Verification Association inspected the goods, and concluded that they were a total
loss. The inspection activity generated an inspection fee of JPY 130,505 and waste
disposal fee of JPY 52,500. In order to avoid the exorbitant cost payable for breach
of contract, the plaintiff supplied the same kind of goods to the consignee JP
Company by air transportation four times, which resulted in air freight costs
amounting to CNY 43,352, sea freight of USD 2800 (amounting to CNY
18,865.84 as per CNY and USD exchange rate ratio of 1:6.7378), and the Japanese
customs clearance fee of JPY 1322, 650. The plaintiff claimed the loss of value of
goods and the related costs. The issues in dispute were:
1. whether the plaintiff had the right to sue;
2. the reason for the cargo damage and whether the defendant should be liable for it;
3. whether the plaintiff’s loss was reasonable.
The Shanghai Maritime Court held that the plaintiff was a party to the contract of
carriage. After cargo damage, as the consignee JP Company had transferred the
corresponding rights to the plaintiff, who also suffered actual losses, so in this case, it
had the right to sue. As to the reasons for the loss of goods, the Court concluded that
the plaintiff did not pay reasonable attention to the flower packaging and placing,
and it was one of the reasons that caused the cargo damage. However, the Court
decided that since the defendant was a professional carrier, he should have known
what was the shelf life of the special goods on board. After the vessel reverted due to
machinery malfunction, the defendant should have foreseen that the goods with a
limited date of use was likely to be damaged because of the long voyage schedule.
However, the defendant did not inform the plaintiff about the return of the ship; nor
did he transship the goods in time, which led to the damage. Therefore, the defendant
also was partially liable for the cargo damage. Since it was difficult to distinguish the
ratio of fault between the plaintiff and defendant, each party was to bear half of the
loss. In addition, because of the inspection fees, waste disposal costs, air freight, sea
freight, customs clearance fees, all being related to the loss of cargo, the Court held
that they should also be borne in the proportion of 1:1 under Article 113 of the
Contract Law.
4 Scope of Compensation for Damage to Goods
Under CMC
Article 55 of Chinese Maritime Code stipulates that “the amount of indemnity. . .for
the damage to the goods shall be calculated on the basis of the difference between the
values of the goods before and after the damage, or on the basis of the expenses for
the repair. . .” According to this provision, there are two ways of calculating cargo
damage. If the goods can be repaired, then the amount of damage is the repair costs;
if the goods cannot be repaired, then the amount of damage is the difference between
the value before and after the damage. The actual value of the goods is calculated on
Compensation for Cargo Damage in International Maritime Transportation:. . .
215
loss. The inspection activity generated an inspection fee of JPY 130,505 and waste
disposal fee of JPY 52,500. In order to avoid the exorbitant cost payable for breach
of contract, the plaintiff supplied the same kind of goods to the consignee JP
Company by air transportation four times, which resulted in air freight costs
amounting to CNY 43,352, sea freight of USD 2800 (amounting to CNY
18,865.84 as per CNY and USD exchange rate ratio of 1:6.7378), and the Japanese
customs clearance fee of JPY 1322, 650. The plaintiff claimed the loss of value of
goods and the related costs. The issues in dispute were:
1. whether the plaintiff had the right to sue;
2. the reason for the cargo damage and whether the defendant should be liable for it;
3. whether the plaintiff’s loss was reasonable.
The Shanghai Maritime Court held that the plaintiff was a party to the contract of
carriage. After cargo damage, as the consignee JP Company had transferred the
corresponding rights to the plaintiff, who also suffered actual losses, so in this case, it
had the right to sue. As to the reasons for the loss of goods, the Court concluded that
the plaintiff did not pay reasonable attention to the flower packaging and placing,
and it was one of the reasons that caused the cargo damage. However, the Court
decided that since the defendant was a professional carrier, he should have known
what was the shelf life of the special goods on board. After the vessel reverted due to
machinery malfunction, the defendant should have foreseen that the goods with a
limited date of use was likely to be damaged because of the long voyage schedule.
However, the defendant did not inform the plaintiff about the return of the ship; nor
did he transship the goods in time, which led to the damage. Therefore, the defendant
also was partially liable for the cargo damage. Since it was difficult to distinguish the
ratio of fault between the plaintiff and defendant, each party was to bear half of the
loss. In addition, because of the inspection fees, waste disposal costs, air freight, sea
freight, customs clearance fees, all being related to the loss of cargo, the Court held
that they should also be borne in the proportion of 1:1 under Article 113 of the
Contract Law.
4 Scope of Compensation for Damage to Goods
Under CMC
Article 55 of Chinese Maritime Code stipulates that “the amount of indemnity. . .for
the damage to the goods shall be calculated on the basis of the difference between the
values of the goods before and after the damage, or on the basis of the expenses for
the repair. . .” According to this provision, there are two ways of calculating cargo
damage. If the goods can be repaired, then the amount of damage is the repair costs;
if the goods cannot be repaired, then the amount of damage is the difference between
the value before and after the damage. The actual value of the goods is calculated on
Compensation for Cargo Damage in International Maritime Transportation:. . .
215