Maritime Law and Practice in China

Liang Zhao and Lianjun Li

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CHAPTER 14 Limitation of liability for maritime claims

14.1 The draft of the provisions regarding the limitation of liability for maritime claims in the CMC 1992 heavily relied upon the Convention on Limitation of Liability for Maritime Claims, 1976 (LLMC 1976). Although China has not acceded to nor ratified the LLMC 1976, the maritime claims for limitation of liability and the amount of limitation are similar in both the CMC 1992 and the LLMC 1976.1 The main differences between the relevant provisions in the CMC 1992 and the LLMC 1976 are the application to various types of ships for limitation purposes and the jurisdiction of the limitation fund.2 The limitation of liability for ships with a gross tonnage not exceeding 300 tons and those engaging in transport services between the ports of the PRC as well as those for other coastal works is not governed by the CMC 1992, but instead by administrative regulations. The limitation of liability in respect of claims for loss of life or personal injury to passengers carried by sea is also governed by administrative regulations.

Scope of application

Ships

14.2 A ship involved in maritime claims subject to limitation of liability in the CMC 1992 must be a real ship, not a ship under construction or a ship in trial operation.3 The limitation of liability in the CMC 1992 does not apply to ships with a gross tonnage not exceeding 300 tons and those engaging in transport services between Chinese ports and ships for the carriage of passengers between the Chinese ports.4 Aside from these exceptions, there is no other special requirement or restriction on the ship for the purpose of the limitation of liability in the CMC 1992. If the general concept of the ship in the CMC 1992 applies,5 the limitation of liability in the CMC 1992 also applies to other mobile units if such units are not within those exceptions. In the LLMC 1976, the limitation of liability does not apply to

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floating platforms constructed for the purpose of exploring or exploiting natural resources on the seabed or the subsoil thereof.6 It seems that the LLMC 1976 does not apply to such floating platforms irrespective of their mobility. However, the limitation of liability in the CMC 1992 may apply to such floating platforms if they are not permanently located in one position, but in transit.

Persons entitled to limit liability

14.3 Under the CMC 1992, shipowners and salvors may limit their liability according to the relevant provisions in the CMC 1992. The shipowner for the purposes of limitation of liability includes both the charterer and the operator of a ship.7 A charterer can include all types of charterers based on charterparties, including any voyage charter, time charter, bareboat charter and any other kind of charter.8 An operator can include a registered ship operator, or a person who, upon entrustment of the shipowner, actually uses and controls the ship and is responsible for the ship, but excludes the NVOCC,9 and the contractual carrier who is not the charterer or the operator.10 14.4 If the claims subject to limitation in the CMC 1992 are not made against shipowners or salvors themselves but against persons for whose act, neglect or default the shipowners or salvors are responsible, such persons may limit their liability in accordance with the relevant provisions of the CMC 1992.11 Furthermore, where the assured may limit his liability in accordance with the relevant provisions in the CMC 1992, the insurer liable for the maritime claims shall be entitled to the limitation of liability to the same extent as the assured.12

Maritime claims

Claims subject to limitation

14.5 Apart from claims exempted from limitation in the CMC 1992, with respect to the following maritime claims, regardless of the basis for liability and the manner of how the claims are lodged, the person liable may limit his liability where:13

(1) claims in respect of loss of life or personal injury or loss of or damage to property including damage to harbour works, basins and waterways and aids to navigation

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occurring on board or in direct connection with the operation of the ship or with salvage operations, as well as consequential damages resulting therefrom;14
(2) claims in respect of losses resulting from delay in delivery in the carriage of goods by sea or from delay in the arrival of passengers or their luggage;
(3) claims in respect of other losses resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations;15
(4) claims of a person other than the person liable in respect of measures taken to avert or minimise loss for which the person liable may limit his liability in accordance with the provisions of this chapter, and further loss caused by such measures.

However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on the limitation of liability under the CMC 1992.16

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