Wang Jing, Managing Partner of Wang Jing & Co.
(D) Carrier Shall Make Remarks on the B/L of the Damage Existing Prior to Loading or of the Inconformity between the Goods Loaded and the Description in the B/L.
In most of soybean meal damage cases, the damage to the goods and inconformity of the quality found at the port of discharge actually existed prior to loading, or is the combination of the existing damage and the damage occurring in transit. For example, proportion of impurities and broken particles in the goods is too high, or large amount of sham sorghum exists, or the goods described in the B/L are yellow soybean flakes while white powdered soybean meal or black flakes are delivered. For this reason, the carrier also often invokes the other two exceptions, i.e., the damage to the goods is resulting from “act of shipper, owner of the goods or their agents” or “other causes arising without the fault of the carrier or his servant or agent”.
But few carriers succeeded in seeking exemption on these two exceptions, because in accordance with the provision of Article 77 of CMC, the B/L is the final evidence between the carrier and the bona fide B/L holder. Furthermore, pursuant to Article 75 of CMC, if the B/L contains particulars concerning the descriptions of the goods with respect to which the carrier or the other person issuing the B/L on his behalf are in knowledge or have reasonable grounds to suspect that such particulars do not accurately represent those of the goods actually received, or, where a shipped B/L is issued, he suspects that descriptions in the B/L are not in conformity with the actual conditions of the goods loaded, or if he has had no reasonable means of checking, the carrier or such other person may make a remark on the B/L indicating those inaccuracies, the grounds for suspicion or the lack of reasonable means of checking. Pursuant to this provision, if the carrier or his agent has issued a clean B/L without making a remark with regard to the actual conditions of the goods loaded, it should be deemed that the goods received or loaded are in apparent good order or condition and if the carrier fails to deliver the clean goods to the lawful B/L holder at the port of discharge, the carrier should be liable to the lawful B/L holder for loss sustained therefrom.
For instance, in the case of “LERESTI”, although damping, molding and caking were found in some parts of the goods at the time of loading, the court still held that the defendant shall be liable for compensation because the defendant did not make a note of the actual conditions of the goods in the B/L. It would be deemed by law that the cargo was in apparent good order and condition. The defendant carrier failed to deliver to the plaintiff the goods as per the deemed-to-be-sound conditions as described in the B/L.
In the case of “RUVU”, the court of first instance held that the defendant or the person issuing B/L on his behalf failed to make remarks with regard to the apparent condition and weight of the goods in the B/L. It has been established that yellow, brown mixed yellow meals existed at the time of loading, which was obviously inconsistent with the description of color of the soybean meal in the B/L. The captain of M.V. “RUVU” was aware of this. In order to be exempted from liability to the B/L holder, the defendant or the person issuing the B/L on his behalf must make note of the above inaccuracy in the B/L. But the defendant or such other person did not make note in the B/L specifying the inaccuracy. In accordance with the provision of Article 76 of CMC, the goods shall be deemed to be in apparent good order and condition. The defendant had to deliver to the plaintiff the goods as per the apparent condition (yellow flakes) of the soybean meal as described in the B/L. The court of second instance affirmed the original judgment in this respect.
(E) Evidential Effect of Commodity Inspection Report and Expert Witness’s Report.
From the cases cited herein, it can be seen that the inspection reports issued by import & export commodities inspection bureaus of China (CCIB) are admitted by all the entertaining courts and are used as the evidence for determining the case where there is no proof to the contrary.
In the case of “LERESTI”, the defendant stated that the carrier’s responsibility for the goods ceased on passing of the goods over the ship’s rail and that Inspection referred to in the Weight Certificate basing on which the plaintiff claimed for loss of shortage was carried out at the warehouse of the consignee and thus was unable to prove that the shortage of goods occurred within the defendant’s responsibility period. But the court held that, at the time of inspection, the plaintiff did not remove the goods from the harbor area and the goods were still under the control of the port. The defendant did not present evidence as to the weight of the goods when discharged from the ship and the evidence showed that the shortage of goods occurred within the port area. Therefore, it should be determined that the shortage occurred before the goods were discharged from the ship and within the defendant carrier’s responsibility period. Under the circumstance that the defendant did not present evidence to establish that the shortage of goods was caused by excepted matters for which the defendant could be exempted from liability, the defendant shall bear the liability for compensation for breach of contract.
In the case of “HUDSON BAY”, the defendant argued that the Weight Certificate relying on which the plaintiff claimed for shortage was issued by CCIB at the port of discharge on basis of the “draft survey records”. The captain made note of dissention on the “draft survey records” reading “I dissent from the draft records made by the inspectors before discharge, because at the time of inspection, there was wind of Beaufort Scale 4 at sea”; therefore the Weight Certificate issued by CCIB Guangxi was not exact and invalid. But the court held that the defence made by the defendant that the captain made note of dissention in the “draft survey records” was not sufficient to reverse the inspection conclusion of CCIB Guagnxi as to the existence of shortage.
