Case of dispute over contract of carriage of goods by sea between Zuoyou Furniture (Shenzhen) Co, Ltd and Schenker International (H.K.) Ltd and Schenker (H.K.) Ltd. and another

2016-03-14 09:54:11 BJT
¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Higher People¡¯s Court of Guangdong Province
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Civil Judgment

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡(2009) Yue Gao Fa Min Si Zhong Zi No.347

Appellant (plaintiff of first instance): Zuoyou Furniture (Shenzhen) Co., Ltd
Domicile: No.5 Luogang Road, Luogang Industrial District, Buji, Shenzhen
Legal representative: Huang Jinlan, board director
Agent ad litem: Liu Ning, lawyer of Guangdong Pin Ran Law Firm
Agent ad litem: Wu Ming, lawyer of Guangdong New Orient Law Firm

1st Appellee (defendant of first instance): Schenker International (H.K.) Ltd.
Domicile: 38/F, China Resources Building, No.26 Harbor Road, Wanchai, Hongkong
Legal representative: Andrew Blaise Jilling, board director

2nd Appellee (defendant of first instance): Schenker (H.K.) Ltd.
Domicile: 35/F, Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Hongkong
Legal representative: Andrew Blaise Jiling, board director

3rd Appellee: Schenkerocean Limited
Domicile: 35/F, Skyline Tower, 39 Wang Kwong Road, Kowloon Bay, Hongkong
Legal representative: Peter Rahan Sprogis, board director

Agents ad litem of the three appellees: Huang Hui, Zhang Jing, lawyers of Huang & Huang Co. Law Firm

Defendant of first instance: Schenker China Ltd.
Domicile: No.266, Yiwei Road, Pudong New Area, Shanghai City
Legal representative: Karl-Heinz Emberger, board director
Agents ad litem: Huang Hui, Zhang Jing, lawyers of Huang & Huang Co. Law Firm

With respect to the case arising from dispute over contract of carriage of goods by sea between the appellant Zuoyou Furniture (Shenzhen) Co, Ltd (hereinafter referred to as ¡°Zuoyou¡±) and the appellees Schenker International (H.K.) Ltd (hereinafter referred to as ¡°Schenker International¡±) and Schenker (H.K.) Ltd. (hereinafter referred to as ¡°Schenker (H.K.)¡±) and Schenkerocean Limited (hereinafter referred to as ¡°Schenkerocean¡±), and the defendant of first instance Schenker China Ltd (hereinafter referred to as ¡°Schenker China¡±), by virtue of dissatisfaction with the Civil Decision under ref: (2008) Guang Hai Fa Chu Zi No.414 rendered by Guangzhou Maritime Court, the appellant lodged an appeal of this case before this court. After accepting entertaining thereof, this court legitimately constituted the collegial panel to try the case, which has now been concluded.

Zuoyou alleged before the court of first instance that: Since April 2007, Zuoyou has concluded a serial of furniture purchase contracts with Reid Furniture Ltd. (hereinafter referred to as ¡°Reid¡±) from Britain by email, agreeing that Zuoyou would supply Reid with furniture such as sofas through different batches. After conclusion of the contract, Reid appointed Schenkerocean as the carrier for the goods under the foregoing contract. Ever since June 2007, Schenker China has advised Zuoyou to make booking with Schenker (H.K.) Dongguan Office who would make booking with the actual carrier Evergreen Line thereafter. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Dongguan Office issued Zuoyou an S/O and advised him to arrange shipment. After the shipment was completed, Zuoyou paid Guangzhou Branch of Schenker China for relevant local operating fees and B/L fees. As the agent of Schenkerocean, Schenker International issued to Zuoyou three sets of original Bs/L No.CNCAN1050704825, No.CNCAN1050705063, and No.CNCAN1050705064. As the agent of Schenkerocean, Schenker (H.K.) issued Zuoyou three sets of original Bs/L No.CNCAN1050704473, No.CNCAN1050704475, and No.CNCAN10507044608. After the goods arrived at the port of destination, the buyer Reid did not effect payment against documents as agreed. On 11th March 2008, Schenker International advised Zuoyou by email that the goods had been delivered to the buyer Reid. Schenkerocean illegitimately released the goods to Reid without collecting the original Bs/L, causing Zuoyou to lose ownership of property over the goods therein while the Bs/L were still under his possession and resulting in¡¡ cargos payment loss of USD243, 522, an export tax refund loss of USD26,809.42, an interest loss of CNY115,961.8 and an exchange rate loss of CNY183,961.37, all sustained by Zuoyou. Zuoyou held that Schenkerocean released the goods at the port of destination without presentation of original Bs/L, as a result of which, Zuoyou was unable to obtain the payment of the goods and suffered from loss of export tax refund, interest loss and exchange rate loss. Thereby Schenkerocean shall be held liable for the above losses and the other three defendants are at fault and shall be severally and jointly liable therefor. Zuoyou requested the court to adjudge the four defendants to indemnify Zuoyou for cargos payment loss of USD243,522, an export tax refund loss of USD26,809.42, an interest loss of CNY115,961.8 and an exchange rate loss of CNY183,961.37 and to bear the litigation fee of this case.

