海事纠纷中的专案调解 (非机构调解)

尽管已经取得了长足的进步，可是在英美法领域中，运用调解来解决商业纠纷这种机制依然相对新颖――除了美国，调解在那里已经被广泛的认可。虽然调解明显的省时省事，但还是只有很少的保险公司和海运相关业者准备将他们的纠纷付诸调解。调解既没有在他们合同里被写为纠纷的解决方式，也不在事后他们的纠纷解决办法的考虑之中。这也许有一定的历史原因在当中，因为诉讼一直都是一个更完整而且倍受青睐的纠纷解决方式。许多人更重视法庭能够执行判决结果的权力，却完全不顾诉讼对商业关系的破坏以及巨大的法律费用开销。

我作为一个职业仲裁员，一直都对调解抱有非常大的热忱。我认为调解既能更好的满足调解双方的要求，又能以友善温和的方式解决问题而不是靠互相指责。这与仲裁形成鲜明对比――在仲裁中，输了的一方常常会对仲裁结果感到不满甚至冷嘲热讽。在我看来，在保险纠纷中保险人与被保险人运用调解是他们解决纠纷的最好办法。调解可以建立一个完美地适合保险纠纷的平台，因为大多被保险人更愿意通过协商来和平的解决问题。除非被保险人是相当规模的公司企业，不然大多数被保险人并没有足够的财力和人力来经历一次冗长的诉讼。

从我的经验看来，相比起一场令人身心疲惫的诉讼而言，许多人更愿意接受一个折衷的协议。困难的是保险公司基本上都听取他们律师的建议，出于不愿让步和妥协的心理，大多不愿走调解这条路。他们也极有可能因为法院强制要求他们在开庭前进行调解而不情愿的做了调解。但是，那些真心接受调解为解决问题的首选方式的人，常常能够如愿以偿。（我可以用我最近的一个案子来阐明这一论点）

海事纠纷诸如集装箱逾期使用费与逾期码头堆存费、因为延时发给提单或者转换提单而造成的损失、取消租船、交船延迟、期租合同下提早收回船只、在最近的全球金融危机形势下运用艰难条款来中止长期租船合同、由于提名不安全港口而造成的损失、船只碰撞等等例子，在我看来都更适合运用调解来获取及早的解决。比起造成激烈对立和令人难堪结局的仲裁和诉讼来说，调解是一个更快更有效的解决方式。

虽然调解如此有效，许多船运业者对它还是不感兴趣。他们要么不了解它，要么害怕在调解过程中暴露太多信息以致于在下一步的仲裁中（如果调解失败）他们会受到不公正对待。这些惧怕并无根据。本人曾成功地在一个大型碰撞案件当中让两位船主最终达成一个交叉赔偿协议。这个案件用了几乎两年时间才结束，而且还是在双方律师的冷嘲热讽和反对劝阻下达成协议的。持久的努力、耐心和坚定的决心，以及日益见长的律师费最终让双方达成了共识。

调解基本上是：

• 一个并不敌对的解决问题的途径；
• 依靠一位来自法律或者其他专业领域的调解员，他会帮助双方明确症结所在并推进建设性的协商，最后探究可能的解决方法，以此推动整个进程；
• 无论律师在与不在，调解双方都可以作出自己的决定。这样，他们才能保证他们把握着对结局的控制，不去冒着风险让一位法官或者仲裁员作出对他们不利的判决并强加于其身；
• 调解并不在于决定谁对谁错，谁无辜谁有过失，也不在于宣布谁是输家赢家;
• 调解不是倒回去看问题。焦点不在于过去谁做了什么谁说了什么。相反的，调解的目的是找到一个可行的办法并最终达成一个能满足双方的要求和目的，让双方都能接受或满意的解决方案

调解的性质

在私人调解中，调解双方既可以共同指定一个调解协会来处理调解，也可以各自选择他们的调解员。

机构调解：

要对调解有更完整的理解，我们一定要明了机构调解的运作方式。本人来自亚洲，所以显而易见的我会用新加坡调解中心以及香港调解中心的例子来阐述这一问题。

在新加坡，调解双方会联系新加坡调解中心并要求调解。有时候，单方会提出调解要求，这时，调解中心会联系另一方或多方，询问或说服他们同意调解。

只有在所有相关方都同意用调解来解决他们的纠纷时，新加坡调解中心才会安排他们签署调解同意书，指定调解的日期时间和地点，指派一位调解员安排各项事宜。

在调解的那天，调解员会引导调解各方了解解决办法的流程。各方的律师会参与当中，并且在协助调解员和向各方提供建议等方面充当重要角色。

调解各方常会在调解终结时，在他们的律师的帮助下将他们的解决方案付诸纸上。

在新加坡调解中心，调解费是每天每一调解方支付调解员900新币。而且这些费用与调解案件的数量挂钩。

专案调解：

相比起机构调解，我更倾向于专案调解。因为它的程序更加灵活机动，没有固定的时间限制。成功或失败取决于一位耐心而经验丰富的调解员。他根据双方设定的程序和进程来进行调解，而不是根据一成不变的协会规定来进行的。

