Maritime Law and Practice in China

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Introduction to Chinese maritime law

Introduction to Chinese maritime law

1.1 The legal system of the People’s Republic of China (the “PRC”) is similar to the civil law system. The main statutory law of the maritime law of the PRC includes the Maritime Law (the “CMC 1992”)1 promulgated in 1992, and the Special Maritime Procedure Law (the “SMPL 1999”) promulgated in 1999. In practice, the Supreme People’s Court (the “SPC”) has also promulgated judicial interpretations for the implementation of Chinese maritime law. The SPC’s judicial interpretations have played an important role in Chinese judicial practice. Still, the judgments of maritime cases in China are not sources of Chinese law. However, maritime judgments, especially some judgments selected by the SPC as the guiding cases, have become important references for adjudication in Chinese maritime judicial practice. 1.2 The judicial practice of maritime law in China started before the enactment of the various legislations of Chinese maritime law and maritime procedure law.2 Before 1984, maritime cases were heard as general civil or commercial cases in local people’s courts and the SPC in China. Chinese maritime trials have since become professional, with the establishment of the maritime courts in 1984. Currently, ten maritime courts, ten high people’s courts as the courts of appeal of the ten maritime courts, and the SPC all have the exclusive jurisdiction of maritime cases in China. Further, the concept of a “second instance finality with three levels of courts” has been formed in Chinese maritime trials.

Chinese maritime law

1.3 In the early years of maritime judicial practice in China, there were no special maritime laws applying to maritime disputes. The enactment of the CMC 1992 and the SMPL 1999 were landmarks in the history of Chinese maritime legislation. The CMC 1992 provides for substantive systems of ships, seamen, carriage of goods by sea, carriage of passengers by sea, towage, collision, salvage, general average, limitation of liability for maritime claims, marine insurance, time limits and applicable laws for foreign-related matters. The SMPL 1999 provides for procedure rules for jurisdiction, preservation of maritime

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claims including arrest and auction of ships and goods carried by ships, maritime injunction, maritime security, preservation of maritime evidence, trial procedures, procedure for constitution of limitation fund for maritime claims, procedure for registration and repayment of debt and procedure for service by publication of maritime liens. 1.4 Not all maritime issues and procedures are governed by the CMC 1992 and the SMPL 1999. Some issues and procedures may be governed by civil laws and civil procedure law. They mainly include the General Principles of Civil Law 1986, as amended in 2009, the Contract Law 1999, the Guaranty Law 1995, the Property Law 2007, the Tort Liability Law 2009, the Law on Application of Laws to Foreign-Related Civil Relations 2010 and the Civil Procedure Law 1991, as amended in 2007 and 2012. Some regulations adopted by China’s State Council have relevant provisions for maritime matters, for example, the Regulations on International Maritime Transportation 2001, as amended in 2013 and 2016 and the Regulations on Seamen 2007, as amended in 2013. Some international maritime conventions that the PRC has adopted also apply to Chinese maritime judicial practice, such as the International Convention on Civil Liability for Oil Pollution Damage 1992, the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea 1974 and the Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910.3 1.5 Besides laws, regulations and international conventions, the SPC’s judicial interpretations are also important judicial authorities even though they are not laws in themselves. There are four types of judicial interpretations; “Interpretation”, “Provisions”, “Reply” and “Decision”.4 “Interpretation” refers to SPC’s judicial interpretations on how to apply a certain law or how to apply law to a specific type of case or issue in trial work. “Provisions” refers to the SPC’s regulations or opinions formulated in trial work based on the spirit of legislation: for example, Certain Provisions on Trying Cases Involving Disputes over the limitation of Liability for Maritime Claims 2010.5 “Reply” refers to SPC’s replies to the request from the High People’s Courts and the special courts, e.g. the maritime courts for the opinion on certain questions of law in trial work: for example, the Reply of the Supreme People’s Court on Request for Claim for Recourse Action for Damage to Goods in Carriage of Goods by Sea in Dalian Port Authority v COSCO Dalian International Freight Co Ltd.6 “Decision” refers to SPC’s decisions to amend or repeal the SPC’s judicial interpretations.7 Only the SPC is authorised to publish judicial interpretations and local courts have no such an authority.8 In judicial practice, SPC’s judicial interpretations may be in other forms: for example, the Minutes of the Second National Working Conference on the Trial of Foreign-Related Commercial and Maritime Cases 2005.9 They are also authorities cited in Chinese judicial practice of maritime law.

