Liability for Missing Goods at Chinese Ports in International Trade: A Case Study

In international trade, the disappearance of goods at Chinese ports raises questions about the party responsible for the loss. When goods arrive safely at a Chinese port but mysteriously vanish before the customer can claim them, who bears the burden of the resulting losses? This article examines a case study that sheds light on this issue.

1.Case Background

In 2016, Huasheng Company entered into an agreement to deliver a batch of goods to a foreign client. To facilitate the shipment, they booked cargo space with Changrong Company. Subsequently, Changrong Company’s shipping agent, Yonghang Company, issued a bill of lading naming Huasheng Company as the consignor. However, upon the goods’ arrival at the destination port, Changrong Company and Yonghang Company delivered the goods to another party without receiving an endorsed and transferred bill of lading from Huasheng Company. When the foreign client came to claim the goods, they found that the goods had already been taken by someone else and were untraceable. In response, Huasheng Company filed a lawsuit with the Guangzhou Maritime Court, seeking compensation from Changrong Company and Yonghang Company for their losses. The defendants argued that they delivered the goods only after receiving a complete set of original bills of lading from a third party, and the loss of goods was a result of Huasheng Company’s mishandling of the original bills, which they claimed was not their responsibility.

2.Relevant Legal Provisions

Article 71 of the People’s Republic of China Maritime Law states that the terms in a bill of lading indicating delivery to a named person, according to the consignor’s instructions, or to the holder of the bill, constitute a guarantee by the carrier for the delivery of goods. Article 79, item 2, further stipulates that an order bill of lading should be endorsed by name or in blank for transfer.

3.Analysis

In this case, Changrong Company, as the carrier, issued an order bill of lading naming Huasheng Company as the consignor. This constituted a commitment by Changrong Company to deliver the goods upon endorsement by Huasheng Company. However, upon the goods’ arrival at the destination port, Changrong Company delivered the goods to another party solely based on the original bill of lading, which lacked Huasheng Company’s endorsement. This action violated the relevant provisions of the People’s Republic of China Maritime Law and amounted to a wrongful delivery, thereby holding Changrong Company liable for the losses suffered by Huasheng Company.

On the other hand, Yonghang Company, as Changrong Company’s shipping agent, had no contractual relationship with Huasheng Company in this case. Consequently, Yonghang Company cannot be held liable for compensation.

4.Conclusion

In maritime trade relationships, even if the consignee possesses the original order bill of lading, without proper endorsement from the consignor, they are not the legal holder of the bill and cannot claim the goods from the carrier. If the carrier delivers the goods to a holder of an order bill without the required consignor’s endorsement, they must bear the corresponding contractual responsibility and compensate the consignor for any resulting losses. In this case, the court ruled in favor of Huasheng Company, and Changrong Company was ordered to compensate them for the losses incurred, totaling over 1.99 million yuan. This case serves as a reminder of the importance of adhering to the relevant provisions of maritime law to ensure smooth international trade transactions and avoid disputes over missing goods at Chinese ports.