SHORTCOMINGS IN OIL AND CHEMICAL POLLUTION COMPENSATION REGIME– THE CHINA EXPERIENCE


China acceded to the 1969 Civil Liability Convention in the 1990 and to the CLC 92 Protocol in 1999. Currently all Chinese ocean going ships carrying more than 2000 tons of oil in bulk are compulsorily insured for oil pollution liability. China is also a party to the Fund Convention (Fund 71) but it is only applicable to Hong Kong SAR but not to the rest of China.

The bulk of the oil and chemical pollutions along the Chinese coasts and rivers are caused by coastal tankers or tankers of less than 2000 grt. Hence in reality, there is no proper compensation regime in existence for oil pollution or for that matter chemical pollution in China which is caused by vessels of this category.

There have been much consultation on this but as of today, no agreement has been reached to set up a domestic compensation regime which requires coastal ships to have mandatory insurance for oil pollution liability and neither is there any compensation fund set up by cargo receivers. Today PRC is the third largest importer of crude oil and the largest importing country of chemical refined products. China has yet to accede to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS), 1996 and it is unlikely to accede to it any time soon largely for the same reason to protect the viability of the local fleets and businesses.

While this policy is understandable, the negative impact of such a policy is that the country’s environment, its industries and its people will have to bear the brunt of the effects of inadequate or non existent compensation regime. More insidious is the chemical pollution where the resultant impact on the environment and the well being of its people is long term and its effects are not so easily identifiable. This loophole is also subject to exploitation by both local and foreign ships engaged in the carriage of oil and chemical products to China.

The paper will examine the growth of China as a key player in the oil, gas and chemical industry, its comparative development of a compensatory legal regime, its shortcomings and how this situation is being exploited by local and foreign shipowners in a perfectly legal way but at the expense of the local environment, water sources and the well being of the population.


The historical records of marine oil spills in PRC

As mentioned above, PRC has now emerged as the third-largest oil importer in the world. Statistics from the Ministry of Communications of PRC indicated that cargo landed by sea reached around 1.8 billion tons in 2005 and the throughput in ports across the country amounted to 4.17 billion tons. This also included the 61.8 million TEUs handled in PRC which is one-eighth of the world’s total. According to the statistics published by the Customs Administration of PRC, the country imported more than 100 million tons of crude oil in 2003 for the first time. By 2004, the crude oil imported had exceeded 120 million tons, and in the case of refined oil and chemical products, more than 40 million tons. In 2005, crude oil imported had exceeded 130 million tons. It is estimated that given the rapid growth of high powered PRC’s economy, the insatiable demand for crude and refined oil and chemicals will continue its spiraling growth.


It is also reckoned that at least 90 per cent of the nation’s imported crude oil would continue to be transported by sea. Even if the pipelines into China from Kazakhstan and Russia are completed and in operation, it is estimated that 80% of the imported oil would still be transported by sea. The phenomenal rise in the movement of goods and people along the Chinese coasts had led to surging growth in maritime traffic. Collisions between ships and incidents of groundings are also on parallel increase and resultant oil pollution occurrences of all descriptions could not be avoided. Between 1973 and 2003, there were more than 2,353 reported oil spills along the Chinese coasts and rivers. This figure includes oil spillages of big and small spills. In PRC, a big spill is in excess of 50 metric tons. Over a period of 30 years, it would work out to be one oil spill every 54 days. Of this figure, there were 62 major spills, each in excess of 50 metric tons and to be precise, more than 34,189 metric tons of oil had been spilt into coastal waters and rivers. This figure represents oil pollution caused by vessels of all descriptions.

If this is broken down into specific details, there were a total of 29 oil spills in PRC between 1973 and 2003 which were caused by oil tankers (according to a statistics ). Each of these spills was in excess of 50 metric tons. 7 of these oil tanker related oil spills were caused by foreign vessels and all of them had paid compensation for the damage caused. Excluding the compensation for cleaning up costs, the compensation for these 7 cases averaged 8.28 million RMB, the highest being 17.75 million RMB. The remaining 22 oil spill accidents were caused by Chinese vessels and only 9 of them had paid compensation. Excluding the compensation for cleaning up resources, their compensation amount averaged 1.53 million RMB, the highest being 5.5 million RMB.

For example on 14 November 2000, a Chinese tanker “DeHang 298” collided with Norwegian chemical tanker “Bow Cecil” at the mouth of Pearl River. Dehang 298 eventually sank with loss of five crew members and 230 cubic meters of heavy oil were leaked into the sea. China’s Maritime Safety Department took timely action to clean up the oil spill and expanded around 6.5 million RMB on the cleaning-up operation. The owner of the tanker DeHang 298 is a single ship owner and did not have the financial ability to pay the compensation. On the other hand, Bow Cecil was found not liable for the collision and hence was not responsible for the cleaning up costs. Due to the absence of clear law governing the compensation regime in PRC, the State ended up having to pay for the entire cleaning up cost.




