Laws of the People's Republic of China

The Supreme People's Court

Circular of the Supreme People's Court concerning Transmitting the Cases of Port-related Economic Dispute and Maritime Dispute

Fa (Jing) Fa [1986] No. 29

October 23, 1986

Local People's Courts at various levels, military courts at various levels, railway transportation courts at various levels and maritime courts at various levels:

We hereby transmitted to you 7 cases of port-related economic dispute and maritime dispute compiled by Economic Division of the Supreme People's Court. The leaders in charge of economic trial please organize relevant person to study and discuss them. If there is any comment in your discussion or at work, please report it to us. [Case One]Chemical Machinery Import & Export Corp. __ Branch v. Hong Kong __ Trading Firm over thePurchase and Sale Contract Quality Dispute Case

Plaintiff: Chemical Machinery Import & Export Corp. __ Branch

Defendant: Hong Kong __ Trading Firm

The plaintiff and defendant have signed a sales confirmation for purchase and sale of air condition in cool & warm air in __ on January 4, 1985, stipulating that the defendant provides the plaintiff with 5000 sets of S-006 air conditions in cool & warm air, USD 28 per set, with the total purchase price of USD 140 thousand, delivering the goods by installments before February 3, 1985. The quality and quantity of the goods are subject to the inspection certificate of China Commodities Inspection Bureau or the certificate issued by the seller and the claim period is within 90 days after the arrival of the goods. On January 9, the legal representative of the defendant discussed with Wang_, the handling person of the plaintiff and required to delete the inspection clause, "subject to the inspection certificate of China Commodities Inspection Bureau", in the sales confirmation because this clause will influence him to purchase from Taiwan factories. Wang_ agreed the requirements of the defendant without the authorization of the legal representative of the company and deleted the aforementioned inspection clause in the sales confirmation hold by the defendant, while the sales confirmation hold by the plaintiff remained without any change. On January 19, the plaintiff issued the letter of credit with the amount of USD 140 thousand. The defendant delivered 3800 sets by installments on February 17 and 25, with the purchase price of USD 106.4 thousand. Regarding the remaining 1200 sets, the parties agreed not to implement any more. However, the air conditions in cool & warm air delivered by the defendant had neither product mark (indicating the variety, type, specification, manufacturer, manufactured date and etc.) nor product inspection certificate. After inspection of the sample by our commodity inspection institutions, they did not satisfy the minimum requirement for safety and normal operation and are completely garbage scrabbled up. On May 10, the plaintiff required to negotiate with the defendant in accordance with the inspection certificate specifying ill quality of 3300 sets of air conditions in cool & warm air issued by __ commodity inspection bureau, however, the defendant refused to negotiate based on the full implementation of the contract. Then the plaintiff sued to the court claiming returning 3300 sets of ill quality air conditions in cool & warm air to the defendant and the defendant's reimbursement of the loan USD 92.4 thousand and the interest. In his defence the defendant insisted that the plaintiff has inspected and paid for the air conditions in cool & warm air, claimed the contract has been terminated and did not agree to return the goods.

After trial the court held: the deletion of the inspection clause in the sales confirmation hold by the defendant by Wang_, the handling person of the plaintiff, after his discussion with legal representative of the defendant was not in accordance with the law and international trade practice both in procedure and substantiality in China and should be regarded as invalid. The air conditions in cool & warm air provided by the defendant were not in accordance with the quality requirements stipulated in the contract, so it was legal for the plaintiff to require the return of the goods and the damage compensation. However, Wang_, the handling person of the plaintiff deleted the clause of the contract without permission and led to the misunderstanding of the defendant, so the plaintiff should be also partially responsible for the liabilities. According to Article 55 , 32(1) of Economic Contract Law, the judgments are as follows: (1) The plaintiff should return 3300 sets of ill quality air conditions in cool & warm air to the defendant within 10 days after receiving the reimbursement of the purchase price, and the cost should be shouldered by the plaintiff; (2) The reimbursement of the purchase price was USD 92.4 thousand, among which, 30% is shouldered by the plaintiff. The remaining USD 64.68 thousand should be returned to the plaintiff within 15 days after the judgment becomes effective.

There are following two problems in handling with the case:

1.

