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MOC’s Opinion on Handling the Issue of Increasing THC Level in South China by the Liner Agreements

March, 2007

Since March, 2007, IADA, IRA, ISAA, IRSA and their members subsequently filed collective agreements on increasing THC level in South China with the MOC’s Water Transport Department. After examination, MOC considers that the above 4 liner agreements and their members’ filing materials have the following problems:

  • ISAA and IRSA have not filed their organization constitution agreements with the MOC in accordance with the , and ISAA , IRSA and their members violate the rule of consultation, establishment and implementation of the relevant freight agreements in relation to the Chinese ports.
  • According to the < NOTICE ON STRENGTHENING SUPERVISION ON LINER CONFERENCES AND FREIGHT DISCUSSION AGREEMENTS > (Decree No. 10 issued by Ministry of Communication, PRC on March 12, 2007), All liner freight agreements must file their designated liaison offices with the MOC before April 15, 2007. However, IADA, IRA failed to do so.
  • In their submission of the materials on increasing THC level in South China to MOC, IADA, IRA and their members failed to submit the explanation materials on the reason and evidence of increasing THC level, and they also failed to submit materials of effective consultations with the relevant shipper organizations in China.

According to the above, MOC announces its opinions on handling this issue as follows:

  • In the light of ISAA and IRSA have not filed their organization constitution agreements with the MOC in accordance with the < Maritime Regulation of the People’s Republic of China>, therefore, MOC considers that the agreements concluded by ISAA and IRSA in relation to Chinese ports are invalid, their agreements on increasing THC level in South China should be cancelled, and they can not conduct any activities in China within one year, and all their members can not consult, establish, and implement ISAA and IRSA’s any operation and freight agreements. At the same time, MOC will give penalties to ISAA, IRSA and their members according to Article 48 of the Maritime Rule of China.
  • In the light of IRA and IADA failed to file their designated liaison offices with the MOC according to MOC’s Decree No. 10, and their members submit incomplete materials on increasing THC level in South China, therefore, MOC does not accept their filing materials. All their members can not implement IRA and IADA’s agreements on increasing THC level in South China.

NOTICE ON STRENGTHENING SUPERVISION ON LINER CONFERENCES AND FREIGHT DISCUSSION

NOTICE ON STRENGTHENING SUPERVISION ON LINER CONFERENCES AND FREIGHT DISCUSSION AGREEMENTS

Ministry of Communication, PRC

In order to facilitate the healthy development of China’s market for international container liner transportation, ensure fair competition in international shipping market, and protect the lawful rights and interests of carriers and shippers, and in accordance with the Regulations of the People’s Republic of China on International Maritime Transportation (hereinafter referred to as the Maritime Regulations), its Implementing Rules and other relevant provisions, the following notice is issued on liner conferences and freight discussion agreements that involve services at Chinese ports:

