Chinalight Resource Import & Export Co. Ltd v. Sino Port Shipping Limited & Others

 

Cite as: Chinalight Resource Import & Export Co. Ltd v. Sino Port Shipping Limited & Others, The Supreme People’s Court (16 May 2012), in Fan Yang, Foreign-related Arbitration in China: Commentary and Cases, Part IV

Case identification

  • Date of Decision: 16 May 2012 

  • Court:

    • The Supreme People’s Court

    • The Higher People's Court of Hubei

  • Arbitral Tribunal:

    • N/A

  • Case number / Docket number:

    • No. 18 of the Fourth Civil Tribunal of the Supreme People’s Court [2012]

    • No. 90 of the Higher People’s Court of Hubei [2012]

Classification of issues present

  • Application of the New York Convention: No

  • PRC case referred to: No.23 of the Fourth Civil Tribunal of the Supreme People’s Court [2002]

Descriptors: Arbitration agreement; Incorporation of arbitration clause; Bill of Lading; Short form bill of lading; Charterparty

 

 

 

Chinalight Resource Import & Export Co. Ltd v. Sino Port Shipping Limited & Others 

An arbitration clause contained in a Charterparty was found not effectively incorporated into the Bill of Lading concerned. In its Report to the Supreme People’s Court, the Higher People's Court of Hubei found that although the front page of the B/L stated “to be used with charter-parties”, it did not clearly stipulate the date and number of the Charterparty to be incorporated; and that the issue whether the Charterparty alleged by Sino Port had been incorporated in the B/L in question could not be determined. In its Reply, the Supreme People’s Court agreed that the arbitration clause contained in the Charterparty did not bind the holder of the B/L concerned.

Case text (English translation)

(16 May 2012 No. 18 of the Fourth Civil Tribunal of the Supreme People’s Court [2012])

 

The Higher People's Court of Hubei:

Your court’s <Report on request on instructions on the validity of an arbitration clause contained in the contract of carriage of goods by sea agreed between Chinalight Resource Import & Export Co. Ltd, Sino Port Shipping Limited and Mindong Congmao Shipping Industry Co., Ltd.> No. 90 of the Higher People’s Court of Hubei [2012] submission has been received. Upon deliberation, our reply is as follows:

The bill of lading (B/L) in question was a short form B/L under the Charterparty. The B/L stipulated the words “to be used with the charter-parties”, but no description as to the Charterparty was made on the front page of the B/L. As the Charterparty to be incorporated into the B/L was unclear, the Charterparty between Brihope Enterprise S.A. and Sino Port Shipping Limited should not be automatically incorporated in the B/L. The arbitration clause contained in the Charterparty is not binding to the parties involved in the B/L. The destination port of this affreightment is Jingjiang, which falls under the jurisdiction of the Wuhan Maritime Court, who shall have jurisdiction over this case.

 

It is so replied.

 

Enclosed:

Request on instructions on the validity of an arbitration clause contained in the contract of carriage of goods by sea agreed between Chinalight Resource Import & Export Co. Ltd, Sino Port Shipping Limited and Mindong Congmao Shipping Industry Co., Ltd.

(5 April 2012 No. 90 of the Higher People’s Court of Hubei [2012])

 

The Supreme People’s Court:

 

This case concerned disputes arising from a contract of carriage of goods by sea agreed between Chinalight Resource Import & Export Co. Ltd, Sino Port Shipping Limited and Mindong Congmao Shipping Industry Co., Ltd. It was accepted by the Wuhan Maritime Court and involved issues regarding incorporation of arbitration clauses contained in a Charterparty in the bill of lading (B/L). Pursuant to Article 1 of the <Circular of the Supreme People's Court on the Relevant Issues Regarding the Handling of Foreign-related Arbitration and Arbitration of a Foreign Country by the People's Court> issued by your court, we hereby report the following:

 

I. Parties

Plaintiff: Chinalight Resource Import & Export Co. Ltd (Chinalight). Domicile: Room 601, 3/F, Jinsong Unit 9, Chaoyang District, Beijing.

Defendant: Sino Port Shipping Limited (Sino Port). Domicile: 19/F, B2B Centre, 36 Connaught Road West, Hong Kong.

Defendant: Mindong Congmao Shipping Industry Co., Ltd. (Congmao). Domicile: Lifan Cun, Xiabaishi Zhen, Fuan, Fujian.

 

II. Facts

On 23 November 2010, 2313 pieces of timber logs owned by Chinalight were loaded on the vessel “Qian Li Shan 15” in Awagli, Papua New Guinea. The captain of the vessel had issued four clean B/L numbered 10A30, 10A22, 10A29 and A0228. The goods were being delivered to Jingjiang, China. Upon arrival, damage to the goods was discovered. After inspection, losses arising from the incident amounted to RMB¥ 2,200,464.22 (USD$ 332,758.22).

