Implementing Rules for Contracts on Railway Freight Transport (Revised in 2011)

Order of the State Council of the People's Republic of China No.588

January 8, 2011

(Approved by the State Council on November 8, 1986, promulgated by the Ministry of Railway on December 1, 1986, and revised according to the Decision of the State Council on Repealing and Amending Certain Administrative Regulations dated January 8, 2011)

Chapter I General Provisions

Article 1 In order to standardize contracts on railway freight transport, the Implementing Rules for Contracts on Railway Freight Transport (Revised in 2011) (hereinafter referred to as the "Implementing Rules") are formulated in accordance with the relevant laws.

Article 2 For the purpose of the Implementing Rules, railway freight transport refers to operating railway freight transport announced by the Ministry of Railway of the People's Republic of China.
The Implementing Rules apply to freight transport contracts between railway transport departments and enterprises, rural economic organizations, state organs, public institutions, social organizations or other legal persons.
The Implementing Rules apply mutatis mutandis to freight transport contracts between railway transport departments and individual business operators or individuals.
Military transportation, international combined transport, and freight transport by a combination of railway and waterway, highway, aviation or pipeline shall be separately provided for.

Article 3 A consignor intending to transport goods via railway shall conclude a freight transport contract with the carrier.
A contract on railway freight transport shall be concluded based on the product allocation plan or railway transport plan assigned by the state and the railway transport capacity, according to the principle of giving priority to the transport of products subject to the state mandatory plan and taking into account products subject to guiding plan and other goods and materials. If the parties concerned cannot reach a consensus in concluding a contract on the transport of products subject to the state mandatory plan, they may report to their superior competent comprehensive departments for handling. For other freight transport, the consignors and the carriers shall conclude freight transport contracts after negotiation. (Deleted on January 8, 2011)

Chapter II Conclusion of Freight Transport Contracts

Article 4 With respect to the transport of bulk goods, freight transport contracts may be concluded on an annual, semi-annual or quarterly basis if conditions permit, or longer transport contracts may be concluded; With respect to full wagonload transport, transport contracts shall be concluded on a monthly basis. Transport contracts concluded on a monthly basis may be replaced by monthly wagon requisition plans.
With respect to the transport of breakbulk goods and container goods, bills of lading shall be taken as transport contracts.

Article 5 A freight transport contract concluded on an annual, semi-annual, quarterly or monthly basis shall be established upon signatures and confirmation by the parties concerned. When handing over goods, the consignor shall also present to the carrier, on a batch-by-batch basis, the bill of lading as an integral part of the transport contract.
A contract on the transport of breakbulk goods or container goods shall be established after the carrier affixes the station date stamp on the bill of lading presented by the consignor.

Article 6 A freight transport contract concluded on an annual, semi-annual, quarterly or monthly basis shall set forth the following basic contents:
1. Names of the consignor and the consignee;
2. The departure station and the arrival station;
3. Name of the goods;
4. Weight of the goods;
5. Type and number of wagons;
6. Liability for breach of contract; and
7. Other matters agreed by the parties concerned.

Article 7 A bill of lading shall set forth the following contents:
1. Names and detailed addresses of the consignor and the consignee;
2. The departure station, the arrival station and the competent railway bureau for the arrival station;
3. Name of the goods;
4. Packaging of and marks on the goods;
5. Number of packages and weight (including the package weight);
6. Date of acceptance of consignment;
7. Time limit for delivery;
8. Transport costs;
9. Type and No. of the wagon;
10. Sealing container number of the sealing container wagon and container; and
11. Other matters agreed by the parties.

