shipper’s and the consignee’s wrong judgment on the market situation thus violating
the principle of fairness.
In Trans-sea Shipping Company v. China Insurance Property Insurance Co.,
Ltd.,
21 Zhanjiang Food Company of Guangdong Province (Zhanjiang Food Company) and Lei Ming Company entered into a sales contract, under which Lei Ming
Company sold 12,000 tons of bulk Indian plate-like soybean meal to Zhanjiang Food
Company. The price was USD 277/ton, C & FFO Zhanjiang, China; payment
method for the buyer was to open a 100% loan irrevocable letter of credit which
was acceptable by the seller. The parties to the contract modified the price to USD
261/ton by signing a confirmation letter. Lucky Sea Company was the carrier of the
goods and Trans-sea Shipping Company was the actual carrier. Zhanjiang Food
Company found that the cargo was damaged and short landed at the port of
discharge. PICC, the Property Insurance Company provided indemnification in
accordance with the insurance contract, and acquired subrogation rights. The cost
of the goods in this case plus freight was USD 261/ton in total was CNY 2166.3/ton
in accordance with the exchange rate of USD 1 equal to CNY 8.3 denominated by
the parties.
The court obtained the insurance proceeds of CNY 16.68/ton of the goods
according to the records in the insurance contract. Thus, the insured goods were of
11,328.3 tons and the total insurance proceeds were in the amount of CNY
11961.82. In this way, the actual value of the goods was CNY 2182.98/ton.
However, the value of goods of the same kind at that time did not exceed CNY
1850/ton. In such case, since Article 55 of the CMC stipulates that the value of the
cargo damage shall be calculated at the value of the goods at the time of shipment, if
the price at the port of destination falls, the carrier bore the market forecast loss for
the mistake. This is unfair to the carrier and has a negative impact on the maritime
transport business.
5 Limitation of Carriers’ Liability for Loss of or Damage
to Goods
Article 56 of the CMC stipulates the system of limitation of carriers’ liability. It
provides that:
Carriers’ liability for the loss of or damage to the goods shall be limited to an amount
equivalent to 666.67 Units of Account per package or other shipping unit, or 2 Units of
Account per kilogram of the gross weight of the goods lost or damaged, whichever is the
higher, except where the nature and value of the goods had been declared by the shipper
before shipment and inserted in the bill of lading, or where a higher amount than the amount
of limitation of liability set out in this Article had been agreed upon between the carrier and
the shipper. Where a container, pallet or similar articles of transport are used to consolidate
goods, the number of packages or other shipping units enumerated in the bill of lading as
21 No.80 Judgement [2001], Second Instance, Guangdong Province Higher People’s Court.
220
L. Han and S. Cai
the principle of fairness.
In Trans-sea Shipping Company v. China Insurance Property Insurance Co.,
Ltd.,
21 Zhanjiang Food Company of Guangdong Province (Zhanjiang Food Company) and Lei Ming Company entered into a sales contract, under which Lei Ming
Company sold 12,000 tons of bulk Indian plate-like soybean meal to Zhanjiang Food
Company. The price was USD 277/ton, C & FFO Zhanjiang, China; payment
method for the buyer was to open a 100% loan irrevocable letter of credit which
was acceptable by the seller. The parties to the contract modified the price to USD
261/ton by signing a confirmation letter. Lucky Sea Company was the carrier of the
goods and Trans-sea Shipping Company was the actual carrier. Zhanjiang Food
Company found that the cargo was damaged and short landed at the port of
discharge. PICC, the Property Insurance Company provided indemnification in
accordance with the insurance contract, and acquired subrogation rights. The cost
of the goods in this case plus freight was USD 261/ton in total was CNY 2166.3/ton
in accordance with the exchange rate of USD 1 equal to CNY 8.3 denominated by
the parties.
The court obtained the insurance proceeds of CNY 16.68/ton of the goods
according to the records in the insurance contract. Thus, the insured goods were of
11,328.3 tons and the total insurance proceeds were in the amount of CNY
11961.82. In this way, the actual value of the goods was CNY 2182.98/ton.
However, the value of goods of the same kind at that time did not exceed CNY
1850/ton. In such case, since Article 55 of the CMC stipulates that the value of the
cargo damage shall be calculated at the value of the goods at the time of shipment, if
the price at the port of destination falls, the carrier bore the market forecast loss for
the mistake. This is unfair to the carrier and has a negative impact on the maritime
transport business.
5 Limitation of Carriers’ Liability for Loss of or Damage
to Goods
Article 56 of the CMC stipulates the system of limitation of carriers’ liability. It
provides that:
Carriers’ liability for the loss of or damage to the goods shall be limited to an amount
equivalent to 666.67 Units of Account per package or other shipping unit, or 2 Units of
Account per kilogram of the gross weight of the goods lost or damaged, whichever is the
higher, except where the nature and value of the goods had been declared by the shipper
before shipment and inserted in the bill of lading, or where a higher amount than the amount
of limitation of liability set out in this Article had been agreed upon between the carrier and
the shipper. Where a container, pallet or similar articles of transport are used to consolidate
goods, the number of packages or other shipping units enumerated in the bill of lading as
21 No.80 Judgement [2001], Second Instance, Guangdong Province Higher People’s Court.
220
L. Han and S. Cai