Qingdao Maritime Court of the People’s Republic of China Civil Judgment (2016) Lu 72 Min Chu No.1326

　　Qingdao Maritime Court of the People’s Republic of China

　　Civil Judgment

　　(2016) Lu 72 Min Chu No.1326

　　Plaintiff: Shandong Foreign Trade Ruifeng Co., Ltd. Residence: No.51, Taiping Road, Qingdao, Shandong Province, People’s Republic of China.

　　Legal representative: JiaoJian, General Manager.

　　Authorized agent ad litem: SongJinsheng, lawyer of Shanghai Allbright Law Office (Qingdao).

　　Authorized agent ad litem: WangHaitao, lawyer of Shanghai Allbright Law Office (Qingdao).

　　Defendant: Nippon Yusen Kabushiki Kaisha. Residence: 3-2, Marunouchi 2 Chome, Chiyoda-Ku, Tokyo, 100-0005,Japan.

　　Legal representative: Naoya Tazawa, Vice President.

　　Authorized agent ad litem: YuanHui, lawyer of Guangdong Wang Jing & CO. (Qingdao) Office.

　　Authorized agent ad litem: WangKai, lawyer of Guangdong Wang Jing & CO. (Qingdao) Office.

　　After the case about disputes on contract of carriage of goods by sea between the plaintiff Shandong Foreign Trade Ruifeng Co., Ltd. (hereinafter referred to as “Ruifeng Company”) and the defendant Nippon Yusen Kabushiki Kaisha (hereinafter referred to as “NYK Company”) was filed on 28 July 2016, the Court applied general procedures for trial. In September 2016, NYK Company applied to the Court for postponing the trail on the grounds of the need to notarize the evidentiary materials formed in Brazil, which was granted by the Court in accordance with the laws. The Court organized an exchange of evidence on 12 May 2017. Ruifeng Company appointed agent ad litem WangHaitao and NYK Company appointed agent ad litem YuanHui and WangKaito participate in the evidence exchange. In the process of evidence exchange, NYK Company applied to the Court for an extension of the period for producing evidence on the grounds that some evidence still needed to be notarized. The Court held a public hearing on 7 September 2017. Ruifeng Company appointed agent ad litem SongJinsheng and NYK Company appointed agent ad litem YuanHui and WangKai to participate in the proceedings. The trial of this case has been concluded.

　　Ruifeng Company raised the following claims towards the Court: to order NYK Company to deliver the goods and, in the failure of delivery, to compensate Ruifeng Company for the loss in amount of US $328,300 and the corresponding interest. The facts and reasons are as follows: in June 2015, Ruifeng Company booked cabins with NYK Company Qingdao Branch, and NYK Company issued five sets of original bills of lading through an agent on 5 July 2015. The bills of lading state that NYK Company is the carrier, the port of loading is Qingdao, China, and the port of discharge is Santos, Brazil. On 17 August 2015, the goods under the bills of lading successfully arrived in Santos, Brazil, but NYK Company delivered the goods to others without authorization, resulting in Ruifeng Company’s loss of both the money and the goods.

　　NYK Company argued that firstly, Ruifeng Company failed to prove that the goods were delivered without a bill of lading at the port of destination, nor could it prove its own losses. Secondly, according to the laws of Brazil, the carrier shall deliver the goods arriving at the port to the port authority or municipal wharf, and the carrier cannot deliver the goods directly to the consignee. Moreover, on the front of the bill of lading, NYK Company has indicated the risk of delivery without bill of lading in Brazil and it also stipulates that NYK Company is exempt from such liability. Therefore, NYK Company shall not be responsible for the delivery of the goods without the original bill of lading.

　　The parties submitted evidence on the claims in accordance with the law, and the Court organized evidence exchange and cross-examination. The Court confirmed the following evidence which brought about no objection from the parties: the superficial authenticity of Ruifeng Company’s evidence 1, 2-2, 3-1, 4-2, 4-3, 5; and the superficial authenticity of NYK Company’s evidence.

　　For controversial evidence, the Court determined as follows: Ruifeng Company’s evidence 2-1, the authenticity of the original stamped with the company’s seal shall be recognized, and the authenticity of the rest shall not be recognized; 3-2 is original, and therefore, its authenticity is recognized; 4-1, 4-4 are printed copies, and hence, they shall be comprehensively analyzed in combination with other evidence.

