Upon the Latest Chinese Judicial Interpretations on the Delivery of Goods without the Original B/L in Chinese Maritime Law

   By Dr. Michael (Zuowei) Liu, LL.M. (Münster), Attorney-at-Law & Partner of BRIGHT & RIGHT & Vice Director for German Law Institute of Harbin University of Technology  

I.                    Brief Introduction

The Decision by the Supreme People’s Court on Several Problems in the Application of Law in Hearing the Cases of Delivery of Goods without the Original Bill of Lading, Judicial Interpretations (2009) No. 1 (hereinafter referred to as “Decision of Supreme Court on B/L”), which was passed on February 16, 2009 by the Adjudication Committee of the Supreme People’s Court in its 1463^rd session, has been promulgated on February 26, 2009, and shall come into effect on March 5, 2009.

The Decision of Supreme Court on B/L, though in the form of a decision by the Supreme Court as one of the judicial interpretations, actually has the legal effect of a law that is formally promulgated by the People’s Congress – the highest legislation organ in China, which has been the latest legislation effort in maritime law to uniformly regulate and ascertain the legal relations in this aspect and create conformity in the application of relevant laws.  There have been many contradictory judgments with respect to the delivery of goods without the original B/L by the People’s Courts in different levels before the promulgation of the Decision of Supreme Court on B/L, thus kind of confusion and disconformity have been caused thereby.  With the Decision of Supreme Court on B/L, a clear legal guidance on the judgment of cases with respect to the delivery of goods without the original B/L has thus been established.      

II.                  Legal Basis of Judicial Interpretation

The said judicial interpretation, the Decision of Supreme Court on B/L, is based upon the relevant laws and regulations of China, such as the General Principles of Civil Law of the People’s Republic of China, the Contract Law of the People’s Republic of China, the Maritime Law of the People’s Republic of China and the like.  Furthermore, as long as no governing civil principles being violated, the provisions in the Maritime Law as a special law should prevail when on the same subject matter there are also provisions in other laws, such as in the Contract Law (so Art. 3 Section 2 of Decision of Supreme Court on B/L).  When there are no such provisions in the Maritime Law, the provisions thereupon in other laws such as the Contract Law and the General Principles of Civil Law should be applied.

III.                Types of B/L Covered

According to Art. 71 of Maritime Law, a B/L is a document that serves as an evidence for the contract of carriage of goods by sea and the taking over or loading of the goods by the carrier, and by means of which the carrier undertakes to make delivery of the goods[i].  The types of B/L covered herein are straight B/L, order B/L and open (blank) B/L (so Art. 1 of Decision of Supreme Court on B/L).

IV.               Constitution of Delivery of Goods without the Original B/L

When the carrier of the goods has, without the original B/L having been presented and submitted, delivered the goods to a receiver who has taken possession of the goods other than to the holder of the original B/L, then the delivery of goods without the original B/L has been constituted.  By the same token, the delivery of goods without the original B/L has also been constituted when the carrier has delivered the goods to a receiver who has taken possession of the goods by means of presenting and submitting a falsified B/L, thus the carrier is responsible for the losses caused to the holder of the original B/L (so Art. 5 of Decision of Supreme Court on B/L). 

Meanwhile, the actual shipper, the shipper who has actually delivered the goods to the carrier and remains possessing the order B/L, though its name is not indicated on the original order B/L, should enjoy the same status as a holder of the original B/L and claim losses in the delivery of goods without the original B/L from the carrier (Art. 12 of Decision of Supreme Court on B/L).  The logical conclusion can also drawn herefrom that the actual shipper of the goods should remain responsible for paying extra costs incurred to the carrier on account of the goods such as the freight, the storage costs and the like, if the actual shipper of the goods, with the original B/L at hand, remains the sole legitimate owner of the goods being carried.  Such circumstances can arise when the consignee at the port of discharge goes bankrupt, the freight has not paid to the carrier, and the lien on the goods alone cannot satisfy the costs by the carrier for the goods.    

