Defendant wins case, court rejects plaintiff's claim for customs clearance delay compensation

Case Description:

Compensation for customs clearance delays: The plaintiff entrusted the defendant to handle the customs clearance of goods in Nigeria. However, due to the adjustment of tax policies, epidemic prevention measures, excessive backlog of goods in ports and storage yards, lengthy application for tariff exemptions and overdue fee reductions, all 10 containers entrusted by the plaintiff were delayed to varying degrees. According to the plaintiff's complaint, six containers were delayed by 28 days and four containers were delayed by 168 days, resulting in a dispute between the two parties.

The plaintiff filed a lawsuit requesting the following:

The three defendants jointly compensate the plaintiff for a loss of 68,439,046.80 Nigerian Naira (equivalent to 1,355,413.01 RMB).

The three defendants pay the plaintiff interest on the amount overpaid as of February 25, 2021, totaling 924,235.72 Nigerian Naira (equivalent to 17,944.38 RMB).

The three defendants pay the plaintiff interest calculated at an annual rate of 6% based on the amount of 68,439,046.80 Nigerian Naira (equivalent to 1,355,413.01 RMB) from February 25, 2021, to the actual payment date.

The three defendants jointly bear all the litigation costs of this case.

The court ruling is as follows:

1,The plaintiff, Rui***yuan Nigeria Co., Ltd.'s lawsuit is dismissed.

2,The court acceptance fee is RMB 8,580.11, which has been prepaid by the plaintiff, Ru***yuan Nigeria Co., Ltd. The court will refund the acceptance fee of RMB 8,580.11 to the plaintiff.

If either party disagrees with this decision, they may submit an appeal to the Guangdong Provincial Higher People's Court within 30 days from the date of delivery of this decision, and provide copies according to the number of opposing parties.

Our handling lawyer has made a summary of the case and also shared some very practical suggestions.

Lawyer's summary:

1. After receiving the case materials, our legal team noticed that the plaintiff mentioned in the complaint that the Shanghai branch had a customs clearance cooperation relationship with it, and requested that the Shenzhen head office and Nigerian company jointly assume joint liability based on the business and personnel confusion between the Shenzhen head office, Nigerian branch, and Shanghai branch.

2. We were very puzzled by this because we did not see any evidence of “personality confusion” between the three companies in the materials submitted by the plaintiff, and the plaintiff also engaged professional lawyers to represent them in this lawsuit, who should not have made such mistakes. In addition, the customs clearance of the goods involved in the case took place in Nigeria, so why did the plaintiff claim that they had a customs clearance cooperation relationship with the Shanghai branch instead?

3. Therefore, we promptly checked the case with the client's staff after receiving the materials and found that the actual business was undertaken by the Nigerian company, and there was a corresponding "Customs Clearance Service Agreement" signed between the plaintiff and the Nigerian company. After learning of this fact, we held a team discussion as soon as possible and believed that the plaintiff in this case had the suspicion of fabricating facts and trying to obtain jurisdiction in China with this.

4.According to Article 530 of the "Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China (Revised in 2022)", if an objection to jurisdiction is raised based on the "inconvenient forum" rule, there is a certain probability of rejecting the plaintiff's lawsuit by the Guangzhou Maritime Court, which would allow the client to completely withdraw from the litigation.

Lawyer's recommendations

However, considering the current judicial environment in China, domestic courts generally do not easily transfer cases to foreign courts, for fear of violating the current national policy of "safeguarding judicial sovereignty." Therefore, there is a high probability that the jurisdictional objection will be rejected. We need to continuously strengthen and improve the corresponding jurisdictional objection reasons to ensure that our point of view can obtain the support of the collegiate bench. The following are the five main reasons we raised when filing the jurisdictional objection, for reference by colleagues and parties who encounter similar disputes.

1. The main facts of this case occurred in Nigeria.

On January 6, 2020, the plaintiff and the three defendants signed a "Cooperation Agreement," which stipulated that the defendants were responsible for handling customs clearance and delivery of the containers. After the containers arrived at the port, the defendants cleared them based on the customs clearance information provided by the plaintiff and transported them to the warehouse designated by the plaintiff. The settlement currency agreed upon by both parties was the Nigerian legal currency Naira, and the "Cooperation Agreement" did not make any special agreements on the applicable law or jurisdictional court in the event of disputes.

Later, in the process of performing the agreement, due to reasons such as changes in Nigerian tax policies, quarantine restrictions, excessive congestion of ports and storage yards, delays in applying for tariff exemptions and overdue fee waivers, the customs clearance of goods was slow, leading to a dispute between the parties.

Therefore, both parties to the dispute are companies registered in Nigeria, and the signing and performance of the contract were also completed in Nigeria, which means that the main facts of the case occurred in Nigeria.

