The respondent was the owner of the cargo loaded on board the appellant’s vessel, the MOL Comfort. The vessel sank in the Indian Ocean due to a fracture in the ship. The respondent filed a claim against the appellant for loss of cargo in the first instance court.

In the first trial, the appellant claimed that this case should be heard in Japan for two reasons. First, there was a jurisdiction clause on the back of the bill of lading which stated that any disputes arising from the bill of lading should be under the jurisdiction of the Japan courts. Secondly, the appellant had applied to set up a limitation fund for maritime claims regarding the appellant’s vessel in the Tokyo District Court. Therefore, relevant claims should be subject to the jurisdiction of the court where the limitation fund claims was constituted.

The first instance court rejected both of the appellant’s arguments. The first instance court ruled that the appellant failed to adopt a special format in the jurisdiction clause in order to draw the plaintiff’s attention. Therefore, the jurisdiction clause on the back of the bill of lading was invalid. The first instance court found that there was no judicial assistance treaty between China and Japan. In addition, China was not a contracting state to the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976). Therefore, the court should not be restrained by the limitation fund and the case should not be under the jurisdiction of the Japanese courts. 

The appellant appealed on the jurisdiction issue.

Held: Appeal dismissed.

Regarding the appellant's first argument, according to art 39(1) of the Contract Law of the PRC, it was correct for the first instance court to conclude that the appellant adopted the wrong format in the jurisdiction clause. Therefore, the jurisdiction clause was invalid.

Regarding the appellant’s second argument, the first instance court’s reasoning on this issue was also correct. In addition, it was correct for the first instance court to conclude that, since China has not acceded to the LLMC 1976, it should not be restricted by the limitation fund.