goods involved was exported goods which belongs to the goods under the supervision of the Customs. One of the contents of the Customs supervision is to check the goods to determine whether the contents declared by the consigner are consistent with the actual situation of the exported goods. In the absence of adverse evidence, the information of the goods recorded in customs declaration should be accepted. (3) The name of the goods recorded in two customs declaration was bra, the total quantity was 245 packages and 14,700 pieces and the total value was 296,610 US Dollars. In accordance with the measurement of bra products conducted by the parties under the organization of the court, the weight of 245 bags bras was about 11,515 kg if per bag was filled with 600 pieces of bras, which was not more than 12,070 kg. (4) Unit price of goods recorded in the customs declaration was 2.63 and 1.63 US Dollars which tally with the normal market price level of this kind of commodity. In accordance with the quantity and name of the goods in the customs declaration and testimony of SU Heming and LIN Shaoxian, the goods in this case included 147,000 pieces of bras, out packing with fiber bag, a total of 245 packages with each package of 600 pieces and with a total price of 296,610 US Dollars.

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Among the 245 packages of bras, there were 150 bags with unit price of 1.63 US Dollars and the price of each package was 978 US Dollars; and there were 95 bags with unit price of 2.63 US Dollars and the price of each package was 1,578 US Dollars. The three Defendants denied the claim of the two Plaintiffs about the name, quantity and value of the goods, but they failed to provide sufficient evidence, so this defence cannot be established. The parties in the trial uniformly choose to apply the laws of the Mainland of the People’s Republic of China to settle the substantive disputes in this case. The two Plaintiffs provided the Chinese text of the Hong Kong Special Adiministrative Region Company Ordinance (chapter 622 of the law of Hong Kong) and the Chinese text of the article 2 and 122 of such ordinance provided by TANG Chuyan, a Hong Kong lawyer and notary of the Chinese Ministry of Justice. The contents of the two legal texts were consistent with those of the relevant texts published on the Internet by the Department of Justice of the Hong Kong Special Administrative Region. In the absence of evidence to the contrary by the three Defendants, the court accepted the text of Article 2 and Article 122 of the ordinance submitted by the two Plaintiffs. Article 2 of Hong Kong Special Administrative Region Company Ordinance stipulates corporate bodies including companies and corporations established outside Hong Kong but not including a single corporation. As to “ the contract before a company becomes a corporate body”, Article 2 of Hong Kong Special Administrative Region Company Ordinance stipulates that: “(1) it applies to this article if the contract was conducted by a company before it becomes a corporate body in the name of or on behalf of the company. (2) Unless otherwise provided in any contract—(a) the contract is as valid as the contract signed on behalf of the company or the agent of the company; (b) such person bears personal legal responsibility for the contract and has the right to enforce the contract. (3) The company may ratify the contract after it becomes a corporate body, and the scope of ratification can be as follows—(a) such company has become a corporate body at the time of the conclusion of the contract; and (b) such contract was conducted by an unauthorized agent on behalf of the company. (4) Notwithstanding the other provisions of paragraph (2) (b), if the relevant contract was ratified by the company concerned, the legal liability of the person described in this paragraph at the time of and after the ratification is not greater than the legal liability of the person who has not been authorized by the company to conclude the contract on behalf of the company after the company becomes a corporate body.” The court considers that this case is a dispute over contract of carriage of goods by sea. The two parties in this case are from the Republic of Singapore and Hong Kong Special Administrative Region of the People’s Republic of China, the destination is Ghana. Therefore, this case belongs to foreign-related and civil disputes involving Hong Kong. Firstly, whether Sumpu company and CHEN Yuyu are qualified Plaintiffs in this case. Whether the Plaintiff is qualified is a matter of procedural law. The procedural law matters shall be governed by the law of the courts—the laws of the Mainland of