It is incorrect to judge the plaintiff to shoulder the loss of 30% the total amount of reimbursement of the purchase price and the cost. The key issue of the case is the product quality. It is completely reasonable for the plaintiff to challenge the product quality within the claim period set by the plaintiff. The defendant should be fully responsible for the damage caused by the breach of the contract. The purchase price of 3300 sets of air conditions in cool & warm air should be completely returned. It is incorrect that the plaintiff should also bear certain responsibilities judged by the trial court based on the confirmation of the deletion of the clause of the contract without permission by Wang_, the handling person of the plaintiff, which led to the misunderstanding of the defendant. Because the deletion of the inspection clause in the sales confirmation held by the defendant by Wang_, the handling person of the plaintiff without permission does not imply that the defendant may provide the ill quality products, let alone the deletion of the clause of the contract without authorization does not constitute legal and effective contract modification. It is the defendant's own fault to breach the contract and provide ill quality air conditions in cool & warm air. The caused damage should be shoulder by the defendant alone. It is no legal basis that the court judged the plaintiff to shoulder 30% of reimbursement of the purchase price and the cost, which, as a result, led to the defendant gain extra economic advantage and thus it could not protect the law keeper and sanction the contract breaker.

2.

The trial court did not suggest the charging department to investigate whether Wang_, the handling person, had other law-breaking activities except ultra vires; it did not suggest the plaintiff to properly dispose of the activities of ultra vires by Wang_, the handling person. Wang _'s deletion of the sales confirmation held by the defendant without permission not only reflected the weak awareness of Wang's legal concept but also exposed the unsound contract management system of the plaintiff. The court should grasp this example to put forward the judicial suggestions to the plaintiff to urge them to strengthen the contract management system and improve operation and management. [Case Two]Hong Kong _ Co., Ltd. v. Special Economic Zone _ Union Development Service Company over the Assignment of Interest of joint operating Dispute Case

The plaintiff: Hong Kong _ Co., Ltd.

The defendant: Special Economic Zone _ Union Development Service Company

The plaintiff and special economic zone _ community have signed a joint operating agreement in December of 1981. The parities have agreed to jointly build and operate a hotel. The community provides a land of 10 thousand sq. feet and the plaintiff is responsible for contributing all capital, around HK$ 4 million, for building and operating the hotel. After the completion of the hotel, the joint operating period of the parties is 15 years. During such period, the community drew certain proportion of the total turnover of the hotel each year, 5% each year in the first 7 years of operation and 9% in the remaining 8 years. In the operation period it is unnecessary for the community to refund the principal and interest of investment to the plaintiff and unnecessary for the plaintiff to pay the land use fee either. In case there is any loss occurred in the operation, the plaintiff should wholly shoulder the responsibilities. Upon expiration, all property and interest of the hotel would unconditionally belong to the community. Without the consent of the parities, any of the parties cannot modify the agreement or transfer the interest to the third party without permission. The hotel was put into the normal operation after the completion. In May of 1983, the plaintiff transferred 80% of total investment in the hotel, RMB 655 thousand, viz. the interest of RMB524 thousand, to site of construction of _ power station (the former of the defendant), evaluating RMB 960 thousand. The agreement on assignment of interest of the hotel reached by the parties was approved by the government of special economic zone in December of 1983, which stipulated site of construction of power station possessed 80% of shares and assets of the hotel by contributing RMB 960 thousand (50% at HK$, 50 at RMB). In the implementation of the agreement, due to the lack of foreign exchange, site of construction of power station exchanged RMB 480 thousand into HK$ 1203439.5 at the foreign exchange swap rate of RMB 39.6/HK$ 100 and remitted HK$ 606719.7 to the plaintiff on November 16, 1983. However the plaintiff objected and insisted it should be exchanged at the foreign exchange rate of RMB 24.67/HK$ 100 issued by the state at that day, thus the defendant should pay HK$ 732242 more. The dispute was then arisen and the plaintiff sued to _ court on July 12, 1984.

The trial court found out after trial:

(1)

Site of construction of power station has already been quashed and its interest to the hotel has already been transferred to power station service company, afterwards, with the name changed to _ union development service company, therefore, the development service company should join in the litigation as the defendant.

(2)

Swap rate is an internal foreign exchange rate for the balance of foreign exchange between local enterprises through the banks. In accordance with the regulations of state administration of foreign exchange, it cannot be applied to overseas Chinese owned enterprises, wholly foreign owned enterprises and Sino-foreign joint venture enterprises. It is illegal and invalid for site of construction of power station to swap foreign exchange on behalf of local enterprises and settle the payment with Hong Kong companies.

