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Handbook of Sulphuric Acid Manufacturing
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Preface
Contents
Storage/Loading/Unloading - Transportation
September 28,
2013
September 18, 2013
In November 2003 a Beijing industrial and
trade company imported 10,000 tons of bulk sulphur from the United Arab
Emirates under cost and freight terms. The goods were carried from
Ruwais, United Arab Emirates to Xin Gang, China by a ship belonging to a
Maltese marine company. The Beijing company took out an insurance policy
for the goods against all risks amounting to $968,000.
The ship departed Ruwais on November 6 2003.
With no advance notice to the Beijing company, the ship changed its
destination and arrived at the port of Qinghuangdao, China on December 5
2003, and even issued a notice of readiness without the consent of the
Beijing company. The Beijing company was thus compelled to discharge the
goods at Qinghuangdao. When offloading the goods, it was found that part
of the shipment had been seriously contaminated. The Beijing company
applied to the Tianjin Maritime Court for preservation of maritime
claims and entrusted a local commodity inspection corporation to inspect
the goods, while also notifying its insurer of the case.
The Beijing company later applied to the court
to arrest the ship at Qinghuangdao. The Shipowners' Mutual Protection
and Indemnity Association issued a guarantee letter for this issue
amounting to $400,000. During this period, the insurer commissioned
China Marine Service Company Ltd to conduct an investigation concerning
the ship and the cause of the goods' contamination. It was concluded
that the contamination was due to the carrier having failed both to make
the ship seaworthy and to ensure safe storage of the goods in the ship
before departure. In the meantime, a quality inspection report issued by
the Qinghuangdao Inspection and Quarantine Bureau stated that all of the
goods were contaminated to various degrees, and that the net loss of the
goods amounted to 2,678.9 tons, which devalued the goods by
Rmb2,544,375.
On January 9 2004 the Beijing company took
legal action against the marine company at the Tianjin Maritime Court.
At the Beijing company's request, the insurer subsequently conducted a
careful investigation, following which it paid an indemnity of
Rmb2,187,049.70 to the company and obtained the right of legal
subrogation for the recovery claim.
From the evidence obtained during the
investigations, it was found that there were three primary issues in the
case.
Whether insurer
was entitled to subrogation right
The Beijing company noted that according to the sales contract, the
seller was responsible for the arrangement of shipping by chartering,
while it had no knowledge of this arrangement. Furthermore, as the
shipowner, the defendant had delivered the goods to the Beijing company
on submission of the bill of lading. Therefore, the defendant had
carried out the marine transportation and was liable for damages to the
goods.
The Beijing company obtained the bill of
lading under the terms and conditions of the contract and a letter of
credit, and also made full payment for the goods, so it committed no
fraud or ill-intentioned actions. The insurer obtained the right of
subrogation after making a reasonable reimbursement to the Beijing
company and receiving the letter of subrogation. As such, it was legal
for the insurer to take action against the defendant in order to protect
its legitimate rights and interests.
Cause of damage to
goods
The two parties had heated arguments on the cause of the damage to the
goods. The inspection report submitted by the defendant contrasted
significantly with the facts. The actual cause of the damage was the
carrier's failure to exercise due diligence when loading and storing the
goods. Given that sulphur is highly corrosive, the defendant should have
washed the cabin before loading the goods; its failure to carry out this
important step was the primary cause of the damage. However, the
defendant also failed to take sufficient measures to protect the goods,
causing significant surface damage to the goods. Furthermore, in
addition to snow and water leakage in the cabin, the damage was
exacerbated by the defendant's failure to divide the goods into separate
cabins. Thus, the plaintiff argued, the carrier was liable for the
damage.
Whether
plaintiff's inspection report had legal force
The defendant attempted to promote confusion over the inspection report
by claiming that it constituted several other types of evidence and
argued that the report was not legally binding on the grounds that the
plaintiff's inspector was not present at the court proceedings. The
plaintiff pointed out that an inspection reports constitutes a single
type of evidence, and that the content and conclusions of the report in
question were an objective reflection of the facts. Therefore, it was
undoubtedly legally valid.
Under court mediation, the two sides reached a
settlement agreement. According to the agreement, the plaintiff would:
·
be the only party capable of exercising the right of action; and
·
on receipt of compensation from the defendant, issue a receipt and
release letter to the defendant by which it abandoned all of its rights
to make claims or preservation of property applications concerning this
dispute to any court or arbitration procedure against any party,
including:
o
the defendant;
o
the ship's
manager;
o
the operator;
o
the charterer;
o
the insurer; or
o
the employer.
Eventually, this case was satisfactorily settled after the defendant
paid the indemnity in a lump sum to the plaintiff.