BRIEF
　　The captain discovered that some bales of cargos had been damaged and it was inaccurate for the tally clerk to tally the amount of cargo in the course of shipment and afterward. The captain declared and objected, but he did not indicate clearly on B/L. The cargos were discovered shortly by tally and inspection after discharging at the port of destination. The insurer brought an action against the carrier in accordance with the right of subrogation after compensating the consignee's damage. The maritime court decided that the carrier shall bear the liability for compensation and the liability shall not be limited.

DETAILS
　　Plaintiff: Beihai Branch, the People's Insurance Company of China
Defendant: Guangzhou Ocean Transportation Company
On April 17, 1995, bales of white sugar in 12,000-ton net weight made in Pakistan were shipped on the defendant's "M/V Sanjingkou". In the course of shipment, on April 27, May 4 and May 5 respectively, the captain had successively declared and objected the following circumstances to the shipper " OWN HOME SERVICES (PVT) LTD." and the loading party 　　　　"International Cargo Loading and Unloading Private Ltd." in written form: the cargos were unclean, for being piled up at the dock without any covering was polluted; the stevedores loaded the cargos from hand to hook and loaded those damaged bales; the tally clerk tallied the amount of cargos inaccurately. On May 8, the loading party promised that the ship bears no liability for any circumstances at the port of unloading in its mail to the captain. On May 9, the captain delivered a declaration again that the total weight of the cargos loaded on the ship was only 11,602 tons and the ship-owner bears no liability for the shortage of the cargos at the port of unloading, on which the captain of "M/V Sanjiangkou", the agent for the carrier and the loading party signed. Later, the captain issued three sets of clean B/L filed as STL/01, STL/02 and STL/03. It was recorded on the B/L: The amount of white sugar recorded on the STL/01, STL/02 and STL/03 are 10,000 tons (200,000 bales), 1000 tons (20,000 bales) and 1000 tons (20,000 bales) respectively. The shipper is "OWN HOME SERVICES (PVT) LTD". The consignee is on order. The port of destination is Beihai Harbor. 　　As those cargos recorded on the three B/L were same in sort, appellation and packing, it is not to load separately according to the different B/L, and the symbol of transportation was not made respectively. Among those cargos, the 11,000-ton white sugar, which was recorded on B/L filed as STL/01 and STL/02, was imported by Beihai Import and Export Company on Eatable Oil and Foodstuff of Guangxi (hereinafter referred to as Beihai Eatable Oil and Foodstuff Company) with the price terms of C&F. The unit price was $437 per ton and the total price was $4,807,000. On May 3, 1995, Beihai Eatable Oil and Foodstuff Company, as the insured, bought the insurance according to Clause A of cargo insurance stipulated by British Association on January 1, 1982. The premium was $5,287,700, i.e. RMB176,803.77. "M/V Sanjiangkou" arrived at the Beihai Harbor on May 23, and all of the cargos were unloaded till July 2. After being tallied by Beihai Foreign Ship Tally Company, it was affirmed that the cargos recorded on three B/L lacked 3,608 bales in total, 2,559 bales in empty and 4,745 bales in damaged. The chief mate signed on the tally sheet and indicated: "There are 3,070 bales being filled." The Bureau for the Inspection of Import and Export Commodities of Guangxi inspected the cargos after being unloaded form the ship and affirmed that: the cargos recorded on B/L filed as STL/01 and STL/02 lacked 3,308 bales in 165.4-ton net weight; 2,346 empty bales in 117.3-ton net weight; 4,288 damaged bales in 122.871-ton net weight; the damage of cargo was 405.571-ton net weight in total. The total loss was $177,234.527 calculated according to the factual value of cargos at the port of destination. The premium for the short cargos was RMB6,515.77 according to the rate of the insured amount and the premium. Moreover, the cost to inspect the commodity was RMB7,146 and the cost to repair the damaged bales was RMB5,578. On January 10, 1996, the plaintiff took the letter of subrogation from Beihai Eatable Oil and Foodstuff Company after paying the insured the insurance compensation $194,957.98 for cargo damage according to the insurance contract.
　　Wuzhou Foreign Trade Company and He County Foreign Trade Company in Guangxi were the consignee to the 1,000-ton white sugar recorded on B/L filed as STL/03. There was no evidence to prove that the damage and shortage of cargo existed, for the cargos recorded on this B/L were not applied to examination.
　　The plaintiff brought this action to the maritime court on May 10, 1996, and asked the court to enjoin the defendant to pay the damages of cargo in the amount of $194,957.98 and relevant interest, the cost to examine and repair in the amount of RMB12,724, and the cost of this case.
The defendant answered that: The loss resulted from the damaged, empty or short bales among this batch of cargo shall not be attributed to the B/L filed as STL/01 and STL/02. It cannot be excluded that the damage is attributed to the B/L filed as STL/03. The 3,070 sugar bales reclaimed from the damaged and empty bales and refilled by the consignee shall be excluded from the plaintiff's claim. Furthermore, in terms of the prescription in the clause on the back of B/L, the defendant's liability and exemption shall apply to Hague Rules, in which it is prescribed in Clause 5 of Article 4 that the defendant shall pay $62,936.75 at most if it shall be responsible of the 405.571-ton damage the plaintiff claimed.