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the People’s Republic of China. Article 119 of the Civil Procedure Law of the People’s Republic of China states that: “the Plaintiff is a citizen, legal person and other organization that has a direct interest of this case.” Sumpu Company and CHEN Yuyu claim rights as the shipper involved in the case, the shipper recorded in the bill of lading in this case is Sumpu Company, CHEN Yuyu is a founding member of Sumpu Company. Sumpu Company and CHEN Yuyu currently hold the original bill of lading, Sumpu Company and CHEN Yuyu have a direct interest in the case, so the lawsuit filed by Sumpu Company and CHEN Yuyu complies with Article 119 of the Civil Procedure Law of the People’s Republic of China on the “Plaintiff”. The three Defendants’ defense against Sumpu Company and CHEN Yuyu are not qualified Plaintiff in this case lacks legal basis and cannot be established. Secondly, whether Sumpu Company is the shipper of the transport contract involved. Article 12 of the Interpretation of the Supreme People’s Court on the Application of the Law on the Application of the Law of the People’s Republic of China on Foreign-related Civil Relations (1) stipulates that: “when the settlement of a civil dispute involving foreign affairs is subject to the confirmation of another civil relationship, the People's Court shall determine the law to which it applies in accordance with the nature of the preliminary problem itself.” The previous question of this case is that whether the contract concluded by the founding members of Sumpu Company in the name of the company before the establishment of the company is valid. The civil relationship issue belongs to the category of civil rights and behavioral capacity of legal persons. Article 14 of the Law of the People’s Republic of China on the Application of Foreign-related Civil Relations Law states that: “the law of the place of registration applies to matters such as the capacity for civil rights and civil conduct, organization and shareholder rights and obligations of a legal person and its branches. The law of the principal place of business may apply where the principal place of business of the legal person is inconsistent with the place of registration. The habitual residence of a legal person shall be its principal place of business.” Article 16 of the Interpretation of the Supreme People’s Court on the Application of the Law on the Application of the Law of the People's Republic of China on Foreign-related Civil Relations (1) stipulates that: “the people’s court shall identify the place of registration of a legal person as the place of registration of a legal person as prescribed in the law applicable to foreign-related civil relations.” Article 19 of the Interpretation of the Supreme People’s Court on the Application of the Law on the Application of the Law of the People's Republic of China on Foreign-related Civil Relations (1) stipulates that: “the application of the law concerning the civil relations of the Hong Kong Special Administrative Region and the Macao Special Administrative Region shall be governed by these provisions.” The place of registration of Sumpu Company is Hong Kong Special Administrative Region. Therefore, the law of the Hong Kong Special Administrative Region of People’s Republic of China shall be applied to determine whether the contract established by the founding members of Sumpu Company in the name of Sumpu Company before the establishment of the

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company is valid. The two Plaintiffs provided legal opinion from TANG Chuyan, a Hong Kong lawyer and notary of the Chinese Ministry of Justice. The court holds the legal opinion is original and confirms the opinion about the understanding and application of Hong Kong Special Administrative Region Company Ordinance in the absence of substantive doubts from the three Defendants. Legal opinions of TANG Chuyan about Article 2 and Article 122 of the Hong Kong Special Administrative Region Company Ordinance are as follows: “Sumpu Company becomes a corporate body at the date of establishment of the company in accordance with the law. Corporate body refers to a body with legal personality in accordance with laws of Hong Kong. The validity of a contract concluded in the name of a company shall be governed by Article 22 of Hong Kong Special Administrative Region Company Ordinance. Before the establishment of the company, the contract concluded by CHEN Yuyu has legal validity, CHEN Yuyu is personally liable for the contract and has the right to enforce the contract. After such company became a corporate body, if any valid resolution of director ratified the contract which was signed by CHEN Yuyu, the scope of ratification is as if the company had been established at the time of the conclusion of the contract. CHEN Yuyu signed the contract with the carrier on behalf of the company. The obligation and rights of the contract belongs to the company.” As the founding member, CHEN Yuyu hired LIAO Yindi who consigned goods in accordance with CHEN Yuyu’s instruction to Pacific Container Company in the name of Sumpu Company. The shipper in the bill of lading was Sumpu Company. The contract of carriage of goods was concluded in the name of Sumpu Company before its registration. In accordance with the article 122 of Hong Kong Special Administrative Region Company Ordinance concerning “the contract which was concluded before a company becomes a corporate body”. Sumpu Company ratified the contract signed by CHEN Yuyu in the lawsuit. As the sole Director of such company, CHEN Yuyu also agree with such opinion of the company and think the contract has effect on Sumpu Company, and the shipper of the contract is the company. Sumpu Company holds the bill of lading now and has the right to claim compensation from the carrier for the loss of the goods under the bill of lading. CHEN Yuyu instructed LIAO Yindi to conclude a contract of the carriage of goods by sea in the name of Sumpu Company. CHEN Yuyu has no right to exercise the rights that Sumpu Company has exercised in the case under the situation that the company has already recognized CHEN Yuyu’s behavior. Thirdly, about the carrier of the contract of the carriage of goods by sea in this case. Article 269 of the Maritime Code of the People’s Republic of China stipulates that: “the parties to the contract may choose the law applicable to the contract, except as otherwise provided by law. If the parties to the contract have no choice, the law of the country most closely related to the contract shall apply.” The contract of carriage of goods by sea in this case shall be determined in accordance with the law applicable to the contract dispute—Law of the Mainland of the People’s Republic of China. Article 71 of the Maritime Code of the People’s Republic of China stipulates that: “the bill of lading refers to documents used to prove that the contract of carriage of goods by sea and the goods have been accepted or shipped