In the case of “DONGFA”, the court held that CCIB Nantong was one of the statutory inspection organs for import and export commodities inspection in China. The inspection report issued by CCIB Nantong in accordance with law for the imported soybean meal involved had evidential effect and should be used as effective evidence in the case.
In the case of “RUVU”, the court of first instance and the court of second instance both held that CCIB Guangdong was the inspection organ established according to law. The inspection report issued by such organ, when there was not proof to the contrary, had the effect of evidence. The inspection certificate of weight issued by CCIB Guangdong recorded short-landing of goods at the port of discharge. The defendant did not present sufficient and effective evidence to overturn the inspection result of CCIB Guangdong nor had he presented evidence to establish existence of an excepted mater on which the carrier could be exempted from liability. Therefore, the Shipping Company shall be liable for compensation for the loss caused to the Feedstuff Company. CCIB was established by the state according to law and was the statutory and authoritative organ for inspecting various items (including weight) of import and export commodities. Although it was at the warehouse of Huangpu Port that CCIB Guangdong carried out the inspection of weight on the discharged goods, the way of inspection of CCIB was in conformity with the practical conditions of ports in China. Therefore, the inspection result should be deemed to be the weight of the goods discharged from the ship rather than the weight of the goods stored at the warehouse. That is to say, the inspection was on the weight of the goods delivered by the carrier. Therefore, the court did not support, for the sake of lack of sufficient legal basis, the defendant’s defence that “the inspection of weight by CCIB Guangdong was carried out beyond the carrier’s responsibility period and had no binding effect on the carrier”.
In the case of “UMBERTO D’MATO”, the inspection applicant in the inspection result sheet issued by CCIB Shenzhen as presented by NPAB was Shenzhen Jin Hua Feng International Freight Agency Ltd., not the plaintiff NPAB. The inspection result sheet did not mention the number, date or place of inspection which are essential elements required of an inspection report. Therefore, the defendant Perseveranza S.P.A di Navigazione defended that the inspection result sheet was in no way relevant to the dispute in the case and unable to prove the alleged shortage or the alleged shortage occurred within the carrier’s responsibility period. But as the defendant did not present proof to the contrary to reverse the inspection result by CCIB Shenzhen, the court of first instance admitted the effect of the inspection result sheet and did not support the defendant’s argument that “the inspection result sheet issued by CCIB Shenzhen has not evidential effect”. The court of second instance held that CCIB Shenzhen was established by the state according to law and was the statutory and authoritative organ for inspecting various items (including weight) of import and export commodities. The inspection result was authoritative and legally effective. The object of inspection was the goods discharged from the carrying vessel “UMBERTO D’MATO” in the case, i.e. inspection of the goods delivered by the carrier. Furthermore, the weight recorded in the discharge records of the discharge operator was the same as the weight inspected by CCIB Shenzhen. Therefore, it could be ascertained that a shortage of 458.76MT of soybean meal occurred within the period of responsibility of the carrier.
In the case of “LOSINJ”, the court of first instance held that the defendants Cross Seas Shipping Corporation Panama and Croatia Line did not present evidence to show that Associate Prof. Wang Xuefeng and Associate Research Fellow Xu Yinfu who issued the Analysis on the Cause of the Damage to the Goods Carried on Board M.V. “LOSINJ” were authorized by the state or professionally qualified to issue such opinion. Therefore, the above opinion could not challenge the inspection report of CCIB Guangdong, an organ of statutory inspection, presented by Development Zone Insurance Company. In the case, the court of first instance went further to take the cause to the cargo damage as stated in the inspection report of CCIB Guangdong as the basis for determining the case. As the inspection report issued by China Classification Society and the inspection report issued by CCIB Guangdong concluded that the cargo damage and shortage occurred within the carrier’s responsibility period, resulting from the failure of the carrier to properly and carefully manage the goods, basing on the two inspection reports, the court of first instance adjudged that the cargo damage was attributed to the carrier’s negligence in managing the goods.
It is a usual practice that a party to shipment of cargo directly and unilaterally appoints surveyors to carry out inspection on the goods discharged at the port of discharge. As such surveyors are not jointly appointed by the parties or designated by the court at the application of the parties, the inspection report issued by them is not one of the 7 categories of statutory evidence provided for in Article 63 of PRC Civil Procedure Law. But the court has the power under Paragraph 2, Article 65, PRC Civil Procedure Law to examine the inspection report issued by the surveyors unilaterally appointed by the party and to determine whether the inspection report is of legal effect and can be admitted as evidences for determining the case. From the cased cited above, it can be seen that all the courts in China confirmed the extremely strong evidential effect of the inspection reports issued by CCIBs.