　　The Court ascertained that:

　　On 5 July 2015, the agent of NYK Company issued five sets of original bills of lading numbered NYKS2410492841, NYKS2410492842, NYKS2340856881, NYKS2340856882 and NYKS2340856883, each in triplicate. The shipperspecified in the bills of lading is SHADONEG FOREIGN TRADE RUIFENG CO., LTD, and the consignee is ZION TRADE SERVICE LTDA-EPP. The name of the vessel and the voyage is MATAQUITO 1527E;the port of loading is Qingdao Port of the People’s Republic of China, and the port of discharge is Port of Santos, São Paulo, Federal Republic of Brazil; the carrier’s liability period is CY to CY.There are 2 containers under each set of the bill of lading, of which the numbers are NYKU7141801, FSCU5692301; TTNU8020001, SZLU9080313; NYKU7112824, NYKU7109029; NYKU7125610, NYKU7121148; TCLU1352196, and NYKU7938992. The name of the goods is garlic.The business unit and the shipping unitspecified on the export declaration form of the goods involved is Ruifeng Company; the country of arrival is Brazil; and the commodity name is garlic. The gross weight of the goods of all ten containers on the export declaration form is consistent with the gross weight of the goods recorded on the surface of five sets of bills of lading. Among them, the export declaration of four containers numbered FSCU5692301, NYKU7141801, SZLU9080313 and TTNU8020001 shows a value of US $137,160, while the export declaration of the other six containers shows a value of US $205,740. Combined with bills of lading numbered NYKS2410492841, NYKS2410492842 and the export declaration of the first four containers, it is known that the value of the goods under the two bills of lading is the same, which is US $68,580.

　　According to a statement issued by the port of EMBRAPORT in Santos, Brazil, the ten containers involved were discharged at the port on 17 August2015 and subsequently transferred from the port of EMBRAPORT to the port of TRANSBRASA for storage on the same day. NYK Company’s agent in Brazil confirmed the above facts. The information inquiry records of the ten containers involved show that all the containers have left the port. NYK Company stated that it no longer controlled the goods after they had been delivered to the Brazilian port authorities on 17 August2015 and did not know where the goods had gone.

　　NYK Company asserted that, under the Brazilian Act, the carrier is not obliged to actually deliver the goods to the importer on the basis of an original bill of lading. In accordance with Article 7 of the 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, NYK Company shall not bear the civil liability for delivering the goods without an original bill of lading.

　　NYK Company submitted the following laws of Brazil:

　　Decree No.116 issued on 25 January1967, whichregulates the operation of the carriage of goods by water involving Brazilian ports, outlines the responsibilities of the port and deals with misplacement and cargo damage. The relevant contents of the Decree are as follows: Article 2 stipulates that the responsibility of the port authority begins with the entry of the goods into the warehouse, yard or other places designated for storage, and terminates when the goods are effectively delivered to the vessel or to the consignee. Article 3 stipulates that the liability of a vessel used for transport shall begin at the time of receiving and loading the goods until the goods are delivered to the port authority or wharf at the port of destination.

　　Article 754 of Section IIICarriage of Goods of Decree No. 10.406 on 10 January 2002 provides thatthe goods shall be delivered to the consignee or to the person producing the endorsed instrument.

　　Articles 18, 21, 54 and 55 of Regulatory Directive No. 680 on 2 October 2006 specify respectivelythe documents to be included in the import declaration form, the tax analysis to be carried out on the import declaration form after the submission of the application and the selectedchannels for customs clearance, the documents to be submitted by the importer forwithdrawingthe goods and the obligations of the customs depository.

　　Articles542, 543 and 553 of Decree No. 6759 of 5 February 2009 respectively stipulates customs clearance procedures for importing,customs clearance obligation for all imported goods and customs clearance instructions for importing.

　　NYK Company provided a statement from a professional maritime law firm in Brazil. With regard to the issue whether “the laws of Brazil require the carrier to deliver the imported goods after discharge to the customs or port authorities rather than the consignee”, the statement declares that the laws of Brazil clearly stipulate that the delivery of the goods is made by the carrier to the port authority under customs control. Article 8 Paragraph 3 under the Decree No. 116/67 stipulates that the carrier’s liability begins from when the goods are discharged and ends when the goods are delivered to the port or wharf of the destination. Similarly, Article 543 of Decree No. 6759/09 provides the responsibility of the customs that all goods imported from abroad should be cleared regardless of whether the importer should pay or has a basis for paying the import duties. Accordingly, the statement concludes that the goods cannot be delivered directly by the carrier to the consignee or importer. In terms of the issue “who is responsible for controlling the discharged goods and delivering the goods to the consignee”, the statement declares that the consignee or importer is required to submit customs clearance documents and produce a bill of lading to the terminal or warehousein order to withdraw the goods. On the issue of “what documents the consignee needsto extract the goods from the customs or the terminal”, the statement declares that Article 54 of Decree No. 680 in 2006 provides for the documents required for the withdrawal, and Article 55 sets out the duty of review undertaken by the customs depository.

