Hainan Tonglian Vs. Minmetal
Addtime:2017-11-20     Browse:58     Author:admin

I. Parties involved 

Applicant: Hai Nan Tonglian Shipping Co., (hereinafter referred to as Tonglian)

Respondent: Minerals International, Non-ferrous Metals Trading Company (hereinafter referred to as Minmetal)

Buyer: Toyota Tsusho Co. (hereinafter referred to as Toyota)

II. Main facts of this case

Minmetal and Toyota established a contract in selling the lower silicon manganese for 1,500 tons. Both parties agreed the actual amount as 1,200 tons aftertime. The export agent of Minmetal was called Hainan International Trading Center (hereinafter referred to as Hainan Trading). In order to shipping those cargo, Hainan Trading, on behalf of Minmetal, signed a voyage charter party with Zhanjiang Haitong Freight Forwarder Co. (hereinafter referred to as Haitong) on Dec. 11th, 1995. Haitong then entered into a voyage charter party with Zhanjiang Penavico and Zhanjiang Penavico established a charterparty with Dalian Wufeng Shipping CO. (hereinafter referred to as Wufeng). The contents of three interlinked charter parties are basically similar, which all appoint M.V. WAN SHENG to carry the concerned cargo for 1,200 tons. The registry owner for WAN SHENG is Tonglian. The vessel is under the operation of Dalian Port Wantong Shipping Co. (abbr. as to Wantong) who is responsible for the equipment of the crew on board. Wantong delivered the ship to Wufeng in form of time charter party. 

On Dec. 25th 1995, 1,200 tons of lower silicon manganese was loaded on board “WAN SHENG” and the bill of lading No. HX- 95 B with Nagoya Japan as port of destination was issued. WAN SHENG also loaded another 1,200 tons of high silicon manganese bound for Kawasaki, Japan. The appearance for two kinds of cargo is same. On Dec. 27th of the same year, WAN SHENG left port of Hai Kou and arrived at port of Nagoya on Jan. 8th, 1996. WAN SHENG made confounder in discharging those two kinds of cargo. Toyota claimed for the losses against Minmetal on the basis of the inconsistence of cargo with the contract on Jan. 26. Minmetal had compensated Toyota generally. Influenced by the performance of this contract, another contract for sales of silicon manganese also failed to perform and losses were suffered by Minmetal. The bill of lading No.Hx-95 B for 1,200 tons of silicon manganese had been endorsed for twice and the cargo involved has been disposed by buyer Toyota at the port of destination, Nagoya. 

III. The original judgment of the case

Minmetal filed a complaint against Tonglian with Haikou Maritime Court and claimed for damages in amount of USD 610,000 and corresponding court fee. Haikou Maritime Court heard the case and decided that: the merit of the case is dispute of contract of goods by sea. There existes transportation contract between Minmetal and Tonglian, and the carrier Tonglian shall be responsible for the wrong discharge. According to the judgment, Tonglian shall compensate Minmetal for USD 461,000 and RMB 81,000 whereas other claim of Minmetal is rejected. The entertaining fee for the first trial shall be paid by Minmetal for RMB 10,000 and by Tonglian for RMB 30,000.

Tonglian refused to accept the judgment of the first trial issued by Haikou Maritime Court and appealed with Hainan Higher People’s Court by alleging that the fact was not ascertained clearly and the regulations and laws were incorrectly applied by the court of first trial because Minmetal was not provided with title for suit and Tonglian should not be deemed as respondent and took no fault in wrong discharge. 

Hainan Higher People’s Court heard the case and decided that: Minmetal, the Shipper, who is recorded on the bill of lading and actually delivered the cargo for shipment, is entitled to file complaint against the carrier for wrong discharge according to contract of goods by sea. Tonglian acting as actual carrier shall be liable for losses of Minmetal resulted from wrong discharge. Hainan Higher People’s Court hence made the judgment rejecting the appeal and maintaining the original judgment. The entertaining fee for the second trail in amount of RMB 40,000 shall be born by Tonglian. 