V.                 Scope of Liabilities

When the rights of the holder of the original B/L are damaged by the carrier in the delivery of goods without the original B/L, the carrier is responsible for the civil liabilities therefor (so Art. 2 of Decision of Supreme Court on B/L).  Furthermore, when the damages are caused by the delivery of goods without the original B/L to the holder of the original B/L, then he is entitled to request the carrier to assume either the contractual liabilities or the tort liabilities (so Art. 3 Section I of Decision of Supreme Court on B/L).  Moreover, the carrier as well as the person who has received the goods without the original B/L should be required to assume the joint and several liabilities of compensation therefor to the holder of the original B/L (Art. 11 of Decision of Supreme Court on B/L).  The liabilities of the carrier to the holder of the original B/L in the delivery of goods without the original B/L should still remain, even if the holder of the original B/L and the person who has received the goods without the original B/L have reached an agreement thereupon and yet the compensation in the agreement has not been honored by the said person who has received the goods (Art. 13 of Decision of Supreme Court on B/L).

VI.               Amount of Compensation

The amount of compensation for the losses caused to the holder of the original B/L is based upon the value of the goods at the time of loading plus the costs of freight and insurance (Art. 6 of Decision of Supreme Court on B/L).  Meanwhile, the said compensation should not be limited by Art. 56 of Maritime Law[ii], which has put limitations upon the carrier’s liabilities for the loss of or damage to the goods (Art. 4 of Decision of Supreme Court on B/L).

VII.             Exemption of Liabilities

Though the delivery of the goods without the original B/L has been constituted, the carrier of the goods should not always remain liable for the losses to the holder of the original B/L.  This is especially the case when one of the following circumstances occurs. 

In other words, the carrier of the goods should be exempted from his liabilities under one of those circumstances:

a.      Local legal limitations

If according to the local legal provisions in the port of discharge that the carrier is required to hand over the goods to the local port authorities or to the local customs authorities, then the carrier should be exempted from his liabilities in the delivery of goods without the original B/L (Art. 7 of Decision of Supreme Court on B/L).

b.      Goods as object of legal actions by the customs

If the goods have been taken over by the local customs authorities and disposed of by means of selling thereby according to the local legal provisions, as the declaration for the goods that have been unloaded in the port of discharge has not been made to the customs within the period of time legally required, then the carrier should be free from his liabilities in the delivery of goods without the original B/L (Art. 8 1^st Sentence of Decision of Supreme Court on B/L).

c.       Goods as object of legal actions by the court

If the goods have been auctioned by a court decision, as the carrier possesses the goods under lien, then the carrier should be exempted from his liabilities in the delivery of goods without the original B/L (Art. 8 2^nd Sentence of Decision of Supreme Court on B/L).

d.      Disposal of the goods by the carrier based on shipper’s order

If the carrier has disposed of the goods according to such orders of the shipper of a straight B/L as to stop the carriage of the goods, return the goods, change the place of destination, or hand over the goods to another consignee other than the original consignee of the straight B/L, then the carrier is free from the liabilities from the delivery of the goods without the original B/L claimed by the original consignee of the straight B/L (Art. 9 of Decision of Supreme Court on B/L).

e.      Goods delivered to the first holder of original B/L in case of several original B/L

If the carrier has delivered the goods to the first holder of the original B/L, as the carrier has issued several original B/L, then the carrier should be exempted from the liabilities for the delivery of the goods without the original B/L claimed by the other holders of the original B/L (Art. 10 of Decision of Supreme Court on B/L).

VIII.           Limitation of Time & Its Suspension

The claim of liabilities for compensation in the delivery of goods without the original B/L, regardless it is a contractual claim or a tort claim, is subject to one (1) year as the limitation period based on Art. 257 of Maritime Law[iii] (Art. 14 of Decision of Supreme Court on B/L).  The suspension of limitation period with respect to the claim of liabilities therefor either as a contractual claim or as a tort claim, should be governed by Art. 267 of Maritime Law[iv] (Art. 15 of Decision of Supreme Court on B/L).