Prevailing Situation of Damage to Environment Arising from Carriage of Hazardous and Noxious Substances by Sea in PRC

Whilst researching for historical records and data on compensation models concerning damage to environment arising from carriage of hazardous and noxious substances in PRC, the writer had met with little success because of the paucity of information. The Chinese State Oceanic Administration began to publish the Ocean Environment Quality Yearbook in 1990 to indicate important happenings to the ocean environment, but incidents of pollution and damage to environment caused by the carriage of hazardous and noxious substances within PRC waters was not recorded. Up to the year 2005, this situation has not changed. To understand the seriousness of the impact to environment arising from carriage of hazardous and noxious substances, the writer would summarize the example of one collision case near the estuary of Yangtze River.

On the morning of April 17, 2001, a chemical tanker of the Republic of Korea which had onboard 2000 metric tons of styrene, was involved in a collision with a Hong Kong registered cargo ship near the estuary of Yangtze River. This collision resulted in more than 700 metric tons of styrene spillage into the sea causing serious damage to the marine environment and ecosystems.

This was the world’s most serious incident of styrene spillage and the relevant department claimed a ‘state indemnification’ of US$8 million from the wrongful parties. The term "state indemnification" is still a new terminology in China and was used for the first time in judiciary practice since the promulgation of the "Law on State Ocean Environment Protection of the People's Republic of China" in April 2000. Pursuant to the relevant provisions of the law, the Chinese Government shall have the right to demand the ship in question to indemnify the State for damage caused to the Chinese marine environment arising from serious leakages of crude oil or other chemical products within the territorial waters of PRC.

The money obtained from the ‘state indemnification’ will mainly be used for i) measure taken to neutralize the damage caused by the chemical and ii) to monitor the condition of the affected marine areas. As the impact is often far reaching, such monitoring and supervision will take years if not decades to determine the true extent of damage. To be realistic, the US$8 million is just an initial estimation by environmental experts and the actual losses to the marine environment and damage to its ecosystems would certainly be much higher.

As the writer is given to understand, the owners of the two ships involved had paid only US$1 million each as fines, hardly sufficient for costs to neutralize the styrene contamination. The final agreement on the "state indemnification" has still to be finalized.

In retrospect, the compensation demanded by the Chinese authority paled in comparison with that of a recent heavy oil spill in the port of Odessa involving 74 m/tons of bunker fuel. The State Ecological Inspection presented a claim of US$24.5 million for environmental damage which amounted to US$329 per kg of oil spilt. The Port Authority also put up a claim of US$7.6 million for cleaning up cost which worked out to US$84 per kilo of oil spilt.

Another trend in the maritime transportation chain which warrants attention in PRC is the importation of high tech refined products such as lubricating oil from United States, South Korea and Singapore. Many of the shipments of refined products are shipped from South Korea or Singapore using small chemical tankers of 2000 dwt or below. This practice is to evade the compensation regime of the CLC and also to take advantage of the absence or lack of a well defined national compensation regime in PRC.

CLC only applies to ship carrying more than 2,000 m/tons of oil in bulk as cargo, and in this case, a ship carrying less than 2000 m/tons can totally evade the governance of CLC should a pollution occur. And since China has not acceded to the HNS Convention or push for a comparable national compensation regime to be put in place, a ship found to be have caused spillage is only governed by the limits of limitation of liability as found in Chapter XI of the Maritime Code of PRC. The limitation amount as set in Chapter XI of the Chinese Maritime Code is actually much lower than that of CLC.

In the case of an oil spill caused by a foreign ship carrying less than 2000 m/tons of oil in bulk within China’s territorial waters, the shipowner can actually escape liability by paying a security deposit into the maritime court in accordance with the stipulations of the Chinese Maritime Code. Once this limitation fund is set up, the wrongful vessel can continue to trade freely without any fear of being arrested or detained by any parties in PRC.

Reasons for the inadequate compensation for oil and chemical spills in PRC

PRC as of to date, does not have a specific legal regime which introduces strict liability for the shipowners and a system of compulsory insurance and insurance certificates for ships of all tonnages operating within Chinese waters. She has a patchwork of articles in laws and regulations which are inadequate and does not address the changing situations confronting the country in the present as well as into the future. Perhaps a highlight of some of these regulations and articles in law would give readers a better picture.

Article 124 of the General Principles of the Civil Law of PRC stipulates “Any person who pollutes the environment and causes damage to others in violation of state provisions for environmental protection and the prevention of pollution shall bear civil liability in accordance with the law.” This is the basic principle for civil compensation regarding oil spill pollution.

Article 90 of the Marine Environment Protection Law of PRC stipulates that “Whoever causes pollution damage to the marine environment shall remove the pollution and compensate the losses; in case of pollution damage to the marine environment resulting entirely from the intentional act or fault of a third party, that third party, shall remove the pollution and be liable for the compensation. For damages to marine ecosystems, marine fishery resources and marine protected areas which cause heavy losses to the State, the department invested with power by the provisions of this law to conduct marine environment supervision and administration shall, on behalf of the State, put forward compensation demand to those held responsible for the damages.”

