Hainan Fenghai Grain and Oil Industry Co., Ltd. V. the Hainan Branch of PICC Property and Casualty Company Limited, a Dispute O

Hainan Fenghai Grain and Oil Industry Co., Ltd. v. The Hainan Branch of PICC Property and Casualty Company Limited, A Dispute over an Insurance Contract for the Carriage of Goods by Sea

Guiding Case No. 52 (Discussed and Passed by the Adjudication Committee of the Supreme People’s Court Released on April 15, 2015)

CHINA GUIDING CASES PROJECT English Guiding Case (EGC52) November 15, 2015 Edition *

* The citation of this translation of the Guiding Case is: 《海南丰海粮油工业有限公司诉中国人民财产保险股份有限公司海南省分公司海上货物运输保险合同纠纷案》 (Hainan Fenghai Grain and Oil Industry Co., Ltd. v. The Hainan Branch of PICC Property and Casualty Company Limited, A Dispute over An Insurance Contract for the Carriage of Goods By Sea ), CHINA GUIDING CASES PROJECT , English Guiding Case (EGC52), Nov. 15, 2015 Edition , available at http://cgc.law.stanford.edu/guiding -cases/guiding -case -52. This document was primarily prepared by Kenneth Daines, Xiaodong Ge, Jesse Holmes, Oma Lee, and Minmin Zhang. The document was finalized by Jordan Corrente Beck and Dr. Mei Gechlik. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings to correspond with those boldfaced in the original Chinese version, was done to make the piece more comprehensible to readers. The following text, otherwise, is a direct translation of the original text and reflects formatting of the Chinese document released by the Supreme People’s Court. The following Guiding Case was discussed and passed by the Adjudication Committee of the Supreme People’s Court of the People’s Republic of China and was released on April 15, 2015, available at http://www.chinacourt.org/article/detail/2015/04/id/1602396.shtml. See also 《最高人民法院关于发布第十批指导性案例的通知》 (The Supreme People’s Court’s Notice Concerning the Release of the Tenth Batch of Guiding Cases ), Apr. 15, 2015, available at http://www.chinacourt.org/law/detail/2015/04/id/148149.shtml.

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Keywords

Civil Maritime Insurance Contracts for the Carriage of Goods by Sea

All Risks External Causes

Main Points of the Adjudication

In an insurance contract for the carriage of goods by sea, the “all risks” [clause] covers, apart from the various liabilities [covered by] the “free of particular average” [(hereinafter referred to as “FPA”)] 1 and “with particular average” [(hereinafter referred to as “WPA”)] 2 [clauses], all or partial losses of the insured goods that result from external causes while [the goods] are in transit. Where the insured does not intentionally [cause the losses] and is not at fault, and the losses of the insured goods result from causes other than those listed in the exclusion clause(s) of the relevant insurance contract, [the court] may determine that those causes are a type of “external cause” that leads to the losses of insured goods. The insurer should bear [liability] for all losses that result from external causes while [the insured goods] are in transit.

Related Legal Rule(s)

Article 30 of the Insurance Law of the People’s Republic of China

Basic Facts of the Case

On November 28, 1995, Hainan Fenghai Grain and Oil Industry Co., Ltd. 3 (海南丰海粮油工业有限公司 ) (hereinafter referred to as “Fenghai Company”) purchased insurance from the

1 Translators’ note: the original text reads “平安险 ” (“free of particular average”). Commonly used in insurance contracts for the carriage of goods by sea, the “free of particular average” (“FPA”) clause limits the liability of insurance companies to only those losses that exceed a certain percentage of the value of the insured goods. See, e.g., Chubb Group of Insurance Companies, Ocean Cargo Insurance: Glossary of Terms , 37 (2004), available at http://www.chubb.com/businesses/cci/chubb5810.pdf. 2 Translators’ note: the original text reads “水渍险 ” (“with particular average”). The “with particular average” (“WPA”) clause limits the liabilities of insurance companies to partial damage from seawater or loss from breakage, leakage. This clause sometimes appears as the “with average” (“WA”) clause. See, e.g., id. at 88. 3 Translators’ note: the name “ 海南丰海粮油工业有限公司 ” is translated here as “Hainan Fenghai Grain and Oil Industry Co., Ltd.”. The term “ 粮” is translated as “grain” in accordance with the translation used in the name of the State Administration of Grain ( 国家粮食局 ) as shown on the agency’s website, at http://www.chinagrain.gov.cn/n316630/n316655/index.html.

