[Case Brief]: In July, 2008, Ningbo Zhongmeng Steel Co., Ltd. (hereinafter referred to as Zhongmeng Ltd), the defendent in this case, signed a sales contract with Hong Kong Grand International Co., Ltd. (hereinafter referred to as Grand International Ltd), the defendent in the case, agreeing to sell 19,000 tons of cold-rolled steel toil to the latter. In September at the same year, Youxin Shipping Co., Ltd. , on behalf of the ship-owner, signed the fixture note with Grand International Co., Ltd, agreeing that the ship-owner would arrange ship space for Grand International Co., Ltd., with “DONGFANGCAIFU” as the carrying vessel, and if there is a note on the mate’s receipt, the ship-owner shall sign and issue the clean B/L according to the shipper’s L/G. Fuzhou Tianheng Shipping Co., Ltd.( hereinafter referred to as Tianheng Ltd), the plaintiff in the case, on behalf of the ship-owner, signed the fixture note with Jinhaian( Hongkong) Group Co., Ltd.. In October, 2008, the goods were loaded on DONGFANGCAIFU, and the mate’s receipt noted packaging defects of some goods. As Zhongmeng Ltd provided L/G to Tianheng Shipping Ltd and the captain of the ship, the ship agency company, on behalf of the captain, signed clean on board B/L. During the voyage, Tianheng Ltd sent a fax to Zhongmeng Ltd, Grand Ltd, the defendent in this case, and Grand Resources Group Co., Ltd.(formerly Zhejiang Grand Import and Export Co., Ltd., hereinafter referred to as Grand Resources Ltd), saying that as the main engine of the ship broke down at the Yangtze Estuary, it had to wait for another 3 months for the replacement parts to arrive. Then Grand International Ltd asked to conduct a ship survey, but Tianheng Ltd didn’t make arrangements. In January, 2009, DONGFANGCAIFU arrived at Port of Krishna, Turkey. The holder of the B/L, ASSAN DEMIR VE SAC SAN.A.S applied to Court of Turkey for an interlocutory injunction, requesting the Court to detain the ship due to its delay in delivery and causing losses by price fluctuations, and asked for 1,769,410.48 US dollars from Tianheng Shipping Ltd as guarantee. The Court of Turkey supported the holder of the B/L in his application and auctioned the ship according to the application of the seamen of the ship. The ship was auctioned at the price of 1,250,000 Turkish lira, while the auction fee stood at 145,000 Turkish lira. Tianheng Ltd filed a lawsuit against Zhongmeng Ltd, Grand International Ltd, and Grand Resources Ltd in Ningbo Maritime Court, requesting the Court to adjudge that the defendents in the case shall compensate for loss caused by detention of the vessel since it was their failure in fulfilling their commitments in the L/G that led to the 143 days of the detention and the auction of the ship, and that they shall also pay for the litigation fee. After hearing, the Court decided that though the L/G involved in this case was agreed to be interpreted in accordance with the English law, as both parties argued that the Chinese law shall be enforced in this case, this case would be interpreted according to the law of the People’s Republic of China. Since Tianheng Ltd was unable to prove that the three defendents in the case shall assume the responsibility of the detention of the ship, or that they suffered losses caused by the detention with its current evidence, there was no fact or legal basis of their losses caused by detention calculated according to the rate of detention charges agreed in the fixture note, in this regard, the Court dismissed the plaintiff’s claim. After the verdict of the first instance, Tianheng Ltd lodged an appeal against the decision. After hearing, Zhejiang Higher People’s Court again dismissed Tianheng Ltd’s appeal and affirmed the original judgment because the grounds of the appeal that the three defendents in this case shall compensate for the losses for detention according to the agreed B/L since the ship was detained because of Tianheng’s signing and issuing of the clean B/L could not be established.

    [Typical Significance]: Issuing L/G in exchange of clean B/L is commonly seen in carriage of goods by sea. The L/G issued by a party out of good intention and recognized by the other shall be binding for both parties. The reference value of this case lies in that the shipper’s issuing the L/G doesn’t mean that the carrier can be exempted from its obligations, such as loading, moving, stowing, transporting, taking care of or unloading the goods in an appropriate and meticulous manner. The scope of the guarantee issued by the guarantor cannot be expanded indefinitely, the obligation of guarantee relates only to the loss or liability arising from the carrier's failure to record the note of mate's receipt on the B/L, while losses caused by other factors shall not be paid by carriers.