在专案调解中，调解双方都必须同意运用调解来解决问题，而这一过程可以在律师的帮助下完成，也可以在律师没有介入的情况下完成。调解是在完全中立的情况下由调解双方自己做出的重要决定。调解员在语言和行为举止上都必须显现出并保持绝对的中立，才能赢得调解双方的信任并且最终取得双赢的调解结果。从我的经验来看，专案调解是最适合运用于海事纠纷的了。机构调解对于调解时间有着硬性的规定，而海事纠纷中双方有可能在不同的国家，有完全不同的文化背景和文化思维，这种硬性规定并不适合。海事纠纷常常具有争议性，而纠纷各方需要耐心的引导，并且鼓励他们逐步的与对方友好相处。很多时候，商业调解要比社区调解耗时得多。

大多时候，调解各方会带着对对方的偏见和固定思维来到谈判桌前。他们也常常非常暴躁而且专横。在很多例子里，他们压根就不准备让步一分一毫，船只碰撞案件尤甚。勿庸置疑，双方都带着对方至少要负70％到80％责任的预想来到谈判桌前。有些时候，他们甚至谴责对方要对意外负百分百的责任。

在这样的背景下，调解员的选择是至关重要的。他或她一定要非常耐心而且对海事领域十分精通。一位完全没有海事背景的调解员是很容易失去调解方的信心的，他们会觉得让一个对海事完全不了解的人做海事纠纷调解员简直就是浪费时间。调解员一定要不偏不倚，而且不光是他或她要做到不偏不倚，他或她也一定要把这种公正性表现出来。在领导整个调解过程当中，他或她必须小心谨慎的走每一步，这样才能让人信赖。这是建立诚信的过程。第一次与各方会面是非常至关重要的。一步错棋或是一个轻率的举动就会导致这个过程前功尽弃。

我常常在专案调解中用的一种办法叫做“破冰会议”，其实也就是邀请各方一起共度茶点休息时间，而不是让他们各自回各自的休息室。我曾经见过“破冰会议”后，原告邀请被告的代表人员吃晚饭，然后第二天晚上，被告也如法炮制的请了原告的客。这种破冰会议对于消除各方的敌对立场非常有效。通常，双方会带着敌视的情绪来进行调解，可是等他们一起吃了一顿饭之后，饭桌上的笑声和打趣缓和了他们之间的紧张气氛，而双方的善意也就由此而发。

调解员也需要严格遵守调解议程表，以防止调解偏离正常轨道，或是刻薄和敌对的谴责影响调解进程。同时，遵循如下步骤会非常有帮助：原告先阐明自己的主张依据，然后被告再说明自己的异议并阐明理由。如果双方都不愿妥协和让步，我作为调解员并不吝于推迟会议，给他们充足时间重新考虑他们的处境。这是为了让双方都从现实情况的角度考虑他们各自的立场，以此缩短需要解决的各种分歧事宜。通常情况是，经过几轮考虑，各方会达成共识：有些要求必须得到满足，可是有些却是可以让步的。在这一阶段双方开始互相让步。

调解员和调解方式
普遍来讲，调解员是一个非常中立的第三方，他的任务只是引导调解各方向他们的最终要求前进。一位调解员并不会强制的做调解决定，或是打算判决一个调解案子。调解员应该运用技巧来帮助调解各方，让他们明白竭力证明他们才是正义的一方并不是正确的想法，正确的做法应该是致力于如何解决纠纷。调解员会集中在怎样做才能推动调解向前迈进，而不是判断孰对孰错，只有这样做才能最终达成一致。

调解员应该是一个好的听众，他会允许各方明确表述自己的意见，探究深层的症结所在，在必要的时候提出质疑或是鼓励调解各方。调解员会在多方会谈时与各方交谈，也会与调解各方单独会面。这是为了帮助各方集中精力在他们的利益和另一方的利益上，而不是他们的法律权利上。调解员也会探究各方最初的商业关系，进一步了解他们一起共事的最初动机，以及是什么导致了各方之间的信任和理解的解体。调解员会帮助各方找出什么是可能达成协议而什么是不可能达成协议的，他也会帮助各方重新审视各自的解决方案，检验他们对自己在案件中的地位是否有力做全面的分析，以及试探他们到底是热衷于解决问题还是对着干。但调解员绝对不会在多方会谈的时候试探各方或是想要找出他们的短处，这些都只可能发生在单方会面的情况下。哪怕是一位评估调解员也会万分小心，不会轻易告诉调解方说他们没有正当理由，一定会输。

在选调解员的时候，调解方一定要注意不能选那些明显偏向于一方的，或明显对调解当中的事宜有偏向性的调解员。这是因为极有可能这个调解员不能做到公正不阿，甚至他有诚信问题。那些反对指定这一调解员的一方会认为他偏向另一方，他不会平等的听取和对待各方意见，而这种怀疑会极大的阻碍调解的进程。

有些时候聘请一位评估调解员反而更加有帮助。比如：1）各方律师对案件的标的金额不能做出准确的估计；2）各方都向对方提出索赔要求而且不愿意让步；3）各方或一方对最终的解决方案有着不切实际的期待。在以上列举的情况中，一位强硬的评估调解员是必须的。

如果调解各方不需要评估调解员，那他们就应该找一位不光有海事背景的调解员，而且这个人还要在调解领域内有丰富的经验。在海事领域内有一部分纠纷是无论调解员有无经验他都可以处理的，比如说一个关于服务费的多寡的简单案件。