Schenker International defended in the first instance that: 1. Schenker International merely accepted the entrustment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue the three sets of original Bs/L No. CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 for and on behalf of Schenkerocean, and is thereby faultless in the carrier Schenkerocean¡¯s release of goods without presentation of original Bs/L and shall not bear any liability for the disputes over release of goods without presentation of original Bs/L in the subject case in accordance with law. 2. Zuoyou has already received part of the payments from Reid, which actually approved the carrier Schenkerocean¡¯s delivering of the subject goods to the consignee. The uncollected payments were due to the quality defects of the goods, which has no direct causal relation with the alleged release of goods without presentation of original Bs/L. 3. The claim amount alleged by the plaintiff is unreasonable. Firstly, Zuoyou has already received payment for the goods in the amount of USD128,526.29 from Reid, which should be deducted from the cargos value loss claimed by Zuoyou. Secondly, the relevant evidence submitted by Zuoyou to prove the local freight as well as the operating and handling fee, could not demonstrate that such fees were actually incurred from the subject goods or that Zuoyou has actually effected payment of such fees. Even if it was so that such fees were incurred from the subject goods and has been actually paid, such fees have been included in the actual value of the goods loaded on board. Thus it would be a repeated claim for cargos payment. Thirdly, the law in our country stipulates that the amount of indemnity to be paid by the carrier to the holder of original B/L for release of goods without presentation of original B/L shall be calculated according to the value of goods loaded on board plus freight and insurance, and the loss for export tax refund and exchange rate claimed by Zuoyou goes beyond the statutory indemnity scope. As a result, Schenker International required the court to reject the litigation requests filed by Zuoyou against Schenker International.

Schenker China defended in the first instance that: 1.Zuoyou did not provide any evidence to prove that Schenker China was the actual forwarder of Schenker International in Mainland China; 2. Schenker China has no relationship with Zuoyou under contract of carriage, nor has he ever participated in the carriage and delivery of the subject goods. Therefore, Zuoyou shall not be entitled to request Schenker China to bear liability for the alleged release of goods without presentation of original Bs/L in the subject case.

Schenker (H.K.) defended in the first instance that: 1. Schenker (H.K.) merely accepted the entrustment of the carrier Schenkerocean and acted as the agent of Schenkerocean to sign and issue three sets of original Bs/L No. CNCAN1050704473, CNCAN1050704475 and CNCAN1050704608 for and on the behalf of Schenkerocean, is thereby faultless in the carrier Schenkerocean¡¯s release of goods without presentation of original B/L and shall not bear liability for the disputes over release of goods without presentation of original Bs/L in the subject case in accordance with law. 2. The goods under the three sets of original Bs/L signed and issued by Schenker (H.K.) were delivered to the consignee Reid during July 2007 and August 2007 respectively, and Zuoyou confirmed that he was aware of the delivery of the goods on 11th March 2008. Zuoyou did not lodge any litigation against Schenker (H.K.) until 30th March 2009, which exceeded the statutory time limit for lodging litigation.

Schenkerocean rebutted in the first instance that: the goods under the six sets of Bs/L carried by Schenkerocean were delivered to the consignee Reid during the period from July 2007 to December 2007, and Zuoyou confirmed that he was aware of the delivery of the goods on 11th March 2008. Zuoyou did not lodge any litigation against Schenkerocean until 19th May 2009, which exceeded the statutory time limit for lodging litigation. Schenkerocean required the court to reject the litigation requests filed by Zuoyou.