(3)

The plaintiff's assignment of interest of the hotel to site of construction of power station did not get consent of the community in advance, which broke the joint operating agreement of the parties. Although the government of municipality mediated afterwards, the community still disagreed and was unwilling to attend the board of directors and claimed to take back the land which was regarded as the second investment. On May 26, 1985, the community sued to the court based on illegal assignment of interest of the hotel by the plaintiff and the defendant and infringement of its legal interest and requested the damage compensation of RMB 400 thousand.

The court has convened the plaintiff and the defendant to mediate many times, while the defendant insisted on his own opinion, alleging it is legal to convert at foreign exchange swap rate and it has already been accepted by Chen_, the former president of the plaintiff and et al (three persons). The new president cannot deny the legal activity of the former president and refused to compensate the plaintiff at foreign exchange rate issued by the state, therefore, the mediation failed. Meanwhile, Lu_, the president of the defendant once acting as the deputy general secretary of provincial People's government convened the relevant charging person of economic division of provincial court and the trial court, handling person of the case and the charging person of the defendant to report the result of the investigation, study the settlement solution and set the principle on how to judge the case:

(1)

Assignment of interest of the hotel has been transacted at RMB, the agreement did not stipulate how to convert RMB to HK$, therefore, the parties both had negligence. It was the site of construction of power station that exchanged RMB 480 thousand into HK$ on behalf of the plaintiff and the defendant cannot bear the economic loss;

(2)

Maintain the interest of the defendant and decrease the loss of the defendant, to the extent possible. Make the plaintiff withdraw the case based on lots of approaching between the parties;

(3)

If the plaintiff insisted not to withdraw the case, the maximum compensation should be one third of the amount.

Due to unsuccessful mediation many times, the plaintiff required the court to judge, however, the court hesitated to do so. In order to avoid the delay and suffer more economic loss, the plaintiff had to propose to terminate the assignment of interest agreement. The defendant agreed the proposal of the plaintiff. The parties have finally reached the settlement agreement presiding by the court after more than half a year's negotiation.

(1)

The parties agreed to terminate the assignment of interest agreement signed on May 24, 1983. The defendant returned 80% share interest to the plaintiff and the plaintiff refunded RMB 480 thousand and HK$ 606719.7 with the interest to the defendant;

(2)

The bonus, RMB 93310.02, paid to site of construction of power station before March of 1984 should be deducted from the income of the hotel;

(3)

The salary of general manager and accountant sent to the hotel by the defendant should be deducted from the operation cost of the hotel;

(4)

The defendant should not enjoy 80% of the bonus of the hotel any more.

The plaintiff applied to withdraw the case on September 10, 1985 and the court ruled the approval of the withdrawal on September 12, the litigation fee, RMB 10,000 should be burdened by the plaintiff.

There are certain problems in handling with the case as follows:

1.

The court did not confirm the invalidity of the assignment of the interest agreement. The plaintiff and the defendant under the case have signed the agreement on assignment of 80% of the interest of the hotel, which did not get the approval of the community in advance, violated the provision "without the mutual consent of the parties, any of the parties cannot privately assign the interest to a third party" in the joint operating agreement agreed by the plaintiff and the community and infringed the legal interest of the community. Although the agreement has been approved by the government of municipality afterwards, it should be regarded as an invalid agreement.

2.

The court did not list the community as a third party with an independent claim to join in the litigation. In the litigation, it is legal and in accordance with the provision of Article 48 (1) of Civil Procedural Law of the People's Republic of China (for trial) for the community to be the party of the litigation due to its filing the case with the court against the plaintiff and the defendant to maintain its own legal interest. However, the court did not let the community join in the litigation, even file the materials including the claim of the community, which is obviously incorrect.

3.

The court was subject to the administrative interference and did not judge fairly. The court shall try cases independently in accordance with the law, and shall not be subject to interference by an administrative organ, public organization or individual, which is a basic principle for the People's court to try cases and is clearly stipulated by Constitution, the Organic Law of the People's Courts and Civil Procedural Law (for trial). The court of the case did not try the case fairly and delay the case when facing the administrative interference under the circumstances that the facts of the case have been examined, which led to the plaintiff's unwilling big concession to close the case. The charging person at two levels, the president of the defendant and the agent ad litem together listened to the research report of the handling person and studied the solution, which seriously violated the trial procedures of Civil Procedural Law (for trial) and the principle of application of the law equally to the parties and harmed the fair image of the court.

4.