但更频繁的案件是要求调解员有海事背景的。他或她应该懂得海事救助，比如说船只扣押和海事保全；他也要懂得海事特定名词；他还要对各位船东之间的商业关系非常熟悉，在有些特定的案子里，他还要懂得船只的实际操作和掌握基本的航海知识。若是调解员有了这些背景知识，调解双方就可以省下教育调解员的时间，而且调解员也可以从一个全新的视角给调解双方分析他们的优势和劣势。

调解最终解决同意书的法律地位：

调解最终解决同意书的法律地位取决于调解双方的意图，调解的内容以及相关法律法规的要求与性质。在许多私人调解中，调解各方会将最终的调解结果付诸纸上并签署这份文件。那这就是一份有法律效力的合同了。这时，这份调解解决同意书就要接受一般合同规范的制约了。
调解的优势：

统计表明，与其他纠纷解决方式相比，调解有着绝对的优势，列举如下：

• 与诉讼和仲裁相比，调解成本更低；
• 调解更为迅捷;

举例说明，一般的较简单的机构调解可以在一个工作日就能解决。要是案件紧急的话，调解可以在一个星期甚至24小时之内被安排好举行。

• 更少风险

调解双方以及他们的调解员只需对他们相互满意的调解结果点头同意。这不同于诉讼和仲裁，调解双方不用冒着输掉官司或是法官或仲裁员做出对他们不利判决的危险。

• 保持良好的商业关系

调解并不是当面对质。调解双方被引导着运用建设性的方法，避免找茬，甚至可以促进他们的商业关系。这在双方仍有贸易或者其他关系的情况下尤为重要。

• 隐私和机密

调解对于那些重视自己隐私和机密的公司非常重要。它是私下举行的，而且在调解过程中得到的信息通常都只让特许人员知道，而且它们都不会被泄露出去。根据协议和法律要求，调解员和其他调解方都不能将任何调解中得到的信息披露给别人。

今天这一演讲关注于如何掌握专案调解的过程。最后，我希望能够给大家提供一些我个人的几点看法，在我看来这些看法都是裁定一个有争议或非常曲折的调解案件中非常重要的因素。

1. 尽早决定调解双方需要提交什么文件给对方或仲裁员，最好是能在第一次会面之前就做好决定。
2. 一个“破冰会议”是非常重要的。它能够让双方在社会影响力的作用下对对方有进一步的了解。
3. 调解员一定要设定调解议程表。这是为了控制调解进程，保证调解会议的进行。
4. 调解员该鼓励调解双方列出一个单子，在上面列出什么问题是没有分歧的。这会促成双方达到最后目标。这也可以阻止调解各方提出让人不能忍受的一长串无理要求，以此节省时间，集中精力在那些重要的问题上。
5. 为了保证客观性和公正性，调解员也可以指派一位专家来指导案件。但这一指派必须要得到调解各方的首肯。
6. 调解员不应操之过急，每次一点进步并得到调解各方的认可才是最重要的。
7. 中场休息、餐点休息和社交聚餐是非常重要的。
8. 调解员的公正是保证调解各方信心至关重要的一点，这也确实并不容易做到。1999年2月3日在新德里，印度最高法院的S P Bharucha法官在他就任调停调解庭的就职演说中说：“一个好的调停人或调解员，可以引导（调解双方）最终达成协议，纠纷事宜能以让人接受的方式解决，而调解双方又不会感到挫败。最终的商定协议不会像法庭判决或者仲裁决定一样让人有苦难言，而是会培养出相互的善意与信任。”他的至理名言总结出了调解的核心思想。
9. 耐心的瓦解双方的不情不愿从而改变他们的敌对立场是非常重要的。
10. 所有与调解方的谈话都必须通知另一方。程序透明是调解成功至关重要的一环。
11. S P Bharucha法官还说：“一个成功的调解员会告诉调解各方他们在案件中的优势和劣势，并且有针对性的给出建议来解决纠纷。他会引导各方到正确的解决思路上来，让他们看清楚什么是对他们最好的解决方式……调解是一门艺术。它需要耐心的培养和不断的完善。一个好的调解员一定要有非常好的洞察力和陈述能力，才能用一种友好而中立的方式看待争论者的气恼和抱怨。”

我有运用调解处理不同国籍公司之间的纠纷的经验，在我看来，调解可以解决问题，避免冗长而不必要的诉讼。调解侧重于为纠纷各方寻找合意的解决方法，而不是将问题局限在法律权利上，而这符合大部分纠纷方的愿望――他们需要一个迅速的解决方法将问题解决，然后向前迈进。

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

THE LEGAL EFFECTS OF THE JURISDICTION CLAUSE

This paper was supposed to be presented by the writer at the ICMA Congress in New York but was cancelled because of the 9/11 Tragedy

It is very common to find a jurisdiction clause in contracts of maritime nature, particularly in the Bills of Lading and charterparty. It is also common knowledge that the ability of this clause to achieve the results intended is dependent on a number of considerations such as the scope of its wording, its exclusivity, to whom it is binding, whether such a clause infringes on any mandatory statutes of the chosen forum and most critical of all, the judicial attitude of the courts in the forum which have to enforce such a clause.

