fundamental basis for determining whether or not “reasonable requirements” under
Article 87 of the CMC are met.
6.5 The Fairness Principle
Apart from the mitigation principle, the fairness principle provided in the CLoC is
applied to examine the carrier’s obligation. In accordance with Article 5 of that Law,
“the parties shall abide by the principle of fairness in prescribing their respective
rights and obligations.” Whereas both these precepts are considered to be general
principles in terms of the Chinese Contract Law, mitigation is distinctive in that it is
derived from good faith.
102 Notably, good faith and fairness are rooted in the
doctrinal foundation of Confucianism.
In Rizhao Guanshun Logistic Co. Ltd. v. Guangdong Jinlong International
Logistics Co. Ltd.,
103 a case brought to the Guangzhou Maritime Court in 2016,
there was a voyage charterparty between the claimant carrier and the defendant
consignee. The consignee failed to pay freight due on time and the carrier invoked
his contractual right by stopping discharge of the cargo, which was considered by the
court as the carrier exercising his lien on cargo. The court held that the period during
which the carrier exercised the lien on cargo should not be counted for using the
vessel by the consignee, and the period should be deducted from the total amount of
the demurrage. In a commentary written by Judge Haibin Han, who incidentally was
the Presiding Judge in this case, he cited a case decided by the Guangzhou Maritime
Court in 1993
104 in which the facts were quite similar. In that case there was also a
voyage charterparty between the claimant and the defendant. There, the court held
that by stopping the discharging of the cargo, the carrier had exercised its lien clause
but had breached his duty of mitigation to avoid increasing the losses.
105 Here, the
Court applied the fairness principle entrenched in Article 5 of the CLoC rather than
the mitigation principle.
106
Suffice it to say in bringing this discussion to an end that under Chinese law,
when the shipowner exercises the cargo lien clause in the charterparty, he cannot
abuse his rights. This is not only a moral compulsion arising from Confucianism, but
also a legal requirement. Article 87 of the CMC entitles a shipowner under a
charterparty to a lien on cargo, so long as he meets the reasonable requirements
102 Cui (2003), p. 17.
103 (2016) Y.72 M.C.1023.
104 Metz Combi Line Ltd. v. Shantou Nanfang (Groudp) Co. (1993).
105 Han (2018).
106 Article 87 of the CMC does not apply in this case because it deals with a dispute between two
parties both of whom are Chinese and the ports in question are both Chinese ports. The application
of the CMC is restricted to cases where at least one party is a foreign entity, or the voyage is
international; otherwise the Contract Law is the applicable legislation. However, in both situations,
the nature of the cargo lien is the same which is why this discussion is necessary.
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S. Jia and H. Yu
Article 87 of the CMC are met.
6.5 The Fairness Principle
Apart from the mitigation principle, the fairness principle provided in the CLoC is
applied to examine the carrier’s obligation. In accordance with Article 5 of that Law,
“the parties shall abide by the principle of fairness in prescribing their respective
rights and obligations.” Whereas both these precepts are considered to be general
principles in terms of the Chinese Contract Law, mitigation is distinctive in that it is
derived from good faith.
102 Notably, good faith and fairness are rooted in the
doctrinal foundation of Confucianism.
In Rizhao Guanshun Logistic Co. Ltd. v. Guangdong Jinlong International
Logistics Co. Ltd.,
103 a case brought to the Guangzhou Maritime Court in 2016,
there was a voyage charterparty between the claimant carrier and the defendant
consignee. The consignee failed to pay freight due on time and the carrier invoked
his contractual right by stopping discharge of the cargo, which was considered by the
court as the carrier exercising his lien on cargo. The court held that the period during
which the carrier exercised the lien on cargo should not be counted for using the
vessel by the consignee, and the period should be deducted from the total amount of
the demurrage. In a commentary written by Judge Haibin Han, who incidentally was
the Presiding Judge in this case, he cited a case decided by the Guangzhou Maritime
Court in 1993
104 in which the facts were quite similar. In that case there was also a
voyage charterparty between the claimant and the defendant. There, the court held
that by stopping the discharging of the cargo, the carrier had exercised its lien clause
but had breached his duty of mitigation to avoid increasing the losses.
105 Here, the
Court applied the fairness principle entrenched in Article 5 of the CLoC rather than
the mitigation principle.
106
Suffice it to say in bringing this discussion to an end that under Chinese law,
when the shipowner exercises the cargo lien clause in the charterparty, he cannot
abuse his rights. This is not only a moral compulsion arising from Confucianism, but
also a legal requirement. Article 87 of the CMC entitles a shipowner under a
charterparty to a lien on cargo, so long as he meets the reasonable requirements
102 Cui (2003), p. 17.
103 (2016) Y.72 M.C.1023.
104 Metz Combi Line Ltd. v. Shantou Nanfang (Groudp) Co. (1993).
105 Han (2018).
106 Article 87 of the CMC does not apply in this case because it deals with a dispute between two
parties both of whom are Chinese and the ports in question are both Chinese ports. The application
of the CMC is restricted to cases where at least one party is a foreign entity, or the voyage is
international; otherwise the Contract Law is the applicable legislation. However, in both situations,
the nature of the cargo lien is the same which is why this discussion is necessary.
336
S. Jia and H. Yu