Chapter III Performance of Freight Transport Contracts

Article 8 A consignor shall have the following obligations:
1. To deliver consigned goods to the carrier according to the time and requirements agreed in the freight transport contract;
2. To package goods that need to be packaged according to the national packaging standards or the packaging standards of the Ministry of Railway (professional packaging standards), or if no unified packaging standards, to package them according to the nature of goods in the principle of ensuring goods transport safety, mark indicative marks thereon according to state provisions, and mark goods weight on each of the goods packagings in case of heavy goods;
3. To present the relevant documents if such documents are necessary for goods transport according to provisions;
4. For wagonload lot, to provide wagon equipment and articles and goods reinforcement materials necessary for goods loading;
5. For goods whose loading is organized by the consignor, to check whether the wagons are complete and clean before the loading and load goods according to the stipulated technical requirements for loading, complete the loading within the stipulated time limit for loading or send wagons to the transfer location within the stipulated duration of stay;
6. For goods requiring special care during transport, to assign special person(s) to escort such goods in transport;
7. To pay prescribed transportation costs to the carrier;
8. To timely send goods reception voucher to the consignee and notify the consignee of receiving the goods at the arrival station;
9. To present the list of stated prices of goods and pay the insurance charge for the goods when the goods are under insured transport;
10. To buy freight transport insurance at the time of consignment in the case of goods that must be insured according to state provisions; to apply the compensation system combining insurance and transport and buy freight transport insurance at the time of consignment in the case of goods with the value of each piece being over CNY700 or goods that cannot be divided into pieces with the value of each ton being over CNY500, subject to provisions separately stipulated.

Article 9 A carrier shall have the following obligations:
1. To allocate clean wagons in good state according to the time, quantity and wagon type stipulated in the freight transport contract;
2. To organize loading and unloading in the case of goods whose loading and unloading are carried out at public loading and unloading places in the station, except for special ones;
3. To deliver the consigned goods in a complete, safe and sound way within the time limit and at the station specified in the contract;
4. For goods whose loading or unloading is organized by the consignor or the consignee, to allocate the wagons to the loading or unloading place or the agreed transfer location;
5. For goods whose unloading is organized by the carrier, to give the consignee a notice on call for reception; and
6. To timely return the overcharged transport fee, if any, found by it, to the consignor or the consignee.

Article 10 A consignee shall have the following obligations:
1. To pay off the transport fee that the consignor fails to pay or pays in shortage at the departure station, the transport fee incurred during the transport, and the advance payment incurred due to reason attributable to the consignor;
2. To timely receive the goods and move the goods out of the station in the prescribed period of free temporary storage;
3. For goods whose unloading is organized by the consignee, to complete the unloading within the stipulated time limit for unloading or send wagons to the transfer location within the stipulated duration of stay;
4. For goods whose unloading is organized by the consignee, to clean up the wagons and close doors and windows, side panels (or covers or valves in the case of special vehicles) after the unloading, and to make brushing and disinfection if so required by provisions.

Article 11 Where a consignor consigns goods or luggage in personal move with the value of each ten kilograms being more than CNY30, the consignor may state the price and require insured transport. When the carrier handles the transport as insured transport, it shall assess and collect insurance charge for the goods according to provisions.

Article 12 Hand-over acceptance shall be made both when a consignor consigns goods to the carrier and when the carrier delivers goods to the consignee. If the goods (if their loading is organized by the consignor, they shall be sealed, loaded, covered by a tarpaulin, or marked with stipulated marks) are found abnormal or inconsistent with the records on the bill of lading, then at the time of acceptance of consignment, the goods shall be accepted only after the consignor makes improvement; and at the time of delivery, the consignee shall raise an objection to the carrier. If the consignee raises no objection at the time of acceptance check of goods, the transport contract shall be deemed as having been performed in full.
For goods whose loading is organized by the carrier and that are unloaded on the special line or in the special railway, they shall be handed over and accepted according to the measures agreed by the carrier and consignee through negotiation.

Article 13 When a carrier cannot find the consignee or the consignee refuses to receive the goods, the consignor shall be notified within 30 days from the date immediately after a notice on call for reception is given or within three days from the consignee' refusal to receive the goods, except for goods not suitable for long-term storage. The consignor shall put forward handling measures and reply to the carrier within five days from the date immediately after the date of receipt of the notice. If the transport contract is still unable to be performed after the said time limits, the carrier has the right to handle the situation according to the relevant provisions.
The consignee shall issue a written statement when refusing to receive the goods.

