The Shanghai Maritime Court (PRC) recently found in Zhongcheng Ningbo Import and Export v Shanghai Asia Pacific International Containership Warehousing and Transport Co. Ltd that a claim for delivery without bills of lading was defective where claimant holders of a negotiable bill of lading were only able to produce one original bill of lading in support of their claim. The plaintiff, the seller and the shipper under the bill of lading, delivered the goods to the defendant at Shanghai for carriage to Australia. The defendant purported to be a forwarder appointed by and acting as agent of the carrier. The defendant issued a bill of lading “as agent of the carrier”. The buyer failed to pay for the goods. The plaintiff intended to take delivery of the cargo at the discharge port but was advised by the local agent of the defendant that the cargo had already been released to the buyer, although the agent of the defendant later advised that the cargo was still in its warehouse. Notwithstanding the fact that the goods were allegedly still in a customs controlled warehouse at the discharge port, Zhongcheng commenced proceedings in China on the grounds of delivery without production of a bill of lading. The case raised two questions for consideration by the PRC court: 1. Identification of the carrier; 2. The shipper’s title to sue under the bill of lading
Identification of the Carrier
In Chinese shipping practice, a party purporting to act as agent of a carrier or forwarder may assume the role of a non-vessel-operating carrier under certain circumstances. Normally, where a forwarder issues the bill of lading bearing its own name as the carrier, the forwarder will probably be identified as the carrier by the PRC court and be charged with the corresponding liabilities of a carrier. In circumstances where a forwarder issues the bill of lading “as agent” or “as agent of the carrier”, whether the forwarder may be considered to be acting as the carrier or simply the agent of the carrier will depend on the specific facts of each individual case. The judge will apply legal principles of agency to determine the legal status of a forwarder. In the instant case, the defendant issued the bill of lading as the agent of the carrier. The title of the bill of lading indicated the name of the intended carrier. In the proceedings, the defendant was unable to produce any proof that the party named as carrier had authorized it to issue the bill. Pursuant to the principle that the legal consequences of an act performed with no power of agency or beyond the scope of any power of agency shall be borne by the performer himself, the court adjudged that the defendant’s act of issuing the bill of lading could not be regarded as an act of agency but could only be regarded as an act of the defendant itself. In the meantime, in light of the fact that the defendant was able to exercise control over the cargo, including the release of the cargo and other related matters, through its agent at the port of discharge, which was beyond the normal scope of power of an issuing agent, the court ruled that the defendant should be regarded as the carrier in this case.
The Shipper’s Title to Sue Under the Bill of Lading
It is well established in PRC law that the bill of lading functions as evidence of the contract of carriage of goods by sea and as a document of title and that delivery of cargo without presentation of the original bill of lading constitutes a breach of the contract of carriage of goods by sea. Meanwhile, in customary shipping practice, though the lawful bill of lading holder is capable of taking delivery of the cargo by surrendering one original bill of lading at the port of discharge, where a lawful bill of lading holder alleges his title under the bill of lading outside the port of discharge he is required to produce a full set of original bills of lading and, accordingly, the carrier has the right to demand the return of the full set. It is also important to remember that this case concerned a negotiable bill of lading consigned “to order”. In making its claim, the plaintiff only submitted one of the full set of three original bills of lading and could not establish the whereabouts of the two other original bills. It was held that the production to the court of one bill of lading did not under the circumstances affirm the plaintiff’s position as a lawful owner of the goods. Under Chinese law the plaintiff would have the right to take delivery of the cargo at the discharge port by surrendering this original bill of lading. However, according to the doctrine of “one thing, one right”, only one bill from the full set of the original bills of lading was insufficient to support the title to sue for the cargo outside the port of discharge in the absence of additional persuasive evidence. Since the plaintiff could not explain why they could not produce the full set of original bills and/or adduce credible evidence of their lawful ownership of the goods, there was a possibility that other bill of lading holders existed and the rights of those potential bill of lading holders could not be ignored. The plaintiff’s title to sue under the bill of lading for loss of cargo due to the carrier delivering the cargo without production of the original bill of lading was fundamentally flawed and unsupported. It is noted that similar views have also been expressed by Xiamen and Guangzhou Maritime Courts in deciding other similar cases. According to the Maritime Procedural Law of the PRC, if the bill of lading is out of the lawful holder’s control or lost, the lawful holder may apply to the maritime court of the place where the goods are for publication of public notice for assertion of claims. Where the other bills of lading of the full set are declared null and void by the court through the procedure for public invitation to assert claims, one of the full set of original bills may provide the lawful holder of the bill of lading a complete and exclusive title to sue.
With thanks to Greg Yang and Mei Tong of Hei Tong & Partners for preparing this article.