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by the carrier, and that the carrier undertakes to deliver the goods.” Pacific Container Guangzhou Branch accepted the booking offer from Sumpu Company. The expense confirmation of Pacific Container Guangzhou Branch indicated that it charged “agency freight”, which has shown its acting as agent. The bill of lading delivered by Pacific Container Guangzhou Branch to Sumpu Company was also a bill of lading with the name of Pacific Lines Guangzhou Branch. The bill of lading states that the bill of lading was issued by Pacific Lines Guangzhou Branch under authorization of Pacific Lines Company and the carrier was Pacific Lines Company. The bill of lading is the proof of the contract of carriage. Sumpu Company accepted the bill of lading and made no objection. In accordance with the meaning of the parties in the conclusion of transport contract, the contract of carriage of goods by sea between Sumpu Company and Pacific Lines Company shall be found. Sumpu Company was the shipper, Pacific Lines Company was the carrier. And Pacific Container Guangzhou Branch and Pacific Lines Guangzhou Branch were only carrier’s booking agent and the agent for the issuance of a bill of lading. Claims of the two Plaintiffs that Pacific Container Guangzhou Branch was the carrier and Pacific Lines Guangzhou Branch was the actual carrier shall not be established because of lack of evidence. Fourthly, the validity of the contract of the carriage of goods involved in the sea and the legal liability of the carrier. The contract between Sumpu Company and Pacific Lines Guangzhou Branch is legal, valid and legally binding on both parties. The two parties shall fulfill their obligations in accordance with the contract. Article 46 Paragraph 1 of the Maritime Code of the People’s Republic of China stipulates the period of liability of the carrier for goods shipped in containers refers to the period from the time of receipt of the goods at the port of loading to the time of delivery at the port of discharge when the goods are under the control of the carrier. Article 48 of the Maritime Code of the People’s Republic of China stipulates the carrier shall properly and carefully load, remove, stow, transport, keep, take care of and discharge the goods carried. The carrier shall be liable for loss of or damage to the goods during the period of liability of the carrier, unless otherwise provided by law. The goods involved were lost and fell into the sea during transportation. The wind encountered by the container before fell into the sea is not uncommon in sea navigation which is not enough to constitute the “act of God, danger or accident at sea or in other navigable waters” as stipulated in Article 51 Paragraph 1 Sub-paragraph 3 of the Maritime Code of the People’s Republic of China. So, Pacific Lines Company claimed that the exemption cannot be established. As the carrier involved in the transportation of goods, and the loss of the goods took place during the period of its responsibility, and there is no evidence to prove that there are any exemption under Article 51 of the Maritime Code of the People’s Republic of China, so Pacific Lines Company shall be liable to Sumpu Company for compensation for the damage of the goods involved in the case. Article 55 of the Maritime Code of the People’s Republic of China stipulates that: “the amount of compensation for the loss of the goods shall be calculated in accordance with the actual value of the goods; the amount of compensation for damage to the goods shall be calculated in accordance with the difference between the actual value of the