Article 39 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In case of violation by vessels of the Marine Environmental Protection Law of the People's Republic of China and these Regulations that has caused pollution damage to the marine environment， the harbor superintendency may order the payment of a fee for eliminating the pollution， and compensation for the state's losses. If the party concerned does not accept the order， he may bring a suit before the people's court in accordance with the stipulation of Article 41 of the Marine Environmental Protection Law of the People's Republic of China.”

Article 40 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In the event that units or individuals that have suffered pollution damage as a result of the marine environmental pollution by vessels demand civil liability compensation， the matter shall be handled in accordance with the handling procedures stipulated in Article 42 of the Marine Environmental Protection Law of the People's Republic of China. Disputes over liability for and the amount of compensation may be handled by the harbor superintendency through conciliation. If a party does not agree, a suit may be brought before the people's court. Cases involving foreign vessels may also be solved in accordance with arbitration procedures.”

Article 44 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In case of vessel-induced pollution，the ship owners who request exemption from liability for compensation shall submit to the harbor superintendency a report，which shall be able to prove that the pollution damage has been caused entirely by one of the circumstances as listed in Article 43 of the Marine Environmental Protection Law of the People's Republic of China，and that the pollution damage to the marine environment could not be avoided despite all prompt and reasonable measures.”

But the above-mentioned rules are too ambiguously drafted to be firmly applied in judicial practices. Due to a lack of a uniform, standard and fixed criterion, the judges in many instances, have to apply their discretions in interpretation and this is one reason which explained for the different conclusions arrived at by the judges of different districts or even from judges of the same court. The inconsistencies of the judicial decisions have led to poor compensation for victims of the pollution incidents.

Another reason for the inadequate compensation in PRC is the loophole in the application of the CLC. According to an analysis , PRC’s domestic oil tankers navigating along the coast with a deadweight of less than 2,000 tons accounts for 77.6 percent while oil tankers on inland rivers below 2,000 tons in deadweight accounts for 87 percent. Fully 47 percent of these inland tankers are less than 500 tons. All these vessels do not come under the governance of CLC and China has such a large diverse fleet of small and old vessels plying within its waters and rivers that any attempt to impose strict liability on them and or compulsory insurance would certainly kill off this important leg of the transport chain which kept the China’s economy beating.

Being a party to CLC, China only requires owners of oil tankers engaged on international route carrying more than 2,000 tons of cargo oil to buy insurance to protect their pollution liability. CLC as a whole, did not achieve its objective well in PRC because insurance for oil pollution is not widely promoted. In PRC only vessels carrying more than 2,000 tons of cargo oil and for international transport are obligated to insure their risks against oil pollution. Vessels for internal transport and vessels with a deadweight under 2,000 tons are not covered with liability insurance for cost reasons.

Next, the FC, of which PRC is a party, is only applicable to Hong Kong SAR and not to the mainland proper. Again for economic reasons, PRC has not set up any oil pollution compensation fund, hence for any excess amount above the limitation amount stipulated by CLC, the victims have no remedy in PRC against the guilty parties. The Chinese authority is apparently reluctant to impose financial burdens on many nascent shipowners who have yet to find their feet.

Finally, the low limitation amount of the limitation of liability regime as stipulated by the Maritime Code of PRC, as mentioned before, also contributed to the inadequate compensation regime available to victims of oil or chemical pollution incidents. Furthermore though the rules are present, the actual implementation and enforcement of the rules are rare and hard to be applied .

The prevalent compensation regimes for oil/chemical spill pollutions in the world which could be models for PRC to adopt

(1) Compensation regime established by CLC and FC

Many countries choose to become a party to both CLC and FC and to follow the stipulations in their entirety. At the end of May 2006 there are 93 countries and regions which have joined both the CLC and FC. But this compensation regime is hard to be promoted in China, because China is now the third largest importer of oil and the largest importer of refined oil products and chemicals. Oil importers would have to shoulder a heavy burden for contributions made to the FC. It will also increase the operating costs of the Chinese oil tanker fleets and any such increases of their operating costs would certainly meet with strong resistance. It is also inevitable that the owners would pass all the cost increases down the line to the consumers. There is a huge social costs to be considered.

(2) US model : Internal Compensation Fund Regime only
Due to the limitation amount stipulated by FC 1971, it was deemed too low by US. It did not join in the FC and after the major oil pollution accident of 1989, US promulgated the OPA 1990, and set up the OSLTF (Oil Spill Liability Trust Fund) accordingly. This kind of compensation regime may be suitable for PRC as it has the liberty to impose a regime which is uniquely suitable for the Chinese economic and social conditions.

(3) Double compensation regime: International Conventions and Internal Legislations

In 1971, Canada promulgated a code to set up an ocean oil pollution compensation fund, and in 1987 promulgated the amended SOPF (Ship Source Oil Pollution Fund). Canada is at the same time a party to the CLC and FC and so the internal fund is mainly for making up shortfalls not covered by the CLC and FC.


