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Can Consignors Seek Compensation for Lost Containers without Insurance?

On the night of Nov. 30, ONE's large container ship "ONE APUS" with a capacity of 14,052 TEU was lost in the Pacific Ocean at 1,600 nautical miles northwest of Hawaii due to bad weather, resulting in collapsed stacks and damaged containers overboard. The accident caused 1816 containers damaged or lost.



It is possible that a consignor’s goods are damaged by bad weather, such as pouring rain or huge waves, during transportation. If the goods are not insured, can a consignor claim compensation under China’s laws?


According to Articles 54, 60, 61 and 63 of the PRC Maritime Law (中华人民共和国海商法), and referring to the cases of Guangdong Higher People's Court and Shandong Higher People's Court, if the goods are lost due to bad weather during transportation, a consignor has the right to sue the freight forwarder and carrier in the Chinese court, demanding that they jointly bear the compensation liability to him/her.


It should be noted that according to Article 832 of the PRC Civil Code (中华人民共和国民法典), if the freight forwarder and the carrier can prove that the loss of the goods is caused by force majeure, the freight forwarder and the carrier do not need to bear the liability for compensation.


With regard to force majeure, according to Article 180 of the PRC Civil Code, force majeure is an unforeseeable, unavoidable and insurmountable objective situation.


Therefore, if the freight forwarder and the carrier can prove that the goods are lost due to force majeure, then they do not need to compensate the consignor.


However, referring to the cases of Shanghai Higher People's Court and Guangdong Higher People's Court, if the freight forwarder and the carrier want to prove that the cause of the loss of the goods is force majeure, they need to provide sufficient evidence to prove that they have made sufficient preparations to ensure the safety of transportation before sailing, and that they have made enough efforts to avoid the affect of bad weather and the loss of goods due to bad weather (including careful operation of the ship, taking adequate preventive measures, etc.), and to prove that their preparations comply with laws, regulations and industry standards, and that although they have fulfilled the above obligations, they still can't avoid the goods being lost due to bad weather.


Therefore, it is very difficult, though not impossible, for the freight forwarder and carrier to prove that the goods are lost due to force majeure and avoid the liability for compensation.


There is another possible situation where the carrier actively throws the goods into the sea in order to ensure the safety of the ship and other goods in bad weather.


According to Articles 193, 197 and 199 of the PRC Maritime Law, if the consignor can prove that the carrier actively throws the goods into the sea, the consignor has the right to require the entities who have profited from the loss of the goods to share the consignor’s loss, the entities who have profited from the consignor’s loss include: firstly, the shipowner whose ship is intact because your goods were thrown into the sea, and secondly, other consignors whose goods and property are intact because your goods were thrown into the sea.


However, according to Articles 196 of the PRC Maritime Law, the consignor should provide sufficient evidence to prove that the carrier proactively throws the goods into the sea in order to confirm the safety of the ship and other goods in bad weather. Therefore, it may be more difficult to obtain compensation under this circumstance.


If you have any more related questions, please do not hesitate to contact our professional Chinese lawyers.


 


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