IV. How is the leading case made:

Tonglian again refused to accept the final judgment issued by Hainan Higher People’s Court and applied for retrial with the Supreme Court. The main arguments were: after negotiation of bill of lading, Minmetal as the shipper was deprived of any right over the cargo and was not provided with title for suit; during the concerned voyage, Tonglian was only the registry owner of WAN SHENG, which was actually under operation of Wantong. The legal position for Tonglian was equivalent to the shipowner under bareboat charter party; additionally, Tonglian was not at any fault in the voyage. Therefore, Tonglian should not be suited as the respondent in this case. 

Minmetal defended that: Minmetal had a direct interest in this case and was entitled to claim as the plaintiff; the wrong act of discharge of Tonglian infringed the civil right and interest of Minmetal directly; as actual carrier, Tonglian should take fully responsibility for his wrong discharge; Tonglian should compensate Minmetal for all losses arising out of this fault act; Minmetal did not assume any fault for the wrong discharge of Tonglian. 

The Supreme Court decided that: 

The merit of the case is dispute of contract of carriage of goods by sea. For the export of 1,200 tons of lower silicon manganese, Hainan Trading, as export agent of Minmetal, established voyage charter party with Haitong; then, Haitong and Zhanjiang Penavico, Zhanjiang Penavico and Wufeng signed interlinked voyage charter party respectively, which provided WAN SHENG as the vessel under charter. Tonglian was the registry owner of WAN SHENG. During the concerned voyage, the vessel was subjected to the operation of Wantong; the crews were equipped by Wantong and the related bill of lading No. HX- 95B was also issued by Wantong. In the concerned voyage, the vessel was operated by Wufeng in accordance with the time charger party. Thus, there existed neither transportation contract relationship proved by bill of lading nor charter party relationship between Minmetal and Tonglian. Therefore, the complaint filed by Minmetal, the shipper of bill of lading, against Tonglian is lack of contractual basis.  

As the shipper of bill of lading and the seller of the sales contract, Minmetal possessed the ownership of the 1,200 tons of silicon manganese shipped under the bill of lading No. HX-95B upon its issuance. However, after the endorsement of bill of lading for twice, when the bill of lading was transferred to Toyota, the buyer of sales contract and the concerned cargo was obtained by Toyota at port of Nagoya, the procedure for deliver of cargo had accomplished at the port of destination. The bill of lading had been negotiated in the normal way, and the right and liability of the shipper under the contract proved by bill of lading had been transferred to the holder, Toyota. Therefore, Minmetal, the shipper under the bill of lading, was no longer in the position to claim for the material right of cargo. There was no interested legal relationship between Minmetal and the carrier. The right to claim for the damages to the cargo due to the wrong discharge by WAN SHENG should be exercised by Toyota. Toyota was entitled to choose to claim for the damages to cargo against the buyer Minmetal according to the sales contract or against the carrier under bill of lading. It was the right of Toyota to claim for the damages to the cargo from the buyer Minmetal based upon the sales contract. Since Minmetal compensated Toyota generally without subrogating the right to recourse the carrier under the transportation contract, Minmetal did not enjoy any right towards the cargo under bill of lading and could not file a complaint against the carrier of bill of lading. Therefore, Minmetal was not provided with the title for suit against Tonglian. The application for retrial filed by Tonglian was justified and should be supported. 

The Supreme Court made the order according to the Article 153 1 (1), Article 184 (1) and Article 108 as follows: set aside the Civil Judgment (1996) Qiong Jing Zhong Zi No. 137 issued by Hainan Higher People’s Court; set aside the Civil Judgment (1996) Hai Shang Chu Zi No. 037 issued by Haikou Maritime Court; reject the compliant filed by Minmetal; The court fees in amount of RMB 40,000 each in the first and the second trial shall be paid by Minmetal. 

V. Summary

 1.The shipper would be deprived of the ownership for the cargo under the bill of lading once the bill of lading is transferred to another party in natural way.

 2.The registry owner of the vessel shall not be deemed as the actual carrier as defined by Maritime Code if he does not operate the vessel that actually carried the cargo.

 3.Any compliant filed against the actual carrier shall based upon the contract of carriage of goods by sea as the legal position for actual carrier is equivalent to the carrier under Maritime Code.

 4.As precondition for claim for the damages to cargo against the carrier, the shipper who is also the seller of sales contract shall seek the right of subrogation from the holder of bill of lading who is the buyer of sales contract when the shipper compensates the holder according to the sales contract.

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