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goods before and after the damage or the cost of repairing the goods. The actual value of the goods shall be calculated in accordance with the value of the goods at the time of shipment plus insurance and freight. The actual value of the goods specified in the preceding paragraph shall be deducted from the relevant expenses which have been underpaid or exempted from payment due to the loss or damage of the goods.” The actual value of the goods in this case was 296,610 US Dollars and the freight was 4,091 US Dollars. Sumpu Company did not prove that it had paid the premium. So the amount of loss should be the value of the goods at the time of shipment plus freight of 300,701 US Dollars. Pacific Lines Company claims the right to limit the compensation for the loss of the goods, and believes that under the premise of the establishment of the liability, Pacific Lines Company is liable only within the 163,334.15 Special Drawing Rights limit which is calculated by 245 bales as the number of freight units. The exchange rate of the Special Drawing Rights is calculated based on the exchange rate on the day of the accident, namely, January 13, 2014. Sumpu Company believes that Pacific Lines Company may have negligence in cargo management and cannot have the limitation of liability. Even if it has the limitation of liability, it should use 248 bales as the freight unit to calculate the limitation of liability. Article 56 of the Maritime Code of the People’s Republic of China stipulates that: “the amount of compensation for the loss of or damage to the goods by the carrier is calculated in accordance with the number of goods or the number of other freight units, each or every other unit of freight is 666.67 units of calculation, or in accordance with the gross weight of the goods, each kilogram is 2 units of calculation, whichever higher shall prevail. However, this article is not including such situation when the shipper has declared the nature and value of the goods prior to shipment and stated in the bill of lading, or the carrier and the shipper have agreed other limitation higher than that of this Article. If the goods were packed in containers, pallets or other similar means of transport, the number of goods shipped in such means of transport or the number of other waybills specified in the bill of lading shall be regarded as the number of goods shipped or the number of other waybills referred to in the preceding paragraph; otherwise, each shipment shall be deemed to be one piece or one unit. Where the articles of transport are not owned or provided by the carrier, the articles of transport themselves shall be regarded as one piece or one unit.” Since there is no fact or evidence that the container goods involved in the case have special requirements for maritime transport, so it shall be deemed that the ordinary container transport ship is sufficient to receive, load and transport the container goods involved in the case. Pacific Lines Company has provided evidence to prove that “KOTA GANDING” actually carrying out the cargo transportation involved in the case is an officially registered container transport ship, and is equipped with crew members who meet the relevant requirements. Therefore, as the carrier, Pacific Lines Company should be considered have arranged appropriate transport ships and fulfilled the carrier’s relevant obligations. In this case, there is no evidence to prove that such loss or damage was caused because Pacific Lines Company acted or did not act recklessly on purpose or knowing that it might cause losses. Pacific Lines Company may refer to Article 56 of the Maritime Code of the People’s Republic of

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China for limitation of liability for compensation in respect of loss of goods in this case. The goods involved were shipped by container. The number of goods in the container was 248 bags, and the gross weight of the goods was 6,520 kg recorded in the bill of lading. The compensation limit calculated by the shipping unit is significantly higher than the compensation limit calculated based on the gross weight of the goods recorded in the bill of lading. Therefore, the compensation limit of Pacific Lines Company should be calculated in accordance with the freight unit number. The number of freight units recorded in the bill of lading is 248 bags, but the number of bras actually loaded into the container is 245 bags with 600 pieces per bag. In the case the goods are general goods and underwear recorded in the bill of lading, Sumpu Company cannot prove the reason for the extra 3 bags of goods as well as the name, variety, unit price and quantity of such three bags of goods. So Sumpu Company shall bear the adverse consequences of the failure of proof. The freight unit which is to calculate the compensation limit for the goods involved in the case should adopt the view of Pacific Lines Company, namely, 245 bags. The goods involved were lost on January 13, 2014. In accordance with article 277 of the Maritime Code of the People’s Republic of China about “the unit of account in this code refers to the Special Drawing Rights stipulated by the International Monetary Fund” and the ratio of the Special Drawing Rights to the United States Dollar was 1 to 1.537700 which was published by International Monetary Fund on January 13, 2014, so the amount of compensation for a single package of goods involved was 1,025.14 US Dollars. Among the 245 packages of lost goods, there were 150 bags of goods with a price of 978 US Dollars per package and 95 bags of goods with a price of 1,578 US Dollars per package. Based on the identified loss of lost goods in a single package, if the amount does not exceed 1,025.14 US Dollars, the compensation shall be calculated based on the actual loss of the goods; otherwise, the compensation shall be calculated in accordance with the limit of 1,025.14 US Dollars. Based on the above calculation, the loss of 150 bags of goods with a price of 978 US Dollars per package does not exceed 1,025.14 US Dollars, so it should be calculated in accordance with their actual losses, a total of 146,700 US Dollars. The loss of 95 bags of goods with a price of 1,578 US Dollars per package exceeds 1,025.14 US Dollars, the compensation shall be calculated in accordance with the limit, amounting to 97,388.3 US Dollars. So the total amount of compensation is 244,088.3 US Dollars. The company claims to calculate the compensation limit in accordance with the 248 package, which lacks the facts and legal basis, so the court does not support its claim. The goods involved were lost on January 13, 2014. The central parity of the RMB exchange rate was 1 US dollar to RMB6.0950 on January 13, 2014 published by China Foreign Exchange Trade System with authorization. The total amount of compensation for the goods involved is converted into 1,487,718.19 yuan based on the exchange rate of 1 US dollar to 6.0950 yuan at the date of the damage. Sumpu Company claims converting US dollars into RMB at the exchange rate of 1 US Dollar to RMB6.2412, which lacks facts and legal basis, so the court does not support its claim. Sumpu Company claims compensation of 1,876,735.08 yuan for the loss of the goods. The court will not support the loss exceeding the limit of compensation. Pacific Lines Company shall pay

