Dongfang Import & Export Co (Dongfang Co) and Lidar Steel Company (Steel Co) entered into a cooperation contract. According to the contract Dongfang Co was responsible for the importation of 10,000 metric ton (M/T) of iron ore and exportation of pig iron 6,000 M/T, while Steel Co was responsible for the processing of iron ore into pig iron; Steel Co was also under the obligation to complete the processing within 10 days upon the arrival of iron ore and then carry the pig iron to Tianjin port for export by Dongfang Co.On 10 March 2008 the first shipment of 5,000 M/T iron ore arrived at the designated port and was promptly carried to the premises of Steel Co for processing.10 days later the second shipment of 5,000 M/T arrived at the Chinese port. However Dongfang Co found that several bank accounts of Steel Co were frozen by the order of the court in a dispute with a third party. Therefore, it immediately despatched a written memo to Steel Co, stating that it would detain the second shipment of iron ore until Steel Co delivered the processed pig iron.Upon the receipt of the notice, Steel Co sent back a fax to express its sincere regret for its delay to deliver pig iron. Steel Co emphasised, however, that it suffered from insufficient funds to buy coke for the processing. It promised to make efforts to deal with this problem, but failed to specify any concrete measures to be taken or give the necessary security for the performance of the contractual obligation. Steel Co also urged that Dongfang Co deliver the remaining 5,000 M/T of iron ore.Considering the date for the shipment of pig iron was approaching but Steel Co did not deliver any processed pig iron, Dongfang Co declared the dissolution of the cooperation contract and sold the remaining 5,000 M/T of iron ore to a third party. Under such circumstances Steel Co brought an action against Dongfang Co for damages on the ground that Dongfang refused to deliver the second shipment of 5,000 M/T iron ore for processing.Required:Answer the following questions in accordance with the relevant provisions of the Contract Law of China, and give your reasons for your answer:
(a) State whether Dongfang Co was entitled to detain the remaining 5,000 M/T of iron ore; (6 marks)
