Below is case study ,please help me with question ...nb;reasons are very important

Case One

The ChineseSeamen's Foreign Technical Services Co. v. Soto GrandeShipping Corp., SA

People's Republic of China, Shanghai Maritime Court, 1987.

The Facts

The plaintiff in this action was engaged in the provision of crewing services for vessels in maritime commerce. The defendant was the owner of the Panamanian M/V Pomona. The plaintiff and the defendant shipowner executed a crewing services contract on December 17,1984, in Shanghai. The contract required the plaintiff to provide 25 sea- men, including a master, officers and crew, to serve for one year aboard the Pomona. The defendant was to pay monthly wages of $20,833 to the plaintiff. On January 14, 1985, the plaintiff dispatched the 25 seamen to the vessel. By September 16,1985, the plaintiff had received only two payments, totaling $21,455 for wages and $840.80 for ship's stores. The plaintiff claimed $225,283.05 in wage payments from the defendant shipowner.

The Seizure and Sale

On September 16, 1985, the plaintiff submitted to the Shanghai Maritime Court a petition for the seizure of the Pomona. The petition prayed for an order directing the shipowner to post security in the amount of USS 200,000, or alternatively, for an order directing the sale of the vessel. The court found that the petition was procedurally correct, that it alleged a claim for which seizure of foreign flag vessels is allowed under Chinese law, and that it set forth a reasonable basis for seizure. On September 28 the court therefore ordered the vessel's seizure.

Due to the failure of the shipowner to furnish security, the court ordered the sale of the Pomona in accordance with Article 93, clause 3 of the Law of Civil Procedure (For Trial Implementation) of the People's Republic of China.

Clause 3... provides that if the property under legal custody cannot be held and maintained for a long period, the People's Court may compel a sale and deposit the proceeds in the court's registry. The Pomona was sold at public auction on October 18, 1985, and sales proceeds of $430,000 were generated and deposited in the court's registry. Simultaneously, the court published an official announcement that all creditors of the vessel should apply to register their claims within 30 days.

The Suit

On October 3, 1985, the plaintiff commenced suit in the Shanghai Maritime Court and sought, in addition to the above-mentioned back wages of the seamen, the fuel expenses which it had covered for the vessel, the cost of the vessel arrest, its legal fees, liquidated damages for breach of contract, and interest. The total amount of plaintiff's claim was $259,636.03.

The shipowner failed to file answering papers within the time limit prescribed by law. Although twice formally summoned by the court, the shipowner consistently failed to submit any legitimate reasons for its refusal to enter a formal appearance in the action. Having given the defendant the requisite opportunity to be heard, the court con- ducted a trial of the action in the shipowner's absence.

The Rulings

The court ruled that the shipowner had breached the

terms of the contract and should bear full responsibilityfor the consequences of its unfulfilled obligations. Following international custom and practice as well as Chinese law, the court ruled as follows:

1.The shipowner was required to compensate the

plaintiff for crew wages in the amount of $190,149.24;

2.The shipowner was required to compensate the

plaintiff for fuel expenses in the amount of $3,500.00;

3.The plaintiff's claims for other expenses were

denied;

4.The shipowner was required to bear certain costs

of litigation, including the filing fee ($1,176.87),

the application fee for seizure of the vessel ($625),

and miscellaneous litigation expenses ($139.90),

totaling $1,941.77. Those expenses were to be

deducted from the sales proceeds after the effec-

tive date of the ruling.

The Preliminary Distribution of the Sales Proceeds

The order took effect after it was served upon the parties and the time for appeal had expired. In accordance with a recent Supreme People's Court directive entitled "Special Rules on the Payment of Claims Against Vessels Sold by Court Order," the court directed the convening of a meeting of creditors to engage in the liquidation of the debts arising out of this case. It publicly verified the sum of money available for distribution, the priority of claims, the nature and extent of each creditor's claim, and the methods of negotiating the creditors' claims~ After marshalling the creditors' evidence and examining the value of the claims, the court certified four creditors' claims in addition to the plaintiff's judgment for crew wages. The additional claims certified by the court were the following:

1.A claim for seamen's wages in the sum of

$171,840.26 put forward by the Chinese Seamen's

Foreign Technical Services Company ("CSFTSC")

of the Shanghai Maritime Transport Bureau;

2.Claims totaling $23,292.18 for harbor usage,

ship's stores and other items put forward by the

Ningpo Branch of the China Ocean Shipping

Agency ("COSA");

3.A ship mortgage in the amount of $1,931,530.34

held by the National Westminster Bank, USA.