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Chinese maritime courts and practice

1.6 There are ten maritime courts in China that have been established since 1984. They are in nine coastal cities of Dalian, Tianjin, Qingdao, Shanghai, Ningbo, Xiamen, Guangzhou, Beihai and Haikou, and one in Wuhan along the Yangtze River. The High People’s Courts of the locus in quo were designated as the appellate courts of ten maritime courts. In order to strengthen guidance and supervision of adjudicatory work for maritime cases throughout the country, the SPC set up the Fourth Civil Division for trials and the rehearing of commercial and maritime cases, and for exercising guidance and supervision of the adjudicatory work of all the maritime courts and the appellate courts. The formation of a specialised maritime adjudication system in China is based on the scheme of second instance finality with three levels of courts, including the maritime courts, the High People’s Courts and the SPC. The courts of each level have jurisdiction as the court of first instance, although there has been no maritime case that has been accepted or tried by the SPC as the court of first instance so far. 1.7 The maritime courts deal with actions brought by parties in respect of maritime tort, disputes over maritime contracts and other maritime disputes as provided for by law.10 Furthermore, where the parties to a maritime dispute are aliens, stateless persons, foreign enterprises or organisations who have agreed in writing to be subject to the jurisdiction of a Chinese maritime court, notwithstanding that the place that is actually related to the dispute is not within the territory of the PRC, the said maritime court does have jurisdiction over the dispute.11 In JP Morgan Chase & Co v Sea Stream Shipping Inc,12 both the plaintiff and the defendants were foreign parties in the dispute regarding a ship mortgage registered in London under the law of the Bahamas. However, the plaintiff JP Morgan Chase voluntarily chose to withhold the vessel and institute proceedings in China. The Guangzhou Maritime Court applied the Bahamas Merchant Shipping Act and entered judgment. 1.8 Chinese courts have handled a large volume of the world’s maritime cases. The annual caseload rose from around 100 cases in the early years to more than 20,000 in 2014.13 By end of December 2013, the ten maritime courts had entertained 225,283 cases of all types since 1984 (131,604 first instance cases, 45,646 special maritime cases, 48,033 maritime enforcement cases), and concluded or enforced 215,826 cases (128,776 at first instance, 40,417 at special maritime proceedings, and 46,633 at enforcement), with a value of more than 22 billion US dollars, involving about 70 countries and regions in Asia, Europe, Africa, and North and South Americas. The SPC believes that the goal of building a maritime judicial centre in the Asia-Pacific region has been achieved.14

Inconsistency in adjudication and guiding cases

1.9 China is not a common law jurisdiction, so Chinese maritime judges do not need to consider or follow any other judgments for the same or similar disputes as precedents, even those made by higher level courts such as the SPC. This judicial practice has caused

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inconsistency in Chinese maritime adjudication. In order to harmonise the judicial practice of maritime law, the SPC has taken some measures to unify the standards for maritime adjudication. First, the SPC has formulated a “three-step” judicial interpretation mechanism, namely from research report, to directive opinions, and finally to judicial interpretations. The SPC aims to promulgate one or two judicial interpretations in the field of maritime law each year so as to unify the judicial practice, especially in the areas that are not covered by statute law. Second, the SPC, by information feedback in individual cases, regularly circulates case quality analyses and annual summaries of maritime trials, etc, which has strengthened internal information exchange on adjudicatory work. For example, the ten maritime courts have formed a forum hosted in turn annually, including an adjudication symposium and enforcement symposium to exchange trial experiences, which has acted as a good aid to the voluntary harmonisation of adjudicatory standards and judicial activities. 1.10 Although Chinese judgments are not precedents, the SPC requires that the maritime courts and the High People’s Courts (as the appeal courts of the maritime courts) to submit five to ten cases each year, from which a batch of typical model cases will be selected for exemplification and promotion in the Gazette of the Supreme People’s Court, Selected Cases of the People’s Courts, Guide on Foreign-Related Commercial and Maritime Trial, and its internet publication at .15 The published cases have become important references for maritime adjudication in China. Last but not least, China has established the guiding case system. According to the Provisions of the Supreme People’s Court on Case Guidance Work 2010,16 Chinese courts at all levels shall take the guiding cases published by the SPC as a reference when trying similar cases.17 Under the Detailed Rules of Implementation of the Provisions of the Supreme People’s Court on Case Guidance Work 2015,18 when a Chinese court at any level refers to a guiding case in the adjudication of a similar case, it must quote the guiding case as part of the reasons for judgment/ruling although the guiding case is not to be cited as a basis for judgment/ruling.19 From 2011 to 5 July 2016, the SPC has published 64 guiding cases. Although there are only three maritime cases in these guiding cases, it indicates that the judicial experiences based on the previous judgments will more and more contribute to and influence Chinese maritime judicial practice.