Can PRC wait any longer to push for and implement a compulsory compensation regime?

In 2005 while promoting compulsory insurance against oil pollution from ships, China’s Maritime Safety Administration (MSA) began the work to establish a compensation regime for oil pollution from ships to guarantee financial support for cleaning up operations and compensation for victims of such incidents. This fund will be set up by levying a charge on ship owners and cargo consignors to ensure that they in take responsibility for oil pollution and compensating the victims of oil spills. But till now the fund has yet to be set up.

PRC in my view, is faced with a difficult choice of trying to protect and nurture a viable shipping and oil/chemical industry but at the same time, pinned down with a pressing need to come to terms with the harsh reality of a fast degrading maritime environment. A weak and feeble legal regime with no bite, will not serve its long term purpose and it is critical that PRC must design a feasible compensation regime to protect its environment adequately and to ensure that victims of such incidents are realistically compensated. PRC cannot afford to remain status quo because with the wide range of industrial chemicals being imported into the country, the impact of any spills whether in small or large quantity, would be far reaching in its impact to its marine ecosystems, marine resources and the health of the Chinese people.

A major source of protein needs of the population is derived from its rivers and coastal waters where large scale aqua farming are undertaken to harvest fish, crabs, shell fish, oysters, scallops, shrimps etc. It cannot depend on catches landed from the surrounding seas and the far oceans as these alone, are not able to meet the demands from a increasingly affluent society. The rivers and lakes are also water sources for PRC. The coastal regions, beside supporting large industrial installations, are also increasingly being used for recreational purposes. Any contamination of such areas by chemicals would be far reaching in its implications. It is unrealistic to draw on the country’s financial resources to clean up such pollution or to implement measures to minimize its damage whilst the guilty parties can get away easily.

Rising health care costs is already a serious concerns for the Chinese people and any additional burdens imposed on the population because of long term contaminated related illnesses will surely lead to social tensions and high social costs.

Imposition of a strict compensation regime will close the loophole now being exploited by local and foreign shipping entities. More importantly, a strict compensation regime will force shipowners to upgrade their fleets and to improve manning standards. The implementation of such a national compensation regime should be taken proactively rather than taking the traditional route of implementing reactive legislation to deal with the effects after a major disaster.

A good example for PRC to consider is the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS) 1996. This Convention was adopted by IMO on 3 May 1996. The HNS Convention is based on the two tier system established under the CLC and FC. However it goes further in that it covers not only pollution damage but also risks of fire and explosions, including loss of life or personal injury as well as loss of or damage to property.
Hazardous and noxious substances are defined by reference to lists of substances included in various IMO Conventions and Codes. These include oils; other liquid substances defined as noxious or dangerous; liquefied gases; liquefied substances with a flashpoint not exceeding 60C; dangerous, hazardous and harmful materials and substances carried in packaged form; and solid bulk materials defined as possessing chemical hazards. The Convention also covers residues left by the previous carriage of HNS, other than those carried in packaged form.

The Convention defines damage as including loss of life or personal injury; loss of or damage to property outside the ship; loss or damage by contamination of the environment; the costs of preventative measures and further loss or damage caused by them.

The Convention introduces strict liability for the shipowner and a system of compulsory insurance and insurance certificates。 For ships not exceeding 2000 GRT, the limits of liability is set at 10 million SDR and above that, additional 1500 SDR is added for each gross ton until it reaches 50,000 GRT and above that, 360 SDR per gross ton until the limit of 100 million SDR is reached or roughly about US$128 million.

In order to ensure that shipowners engaged in the transport of HNS are able to meet their liabilities, the Convention makes insurance compulsory for them. A certificate of insurance must be carried onboard and a copy is kept by the authorities who keep record of the ship’s registry.

The HNS also set up a second tier fund which is financed by cargo interests. Contributions to the second tier will be levied on persons in the contracting parties who receive a certain minimum quantity of HNS cargo in a calendar year. This second tier will consist of one general account and three separate accounts for oil, liquefied natural gas and liquefied petroleum gas. The HNS Convention excludes pollution damage as defined in the CLC and FC to avoid an overlap with these Conventions.

The HNS in the writer’s view, is not entirely perfect but it serves to provide a good template for PRC to study and to create a compensation model which will suit the Chinese economic model whilst at the same time, represent a bold step to ensure at least some certainty of compensation for the victims of oil or chemical substance pollution. This will also relieve the State from having to shoulder the burden of dealing with the consequences of long term damage to its maritime environment, ecosystems and the health of the Chinese people.


