WTO entry may swing damages verdict to foreign firm

PUBLISHED : Monday, 25 November, 2002, 12:00am
UPDATED : Monday, 25 November, 2002, 12:00am

One of the last of the so-called 'soybean cases' involving Chinese importers' claims for damage to cargo from the United States is due to open today in Guangzhou Maritime Court.

Legal sources said they are optimistic China will for the first time rule in favour of the foreign party.

Shanghai Agriculture & Industry and Commerce Foreign Trade Corporation is claiming damages from Domino Shipping Ltd of Malta for alleged damage to cargo caused by bad ventilation.

It is one of what is believed to be 100 or more similar disputes in the wake of sharp declines in world soybean prices towards the end of 1997, a lawyer familiar with the cases said.

Chinese importers, who had soybean cargo at sea that had been contracted at prevailing market prices before they suddenly plunged by as much as 25 per cent, saw their customers walking away from the contracts.

When their cargo arrived at Chinese ports, the importers brought claims for water damage, which the lawyer said coincidentally matched the sum the crop had fallen by on the market.

The lawyer said Chinese courts had in every case so far awarded in favour of the claimants for 100 per cent of the amount claimed, which was between US$1.5 million and US$3.5 million (HK$11.7 million and HK$27.3 million).

However, the Guangzhou case might be a watershed as there have been recent indications that the Chinese courts are increasingly concerned about criticisms abroad of the mainland legal system, he said.

In August, the Dalian Maritime Court ruled that it would not take jurisdiction in cases where there is a clause for foreign arbitration to settle disputes, while the Zhejiang People's High Court overruled the Ningbo Maritime Court after it refused to recognise the clause.

Six weeks ago, the Supreme People's Court resurrected one of several soybean cases after it had launched an investigation into whether the ruling was right.

The supreme court held a new trial of the case, originally heard by the Wuhan Maritime Court in Beijing, instead of sending it back to the maritime court as is normal practice. However, it has yet to hand down a ruling.

'We are reasonably optimistic that there may be a turning of the tide and this could be the first case in which the foreign defendant may be successful,' the lawyer said.

The case comes ahead of China's first anniversary as a World Trade Organisation member next month and as it faces public scrutiny for compliance with the rules of global trade, including its pledge to overhaul its legal system.