the loss of the goods. In this case, the plaintiff sold the damaged phenol at the price
of CNY 4270/ton at the port of destination which did not meet the domestic market
price of phenol CNY 4700/ton to CNY 6200/ton, The Court adopted CNY 5000/ton
as the value of the damaged goods, and total value of the damaged goods was thus
CNY 7,000,000. By applying the “direct subtraction method”, namely, the total
value of goods at the port of loading of CNY 14,668,844.4 minus that at the port of
destination equaled the amount of compensation CNY 7,66,884.4.
During the retrial, the Supreme People’s Court adopted the “depreciation rate
method” to calculate the loss of goods. The amount of compensation for the loss of
cargo was the value of the goods in the port of destination minus the value of the
damaged goods, divided by the value of the goods in the port of destination to
calculate the value of the depreciation of the goods. Finally, the depreciation rate was
multiplied by the actual value of the goods in the port of loading and other related
expenses. The Court held that the shipping time was relatively long, and the value of
the goods was vulnerable to fluctuations of the market. Notably, the actual value
calculation method which has been stipulated in Article 55 of the CMC excluded the
loss of market value. Such method is in line with the principles of causation and
reasonable foreseeability for breach of contact. Moreover, the market price of phenol
involved did not fall into the scope of the loss or damage of goods under the CMC;
thus, the carrier was not liable for loss of market value.
The opinion of the present authors is that for the irreparable damage of goods, the
“depreciation rate method” adopted by the Supreme People’s Court is most reasonable. They also believe that the calculation method stipulated in Article 55 of the
CMC is proper and objective, that is, the actual value of the goods calculated on the
basis of the CIF value, without regard to any relevant economic losses, such as loss
of market value, loss of liquidated damage or loss of use value. If the direct
subtraction method is used, it cannot eliminate the loss of market value because of
taking the reasonable value of the goods at the port of destination as the value of the
damaged goods. On the contrary, the depreciation rate method can be used to avoid
the intervention of the market volatility effectively, and it is in line with the provisions of Article 55.
4.2 Maritime Courts’ Different Standards for Determining
Value of Goods at Time of Loading
Local maritime courts calculate the amount of cargo damage according to CIF value,
based on the actual value of the goods at the time of loading. The actual value can be
identified in different ways according to various specific circumstances. In some
cases, the actual value is based on the price in the contract of sale. For example, in
Heilongjiang Agricultural and Grain Economic and Trade Limited Liability
Compensation for Cargo Damage in International Maritime Transportation:. . .
217
of CNY 4270/ton at the port of destination which did not meet the domestic market
price of phenol CNY 4700/ton to CNY 6200/ton, The Court adopted CNY 5000/ton
as the value of the damaged goods, and total value of the damaged goods was thus
CNY 7,000,000. By applying the “direct subtraction method”, namely, the total
value of goods at the port of loading of CNY 14,668,844.4 minus that at the port of
destination equaled the amount of compensation CNY 7,66,884.4.
During the retrial, the Supreme People’s Court adopted the “depreciation rate
method” to calculate the loss of goods. The amount of compensation for the loss of
cargo was the value of the goods in the port of destination minus the value of the
damaged goods, divided by the value of the goods in the port of destination to
calculate the value of the depreciation of the goods. Finally, the depreciation rate was
multiplied by the actual value of the goods in the port of loading and other related
expenses. The Court held that the shipping time was relatively long, and the value of
the goods was vulnerable to fluctuations of the market. Notably, the actual value
calculation method which has been stipulated in Article 55 of the CMC excluded the
loss of market value. Such method is in line with the principles of causation and
reasonable foreseeability for breach of contact. Moreover, the market price of phenol
involved did not fall into the scope of the loss or damage of goods under the CMC;
thus, the carrier was not liable for loss of market value.
The opinion of the present authors is that for the irreparable damage of goods, the
“depreciation rate method” adopted by the Supreme People’s Court is most reasonable. They also believe that the calculation method stipulated in Article 55 of the
CMC is proper and objective, that is, the actual value of the goods calculated on the
basis of the CIF value, without regard to any relevant economic losses, such as loss
of market value, loss of liquidated damage or loss of use value. If the direct
subtraction method is used, it cannot eliminate the loss of market value because of
taking the reasonable value of the goods at the port of destination as the value of the
damaged goods. On the contrary, the depreciation rate method can be used to avoid
the intervention of the market volatility effectively, and it is in line with the provisions of Article 55.
4.2 Maritime Courts’ Different Standards for Determining
Value of Goods at Time of Loading
Local maritime courts calculate the amount of cargo damage according to CIF value,
based on the actual value of the goods at the time of loading. The actual value can be
identified in different ways according to various specific circumstances. In some
cases, the actual value is based on the price in the contract of sale. For example, in
Heilongjiang Agricultural and Grain Economic and Trade Limited Liability
Compensation for Cargo Damage in International Maritime Transportation:. . .
217