clear, nor can it be determined in accordance with Article 61 of this Law, it shall be
calculated on the basis of the prevailing market price at the destination when the
cargoes are or ought to be delivered. Where a law or administrative regulation
provides otherwise in respect of the measures for the calculation of damages and
of the ceiling of the amount of damages, these provisions shall be applied.” Therefore, the Contract Law covers not only the loss and damage of the goods, but also the
loss of the market value of the goods. However, the CIF value provided by Article
55 of the CMC does not consider the loss of market value; nor does it include other
types of economic losses.
However, in practice, when dealing with cargo damage in maritime transport, the
plaintiff cargo owner will not only claim for losses of the goods, but also for
economic losses of benefits under the Contract Law. The carrier will usually defend
itself by invoking Article 55 of the CMC, which stipulates the CIF value as the actual
value, and will not agree with the claim for other economic losses. In dealing with
this controversial issue, the judgments of Maritime Courts are basically the same.
They all insist on the application of Article 55 of the CMC to calculate the cargo
damage compensation, and exclude the application of the General Principles of the
Civil Law and the Contract Law to calculate any relevant economic losses. The
anomaly is that the rationale for excluding application of the General Principles of
the Civil Law is not the same as the rationale for excluding the application of the
Contract Law.
For example, in the case of Beijing Fuyang Bank Trading Co., Ltd. v. The
International Trade Co., Ltd,
8 on June 2002 the plaintiff entrusted the defendant
to carry a number of frozen boiled beans from Fuzhou to Los Angeles via its foreign
trade agent Fuzhou Foreign Trade Company (hereinafter referred to as “Fuzhou
Foreign Trade”). The plaintiff clearly told the agent that the container temperature
should be set to 18
C. The defendant received the goods and issued a clean bill of
lading. The shipper was Fuzhou Foreign Trade. Unexpectedly, the frozen container
in Xiamen port transit was powered off, resulting in cargo damage. The plaintiff
instructed the carrier to ship the goods back to Fuzhou. The Entry-Exit Inspection
and Quarantine Bureau identified that the quality of the goods did not meet the
export requirements of suitability for human consumption. Since the export of the
goods was subject to a deal under a bulk trade contract, the above incident resulted in
the US buyer altering the contract and cutting the export of 15 containers. Furthermore, not only did the plaintiff lose his profits, he also had to endure the loss of CNY
330,000 for the default of a domestic contract. Therefore, by invoking relevant
provisions in the General Principles of Civil Law and the Contract Law, the plaintiff
claimed the following losses against the defendant: (1) compensation for the cargo
loss USD 21,924, inspection fees CNY 799, other export charges CNY 1630 and the
interest calculated on the basis of corresponding interest rates on bank overdue loans
from July 4, 2002 to the date of the actual payment of the above losses; (2) the loss of
CNY 330,000 for the payment of the domestic goods supplier and the interest
8 No. 014 Judgement [2003], First Instance, Xiamen Maritime Court.
212
L. Han and S. Cai
calculated on the basis of the prevailing market price at the destination when the
cargoes are or ought to be delivered. Where a law or administrative regulation
provides otherwise in respect of the measures for the calculation of damages and
of the ceiling of the amount of damages, these provisions shall be applied.” Therefore, the Contract Law covers not only the loss and damage of the goods, but also the
loss of the market value of the goods. However, the CIF value provided by Article
55 of the CMC does not consider the loss of market value; nor does it include other
types of economic losses.
However, in practice, when dealing with cargo damage in maritime transport, the
plaintiff cargo owner will not only claim for losses of the goods, but also for
economic losses of benefits under the Contract Law. The carrier will usually defend
itself by invoking Article 55 of the CMC, which stipulates the CIF value as the actual
value, and will not agree with the claim for other economic losses. In dealing with
this controversial issue, the judgments of Maritime Courts are basically the same.
They all insist on the application of Article 55 of the CMC to calculate the cargo
damage compensation, and exclude the application of the General Principles of the
Civil Law and the Contract Law to calculate any relevant economic losses. The
anomaly is that the rationale for excluding application of the General Principles of
the Civil Law is not the same as the rationale for excluding the application of the
Contract Law.
For example, in the case of Beijing Fuyang Bank Trading Co., Ltd. v. The
International Trade Co., Ltd,
8 on June 2002 the plaintiff entrusted the defendant
to carry a number of frozen boiled beans from Fuzhou to Los Angeles via its foreign
trade agent Fuzhou Foreign Trade Company (hereinafter referred to as “Fuzhou
Foreign Trade”). The plaintiff clearly told the agent that the container temperature
should be set to 18
C. The defendant received the goods and issued a clean bill of
lading. The shipper was Fuzhou Foreign Trade. Unexpectedly, the frozen container
in Xiamen port transit was powered off, resulting in cargo damage. The plaintiff
instructed the carrier to ship the goods back to Fuzhou. The Entry-Exit Inspection
and Quarantine Bureau identified that the quality of the goods did not meet the
export requirements of suitability for human consumption. Since the export of the
goods was subject to a deal under a bulk trade contract, the above incident resulted in
the US buyer altering the contract and cutting the export of 15 containers. Furthermore, not only did the plaintiff lose his profits, he also had to endure the loss of CNY
330,000 for the default of a domestic contract. Therefore, by invoking relevant
provisions in the General Principles of Civil Law and the Contract Law, the plaintiff
claimed the following losses against the defendant: (1) compensation for the cargo
loss USD 21,924, inspection fees CNY 799, other export charges CNY 1630 and the
interest calculated on the basis of corresponding interest rates on bank overdue loans
from July 4, 2002 to the date of the actual payment of the above losses; (2) the loss of
CNY 330,000 for the payment of the domestic goods supplier and the interest
8 No. 014 Judgement [2003], First Instance, Xiamen Maritime Court.
212
L. Han and S. Cai