Unfair disposal. Reviewing the settlement agreement reached by the plaintiff and the defendant presiding by the court, the plaintiff refunded the money paid for shares and the interest under the principle of reimbursement, while the defendant only refunded the interest of the hotel but did not refund the bonus, RMB 93310.02, got in the assignment period before May of 1984, which is obviously unfair and broke the principle of legally execution of the law and protection of the legal right of foreign companies and Hong Kong and Taiwan Chinese.

[Case Three]Hong Kong _ Tea House v. _ County Worker Culture Palace over the Joint Operating Contract Dispute Case

The plaintiff: Hong Kong _ Tea House

The defendant: _ country worker culture palace

The plaintiff and the defendant have reached an agreement on joint operating fast food on March 10, 1982. It was stipulated that the defendant provided the site with 600 square meter and 40 workers and be responsible for organizing the construction and the plaintiff provided the capital of HK$ 500 thousand without interest for infrastructure and equipment investment, among which RMB 150 thousand was used for importing the equipments and instruments. In addition, the plaintiff also shouldered to provide HK$ 200 thousand without interest as the working capital for the turnover of joint operating fast food. The parties also agreed that construction materials should be bought overseas except that part of them should be imported from Hong Kong. The agreement will take effective as of the date of approval by the charging department and the period of validity is 5 years. On March 22, the agreement was approved by the county foreign economic and trade committee. On June 7, the committee issued the official document to terminate the joint operating project between the plaintiff and the defendant in accordance with the provisions of the provincial People's government on prohibiting state organs, public organizations, schools and other public service units from operating commercial activities and import & export. The plaintiff disagreed with the decision and required to continue to implement the agreement by consulting with the defendant, the county foreign economic committee and the provincial foreign economic committee. During the period, the plaintiff remitted HK$ 30 thousand to the defendant for the building of fast food; meanwhile, the plaintiff bought part of equipments in Hong Kong and the defendant paid for accommodation and transportation fee for the plaintiff. The plaintiff sued to the court because of no result of negotiation and required the defendant to compensate the damage caused by his default of the agreement.

The trial court held through trial: the agreement reached by the plaintiff and the defendant was originally valid; however, it is terminated and invalid by the decision of the charging department. In the period of validity of the agreement, the plaintiff neither delivered any equipment nor remitted any capital. The time the plaintiff remitted HK$ 30 thousand is after the charging department decided to terminate the agreement. The plaintiff insisted on continuing to construct fast food, refused to terminate the settlement and afterwards, put forward the high amount of damage, which is obviously inappropriate. It is also inappropriate that the defendant put HK$ 30 thousand remitted by the plaintiff into the use of infrastructure after the termination of the agreement. The court held the judgments in accordance with Article 2 (2) of the Law on Chinese-foreign Equity Joint Ventures and Article 16 of Economic Contract Law as follows:

(1)

The agreement reached by the plaintiff and the defendant on joint operating fast food is invalid;

(2)

The defendant should refund the investment of RMB 9576 with the interest of RMB 955.93, namely RMB 10531.93 remitted by the plaintiff;

(3)

The plaintiff should refund the loan and the capital paid by the defendant, with a total amount of RMB 1244.21;

(4)

After offsetting Item 2 and 3, the defendant should refund RMB 9287.72 to the plaintiff and exchange HK$ at foreign exchange rate of the judgment date and remit outside China via Bank of China.

If the plaintiff had an objection against the judgment, he may file an appeal. The court of appeal held after trial: the joint operating agreement reached by the plaintiff and the defendant with autonomy and approved by the charging department will be invalid because of the termination direction of the charging department and the parties shall not shoulder the responsibilities for the breach of the contract. Regarding the decision of county foreign economic committee, the parties shall unconditionally implement. The plaintiff insisted on implementing the agreement after the termination of the agreement and remitted the amount to purchase the equipments, which is only the intention of the plaintiff and the plaintiff should shoulder the responsibilities. Upon receipt of written circular of county foreign economic committee of termination of implementation of the agreement, it was appropriate for the defendant to accept the remittance of the plaintiff for infrastructure. There were mistakes for the trial court to judge the agreement invalid and apply to Article 16 of Economic Contract Law. It is hereby judged as follows:

(1)

Annul the decision on the invalidity of the agreement in Item one of the judgment of the trial court;

(2)

Sustain Items two, three and four of the judgment of the trial court;

(3)

After the termination of the agreement, the cost for the construction of the joint project except held by the aforementioned judgment is shouldered by the parties respectively without compensating the damage each other.