Take the Gencon Bills of lading for instance, the choice of law and choice of jurisdiction are incorporated by way of reference. The clarity with which the bills of lading incorporate the choice of jurisdiction in the charterparty is very important. If the incorporation is vague and unclear, the court may not permit effective incorporation of the charterparty terms. There are several cases which have dealt with this issue. Hence the manner in which the bills of lading are worded to incorporate the provision of the charterparty is very important.

The next issue that have given rise to legal debates relates to situations where there are several sub-charterparties. The question that had risen is, which is the effective charterparty for purposes of ascertaining the correct jurisdiction clause. The problem becomes compounded when the various charterparties provide for different jurisdiction clauses. The tentative solution has been to determine which of the charterparties is available and therefore that would be the relevant choice of jurisdiction. However this area of the law remains cloudy.

The effects of a jurisdiction clause are serious enough to warrant many legal opinions being sought by marine cargo insurers and other uninsured cargo interests. In the context of international trade, most of the shippers have no direct influence over the choice of the jurisdiction clause in the bills of lading (unless of course you are a major shipper). In reality, many shippers are not even aware of the significance and the legal effects of such a clause.

The primary objective of most hard headed business people is to have the goods shipped and delivered to final destination with minimum fuss, very often with the fastest and the most cost effective means possible. It is not too presumptuous to state that the effects of the jurisdiction clause are not fully appreciated until a cargo claim has arisen or at the commencement stage of recovery action by the subrogated insurers, that is, after a claim has been paid.

The problems are even more complex and unfair when the bill of lading has been indorsed to an innocent third party like the consignee. To his dismay, he has to accept the fact that under common law, he is bound by a clause of which he is not even a party to it and of which, he has no knowledge. Take the case of a consignee who is based in India and the shipper is domiciled in Singapore but the choice of jurisdiction happens to be say, Nicaragua. Some jurists have commented that in such cases where the choice of jurisdiction have no direct connection to the transaction or the parties, the terms of the bills of lading should not be given effects.

Under the English law, a party can be bound by a term in a contract to which he is not party and of which he has no knowledge. This was established in the Court of Appeal judgement in the KH Enterprise case. Under the English law, jurisdiction clause in the bills of lading is generally held to be effective though this may not be the case in non-English law jurisdictions.

In the insurance recovery process, the jurisdiction clause in the bills of lading remains the most thorny issue confronting many marine cargo insurers. The concerns of the marine insurers is understandable and most would feel comfortable with forums which embrace established carriage of goods by sea conventions or where the rule of law is firmly established. Their biggest concern is having to fight an action in a jurisdiction where the rule of law is not firmly established and precedents do not have significant bearing in the adjudication process.

These problems are further compounded by the widespread use of multimodal transport bills of lading or intermodal bills of loading where the jurisdiction clause and governing law is very often, leveraged on to the law of the country where the multimodal operator is domiciled. In some of these countries, the body of maritime law is not fully transparent or adequately developed.

Yet attempt to transfer the jurisdiction to a more favourable forum is the natural desire of all the claimants against the carrier but this decision is fraught with danger. For the enterprising ones who try, they face the prospects of not being able to resist a stay application from the carrier in a forum of choice.. Some jurisdictions have not acceded to the Hague Visby Rules or other established convention and had unilaterally, adopted a shortened time-bar of less than a year in action against the carrier. Any delays in trying to settle for a forum of choice may cause the claimants to be time-barred in the forum as defined in the contract.

Perhaps an example in a recovery case handled by the writer will be able to spotlight the problems posed by the jurisdiction clause in the bill of lading. In this example, the jurisdiction clause provides for Taiwanese law, and for the exclusive jurisdiction of the courts in Taipei. This matter involved a misdelivered shipment of goods from Hongkong to Russia. Claims against the carrier (through negotiation) was unsuccessful and an in-rem proceedings was thus commenced in Hongkong but not served on the carrier. The concern was whether the claimants could resist a stay application from the defendants who would obviously wish to rely on an alleged jurisdiction clause in the bill of lading.

This hesitation prompted the subrogation insurers to seek an opinion from a maritime lawyer in Taipei on the judicial attitude of the courts in Taipei. It was suggested that the Supreme Court of Taiwan had ruled in a case in 1978 that the jurisdiction clause in the bill of lading is only an expression of a carrier’s own willingness and as such, should not be deemed to be an agreement between both parties. It therefore followed that shippers are not bound by the jurisdiction clause in the bill of lading and it is the right of the shipper to decide whether or not to be bound by such a provision in the bill of lading.

Attention was also drawn to the 9 month time bar clause on the reverse side of the bill of lading. It was suggested that the subrogated insurers should ignore the jurisdiction clause (to avoid this 9 month time bar provision) on the pretext that the jurisdiction clause is only an unilateral expression of willingness made by the carrier and that such provision should not be applicable to the shipper or the subrogated insurers.

We also learned through this consultation process that the ROC courts will usually use the Civil Procedure Code to determine the issue of jurisdiction. Under this Code, it would appear that the courts in ROC lack jurisdiction over the matter on the argument that the ship involved is owned by a company not domiciled in Taiwan and that the ship in question has never called at Taiwan. Finally, the said casualty had occurred outside Taiwan.

