China - Evidence of Adequate Stowage and Lashing

The laden container vessel "Ville De Tanya" departed from Shanghai and made course south towards Ningbo. A typhoon was approaching so the vessel was anchored in the mouth of the Changjiang River. Based on subsequent weather reports, the master predicted the typhoon would pass directly through the area so the vessel left the anchorage and attempted to "ride out" the deteriorating weather at sea. Unfortunately the ship failed to avoid the centre of the typhoon and a total of 119 containers were lost overboard. The charterers of the vessel had issued their own bill of lading to the shipper (PICC's assured), and were the carriers under the bill of lading.

The charterers defended the claim in the Shanghai Maritime Court on the basis of the "error of navigation or management" defence which is found at Article 51(1) of the PRC Maritime Code. They said that the master's decision to leave the anchorage and his subsequent handling of the vessel were excusable errors. The claimant, however, argued that the stowage and lashing of the containers were inadequate and that the carrier was therefore in breach of Article 48 of the Code (equivalent to Article III, Rule 2 of the Hague and Hague-Visby Rules).

In its judgment the Court drew a clear distinction between the master's decisions regarding the positioning of the vessel and the issue of whether the cargo had been properly cared for. If the former had been the sole cause of the loss the carrier would have been absolved of liability, but if the latter was a cause then the carrier would be liable. The Court found that the charterers did not provide sufficient evidence demonstrating proper stowage and lashing. For example, they could only positively demonstrate that containers in the third tier and below were lashed and secured in accordance with the cargo securing manual: there was no evidence regarding cargo above the third tier. There was no evidence that the lashing equipment used might fail in the weather conditions experienced, even if the cargo had been properly secured. Finally, there was no evidence that the distribution of containers on the vessel was correct. In the circumstances, the Court decided that there had been a failure to take proper care of the goods and found in favour of the claimant.

The case provides guidance as to the kind of evidence which the PRC Courts will look at in these situations. It is not very different from the evidence a carrier would try to put forward in a case under English law. In this respect expert evidence can be expensive and it is, perhaps, not surprising that the charterers in this case did not go to the lengths demanded by the Court, given that the total claim in the case was for less than US$30,000. Furthermore, the decision to interpret narrowly the error of navigation or management defence is similar to the approach taken in most jurisdictions to the equivalent provisions of the Hague and Hague-Visby Rules.

Another aspect of this decision provides an indication of how the PRC Courts view choice of law clauses in contractual documents. According to the General Principles of Civil Law, Article 145, the parties to a contract with a foreign element are free to choose the governing law. In this case the Bill of Lading was the standard printed form used by the charterer. The Court said it would not recognise the choice of law specified in the Bill of Lading, as this had not been the subject of actual consultation between the parties prior to the shipment. Instead, the Court would apply the law of the jurisdiction which had the closest relationship with the contract and the dispute. As the load port, the place where the damage occurred, the residence of the shipper and the place where the bill of lading was issued were all in China, the Court applied Chinese domestic law.

PICC Jinhua Branch v The Charterers of the "Villa De Tanya" in Selected Cases Of Maritime International: Judgments and Comments, Shanghai Maritime Court, 2003, p. 312.

For a contrasting approach see Steamship Mutual website report on the Chinese Higher Court decision in the Guangzhou case.