Capt Lee Fook Choon
International Congress of Maritime Arbitrators
Singapore 27 Feb 2007

海洋运输中谷物类散货的证据保存

背景

中国加入WTO后，根据统计，2004年我国粮食进口快速增长，出口大幅下降，粮食贸易由净出口转为净进口。全年进口粮食2998万吨，出口586万吨，净进口2412万吨，净进口粮食约占年度粮食消费量的4.9%，通过国际市场的调剂，对于弥补国内粮食供需缺口发挥了重要作用。

随着粮食进口的增加，通过海洋运输方式进口我国的货物也在不断的增加。由于海上运输的高风险性，在国际海上货物运输过程中，货损货差的现象司空见惯。作为收货人，在遇到货损货差时，会根据业务特点及造成损失的不同原因，向保险人或承运人提出索赔。如果收货人是货物买卖合同的直接买方，还可能依据买卖合约向合约的卖方(通常情况下是发货人)提出索赔。

谷物货损的表现形式

1、因细菌腐烂而导致的异味；
2、发霉（菌类生长）和由于高温和高湿度而导致的变色。上述病变在25-30摄氏度时其发展是最为迅速的；
3、受热导致谷物结块和发黑等。

谷物货损的原因

收获时，谷物本身品质下降
装船前，谷物固有的高水分含量
船舶运行过程中糟糕的通风和湿度控制
船载的制冷设备的故障
船载过程中不适当的载货安排
船舶运行过程中水密不好
恶劣天气导致

货损责任的承担

无论货方的保险人还是船东互保协会，均关心货损真正原因。显而易见，如果货损是由于货物本身的特质所造成，则货方的保险公司就不承担赔偿责任。相反地，如果货损是由于海洋运输处理不当或者由于承运人的保管不当，则货方保险人则不得不先行完全承担后，再行向承运人追偿。

货损原因分析

货物本身自然属性造成的损失并没有引起足够的重视。以前只是强调谷物的产量和扩大种类。最近几年，谷物收获后的存储和保存以防止货损已经被越来越重视。谷物、蔬菜、水果等的货损通常是从收货到最后消费过程中累积发生的。

谷物收获时造成的退化

过去收获时的退化的类型：物理损害、化学损害、病变腐化。

造成了过去收获时的退化的原因：作物材质、天气、作物的管理、收获操作技术。


谷物收获后的货损

保险人应当清楚基本的谷物保存和处理的基本技术细节。在热带国家，由于高温和高湿度，谷物的退化是非常迅速的。所有的作物，即使在收获后依然是存活的生命体。所有的作物无论是从树上摘下，或者藤上折下，呼吸作用同样也受环境问题的影响，如果周围环境温度上升，呼吸作用也会加强。众所周知，呼吸作用的加强将决定产品保存的时间。高呼吸率的农作物如果不保存在凉的环境中将不能保存很长时间。

另一个相关的特质是作物的蒸发作用，例如通过作物表面将水份蒸发。这可能导致重量的损失，以及萎缩和起皱。实际的重量损失将会比表面可见现象更早，而且不易察觉。

防护措施

适合存储的设备空间可以减少水份损失，降低呼吸效应以及抑止微生物的发展。基本上以最简单的形式防止作物直接受热。一些国家在装船前适用洞穴存储的技术，例如土耳其、日本和中国。

海上运输过程中的防护措施

海洋运输过程中注意观察谷物情况的变化
适当的在船上堆存以确保空气的流通以及装载的稳定性。
导入潮湿和温暖的空气进入货物，并严格加以控制。
通过监控露点温度以控制发汗现象。
使用适当的日常用具。
监控温度，以保持在正常范围。

船东互保协会刊出的大量承运人公告，对于船员适当地履行其装卸的管理人责任是非常有用的。

证据的取得

从被保险人或托运人处获得文件和信息

货物保险人的文件和信息；
货物的出产年份、收获方式、装船前的存储方法、存储时的气候条件和如果处于不同装载点时的转载要点；
从生产地到装船前的存储地的运输方式；
装船前存储的温度报告；
品质分析证书；
装运港的质量品质检验报告；
船长的装载建议；
由当地权威机构出具的检验证书，例如部分国家的农产品委员会；

在卸货港从承运人处获得的文件和信息

甲板日志。
舱底排水测试记录。
船舱检查记录。
航程中货舱通风记录。
航程中温度控制。
船长的声明。
船上的安全记录。
航程中的气象记录。
当前航程燃料油，柴油和压舱水分配计划。
露点记录（如果有的话）。
保存船上的船东互保通告。
托运人给予的承运建议。

承运人不披露证据的对策

如果遇到船东不合作，不披露上述相关信息和记录时，在中国，可以根据已经于2000年7月1日生效的《海事特别程序法》的程序规则进行主张。让我们审视该法规，以寻找部分对货方有利的依据。

在普通法的判决中，法庭规则允许在进入正式法庭程序之前进行先行披露，但是由原告发起的该程序并非总是成功。披露主要还是作为没有法庭干涉的中间程序。而在目前的中国，这种情形完全不同，法庭有权根据《海事特别程序法》的规定，在原告的请求被认为合法的情况下，要求一方（例如船东）去向法院提交证据。上述法院要求提供证据的权利被规定在《海事特别程序法》第5章第62至72条，在中国法上被称为海事证据保全。法院根据申请，依据第17条的规定在48小时内做出裁决。上述申请必须由厉害关系人提出例如上下文提到的收货人。上述行动意味着必须迅速且在船舶离开卸货港之前采取。