With regard to the issue of the governing law, it was further suggested that it is the practice of the ROC courts to determine such issue based on the Law Governing the Application of Laws to Civil Matters Involving Foreign Elements. It was suggested that lex loci actus shall be applied to cases where the intention of the parties are unclear and that the act was committed outside Taiwan. Hence, it is very likely that the ROC courts will probably rule that the governing law clause is an unilateral expression of the carrier’s willingness and as such, shall not bound the shipper if the shipper chose not to.

Review of the above opinion by a learned Counsel in London

Still uncertain of the above findings, the subrogated insurers decided to place the facts of the above case and the Taiwanese opinion before a learned Counsel in London for review. Interestingly enough, the learned Counsel was of the view that under English law, the jurisdiction and governing law clauses in the bill of lading would be deemed to effectively incorporated though in ROC, this may not be case.

The issue in question, as expressed by the learned counsel, is whether the courts in Hong Kong would give effect to the law and jurisdiction clause in the bill of lading, bearing in mind that if they were to refuse jurisdiction on the basis that the matter should be dealt with in Taiwan, the Taiwanese courts on the other hand, may not regard the incorporation of the clause as effective. In effect, a court which is required to consider whether or not the clause should be given effect must do so not according to the court’s own law (lex fori) but according to the putative proper law of the contract ie in our case here, the ROC law.

An Australian case was also highlighted (Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 65 CLR 197) in where the issue was whether the foreign law and jurisdiction had been incorporated into the contract. The decision was that the issue should be determined not by the system of law indicated by the clause itself, but by the lex fori (the Australian law in this case).

In UK however, the questions of incorporation of the jurisdiction and governing law clause have generally been a settled issue to be considered under the putative proper law ie the law which would be proper law of the contract if the clause was validly concluded. To support this finding, several cases were mentioned, ie The Parouth [1982] 2 LR 351; The Atlantic Emperor [1989] 1 LR 548, 552lhc –553lhc and 554 rhc; The Lake Avery [1997] 540,550lhc etc.

Our understanding of this matter was further strengthened in a decided case (Albeko Schuhmaschinen AG v Kamborian Shoe Machine Co Ltd (1961) 111 LJ 519 which relates to the formation of contracts and where Salmon J expressed the view that even if the criteria of the lex fori regarding the formation of the contract had been satisfied, nevertheless the contract would not be regarded to be effectively concluded if the criteria of the putative proper law were not satisfied.

This example focussed the typical problems posed by the jurisdiction clause and in today’s context, we have seen widespread incorporation of jurisdiction and governing law clause in multimodal bill of lading issued by multimodal operators in countries like Vietnam, Thailand, Indonesia and many others. Whilst it is not the attempt of this writer to belittle the legal framework of some of these countries, it is a fact that there exist, many unknown grounds and uncertainties in the law of incorporation of the jurisdiction clause and governing law in countries where the body of maritime law is still being developed. The Taiwanese courts to be fair, have shown a great deal of common sense in their approach to this issue.

Issuers of bills of lading would obviously prefer to hide behind the uncertainties and unfamiliarity of some of the lesser known forums. For the subrogated insurers or uninsured cargo interests, it is a costly affair to ascertain the judicial attitude of some of these forums and also in trying to resist the stay application of the defendants in a forum of choice. Finally, to overcome the problem of choice of law/jurisdiction, it is recommended that insurers should proceed with recovery action at an early stage so that the issue of time bar could be managed.

Capt Lee Fook Choon

LN52.10.01

MARINE CARGO INSURANCE

The Challenges Beyond

The cargo insurance industry has become highly competitive and knowledge intensive. Insurers have resorted to mergers and information technology to achieve the economy of scale.

The global environment is in a constant state of change. Whether insurers can depend on; internal costs control; imaginative investment incomes; and core premium income to stay viable will be something which even economists cannot predict with certainty.

With the rapid liberalisation of China and the opening of India, cargo insurers are posed with formidable challenges but with many opportunities too. One needs to take bold, imaginative and well-considered risks. The challenge ahead is to lift the traditional conservative lid among insurers to allow the range and scope of business to be expanded even when the premium rates are nowhere near attractive.

The increase in the range and depth of cargo insurance business should not be achieved purely from commercial expediency but in a well-considered undertaking. To achieve this, insurers cannot be contented with just enhancing the insurance knowledge of their underwriting and claims handling staff. There is also a crucial need to expand their fields of knowledge in a multi-discipline approach. For instance, they need to enhance their knowledge of the subject matter insured (product knowledge); the mechanics and risks of sea/land/river/air transportation; the packaging criteria; pre and post casualty control measures; ways to control litigation costs and country knowledge of the main trading nations. Acquisition of knowledge for underwriting and claims handling staff, like any many other professions, is a continuous process.

Product Knowledge

Many underwriting and claims handling personnel are rather poorly informed of the subject matter insured. Many are insufficiently equipped to understand the nature and characteristics of the subject matter insured. Hence, in determining whether it is a good risk that warrants a Class A coverage; or whether a particular mode of transport is suitable; or whether a particular damaged product can be sold in the market or to be condemned; they are largely left to the whims of the assureds or intermediaries.

Take for instance steel related cargoes. Many insurance personnel do not understand the complexities of the steel trade. Grade B steel products are being insured as though they are of Grade A materials. Similarly, in food grains and other agricultural products, losses sustained are being treated as transit loss covered by the policies when in reality, many of the losses can be traced to defects in seeding process; weather-derived diseases; poor crop husbandry; and harvesting and handling deficiencies before shipments. The same can be said of the timber trade and other vegetable oil business where many claims can be attributed to rust suspensions and other non-chemical based impurities which actually can be made good or even sold at substantially good prices even if downgraded or reprocessed.

