Shipping 2026 Comparisons

Main Domestic Laws

Hong Kong’s maritime and shipping jurisdiction is principally exercised by the High Court, sitting as the Admiralty Court. The foundational legal framework for maritime jurisdiction in 2026 includes:

• High Court Ordinance (Chapter 4) Section 12 defines maritime claims and empowers the High Court to hear actions in rem and in personam, including the arrest of vessels;
• the Rules of the High Court (Chapter 4A), particularly Order 75, govern the admiralty proceedings, such as warrants of arrest and preliminary acts in collision cases;
• Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Chapter 434) implements international conventions (Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the 1996 Protocol (LLMC 1976/1999)) that allow ship-owners and salvors to limit their financial liability;
• Carriage of Goods by Sea Ordinance (Chapter 462) enacts the Hague-Visby Rules into local law, governing cargo claims;
• District Court Ordinance (Chapter 336) grants limited in personam (against the person) jurisdiction for maritime claims within specific monetary limits; and
• other ordinances, including the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Chapter 508) and the Bunker Oil Pollution (Liability and Compensation) Ordinance (Chapter 605).

Common Maritime Claims

High Court

The High Court has unlimited jurisdiction and hears the vast majority of maritime disputes in practice, including:

• proprietary claims regarding possession, ownership or mortgages of a ship;
• damage and collision claims for damage done or received by a ship;
• cargo claims arising from the carriage of goods, loss of cargo or breach of bills of lading;
• ship arrest and judicial sale to secure maritime claims;
• salvage, general average and towage claims;
• wages and disbursements claims; and
• limitation of liability and pollution claims.

District Court

The District Court can hear maritime claims only in personam (not against the ship itself), provided the claim value falls within its jurisdiction limits.

Arbitration

Many shipping disputes – especially charterparty and bill of lading claims – are resolved by arbitration in Hong Kong under the Arbitration Ordinance (Chapter 609). Bodies such as the Hong Kong Maritime Arbitration Group (HKMAG) promote, but do not adjudicate, maritime arbitration.

Port State Control and Marine Casualty Powers

Hong Kong appliesportstatecontrol (PSC) in accordance with the Tokyo Memorandum of Understanding (the “Tokyo MOU”). The competent authority is the Marine Department (MD), which enforces international maritime standards adopted by the International Maritime Organization (IMO).

The MD’s PSC powers derive from the Shipping and Port Control Ordinance (Chapter 313) and a range of Merchant Shipping Ordinances that implement major IMO conventions, including:

• the International Convention for the Safety of Life at Sea (SOLAS);
• the International Convention for the Prevention of Pollution from Ships (MARPOL);
• the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW); and
• the Maritime Labour Convention (MLC).

PSC officers may board foreign vessels in Hong Kong waters to inspect certificates, equipment and crew conditions. Where “clear grounds” exist, the MD may conduct detailed inspections, detain substandard ships and initiate prosecutions. Failure to comply with detention orders or statutory requirements may result in fines and imprisonment.

Marine Casualties and Incidents

Marine accidents and casualties are investigated by the Marine Accident Investigation Section (MAIS) of the MD, in accordance with domestic legislation and the IMO Casualty Investigation Code. Mandatory reporting applies to collisions, groundings, pollution incidents, loss of life, serious injury and dangerous occurrences involving foreign vessels in Hong Kong waters, local vessels and Hong Kong-registered ships worldwide (primarily under Chapter 313 and the Merchant Shipping (Safety) Ordinance (Chapter 369)).

The Director of Marine may conduct a preliminary inquiry, and in serious cases the chief executive may order a marine court, which has powers including suspension or cancellation of seafarers’ certificates.

Pollution, Grounding and Wreck Removal

Under MARPOL-related legislation, pollution incidents must be reported promptly, and enforcement action may follow. Where a vessel is grounded or constitutes a hazard to navigation, the Director of Marine may direct removal, take possession of, or remove or destroy a wreck, with costs recoverable from the owner as a civil debt.

The Merchant Shipping (Registration) Ordinance (Chapter 415) establishes the complete system for registering ships, setting out the eligibility criteria, the registration process and the legal effects of registration.

