Which Court Has Jurisdiction?

A brief analysis to a case handled by
China's Court of Railway Transportation



By Wang Xuanjun

ONE LOT OF CARGO in conventional wagons was transported in 1996 from Zhengzhou railway station, Henan Province, in central China to Moscow, Russia, via the Manchouli/Zabaikalsk border railway stations between the People's Republic of China ("PRC" or "China") and Russia.

Before having the cargo transported, the shipper ("P") of Zhengzhou concluded a contract for the combined transport with the dispatching station as the representative of carrier under the Protocol on International Railway Cargo Combined Transportation ("SMGS"). In the meantime, P also concluded an agency contract with a freight forwarder ("D") of Beijing in which it is provided that D, acting as the payment agent of P, is obliged to pay the transport costs and charges of the cargo in conventional wagons for the section from Manchouli up to Moscow.

Basic knowledge is necessary to be provided. Since the disintegration of the USSR on December 26, 1991, great changes have resulted to international railway cargo combined transport in conventional wagons under SMGS, to which Russian Railway and PRC's Railway are contracting railways. One of material changes is that the transport costs and charges between or among the contracting railways to SMGS is cleared up by the respectively authorized freight forwarders instead of by the respective railways themselves. Thus, P could not pay the transport costs and charges for the section Manchouli-Moscow to PRC's Railway directly but to a freight forwarder.

After the cargo arrived at the destination, Moscow, P was told through the consignee that the Russian Railway requested the consignee to pay the transport costs and charges for Manchouli-Moscow section, and exercised the right of lien on the cargo before being paid. It was found through investigation that the wording relating to the payer of the costs and charges in Column 20 of the SMGS railway bill was blurred due to being daubed so as not to be readable.

Therefore arose was the dispute between P and D over the payment of the costs and charges. P commenced an action against D in Zhengzhou Intermediate Railway Transportation Court ("IRTC") and then was told that he should commence the action in Harbin IRTC or Beijing IRTC but not Zhengzhou IRTC. The reasons why P took the action in Zhengzhou IRTC were: (1) D, as payment agent of P, failed to perform due obligation under the agency contract and under SMGS regulations; (2) Zhengzhou is the starting station of the combined transport, Zhengzhou IRTC has the jurisdiction over the case in accordance with the provisions of Article 28 of Civil Procedure Law of PRC ("CP Law"). Whereas, Zhengzhou IRTC held Article 24 of CP Law should be applied to this case in respect of the territorial jurisdiction.

Thus, one question is, which court has the jurisdiction over the case?

The key point is how to understand the real legal relationship between P and D. As said above, P and D had contractual nexus of agency in which P was in the capacity of "principal" and D was in the capacity of "agent", but no contractual nexus of the combined transportation (Russian Railway and China's Railway), which existed only between P and SMGS carrier. The first nexus existed on the basis of agency contract, which is not explicitly specified in CP Law, the later one existed on the basis of the combined transportation contract, which is explicitly specified in Article 28 of CP Law. So, as to the territorial jurisdiction over the case, Article 24 but Article 28 of CP Law should be applicable.

Beijing is the place of Defendant's domicile and Harbin the place of performance of the agency contract (Manchouli is in the region of Harbin according to China's railway divisions), whereas Zhengzhou is neither the place of D's domicile nor the place of performance of the agency contract. Thus, not Beijing ITRC or Harbin ITRC, but Zhengzhou ITRC in China had the territorial jurisdiction over the case. If a legal action was took against SMGS carrier by P, Zhengzhou IRTC, as the court at the place of departure of the combined transport contract, shall have the territorial jurisdiction according to the provisions of Article 28 of CP Law.

We hereby emphasize that correctly understanding the nature of different contracts, in which a party is involved, is very important for the party to promptly and efficiently settle a dispute by selecting a court having jurisdiction.

Notes:

1. The names of the parties to this case are omitted or false.

2. Article 28 of CP Law: "The people's courts at the place of departure, destination or defendant's domicile shall have jurisdiction over the action brought due to the disputes arising from the contract for railway, highway, waterway, air, and combined transportation."

3. Article 24 of CP Law: "The people's courts at the place of defendant's domicile or performance shall have jurisdiction over the action brought due to the disputes arising from a contract."



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Text and Photo 1999, Wang Xuanjun
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