Knowledge of vast categories of goods insured can be acquired through talks or short courses given by many trade associations and such talks can be organised through the Institute of Insurance or other insurers' associations.

Understanding the Transportation Systems

Today, goods are transported across the world by a multitude of transport modes involving mother carriers, feeder ships, inland barges, road, rail or even domestic air carriers. While the transport systems in Japan, Europe and US are highly developed, the same cannot be said in most countries.

The rail systems and roadways in many countries are in desperate needs of repairs or investment in infrastructure renewal. This also includes the fleet of inland barges and coastal ships used in delivering goods to far inland destinations. It is common to see poorly equipped coastal tankers being chartered to deliver parcel chemical or clean oil products from well-managed ocean tankers to inland river ports. The standard of tank preparation before loading is not observed and the interchangeability of the tank used is also not adequately monitored. This often results in contamination of products on arrival at the final destination. It is also not uncommon to find rickety open and uncovered trucks being used to carry expensive cargo to inland destinations.

Many insurers, under tremendous commercial pressure, are willing to cover door-to-door risks even though they may not have the slightest clue with regard to the state of the inland transport systems in the country of destination. In such a situation, insurers must be prepared to take inevitable losses rather than fortuitous losses. To increase awareness of the inland transport systems and the applicable legal regime governing the limit of liability for such inland carriers, insurers will do well by building up a file on useful data and historical records of the principal trading nations.

Packaging

One major factor contributing to frequent losses is the sufficiency and adequacy of packaging. Many of the losses suffered in transit, especially during inland transits, can be attributed to less than rigorous packaging being employed. Some packaging methods or materials are determined by shippers whilst some are left to forwarders engaged by the shipper to do the packaging and/or consolidation for shipment.

The normal excuse given by shippers is that a particular packaging material has been in use for numerous shipments without difficulties encountered and, therefore, the argument that insufficient packaging or inadequate packaging is the cause of loss cannot be accepted. To reinforce this point, I will cite a case involving medical basic ingredients shipped in paper cartons by air from India to Europe. On arrival, the paper cartons were found to have softened by moisture as a result of condensation during the airflight and the entire shipment was rejected by the Danish Health Authority for being unfit for human consumption.

The assured gave the excuse that the packaging was adequate and customary whilst ignoring the fact that frequent use of a certain packaging mode without apparent deficiency noted does not mean that the standard of packaging is adequate. A combination of human negligence, weather effects, and shortcomings of the aircraft storage control procedures can put to test whether a certain packaging mode is adequate. There are many similar cases that can be quoted.

Many shippers are also under intense pressure to trim their business costs. Rationalising the packaging methods or materials used is one cost-effective measure. Packaging materials and method used should be adequate to withstand the full rigours of handling and storage in many transport modes and the benchmark cannot be measured only against a particular mode such as truck transportation.

One of the effective ways for insurers to control their claims exposure is to focus on the packaging of the subject matter insured. Good, adequate and robust packaging can go a long way to reduce the scope and extent of damage to goods-in-transit.

Claims Handling

The importance of proper claims handling to ensure only valid claims are paid, cannot be overstated in determining the profitability of the business. It is a fact that insurers rely to a great extent on a network of insurance surveyors to keep claims in check. For some established insurers, great pains are taken to set up a panel of surveyors but this panel is realigned each time a new claims person is put in charge. It is important for insurers to take note that professionalism and loyalty work both ways.

If a survey firm is confident that their listing on the panel is based on merits and is not simply replaced by a change of claims manager, they will work with diligence and a degree of professionalism. As most surveyors can testify, to do a good job in obtaining important information or documents or other physical evidence, very often surveyors must go the extra mile. It is this ‘ extra push’, which very often, makes the difference. The other spectrum is to do ‘just enough’ and the pride of a job well done is relegated to the back-burner. So, many claim handlers do complain about the quality and standard of field surveyors.

It is also common practice that the benchmark of survey services is focused on costs. While it is undeniable that cost has to be controlled, it is also a fact that experienced professionals cannot be cheaply reproduced. They are expensive employees and the costs of employing such people will have to be passed on to users of such services. Globalisation and economy of scale will not alter this situation and in fact, with globalisation, experienced personnel are even harder to keep as their services are in demand.

Perhaps, insurers should take another look at these suggestions:

1. A reliable network of surveyors to be maintained. Once a panel is formed, removal from or addition to this panel should be based on merits and not on personal relationship. Surveys firms should be assessed on the quality of their employees; their knowledge of the local environment; contacts with salvage merchants and traders; and their contacts with service and repair workshops, whether locally, in the region or through Internet.

2. The quality of surveyors should be assessed based on their professional background and pay structure to stamp out corrupt practices.

3. Insurers should back up surveyors in the course of their work in dealing with assureds or their intermediaries in the course of claims handling.

The quality of survey report has a tremendous bearing on the ultimate success of recovery actions against the carriers. Many cases of good merits can be frustrated by poor reports with no concrete substantiation of evidence and facts.