《海事特别程序法》于2000年7月1日颁布实施，被认为一种突破。作为一部新法有助于1993年7月1日生效的《海事法》的实施。《海事特别程序法》明确了许多《海商法》所不明确的地方。同时也弥补了民事诉讼法在海事程序中的不足。《海商法》是一部成文的海事法律，其结合了12部国际海事惯例例如1910年碰撞公约，1976年责任限制公约，1989年救助公约等等。由于《海商法》的颁布，10个海事法院已经在中国成立，并且又超过200名海事法官。

船长是受船东的指示以及作为船东互保的代表在船上行使职权，因此通常不会同货物保险人代表进行合作而去泄露信息或者披露不利的文件。如果遭受的损失可以归咎于谷物在过去收获时本身的退化或者是在搬运时的不足所引起，则披露上述文件也就不会不利。例如货物保险人代表被准予有限制地上船。

在一些大型的索赔案中，有必要提供样品进行专业的分析。可以是农学家、园艺家、植物学家、微生物专家、真菌专家、细菌学家或农业部门的专业人士。商业实验室通常也比较擅长，例如：英国的CAB国际微生物研究院，以及荷兰的Centraalbureau voor Schimmelcultures。



Capt Lee Fook Choon
China International Marine Insurance Seminar
Nanjing 27 April 2007

Legal System

Legal System refers in general to the legislative, the executive and the judicial system of a country. This paper attempts to discuss some significant aspects of the Chinese legal system such as the law making process, interpretation of law and the judiciary.

1 Law Making

 The National People’s Congress (NPC) together with its permanent body – the Standing Committee, is the highest organ of state power in making laws for the country.

 NPC deputies elected from the provinces, autonomous regions and municipalities and from the armed forces

 3000 members and met once each year for about 2 weeks

 A session of NPC may also be convened at any time if the Standing Committee deems it necessary or if 1/5 of the deputies so decide

 In principle, NPC has power to enact and to amend basic laws but in reality, it has neither the skill nor adequate time to consider draft bills for enactment

 On the other hand, the Standing Committee is much smaller in size and meets every two months and many of its members are full time with the Standing Committee.

 The Standing Committee cannot however amend the Constitution but can interpret the Constitution and supervise its enforcement

 Chairman of provincial people congresses are invited to attend the standing committee meeting but with no voting rights.

 In addition, State Council (Central People’s Govt of PRC) and local governments of provinces, autonomous regions and municipalities directly under the Central Government can also have legislative power like the NPC and its Standing Committee provided it is for local regulations and must not contravene with the provisions of the Constitution, the law and administrative rules and regulations.

 In effect, Chinese law can be divided into 4 levels, namely : the Constitution, laws adopted by the NPC and its Standing Committee, administrative regulations adopted by the State Council and local regulations by the people’s congresses of provinces, autonomous regions and cities.


2 Interpretation of Law

 In China, the Court has the power to implement the law but not to interpret the law. The Constitution entrusts the NPC Standing Committee with the power to interpret the Constitution and Laws. As mentioned earlier, the State Council and people’s congresses at various levels may enact administrative and local regulations respectively. The basis of legislative interpretation is that those who make the law are in the best position to interpret the law. It therefore follows that in addition to NPC and its standing committee, the State Council and the standing committees of the various local people’s congresses can also interpret the law.


3 Judicial Interpretation


A resolution adopted by the NPC Standing Committee dated 10 June 1981 allowed the Supreme People’s Court to interpret all questions arising from court trials concerning specific application of laws and decrees. The lack of action on the part of the NPC Standing Committee to interpret various laws have left much room to the court to fill in the void. Since the 1981 decision, the Supreme Court has issued thousands of judicial interpretation to guide the lower courts

Such judicial interpretations have binding force on all the courts in China and covers almost every aspect of the legal system.






The Judiciary


 The people’s courts of the PRC are the judicial organs of the State and it is tasked to try criminal, civil, economic, administrative, maritime and other cases prescribed by law

 Judicial power is exercised by the courts at four levels namely :basic people’s court, intermediate people’s court and special court, high people’s court and the Supreme People’s Court. Except for the Supreme People’s Court, all other courts are referred to as local courts. There is only one Supreme People’s Court which is located in Beijing

 The Supreme People’s Court handles cases of first instance assigned by law such as major criminal cases of national importance, economic, administrative, communications and transportation matters affecting whole nation. It also handles appeals and protests lodged against judgements handed down by local people’s high courts and special courts

 The high people’s courts include all the high people’s courts of the provinces, autonomous regions and municipalities under the Central government. A high people’s court handles cases of first instance assigned by law as well as appeals and protests lodged against judgements made by intermediate or special courts. It also supervises the administration of justice by people’s courts at lower levels.