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Hainan Branch of PICC Property and Casualty Company Limited 4 (中国人民财产保险股份有限公司海南省分公司 ) (hereinafter referred to as “Hainan PICC”) to insure 4,999.85 tons of barreled palm oil carried by the Indonesian vessel, the Hagaag , from the port of Dumai, Indonesia, to the port of Yangpu, China. The risks insured were “all risks”. T he price of the goods was USD 3,574,892.75, the insured amount was USD 3,951,258, and the insurance premium was USD 18,966.

After the insurance was purchased, Fenghai Company paid Hainan PICC the insurance premium in accordance with the contract. Hainan PICC [then] issued a notice of shipment to Fenghai Company, signed for issuance an insurance policy for the carriage of goods by sea, and appended to the policy [a set of] insurance clauses on the carriage of goods by sea. According to these insurance clauses, the “all risks” coverage included various liabilities [covered by] the FPA and WPA [clauses] and [further coverage that required] Hainan PICC to be “responsible for all or partial losses of the insured goods that result from external causes while the goods are in transit”. The clauses also provided for five exclusions.

The abovementioned insured goods were purchased by Fenghai Company from Singapore Wilmar Pte. Ltd. 5 (hereinafter referred to as “Wilmar Company”) at the CNF price.6 Based on the stipulations in the sale and purchase contract, consignor Wilmar Company signed a charter -party with Liang International Agency (hereinafter referred to as “Liang International”), which was an agent of the owner [of the Hagaag ]. The charter -party stipulated that the Hagaag would carry to the port of Yangpu, China, Fenghai Company’s insured goods, [i.e.] the 5,000 tons 7 of palm oil, and would carry to Hong Kong another 1,000 tons of palm oil.

On November 29, 1995, Indonesia’s PT. SAMUDERA INDRA Company 8 (hereinafter

4 Translators’ note: the name “ 中国人民财产保险股份有限公司海南省分公司 ” is translated here as “Hainan Branch of PICC Property and Casualty Company Limited”. The name “ 中国人民财产保险股份有限公司” is translated as “PICC Property and Casualty Company Limited” in accordance with the translation used in the prospectus for the company’s global offering, made available at the company’s website, at http://www.picc.com.cn/res/PICCCMS/structure/ewf101.pdf. 5 Translators’ note: the name “ 新加坡丰益私人有限公司 ” is translated here as “Singapore Wilmar Pte. Ltd.”. This might more accurately refer to the company Wilmar Trading (China) Pte. Ltd. ( 丰益贸易（中国）私人有限公司 ), which operates as a subsidiary of Wilmar International Limited, a well -known company in Singapore. See Company Overview of Wilmar Trading (China) Pte. Ltd.: Snapshot , BLOOMBERG BUSINESS , available at http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=9708236. 6 Translators’ note: the original text reads “CNF 价格 ” (“CNF price”). CNF stands for “Cost, No insurance, and Freight” and is a term used to indicate that the price for a shipment does not include insurance charges, but includes all expenses up to a named port of destination. This is alternatively referred to as “Cost and Freight” (“C&F” or “CFR”). See, e.g., Chubb Group of Insurance Companies, supra note 1, at 10. 7 Translators’ note: the original text reads “5000 吨” (“5,000 tons”). It is not clear why the text does not read “4,999.85 tons”, which was the exact amount of oil insured. 8 Translators’ note: the original text reads “PT. SAMUDERA INDRA 公司 ” (“PT. SAMUDERA INDRA Company”). This might actually refer to PT Samudera Indonesia Tbk, whose website can be viewed at http://www.samudera.com.

2015.11.15 Edition referred to as “PSI Company”), which was the time charterer of the Hagaag and the actual carrier of that batch of goods, signed for issuance an on -board bill of lading numbered DM/YPU/1490/95. That bill of lading clearly listed the ship as the Hagaag , the port of loading as the port of Dumai, Indonesia, the port of discharge as the port of Yangpu, China, the shipping mark of the goods as BATCH NO. 80211/95, and the quantity of goods loaded as 4,999.85 tons. It [was also marked with the words] “clean,9 freight prepaid”.

