2010年4月许，原告C公司自S公司CIF购买一批印度铁矿砂（下称“货物”）。S公司程租“J”轮以承运货物。2010年4月25日，货物装船后，装港代理代表“J”轮船长（For and on behalf of Master）签发了租约提单（下称“提单”）。提单上的“收货人”和“通知方”均记载为“To Order”；装港为印度某港，卸港为中国某一主要港口；运费支付按2010年4月14日航次租船合同（下称“租约”）的约定；提单背面条款载明，约定提单正面所载日期的租约的所有条款和条件、自由和免责（包括法律适用和仲裁条款）并入提单，；同时，提单背面条款中所含“首要条款”写明《海牙规则》适用于提单。之后，提单全套正本经背书转让给了R公司。
Judgment by Xiamen Maritime Court
Concerning Disputes of On-Carriage Freight of Cargoes under B/L
In April 2010 or about, the plaintiff C Company ordered a consignment of Indian iron ore (hereunder called “cargo”) from S Company. On 25 April 2010, the port of loading agent signed charterparty B/L (hereunder called “B/L”) for and on behalf of Master after the cargoes were loaded onboard. The Consignee and Notify Party were stated as “To Order” on B/L. The port of loading is a port of India and the port of discharge is a major port in China. The freight is paid as per the stipulations of the voyage charterparty dated 14 April 2010 (hereunder called “the Charterparty”). The terms on the back of B/L stated that all the terms, conditions, entitlements and exemptions, including applicable law clause and arbitration clause of the Charterparty, the date of which was defined on the face of the B/L are incorporated into B/L. Also the paramount clause included in the back terms of the B/L stated that the Hague Rules applied to the B/L. Then the full set of original B/L was transferred to R Company.
On 9 May 2010, Vessel “J” collided with other vessel when sailed in the sea area near Shantou (hereunder called “the accident”), which caused cargoes partially damaged and the Vessel could not set sail. The Owners of Vessel “J” assigned tugboat for salvage. Part of the cargoes were discharged to the salvage barge and carried to Xiamen Port together with the barge. The rest of the cargoes together with Vessel “J” were towed to Zhangzhou Port and discharged to the dock on 19 June 2010. On 23 June 2010, Vessel “J” sailed into a shipyard in Zhoushan for repair.
After the accident, the plaintiff called together cargo shipment insurer, owners of both colliding vessels, the salvage party and S Company for coordination meetings twice, discussing the matters including the measurement, quality inspection, damage assessment method of the captioned cargoes, the work content and document of parties concerned and the transshipment of the cargoes. The second coordination meeting was held on 11 August 2010. A meeting minute was recorded after discussions, determined the cargoes to be transshipped to the destination and the owner of Vessel “J” was required to cooperate to handle formalities. On 19 August 2010, C Company concluded a charteparty with Z Company to charter Vessel “D” of Company Z to carry the captioned cargoes from Xiamen and Zhangzhou Port to the port of discharge which was determined prior to the accident. On 5-8 September 2010, all the cargoes were loaded onboard at the port of Xiamen and Zhangzhou, carried to the port of discharge safely and then discharged, which incurred on-carriage freight in sum of USD360,000 and extra port agency expenses (hereunder called “on-carriage freight”).
On 13 August 2010, as required by owners of Vessel “J”, the shipyard issued a statement, illustrating Vessel “J” had entered into shipyard for repair and the repair work would be finished till 18 September 2010. On the same day, owners of Vessel “J” relayed the statement to C Company for C Company’s use of custom declaration when cargoes arrived at port of discharge. On 13 September 2010, Chinese Classification Society issued Interim Certificate of Class for Vessel “J”. On 17 September 2010, Vessel “J” finished repairing and left the shipyard.
After that, C Company filed a lawsuit against owners of Vessel “J” before Xiamen Maritime Court, claiming for the aforementioned on-carriage freight in approximate sum of USD360,000 and extra port agency expenses, etc.
C Company contended that, since the charterparty was not transferred together with B/L, C Company had no way to learn about the contents and existence of the charterparty as the transferee of B/L, let alone to reach an agreement with owners of Vessel “J” on the contents of the charterparty. So the terms of the charterparty should not be the basis of the judgment. The applicable law of the case should be same as that of B/L.
Owners of Vessel “J” argued that, the charterparty was submitted and indicated on the B/L and was consequently incorporated into B/L. According to the applicable law as per the charterparty and back terms of B/L, the applicable law of this case should be English law.
2.Whether the Owners Could Be Exempted from Liabilities for Late Delivery Due to Collision and Should Assume the On-carriage Freight
C Company contended that, under the contract of carriage of goods by sea which is proven by B/L, it is the liability of owners of Vessel “J” as B/L carrier to carry the cargoes to the destination safely and delivered same at destination, which could not be exempted by the accident. The on-carriage freight should not be deemed as losses applied to the exemption of carrier. After the accident, owners of Vessel “J” agreed to carry the cargoes by other vessel to the destination. However, the owners of Vessel “J” did not arrange an alternative vessel. It was over three months since the date of the accident when the owners informed that Vessel “J” would finish repairing on 18 September 2010. Owners of Vessel “J” also expressed several times that they would not carry the cargoes to the destination if the freight or hire was not paid. For the purpose of carrying the cargoes to destination on time and fulfilling the shipment which should be done by owners of Vessel “J” under B/L, C Company had to enter into a charterparty with Z Company. Thus owners of Vessel “J” should assume the on-carriage freight incurred to C Company of the remaining voyage for the cargoes.
