Concerning the identity of contracting parties, can a container line sign an international container liner service contract on the cargo in & out of China’s ports with a foreign forwarder that does not have a Chinese NVOCC license?

According to Subparagraph 2, Article 18 of “Regulations of the People’s Republic of China On International Maritime Transportation” (the Regulations in short), negotiated rates refer to the freight rates agreed upon between international liner service operators and shippers or non-vessel-operating common carriers; in Paragraph 18, Article 3 of “Implementing Rules of the Regulations of the People’s Republic of China on International Maritime Transportation” (the Implementing Rules in short)”, “Negotiated rates shall be concluded in the form of written contracts or agreements”. The agreement on freight rates is a contracting form of price between carrier and shipper as part of service contract, and therefore the contracting parties of freight agreement are the same as those of service contract. Article 19 in Regulations reads as “When concluding agreements on negotiated rates with non-vessel-operating common carriers, international liner service operators shall make sure that such non-vessel-operating common carriers have registered their bills of lading and paid the required surety bond in according to with the provisions of these Regulations”; Article 29 in the Implementing Rules reads as “An operator of international shipping services shall not accept cargo or containers from a non-vessel-operating common carriers who fails to register its bill(s) of lading and deposit the surety bond”. So if the contracting party (shipper) of a freight agreement transfers this agreement to other shippers, which falls into the scope of non-vessel operation as per Subparagraph (4), Article 3 of the Implementing Rules, such contracting party (shipper) must obtain NVO qualification in China. Article 23 of the Regulations reads as “No one shall be engaged in non-vessel-operating services without registering its bill of lading and paying required surety bond in accordance with the provisions of these Regulations”. Hence a liner company is NOT allowed to sign a freight agreement carrying cargo in & out of Chinese ports with a freight forwarder outside China who has NO Chinese NVOCC qualification. But the aforesaid freight forwarder outside China may sign the freight agreement on behalf of the principal of service contract (shipper) provided that such freight agreement clearly states the signing qualification of contracting party. As above, a liner company is only allowed to sign with shipper or qualified NVOCC the international container liner freight agreements while freight forwarders outside China may sign as agents on behalf of shipper or Chinese NVOCC, plus clear statement in the freight agreements of identity of contracting parties. According to the general provisions of Guidance on Container Liner Precise Freight Filing Operation (the Guidance in short), “the freight rate agreement (copy) shall be provided to SSE or retained by Liner Company own while filing negotiated rate for random inspection. The retained agreement (copy) shall be kept at least three years…Filed contract party and cargo descriptions are to be consistent with the statements in transport documents.”

Matters concerning the submitting of materials and information relating to addition or increase of surcharges by a container line.

According to Article 3 of Circular No.64[2013] on the Implementing Rules of the International Container Liner Precise Freight Filing (Circular No.64 in short), before new or increase of surcharges, the freight filing obligor is to well communicating and negotiating with paying parties and provide in filing reasonable explanation of such new or increased surcharges. Given that conventional surcharges well accepted by industry as common practice, such part may be filed as per Circular No.64, but for any new or increased surcharges in CNY, the freight filing obligor is to strictly follow the procedural regulations to submit related materials stating the basis and reasonability. Additionally, Article 1 of Circular clarifies international container liner operators are providing marine cargo transportation services in respect of remuneration, including maritime freight (Ocean Freight) and maritime related surcharges (including THC); Article 3 requires “the filed tariff rates shall take effect thirty (30) days after the date when such filing is accepted”. Consequently the related filed surcharges for filing tariff rate as part of international container liner rates shall also take effect thirty (30) days after the date when such filing is accepted.