The key issue in handling with the case is the agreement reached by the plaintiff and the defendant on joint operating fast food cannot be regarded as invalid due to the termination decision of county foreign economic committee. In the foreign economic communication, China always insists on the principle of keeping the validity of the contract and the promise. The foreign-related economic contract is established under the law and is binding on both of the parties. Any of the parties cannot modify or terminate the contract. The decision of county foreign economic committee may be regarded as the basis of modification or termination of the agreement by negotiation between the local party and the foreign party and generally it does not fall with the range of Force Majeure unless otherwise agreed by the parities in the agreement. In case there is any economic loss caused to the other party, it should be reasonably compensated. The charging organs cannot terminate the economic contract reached by the parties under the law by administrative order. Regarding the case, the decision made by county foreign economic committee to terminate the agreement between the plaintiff and the defendant is only directive to the defendant and is not binding on the plaintiff. The defendant may propose to the plaintiff to negotiate and terminate the agreement based on it, however, the original agreement is still valid before the termination of the agreement negotiated and agreed by the parties. Therefore, they were incorrect for the trial court and the appellate court to judge that the joint operating agreement between the plaintiff and the defendant was invalid due to the termination decision of county foreign economic committee, that the parties shall unconditionally implement the decision of country foreign economic committee and that the plaintiff shall shoulder the responsibility for continuing implementing the agreement after the county foreign economic committee made the termination decision.

[Case Four]_ County Medicine Company v. _ Army over the Goods Damage Compensation Dispute Case

The plaintiff: _ County Medicine Company

The defendant: _ army

The transport ship, "Dai Shang No. 3" owned by the plaintiff, with the ratified carrying capacity of 20 tons and actual carrying capacity of grocery of 21.6 tons, sailed for Mountain Dai from Ningbo Harbor at 9:20 am on July 5, 1984 and encountered one landing craft owned by the defendant, which sails against the current at 8.2 kts when sailing in Yong Jiang which is between Wang Jia Yang and Qing Shui Pu at 10:30. The drum wave attacked the cargo ship of the plaintiff, water swarmed into engine room and warehouse and the ship quickly inclined and went down. Although rescuing by other ships and then landed in the south of the river, the damage of the goods still reached RMB 32798.21. The plaintiff sued to the maritime court and claimed to judge the defendant to compensate 50% of the damage. The defendant denied the facts of damage caused by wave in the defence and refused to bear any responsibility for compensation. The court seriously investigated and collected abundant evidence, especially found the witness, Yu_, who was a shepherd and witnessed "Dai Shang No. 3" damaged by the landing craft. Before the evidence, the defendant had to confess the fact. The court found out in the trial that "Dai Shang No. 3" owned by the plaintiff surcharged the cargo of 1.6 tons against the regulations and loaded inappropriately. The captain did not take any measure to avoid when encountering landing craft. The defendant violated the harbor rule of Ningbo harbor regarding the maximum speed of sailing against the current in Yong Jiang is 6 kts and sailed at high speed. Moreover, the defendant did not accept the dissuasion of the supervisor of the harbor and continued to sail at high speed, which led to the wave attacked the cargo ship of the plaintiff and the damage of the cargo. Based on the above, the court judged the overloading and inappropriate loading by the plaintiff is the main reason of the accident, and the defendant's sailing with high speed is the direct reason of the accident. Therefore, the court ruled that the plaintiff should shoulder 70% of the responsibilities and the defendant should shoulder 30%.

The key issue in handling with the case is that the judgment regarding the loss of cargo is inappropriate. Overloading and inappropriate loading the cargo by the plaintiff is a potential risk in the sinking of the ship and the damage of the cargo, however, it is just a kind of possibility, not the necessary cause for the sinking and the damage. It is the damage of wave that changed the possibility into the reality. The direct and main cause for the sinking and the damage is that the defendant sailed at high speed in Yong Jiang against the harbor rule and attacked "Dai Shang No. 3". Especially, the defendant did not accept the dissuasion of the supervisor of the harbor, set the safety of other ships aside, and continued to sail at high speed, which finally led to the sinking of the ship and the damage of the cargo. It should be dealt with seriously. Although the responsibility of the defendant can be mitigated due to the fault of the plaintiff, the defendant still should be judged to shoulder more responsibilities. [Case Five]_ Publishing and Materials Company v. _ County Transportation Department over the Goods Damage Compensation Dispute Case

The plaintiff (the defendant of the counter-claim): _ Publishing and Material Company

