Background Facts: In August 2012, the ship “Deming” was loaded with 60,500 tons of soya beans at the port of Paranagua, Brazil, and bound for the port of Dalian, China. The owner of “Deming” was the carrier Kuang Ming (Liberia) Corporation (hereinafter referred to as K.M.Corporation). Dalian Soybean Science and Technology Co., Ltd. of Jiusan Group (hereinafter referred to as Jiusan Company) was the holder of bill of lading of the goods. The ship ran aground while sailing near the Sunda Strait in Indonesia. The captain failed in his attempt to save the ship. K.M. Corporation appointed T&T Company to conduct on-site inspection. The conclusion was that the ship could not get out of trouble without the help of external forces. On September 19, 2012, K.M. Corporation signed a rescue contract with T&T Company to salvage the stranded ship and goods, and so on. According to the ship damage condition and rescue force distribution, T&T Company successively worked out two versions of the rescue plan. First unloading the goods in No.1 hold was changed to first unloading the goods in No.2 hold. In the course of the rescue, the rescuers found that No.1 hold had been damaged and the sewage depth of sewage well had increased. The rescuers immediately worked out the third version of the rescue plan, which unloaded 3,575.356 metric tons of soybeans from No.1 hold to the salvage ship. The total loss of goods in No.1 hold was confirmed afterwards. The goods insurer Ping An Property Insurance Company of China paid the insurance indemnity to the insured Jiusan Company. Ping An Property Insurance Company Heilongjiang Branch (hereinafter referred to as HLJ Company), on behalf of his head office, signed the Agreement on Compensation and Transfer of Rights and Interests with Jiusan Company, obtaining the right of subrogation. HLJ Company claimed the unseaworthiness of “Deming” and severe fault in goods management of K.M. Corporation, demanded K.M. Corporation for compensating for the loss of the goods amounting to RMB16,635,286.76 and the corresponding interest, and loss from the reward for the rescue amounting to USD4.68 million and the corresponding interest and evaluation fee.
Summary of Judgment: After the trial, the Court held that there was no unseaworthiness of “Deming”. After the accident took place, K.M. Corporation actively mobilized rescue ships, divers, diving equipment and other special rescue equipment with the help of the rescue company, and examined and monitored the damage condition of the ship when the local weather permitted. KM Corporation changed the rescue plan from unloading the goods from the No.1 hold first to unloading the goods from the No.2 hold, and took the following factors into consideration for prudent and reasonable rescue: the safety of goods and personnel on board “Deming”, the specific circumstances of the ship receiving the goods, on-spot space limitations (such as depth of water, the position of the ship stranded and the location of the salvage ship, etc.), strength of the ship. Water ingress into the hold was a gradual process. The No.1 hold damage and goods water-dampness was found during the salvage operation, and then salvage measures were taken. HLJ Company did not provide evidence to prove the rescue plan was unreasonable and therefore caused the expansion of goods loss of No.1 hold. Even if the salvage measures further expanded the extent and scope of the damage, as long as the salvage measures were reasonable, and the causative potency of the goods being damaged by water ingress into the hold was not interrupted, it should not be considered that the K.M. Corporation was at fault in the management of goods. In the process of transportation, “Deming” ran aground on the reef due to the fault of the captain and crew members in the navigation of the ship, resulting in the loss of goods in No.1 hold, which was one of the exemptions provided in Subparagraph 1, Paragraph 1 of Article 51 of the Maritime Code. The Court dismissed HLJ Company’sclaims. After the judgment of the first instance by the Court was pronounced, neither party appealed.
Typical Significance: This case is a typical case in which the fault of the carrier driving the ship causes the ship to run aground on the reef, which resulted in disputes over foreign-related contracts for the carriage of goods by sea. Through analyzing maritime technical issues such as the reasonableness of the rescue measures and the causative potency of the damage of the hold, regarding the difficulty in the trial, which was that in the process of rescue, the damage of goods was found and the damage of goods might have escalated due to the behavior of the rescue, the following conclusions were drawn in the case: as long as the carrier’s rescue measures were reasonable and the causative potency of the goods being damaged by water ingress into the hold was not interrupted, then even if the rescue measures had further expanded the extent and scope of the damage, the carrier was still not at fault in the management of the goods and should be exempted from liability according to the law. This case involves countries along the “Belt and Road” route, such as Liberia and Indonesia. Focusing on the overall situation of the “Belt and Road” construction, the Court upheld the basic values of justice, efficiency and professionalism and, in accordance with the law, apportioned the burden of proof and ascertained the facts of the case, interpreted the law accurately, and exempted the foreign carrier from liability for compensation. The trial wins the respect and trust of the parties at home and abroad and establishes the international credibility of China’s maritime judicial system.