Upon hearing, the court of first instance ascertained that:

Since September 2006, Zuoyou has developed long-term furniture export trade cooperation with Reid. The subject goods are furniture under Bs/L No.CNCAN1050704473, CNCAN1050704475, CNCAN10507044608, CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064, whose total value amounts to USD243,522 as recorded therein. For carriage of the above goods under the 6 sets of Bs/L, Zuoyou made booking with Schenker (H.K.) Dongguan Office during the period from June 2007 to October 2007. After obtaining shipping space from Evergreen Line, Schenker (H.K.) Dongguan Office issued to Zuoyou an S/O, notifying him to arrange shipment. After the shipment was completed by Zuoyou, Schenker (H.K.) immediately issued to Zuoyou an expense list covering such charges as THC, document charges and commission charges, which totaled CNY48,853. Zuoyou effected payment of the above amount to Sinotrans Guangdong International Forwarding Co., Ltd, Guangzhou Branch (hereinafter referred to as ¡°Sinotrans Guangzhou¡±). Sinotrans Guangzhou issued Zuoyou special invoice of international freight forwarding agency for the expenses incurred under the 6 sets of Bs/L. During the court hearing, all parties involved confirmed that the cargos under the 6 sets of Bs/L had been shipped to the port of destination from July to December 2007, and the carrier, Schenkerocean, actually released the cargos to the purchaser, Reid, without presentation of original Bs/L. Zuoyou received the email on 11th March, 2008 from Schenker International and was informed that the cargos had been delivered to Reid at the port of destination.

The three original bills of lading with B/L No. CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International and the personal seal of Zhou Guoqiang. The other three original bills of lading with B/L No. CNCAN1050704473, CNCAN1050704475 and CNCAN10507044608 were stamped by the seal of Schenker (H.K.) and the personal seal of Zhou Guoqiang. The top left corners of the said six bills of lading were printed with ¡°SCHENKERocean¡± in large letters, with Zuoyou stipulated as the shipper, Reid as the consignee and the Notify Party, Shenzhen Yantian as the port of loading and Scotland GRANGEMOUTH as the port of destination therein. On the lower right corner, it was recorded in red letters (other information was all recorded in black letters) that ¡°Signed and issued as agents for Schenkerocean as Carrier by¡±, and on the back side thereof, the ¡°definition¡± terms identify that the ¡°carrier¡± of the B/L refers to ¡°the party under whose name the B/L is issued, which is Schenkerocean¡±. The top left corner of all 6 S/Os under the 6 subject Bs/L, were recorded with ¡°Schenker (H.K.) -Dong Guan Office¡±, the top right corner with ¡°Acknowledgement of Booking only for Schenker (H.K.)¡±, and the ¡°document required¡± column with ¡°Schenker Ocean B/L¡±. The full name of Schenker Ltd -Dongguan Office is Schenker (H.K.) Ltd -Dongguan Representative Office£¬and with Zhou Guoqiang as its chief representative and its registered number as ¡°No. Qi Wai Yue Wai Zhu Zi Di 000393¡±. During the hearing, all parties involved said they were unable to confirm the relationship between Zhou Guoqiang and the fourth defendants.

With respect to the loss claimed by Zuoyou, all parties involved raised no objection to the cargo value of USD 243.522 under the six bills of lading, which was also affirmed by the court of first instance. Schenker International alleged that the purchaser, Reid, had effected payment of USD128.526.29 as part of the payment for goods and submitted the payment vouchers thereof as evidence. Despite that such payment vouchers as the Scottish Bank remittance slip submitted by Schenker International could prove that the purchaser, Reid, had indeed paid USD128,526,29 in different sums to Zuoyou as payment for the goods, there was a series of sales and purchases of goods and cargo payment between Zuoyou and Reid due to their long-term business relationship. Given that, such payment vouchers rendered by Schenker International could not be used to refer to the goods under the 6 subject bills of lading, and therefore could not prove the amount of USD 128,526,29 was effected as payment for goods under the 6 subject bills of lading. Thus they were not confirmed by the court of first instance. The RMB48, 853 loss of local freight and relevant handling charges claimed by Zuoyou is charges that happened before loading. It was the necessary cost for Zuoyou to export goods. The cost should have been included in the actual value at the time of loading. Zuoyou has no right to double claim the charges. Zuoyou rendered no evidence to prove the USD26.809.42 loss of export rebate it claimed, and therefore was not affirmed by the court of first instance. Zuoyou claimed a RMB183. 961. 37 loss of foreign exchange rate. Owing to the contract breach of the defendant, Zuoyou didn¡¯t receive the payment in time, causing Zuoyou unable to exchange the payment in time and to avoid the risk of depreciated US Dollars against RMB. Therefore, the foreign exchange rate loss of Zuoyou should be indemnified by the defendant as per the exchange rate on the agreed day of payment.

