Maritime Law and Practice in China

Liang Zhao and Lianjun Li

Document

Page 246

CHAPTER 20 Preservation of maritime claims

Introduction

20.1 According to article 12 of the Special Maritime Procedure Law (the “SMPL”), the preservation of maritime claims means the compulsory measures taken by a maritime court on the application of a maritime claimant against the property of the person against whom a claim is made, for the purpose of ensuring satisfaction of the claim of the maritime claimant. 20.2 The rules in relation to the preservation of maritime claims are set out in chapter III of SMPL as well as Part 2 of the Interpretation of the Special Maritime Procedure Law of the Supreme People’s Court1 (the “Interpretation of the SMPL”). 20.3 The preservation of maritime claims is a special method of preservation, and the relevant rules are different from those for general litigation set out in the Civil Procedure Law of People’s Republic of China (the “CPL”). For example, in accordance with article 100 of the CPL, with regards to property preservation in general litigation, a people’s court may make determination on an application of a party concerned or it may take the initiative to make a determination according to its own authority. In contrast, preservation of maritime claims must be applied for by the party concerned.2

Procedures and requirements for applying preservation of maritime claims

Jurisdiction

20.4 The preservation of maritime claims, as a procedure in relation to maritime disputes, should be submitted to the maritime court at the place where the property subject to preservation is located.3 20.5 The jurisdiction of a maritime court for preservation procedures is not restricted by any jurisdiction agreements or arbitration agreements entered into between the parties.4 Even if the applicant commences proceedings or arbitration in a foreign country, the maritime court will also accept the application, provided that the subject matter to be preserved is within the jurisdiction of China.5

Page 247

20.6 For the preservation of maritime claims, the place where the property is located is generally considered to be the place where the vessel or the cargo is located. If the cargo has been removed by the carrier out of the jurisdiction of the maritime court, the applicant can make the application to the local people’s court where the cargo is located.6 20.7 Where legal proceedings or arbitral proceedings have not yet been commenced in respect of a maritime dispute, any party may bring an action in respect of the maritime claim in the maritime court that adopts measures for preservation of the maritime claim. A party may also commence action at another maritime court that has jurisdiction, unless a jurisdiction agreement or arbitration agreement has been reached between the parties otherwise.7

Application form

20.8 Generally, a written application needs to be submitted to the maritime court. In the application, the particulars of the maritime claim, reasons for the application, subject-matter to be preserved and the amount of security required must be specified, along with evidence attached.8 In judicial practice, a maritime court usually requests the claimant to submit an original written application. However, in especially urgent situations, some maritime courts may accept an application by other means, such as by fax, but in such situations the court would request the applicant to promptly provide the original application form.9 20.9 Generally, the name of the person against whom the preservation application is made also needs to be specified in the application submitted to the maritime court. However, there might be certain circumstances where the applicant cannot identify the respondent in time, for example, when the respondent is a shipowner. Under such circumstances, the applicant can simply list the respondent as the owner of a certain vessel. Article 25 of the SMPL clearly provides that a maritime claimant who wishes to apply for arrest of the ship concerned but cannot promptly ascertain the name of the person against whom the claim is made may still apply for its arrest.

Evidence

20.10 Given that in most circumstances the application for preservation is made urgently and the applicant does not have enough time to obtain sufficient evidence, the maritime court generally does not have strict requirements on evidence. The relevant documentary evidence attached to an application document need only be preliminary, so long as it is sufficient to prove the existence of the maritime claim and the necessity to make a preservation of maritime claim.

Page 248

Security

20.11 The maritime court, having entertained an application for preservation of a maritime claim, may require the claimant to provide counter-security.10 20.12 This is different from the security requirements for the preservation for general civil and commercial litigation. Under the CPL, after the action has been commenced, a counter-security must be provided when applying for pre-litigation property preservation. The applicant may be ordered to provide a counter-security when the application is made in the process of a legal action.11 Under the SMPL, whether security is needed in the application for preservation during either period all depends on the court’s discretion. 20.13 However, it should be noted that when the method of preservation is to arrest a ship, the court shall order the claimant to provide counter-security, unless the claimant applies for arrest of the vessel due to disputes over crew labour contracts or compensation for personal injuries suffered at sea or in waters connecting the sea, and the facts are clear and the relationship of rights and obligations are undisputed.12 20.14 The security provided by a maritime claimant should be submitted to the maritime court.13 20.15 The mode and amount of security provided by a maritime claimant shall be determined by the maritime court. The mode and amount of security to be provided by the respondent may be agreed between the claimant and the respondent, failing which the matter shall be determined by the maritime court.14 The issue of maritime security is discussed in detail in .

Order of preservation and discharge of the preservation

20.16 An application for preservation of a maritime claim is usually made on a tight timeline, since there may be a possibility that the ship or cargoes that the application for maritime preservation is made against may be moved out of the maritime court’s jurisdiction. As a result, the SMPL requires the maritime court to make a determination whether or not to grant the order of preservation within 48 hours after accepting the application15 in order to avoid the ship to be arrested from leaving its jurisdiction, or the cargoes to be arrested from being resold or disposed of. 20.17 No hearing is required before the court renders such an order. The court shall only conduct an examination on the formalities of the application, and the scope of examination mainly includes: whether there is a valid maritime claim, whether the evidence submitted by the claimant is authentic or not, whether it is necessary to take the preservation measures, and whether the counter-security provided by the claimant is reliable or not. 20.18 Any party who is dissatisfied with the order of preservation may, within five days after receiving the order, apply for review of the decision not more than once. The

Page 249

maritime court upon receipt of such application should render the result of the review within five days. 20.19 It should be noted that the execution of the original order of preservation is not suspended during the period of reviewing such order by the maritime court.16 20.20 Apart from the party against whom the preservation order is made, if an interested third party is of the view that the order of the maritime court causes damage to its own interests, it may raise an objection to the maritime court. The maritime court shall examine the objection and discharge the preservation order against the property it considers that the reasons are justified.17 Unlike the objection raised by the respondent himself, there is no express time limit for raising an objection by an interested third party. 20.21 If the maritime court grants the order of preservation, the order shall be executed immediately. If the preservation order is to arrest a vessel, the general procedure would be for the officer for enforcement to go on board the vessel to deliver the ruling and the order of arrest to the master and read the contents to him. 20.22 After the preservation order has been executed and the relevant property has been arrested, there are three circumstances where the maritime court will discharge the preservation of maritime claim:18

a. The party against whom the claim is made has provided security

The rest of this document is only available to i-law.com online subscribers.

If you are already a subscriber, click Log In button.