2. The present case should be tried under Nigerian law.

According to Article 41(2) of the Law of the People's Republic of China on Application of Law to Foreign-related Civil Relations, "If the parties have not made a choice, the law of the country where the party who is to perform the obligation that is most characteristic of the contract habitually resides or the law that has the closest connection with the contract shall apply." In this case, the plaintiff is responsible for the payment obligation, while the third defendant is responsible for the duty of handling customs clearance and delivery of goods on behalf of the plaintiff. Therefore, it should be determined that the third defendant is the party who is to perform the obligation that is most characteristic of the contract.

According to the second piece of evidence provided by the plaintiff in the lawsuit, the "Registration Certificate of the Third Defendant in Nigeria," the defendant's registration location is at No.8, OpebiRoadikejaLagos. According to the "Lease Agreement" submitted by the defendant after the pre-trial meeting, the actual office location of the defendant is also in Nigeria. Therefore, whether based on the registration location or the actual office location, the residence of the third defendant is in Nigeria, not in China, as stated by the plaintiff during the trial.

In addition, the 17th piece of evidence submitted by the plaintiff, the Nigerian Customs and Goods Management Law, also indicates that the plaintiff acknowledges that Nigerian law should be applied in this case. Therefore, it is evident that Nigerian law should be applied in this case.

3. This case does not involve the interests of the People's Republic of China, its citizens, legal persons, or other organizations.

During the pre-trial conference, the plaintiff's representative argued that this case involved the interests of the People's Republic of China, its citizens, legal persons, or other organizations, and therefore the domestic court should have jurisdiction. The main reasons given were: (1) the main contact person in the case is a Chinese national; (2) there is an investment/cooperation relationship between the plaintiff, defendant three, and domestic defendants one and two; (3) the handling of this case will affect the interests of Chinese companies and citizens.

However, the second defendant believed that this argument was far-fetched. It is well-known that the flow of production factors such as goods, personnel, funds, and management experience across national and regional boundaries has become a norm in today's world economy. If we only identify a case as involving the interests of the People's Republic of China, its citizens, legal persons, or other organizations simply because the main contact person in the business is a Chinese national or because there is an investment/cooperation relationship between the parties and Chinese companies, it will inevitably result in an overly extended chain of interests, a proliferation of domestic court jurisdiction, and an excessive burden on the judicial system, as well as international criticism for the long-arm jurisdiction. For example, if a person purchases stocks of a U.S. Nasdaq-listed company, can a Chinese court gain jurisdiction over disputes involving that listed company?

Furthermore, according to the unified view in the international judicial field, the substantive meaning of Article 530, paragraph 4 of the "Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China" is that if the trial of a case will affect the interests of the jurisdiction, that is, the national interests and public policies of the jurisdiction, the court hearing the case should have the discretion to refuse to apply inconvenient court principles to safeguard the freedom of discretion to protect those interests. In other words, this provision actually emphasizes the impact on China, and therefore, the term "interests of the Chinese state, citizens, legal persons or other organizations" should be narrowly interpreted to avoid a broad interpretation of this concept.

4. This case does not involve exclusive jurisdiction or jurisdiction by agreement.

In this case, the parties did not reach any agreement on the jurisdiction of Chinese courts, and there is no provision in the "Cooperation Agreement" that stipulates that this case should be under the jurisdiction of Chinese courts.

Exclusive jurisdiction in foreign-related cases is limited to Article 273 of the Civil Procedure Law, which states that "lawsuits arising from disputes over contracts for Sino-foreign joint ventures, Sino-foreign cooperative ventures, or contracts for the exploration and development of natural resources between Chinese and foreign parties shall be under the jurisdiction of the People's Courts of the People's Republic of China." Therefore, it is clear that this case does not fall under any of the three circumstances of exclusive jurisdiction.

5. In this case, there is an obvious convenience for the court;

In general, the convenience of litigation in the alternative court, the convenience of evidence collection and service, the location of the parties' property, the enforceability of the judgment, and whether the alternative court can provide the same relief are all reference factors for judging whether the alternative court is "more convenient". In this case, the parties' place of residence, the place where the main facts and results of the case occurred, the location of the subject matter, and the location of the main evidence of the case are all in Nigeria. Therefore, in this case, the Nigerian court is obviously more convenient in hearing this case.

Zhai Dongwei International Trade & logistics Attorney team was founded in 2007. Its founder, Zhai Dongwei, is the founding partner of Guangdong Yingzun Law Firm. Focusing on International trade,maritime affairs, and supply chain cases for more than 16 years, the team currently has more than 30 professional logistics attorneys, of which more than 10 have overseas work and study experience, and can use Chinese, English and French to work and participate in business negotiations.