According to investigation, consignor Wilmar Company paid Liang International the freight rate, which was then passed by Liang International to PSI Company. On December 14, 1995, Fenghai Company made a payment to its issuing bank in order to redeem the documents and, as a result, obtained the entire set (3 copies) of the original bill of lading for the above - mentioned insured goods. Between November 23 and 29, 1995, the Hagaag was loaded at the port of Dumai with 31,623 barrels of “Four Seas” brand palm oil, with a net weight of 5,999.82 tons, 10 and began its voyage. Since East Indonesia’s PT. PERUSAHAAN PELAYARAN BAHTERA BINTANG SELATAN Company (hereinafter referred to as “BBS Company”), the owner of the Hagaag , and PSI Company, the time charterer of the ship, had a dispute over the ship rental, the Hagaag ’s voyage as stipulated in the bill of lading was suspended and information about the dynamic status of the vessel [including its location] was blocked from outsiders.

In order to avoid losses of the insured goods, Wilmar Company, Fenghai Company, and Hainan PICC sent [their] representatives multiple times to participate in negotiations between the owner and the time charterer of the Hagaag . However, because the shipowner was not willing to disclose the whereabouts of the Hagaag on the ground that the rental had not been received, the multilateral negotiations were to no avail. Afterwards, Wilmar Company and Fenghai Company [made] representations through a variety of channels and [tried to] locate the Hagaag in many [different] ways. Hainan PICC also assisted in attempts to find the Hagaag through its institutions abroad. [There was no news] until April 1996 when the Hagaag smuggled [goods] to Shanwei, China, and was [then] seized by the China Coast Guard.11

According to the ascertained [facts as stated in] the People’s Procuratorate of Guangzhou Municipality’s Sui Jian Xing Mian Zi (1996) No. 64 Written Decision on Exemption from

9 Translators’ note: the original text reads “清洁 ” (“clean”). A “clean” bill of lading is a bill of lading issued by a carrier to declare that the goods that it has received do not show any defects or deviations in quantity. See, e.g., Investopedia, Clean Bill of Lading , available at http://www.investopedia.com/terms/c/clean -bill -lading.asp. 10 Translators’ note: the original text reads “5999.82 吨” (“5,999.82 tons”). It is not clear why the text does not read “5,999.85 tons”. Earlier in the Guiding Case, it was mentioned that the Hagaag would carry to the port of Yangpu, China, Fenghai Company’s insured goods, which should be 4,999.85 tons of palm oil, and would carry to Hong Kong another 1,000 tons of palm oil. The total weight should be 5,999.85 tons. 11 Translators’ note: the original text reads “我海警 ” (“our [country’s] coast guard”). This refers to “中国海警”, whose official English name is “China Coast Guard”. See, e.g., 中国海警局正式挂牌设南海北海东海 3 个分局 (China Coast Guard is Formally Established; Set Up 3 Branches [Covering] South, North, and East Seas ), 《新京报》 (BEIJING NEWS ), July 23, 2013, available at http://politics.people.com.cn/n/2013/0723/c1001 - 22285781.html.

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Prosecution, from January to March 1996, Ellis Lunbake,12 the captain of the Hagaag , based on BBS Company’s instructions, commanded [his] crew to transfer 11,325 barrels of palm oil [weighing] more than 2,100 tons to the Iwana 13 and the Salaha ,14 which were [two] cargo ships belonging to the same ship company. [The oil] was to be carried away for sale. [The captain] also let the crew alter the name of the ship from the “Hagaag ” to “ Eliza II ”. In April 1996, the cargo ship renamed “ Eliza II ” carried the remaining 20,298 barrels of palm oil and smuggled them into Shanwei, China. [The ship] was seized by the China Coast Guard on April 16. The 20,298 barrels of palm oil had already been confiscated by procuratorial organs in Guangdong Province as smuggled goods and turned over to the State Treasury. On June 6, 1996, Fenghai Company submitted to Hainan PICC a report to claim compensation. On August 20, Fenghai Company further presented to Hainan PICC a written application to claim compensation. Hainan PICC explicitly stated its refusal to pay compensation. Consequently, Fenghai Company brought suit in the Haikou Maritime Court.

Fenghai Company was set up as a Chinese-foreign equity joint venture on August 14, 1995 by Hainan Fengyuan Trade Development Co., Ltd. and Singapore Haiyuan International Co., Ltd. After [Fenghai] Company was established, it developed a business relationship with Hainan PICC. From October 1, 1995 to November 28 of the same year (before the insurance policy of relevance to this case was issued), four insurance transactions involving imported palm oil [were completed]. Three of [the policies that resulted from these transactions contained] all risks coverage and the remaining [policy included] “war risk coverage in addition to all risks”. [Eventually], claims for compensation were made under all four of the policies. Some compensation was paid for lost and damaged goods, [a type of risk] covered by the all risks [clause in the policies].

