Author: Li GuanFeng, intern lawyer with the Hua Junli International Law Firm’s team.

1.Introduction

Confucius said:“To know what you know and to know what you do not know—this is true knowledge.” Knowing is knowing, and not knowing is not knowing; this is the wisdom of life. Moreover, in the course of maritime transport, there is also a distinction between “knowledge” and “ignorance.” For the carrier, if it is unaware of the condition of the goods being shipped, promptly declaring its “ignorance” can be a prudent course of action, which has led to the emergence of the “clause of ignorance.”

The “unknown clause,” as an important rule in maritime transport, concerns the allocation of liabilities among the carrier, the shipper, and the consignee, and thus deserves our close attention. Whether it is the “Notice on Trial Proceedings of the Guangzhou Maritime Court” recently released by the Guangzhou Maritime Court (2021), or2022The “Minutes of the National Conference on Foreign-related Commercial and Maritime Trial Work” issued by the Supreme People’s Court in [Year] each contain a dedicated section that addressesThe rules and application of the “clause of ignorance” are of considerable importance and complexity.

2.The concept of clauses is unclear.

In maritime transport practice, if the goods are first packed into a container by the shipper, it is quite possible that the container’s exterior appears intact while the cargo inside was already damaged at the time of loading. However, requiring the carrier to inspect the quality and quantity of the cargo at the very outset of the voyage would be impractical and economically unreasonable.

Therefore,"Unknown Clause"(Unknown Clause)As rules that balance the interests of the contractor and the shipper, they thus have room for further development.

Not knowing the terms, it refers toClauses established by the carrier to exempt or limit its liability for the carriage of goods declared by the shipper.. There are mainly two forms: the clause form and the endorsement form. In the clause form, this clause is added separately on the bill of lading; in the endorsement form, this clause is not added separately but is instead placed before the description of the goods.The phrase “it is alleged” should be used to indicate that the carrier is not aware of the quantity or other information regarding the cargo.

3. The validity of the clause is unknown.

First, within China’s legal system, does it recognize this?The validity of “unknown clauses” and similar provisions? The answer is yes.According to Article 75 of the Maritime Law:“The carrier or any person acting on its behalf who issues the bill of lading, if it knows or has reasonable grounds to suspect that the description of the goods, marks, number of packages or pieces, weight, or volume stated in the bill of lading does not correspond to the goods actually received, or, in the case of an on-board bill of lading, suspects a discrepancy with the goods actually loaded, or if there is no appropriate means to verify the information stated in the bill of lading, may make a notation on the bill of lading specifying the nature of the discrepancy, the basis for the suspicion, or stating that verification was not possible.

China has, at the legal level, established and recognized the validity of the “ignorance clause.”

Secondly, in our country, recognition is granted.Under the premise that the “clause of ignorance” is valid, may a carrier pre‑insert such a clause into the bill of lading and, in the event of cargo loss, invoke it as a basis for refusing to assume liability for the entire loss? The answer is no.This involvesThe prerequisite for the “clause of ignorance” to take effect.

In accordance with Article 75 of the Maritime Law and Article 57 of the Minutes of the National Courts’ Symposium on Foreign-related Commercial and Maritime Trials, among other provisions,The applicable requirements for the “doctrine of ignorance of the law” include several points:

1. The carrier, whether aware or unaware but with reasonable grounds to suspect, regarding the description of the goods as stated on the bill of lading and the actual goods received…

The cargo does not conform to the description, or the carrier, upon issuing a shipped-on-board bill of lading, suspects that it does not match the cargo actually loaded.

This needs to take into account the carrier'sWhether there was negligence in “not knowing the status of the goods,” that is, whether due diligence was exercised.

As the Shanghai Maritime Court has ruled in the case of Global Speed Co., Ltd. v.The views in the case of Peihua Yuntong International Logistics (China) Co., Ltd.:“……Where the goods in question are packed and sealed by the shipper and declared by the shipper, it is unreasonable to require the carrier to verify the actual condition of the cargo inside the container.