　　Ruifeng Company held that it doesn’t mean the original bill of lading is not required to deliver the goods in Brazilian ports, instead the importer needs to obtain the delivery order from the actual carrier by virtue of its original maritime bill of lading to further proceed the goods withdrawal process. Ruifeng Company demonstrated the Instructions by the Bureau of Fair Trade of the Ministry of Commerce on the New Regulations on the Delivery of Goods Without An Original Bill of Lading in Brazil, which was published on the website of the Ministry of Commerce of the People’s Republic of China on 6 June 2013. It illustrates that the Ministry of Finance in Brazil executed Decree No. 1356 from 6 May 2013. The Decree has revised certain articles under the Decree No. 680. In accordance with the new Decree, after the clearance of imported goods, the importer may withdraw the goods without an original bill of lading. The customs in Brazil follow a procedure of “clear first, withdraw the goods after”. Pursuant to previous regulations, during the clearance process, the importer or the forwarder needs to submit to the customs documents such as the original bill of lading, original invoices and packing list etc. But after the release of the new Decree, the importer/consignee or the forwarder needs to exchange its original bill of lading for delivery order from the carrier for the purpose of goods clearance in the customs, and to withdraw the goods after the clearance by virtue of the cargo release certificate issued by the customs, without the need to produce the original bill of lading. The Decree No. 1356 attached below provides in Article 3 that under the Decree No. 680, Article 54, the first item under Article 57 and the independent paragraph under Article 59 shall be deleted. Namely: Article 54 In the event of withdrawing cargoes from a Free Trade Zone, the importer shall submit the following documents to the Warehouse Keeper: 1. original Delivery Order or other documents of the same effects, such as certificate of title or proof of ownership (repealed); 2. Commodity Circulation Tax Certificate, or Duty-Free Certificate under specific circumstances; 3. commercial invoices with the title of importer or other documents of the same effects, except for the exemptions stipulated by State laws; 4. the identification documents of the consignee.

　　The statements made by the Brazilian law firm and submitted by the NYK Company confirmed the revision of Article 54 under the Decree No. 680.

　　Ruifeng Company contended that the aforementioned goods were sold to a Brazilian buyer, and an advance payment in amount of $20,000 made by the buyer has been received on 30 June 2015. Due to the failure of the foreign buyer to pay the bank for the documents, the involved original bills of lading in collection were returned by the Brazilian bank. At present Ruifeng Company holds two original bills of lading numbered NYKS2410492842 and other four sets of the original bills of lading in triplicate.

　　In addition, the Court ascertained that:

　　Both parties have chosen the laws of the People’s Republic of China as the governing law of the present case.

　　This Court holds that:

　　This case concerns the disputes arising from thecontract of carriage of goods by sea. Pursuant to Article 4 of the Special Maritime Procedure Law of the People’s Republic of China and Article 27 of the Civil Procedure Law of the People’s Republic of China, this Court, as the court at the place of departure, has the jurisdiction over this case.

　　Both parties have chosen the laws of the People’s Republic of China as the governing law of the present case, which is in accordance with Article 269 of the Maritime Law of the People’s Republic of China, and therefore, this Court confirms it.

　　NYK Company is the carrier of the involved carriage of goods and issued five sets of original bills of lading. Ruifeng Company is the holder of the bills of lading. Pursuant to Article 78 of the Maritime Law of the People’s Republic of China, the relationship between the carrier and the holder of the bill of lading with respect to their rights and obligations shall be defined by the clauses of the bill of lading. And pursuant to Article 71 of the Maritime Law of the People’s Republic of China, a bill of lading is a document under which the carrier undertakes to deliver the goods. A provision in the document stating that the goods are to be delivered to the order of a named person constitutes such an undertaking.

