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A.P. Moller-Maersk AS v. Shenzhen Branch of Shanghai Chanlian Xieyun Logistics Co., Ltd. and Shanghai Chanlian Xieyun Logistics Co., Ltd.

Determining the Fees for the Extended Use of Shipping Containers According to Law
Maintaining the Fairness of Shipping Trade Order
——A.P. Moller-Maersk AS v. Shenzhen Branch of Shanghai Chanlian Xieyun Logistics Co., Ltd. and Shanghai Chanlian Xieyun Logistics Co., Ltd. (Retrial case concerning dispute over container demurrage in a contract on carriage of goods by sea) 
[Basic Facts]
In January 2010, Shenzhen Branch of Shanghai Chanlian Xieyun Logistics Co., Ltd. (hereinafter referred to as “Chanlian”) entrusted A.P. Moller-Maersk AS (hereinafter referred to as “Maersk”) to ship five containers of goods from Huangpu, Guangdong to New Delhi, India. On February 23, the goods arrived at the port of destination and the shipper continued to change the consignee. However, no one had ever drawn the goods. On February 21, 2011, the goods were auctioned by Newport Customs in Mumbai, India. On February 28, the customs signed a bill of lading requesting Maersk to deliver the goods to the buyer. On February 27, 2012, Maersk filed a lawsuit requesting Shenzhen Branch of Chanlian and Chanlian to be jointly responsible for the container detention charge of INR 8,026,425, which was calculated from March 1, 2010 and equivalent to CNY 1,029,554.51 on the day of filing.  
[Judgment]
This case was brought to Guangzhou Maritime Court for first instance and the High Court of Guangdong Province for second instance. Both courts held that this case is a dispute over a contract for the carriage of goods by sea. The limitation period for the action is one year, counting from the date on which an obligee knows or should have known that its rights have been infringed. The reason of the violation of Maersk's rights was that the containers provided by Maersk were occupied beyond the contracted period of time, and the damage continued uninterrupted until the goods were auctioned by the customs. Then the damage caused by the detention of containers was suspended and the amount of fees was fixed. Therefore, the limitation period for Maersk to exercise the right of claim should be calculated from the date on which the goods delivery notification was issued by the Newport Customs, Mumbai, India, i.e. from February 28, 2011 to February 27, 2012 on which Maersk filed a lawsuit in the first instance court and did not exceed one year’s limitation period. Due to the failure to take delivery, the containers involved in the case were occupied for a long period of time and could not be put into transport and production in the meantime time. The shipper, Shenzhen Branch of Chanlian, should be liable for compensation, and the container detention charge shall be limited to the price of repurchasing new containers. Therefore, it was decided that Shenzhen Branch of Chanlian and Chanlian should jointly compensate Maersk for the detention charge of the five containers involved of CNY 150,000. Shenzhen branch of Chanlian and Chanlian appealed to the Supreme People's Court for retrial. The Supreme People's Court determined to review the case.
In the view of the Supreme People's Court, after the goods involved in the case were transported to the port of destination, the consignee designated by the Shenzhen branch of Chanlian did not withdraw the goods, causing the containers provided by the carrier Maersk  in performance of the transportation contract to be occupied for a long time and unable to be put into normal turnover, thus constituting a breach of contract. Maersk has the right to request the compensation of excessive use of the containers from the shipper Shenzhen branch of Chanlian for contractual damages due to the delayed performance of the obligation to return the containers in accordance with the contract of carriage of goods by sea. According to the Supreme People's Court's Reply to the Limitation Period of the Carrier's Requirement for Claims against Shippers, Consignees, or B/L Holders with regard to the Carriage of Goods by Sea, the limitation period for the claim is one year, counting from the date on which Maersk knew or should have known that the rights had been infringed. According to the confirmation of all parties, the shipper Shenzhen Branch of Chanlian should pay Maersk the container detention charge from March 1, 2010, and Maersk’s right to claim the payment of the container detention charge had already been generated--that is, Maersk knew or should have known that its rights had been infringed since March 1, 2010. Shenzhen branch of Chanlian made a promise through email on March 30 that the shipper would bear the container’s detention charge, which constituted the suspension of limitation as stipulated in Article 267 of the Maritime Code of the People's Republic of China. Therefore, this case should be counted from March 30, 2010. Maersk filed a lawsuit on February 27, 2012, which had exceeded the one-year limitation period, and lost the right to win the case. The Supreme People's Court set aside judgments of first instance and second instance and rejected Maersk's claim of action. 
[Significance]
With the slowdown in global trade growth, the shipping market has also experienced a continuous downturn, resulting in the emergence of a large number of maritime disputes. The types of disputes have spread from the traditional cargo damage disputes and marine insurance disputes to the upstream and downstream chains. Among them, disputes over the fees for the extended use of containers have been rising in maritime cases in recent years. The number of problems arising during this period has also been increasing, including the categorization of legal relations, the calculation standards of the fees, and the calculation of limitation period, etc.. The standards of domestic judicial practice in China have not been unified and the international treatment of such disputes is not the same, causing the relevant shipping companies at a loss of rules to follow in practice. Through the review and correction of the case, the Supreme People's Court has made a clear determination of the nature of the dispute over the fees for the extended use of containers in the contract for the carriage of goods by sea and the issue of limitation of action. The judgment of this case is a decision with foreign maritime element, which has aroused widespread concern and attention from Chinese and foreign shipping enterprises. The judgment result protected the right of the shipping enterprise to claim compensation for the extended use of the containers in accordance with law. Meanwhile, it has clarified how shipping enterprises should claim rights against the shippers or consignees in time during the limitation period of legal action while providing legal support for Chinese and foreign shipping enterprises to take active legal measures to effectively protect their lawful rights and interests. It has also established a unified standard for China's maritime judicial practice. China is a large oceanic, shipping and trading country, with extensive strategic interests in the oceans. The strategy of the “Belt and Road” is an important measure for building a strong maritime nation. A fair and efficient judicial system is an indispensable element in safeguarding the “Belt and Road" strategic and healthy economic environment. The trial of the case has fully played the role of maritime trials in providing judicial guarantees for the building of the “Belt and Road”. Moreover, it offered equal protection of the lawful rights and interests of Chinese and foreign parties in accordance with the law, improved the international credibility of China’s maritime trials and created a good legal environment for the building of the “Belt and Road”.


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