Zuoyou filed a litigation before this court on 19th August 2008, with Schenker International and Schenker China as the defendants. During the trial process, Zuoyou applied to add Schenker (H.K.) and Schenkerocean as the co-defendants on 2nd April 2009 and 19th May 2009 respectively.

The court of first instance holds that this case is arising from dispute over the contract of carriage of goods by sea. During the trial, all the parties involved agreed that laws of the P. R. China are applicable. According to Article 269 of Maritime Code of the People¡¯s Republic of China, laws of the P. R. China are applicable to settle substantive disputes in this case.

After concluding the export trade contract with the purchaser, Reid£¬Zuoyou contacted Schenker (H.K.) -Dongguan Office and conducted such services as booking, shipment, payment as required by the office. It was clearly stipulated in the six subject shipping orders given by Schenker (H.K.) -Dongguan Office to Zuoyou that Schenker (H.K.) -Dongguan Office accepted the booking on behalf of Schenker (H.K.). Among the six bills of lading held by Zuoyou, the three original bills of lading with B/L No. as CNCAN1050704825, CNCAN1050705063 and CNCAN1050705064 were stamped by the seal of Schenker International and the personal seal of Zhou Guoqiang. The other three original bills of lading with B/L No. as CNCAN1050704473, CNCAN1050704475 and CNCAN10507044608 were stamped by the seal of Schenker (H.K.) and the personal seal of Zhou Guoqiang. However, from the contents of the Bs/L, on the lower right corner of the bills, it was written in red letters (other information was all written in black letter) that ¡°Signed and issued as agents of Schenkerocean as Carrier by¡±, and on the top left corner ¡°Schenkerocean¡± in large printed letters, which could be considered that through what was recorded on the bills of lading Schenkerocean Ltd is shown as the carrier, authorizing Schenker International and Schenker (H.K.) to issue the bills of lading, and Schenker International and Schenker (H.K.) are the agents of Schenkerocean. Zuoyou raised no objection while accepting the bills of lading, thus it could be regarded that Zuoyou recognized the proxy relation between Schenkerocean and Schenker (H.K.) and Schenker International, and was aware that Schenker International and Schenker (H.K.) undertook civil legal acts under the name of Schenkerocean. Zuoyou also confirmed the establishment of relationship under contract of carriage of goods with Schenkerocean. To say the least, even though Zuoyou deemed that Schenker International and Schenker (H.K.) established the contract relation under their own names, according to Article 402 of Contract Law of the People's Republic of China, ¡°Where the agent enters into a contract with a third party under the agent¡¯s name within the scope of authorization by the principal, and if the third party is aware of the proxy relationship between the agent and the principal, the said contract shall directly bind the principal and the third party, unless truthful evidence proves that the said contract binds only the agent and the third party¡±, it shall be considered that parties concerned stated on the six bills of lading are Zuoyou and Schenkerocean, under the circumstances where Zuoyou hasn¡¯t rendered any evidence to prove the subject contract of carriage of goods binds only Zuoyou, Schenker International and Schenker (H.K.).

Zuoyou believed that Schenker International has neither registered with the Administration for Industry and Commerce in China, nor paid taxes in accordance with laws; Schenker (H.K.) has neither registered with the Administration for Industry and Commerce in China, nor paid taxes in accordance with law and hasn¡¯t yet acquired the NVOCC qualification from the Ministry of Communications; Schenkerocean obtained the NVOCCC qualification, yet it failed to establish the corporate legal person in China according to law. The three defendants violated relevant regulations in the Regulations of the PRC on International Maritime Transportation put forward by the State Council and ¡°the Promulgation on the Implementation of the Regulations of the PRC on International Maritime Transportation¡± put forward by the Ministry of Communications, which constitutes the act of illegal proxy, and the three defendants should bear several and joint liabilities therefor. Nevertheless, Zuoyou has not rendered any valid evidence to prove the above facts. Pursuant to the provisions of Article 14 of Interpretation (2) of the Supreme People¡¯s Court on Several Issues concerning the Application of the Contract Law of the People¡¯s Republic of China, ¡°mandatory provisions in Paragraph 5 of Article 52 of Contract Law means mandatory provision of competence¡±, even though the three defendants failed to establish corporate legal person in China or obtain NVOCC qualification, it was the administrative mandatory provision that they violated, which would not necessarily invalidate the proxy act or the contract of carriage of goods.