The defendant (the plaintiff of the counter-claim): _ County Transportation Department

The third party: _ Paper Manufacturer

The plaintiff ordered 3500 tons of 52 gram No. 2 web-fed anastatic paper from the third party in 1981 and entrust the third party to handle with the matter of water transportation of goods and the defendant as the carrier. On November 8, 1981, the ship, "Yuan Bo No. 10" owned by the defendant loaded 76.137 tons paper from the third party and be pulled by the tug to Shanghai. After reaching the destination harbor on December 7, the ship stayed in the fourth berth of Suzhou River and moved to the first berth at 9 am. At 24 pm, Yang_, the captain of "Bo Yuan No. 10" examined the damp warehouse to see whether there is any water swarmed into, misunderstood the wide set in and then went to sleep. Because of no watch in the tug, in the morning on 10, water started to swamp into the warehouse and then sink in. Through investigation, the tug ran aground due to the wane of tide, the bottom of the ship was leaked by the abandoned iron staircase in the riverway and the damage of the paper reached 67.763 tons, with a total amount of RMB 48335.3. The plaintiff has thought this was a responsible accident and required the defendant to shoulder all the responsibility of the damage. While the defendant insisted on this was an accident and refused to shoulder any responsibility. With the parties' negotiation for many years and even the mediation through maritime administration, there was still no result and then the plaintiff sued to the court in January of 1985. During the period of litigation, the defendant filed a counter-claim regarding the detainment of another voyage fee with the amount of RMB 20250.55 and the rescuing fee, tug repairing fee and deferment of rescuing fee after the occurrence of the average by the plaintiff, with a total amount of RMB7842.54.

The court held after trial: the defendant violated Article 9 of Certain Interim Measures for Suzhou River Administration for Voyage in Harbor regarding duty system during the anchoring of the ship. From 24:00 of December 9 to the morning of the next day, no person was arranged on duty. Meanwhile, the captain of the tug incorrectly estimated the time of rising and wane of tide, which caused the tug run aground and the water swamp into the warehouse. Therefore, the defendant should be responsible for the damage and the third party should be exempted. It is appropriate for the plaintiff to detain the fee of another voyage and should return the fee to the defendant. Presiding by the court, the plaintiff and the defendant have reached the following agreement:

(1)

The plaintiff shoulder 65% of the economic damage;

(2)

The defendant shoulder 35% of the economic damage and the defendant compensate the plaintiff RMB 16917.33;

(3)

The freight of the defendant, RMB 20250.55 detained by the plaintiff should be refunded to the defendant and the remaining should be shouldered by the defendant;

(4)

The parties have agreed the verdict made by the court regarding the litigation fee: the litigation fee of the claim, RMB 507.24 should be shouldered by the defendant; regarding the litigation fee of the counter-claim, RMB 344.9, the plaintiff should shoulder RMB 260.9 and the defendant should shoulder RMB 84.

There are the following problems in handling with the case:

1.

It is incorrect to rule the plaintiff without any responsibility shoulder most of economic loss. The occurrence of average accident was mainly because of the negligence of the carrier. If the carrier arranged the person to watch at night in accordance with the regulations, they could loosen the cable rope upon the wane of tide and make the barge move to the center of the river with the tide and avoid running aground, then the bottom of the ship will never be damaged by the abandoned iron staircase in the river. Therefore, the carrier should be mainly responsible for the economic loss of the average accident. In the accident, the plaintiff had no fault and had nothing to do with the occurrence of the accident, so he should not be responsible for the damage caused by the accident. During the mediation presiding by the court, it is no legal basis to let the plaintiff shoulder 65% of the economic loss. If it was really hard for the defendant to compensate all the economic loss, it can be paid by installments or mitigated appropriately. It will be approved that the plaintiff voluntarily gave up part of the litigation petitions in order to take care the actual difficulty of the defendant. However, it must not confuse this kind of voluntary giving up with the responsibilities shouldered under the law.

2.

Relevant departments did not be notified under the law as a third party to join in the litigation and shoulder the responsibility. This average accident is because the barge ran aground and four holes in the bottom of the ship led water swarm into the warehouse. When city construction department built the iron staircase for disembarkation, they casually threw the abandoned iron staircase into Suzhou River. Besides, the administration for sea-route is negligent of examination and did not timely find out and clear away. If there is no abandoned iron staircase in the bank, even if the barge ran ground, properly the damage would not occur to make the loss of the goods. Therefore, city instruction department and the administration for sea-route are all responsible for this average accident. It is inappropriate that the court did not run their responsibility and submit the judicial suggestion to the administration for sea-route for cleaning away the danger.