Article 14 If goods transport is obstructed due to natural disaster, the carrier shall take the detour transport or unloading and reloading measures. If detour transport or unloading and reloading will cause losses to the goods due to the special nature of the goods, the carrier shall contact the consignor or the consignee and require the same to give a resolution within the required time limit. If the consignor or the consignee fails to reply within the said time limit, the carrier may handle the situation by reference to Article 13 hereof.

Chapter IV Change or Discharge of Freight Transport Contracts

Article 15 Any change of a freight transport contract must be agreed by the parties concerned and within the prescribed scope of change.

Article 16 A consignor or consignee may change, due to a special reason and subject to consent of the carrier, the arrival station or the consignee at the intermediate station where the goods are on a batch-by-batch basis in respect of consigned goods, unless:
1. The change violates state laws, administrative regulations, material flows or transport restrictions;
2. The changed time limit for goods transport is longer than the permitted time limit for goods transport;
3. The change is made to part of a batch of goods; or
4. The arrival station is changed for the second time.

Article 17 A freight transport contract may be discharged upon consent of the parties concerned before the goods are transported.

Chapter V Liability for Breach of Freight Transport Contracts and Treatment Thereof

Article 18 Responsibilities of a Carrier
1. If a carrier fails to comply with the freight transport contract due to any of the following reasons, it shall make compensatory payment of CNY50 to the consignor for each wagon of goods:
(1) The carrier fails to allocate sufficient wagons according to the loading plan under the Ten Days Calendar and agreed type or model of wagon, unless the carrier replenish the shortage in the current month or change the type or model of wagon and the consignor agrees to the loading and transport;
(2) The carrier fails to deliver wagons to be used by the consignor for loading to the loading location at the agreed time, as a result of which the loading cannot be completed in the current month;
(3) The allocated wagons are in a complete and clean state not suitable for the requirements for transported goods; or
(4) The loading is stopped or the consignor is unable to move goods to the loading location in the station as planned due to reasons attributable to the carrier.
2. If goods are lost, in shortage, metamorphous, polluted or damaged during the period from the date of acceptance of consignment of the goods to the date when the goods are delivered to the consignee or handled according to the relevant provisions, the carrier shall make compensation according to the following provisions:
(1) In the case of goods covered by goods transport insurance, the carrier and the insurance company shall make compensation according to provisions;
(2) In the case of goods under insured transport, the carrier shall make compensation based on the stated price, or if the actual losses of the goods are lower than the stated price, based on such actual losses;
(3) except for the circumstances in Items 1 and 2 above, the carrier shall make compensation based on the actual losses of the goods. The calculation method of compensation amount shall be separately stipulated by the Ministry of Railway in consultation with the State Administration for Commodity Prices and the State Administration for Industry and Commerce.
3. If goods are lost, in shortage, metamorphous, polluted or damaged due to any of the following reasons, the carrier shall not be liable for compensation:
(1) Force majeure;
(2) Fragmentation, rust, decrement, metamorphism or spontaneous combustion caused by the nature of the goods;
(3) Reasonable depletion of goods stipulated by the competent department of the state; or
(4) The fault of the consignor, the consignee or the supercargo assigned.
4. If goods are transported to a wrong arrival station or delivered to a wrong consignee due to the carrier's fault, the carrier shall transport the goods to the arrival station stipulated in the contract free of charge and deliver the same to the consignee.
5. If a carrier fails to transport the goods to the arrival station within the prescribed time limit for arrival, it shall pay to the consignee liquidated damages being 5% to 20% of the transport fee collected for the goods.
6. If the consignor or the consignee proves that losses are attributable to an intentional act of the carrier, the carrier shall compensate for the actual losses according to provisions and meanwhile, be imposed by the contract management authority a fine being 10% to 50% of the losses.