Zuoyou filed the lawsuit over the loss caused by the carrier of cargos involved releasing the cargos to the consignee without presentation of original B/L. Pursuant to the provisions of Article 71 of the Maritime Code of the People¡¯s Republic of China, a bill of lading is a document based on which the carrier undertakes to deliver the goods against surrendering the same, and the carrier has the obligation to release goods based on the original B/L. In this case, Schenkerocean is the party liable for the act of releasing goods without presentation of original B/L. As per the provisions of Paragraph 2 of Article 63 of General Principles of the Civil Law of the People's Republic of China, ¡°An agent shall perform civil juristic acts in the principal¡¯s name within the scope of the power of agency. The principal shall bear civil liability for the agent¡¯s acts of agency¡±, the liability for releasing goods without presentation of¡¡original B/L shall be borne by the carrier itself rather than its agent. Since Schenker International and Schenker (H.K.) are only agents of the carrier Schenkerocean, rather than concerned parties in the relationship of contract of carriage, they shall not be liable for Schenkerocean¡¯s act of releasing goods without presentation of original B/L. Given the current evidences, Schenker China had no connection with the carriage of the goods involved and didn¡¯t participate in any part of the carriage of the goods, and therefore shall not be liable for Schenkerocean¡¯s act of releasing goods without presentation of the original B/L, either.

Cargos under the six subject bills of lading arrived at the port of destination during July to December in 2007, and was actually delivered to Reid by the carrier, Schenkerocean. Getting to know on 11 March 2008 the carrier¡¯s release of goods without presentation of the original B/L, Zuoyou applied to add Schenkerocean as co-defendant of this case on 19 May, 2009. Pursuant to Article 14 of Provisions of the Supreme People¡¯s Court on Several Issues concerning the Application of Law during the Trial of Cases about Delivery of Goods Without an Original Bill of Lading,¡¡where the holder of the original B/L files a lawsuit against the carrier by reason of the carrier¡¯s delivery of goods without presentation of original B/L, provisions in Article 257 of Maritime Code of the P. R. China Shall be applicable. The limitation of action is one year, counting from the day the goods should have been delivered by the carrier¡±, Zuoyou failed to render any valid evidence to prove that the limitation period shall be suspended or discontinued, and its lawsuit against Schenkerocean has surpassed the one-year limitation of time. Therefore, it shall not be entitled the right to win the lawsuit.

In conclusion, pursuant to the provisions of paragraph 2 of Article 63 of the General Principles of the Civil Law of P. R. China and the provisions of Article 257 of the Maritime Code of the P. R. China, the judgment is hereby rendered as follows:

The litigation requests filed by Zuoyou Furniture (Shenzhen) Co, Ltd are hereby rejected. The court fee of this case is RMB 24,456, all of which shall be borne by Zuoyou Furniture (Shenzhen) Co, Ltd.