[Case Six]_ County _ District Supply and Distribution Manager Office v. _ County _ Town _ Production Cooperation over the Maritime Cargo Transportation Contract Dispute Case

The plaintiff: _ County _ District Supply and Distribution Manager Office

The defendant: _ County _ Town _ Production Cooperation

The plaintiff and the defendant have reached an agreement on May 7, 1985, stipulating the defendant carried 240 thousand open-mouthed bottles to Yongan Dock of Wenling county of Zhejiang province, with the freight of RMB 2100 and freight paid when the ship arrived at the dock. At the same day, No. 86 ship owned by the defendant was allocated by the harbor bureau and sailed after loading the aforementioned cargo by the manufacturer and harbor bureau. The plaintiff sent person to escort in transportation. The cargo and the ship arrived at Yongan Dock of Wenling County on May 11. Because the plaintiff did not pay under the contract and the defendant disagreed with the plaintiff to wholly discharge, therefore, the dispute of the parties arose. On May 14, the defendant shipped back part of cargo in lien to the dock of loading because of unreachable freight and the plaintiff's wording "if you have the ability to ship cargo back, you do it." Afterwards, the defendant asked the plaintiff to settle the aforementioned dispute many times; however, the plaintiff's attitude was negative and emphasized this was a private business activity done by Zhan_, the operator without the permission of the manager and Zhan_ was responsible for the settlement in person. Thus cargo was laid aside for 4 months. In order to mitigate the loss of cargo and custodian fee, the defendant sold the aforementioned cargo on October 10 after the approval by the local government and harbor bureau and drew the amount, RMB 20698.2. The plaintiff then sued to the court based on the breach of the contract by the defendant, detainment of cargo without permission, damage and shortage in the course of shipping and disposing the aforementioned cargo and required the defendant to return the money and compensate the damage.

The court held upon hearing: the contract dispute of maritime transportation of cargo arose because the plaintiff did not reimburse the transportation fee under the contract. The plaintiff should be responsible for the reasonable fee for shipping back and disposing cargo. Whereas, the defendant also should bear the responsibilities for the damage and shortage of the cargo caused in the course of shipping back and disposing of the aforementioned cargo. Through the mediation of the court, the plaintiff and the defendant have reached the agreement as follows:

1.

The plaintiff should reimburse the defendant cargo transportation fee and compensate the reasonable loss for shipping back and disposing of cargo, with the total amount of RMB 6150;

2.

The defendant should compensate the plaintiff the loss of cargo, with the total amount of RMB 5090;

3.

The defendant should return sold off cargo, RMB 20698.2 with the interest 82.79, totaling RMB 20780.99;

4.

The remaining amount, RMB 19720.99, deducting from the above item 3 by the balance of item 1 and 2, RMB 19720.99 should be remitted to the plaintiff within 7 days calculating from the next day after the defendant's receiving the mediation agreement;

5.

The filing fee of the case, RMB 410 should be respectively shouldered by the plaintiff and the defendant for half-and-half.

There are two problems in handling with the case:

1.

There are certain important facts which did not be clarified and proofed, for example, how many are the open-mouthed bottles for loading? How many was discharged on the destination harbor? How many was in lien, shipped back to the destination of loading and discharged on the site of construction of the defendant? Zhan_, as the operator of the plaintiff, the handling person who signed the transportation agreement with the defendant, the supercargo of cargo transportation and the party who did not pay the transportation fee on time and quarreled with the defendant is a key person in the case and an important witness as well. However, in the whole course of litigation, the court did not get any evidence from him, which was a serious oversight.

2.

Ambiguous responsibility. The defendant exerted the power of lien in the circumstances of the breach of the contract by the plaintiff who refused to pay the transportation fee. All the loss caused by lien should be shouldered by the plaintiff. Meanwhile, the plaintiff also burdened the responsibility for the damage caused by the breach of the contract. If the plaintiff could not prove the default of the defendant, it is unreasonable for the defendant to compensate the shortage and damage in the course of shipping back and disposing of open-mouthed bottles. Therefore it is inappropriate for the court to judge the defendant should bear the compensation responsibility.

