Different statutes of limitations
Multimodal transport is widely applied in logistic handling and practice. In a multimodal transport, if one of its modes of transport is sea carriage and there is cargo loss or a damage claim against the operator, which statute of limitations should apply? This is debated in legal practice because the statutes of limitations stipulated in the Maritime Law and the Civil Code are quite different.
This article discusses this debate from the perspective of Chinese legislation and relevant case law from the Supreme Court.
Different statutes of limitations
There are different rules on the statute of limitations applicable according to different circumstances.
The statute of limitations is generally three years. Article 188 of the Civil Code stipulates that the statute of limitations regarding applications to a court for protection of civil rights is three years, except as otherwise provided by any other law.
Unless otherwise provided by any other law, the statute of limitations begins as of the day that the oblige knows or should have known:
- that their rights have been infringed; and
- the identity of the obligor.
However, the statute of limitations applicable to the carriage of goods by sea is one year. Article 257 of the Maritime Law stipulates that the statute of limitations for claims against the carrier as regards the carriage of goods by sea is one year, commencing as of the day on which the goods were delivered or should have been delivered by the carrier.
Article 105 of the Maritime Law stipulates that if the loss of or damage to goods has occurred in a certain section of the transport, the provisions of the relevant laws and regulations governing that specific section of the multimodal transport apply to matters concerning the operator's liability and the limitations thereof.
Therefore, is this principle also applicable when deciding the time limits imposed upon the multimodal transport operator?
In two recent cases, the Supreme Court held that the general three-year statute of limitations should be applied in multimodal transport cases.
Baoding Tianwei Baobian Electric Co, Ltd and COSCO Shipping Logistics Co, Ltd signed a multimodal transport contract in which COSCO agreed, as the multimodal transport operator, to provide transport services. However, the goods were damaged during the inland portion of the transport. Therefore, Baoding Tianwei filed a lawsuit to claim losses against COSCO, and the statute of limitations became the main issue to be resolved.
The Supreme Court decided that the general statute of limitations would apply (at the time, this was a two-year period) because chapter 13 of the Maritime Law contains no special provisions on the statute of limitations relating to multimodal transport contracts. This decision indicates that the court holds multimodal transport contracts as a separate kind of contract, different from sea carriage transport contracts.(1)
The carrier Evergreen Marine (Singapore) Pte Ltd issued two sets of bills of lading to the shipper Asus Technology Pte Limited and agreed to carry the goods from Shanghai to Mexico City via Manzanillo. The cargo damage occurred during the inland portion of the transport from Manzanillo to Mexico City. The insurer, First Insurance Co, Ltd, paid insurance indemnity to Asus and then brought a recovery claim against Evergreen Marine. Once more, the statute of limitations was one of the main issues in the case.
The Court determined that the general statute of limitations is applicable when an insurer pursues its subrogation right in a cargo damage claim relating to multimodal transport, as article 105 of the Maritime Law is relevant only in relation to the multimodal transport operator's liability limits and not the statute of limitations. Indeed, in many international conventions that predate the Maritime Law, the network liability system is applied only in liability limitations matters and the statute of limitations is stipulated separately.(2)
Although the aforementioned Supreme Court judgments could show a tendency to rule that the general statute of limitations will be considered in cargo damage claims against multimodal transport operators, it is still a problem to be further discussed. This is particularly relevant when the cargo damage occurs in the sea carriage portion of the transport. If different statutes of limitations are applied, by the time the multimodal transport operator can pursue the sea carrier (ie, which is after it has compensated the cargo owner), the statute of limitations for the sea carriage portion may have expired. This may be unfair or cause legal problems.
For further information on this topic please contact Jin Yu-Lai at KaiRong Law Firm by telephone (+86 21 5396 1065) or email ([email protected]). The KaiRong Law Firm website can be accessed at www.skrlf.com.
(1) Baoding Tianwei Baobian Electric Co, Ltd v COSCO Shipping Logistics Co, Ltd, (2018) Zui Gao Fa Min Shen 3153.
(2) First Insurance Co, Ltd v Evergreen Marine (Singapore) Pte Ltd, (2018) Zui Gao Fa Min Zai 196.