By virtue of dissatisfaction with the Civil Judgment rendered by the court of first instance, Zuoyou lodged an appeal to this court, requesting: 1. to set aside the judgment of first instance; 2. to adjudge that Schenker International, Schenker (H.K.), and Schenkerocean jointly indemnify Zuoyou for loss of payment of the goods in the amount of USD243,522, interest loss of RMB115,961.80, export tax rebate loss of USD26,809.42 and foreign exchange loss of USD183,961.37; 3. to adjudge that the litigation cost of the first and second instances shall be borne by Schenker International, Schenker (H.K.), and Schenkerocean, with reasons as follows: 1. The court of first instance rendered that ¡°SCHENKERocean¡± recorded on the top left corner of and on the subject bills of lading represents SCHENKEROCEAN LIMITED and rejected the litigation requests of Zuoyou on grounds that ¡°The plaintiff raised no objection while accepting the bills of lading. Thus it could be regarded that the plaintiff recognized the proxy relationship between Schenkerocean and Schenker (H.K.) and Schenker International, and was aware that Schenker International and Schenker (H.K.) undertook civil legal acts in the name of Schenkerocean. The plaintiff also confirmed the establishment of relationship under contract of carriage of goods with Schenkerocean¡± and ¡°On 11th March, 2008 the plaintiff acknowledged that the carrier had already released the goods without first obtaining the original Bs/L, and on 19th May, 2009 applied to add Schenkerocean as co-defendant of this case. But its lawsuit against Schenkerocean has surpassed the limitation of action of one year. Therefore, it shall not be entitled to win the lawsuit¡±. The aforesaid judgment made by the court of first instance went against the facts and law. First of all, ¡°SCHENKERocean¡± did not necessarily represent SCHENKEROCEAN LIMITED and none of the 6 sets of bills of lading was recorded with a full name of SCHENKEROCEAN LIMITED as the carrier; while carrying the aforesaid goods for Zuoyou, Schenkerocean hadn¡¯t yet obtained the NVOCC qualification from the Ministry of Communication of the P. R. China, and there was no evidence to prove that Schenkerocean had filed the bills of lading with letters of ¡°SCHENKERocean¡± on record for reference of exclusiveness. Therefore, when Schenker International and Schenker (H.K.) issued the bills with letters of ¡°SCHENKERocean¡±, such bills of lading could not be deemed as the exclusive ones of Schenkerocean and thus be used to confirm the identity of Schenkerocean as the carrier. Zuoyou couldn¡¯t confirm or acknowledge in light of such bills of lading, that Schenkerocean was the carrier, nor its proxy relationship with Schenker International and Schenker (H.K.) Secondly, Schenker International and Schenker (H.K.) had neither presented to Zuoyou any document or power of attorney indicating their proxy relationship with Schenkerocean, nor made sufficient implication or statement on the content of the bills of lading to show their identity as the agents and Schenkerocean as the actual carrier, not when Zuoyou made the booking or when Schenker International and Schenker (H.K.) signed and issued the 6 sets of bills of lading in their own names and had Dongguan Office present them to Zuoyou. The aforesaid 6 sets of bills of lading were all made in English format. Both Schenker International and Schenker (H.K.) have the letters ¡°SCHENKER¡± in their English name. And ¡°SCHENKER¡± in ¡°SCHENKERocean¡± recorded on the top left corner of the bills was deliberately made in capital and ¡°ocean¡± in lowercase. Even professional translation companies would believe that ¡°SHENKERocean¡± represented Schenker International, which justified Zuoyou¡¯s understandings that the carrier in the bills of lading was Schenker International and Schenker (H.K.). Pursuant to the provisions of Article 40, Article 41 and Article 42 of the Contact Law and the provisions of Article 10 of Interpretation (2) of the Supreme People¡¯s Court on Several Issues concerning the Application of the Contract Law of the People¡¯s Republic of China, the standard terms used by Schenker International and Schenker (H.K.) with a view to exempting their liability is invalid and their claim to be the agents of Schenkerocean is groundless. Schenker International and Schenker (H.K.) shall be identified as the carrier and held liable for indemnity and breach of contract, as understood by Zuoyou. To say the least, although Schenker International and Schenker (H.K.) signed and issued the Bs/L to Zuoyou in their own names within the scope of authority granted by Schenkerocean, they failed to present to Zuoyou any legal documents or power of attorney revealing their status as agents, nor did they make sufficient implication or statement