The defendant’s vessel, the Arkadiy Kamanin, issued a clean bill of lading on 4 February 1998. The goods on board were 520.4 mts of white fishmeal in 13,030 bags. When the goods arrived at Fujian for discharge, some damage was found. After inspection by the Inspection Bureau, it was found that around 47 mts of the goods were rotten. The buyer of the goods was insured by the plaintiff. The insured amount was USD 354,934. The plaintiff paid USD 32,007.60 to the insured for its losses, and was entitled to a right of subrogation. Accordingly, the plaintiff issued a claim against the defendant for the amount of USD 32,007.60.

Regarding the issue of the applicable law in this case, the defendant argued that the bill of lading should be governed by the Hague-Visby Rules since this was stated in a clause on the reverse of the bill of lading. The plaintiff did not challenge this allegation.

Held: The defendant’s argument that the case should be governed by the Hague-Visby Rules should be rejected.

In China, the Hague Rules and Hague-Visby Rules are both only international customs, which do not have the effectiveness of legal norms. According to the clause on the reverse of the bill of lading, this case should be governed by the laws of the country of the port of destination, that is, the laws of the People's Republic of China for the settlement of disputes between the parties.