Understanding the Threat of Fraudulent Practices in International Trade

Fraudulent activities in international trade are on the rise. These activities are not only confined to Malacca Straits but also to Vietnam, Philippines waters, parts of China, Central America, South America, parts of Africa and even in Europe. There is still no international order that can help to eradicate or minimise the threats of such criminal activities. The modus operandi of these fraudulent activities is a very complex web involving the planners, executioners, collaborators, distributors and some authorities at the point of sale.

To depend on law enforcement agencies or the courts in many countries to recover converted goods is still a dream. It is better for insurers to take precautionary measures than to become a victim of criminal acts. Insurers need to understand the types of maritime frauds prevalent in the market place and what are some of the possible steps that can be taken to mitigate the risks:

Types of Maritime Frauds

* Hijacking of ship by disgruntled crew to settle disputes with owners

* Hijacking of ship by organized syndicates with crew’s complicity

* Hijacking of cargoes with or without crew’s complicity

* Hijacking of ship and cargoes by crew or by organized syndicates

* Illegal detention of ship/cargo by owners to force payment of outstanding hire or demurrrage or detention charges

* Pirate attacks to plunder ship's stores, equipment and or cash

* Misrepresentation of the nature of goods shipped

How to prevent maritime frauds

* Investigate the ownership and background of operators including their share ownership, mortgages etc 

* If the ship is a chartered carrier, obtain all pre-chartering correspondence between charterers, shipbrokers and owners to determine the quality of shipowners and the shipbrokers.

* Obtain details of P & I coverage as well as hull and machinery coverage to determine the quality of insurance. 

* Obtain copies of vessel’s trading documents to establish the authenticity of registration/classification documents.

* Obtain details of crew (if possible) such as their nationality, age, qualifications, domicile address in order to draw up a character profile of the crew-very critical to determine whether they are guilty of complicity in the crime committed. 

* Investigate into the background of charterers, nature of their business, scale of their operations and location of their office. 

* Obtain evidence and investigate into the background of shippers, nature of business, historical aspects of sale transaction of missing cargo, payment terms of goods, how shipments were arranged, how carrying ships were selected, terms of bills of lading, legality of export and foreign exchange control procedures. 

* Identify the chain of buyers i.e. intermediate and final buyers, their background, if possible, and whether or not they qualify to claim under the policy, whether the import is legal and is covered by the necessary import permits. 

* Examine prevailing market conditions of the product that is the subject of crime.

Country Knowledge

Many insurers are less than well informed of the economic, political, social and legal environment of their principal trading nations other than the United Kingdom. If insurers want to ensure prudent measures to be taken to avoid the pitfalls in claims handling, they need to expand their country knowledge of their principal trading nations. The major trading nations I am referring to are China, India, European Community, East European Countries, Korea, Japan, United States and Russia.

There is a compelling need for insurers to compile country information and data (for quick reference) on the strengths and weaknesses of each of these countries, their technical abilities, customs regime and transaction restrictions, trade practices, political risks, quality of inland transport systems, judicial system, etc. Ask yourself these questions: How much do you know about a country’s legal system? How does the court system function in that country? Is there any avenue for application to court for access to the vessel for document inspection? Do you know enough of the ship’s arrest procedures in all these countries in respect of obtaining security for your claims, the issue of counter security, the issue of whether protective writ can be issued to protect time-bar, repercussions of wrongful arrest, sister and associate ship arrests, the law governing validity of the limitation fund etc?

Why are these questions so important? They are very important because without which, insurers will be heavily exposed to wrongful advice leading to massive wastage in the legal costs in either pursuing a recovery claim or defending a claim. Many insurers, due to the legacy of history, are comfortable with English law but, unfortunately, English law is not universally adopted. Continental law or a hybrid variation of English law is adopted in many trading nations.

Dispute Resolution

Traditionally, insurers tend to look to the court for resolving any disputes with assureds or reinsurers. But in today’s commercial world, there are alternative cost-effective dispute resolution options other than going to court to settle a commercial dispute. In India and China, for instance, it does not make sense to settle disputes by dragging them through the district, provincial high court and then the highest court of appeal. Increasingly, insurers should look at Arbitration and or Mediation processes to resolve commercial disputes.

Insurers in European countries are looking into all aspects of claim control possibilities and it is of no co-incidence that they are by far the boldest in trying out mediation and arbitration.

Arbitration

Arbitration as a dispute resolution process is very little understood amongst insurers in this part of the world. What is an arbitral process and how to commence an arbitration proceeding is something still unfamiliar to many insurers. In actual fact, the East Asian Branch of the Chartered Institute of Arbitrators and the Hong Kong International Arbitration Centre will be more than willing (I believe) to educate insurers through insurers’ associations or the Institute of Insurance in understanding the arbitration process..

The arbitration process needs to be understood and insurers will be well served if they are briefed on the advantages and disadvantages of arbitration such as : How arbitrators are appointed? The difference between a sole and a three-member tribunal; the definition of commencement of arbitration in preservation of writ; How to challenge and dismiss arbitrators guilty of misconduct? How to ensure transparency and accountability in the arbitral process? How to control the costs of arbitration? How to enforce an arbitration award in home country as well as in a foreign country? The right of appeal to the court etc.

Mediation

This is a process that has seldom been used by local insurers. From my experience as a mediator for foreign insurers, the results have been most gratifying. In most cases, it is a win-win situation, and unlike court or arbitration, the parties can walk away happy with the outcome (having the opportunities to have their views heard and tested against reality). Mediation is a poorly understood concept even among local insurers who are familiar with court proceedings.