Owners of Vessel “J” argued that, they never agreed to carry the cargoes by other vessel to the destination. Besides, since the charterparty was incorporated into B/L effectively, English law as applicable law stipulated on the charterparty should also apply to B/L. According to English law, although owners of Vessel “J” as carrier have obligations to fulfill the shipment of the cargoes after collision accident, the owners are entitled to arrange repair work with reasonable dispatch and have no duty to charter an alternative vessel to arrange shipment. The cargo interests could arrange shipment by themselves, however the risks and expenses should be assumed by themselves. Thus the on-carriage freight should not be assumed by owners of Vessel “J”.
Main Points of The Judgment
After hearing, Xiamen Maritime Court judged as follows:
1. Whether the charterparty was incorporated into B/L
The Court held that, C Company did not provide reverse evidence to prove that the charterparty submitted by owners of Vessel “J” was not the charterparty incorporated into the B/L by stating the date on the face of B/L. So the Charterparty was that referred to by the incorporation clause of B/L and the Charterparty was incorporated into B/L effectively.
2. Applicable law
The Court held that, C Company entered into a contract of carriage of goods by sea with owners of Vessel “J”. The incorporation clause on back side of B/L was effective and the applicable law should be English law as per stipulations of Charterparty. However, in the circumstances when parties concerned choose to apply foreign law, the contents of the foreign law should be supplied or proven by parties concerned. Owners of Vessel “J” did not provide any judicial precedent or literature to prove the stipulations of English law. Consequently, this case shall apply to Chinese law when the stipulations of English law could not be ascertained.
3. Whether parties concerned reached an agreement on C Company’s shipment arrangement by themselves
The Court held that, C Company did not submit evidence to prove both parties had reached an agreement on the shipment arrangement by themselves.
The Court held that, the Charterparty was incorporated into B/L effectively and the Hong Kong arbitration clause stipulated in the charterparty was incorporated into B/L. However, C Company did not declare the existence of arbitration agreement when filed the lawsuit and owners of Vessel “J” did not file an objection at the time of first court hearing. Consequently, according to Clause 26 of PRC Arbitration Law, it is deemed as an abandonment of arbitration agreement. In light that the port of transshipment is Xiamen and Zhangzhou Port, this Court has jurisdiction over the case.
5. Whether the exemptions including the fault of navigation and ship-management and owners’ liability stipulations in clause 2 of Gencon 94 charterparty applied to the case.
The Court held that, the category of the case is concerning disputes in relation to damages caused by alternative performance due to late, which is irrelevant to losses or damages of cargoes. Consequently, the stipulations of late delivery of cargoes in Clause 50 and exemptions of fault of navigation and ship-management in Clause 51 of Chinese Maritime Code did not apply to the case. Besides, although stipulations of owners’ liability in clause 2 of Gencon 94 charterparty were incorporated into B/L, the exemptions in clause 2 exceeded the stipulations of Hague Rules which was applied according to statement of paramount clause on the back side of B/L and were consequently invalid. Additionally, according to Clause 53 of Contract Law of PRC (hereunder called “Contract Law”), the exemption clause which exempt one parties’ liabilities for other parties’ property damages due to willful misconduct or gross negligence is invalid. Consequently, the exemptions of carrier stipulated by the incorporated charterparty and Hague Rules as B/L terms should be bound by such stipulations.
6. Whether owners of Vessel “J” should assume on-carriage freight
The Court held that, according to Clause 290 of Contract Law, carrier should carry the cargoes to the appointed destination at agreed time or within reasonable period. In this case, the collision of Vessel “J” did not lead to the non-performance of the contract and the carrier was still obliged to fulfill the shipment within reasonable time.
The Court also held that, owners of Vessel “J” should repair the Vessel within reasonable time. In cases the Vessel could not be repaired within reasonable time, alternative vessel should be arranged to carry the cargoes. The carrier could be exempted from liabilities for late only within reasonable time for repairing the vessel or seeking for alternative vessel. In this case, C Company demanded owners of Vessel “J” to fulfill its obligation of cargo carriage, served notice after cargoes were discharged for over one month and concluded another charterparty to carry the cargoes, all of which could not lead to the conclusion that the chartered vessel was not reasonable. On the other hand, owners of Vessel “J” leaved the cargoes which valued several millions of dollars at the port of transshipment, waiting the vessel to be repaired to fulfill the shipment, which violated the principle of good faith and general rules in business practices and constituted gross negligence. Thus owners of Vessel “J” could not be exempted from liabilities according to B/L terms and should compensate reasonable on-carriage expenses and losses to C Company.
In conclusion, the Court judged that owners of Vessel “J” assumed the above on-carriage freight and extra port agency expenses incurred to C Company due to chartering alternative vessel for cargo carriage.
This judgment was not appealed.