The Merchant Shipping (Registration) Regulations support the aforementioned ordinance by providing the necessary procedural specifics for applications, surveys and documentation. Registration is influenced by broader maritime laws, such as the Merchant Shipping (Safety) Ordinance (Chapter 369), as a vessel must meet prescribed safety standards before it can be registered.

The Hong Kong Shipping Register, administered by the MD, is responsible for administering the domestic registration of vessels. The Director of Marine serves as the statutory Registrar of Ships, holding the ultimate authority over decisions on registration, the issuance of certificates and the maintenance of the official register. Daily operational responsibilities are carried out by the dedicated Shipping Registry division within the MD.

Vessels registered in Hong Kong are required to be owned primarily by qualified persons, namely:

• Hong Kong identity card (HKID) holders who are ordinarily resident;
• Hong Kong-incorporated companies; and
• non-Hong Kong companies registered in Hong Kong.

Foreign individuals or companies can own vessels registered in Hong Kong, but they must either register as a non-Hong Kong company with the Companies Registry or ensure that a majority interest is owned by one or more qualified persons.

Under Demise Charter registration, vessels owned by foreign owners can be registered in Hong Kong for the duration of the demise charter only if the demise charterer is a qualified person.

A representative person must be appointed for each Hong Kong-registered ship. The person must be either a qualified person and the owner or part-owner of the ship, or a Hong Kong-incorporated company engaging in the business of ship management/agency.

There is no specific provision regarding the registration of a vessel under construction. However, since documents like a builder’s certificate are required for registration, which will not normally be released unless construction is finished, it is practically impossible to meet the registration requirements.

Temporary/Provisional Registration

Provisional registration is available in Hong Kong under the Merchant Shipping (Registration) Ordinance (Chapter 415). This is not a prerequisite for full registration, but a substantive registration for a limited duration, primarily to facilitate the process when original documentation is not immediately available; instead, photocopies or scanned copies of the title documents can be produced at the time of registration. A certificate of provisional registry is valid for one month, and can be extended for up to one more month under justifiable special circumstances.

For local or foreign vessels operating in Hong Kong for a definite, short period, the MD also issues temporary licences for specific operations without requiring full registration (Chapters 548 and 313).

Dual Registration

Hong Kong does not permit dual registration. A ship will cease to be registrable in Hong Kong if it is, or subsequently becomes, registered in any other place outside Hong Kong.

A demise/bareboat charterer can register a ship in Hong Kong but must declare it will not be registered elsewhere while under Hong Kong registration, with this registration being valid for the charter’s duration.

The Registrar of Shipping within the Hong Kong Shipping Registry, operated by the MD, maintains the registration of mortgages. Mortgages are recorded on the ship’s entry in the Shipping Register. If the mortgage is created by a Hong Kong-incorporated company, it must also be filed with the Companies Registry within one month of its creation.

Registration of a mortgage must be in the form “RS/M1 MD 641”, in A3 size. When a ship is provisionally registered, the mortgagee is also required to produce a “Confirmation by Mortgagee” to the Registrar.

A ship mortgage must be executed under the corporate seal of the owning company, in accordance with its constitution. If the mortgage is signed by an attorney in fact, the power of attorney must be produced (original or certified copy), witnessed by a named witness and notarised if executed outside Hong Kong.

If a company does not have a common seal, it must provide a “Declaration of No Seal” made by a director or secretary. This declaration must be sworn in Hong Kong before the Registrar, a justice of the peace, a notary public, a commissioner for oaths or a solicitor; if made overseas, it must be sworn before a notary public. The Registry accepts various forms of corporate seals, including a simple seal marked “(Corporate Seal)” or a legal opinion – or notary statement – confirming that the company is not legally required to have a seal and that the signatory has proper authority to execute the document.

Hong Kong allows public access to ownership and mortgage information recorded on the Hong Kong Shipping Register as it is a public record for transparency on legal ownership and charges.

The Transcript of Register contains the ship’s current and past records including the status of mortgages as entered in the register.

Anyone may request an official Transcript of Register, either certified or uncertified, by completing request forms available on the MD’s website when applying to the Registrar of Shipping and paying the required fee.

