Asia Update - August 2009

China

China's Supreme People's Court tries to clarify

rules on the law of Bill of Lading

The law relating to bills of lading is codified in chapter IV of

the Maritime Code of the People's Republic of China (the

"Maritime Code") which came into effect as of 1 July

1993. The Maritime Code lacks clear provisions regarding delivery

of cargo without presentation of the original bill of lading and

the incorporation of an arbitration clause into the bill of lading.

This has caused a huge amount of confusion over the years. The

Supreme People's Court ("SPC") is now determined to

resolve these problems by giving more definite and clear judicial

interpretations for the lower courts to follow.

Delivery of cargo without presentation of the original

bill of lading

In February 2009, the SPC issued directive rules on trials for

delivery of cargo without presentation of the original bill of

lading (Fa Shi (2009) No. 1) which came into effect as of 5 March

2009. The new rules clarify the position on damages and remedies in

the event where the carrier delivers the cargo to parties without

presentation of the original bill of lading.

The highlights of the new directive rules are as follows:

The lawful holder of the original bill of lading may choose to

claim for its loss against the carrier either in contract or in

tort.

The lawful holder of the original bill of lading may claim

against both the carrier and the party who took delivery of the

cargo without the original bill of lading and hold them jointly

liable.

The carrier is liable if he delivers the cargo to parties who

demand delivery with presentation of a forged bill of lading.

The claim amount of the loss is to be calculated in accordance

with the CIF price of the cargo at the loading.

The carrier is not entitled to limit its liability under

Article 56 of the Maritime Code i.e. the package limitation regime

similar to the Hague-Visby Rules.

The carrier is not liable once he has delivered the cargo to

the first lawful holder of the original bill of lading who made the

presentation, if the originals are several in a set.

The limitation period for claims against the carrier (both in

contract and in tort) for delivery of cargo without presentation of

the original bill of lading is one year starting from the time when

the cargo should have been delivered by the carrier.

The limitation period against the carrier (both in contract and

in tort) will not be interrupted unless litigation, arbitration or

ship arrest has been applied for or the claim has been accepted by

the respondent.

The rules are applicable to straight bills of lading, "to

order" bills, and blank bills.

In relation to straight and "to order" bills of

lading, the new rules have set out two specific provisions as

follows:

The carrier is not liable to the consignee if the carrier

suspended the transport, redelivered the cargo, changed the

destination or...