It seems the universal practice that carriers or their agents should be liable for the bill of lading holder’s loss if they deliver the cargo without production of the original bill of lading. However, in The Kota Maju,1 the Guangzhou Maritime Court has recently exempted the carrier’s agent from liability for delivery of cargo without production of the original bill of lading in specific circumstances. The decision is published in the PRC Supreme People’s Court Law Report and is binding on all PRC courts.

On 6 May 1989, Hongkong Resources Textile Crude Material Co. Ltd. (the plaintiff) signed a sale contract with Norsud S.A., Geneva, under which the plaintiff purchased 1,905 tonnes of Sudan crude cotton, payment by letter of credit. On 27 May, the plaintiff and Shenzhen Specific Economic Zone Imp. & Exp. (Group) Co. (“Shenzhen”) entered into a contract to provide 1,908 tonnes of Sudan crude cotton by the plaintiff, delivery in two shipments. On 28 June, Shenzhen signed a cotton processing contract with Zhanjiang Textile Enterprise (Group) Co. (“Zhanjiang Textile”), under which Shenzhen was to provide 954 tonnes of crude cotton for Zhanjiang Textile to process. Customs entry and formalities for taking delivery of cargo were to be carried out by Shenzhen, while transportation from the import port to warehouse was the responsibility of Zhanjiang Textile. On 24 July, following the application of Shenzhen, the Bank of China Shenzhen Branch (“the Bank”) issued an irrevocable documentary letter of credit. The credit stipulated for Sudan crude cotton 754 tonnes, unit price U.S. $0.73 pounds, c.i.f. Zhanjiang. On 11 October, the plaintiff issued a bill of exchange for U.S. $ 1,530,596.11, together with the complete set of negotiating documents including the original bill of lading to the Bank of China Shenzhen through Bank of China Hongkong, demanding that Shenzhen pay the cargo value. The bill of lading details were: carrier Pacific International Lines (Pte.) Ltd.; vessel concerned the M.V. Kota Maju; bill of lading No. Zhan/1; shipper Port Sudan Cotton Co.; consignee was order of Port Sudan Cotton Co. Khar—Toum/ Sudan for A/C of Norsud S.A. Cotton Div, 1204 Geneva, loading port Sudan, discharge port Zhanjiang, 5,023 bales, weight 963,583kg, Sudan crude cotton. The Cotton Division of Norsud S.A. endorsed over the bill of lading in blank. On 14 October, the Bank of China Shenzhen Branch requested Shenzhen to pay the cargo value after they received the documents under the letter of credit. However, on 20 October, Shenzhen notified the Bank that the documents received did not conform with the letter of credit and they refused to pay the value. On the same day, the Bank notified their Hongkong Branch that cargo value under the letter of credit was rejected.

On 11 October 1989, the Kota Maju arrived at port Zhanjiang. Zhanjiang Shipping Agent was the Kota Maju’s agent instructed by the carrier. The vessel finished discharging