Secondly, although the actual weight of the container in question differs from the weight stated on the bill of lading, the defendant is not a professional cargo surveyor or weighing authority, and at the time the goods were consigned, there was no mandatory requirement for container weighing. Therefore, in this case, the defendant’s notation on the face of the bill of lading indicating that it was unaware of the condition of the goods is reasonably justified.

Finally, based on the facts ascertained in this case, the plaintiff’s representative participated in and witnessed the process of loading and sealing the cargo. Subsequently, before the cargo was placed in the container yard, it was swapped. Therefore, the plaintiff’s loss was not caused by any intentional or negligent act of the defendant in the performance of the maritime carriage contract, and no legal causal relationship exists between the two.

2. There is no appropriate method to verify the information recorded on the bill of lading.In determining whether a method isWhen considering "appropriateness," one must not only take into account
Realistic feasibility must also take economic rationality into account. If the shipper packages the goods into the container themselves, although it is technically feasible for the carrier to physically open the container and inspect the quality and quantity of the cargo, doing so would inevitably impose a substantial financial burden on the carrier and would not be economically justified.
As stated by the Guangzhou Maritime Court in the “Report on Trial Proceedings of the Guangzhou Maritime Court,”2021) As indicated in the published case:“In the case of full-container-load shipping, based on shipping efficiency and decades of practice in container transportation., The carrier shall be obliged to verify the weight of the goods being carried, except when weighing facilities are available.Furthermore, the carrier shall not be responsible for the actual condition, quantity, or volume of goods that have been packed, counted, and sealed by the shipper.”
3. It needs to be endorsed on the bill of lading.Unless otherwise specified, it is impossible to determine the carrier’s liability for this shipment.“No”
knowFurthermore, on such a statement, any notation indicating “lack of knowledge” regarding certain characteristics of the goods must be accompanied by an explanation of the basis for the suspicion, clearly stating the facts or reasons for such lack of knowledge.
4. The carrier has not violated the obligations set forth in Articles 47 and 48 of the Maritime Law.
In accordance with Articles 47 and 48 of the Maritime Law, the carrier has a statutory obligation to ensure that the vessel is seaworthy, that the cargo holds are fit for and capable of safely receiving, carrying, and storing the goods, and that it exercises due care in the custody of the cargo.
Therefore, the “Minutes of the National Courts’ Symposium on Foreign-related Commercial and Maritime Trial Work” specifically points out that“……There is evidence that the cause of the cargo damage was the carrier’s breach of the obligations set forth in Articles 47 and 48 of the Maritime Law, and the carrier invokes…The People’s Court shall not uphold a claim based on the “unknown terms” defense to exempt liability for damages.”
4. It is unclear what advice the clause provides to the carrier.
1.willThe “unknown clause” shall be incorporated into the company’s standard business contract template, and, in principle, must be included in all transportation contracts entered into with shippers.
China’s Maritime Law has explicitly recognized the validity of this rule, which is an important provision for balancing the responsibilities between carriers and shippers, significantly reducing the carrier’s burden of proof and its liability for damages arising from changes in the condition of the goods. Therefore, when drafting business contract templates, carriers must ensure that this clause is included in all such contracts.
2.In ensuringEven where a “clause of ignorance” is included in the contract, it remains necessary to make every effort to inspect the actual condition of the goods and to retain relevant supporting documentation.
As mentioned above,The “unknown clause” does not take effect under all circumstances; one of the prerequisites for its effectiveness is that the carrier must fulfill its duty of due diligence, and the carrier bears the burden of proving that its notation complies with the provisions of Article 75 of the Maritime Law. Therefore, carriers should not assume that the presence of an “unknown terms” clause in the contract absolves them of responsibility and allows them to disregard the condition of the goods. Instead, they must proactively fulfill their statutory obligations by verifying the actual condition of the cargo and preserving relevant evidence for use as proof in any subsequent litigation.

Members of the Hua Junli Law Firm:
Hua Junli  lawyer Guangdong
Li Guanfeng  Paralegal Guangdong
Tong Qingxi  Paralegal Guangdong