Xiamen Maritime Court

Cases

Xiamen Maritime Court

Dec. 21, 1996

Sinopac Xiamen
v.
Billiongold HK
and
others

Application for stop-payment of accepted L/C
Due to forged B/L

Note: This is an edited English translation of one case from Selected Cases of People’s Court (No.45 of Volume 24), including a true introduction to the facts and trial.

Facts:

Plaintiff: Sinopac Materials and Equipment Import & Export Co., Ltd., Xiangyu Bonding Zone, Xiamen, Fujian Province, South-east China (“Sinopac Xiamen”)

1^st Defendant: Billiongold Int’l Ltd., HK (“Billiongold”)

2^nd Defendant: Winwick Shipping Ltd., HK (“Winwick”)

3^rd Defendant: Rishelle Navigation Inc. (“Rishelle”)

Sinopac Xiamen and Billiongold concluded on Mar. 4, 1996 a contract of purchase-and-sale of steel plate, by which it was agreed that the cargo would be carried from Black Sea ports to Zhenjiang port, China with partial shipments. As per the provision of the contract, Sinopac Xiamen on July 1, 1996 issued an irrevocable time L/C No. FIBMX96698-XG for the amount of USD 600,000.00 (5% more or less) in favor of Billiongold, for which the bank charges was RMB 8,303.03. The L/C provided that the shipment would not be later than July 15, 1996 and the date of payment would be Jan. 14, 1997. The L/C was amended with new delivery port to be Fuzhou, China, for which the bank charges was RMB 800.00.

Billiongold gave the whole set of documents to the negotiating bank during the negotiating period. Sinopac Xiamen on July 18, 1996 obtained the documents against acceptance from the opening bank, which on July 25 confirmed acceptance to the negotiation bank. Billiongold obtained the accepted draft and then transferred it to a company of London. It was indicated on the B/L obtained by Sinopac Xiamen that the cargo was loaded on the vessel KAPITAN POLKOVSKIY owned by Rishelle and the B/L itself was issued by Winwick on behalf of Rishelle. The loading port was Ilyichevsk and the discharging port Fuzhou. But neither the B/L was Rishelle’s standard one nor the name of the B/L was Winwick.

After the vessel KAPITAN POLKOVSKIY arrived at Fuzhou port, Sinopac Xiamen went to pick up the cargo and found that the cargo was not available on the vessel. Sinopac Xiamen held that the B/L and other shipment documents supplied by the defendants were all false and thus brought an action against them in Xiamen Maritime Court, requesting a judgment that: (1) the contract of purchase-and-sale and the shipment documents were to be null and void; (2) the L/C was to be revoked and the payment under the L/C was to be stopped; (3) the defendants were to undertake joint and several liability for compensation to the plaintiff.

Rishelle defended itself that:

Rishelle and its agent did not issue the B/L in question, Rishelle neither let the vessel to Winwick nor authorize Winwick to be its agent to issue a B/L. So Rishelle would not undertake legal liability for Winwick’s act and its consequences. And Rishelle had never carried the cargo or accepted the consignment by anyone. Rishelle requested the Court to reject the action against itself instituted by the plaintiff.

Billiongold and Winwick did not defend themselves.

Trial:

Xiamen Maritime Court after hearing found:

Rishelle was a shipping company registered in Liberia and possessed the vessel KAPITAN POLKOVSKIY, which was arrested at the port Fuzhou due to the reason of another case in the duration of this action. Rishelle neither consigned Winwick as its agent nor authorized Winwick to issue the B/L. The cargo indicated on the B/L held by the Plaintiff was not included in 24,860.627 tons of cargo loaded on the vessel KAPITAN POLKOVSKIY from May 24 to June 13, 1996 at Ilyichevsk. The shipping agent for the voyage of the vessel did not received the relevant consignment by the Plaintiff as the consignee.

Xiamen Maritime Court held:

Law should protect Sinopac Xiamen’s lawful rights and interests in its application to the opening bank for opening the L/C according to the contact of purchase-and-sale of steel between the Sinopac Xiaomen and the Billiongold. In stead of supplying the agreed cargo, Billiongold, colluding with Winwick, forged the clean B/L on board, and presented the B/L and other documents forged to the negotiating bank for gaining the payment for the cargo by intentionally cheating the Plaintiff, which had nothing to do with Rishelle. Upon the above, Xiamen Maritime Court, in accordance with the provisions of Article 58, Article 61, Paragraph 1, 2 of Article 66 of General Principles of Civil Law of PRC, and of Article 10, 11 of Foreign Economic Contract Law of PRC, gave on Dec. 21, 1996 a sentence as follows:

1. Null and void was to be the contract of purchase-and-sale between Sinopac Xiamen and Billiongold and relevant documents including the B/L No. 9A issued by Winwick on June 26, 1996. Sinopac Xiamen was not to make the payment under the L/C No. FIBMX96698-XG in favor of Billiongold.

2. Billiongold and Winwick were to undertake joint and several liability for compensating Sinopac Xiamen for the bank charges for opening and amendment.

3. The claim against Rishelle was to be rejected.

No parties, after receiving the sentence, instituted an appeal in the period of appeal. Thus, the Court informed the opening bank of the stop-payment under the L/C. The opening bank also informed the negotiating band, World Bank, etc. of the reason and the foundation of the stop-payment, and obtained the understanding thereof. The British company, the transferee of the draft, authorized a law firm to send the Court a letter for investigation of the case, and then instituted an legal action against Billiongold in London and applied for the preservation of the properties in London and other places owned by Billiongold after understanding the facts of fraud. Billiongold, under the pressing by the negotiating bank and the third party, contacted thereafter the Plaintiff on paying the losses caused to the Plaintiff.

[Back To Top] [Other Cases]