The evidential effect of inspection reports issued by other surveyors, however, are not strong. In the case of “PATMOS”, even though the certificate of weight issued by Guangdong Import and Export Commodities Company, showed a shortage of 484.337MT, the court found on evidence obtained from the port that there was no shortage of the goods actually taken delivery of by the consignee. The court of first instance held that the evidence it took had established the actual weight of goods taken delivery by the consignee and was sufficient to overturn the inspection report presented. Therefore, the court dismissed the claims of NPAB for loss of shortage. (In the case, the court took evidence from Xingang Port Affairs Company of Guangzhou Port Office as to the weight of goods and the evidence taken showed no shortage.) In the case of “RUVU”, the court of second instance held that the inspection result issued by Guangdong Import and Export Commodities Company had no legal effect binding both parties because it was issued at the unilateral appointment by the Shipping Company rather than by the joint appointment of the two parties. The Shipping Company had the obligation to present the original of the document issued at its sole appointment and the copy had no evidential effect and shall not be admitted. Furthermore, the goods were actually weighed by weighbridge at the port of loading while CCIC Guangdong measured the weight of the goods by draft. The result by draft would be greatly different from that by weighbridge and therefore should not be used as the basis for determining the weight of the goods at the port of discharge. In the case of “UMBERTO D’MATO”, the court of second instance held that the SGS report was issued at the sole appointment of Perseveranza S.P.A di Navigazione and was not accepted by NPAB. The draft method was used for weight measurement at the port of discharge, the result of which would be greatly different from that obtained at the port of loading by electric scale. Therefore, the report issued at the port of discharge was inadmissible as evidence.
From the above cases, it can be seen that the reports issued by the statutory inspection organs in China will be given much weight in the cases of damage to cargo such as soybean meal while the inspection report issued by surveyors other than the statutory inspection organs will be treated discretionarily, i.e. the court may choose to admit or not. Especially when the conclusion of such surveyors is different from or contrary to that of the statutory inspection organs in China, the former’s conclusion will usually be rejected.
However, this writer notices that in the recent years, some experts, scholars and judges in China have noted this problem and brought this problem to seminars, to newspapers and journals and to legislative consulting conference for discussion and soliciting opinions. The focus of the most hotly debated topics is whether the inspection reports and conclusions of the statutory inspection organs are challengable. If any faults are found in the survey reports of these statutory inspection organs, may survey reports of other inspection organs or opinions of other experts reverse the faulty survey reports of the former? Under the circumstances, what would be the legal standing of the survey reports of other surveyors and the opinions of other experts? Could they appear before the court as expert witnesses to air their views?
There appear to be three different opinions on the practicability of the surveyors holding opinions different from that of CCIB to appear before a court to give testimony. The first one is: expert may not appear before a court as witness but may appear before a court as the expert witness appointed by the party to express his views on a specific issue. The second opinion is that expert may appear before the court as the witness of one party to testify a generally-acknowledged truth. Another opinion is that because expert neither meets the conditions of witness nor the conditions of expert witness as provided for in PRC Civil Procedure Law, it will be legally groundless for the expert to give testimony or give expert opinion before the court. The witness as defined in Article 70 of PRC Civil Procedure Law refers to the person or entity who knows something about the case. While the expert witness refers to the person or entity appointed or designated by the court to appraise or determine a specific issue/matter. Therefore, the expert unilaterally appointed by the party does not know the facts of the case and he/she is not appointed or designated by the court, thus failing to meet the conditions as witness or expert witness as defined by law and thus may not appear before the court in the two capacities.
It is obvious that the crux of the problem lies in the imperfection of the provisions as to witness and expert witness in PRC Civil Procedure Law. The lack of expert witness system constitutes a further one of the “pale sections” in the legal system of China, giving rise to the above-mentioned three different opinions. Some legal experts suggest to add “expert witness” in the Civil Procedure Law or Evidence Law presently under enactment to provide supplementary legal basis and channel for the appearance of experts before the court, so as to ensure the procedural justice and safeguard the lawful rights of the parties. It is suggested that the traditional term of “witness” shall be defined only as the general witness, as opposed to expert witness. Expert witness shall be subject to examination and cross-examination by parties and open to verification before it can be taken as basis for ascertainment of facts. However, before amendment to the relevant laws is effective, the legal position of the inspection report or expert opinion presented by the party remains at issue.
Under current Chinese law, the party has the right to rely on Article 72 of PRC Civil Procedure Law to file application with the court for designating experts to re-appraise the questionable expert conclusion or method of inspection. Article 25 through Article 29 of Supreme People’s Court Provisions on Evidence used in Civil Actions with effect from 1 April 2002 provide for the right of the parties to apply for an appraisal and the qualifications of experts as follows:
Article 25 Parties shall apply for appraisal within the period for presenting evidence, except under one of the circumstances listed in Article 27.
Should the party who bears the burden of proof for a matter requiring appraisal fail to file an application for appraisal without cause or fail to prepay appraisal fee or fail to provide relevant documents within the time period specified by the court, thus causing the matter at issue unable to be verified, such party shall bear the consequence for failure to adduce evidence for the matter.
Article 26 After the approval of the court has been obtained, the two parties shall reach agreement to appoint qualified appraising entity or surveyors. Should agreement fail to be reached, the court shall make the designation.
Article 27 The court shall allow the party’s application for new appraisal if the party has objection to the expert conclusion issued by the appraising entity designated by the court and has produced evidence to show one of the following circumstances:
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The appraising entity or surveyor is not qualified to expertize the matter;