[Case Seven]Shen_ and et al (four persons) v. transportation commission station along the river and outside the sea of _ county transportation company and etc. over the Maritime Cargo Transportation Damage Compensation Dispute Case

The plaintiff: Shen_ and et al (four persons)

The defendant: transportation commission station along the river and outside the sea of _ county transportation company

The defendant: Chen_, the captain of "_ _ Yu 0107 Lun"

Re: Maritime Cargo Transportation Damage Compensation Dispute

On January 23, 1985, the plaintiff, Shen _ and et al (four persons) (carrier without certificates) went to the place of the defendant, transportation commission station along the river and outside the sea of _ county transportation company ("Commission Station") to consign 51 bundles of acrylic sweaters to Fuzhou, the commission station cosigned this batch of cargo to "_ _ Yu 0107 Lun" contracted by the defendant, Chen_. At the same day, after the loading of cargo, the plaintiff, Shen_ and et al paid the transportation fee to the commission station and got the voucher issued by the station and took the train to Fuzhou to take the delivery of the goods by train. The station reached an oral agreement with Chen_ for continuous loading of other cargo on January 24. Chen_, the defendant broke the contract, let the ship go and only let other shipmen carry two round logs back to the village. At 16:00 of 24, this ship sank in the sea nearby Cangnan County because of the falling off of putty in the bottom of the ship, which led to the total loss of the ship and cargo. The plaintiff sued to the maritime court and required for ruling the commission station to compensate the loss of the cargo, RMB 20310.5. The commission station sued Chen_, requiring the compensation of the loss of cargo, RMB 20319.5. Maritime court held to incorporate two cases for trial, Shen_ and et al (four persons) as the plaintiff, while the commission station and Chen_ as the defendant.

The court held through trial: the defendant, Chen_, used the fisher which is only permitted for catch to transport cargo and let the ship navigated by other shipmen, leading to not rescue on the place when the occurrence of average accident, therefore, he should burden the main responsibility. The defendant, the commission station had known "_ _ Yu 0107 Lun" was a fisher and still agreed to transport cargo to Fuzhou by the ship and should also burden part of responsibility. The plaintiff, Shen_ and et al did not get the approval of the administration for Industry & Commerce; carry in long distance without permission. And after recognizing "_ _ Yu 0107 Lun" was a fisher and still consented its carry, thus, it should be partially responsible for the loss of the goods. Furthermore, the amount of the loss provided by the plaintiff was lack of evidence to prove, which cannot be affirmed and should be estimated again in accordance with the market price of the goods. The plaintiff and the defendant have reached the following agreement on October 12, 1985 through mediation presiding by the court:

1.

Make sure the amount of the loss of the goods is RMB 8415;

2.

The defendant, Chen_, should bear the loss of the goods, RMB 5049; the defendant, the commission station should bear the loss of the goods, RMB 2103.75; and the plaintiff, Shen_ and et al (four person) should shoulder the loss of the goods, RMB 1262.25;

3.

The amount of the loss the goods shouldered by the defendant, Chen_ should be paid to the plaintiff, Shen_ and et al (four persons) by two installments (pay RMB 2524.5 before November 15, 1985; pay the rest before June 15, 1986);

4.

The amount of the loss of the goods shouldered by the defendant, the commission station, should be paid to the plaintiff Shen_ and et al (four persons) before November 15, 1985;

5.

Regarding the filing fee of the case, RMB 446.4 the defendant, Chen_ should shoulder RMB 267.84, the defendant, the commission station should be responsible for RMB 111.6 and the plaintiff, Shen_ and et al (four persons) should shoulder RMB 66.96.

The key issues in handling with the case are:

1.

It is inappropriate to confirm the responsibility of the loss of the goods and the plaintiff should not be responsible for the loss of the goods. The transportation without certificate by the plaintiff broke the regulations of the administration for industry & commerce, as the case may be, the plaintiff can be educated or penalized, and however, the breach of the regulation by the plaintiff was not the reason for the accident. It is unreasonable to require the plaintiff, the owner of the goods to be familiar with the voyage regulations. They loaded the ship according to the notice of the commission station, which could not be regarded as negligence. Therefore, it was inappropriate for the plaintiff to shoulder part of the responsibilities.

2.

Chen_ should be regarded as the third party of the case, not the defendant. The transportation contract relationship of the case is between the plaintiff and the commission station. The plaintiff and Chen_ have no legal relationship indeed; therefore, Chen_ should not be the defendant of the case. However, Chen_ and the commission station have legal interest. So when the court handled with the contract dispute between the plaintiff and the commission station, Chen_ should be regarded as the third party of the case.