Results of the Adjudication

On December 25, 1996, the Haikou Maritime Court rendered the (1996) Hai Shang Chu Zi No. 096 Civil Judgment:

1. Hainan PICC should pay Fenghai Company USD 3,593,858.75 as compensation for the losses [as measured by] their insured value.

2. [The court] rejects Fenghai Company’s other litigation requests.

After the judgment was pronounced, Hainan PICC appealed. On October 27, 1997, the Higher People’s Court of Hainan Province rendered the (1997) Qiong Jing Zhong Zi No. 44 Civil

12 Translators’ note: the name “埃里斯•伦巴克 ” is translated here as “Ellis Lunbake” in accordance with the pinyin system. 13 Translators’ note: the name “依瓦那 ” is translated here as “Iwana” in accordance with the pinyin system. 14 Translators’ note: the name “萨拉哈 ” is translated here as “Salaha” in accordance with the pinyin system.

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Judgment: [the court] revokes the first-instance judgment and rejects Fenghai Company’s litigation requests. Fenghai Company applied to the Supreme People’s Court for a retrial. On August 11, 2003, the Supreme People’s Court decided by the (2003) Min Si Jian Zi No. 35 Civil Ruling to bring the case up [to the Supreme People’s Court] for adjudication.15 On July 13, 2004, [the Supreme People’s Court] rendered the (2003) Min Si Ti Zi No. 5 Civil Judgment:

1. [The court] revokes the Higher People’s Court of Hainan Province’s (1997) Qiong Jing Zhong Zi No. 44 Civil Judgment.

2. [The court] upholds the Haikou Maritime Court’s (1996) Hai Shang Chu Zi No. 096 Civil Judgment.

Reasons for the Adjudication

The Supreme People’s Court opined: this case involved a dispute over an insurance contract for the international carriage of goods by sea. [Both] the insured and the port of destination of the insured goods were within the territory of the People’s Republic of China. It was correct for [the judges of] the original trial to use the law of the People’s Republic of China as the governing law to resolve the dispute of this case. Neither of the two parties raised objections [to the choice of law].

The insurance contract entered into by Fenghai Company and Hainan PICC was legal and valid. The rights and obligations of both parties should be bound by the insurance policy and the insurance clauses attached [to that policy]. There was already actual total loss of the insured subject in this case and on this, consignor Wilmar Company was not at fault, nor was there evidence to prove that Fenghai Company, the insured, intentionally [caused the loss] or was at fault. The [actual total] loss of the insured subject was caused by the BBS Company, the owner of the Hagaag , carrying the goods on board away for sale and smuggling them, [in response to] a dispute over the rental that it had with the time charterer. In this case, the focal point of the dispute was how to understand the scope of liability [covered] by the “all risks” [terms] in the insurance clauses at issue.

In the course of handling the second-instance adjudication, the Higher People’s Court of

15 Translators’ note: the original text reads “提审 ” (“bring [a case] up to [an upper level court] for adjudication”). According to Article 13, Paragraph 2 of the Organic Law of the People’s Courts of People’s Republic of China , if the Supreme People’s Court finds an error in a judgment or ruling rendered by a lower -level court and the judgment or ruling has already come into effect, the Supreme People’s Court has the authority to adjudicate the case itself or to direct the lower -level court to conduct a retrial. See 《中华人民共和国人民法院组织法》 (Organic Law of the People’s Courts of the People’s Republic of China ), passed on July 1, 1979, issued on July 5, 1979, effective as of Jan. 1, 1980, amended three times, most recently on Oct. 31, 2006, effective as of July 1, 2007, available at http://www.npc.gov.cn/wxzl/gongbao/2006 -12/05/content_5354938.htm .

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Hainan Province opined that based on the insurance clauses attached to the insurance policy and the conventional practices of the insurance industry, the scope of liability covered by all risks [clauses] included FPA, WPA, and common additional risks (i.e., the risk of theft, pilferage and non-delivery, the risk of fresh water rain damage, the risk of shortage, the risk of intermixture and contamination, the risk of leakage, the risk of clash and breakage, the risk of odor [damage], the risk of damage from heating and sweating, the risk of hook damage, the risk of breakage of packaging, and the risk of rust [damage]). In the Reply Concerning a Request for Instructions on Interpreting Carriage of Goods By Sea “All Risks” Clauses , the People’s Bank of China prepared clear provisions [interpreting the meaning of “all risks” clauses] in the same way. Thus, the loss of Fenghai Company’s insured goods was not within the scope of liability covered by the all risks [clause].