on the contents of the Bs/L, but intentionally concealed such material facts as their status as agents and the identity of the actual carrier, which violated the principle of good faith and caused Zuoyou to suffer from actual loss. Pursuant to stipulations in Paragraph 2 and Paragraph 3 of Article 42 in the Contract Law, Schenker International and Schenker (H.K.) shall indemnify Zuoyou for the loss suffered therefrom. Thirdly, before Schenkerocean obtained the NOVCC qualification and registered its B/L for record in China, and prior to Schenkerocean¡¯s retroactive recognition to Zuoyou for the subject Bs/L signed and issued by Schenker International and Schenker (H.K.), the ascertainment that the carrier under the subject Bs/L was Schenkerocean lacks legal basis and shall not be confirmed or recognized by Zuoyou. After the format of the subject Bs/L was registered for record in China, Schenker International and Schenker (H.K.) were not registered for record as the designated agents simultaneously. Therefore, prior to Schenkerocean¡¯s retroactive recognition to Zuoyou for the subject Bs/L signed and issued by Schenker International and Schenker (H.K.), the agency act of Schenker International and Schenker (H.K.) could not be deemed as valid. Furthermore, in the email sent by Schenker International to Zuoyou on 11th March 2008, he notified Zuoyou of the delivery of the goods, but did not mention that the carrier who delivered the goods was Schenkerocean. Consequently, from the time of booking shipping space till 19th May 2009, Zuoyou was never told and did not affirm either that Schenker International and Schenker (H.K.) were merely the agents; with respect to the fact that current Schenkerocean was the actual carrier, Schenker International and Schenker (H.K.) did not advise or imply it to Zuoyou on 19th May 2009, either. 2. As regards the time limit for litigation of this case, Zuoyou learnt by email on 11th March 2008 that the subject goods had been delivered without presentation of the original Bs/L and lodged the litigation before the court on 19th August 2008, listing Schenker International and Schenker (H.K.) as the defendants. Therefore the time limit for litigation against Schenker International and Schenker (H.K.) that was discontinued from the date the lawsuit was lodged hasn¡¯t yet exceeded the statuary time limit of one year. Since Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) in signing and issuing the Bs/L, Zuoyou opined that Schenkerocean retroactively recognized the agency act of Schenker International and Schenker (H.K.). Pursuant to the provisions of Article 11 of Interpretation (2) of the Supreme People¡¯s Court on Several Issues concerning the Application of the Contract Law of the People¡¯s Republic of China, such retroactive recognition shall take effect as of the date Schenkerocean¡¯s recognition reached Zuoyou. After Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) on 19th May 2009, Zuoyou added Schenkerocean as the co-defendant on the very date; the time limit for litigation was discontinued thereupon and has never exceeded the statutory time limit of one year, thus Zuoyou shall have the right to win the lawsuit in accordance with law. Thereby, the ascertainment by the court of first instance that the time limit for the Zuoyou to lodge the lawsuit against Schenkerocean exceeds one year is erroneous and shall be corrected in accordance with law. 3. Since the six subject original Bs/L were all signed and issued by Schenker International and Schenker (H.K.), even though Schenkerocean retroactively recognized the act as agency relationship afterwards, prior to the registration of the subject B/L format for record and the confirmation by Zuoyou on the Schenkerocean¡¯s retroactivity, such retroactive recognization shall not have any legal force against Zuoyou, and Schenker International and Schenker (H.K.) shall indemnify Zuoyou for the loss suffered therefrom; meanwhile, by right of the voluntary retroactive recognition of Schenkerocean, Schenkerocean shall be jointly liable for such loss sustained by Zuoyou; after the format of the subject Bs/L was registered for record, as the exclusive user of the Bs/L, Schenkerocean confirmed the agency act of Schenker International and Schenker (H.K.) and thereby shall be liable for the loss thus suffered by Zuoyou; besides, since Schenker International and Schenker (H.K.) intentionally concealed material facts when signing and issuing the Bs/L, which violated the principle of good faith, they shall indemnify Zuoyou for the loss thus sustained. Therefore, the loss arising from the carrier¡¯s delivery of goods under the six subject Bs/L without presentation of the original Bs/L shall be jointly borne by Schenker International, Schenker (H.K.) and Schenkerocean.