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1,487,718.19 yuan and interest to Sumpu Company. Sumpu Company claims that the interest calculated on the loan interest rate from January 16, 2014 to the date of the judgment to determine the payment issued by the People’s Bank of China for the same period of time. Such claim is reasonable and the court will support it. Sumpu Company has ratified CHEN Yuyu’s act of concluding a contract in the name of Sumpu Company. And Sumpu Company’s claim against Pacific Lines Company has been supported. CHEN Yuyu’s claim for the three Defendants should be rejected for lack of facts and legal basis. Sumpu Company claims the three Defendants should jointly and severally liable for damages. It is found that as the shipper, Sumpu Company concluded a contract of carriage of goods by sea with Pacific Lines Company. Pacific Container Guangzhou Branch accepted booking and collected freight in accordance with the arrangement of Pacific Lines Guangzhou Branch. Pacific Lines Guangzhou Branch issued a bill of lading based on the commission of Pacific Lines Company. There is no contract of carriage of goods by sea between Pacific Container Guangzhou Branch, Pacific Lines Guangzhou Branch and Pacific Lines Company. Therefore, the liability of the carrier shall be borne by Pacific Lines Company. As the agent of carrier, Pacific Container Guangzhou Branch and Pacific Lines Guangzhou Branch shall not bear the carrier’s liability. There is no other fact or evidence to prove that there is an agreement between Sumpu Company, Pacific Container Guangzhou Branch and Pacific Lines Guangzhou Branch that the latter shall be jointly liable for compensation. So the court will not support such claim of Sumpu Company for lack of facts and legal basis. To sum up, in accordance with Article 14 of the Law of the People’s Republic of China on the Application of Foreign-related Civil Relations Law, Article 12 of the Interpretation of the Supreme People’s Court on the Application of the Law on the Application of the Law of the People’s Republic of China on Foreign-related Civil Relations (1), Article 46 Paragraph 1, Article 48, Article 55, Article 56, Article 71 and Article 269 of the Maritime Code of the People’s Republic of China, Article 119 of the Civil Procedure Law of the People’s Republic of China, and Article 122 of the Hong Kong Special Administrative Region Company Ordinance, The judgment is as follows: 1. The Defendant Pacific Lines Company shall compensate for loss and damage of goods of 1,487,718.19 yuan and interest to the Plaintiff Sumpu Company (interest to be calculated from January 16, 2014 to the date of the judgment to determine the payment and based on the benchmark loan interest rate published by the People’s Bank of China for the same period); 2. Reject other claims of the Plaintiff, Sumpu Company; 3. Reject CHEN Yuyu’s claims. The above financial obligations shall be fulfilled within ten days from the effective date of this judgment.