 The intermediate people’s courts include those established in the prefectures of a province or autonomous region or municipalities under the jurisdiction of a province and those established in the municipalities under the Central Government. It handles cases of first instance assigned by law as well as appeals and protest against judgements of the basic people’s courts. It also supervises the administration of justice of the basic people’s courts

 The basic people’s courts include the people’s courts of counties, autonomous counties, cities (at county level) and municipal districts. It handles all criminal, civil, economic and administrative cases of first instance. It also directs the work of people’s mediation committees A basic people’s court may also set up a number of people’s tribunals as agencies within its jurisdictions. A people’s tribunal is part of the people’s basic court and its judgements and orders are judgements and orders of basic people’s court.

 The special people’s courts are set up for specific designated cases and these are military courts, railway transport courts and maritime courts. These special courts are deemed at the same level as intermediate courts.

 According to the Constitution, each people’s court is composed of one president, vice-presidents, chief judges and associate chief judges of divisions and judges.

 Only the people’s courts can exercise judicial power. No other government agencies, department has the right to exercise this power.

 In principle, a people’s court is independent and not subject to interference by any administrative organ or public organization.



Jurisdiction by Level

1 Hierarchy Jurisdiction

 Jurisdiction of court is sub-divided into hierarchically and geographically.

 Under the Civil Procedure Law, a basic people’s court could hear all civil cases as courts of first instance

 Intermediate courts have jurisdiction as courts of first instance over major cases involving foreign interests and cases that have substantial impact on the community within their geographical jurisdiction’s well as cases which are assigned by the Supreme People’s Court

 The maritime people’s court has jurisdiction as courts of first instance over maritime cases and related commercial cases

 High people’s court has jurisdiction as courts of first instance which have substantial impact on the community within their geographical jurisdiction

 The Supreme People’s Court has jurisdiction as the court of first instance to hear cases which have substantial impact on the whole country

 Prior to the adoption of the Civil Procedure Law, all cases involving foreign interests must be heard by an intermediate court but now it could also be heard before a basic people’s court. This is a reflection of the gradual maturity of the system and the fact that there is a need to share the case load of the intermediate courts.


2 Jurisdiction by Geographical Locality

 A civil lawsuit brought against a citizen, a legal person or any other organization shall be under the jurisdiction of eh court in the place where the defendant is domiciled If the defendant’s domicle is different from his habitual residence, the lawsuit shall be under the jurisdiction of the court of the place of his habitual residence

 Actions from contractual disputes come under the jurisdiction of the people’s court where the defendant is domiciled or the place of implementation of the contract. However parties may specify in writing to choose the jurisdiction of the people’s court with regard to the defendant’s place of domicle, or the place for honoring the contract, or the place where the contract is signed, or the plaintiff’s domicle and the place of the subject matter but they must never violate the rule of jurisdiction by level or exclusive jurisdiction like the maritime courts or the railway courts

 Actions arising from disputes over insurance contracts come under the jurisdiction of the people’s court at the place of the defendant’s domicle or at the place of the insured subject matter

 Actions arising from disputes over negotiable instruments come under the jurisdiction of the people’s court at the place where payment is to be made or at the place where the defendant is domiciled.

 Actions arising from disputes over contracts on carriage by rail, road, water, air or combined transportation come under the jurisdiction of people’s court at the place of departure, destination or the place where the defendant is domiciled.

 Actions against acts of infringement come under the jurisdiction of the people’s court at the place where such acts are committed or at the place where the defendant is domiciled.

 Actions claiming compensation for damage arising from rail, road, water and air accidents come under the jurisdiction of the people’s court at the place where such accidents occurred, or at the place where the vehicles or ships first arrived, or at the place where the aircraft first landed, or at the place where the defendant is domiciled.

 Actions claiming compensation for damage from ship collisions or other maritime accidents come under the jurisdiction of the people’s court where such collision took place, or at the port where the collided ship first arrived, or at the port where the ship responsible for the damage is detained or at the place where the defendant is domiciled.

 Actions claiming salvage come under the jurisdiction of the people’s court at the place of the rescue or at the prot where the rescued ship first arrived.

 Actions arising from general average come under the jurisdiction of the people’s court at the port where the ship first arrived, or at the place where the general average is adjusted, or at the port where the voyage terminates.

 If more than one court has jurisdiction over the same dispute, the court that first accepts the case should exercise jurisdictions.



Systems of Adjudication


 The people’s courts try cases in public, except for those involving state secrets, individual privacy and the commission of crimes by minors. For public hearing, announcements will be made in advance and citizens are allowed to attend

 Cases of first instance are tried by a collegial panel of judges except for very simple civil cases and minor criminal cases where a single judge by adjudicate. Appeals and protests are heard by a collegial panel of judges. The presiding judge of the panel is appointed by the president of the court or the chief judge of a division. Majority view will prevail but dissenting view is also entered into minutes.

 The parties and their legal representatives have the right to demand the withdrawal of members of the judicial panel, clerks, public prosecutors, expert witnesses or interpreters, who they think have an interest in the case or related to a party in the case. Such persons may also withdraw on their own accord

 China practises a two instances final adjudication system

 In China, there is a system known as supervision of adjudication system. If errors are discovered concerning the finding of facts or application of the law in the judgements or orders that have already become legally effective, they can still be corrected through the procedure of trial supervision or what we may call judicial review




Special Provisions for Procedure of Civil Action Involving Foreign Interests.