The questions often asked are: How does mediation work? What is the difference between domestic and cross-border mediation? How to appoint a mediator? How can complex insurance claims be resolved through mediation? What are the advantages of mediation? If we proceed with mediation, can we revert to arbitration or court action at a later stage? Can a mediation agreement be binding on the parties? And, finally, what is the likely cost of mediation?

Mediation is hot topic in many countries. In construction, municipality and domestic family disputes, for instance, it is widely practised with good results. It is not possible to go into a substantive discussion on specific questions of the mediation process in this article as the depth of the subject will require a separate paper to do so.

The writer reckons that his views may not be shared by all but certainly, he hopes that this article will act as a catalyst to stir more general discussions among insurers to enhance the professional levels in the industry.

Capt Lee Fook ChoonACII, Master Mariner, LLM, Chartered ArbitratorToplis & Harding (Marine) LtdToplis & Harding (Recoveries) Ltd

LN56.03

GENERAL AVERAGE EXPLAINED

Classic definition of general average given by an English Judge Lawrence J in Birkley v Presgrave :

All loss which arises in consequence of extraordinary sacrifices made or expenses incurred for the preservation of the ship and cargo come within general average and must be borne proportionately by all those who are interested

GA is now defined in MIA 1906 s 6

(1) GA loss is a loss caused by or directly consequential on a general average act. It includes
ageneral average expenditure as well as a general average sacrifice.

(2) There is a general average act where any extraordinary sacrifice or expenditure is
voluntarily and reasonably made or incurred in time of peril for the purpose of preserving
the propertyimperiled in the common adventure. Rule A of York Antwerp Rules 1994 which in practice apply to the adjustment of general average provides :

“ There is a general average act when, and only when, any extraordinary sacrifice or expenditure is intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure.

The result of a GA act is a GA loss. GA losses include : the loss suffered by virtue of a GA sacrifice; loss or liability incurred by a GA expenditure, or any losses directly consequent upon a GA act.
The person who suffers a GA loss is entitled to claim a contribution from those who benefit from it in proportion to the values of the interests which have been sacrificed and those which have been saved. The liability for such contributors may in turn be a loss for which they can claim against their own insurers and is also described as a general average loss.

Differences between Particular Average and Particular Charges

PA loss is a partial loss of the subject matter insured caused by a peril insured against, which is not a general average loss or a particular charge.

“Particular Charges” are expenses incurred by or on behalf of the assured for the safety and preservation of the subject matter insured, other than particular average or general average. They include expenses of services ‘ in the nature of salvage’ rendered by the assured or his agents.

Examples of GA

Jettisoning part of cargo or ship's stores, scuttling the ship, cutting away masts or cables, extinguishing a fire by pouring water into a hold, voluntary stranding, putting the cargo into lighters, engaging salvage services, paying money to secure the vessel's release from detention, sale of part of the cargo, additional fuel consumption, employment of towage services, tipping the vessel to repair the propellers, incurring damage to property belonging to third parties

General Average losses include expenses of ship repairs and reconditioning cargo.

York Antwerp Rules

Generally widely accepted as can be seen by their frequent incorporation into charterparties, B/L and marine insurance policies. YA Rules revised regularly, the most recent times was 1994, 2000 and 2004. Consist of 7 lettered rules and 22 specific rules. GA claims adjusted mainly on principles of lettered rules though reasonable consideration are given to the specific rules. GA Rules had been developed since mid 19 century for the purpose of removing differences between municipal laws and for reaching general agreement on matters of details and principles.

Claims Procedures

A person claiming GA contribution can assert a lien. The lien is released in return for the defendants providing an average bond, whereby he undertakes to pay the contribution due and to provide particulars of the value of his property and security in the form of either or both of a cash deposit or more commonly, a guarantee issued by his insurers.

The shipowners will then appoint a GA average adjuster, who in turn carries out a detailed and often lengthy assessment of the rights and liabilities of all interested parties, though unless otherwise agreed, his adjustment is not binding on them.

SPECIAL FEATURES

- The right only arises from a maritime adventure in the nature of a voyage

- There must be a real danger

- The danger must be to a common adventure and the action taken must be necessary for the safety of the common adventure or a direct consequence of such action

- Duration of the common adventure (eg if a portion of cargo is discharged and a GA event followed , the discharged cargo should not be called upon to contribute)

- Port of Refuge expenses [“ the going into port, the unloading, warehousing, and reloading of the cargo and the coming out of the port, are at all events part of one act or operation contemplated, resolved upon and carried through, for the common safety and benefit, and properly to be regarded as continuous.” By Thesiger LJ in Artwood v Sellar]

- There must be a sacrifice or expenditure of an extraordinary nature

- The sacrifice or expenditure must be real

- The GA act must be intentionally incurred for the benefit of the common adventure

- The action taken must be reasonable

- Contribution may be claimed from and only from an interest when it is successfully brought to the place of termination of the adventure

- Substituted Expenses (towage of a vessel from a port of refuge, forwarding of cargo from a port of refuge, temporary repairs, the extra expenses of drydocking with cargo onboard, additional overtime and air freighting spare parts.


Capt Lee Fook Choon