JUDGEMENT
　　　The maritime court holds that the B/L is the certification for the marine freightage contract. The relationship on right and obligation between the carrier and the holder of B/L, the consignee shall be determined according to B/L. Being the insurer to the cargos recorded on B/L, the plaintiff took the letter of subrogation legally after paying the damage Beihai Eatable Oil and Foodstuff Company, the holder of B/L, suffered, and was entitled to recourse to the carrier in terms of the marine freightage contract proved by B/L. The fact in this case indicates that: The captain had discovered the cargos being polluted when "M/V Sanjiangkou" was loaded with at the port of start; the captain declared and objected that the stevedores loaded cargos from hand to hook and loaded those damaged bales in the course of shipment. However, the ship-owner still endorsed the weight and amount affirmed by the shipper without considering the fact and did not indicate on B/L. The defendant, as the carrier, shall deliver cargos according to the amount and weight recorded on B/L, and shall bear the liability for compensation if the cargos delivered do not accord with B/L. The defendant's action to issue the clean B/L under the condition of knowing clearly that the loaded cargos were damaged in bales and shortage in amount is a kind of reckless nonfeasance with knowledge that such loss would probably result. Therefore, the defendant shall not take the right of limitation of liability. It is lacking factually to the defendant's claim that the cargos claimed for compensation by the plaintiff shall not be attributed to the B/L filed as STL/01 and STL/02 and it can not be excluded that the damage is attributed to the B/L filed as STL/03, together with that the 3,070 sugar bales reclaimed from the damaged and empty bales and refilled by the consignee shall be excluded from the plaintiff's claim. The plaintiff's claim for both the damage of cargo and its interest shall be supported. However, the amount shall be calculated according to the value of the short cargos being loaded along with the freight and premium, instead of the amount stipulated in the insurance contract. The reason to ask for the cost to examine and repair requested by the plaintiff shall be supported.
　　The maritime court hereby decides as follow pursuant to Article 46, 55, 59, 71, 75, 76, 77 and Clause 1 of Article 78 of Maritime Law of the People's Republic of China:
　　1.The defendant shall pay the plaintiff the damage in the amount of $177,234.527, RMB6,518.77 and the interest.
　　2.The defendant shall pay the plaintiff the cost to examine and repair in the amount of RMB12,724.
Both the parties accepted the judgment as final and did not appeal.
COMMENT
　　The carrier or its deputy can indicate the unconformity, the grounds of doubt or the failure to checkage on B/L when it knows or doubts on reasonable grounds that the appellation, symbol, number of packing or piece, weight or volume of the cargo recorded on B/L are not accordant to the cargo took over factually. The B/L with such indication is called unclean B/L. To the unclean B/L, the carrier can be exempted its liability to the consignee within the range indicated. It is clean B/L on which the carrier or its deputy does not indicate the apparent situation. To the clean B/L, the carrier shall deliver the cargo accordant to the record on B/L to the consignee or the holder of B/L. Otherwise, the carrier shall bear the liability for compensation.
　　To the shipper, there is primary evidential validity on B/L that proves the conformity between the shipped cargo and the record on B/L. However, the carrier can submit the opposite evidence to deny the record on B/L to against the shipper. There is final evidential validity on B/L to the third party subrogating B/L in goodwill, including the consignee, and the opposite evidence submitted by the carrier shall not be accepted.
It is clean B/L in this case. Hence, the carrier is liable for delivering the cargo in good apparent situation accordant to the record on B/L. Otherwise, the carrier shall bear the liability for compensation. The fact indicates that the cargos delivered by the defendant to the holder of B/L are short in amount and damaged in bale, ever empty. It is without question that the defendant shall bear the liability for compensation to the holder of B/L (or to the insurer under the condition that the insurer takes the letter of subrogation after paying the damage to the holder of B/L according to the insurance contract). The defendant did not demur to this.
The question is that whether the defendant is entitled to the right of limitation of liability. In accordance with Hague Rules being chosen to apply and Maritime Law of China, the carrier is entitled to limited its liability for compensation within the prescription while it shall bear the liability according to law. It is prescribed both in Hague Rules and Maritime Law that the carrier shall not limit the liability for compensation when the destroy or damage of cargo is caused by the carrier's intentional or reckless feasance or nonfeasance with knowledge that such loss would probably result. In this case, the carrier did not indicated on B/L, although it had known the damage and shortage of cargos in the course of shipment and afterward, and had declared and objected to the shipper and the loading party. The carrier let alone the consequence that it cannot to deliver the cargos accordant to B/L at the port of destination with knowledge that such loss would probably result. As a result, the carrier is deprived of the right of limitation of liability in accordance with Hague Rules and Maritime Law.
　　Under the circumstance to determine the carrier's liability cannot be limited, the amount of compensation shall be calculated according to the factual value of cargos. In accordance with Maritime Law, the factual value of cargo is the value when being loaded, along with the freight and the premium. In this case, the insurer exercised the right of subrogation by asking the carrier to pay the compensation. Since the insurer asked for the compensation on behalf of the consignee, the basis of compensation shall be the freight contract instead of the insurance contract. Therefore, the compensation shall be determined in accordance to the freight contract and the relevant law of application. The amount of compensation claimed by the plaintiff according to the amount it had paid to the insured shall not be supported.
　　There are three principles been established in this case:
　　1.To the clean B/L, the carrier shall deliver the cargo recorded on B/L. Otherwise, it shall bear the liability for compensation. Even if the loss or the damage of cargo had existed before the shipment or in that course, the carrier shall not be exempted the liability to the consignee of the holder of B/L.
　　2.The carrier's liability for compensation to the consignee or the holder of B/L shall not be limited if the carrier does not indicate on B/L when it know that the loaded cargo is not accordant with the record on B/L.
　　3.The standard to determine the amount of compensation shall be the freight contract and the relevant law of application instead of the factual amount the insurer has paid to the insured when the insurer exercises the right of subrogation and asks the compensation for the damage or shortage of cargo to the carrier.