The B/L in question was a Charterparty bill of lading. Words “to be used with the Charterparty” had been provided in the B/L, but no provisions as to the date of the Charterparty and the number were made. The consignor of B/L 10A30, 10A22 and 10A29 was Niugini Lumber Merchants Ltd. The consignor of B/L A0228 was Island Forest Resources Ltd. All four B/Ls are to the order of the consignee. The notifying party shall be Chinalight. (sic) Clause 1 of the terms and conditions of the B/L stipulates that “ALL TERMS AND CONDITIONS, LIBERITES AND EXCEPTIONS OF THE CHARTERPARTY, DATED AS OVERLEAF, INCLUDING THE LAW AND ARBITRATION CLAUSE ARE HEREWITH INCORPORATED”.

The Charterparty submitted by Sino Port was concluded on 27 August 2010, with the ship owner being Sino Port and the charterer being Brihope Enterprise S.A.. Clause 26 of the Charterparty stipulated that “ANY DISPUTE ARISING FROM THIS FIXTURE NOTE SHALL BE SUBMITTED TO ARBITRATION HELD IN HONG KONG IN ACCORDANCE WITH PROVISIONS OF MARITIME ARBITRATION RULES OF HONG KONG AND AWARD GIVEN BY THE ARBITRATION SHALL BE FINAL AND BINDING ON BOTH PARTIES”.

On 13 June 2011, Chinalight filed a claim at the Wuhan Maritime Court, demanding Sino Port and Congmao compensate its loss of goods amounting to RMB¥ 2,200,464.22 plus interest.

The Wuhan Maritime Court accepted the case on 20 June 2011. Upon receipt of the notices of response to action, Sino Port and Congmao made an objection to the Wuhan Maritime Court as to its jurisdiction, submitting that since the B/L in question was a Charterparty B/L and Clause 26 of the Charterparty stipulated that any disputes arising from the note shall be submitted to arbitration held in Hong Kong in accordance with the provisions of maritime arbitration rules and the award given by the arbitration shall be final and binding on both parties. Therefore, the case shall be submitted to arbitration instead of litigation. Sino Port and Congmao requested that the Wuhan Maritime Court dismiss Chinalight’s claims.

 

III. Opinions of the Wuhan Maritime Court

Upon discussion, it is in the Wuhan Maritime Court’s opinion that the jurisdiction objection of Sino Port and Congmao are not established. The reasons are as follows:

1. According to the terms and conditions stipulated in the B/L in question, all terms and conditions, liberties and exceptions of the Charterparty, dated as overleaf, including the law and arbitration clause are incorporated in the B/L. The Charterparty referred to by the incorporated clause should clearly stipulate the date, yet no date can be found in the Charterparty here, regardless of the front and the back page of the document. Therefore, the so-called incorporated Charterparty was unclear. The incorporated clause cannot be incorporated in the Charterparty submitted by Sino Port.

2. The ship owner of the Charterparty submitted by Sino Port was Brihope Enterprise S.A., while the consignor of three B/L was Niugini Lumber Merchants Ltd and the consignor for the remaining one was Island Forest Resources Ltd. Incorporation of Charterparty in the B/L presupposes that the B/L will be issued pursuant to the voyage charter, which is a B/L signed between the consignor and the consignee under the Charterparty. The charterer of the Charterparty and the consignee of the B/L are not the same party. In other words, the charterer may not be a party of the B/L. Therefore, it can be determined that the B/L in question is not the B/L contained in the Charterparty. Sino Port’s submissions on effective incorporation lack legal grounds.

3. Provided that the Charterparty had not effectively incorporated in the B/L in question, here no arbitration agreement had been made between Chinalight and Sino Port. Being the court of the destination of the affreightment, Wuhan Maritime Court has jurisdiction over this case. Therefore, it shall dismiss Sino Port and Congmao’s jurisdiction objection.

 

IV. Opinions of our court

Although the front page of the said B/L stipulated the words “to be used with charter-parties”, pursuant to your court’s reply (No.23 of the Fourth Civil Tribunal of the Supreme People’s Court [2002]), without clearly stipulating incorporation of the date and number of the Charterparty on the front page of the B/L, the issue whether the Charterparty alleged by Sino Port had been incorporated in the B/L in question cannot be determined (merely by the materials mentioned above). Our court agrees with the opinions of the Wuhan Maritime Court.

Please reply whether the above opinions are correct.