Yu Dan v Wang Wei and Hainan Lin'gao Yinghai Shipping Co., Ltd. in respect of Dispute over Ship's Title

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Yu Dan v Wang Wei and Hainan Lin’gao Yinghai Shipping Co., Ltd. in respect of Dispute over Ship’s Title

 

Case No.: (2015) QHFSCZ No.16

Cause of action:  Dispute over ship’s title

Sea area involved: N/A

Date:  15 July 2015

 

Gist

 

  1. Establishment and transfer of property rights to the movables shall become effective upon delivery except as otherwise provided by law.
  2. The registration of property right to a ship is mainly for publicity, i.e. with legal effect that such registered rights could be used against bona fide third parties, and there is no law prohibits the parties to make special agreement on assigning the ownership of the registered property rights to a ship.
  3. The Defendant fails to present sufficient evidence in proving its claims and thus shall bear the adverse legal consequences.

 

Applicable laws

 

  1. Article 23 and 33 of the Property Laws of the People’s Republic of China.
  2. Paragraph 1 in Article 64 of the Civil Procedure Law of the People’s Republic of China.
  3. Articles 90 and 91 of the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China.

 

Basic facts

 

On 3 June 2011, the cargo ship “Ying Hai 288” was registered under the name of Yinghai Shipping with joint ownership of Yinghai Shipping and Chen Feier, i.e. Yinghai Shipping owns 51% of the shares and Chen Feier 49%. In October 2013, the Claimant purchased “Ying Hai 288” from Lin’gao Yinghai Shipping and Chen Feier at the price of RMB1,800,000 through Wang Wei. In order to clarify the title of the ship and other matters, the Claimant and the Defendant signed, on 28 October 2013, an Agreement on Confirming the Title of the Ship, under which it’s agreed that the Claimant purchased the cargo ship “Ying Hai 288” (ship’s registry number: 110505000011; ship’s identification number: CN20046727369) in the name of the Defendant Wang Wei, and registered the ship under the name of Wang Wei. It’s agreed by both parties that the subject ship is 100% owned by the Claimant, and the Defendant shall not transfer or charter the ship without the Claimant’s consent. If the Claimant sells the ship, the Defendant shall assist the Claimant in handing so. On 18 November 2013, after the payment of RMB1,800,000 to the original shipowners by the Claimant, the Defendant went through the formalities for change the registration of the title of the cargo ship “Ying Hai 288”, i.e. the share of 49% owned by the original owner Chen Feier was changed to Wang Wei, which means that Yinghai Shipping takes 51% share of the ship and Wang Wei takes 49%, but as agreed that Yinghai Shipping nominally takes the shares of the ship and does not actually enjoy any share of the title of the cargo ship “Ying Hai 288”. After going through the formalities for change of ownership, the subject ship was actually taken by the Claimant and the Defendant. Since the Claimant lived in another city, it’s the Defendant who was in charge of the management and operation of the subject ship. On 19 May 2014, the Defendant changed the registration of the cargo ship “Ying Hai 288” to Hainan Daxin Logistics Co., Ltd. in the name of sale. On 9 September 2015, the Defendant changed the registration of the ship to Yangpu Kaiwei Shipping Co., Ltd. and changed back to Hainan Daxin Logistics Co., Ltd. on 25 December 2015 till now.

 

In addition, this Court finds that in November 2014 the Claimant requested, due to dispute arose between the two parties in respect of the operation of “Ying Hai 288”, the Defendant to handle the transfer of ownership of the subject ship. However, the Defendant refused to transfer the ownership and denied that the subject ship was owned by the Claimant. For this reason, the Claimant filed, on the ground that the Defendant refused to handle the transfer of the ownership of the subject ship, maritime preservation application before bringing a lawsuit at this Court on 1 December 2014, requesting to arrest “Ying Hai 288” owned by the Defendant and to order the Defendant to provide cash security in an amount of RMB2,500,000. Upon examination, this Court rendered the Civil Ruling of (2014) QHFBZ No.28 on 2 December 2014, arresting the subject ship at Qianghai Tanmen Port and the ship was still under detention.

 

The Claimant Yudan requested the court to:

  1. Adjudge that the title of “Ying Hai 288” is enjoyed by the Claimant;
  2. Adjudge that the Defendant shall immediately deliver the ship and related certificates to the Claimant;
  3. Adjudge that the Defendant and the third parties, Hainan Daxin Logistics Co., Ltd., Yangpu Kaiwei Shipping Co., Ltd. and Hainan Lin’gao Yinghai Shipping Co., Ltd. to assist the Claimant to change the registration of the title of the cargo ship “Ying Hai 288” under the Claimant’s name;
  4. Adjudge that the Defendant shall bear the application fee for preservation and the court fees in this case.