 In the event that the provisions of any Internationa Treaty which China had acceded to but such provisions are in conflict with the Chinese local law, the provisions of international treaty shall apply.

I
 If foreigners or foreign enterprises and organizations are going to have agent ad litem in taking or responding to actions in PRC on their behalf, they must appoint an attorney-at-law of the PRC

 Parties involved in disputes over contractual or property rights may specify in writing to choose the jurisdiction of the people’s court at the place having actual relation with the dispute. But actions over disputes arising from contracts for Sino-foreign equity joint ventures etc shall be under the jurisdiction of the people’s court

 Judgement made by foreign court or award rendered by a foreign arbitration organization have to apply for recognition and enforcement of the people’s court, if the parties to such judgement or award wanted to have it enforced in PRC



Special Maritime Procedure


 China has adopted the Special Maritime Procedure Law (SMP) on 25 Dec 1999. SMP is a special law. When the people’s court tries any maritime cases, the SMP takes precedent over the Civil Procedure Law. It means that Civil Procedure Law will only apply if there is no relevant provision under the SMP.
 Maritime tortuous actions also come under the jurisdiction of the maritime court of the place where the ship’s port of registry is located.


 Actions arising from a charter party dispute of a seagoing ship shall be under the jurisdiction of the maritime court of the place of the port of delivery, the port of re-delivery, the ship’s port of registry and the defendant’s place of domicle

 Actions arising from a dispute over a protection and indemnity contract shall be under the jurisdiction of the maritime court where the subject matter of insurance is located, where the accident occurred or where the defendant is domiciled.

 Actions arising from the service contract of crew, shall be under the jurisdiction of the maritime court of the place where the plaintiff is located.or where the contract is signed, where the port of embarkation and disembarkation of the crews is located or where the defendant is domiciled.

 Actions arising from a dispute over maritime security shall be under the jurisdiction of the maritime court of the place where the collateral is located or where the domicle of the defendant is located, actions arising from a dispute over a ship mortgage may also be under the jurisdiction of the maritime court where the ship’s port of registry is located.

 Actions arising from a dispute over the ownership, possession, employment and maritime lien of a sea going ship shall be under the jurisdiction of the maritime court of the place where the ship is located, where the ship’s port of registry is located or where the defendant’s domicle is located.


 Where all the parties to a maritime dispute are foreigners, foreign enterprises have agreed in writing to be subject to the jurisdiction of a maritime court of PRC though the place actually related to the casualty is not within the territory of PRC, the said maritime court shall have jurisdiction over the dispute.

 The Chinese maritime court also allowed the application by the claimants for the preservation of evidence. Some conditions must be met before such an application is approved. First the claimants must be a party to the dispute, second the evidence to be preserved must substantiates the maritime claims, thirdly, the party against whom an application is made, is a party to the dispute and lastly, there must be fear that the respondents may disperse off the evidence which are hard to obtain.



Arbitration in China


 China has been advocating the use of arbitration to resolve commercial disputes. Arbitration has made 4 decades of progress in PRC.


 China’s first Arbitration Law was propagated on 31 Oct 1994 and came into effect on 1 Sept 1995

 An arbitration agreement means an arb clause stipulated by their parties in the contract or a written agreement to refer their dispute to arbitration. Chinese law requires a valid arb agreement to name the Arb Commission so choose, parties must have capacities to sign the arbitration agreement

 A party may object to the jurisdiction of an arbitration commission if he has justifiable reasons and such objection must be raised before the first hearing or in the case of documents only arbitration, before the service of the first defense.

 Preservation of Property and Preservation of Evidence can be effected by application to the intermediate people’s courts. Such application is made by the arbitration commission.

 Enforcement of arbitration award by a Domestic Arbitration Institution must be lodged with the Intermediate People’s Court. The competent court will only review the arbitration procedures adopted. But it will not require the evidence to be verified, or investigate whether the law is properly applied and neither would the court examine the actual compensation to be paid..

 If the party is domiciled outside China, the applicant shall directly request a competent foreign court to recognize its validity and enforce the award

 Enforcement of an Award issued by a Foreign Arbitration Commission shall apply directly to the local Maritime Court in China and if there is no maritime court, then to the Intermediate People’s Court for enforcement action. The intermediate People’s Court shall act in accordance to international treaties which China has concluded or to which China is a party on the basis of the principle of reciprocity.

 CIETAC, also named as the Court of Arbitration of China Chamber of International Commerce from 1 October 2000. It is headquarted in Beijing with sub branches at Shenzhen and Shangai

 CMAC, China Maritime Arbitration Commission, headquartered in Beijing with sub-commission in Shanghai (established Jan 2003). A Fishery Dispute Resolution Center was also established in Jan 2003 within Shanghai CMAC




Capt Lee Fook Choon

Maritime Law Seminar
Jakarta, December 2006