Case Background:

Civil verdict of Shanghai Maritime Court of the PRC
Plaintiff: ### Export Co.(“Party A” hereinafter, the holder of bills of lading and the shipper)
Defendant: ### Storage and Sea-freight Co. Ltd. (“Party B” hereinafter, the freight forwarder of the plaintiff and the freight agent of the second defendant “Party C”)
Defendant: ### Shipping Company (“Party C” hereinafter, the contractual carrier in the bills of lading)
Defendant: ### Marine Corp. Ltd. (“Party D” hereinafter, the actual carrier)

The plaintiff claimed that in September, 1995, it consigned a batch of garments to "Party B" from Shanghai to Germany, and "Party B" issued a set of bills of lading and "Party D" did the actual carriage. After having shipped out the goods for a long time, the plaintiff failed to receive the payment and it learned through inquiry that the goods had been released at the port of destination. Thus the plaintiff resorted to the court and pleaded it to order the three defendants to jointly compensate for the losses, totaling RMB 3542437.23 yuan. In addition, the plaintiff claimed in the court, defendant "Party B" has an identification of double agency. Violating the will of the plaintiff, it modified the records on the maritime bills of lading by itself. Its act directly caused the release of goods at the destination port to any other party that had nothing to do with the plaintiff. The consignee was the agent specified by defendant "Party C" and defendant "Party D" hadn’t released cargo upon instructions. Thus the three defendants shall be liable for the economic losses that the plaintiff suffered from releasing cargo without bills of lading.

Defendant "Party B" argued that as the freight agent of the plaintiff, it was at fault in this matter, but its fault would not result in the release of goods without bills of lading. It pleaded the court to make a fair judgment on the basis of facts and the consequence of its fault.

Defendant "Party C" argued that, during the whole course of this matter, it only charged fees of agency for lending a bills of lading, it wasn’t the actual carrier. It had never entrusted "Party B" to antedate the bills of lading. Thus "Party B" alone shall be liable for the legal consequences resulting from its act .

Defendant "Party D" argued that: The bills of lading, which was being held by the plaintiff, was not the one issued by "Party D" and on the back of which, there wasn’t a bank’s endorsement to the plaintiff, so the plaintiff wasn’t the legal holder of the bills of lading, it had no right to file a lawsuit against this Corp. In the whole course of the shipping, only defendant "Party B" had business with this "Party D" Defendant "Party C" had no business with it, thus it wasn’t the real carrier as provided in the Maritime Law. In addition, the whole set of bills of lading had been handed back by defendant "Party B" at the port of departure, thus it wasn’t wrong for it to deliver the goods according to the consignee’s name on the bills of the lading. For these reasons, it pleaded the court to dismiss the action against it lodged by the plaintiff in accordance with the law.

Upon hearing the case, the court found that:

The plaintiff and defendant “Party B” had ever signed an agreement on power of attorneyof export, for which the plaintiff entrusted “Party B” to ship out several batches of garments and required “that the goods is to be shipped by “Party D” only”. Because the shipping date was beyond the date as required by the L / C, the plaintiff requested that the bills of lading be antedated, and for which it issued a guarantee. According to the plaintiff’s instructions on the shipping order, it was shown in the bill of lading that the shipper should be the plaintiff, the consignee should be “upon instructions of Shanghai Branch of the People’s Bank of China”, the notifying party should be Aldgate Warehouse (Wholesale) Ltd. According to the said instructions, “Party B” booked space and handled other shipping procedures at “Party D”, but the latter refused to antedate the bill of lading, and it issued four bills of lading according to the actual on-board dates (hereinafter referred to as “Party D”’ bill of lading), and the dates thereon are: December 16, 1995, September 29, 1995, September 30, 1995 and December 9, 1995. Because of the written instructions and guarantee of “Party B”, there were inconsistencies between the above-mentioned bills of lading and the content instructed by the plaintiff, among which the shipper showed on the two bills was modified to “Party B”, all the notifying parties and consignees shown on the “Party D” bills of lading were modified to Jordan & Berger Nachf. In the court hearing, “Party B” claimed that Jordan Co. was the agent of “Party C” in Europe. After the “Party D” bills of lading had been issued out, they were taken away by “Party B”, but “Party B” claiming that these bills were given to “Party C”. The “Party D” affirmed that it had taken back the said bills of lading from “Party B” and they had been destroyed because of expiration of document preservation. The total freight under the “Party D” bills of lading were 13700 US$, which had been paid by “Party B” to the “Party D”. “Party C” charged “Party B” 320 US$ fees of agency by 80 US$ per container of 40 feet.

As to the above-mentioned facts, "Party B" presented a faxed power of attorney on sea-freight, the agreement (with the plaintiff), the guarantee issued by the plaintiff, and the bill of "Party C" to prove that the shipment of the goods was upon the instructions of the plaintiff, and "Party C" collected some charges. The plaintiff and "Party D" raised no objection to these proofs. "Party D" presented "Party B"’s shipment order, copies of the "Party D" bills of lading, note of modification and guarantee (issued by "Party B"), "Party B"’s note of acceptance of bills of lading, receipt document to proved that it made out the bills of lading according to "Party B" instructions, handed them to this company and charged sea-freight. The plaintiff and "Party B" raised no objection to the above-mentioned proofs.

At the time when the Party D’s bills of lading were issued, "Party B" obtained some blank bills of lading from "Party C". It made out the bills of lading according to the above-mentioned instructions of the plaintiff, affixed a seal “ ON BOARD” in the name of itself on these bills of lading, and then antedated them respectively to September 29, 1995, September15, 1995, September20, 1995 and September 29, 1995 in the name of "Party C" (hereinafter referred to as "Party C" bills of lading). The numbers on the "Party C" bills of lading were the same as those on the "Party D" bills of lading, in addition, it was marked a shipment number of "Party B" and on its back, there’s an instruction endorsed by the People’s Bank of China, Shanghai Branch: “Honor upon instructions of the Bank of Leumi.” It was shown on the commercial invoice and commercial draft presented by the plaintiff that the Bank of Leumi is the issuing bank of Aldgate (the notifying party on the Lianyun bills of lading). After the "Party C" Bills of lading had been made out, they were given to the plaintiff for settlement of exchange at the bank. When the plaintiff lodged this action, it held the whole set of "Party C" bills of lading. These facts were supported by the original "Party C" bills of lading, which were presented by the plaintiff for the purpose of proving that it was the owner and shipper of the goods involved in this case. In the court hearing, the three defendants raised no objection to this point.

On December 9, 1995 and December 11, 1995, "Party B" and "Party C" signed a power of attorney and a sea-freight agreement respectively, thus both parties became an agent of each other, and "Party B" had the right to issue the whole set of "Party C" bills of lading. "Party B" presented the entrustment, the sea-freight agreement and letter issued by Shanghai International Freight Forwarders Association to prove that it’s act of issuing the bills of lading didn’t violate the law. In the court hearing, the plaintiff raised no objection to this point, but it argued that "Party B" thus became a carrier without ship. "Party C" and "Party D" raised no objection to Party B’s argument.

to be continued