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Dispute over maritime freight forwarding contract between Shanghai JieXi International Freight Forwarding Co., Ltd. and Chongqing Highway Engineering (Group) Co., Ltd

[basic case]

On november12,2014, JieXi freight forwarding company signed a transportation agreement with Chongqing highway company, which agreed that JieXi freight forwarding company would handle the shipment of 161 vehicles and equipment on behalf of Chongqing highway company. The loading port was Shanghai, China, and the unloading port was Hodeidah, Yemen. After the goods arrived at the port of destination and were successfully delivered, Chongqing highway company failed to pay the payable expenses under the transportation agreement to JieXi freight forwarding company as agreed. On february4,2015, Chongqing highway company issued a payment commitment to JieXi freight forwarding company, saying that due to the unstable situation in Yemen and the sudden death of the Saudi king, it was unable to receive the project advance payment from the Saudi project fund within the agreed time, so it defaulted on the expenses of JieXi freight forwarding company, and promised to pay all the arrears before march2,2015, but has not paid since. During the trial, Chongqing highway company claimed to invoke the exemption of force majeure on the ground of war in Yemen, the country where the destination port is located. After investigation, the goods involved in the case were originally intended to be used for the construction of Amran Aden expressway project undertaken by Chongqing highway company in Yemen. The project team members had been withdrawn to China in the Yemeni overseas Chinese evacuation event in March, 2015, so the project was put on hold.

[judgment result]

The Shanghai maritime court held that the war in the country where the destination port is located affected the highway construction project, and the solvency of Chongqing highway company was affected, but it could not be exempted from its payment obligation to JieXi freight forwarding company because it could not receive the contract payment under the highway construction project. Therefore, Chongqing highway company was ordered to pay the arrears. The original judgment was upheld in the second instance.

[typical meaning]

There are many countries along the “the Belt and Road”, with complex and diverse political, economic, ethnic, religious, legal, cultural and geographical conditions. In the process of “going out” to participate in investment, cooperation and construction, it is inevitable to encounter force majeure events such as political turmoil, war, strikes, natural disasters or other unpredictable changes in circumstances. This case is a typical case of disputes arising therefrom. The destination of the contract for carriage of goods by sea in this case, Yemen, is one of the countries along the “the Belt and Road”. The goods transported are used for major infrastructure construction projects undertaken by domestic enterprises through overseas bidding. The occurrence of the dispute is related to the sudden change of the situation in Yemen. Therefore, the accurate division of the responsibility limit and risk burden of the parties to the contract under similar events is of practical significance to protect the overseas investment interests of enterprises according to law and encourage and promote enterprises to participate in the construction of the “the Belt and Road”. The judgment of this case makes it clear that the principal of the maritime freight forwarding contract cannot be exempted from his contractual obligations to the trustee under the maritime freight forwarding contract because his investment project cannot be performed, so as to avoid the improper transfer of unexpected risks in the field of overseas investment and construction to the shipping industry chain that provides logistics support services. This principle is also applicable to the performance of contracts for the carriage of goods by sea and other relevant contracts for the provision of materials, financing, etc. for overseas investment projects, and can be used for reference in dealing with similar cases involving the “the Belt and Road” in the future.



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