In addition, given that Hainan PICC and Fenghai Company had a long-term business relationship [in the provision of] insurance [coverage] and that prior to the occurrence of the dispute in this case, both parties had signed multiple insurance contracts and Hainan PICC had paid compensation for [losses] that were within the all risks coverage, Fenghai Company should, therefore, have clearly understood the main contents, exclusion clauses, and the scope of liability covered by the all risks [clause] of the insurance contract in this case. [The Higher People’s Court of Hainan Province] therefore determined that the first-instance judgment [was based on] erroneous applications of law.

According to the “Insurance Clauses on Carriage of Goods by Sea” involved in this case, the all risks [coverage] included various liabilities [covered by] the FPA and WPA [clauses] and [further coverage that required Hainan PICC] to be responsible for losses of the insured goods resulted from various external causes when [the goods] were in transit. At the same time, the clauses also clearly listed five types of exclusions, which were:

(1) losses caused by the insured’s intentional acts or fault; (2) losses arising from liabilities of the the consignor; (3) losses due to the inferior quality or a deficiency in quantity present in the insured goods before the insurance responsibilities began; (4) losses arising from natural wear and tear, defects and characteristics in nature, drop in market price, or delay in the carriage of the insured goods; [and] (5) the scope of the liabilities and exclusions as set forth in the company’s c arriage of goods by sea war risk clause and carriage of goods strike risk clause.

Looking at the abovementioned clauses, the “all risks” terms in i nsurance clauses in [contracts for the] carriage of goods by sea have the following characteristics:

1. “All risks” are not listed risks, but are non-listed risks. In i nsurance clauses involving carriage of goods by sea , FPA and WPA are listed risks, whereas “all risks” [covers] FPA, WPA, and non -listed losses of the insured subject which result from external causes when [the insured subject] is in transit .

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2. The losses of the insured subject must be caused by external causes. When the insured claims compensation from the insurer, [the insured] must prove that the losses of the insured subject resulted from external causes while in transit. External causes can be natural causes or accidents caused by human error. However, the risks covered by the all risks [clause(s) must] possess uncertainty 16 [in the sense that] the insured risks cannot be certain risks, but rather are risks of accidental [harm], and [thus] cannot be listed [in advance]. Those expected, certain, and normal hazards are not within the scope of liabilities [that result from] external causes.

3. External causes should be limited to those that occur in transit, excluding events that occur before or after. As long as the insured proves that the losses are not self-caused, but are caused by accidents that occurred [while the insured subject was] in transit, the insurer should bear the responsibility for [paying] insurance compensation.

According to the Insurance Law,17 where an insurance contract has a clause exempting the insurer from liability, the insurer should clearly explain this to the insurance buyer when the contract is entered into. If [the insurer] does not clearly explain this, the [exclusion] clause will not take effect. Based on this, although exclusions listed in an insurance clause [generally] exempt an insurer from paying compensation [for particular losses], the prerequisite for this is that the insurer has clearly informed the insured 18 of the exclusion clause when the insurance contract is signed. Otherwise, the exclusion clause cannot bind the insured.

On the opinions [stated in] the People’s Bank of China’s replies.

Before the China Insurance Regulatory Commission was established, the People’s Bank of China was the administrative organ in charge of the insurance industry. On May 1, 1997, in the Reply Concerning a Request for Instructions on Interpreting Carriage of Goods By Sea “All Risks” Clauses sent to the People’s Insurance Company of China Limited,19 the People’s Bank of China opined that the all risks coverage [included] FPA, WPA, and all or partial losses of the insured goods resulted from external causes while [the goods] were in transit. [The bank] further pointed out: external causes merely refer to theft, pilferage, non-delivery, fresh water rain damage, etc. On November 27, 1998, in a reply on the Interpretations of PICC P&C Co., Ltd.