Article 19 Responsibilities of a Consignor
1. If a consignor fails to comply with the freight transport contract due to any of the following reasons, it shall make compensatory payment of CNY50 to the carrier for each wagon of goods:
(1) The consignor fails to put forward the loading plan under the Ten Days Calendar within the stipulated time limit as a result of which the carrier fails to allocate wagons (unless replenished in the current month), or the consignor fails to put forward the daily wagon requisition plan according to the arrangement in the loading plan under the Ten Days Calendar;
(2) In case unloading is organized by the consignee, the unloading is delayed and the line is occupied due to reasons attributable to the consignee, affecting the allocation of empty wagons to the loading location or the use of empty wagons (where the unloading shall be organized by the consignee) for loading, and therefore the loading plan is not fulfilled;
(3) The transport is cancelled before the acceptance of consignment; or
(4) The carrier breaches the contract due to temporary unplanned transport, causing the frustration of other transport contracts.
2. If means or equipment of transport or a third party's goods are damaged due to any of the following reasons, compensation shall be made based on the actual losses:
(1) Name or weight of the goods is concealed or wrongly reported;
(2) The goods packaging has defects which cannot be found from the exterior or indicative marks are not marked on the goods packaging according to state provisions;
(3) In case the consignor organizes loading, the reinforcement materials do not meet the prescribed conditions or breach loading provisions, which cannot be found at the time of hand-over; or
(4) The fault of the supercargo.

Article 20 In case of any damage to the means or equipment of transport or a third party's goods due to reasons attributable to the consignee, the consignee shall make compensation according to the actual losses.

Article 21 If a freight transport contract falls under any of the following circumstances, the carrier or the consignor shall not be held liable:
1. The evacuation and wagon dispatching are affected by force majeure or a major railway accident, or the loading is affected by a major accident and power cut in the enterprise, and each of the situations lasts for more than 24 hours;
2. The loading is required to be stopped by the competent administrative organ of the state or the corresponding province, autonomous region or municipality directly under the Central Government in writing;
3. The prescribed number of wagons is not reached due to the organization of the balance of loading for light and heavy goods or the reach to the tunnage of goods; or
4. The loading is inadequate as wagon reception cannot be made as planned due to blocking of vehicles at a maritime port or frontier port.

Article 22 A carrier has 180 days to claim compensation from or supplementary payment of transport fee by the consignor or the consignee, and the consignor or the consignee has 180 days to claim compensation from or return of transport fee by the carrier (and they have 60 days to claim liquidated damages from the railway department for failure to transport the goods to the arrival date within the time limit for delivery).
The time limit for the consignor or the consignee to claim compensation from or return of transport fee by the carrier shall commence from:
1. The day immediately following the day when the station delivers the freight transport records in case the goods are lost, in shortage, metamorphous, polluted or damaged;
2. The 16th day after the time limit for delivery expires in case all the goods are lost without freight transport records, or the date immediately after the time limit for delivery expires in the case of fresh and live goods;
3. The day immediately after the delivery of goods, in respect of claim for liquidated damages for failure to transport goods to the arrival station within the time limit for delivery; or
4. The day immediately after transport fee is assessed and collected in case such fee is overcharged.
The time limit for the carrier to claim compensation from or supplementary payment of transport fee by the consignor or the consignee shall be calculated from the day immediately after the losses are incurred or the transport fee is collected in shortage.

Article 23 Any claim by the carrier for compensation from the consignor or the consignee, or by the consignor or the consignee for compensation from the carrier shall be handled within 30 days (or 60 days if the goods transport involves more than two railway bureaus) from the day immediately after the written claim for compensation is received by the consignor, the consignee or the carrier (as the case may be).
The claimer who has a different opinion after receipt of the other party's reply shall put forward such different opinion within 60 days after such receipt.

Article 24 Any dispute on a freight transport contract shall be settled by the carrier and the consignor or the consignee (as the case may be) through negotiation. In case the negotiation fails, any party may apply to the contract management authority for mediation or arbitration or directly file a lawsuit with the people's court.

Chapter VI Supplementary Provisions

Article 25 The Implementing Rules shall be interpreted by the Ministry of Railway.

Article 26 The Implementing Rules shall come into force as of July 1, 1987.