amount of indemnity for the loss of the goods shall be calculated on the basis of the
actual value of the goods so lost. . .” “The actual value shall be the value of the goods
at the time of shipment plus insurance and freight. From the actual value referred to
in the preceding paragraph, deduction shall be made, at the time of compensation, of
the expenses that had been reduced or avoided as a result of the loss or damage
occurred.”
Thus, according to Article 55 of the CMC, the amount of compensation for the
loss of goods is calculated based on the actual value of the goods, which means the
expenses that had been reduced or avoided as a result of the loss or damage occurred
shall be deducted from the CIF price. From the vantage of the legislation, this
method of calculation is more convenient, but this Article has caused great controversy in practice.
3.1 Carrier Liability for Economic Losses Besides Liability
for Loss of Goods
Economic losses caused by the loss of cargo usually include loss of market value,
loss of use value and liquidated damages that the consignor or consignee may have
to suffer. Such disputes became more prominent after the implementation of the
Contract Law of the People’s Republic of China (“Contract Law”) in October
1, 1999. Article 113 of the Contract Law stipulates that “damages to the consumer
where a party failed to perform or rendered nonconforming 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 breach party at the time of conclusion of the contract.” Thus,
according to the Contract Law, the non-defaulting party may claim damages for
the benefits that may accrue from performance of the contract.
It is the more progressive regulation of Article 111 and Article 112
7 of The Civil
Law of the People’s Republic of China (General Principles of the “Civil Law”). In
addition, Article 312 of the Contract Law provides “where the parties agree on the
amount of damages in case of damage to or loss of the cargos, the damages payable
is the agreed amount; if the amount of damages is not agreed or the agreement is not
7 General Principles of the Civil Law Article111 provides that if a party fails to fulfill its contractual
obligations or violates the term of a contract while fulfilling the obligations, the other party shall
have the right to demand fulfillment or the taking of remedial measures and claim compensation for
its losses; General Principles of the Civil Law Article 112 provides that the party that breaches a
contract shall be liable for compensation equal to the losses consequently suffered by the other
party.
Compensation for Cargo Damage in International Maritime Transportation:. . .
211
actual value of the goods so lost. . .” “The actual value shall be the value of the goods
at the time of shipment plus insurance and freight. From the actual value referred to
in the preceding paragraph, deduction shall be made, at the time of compensation, of
the expenses that had been reduced or avoided as a result of the loss or damage
occurred.”
Thus, according to Article 55 of the CMC, the amount of compensation for the
loss of goods is calculated based on the actual value of the goods, which means the
expenses that had been reduced or avoided as a result of the loss or damage occurred
shall be deducted from the CIF price. From the vantage of the legislation, this
method of calculation is more convenient, but this Article has caused great controversy in practice.
3.1 Carrier Liability for Economic Losses Besides Liability
for Loss of Goods
Economic losses caused by the loss of cargo usually include loss of market value,
loss of use value and liquidated damages that the consignor or consignee may have
to suffer. Such disputes became more prominent after the implementation of the
Contract Law of the People’s Republic of China (“Contract Law”) in October
1, 1999. Article 113 of the Contract Law stipulates that “damages to the consumer
where a party failed to perform or rendered nonconforming 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 breach party at the time of conclusion of the contract.” Thus,
according to the Contract Law, the non-defaulting party may claim damages for
the benefits that may accrue from performance of the contract.
It is the more progressive regulation of Article 111 and Article 112
7 of The Civil
Law of the People’s Republic of China (General Principles of the “Civil Law”). In
addition, Article 312 of the Contract Law provides “where the parties agree on the
amount of damages in case of damage to or loss of the cargos, the damages payable
is the agreed amount; if the amount of damages is not agreed or the agreement is not
7 General Principles of the Civil Law Article111 provides that if a party fails to fulfill its contractual
obligations or violates the term of a contract while fulfilling the obligations, the other party shall
have the right to demand fulfillment or the taking of remedial measures and claim compensation for
its losses; General Principles of the Civil Law Article 112 provides that the party that breaches a
contract shall be liable for compensation equal to the losses consequently suffered by the other
party.
Compensation for Cargo Damage in International Maritime Transportation:. . .
211