16 Translators’ note: the original text reads “不确定性 ” (“uncertainty”). In Chinese law, the construction “to possess” or “to have” followed by a noun is often used to indicate a required quality or characteristic. 17 Translators’ note: the term “保险法 ” (“Insurance Law”) as used in this Guiding Case refers to 《中华人民共和国保险法》 (Insurance Law of the People’s Republic of China ). Because this Guiding Case was released on April 15, 2015, the Insurance Law referenced here should be the law as amended on and effective as of August 31, 2014. The specific provision is Article 17, Paragraph 2, which remains unchanged in the latest amendment. 《中华人民共和国保险法》 (Insurance Law of the People’s Republic of China ), Article 17, Paragraph 2, passed and issued on June 30, 1995, effective as of Oct. 1, 1995, amended three times, most recently on Apr. 24, 2015, effective as of Apr. 24, 2015, available at http://www.lc123.net/law/zx/2015 -07 -02/281492.html. 18 Translators’ note: the original text reads “被保险人 ” (“the insured”), but the context here suggests that “ 投保人 ” (“the insurance buyer”) is likely the term meant to be used here. 19 Translators’ note: the name “ 中国人民保险公司 ” is translated here as “The People’s Insurance Company of China Limited” in accordance with the translation used on the company’s website, at http://www.picc.com/.

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Concerning Carriage of Goods By Sea Insurance Clauses, the People’s Bank of China again made clear that the scope of liability covered by all risks [clauses] includes FPA, WPA, and all or partial losses of the insured goods that resulted from external causes while [the goods] were in transit. By “all or partial losses [of the insured goods] resulted from external causes”, [the Bank] meant eleven types of general additional risks.

The above replies of the People’s Bank of China are not laws or regulations, nor are they administrative rules. According to the Legislation Law of the People’s Republic of China ,20 the ministries and commissions of the State Council, the People’s Bank of China, the National Audit Office, 21 and subordinate institutions with administrative management functions may, in accordance with laws, as well as administrative regulations, decisions, and orders of the State Council, formulate rules within the scope of the department’s authority. The matters as set forth in [these] departmental rules should be matters [covered by] the enforcement laws or administrative regulations, decisions, and orders of the State Council. Consequently, insurance clauses are not within the scope of rules that departments [with administrative management] functions have the authority to formulate. Therefore, the People’ Bank of China’s interpretations of insurance clauses cannot be bases for binding the insured. Moreover, the People’s Bank of China’s replies on all risks [clauses] are a type of interpretation of insurance contract clauses. With respect to insurance contracts that are entered into by entities of equal [status], according to law, only people’s courts and arbitral institutions have the authority to issue interpretations that bind the parties. Therefore, the abovementioned replies could not bind the insured [in this case]. The only [way] to make the interpretations [stated in] the replies contractual clauses that would bind the insured would be to treat them as content of an insurance contract and attach them to an insurance policy.

[The fact that] the People’s Insurance Company of China Limited requested instructions from the [administrative] organ in charge regarding the scope of liability [covered] by all risks [clauses] and that the organ in charge did issue a reply showed that there was controversy over the understanding of all risks [clauses]. According to Article 31 of the Insurance Law ,22 with respect to clauses in insurance contracts, when the insurer has a dispute with the insurance buyer, the insured, or the beneficiary, people’s courts or arbitral institutions should interpret [the clauses] in a manner favorable to the insured and the beneficiary. Interpretations issued by the [administrative] organ in charge of the [insurance] industry that are favorable to the industry [itself] cannot apply to contractual parties who are not in the industry.

20 《中华人民共和国立法法》 (Legislation Law of the People's Republic of China ), Article 80, passed and issued on Mar. 15, 2000, effective as of July 1, 2000, amended on and effective as of Mar. 15, 2015, available at http://www.gov.cn/xinwen/2015 -03/18/content_2835648.htm (hereinafter “ New Legislation Law ”). 21 Translators’ note: the name “ 国家审计署 ” is translated here as “the National Audit Office” in accordance with the translation used on the office’s website, at http://www.audit.gov.cn/. 22 Translators’ note: the provision referenced here should be Article 30 of the Insurance Law as amended in 2014, whose provision number and content remain unchanged in the latest amendment. 《中华人民共和国保险法》 (Insurance Law of the People’s Republic of China ), Article 30, supra note 17. In fact, in the “Related Legal Rule(s)” section of this Guiding Case, “Article 30”, instead of “Article 31” was listed.

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In conclusion, it should be determined that the insured events in this case were within the scope of liability [covered by] the all risks [clause]. The court of second instance opined that Fenghai Company’s losses of the insured goods were not within the scope of liability [covered by] the all risks [clause]. This was incorrect and should be reversed. Fenghai Company’s grounds for the retrial application had sufficient basis and should be supported.