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April 21, 2014

Chinese Authorities Impound MOL Vessel

TOKYO-Mitsui O.S.K. Lines, Ltd. (MOL; President: Koichi Muto) today announced that on April 19, 2014, the MOL-operated iron ore carrier BAOSTEEL EMOTION was impounded by Chinese authorities in Zhejiang province, China.

The impounding is connected to the two freighters that were chartered from Chinese shipowner (Chung Wei Steamship Co.) by Daido Kaiun (predecessor of Navix Line, Ltd. which merged with MOL in 1999), commandeered by the Japanese government and subsequently lost at sea. The Shanghai Maritime Court issued an order to MOL to pay some ¥2.9 billion the plaintiff including the shipowner. MOL filed an appeal with the Supreme Court of the People's Republic of China, but the appeal was not recognized. Therefore, MOL was looking to conduct negotiations with the plaintiff toward the possibility for out-of-court settlement.

(Reference):
The sequence of events in the case

  • This incident occurred in June and October 1936. Daido Kaiun, one of predecessors of MOL, chartered two vessels, SHUN FOONG and HSINTAIPING from Chung Wei Steamship Co., but the vessels were expropriated by the Japanese government before their charter contracts were terminated. Both vessels then sank or were lost at sea.
  • In 1964, the heir of the president of Chung Wei Steamship Co. brought a plea for arbitration against the Japanese government in the Tokyo Summary Court, but it ended unsatisfactorily for him in 1967. In 1970, the plaintiff filed the case in the Tokyo Summary Court, but it was refused due to laches.
  • In 1987, statute of limitations of the civil law was introduced in China and the year-end of 1988 was to be the limit for filing the case. The heir of the president of Chung Wei Steamship Co. brought suit for damages and reparations for nonfulfillment of financial obligations on the charter contract in the Shanghai Maritime Court against the successor to Daido Kaiun, Navix Line, Ltd. (now Mitsui O.S.K. Lines, Ltd.) in 1988 before the time limit.
  • On December 7, 2007, the Shanghai Maritime Court instructed MOL to pay the plaintiff Chung Wei Steamship Co., the equivalent of ¥2.92 billion. MOL disagreed with the verdict of the ruling and appealed to the Shanghai Municipal Higher People's Court (Second Judgment).
  • On August 6, 2010, the Shanghai Municipal Higher People's Court issued a second judgment upholding the initial judgment. MOL filed a motion for a new trial to the Supreme Court of the People's Republic of China, but the motion was refused and notification of the refusal was sent to MOL on January 17, 2011.
  • MOL, getting in touch with the Shanghai Maritime Court, was seeking the possibility of out-of-court settlement when the vessel was suddenly impounded and we were notified of that fact.

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