 

Reasoning

 

The effective judgement holds:

 

This was a case of dispute over ownership of a ship. In respect of the ownership of the subject ship “Ying Hai 288”, this Court held that the Agreement on Confirming the Title of the Ship signed by and between the Claimant and the Defendant for the purchase of “Ying Hai 288” owned by the third parties Ying Hai Shipping and Chen Feier, was the true intention of the parties and did not violate any mandatory regulations provided by the laws and administrative rules. The said agreement was valid and effective and binding on both parties for their performance. Upon the payment of RMB1,800,000 by the Claimant, the original owners of “Ying Hai 288”, i.e. the third parties Ying Hai Shipping and Chen Feier, had actually delivered the subject ship to the Claimant and the Defendant. In accordance with Article 23 of the Property Law of the People’s Republic of China that establishment and transfer of property rights to the movables shall become effective upon delivery except as otherwise provided by law, the transfer of the title of “Ying Hai 288” had become effective. Although Article 24 of the Property Law of the People’s Republic of China provides that before registration, the establishment, alteration, transfer or extinction of the property right of the vessels, aircraft, motor vehicles, etc. shall not be used against a bona fide third party, the registration of property right to a ship is mainly for publicity, i.e. with legal effect that such registered rights could be used against bona fide third parties, and there is no law prohibits the parties to make special agreement on assigning the ownership of the registered property rights to a ship. In this case, it’s clearly agreed by both parties in the Agreement on Confirming the Title of the Ship that the ship was purchased by the Claimant in the name of the Defendant and the ship was registered under the Defendant’s name. The Claimant owned 100% of the title of “Ying Hai 288” and the Defendant did not actually enjoy the ownership of the subject ship. Besides, the current registered owner of “Ying Hai 288”, namely the third party Daxin Logistics, also admitted that it’s a nominal registration and Daxin Logistics did not enjoy the ownership of the subject ship. In summary, the title of “Ying Hai 288” belonged to the Claimant. Hence, the Claimant has legal and factual grounds to claim for confirmation of his title on “Ying Hai 288” and to request the court to order the Defendant to deliver the subject ship, which were supported by this Court.

 

By arguing that the subject ship was transferred to him by the Claimant because of the Claimant’s lack of funds for maintenance and conversion of the subject ship and the transfer price would be paid by his profits through operating the subject ship, the Defendant was in fact denying the original ownership of the ship and alleging that there is a new contractual relationship for the purchase and sale of the ship between the two parties. Paragraph 1 in Article 64 of the Civil Procedure Law of the People’s Republic of China provides that a party shall have the burden to provide evidence for its claims. Article 90 of the Interpretations of the Supreme People's Court on Applicability of the Civil Procedure Law of the People's Republic of China provides that a party concerned shall furnish evidence to prove the facts on which its own claims are based or on which its refutation of the opposite party’s claims is based, unless otherwise prescribed by law. Where a party concerned fails to furnish any evidence to prove the claimed facts or where the evidence so furnished is insufficient to prove the claimed facts prior to the pronunciation of a judgement, the party having the burden of proof shall be liable for unfavorable consequences. Article 91 of the Interpretations of the Supreme People's Court on Applicability of the Civil Procedure Law of the People's Republic of China provides that unless otherwise prescribed by law, the people’s court shall determine the burden of proof between the parties concerned in lie with the following principles: (1) a party concerned who claims that a certain legal relationship exists shall have the burden of proof relating to the basic facts for the establishment of the legal relationship; and (2) a party concerned who claims that a certain legal relationship has changed or terminated, or that its rights have been infringed upon shall have the burden of proof relating to the basic facts for the change or termination of the legal relationship, or the infringement upon its rights. In light of the aforesaid provisions, for the purpose of either denying the original legal relationship on ownership, or the establishment of new legal relationship, namely contractual relationship for the purchase and sale of the ship, between the parties, the Defendant shall bear the burden of proof relating to the basis facts. In this case, to prove its claims the Defendant had furnished evidences 3 and 4. However, as mentioned before, the evidences had flaws and thus were not admitted by this Court for proving the claimed facts. The Defendant failed to furnish sufficient evidence to prove the claimed facts and shall be liable for unfavorable consequences. Hence, the arguments by the Defendant were not supported by this Court.

 

In respect of the request by the Claimant to order the Defendant Wang Wei to immediately deliver the subject ship and related certificates, this Court found during court investigation that the certificates of “Ying Hai 288” were not possessed by Wang Wei and it’s not possible for Wang Wei to deliver the ship’s certificates. Hence, this claim item by the Claimant was not supported by this Court. With regard to the request by the Claimant to order the Defendant Wang Wei and the third parties, Daxin Logistics, Kaiwei Shipping and Yinghai Shipping to assist to change the registration of the title of “Ying Hai 288” under the Claimant’s name, it’s the Defendant Wang Wei and the third party Daxin Logistics, but not Kaiwei Shipping and Yinghai Shipping that were liable for assisting the Claimant for changing the registration of the title of “Ying Hai 288” as per the Agreement on Confirming the Title of the Ship and the fact that the subject ship was registered under the name of the third party Daxin Logistics.

 

Judgment

 

  1. It’s confirmed that the title of “Ying Hai 288” (ship’s registry number: 110505000011; ship’s identification number: CN20046727369) belongs to the Claimant Yudan, and the Defendant Wang Wei shall, within 10 days upon the effectiveness of this judgement, deliver the subject ship to the Claimant;
  2. The Defendant Wang Wei and the third party Hainan Daxin Logistics Co., Ltd. shall, within 15 days upon the effectiveness of this judgement, assist the Claimant to change the registration of the title of “Ying Hai 288” under the name of the Claimant;
  3. Overrule other claims by the Claimant.

(The second instance court sustained this judgement.)