4.A claim asserted by the Repair Center of the

Shanghai Shipbuilding Industry Corporation

("SSIC") for repairs totaling $39,000.

The Pomona sales proceeds were applied first to litigation costs and certain.., custodia legis expenses. The

costs and expenses paid in this manner consisted of the

$1,941.77 in costs awarded to the plaintiff; $25,185.88 in

claims and expenses arising from the sale of the vessel, and

$3,500 for the diesel oil and lighterage expenses incurred

by the plaintiff during the period of seizure. The remaining

amount of USS 399,372.35 was augmented by $17,921.67

in interest earned while the sales proceeds were held in

legal custody at the Bank of China. The fund available to

creditors was thereby raised to USS 417,294.02.

The priority rules established by the aforementioned directive rank seamen's wages in the first priority class. The plaintiff's judgment for seamen's wages and the wage claim of the Shanghai CSFTSC, which together amounted to $361,989.50, were therefore paid first out of the remaining sales proceeds.

The second priority class established by the directive includes national taxes, harbor usage fees and other port expenses~ The claim of the Ningpo COSA included items totalling $9,574.29, which fell within the second das~ Those items were accordingly paid next.

There were no other claims in the first three priority classes established by the directive. The next highest claim was the mortgage held by the National Westminster Bank, which was listed between the fourth and fifth priority classes. The remaining claims of the Ningpo COSA, including claims for fuel and water supplied to the vessel, and the repair costs claimed by the Repair Center of SSIC, were deemed "other registered claims" within the meaning of the directive. They fell within the fifth priority class, below the mortgage. The balance of the sales proceeds, totalling $45,730.23 was therefore distributed to the mortgagee, and the remaining claims were left unpaid.

The Final Distribution of Sales Proceeds

After another step in the deliberations, the Shanghai CSFTSC "reconsidered" the effect of the plaintiff's lead in this case and agreed to transfer $12,400.26 to the plaintiff from its own portion of the preliminary distribution. The Shanghai CSFTSC and the National Westminster Bank then "reconsidered" the actual losses of the Repair Center of SSIC Corporation and the Ningpo Branch of COSA, and agreed to allow them, from their portions of the preliminary distribution, "suitable amounts" to remedy their losses. In this way, the five claimants arrived at the following final distribution of payments:

~ The plaintiff received $202,549.50;

~ The Shanghai CSFTSC received $150,000;

~ The Ningpo Branch of COSA received $15,274.29;

~ The National Westminster Bank USA received

$44,970.23;

~ The Repair Center for SSIC Corporation received

$4,500.O0.

The trade terms the parties choose in their sales contract determine who is responsible for purchasing maritime insurance, and who benefits from it. However, even when the "risk of loss" shifts from the seller to the buyer, the seller continues to have an interest in seeing that the goods are insured. If the goods are lost and the buyer is either bankrupt or unwilling to pay, insurance may be the only basis for recovery available to the seller.

Should a party who is required to purchase insurance be involved in an isolated sale, he can purchase a special cargo policy covering the single sale. It is more common, however, for cargo to be covered by an open cargo policy. Such a policy is an open-ended contract that insures all the cargo of an exporter during a particular time period. All of the exporter's shipments, whether by truck, rail, air, or vessel, are covered. Parties involved in an isolated sale often arrange to have their goods covered by the open cargo policy of a freight forwarder or customhouse broker.

Perils

The perils covered by special and open cargo policies commonly include the following:

1. Loss or damage from the sea (e.g., weather, collision, stranding, sinking)

2. Fire

3. Jettison (i.e., the dumping of cargo in order to protect other property)

4. Forcible taking of the ship

5. Barratry (i.e., the fraudulent, criminal, or wrongful conduct of the captain or crew)

. Explosion

7. Fumigation damage

8. Damage from loading, discharging, or transshipping cargo

The coverage of maritime insurance policies is examined in the following case.

Question:Do you agree or not agree to the rulings byShanghai Maritime Court? Give your reasons