Schenker International, Schenker (H.K.) and Schenkerocean defended in the second instance that: 1. the subject S/O and Bs/L all served to demonstrate that the carrier was Schenkerocean. The Bs/L indicated in red letters that it was signed and issued by Schenker International, Schenker (H.K.) on behalf of Schenkerocean. It was Zuoyou¡¯s own fault for failing to ascertain the relationship thereunder and the carriage relationship stipulated by the Bs/L shall not be denied. 2. Although the word ¡°schenker¡± are found in the names of all the defendants, they completely vary from each other, and represent independent legal persons. It was Zuoyou¡¯s own fault to mix up each subject in light of one English word in common. 3. The agency relationship between Schenkerocea and Schenker International and Schenker (H.K.) exists from the very beginning instead of being recognized retroactively in the first instance. 4. Schenkerocea acquired the NVOCC qualification from the Ministry of Communications in November 2006. Therefore, the act of agency in this case is valid. To say the least, even if Schenkerocea hasn¡¯t obtained the NVOCC qualification, the civil juristic act of signing and issuing Bs/L on behalf of the carrier remains valid. The litigation filed by Zuoyou went beyond the limitation of actions. The defendants request the court to reject the appeal and uphold the original judgment.

Schenker China agreed with Schenker International, Schenker (H.K.) and Schenkerocean.

After hearing, the court of second instance finds the fact ascertained by the original judgment to be true and is hereby confirmed by this court.

This court holds that: this case is arising from dispute over the contract of carriage of goods by sea. After Zuoyou concluded the booking of shipping space with Schenker (H.K.) -Dongguan Office, Schenker (H.K.) and Schenker International issued the 6 sets of the subject Bs/L. Schenker (H.K.) and Schenker International claimed that they signed and issued the Bs/L on behalf of Schenkerocean but failed to assume the obligation of express by notifying Zuoyou of their principal-agent relationship with Schenkerocean. Besides, their English names are similar to that of Schenkerocean. Meanwhile, the 6 sets of Bs/L were stamped by the personal seal of Zhou Guoqiang, chief representative of Schenker (H.K.) -Dongguan Office. Given the above, Schenker (H.K.) and Schenker International shall be ascertained as the carrier. Schenker (H.K.) and Schenker International claimed themselves to be agents of Schenkerocean but failed to provide clear power of attorney, which was not clear power of attorney as to the authority conferred. Pursuant to the provisions of Paragraph 3 of Article 65 of General Principles of the Civil Law of the People's Republic of China, ¡°If the power of attorney is not clear as to the authority conferred, the principal shall bear civil liability towards the third party, and the agent shall be held jointly liable¡±, Schenker (H.K.), Schenker International, and Schenkerocean shall be held jointly liable. Schenkerocean claimed that he had acquired the NVOCC qualification from China by the time of the subject carriage but failed to provide evidence to prove it. Therefore, it shall be ascertained that Schenkerocean had not obtained qualification to operate non-vessel shipping business within the territory of China by the time of the subject carriage and that it was illegal for Schenker (H.K.) and Schenker International to operate non-vessel shipping business within the territory of China as agents for Schenkerocean and thereby they shall be held jointly liable as well.

With respect to the limitation of actions, Schenkerocean, Schenker (H.K.) and Schenker International shall be held jointly liable for the subject carriage of the goods. The limitation actions shall be discontinued as Zuoyou filed a lawsuit against any of them. The lawsuit filed by Zuoyou against Schenker International hasn¡¯t yet surpassed the limitation of action as prescribed by Maritime Code of the People's Republic of China, and thereby Zuoyou shall not lose the right to win the case. Zuoyou is entitled to claim that Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for loss of payment of the goods and the interest thereof, but his request for export tax refund loss and exchange rate loss lacks grounds and thereby shall not be supported.

To sum up, the erroneous facts ascertained by and improper handling of the first instance, are hereby corrected by this court. Parts of the reasons for Zuoyou¡¯s appeal are well-grounded and hereby supported by this court, while the rest are not and hereby rejected in according with law. Pursuant to Provision 3 of Paragraph 1 of Article 153 of Civil Procedure Law of the People's Republic 0f China, the judgment is rendered as follows:

1. The original judgment is hereby set aside.

2. Schenker (H.K.), Schenker International and Schenkerocean shall jointly indemnify Zuoyou in the amount of USD243,522 and the interest thereof, which shall be based on the principal in RMB converted from the above amount in USD and calculated as per the interest of liquidity loans over corresponding period promulgated by People's Bank of China, counting from 11th March 2008 till the date of actual payment.

The above obligation of payment shall be fulfilled within 10 days as of the date this judgment enters into effect. In case of failing to make the payment within the period designated by the judgment, interest on the debt for the delayed period shall be doubled.

The entertaining fee of the first instance is RMB24,456, of which, Zuoyou shall pay RMB4,377, and Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for RMB20,079. The entertaining fee of the second instance is RMB24,456, of which, Zuoyou shall pay RMB4,377, and Schenker (H.K.), Schenker International and Schenkerocean shall be jointly liable for RMB20,079.

This judgment is final.





¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Presiding judge: Ouyang Zhenyuan
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡Acting judge: Mo Fei
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡Acting judge: Li Yunchao
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡25th December 2009

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡Higher People¡¯s Court of Guangdong Province (stamp)

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ This copy is proved to be identical with the original after checking.


¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡Clerk: Jiao Xiaoding




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