SUMPU INTERNATIONAL LIMITED et al. v. Pacific …

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If the obligation to pay money is not fulfilled within the period specified in this judgment, the interest on the debt for the delayed performance shall be doubled in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China. Court acceptance fee in amount of 22,083 yuan, the Defendant Pacific International Lines (China) Limited Guangzhou Branch shall bear 17,506 yuan and Sumpu International Limited shall bear 4,577 yuan. The Plaintiff Sumpu International Limited has prepaid court acceptance fee of 22,083 yuan, so the Defendant should pay 17,506 yuan to the Plaintiff and the court will no longer refund the prepaid fee to Sumpu International Limited. If not satisfied with the judgement, the Plaintiff, CHEN Yuyu, the Defendant, Pacific Container Service (China) Limited Guangzhou Branch, the Defendant, Pacific International Lines (China) Limited Guangzhou Branch may appeal to the court within 15 days as of the second day of receiving the written judgement. The Plaintiff, Sumpu International Limited and the Defendant, Pacific International Lines (Private) Limited may appeal to the court within 30 days as of the second day of the receiving the written judgement. The appellant shall submit copies in accordance with the number of the parties so as to appeal to Guangdong High People’s Court of the People’s Republic of China. Presiding Judge: SONG Ruiqiu Judge: PINGYANG Danke Acting Judge: ZHONG Yufeng December 30, 2016 Clerk: ZHANG Xiujie

Wuhan Maritime Court Civil Judgment Taizhou Changxin Transportation Co., Ltd. v. Yong’an Property Insurance Co., Ltd. Taizhou Central Branch (2015) Wu Hai Fa Shang Zi No.00447 Related Case(s) This is the judgment of first instance, and the judgment of second instance and the judgment of retrial are on page 1360 and page 1369 respectively. Cause of Action 230. Dispute over marine insurance contract on the sea or sea-connected waters. Headnote Defendant insurer held liable to indemnify plaintiff shipowner for liability incurred to cargo-owners when carrying ship sank during typhoon; ambiguous exemption clause protecting insurer against liability for losses caused by typhoon interpreted in favor of plaintiff assured. Summary Plaintiff’s ship “Changxinshun 888” sank during a typhoon, with total loss of cargo. Plaintiff settled separate proceedings brought by the insurers of the cargo that was lost, and sought an indemnity from Defendant insurer for the amount paid in settlement of the cargo insurers’ claims. Defendant denied liability, relying on an exclusion clause in the contract that excluded liability for claims arising from losses caused by (among other things) typhoons. Defendant also alleged that the ship was lost as a result of Plaintiff’s gross negligence, which also excluded Defendant’s liability. The Court held that the typhoon excluded clause could be interpreted in two ways: (1) that it applied whenever a typhoon was the cause of liability for loss of cargo; or (2) that it applied only when the typhoon was the direct cause of the loss of the cargo, so that if the cargo was lost as a result of the ship being lost in the typhoon, the exclusion clause did not apply. Because the clause was ambiguous, the Court held that it should be interpreted in a way that favored the Plaintiff assured [ie, interpretation (2)], and so it did not exclude Defendant’s liability. The Court also held that Plaintiff’s crew had not been guilty of gross negligence, so that exclusion of liability was not available to Defendant, either.

© The Author(s), under exclusive license to Springer-Verlag GmbH, DE, part of Springer Nature 2022 M. Davies and J. Lin (eds.), Chinese Maritime Cases, Chinese Maritime Cases Series, https://doi.org/10.1007/978-3-662-64029-6_71

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Judgment The Plaintiff: Taizhou Changxin Transportation Co., Ltd. Domicile: Room 222, 223, No.719-1, North Jiangzhou Road, Hailing District, Taizhou, Jiangsu. Legal representative: JIN Xin, general manager. Agent ad litem: WU Fuhong, lawyer of Jiangsu Suyuan Law Firm. Agent ad litem: MA Xinyi, lawyer of Jiangsu Suyuan Law Firm. The Defendant: Yong’an Property Insurance Co., Ltd. Taizhou Central Branch Domicile: 1/F, East Building, No.315, South Hailing Road, Taizhou, Jiangsu. Representative: TANG Zhen, general manager. Agent ad litem: SHENG Xuechuan, employee of the company. With respect to the case arising from dispute over marine insurance contract between the Plaintiff Taizhou Changxin Transportation Co., Ltd. (hereinafter referred to as Changxin) and the Defendant Yong’an Property In