This case concerned a consignment of seamless steel pipes sold on FOB terms and packed in 26 40-foot containers. Haiyao Enterprise Co Ltd (Haiyao) purchased the goods from China National Machinery International Co-operation Co Ltd (China National Machinery) and, through freight forwarders, booked space with and paid freight to New Golden Sea Shipping Pte Ltd (New Golden Sea). After the goods were loaded onto the CSCL Santiago, New Golden Sea's agent issued an order bill of lading naming China National Machinery as the shipper. The goods arrived at Laem Chabang, Thailand, but remained unclaimed for a long period. China National Machinery had negotiated the bill of lading and other documents with the bank and received the full purchase price, after which the full set of bills of lading was returned to New Golden Sea.

New Golden Sea brought proceedings against China National Machinery, seeking payment of container demurrage charges and storage charges and the return of the 26 containers or, if they could not be returned, compensation for their value. New Golden Sea argued that, as the shipper named in the bill of lading, China National Machinery was bound by the terms on the reverse of the bill of lading and should be liable for the losses arising from the failure to take delivery of the goods at the port of discharge. China National Machinery argued that the FOB buyer was responsible for booking space and concluding the contract of carriage, and that it had merely delivered the goods to the carrier. It was therefore an actual shipper or delivering shipper, rather than a contracting shipper.

The Tianjin Maritime Court dismissed New Golden Sea's claims. It held that art 42.3 of the Maritime Code of the PRC covered two categories of shipper: the contracting shipper, who concluded the contract of carriage of goods by sea with the carrier; and the delivering shipper, who delivered the goods to the carrier. The contracting shipper was liable for losses arising from the failure to take delivery at the port of discharge because it had concluded the contract of carriage and arranged for the consignee. A delivering shipper who had not concluded the contract of carriage and had not designated the consignee was not liable for those losses. China National Machinery had merely delivered the goods to New Golden Sea and was therefore the delivering shipper rather than the contracting shipper.

The dual definition of 'shipper' in art 42.3 of the Maritime Code of the PRC corresponds to art 1.3 of the Hamburg Rules. Under art 1.3 of the Hamburg Rules, 'shipper' includes both a person by whom, or in whose name or on whose behalf, a contract of carriage of goods by sea has been concluded with a carrier and a person by whom, or in whose name or on whose behalf, the goods are actually delivered to the carrier.

The Tianjin High People's Court dismissed the appeal and upheld the judgment. It further held that the terms on the reverse of the bill of lading were standard terms prepared by the carrier. As the delivering shipper, China National Machinery could not have known those terms before delivering the goods and had no opportunity to decide whether to accept them. The fact that it was named as the shipper and had temporarily held the bill of lading for the letter of credit transaction was insufficient to prove that it had accepted the terms on the reverse of the bill of lading, or had agreed with New Golden Sea to conclude the contract of carriage. The bill of lading had passed through the letter of credit transaction, and China National Machinery no longer held it, or asserted any rights under it. 

New Golden Sea applied to the Supreme People's Court for a retrial. It argued that the Maritime Code of the PRC did not distinguish between the rights and obligations of contracting and delivering shippers. Since China National Machinery was named as the shipper in the bill of lading and might enjoy the rights of a shipper, it should also bear the liabilities arising from the failure to take delivery at the port of discharge. 

Held: Retrial application dismissed.

The Supreme People's Court held that the principal issue was whether China National Machinery was liable for the losses claimed by New Golden Sea and was required to return the containers. Although China National Machinery was named as the shipper in the bill of lading, under art 71 of the Maritime Code of the PRC, the bill of lading was merely evidence of the contract of carriage and was not the contract itself. China National Machinery had not participated in the conclusion of the contract of carriage, had not given any specific instructions to New Golden Sea during its performance, and had not paid freight to it. It was merely the delivering shipper. The contract of carriage had been concluded between Haiyao and New Golden Sea, and New Golden Sea did not dispute those facts. The carrier was entitled to claim the expenses arising from the failure to take delivery at the port of discharge against the contracting shipper. There was no legal basis for requiring China National Machinery to bear those losses. In addition, the bills of lading had been returned to New Golden Sea and China National Machinery did not control the containers. It was therefore not required to return them. The lower Court had not erred in law in dismissing New Golden Sea's claims.