　　In this case, NYK Company lost the control over the goods without collecting the original bill of lading at the port of destination. Thus, it violated the undertaking that the carrier should delivery the goods by virtue of the original bill of lading. Since the loss of the goods occurred during the responsibility period of the carrier, and therefore, NYK Company as the carrier shall be liable for the loss of the goods under the four sets of the bills of lading numbered NYKS2410492841, NYKS2340856881,NYKS2340856882 and NYKS2340856883. Considering that the goods can be withdrew by one original bill of lading, yet Ruifeng Company cannot prove that it holds the whole set of the original bills of lading, and thus this Court rejected the claims related with the bill of lading numbered NYKS2410492842 raised by Ruifeng Company.

　　NYK Company cited Article 7 of the 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. And it contended that it shouldn’t be liable for delivering the goods without an original bill of lading. Since NYK Company raised “the law of the place where the port of unloading is located” as a defense, it undertakes the burden of proof.

　　The laws of Brazil submitted by NYK Company can only prove the responsibility period of the port authority and the vessel undertaking the carriage but doesn’t provide that the goods must be delivered to the local customs or the port authorities. The statements made by the Brazilian maritime law firm submitted by NYK Company belongs to witness testimony in terms of the form of evidence. As for its ability of proof, this Court holds that pursuant to Article 69 Paragraph 5 of Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures, the testimony of a witness that fails to appear in court to bear witness may not be used independently as the basis for affirming the facts of a case and thus this evidence lacks the ability of proof. Accordingly, the evidence produced by NYK Company is insufficient to prove that pursuant to the laws of Brazil, the goods arriving at the port must be delivered to the local customs or the port authorities. Therefore, NYK Company shall be liable to damage.

　　Ruifeng Company suffered loss in total amount of $254,320 ($137,160+ $205,740 - $68,580 - $20,000).

　　NYK Company lost the control over the goods from 17 August 2015. Ruifeng Company argued the interest should be counted from 21 July 2016, which this Court agrees.

　　In conclusion, NYK Company, as the carrier, lost the control over the goods without collecting the original bill of lading, which caused the loss of Ruifeng Company. And NYK Company was not able to prove that pursuant to the laws of Brazil, the goods arriving at the port must be delivered to the local customs or the port authorities. Therefore, it shall take the responsibility to compensate. Because the evidence provided by Ruifeng Company can only prove a part of its loss it claimed, accordingly this Court only supports the corresponding part of its claim. Pursuant to Articles 71, 78 and 269 of the Maritime Law of the People’s Republic of China, Article 7 of the 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, Article 27 of the Civil Procedure Law of the People’s Republic of China and Article 4 of the Special Maritime Procedure Law of the People’s Republic of China, this Court rules that:

　　1. Nippon Yusen Kabushiki Kaisha shall pay damage to Shandong Foreign Trade Ruifeng Co., Ltd. in amount of $254,320 within 10 days from the date when the judgement becomes effective.

　　2. Nippon Yusen Kabushiki Kaisha shall pay interest to Shandong Foreign Trade Ruifeng Co., Ltd. for the above compensation, from 21 July 2016 to the date of payment determined by this Court, in accordance with the loan interest rates announced by the People’s Bank of China for the same period and within 10 days from the date when the judgement becomes effective.

　　3. Other claims raised by Shandong Foreign Trade Ruifeng Co., Ltd. against Nippon Yusen Kabushiki Kaisha are rejected.

　　In the event that the defendant fails to perform the obligations to make the payment during the period specified in the judgment, double interest for the debt for the period of deferred performance shall be imposed on the defendant, in accordance with Article 253 of the Civil Procedure Law of the People’s Republic of China.

　　The case acceptance fee is 24,334 yuan, of which Shandong Foreign Trade Ruifeng Co., Ltd. should pay 5,484 yuan, and Nippon Yusen Kabushiki Kaisha should pay 18,850 yuan.

　　Against this judgment, parties may submit a written appeal to this Court within 15 days after the service of the judgement for Shandong Foreign Trade Ruifeng Co., Ltd. and for Nippon Yusen Kabushiki Kaisha, within 30 days. The appeal partyshould submit copies of the written appeal in the same number of the counterparty or authorized representatives and appeal to the Shandong High People’s Court.

　　Chief Justice  WangNing

　　People’s Juror WangJun

　　People’s Juror   XuShan

　　29 December, 2017

　　Court ClerkKouShanshan