  • Liner conferences and freight discussion agreements shall abide by the relevant provisions in the Maritime Regulations, other related Chinese laws, rules and regulations, and the Convention on a Code of Conduct for Liner Conferences, 1974 of the United Nations, and shall not undermine fair competition in the international shipping market.
  • Relevant liner conferences and freight discussion agreements shall designate a point of contact or representative within the Chinese territory before April 15, 2007, release the name and address of the point of contact, and the name and means of contact of the representative on press agencies designated by the Ministry of Communications (hereinafter referred to as the MOC) (see appendix), and file the above-mentioned information with the MOC, while informing the shippers or shippers’ associations within the Chinese territory of the above-mentioned information. The documents for filing shall also include:
    • the letter of entrustment issued by persons in charge of the liner conferences and freight discussion agreements;
    • the photocopy of the business registration document of the appointed point of contact;
    • the name of the representative of the appointed point of contact and his/her proof of identity. Any change of the above point of contact and representative shall be announced and filed with the MOC within 15 days after such change, and shippers or shippers’ associations within the Chinese territory shall be informed.
  • The liner conferences and freight discussion agreements shall establish effective consultation mechanism with shippers or shippers’ associations within the Chinese territory, so as to have extensive and effective consultation on issues like the adjustment of items of charges, the adjustment of freight rates, the adjustment of surcharges and other related issues. Upon receiving request for consultation from the other side, the recipient shall send a representative for consultation in a timely manner and without undue delay. All relevant parties shall respect and carefully consider each other’s suggestions and concerns and try to reach consensus.
  • According to the provisions of the Maritime Regulations, international liner operators that participate in the conclusion of the liner conference agreements, service operation agreements and freight rate agreements in which Chinese ports are involved shall be the party responsible for filing. The liner conference agreements, service operation agreements and freight rate agreements referred to in this article shall mean the related agreements listed in Article 3 of the Implementing Rules. International liner operators shall file the relevant documents in accordance with Article 22 of the Maritime Regulations. The international liner operators shall submit photocopies of the agreements to the MOC within 15 days after the conclusion of the agreements, either by itself or by entrustment of the liner conferences and freight discussion agreements through their points of contact within the Chinese territory. The following documents shall be submitted:
    • Signed photocopies of the agreements, including minutes, decisions, agreements and other materials of meetings that involve discussions on the change of charge items and rate of charges, the freight rates, surcharges and other related issues. In the relevant agreements, minutes and decisions of the meetings and other related documents, it should be indicated clearly that relevant decisions are not binding on the members of liner conferences and freight discussion agreements, and the members have the right to act independently. Representatives of the members shall sign on the agreements or the meeting minutes for confirmation.
    • A statement signed by persons in charge of the liner conferences and freight discussion agreements on the items to be filed. If the agreement involves the adjustment of the items of charges, or the increase of freight rates or surcharges, the following issues should be specified in detail:
      • reasons and grounds;
      • consultation with the shippers’ associations within the Chinese territory and the main opinions of relevant parties;
      • related information of areas outside the Chinese Mainland. The documents for filing shall be complete and effective. The MOC will refuse to accept the documents for filing that are unqualified and failed to be promptly supplemented or adjusted. The documents for filing shall be written in Chinese. A Chinese translation shall be attached if the documents are written in other languages.
  • The liner conferences and freight discussion agreements shall release the main contents and the reasons for implementation of the agreements on the press agencies designated by the MOC at least 15 days prior to the date on which these agreements become effective.
  • Means of Filing Apart from submitting the above-mentioned written documents, the party responsible for filing can also submit the electronic version of the above-mentioned documents to the MOC.

The written documents for filing shall be mailed to the following address:

Before December 31, 2007:

2 An Ding Men Wai Avenue
Department of Water Transportation
Ministry of Communications, PRC
Beijing, 100013
Tel: (010) 65292650
After January 1, 2008:
11 Jian Guo Men Nei Avenue
Department of Water Transportation
Ministry of Communications, PRC
Beijing, 100736
Tel: (010) 65292650

Please write “For Filing of Agreements” on the upper-right corner of the envelop. The email address for electronic documents is as follows: [email protected]

APPENDIX

The Ministry of Communication, PRC
March 12, 2007

Name List of Press Agencies Designated by the MOC

Chinese Shipping Website (http://www.chineseshipping.com.cn)
Add: Room 4001, 88 Yang Shu Pu Road, Shanghai
Tel: 021 65038781

China Water Transport Newspaper
Add: 7 Qingdao Road, Hankou, Wuhan
Tel: 027 82767376/82836021

Shipping Exchange Bulletin
Add: Room 1902, 18 Yang Shu Pu Road, Shanghai
Tel: 021 55970334

China Shipping Gazette
Add: 5F, Building No.1, Time Fortune, No. Jia 6, Shuguang Xili, Chaoyang District, Beijing
Tel: 010 58678891/58678999-138

China Communications Newspaper
Add: Building No. 13, Anwai Anhua Xili Sanqu, Beijing
Tel: 010 64250642/64250640

China Shipowners’ Association Website (http://www.csoa.cn)
Add: China Shipowners’ Association, 6 East Chang’an Street, Beijing
Tel: 010 65212474/65212484

The Chinese Shipping Website is a compulsory choice, whereas the others are optional choices. There shall be at least two optional choices.

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