These proceedings arose from Zhejiang Longda Stainless Steel Co Ltd (Longda) entrusting AP Moller-Maersk A/S (Maersk) to carry four containers of stainless steel seamless products from Ningbo, China, to Colombo, Sri Lanka. The goods were loaded on 28 June 2014. On 9 July, when the goods were less than two days away from the port of destination, Longda asked Maersk to change the port of discharge or return the goods. Maersk replied that it was unable to arrange a change of port, and that returning the goods on the same vessel was also impracticable. If the goods were to be returned, they would first have to be discharged at the port of destination, and the relevant customs clearance and customs procedures completed. The goods subsequently arrived at Colombo, but were not collected, and were auctioned by the local customs authorities on 13 March 2015. Longda argued that Maersk had failed to carry out its instructions to change the port of discharge or return the goods, and had failed properly to care for the goods, and claimed compensation for the full loss of the goods plus interest. The Ningbo Maritime Court dismissed Longda's claims at first instance. After Longda appealed, the Zhejiang High People's Court varied the judgment and held Maersk liable for 50 per cent of the cargo loss. Maersk subsequently applied to the Supreme People's Court for a retrial.

Held: Retrial allowed. Second instance judgment set aside. First instance judgment upheld.

The Supreme People's Court first considered whether Maersk was obliged to arrange a change of port of discharge or return of the goods in accordance with Longda's request. As the PRC Maritime Code did not provide for a shipper's right to vary the contract of carriage during sea carriage, the Court applied art 308 of the PRC Contract Law. That art provides that, before the carrier delivers the goods to the consignee, the shipper may require the carrier to suspend the carriage, return the goods, change the destination, or deliver the goods to another consignee. This right corresponds in part to arts 50.1.b and 54.1 of the Rotterdam Rules, but remains subject to the principle of fairness in art 5 of the Contract Law.

The Court noted that liner shipping involves large cargo volumes, fixed schedules and routes, and carriage for multiple shippers. A carrier may refuse an instruction that is impracticable, or would seriously interfere with its operations, provided that it promptly explains why. This reflects arts 52.1.b and 52.1.c of the Rotterdam Rules, under which an instruction must be reasonably capable of execution, and must not interfere with the carrier's normal operations. Longda requested a change of destination or return of the goods only two or three days before the vessel reached Colombo, while the vessel was also carrying other cargo. Maersk's refusal was therefore objectively reasonable.

As to the loss after arrival at Colombo, the Supreme People's Court applied art 86 of the Maritime Code. Where goods are not taken delivery of at the port of discharge, or the consignee delays or refuses to take delivery, art 86 permits the master to discharge them into a warehouse or other appropriate place, with the resulting expenses and risks borne by the consignee. This provision corresponds to art 48 of the Rotterdam Rules on goods remaining undelivered. Maersk discharged the uncollected goods at the Colombo terminal, and therefore complied with art 86 of the Maritime Code. Longda knew when the goods were due to arrive, and that they remained uncollected, but took no effective action for about eight months, by which time the goods had been auctioned by the local customs authorities.

The Court also considered whether Maersk had breached its duty to care properly for the goods. Article 48 of the Maritime Code requires the carrier properly and carefully to load, handle, stow, carry, keep, care for and discharge the goods, reflecting arts 3.2 of the Hague and Hague-Visby Rules. Longda failed to prove any improper cargo care by Maersk. The resulting loss, caused by the goods remaining uncollected for a prolonged period and ultimately being auctioned by customs, therefore did not fall on Maersk.