Debt Financing

Hong Kong ship finance is predominantly debt driven, typically provided by banks through bilateral or syndicated loans. A typical ship loan or facility outlines the terms of the loan, interest, repayment schedules, and the rights and obligations of both the borrower and the lender. It includes key operative provisions such as:

• representations and warranties, covering ownership of the vessel, validity of security, financial condition, assets and corporate status;
• conditions precedent to drawdown, including delivery of security and insurance documents;
• covenants, requiring compliance with insurance, maintenance and reporting obligations and restricting disposals or changes of ownership;
• events of default, such as non-payment, breach of covenant or insolvency, which allow the lender to accelerate the loan; and
• mandatory prepayment events, including total loss of the vessel or certain changes in ownership, which oblige the borrower to repay the loan immediately, even without a breach.

Equity Financing

While less common for large-scale ship acquisition compared to bank loans due to demanding listing requirements and complex procedures, shipping companies may raise equity through joint ventures, private placements or specialised maritime investment funds. In practice, equity is usually alongside bank debt rather than as a standalone funding source.

Ship Mortgages

The ship mortgage is the primary form of security for lenders. Mortgages over Hong Kong-registered ships are governed by the Merchant Shipping (Registration) Ordinance (Chapter 415) and must be executed in the prescribed statutory form (Form RS/M1). The form can be drafted to secure a wide range of complex financial arrangements such as syndicated loans, multi-currency facilities and hedging obligations.

The mortgage must be registered against the vessel at the Hong Kong Shipping Registry and, if the mortgagor is a company, at the Companies Registry in Hong Kong within one month of creation. Upon default, the mortgagee can take possession of the ship, or sell it either through a private sale or judicial auction via the Admiralty Court to discharge the debt. These remedies are grounded in both the statutory mortgage framework and the contractual terms incorporated into the loan and security documents.

Common Transactions and Other Security Packages (Ancillary Security)

Common transactions include newbuilding and second-hand vessel financing through bilateral and syndicated bank loans. Ship leasing arrangements, particularly finance leases and sale and leaseback, are also prevalent, often used by banks as an alternative to a direct loan for tax or structural reasons.

Beyond the statutory ship mortgage, lenders typically require a comprehensive security package to mitigate risk. This typically includes:

• assignment of vessel insurances and insurance proceeds, such as hull and machinery, P&I and war risks;
• assignment of earnings, freights and charter hire;
• assignment of rights under key contracts such as ship-building contracts, charterparties and management agreements;
• corporate or personal guarantees;
• charges over bank accounts;
• mortgages over shares in the ship-owning special purpose vehicle; and
• floating charges or debentures over other assets of the borrower.

Ship leasing in Hong Kong is increasing, driven by Hong Kong’s tax incentives. The global ship finance landscape has shifted away from traditional European bank lending towards leasing, with Chinese lessors becoming dominant players. This shifts focus from lender/borrower loans to lessor/lessee leases for capital efficiency and asset management, while sale leasebacks offer liquidity and legal frameworks handle defaults differently, favouring lease asset repossession over traditional mortgage enforcement.

There has been a significant shift away from traditional banks towards Chinese leasing houses, Japanese leasing companies, private equity and alternative credit funds. Banks have reduced exposure, creating funding gaps, while leasing offers better funding diversification.

Lessor/Lessee Versus Lender/Borrower

Regarding the lessor/lessee (lease), the lessor owns the asset (ship) and grants use to the lessee for a fee (hire). This is an asset-based financing structure, often with higher loan-to-asset ratios, mitigating obsolescence risk for the lessee (especially with operating leases). Regarding the lender/borrower (loan), the borrower owns the ship and grants a mortgage as security. The lender provides debt, secured by the vessel (mortgage), but does not own the asset.

Differences in Enforcement

Regarding the lease, the focus is on repossessing the leased asset (the ship) under lease terms, which is often faster than mortgage enforcement – and is often governed by English law and arbitration (eg, the LMAA). A mortgage involves court-ordered foreclosure and sale, which is a more complex process – especially with international jurisdictions. This is governed by the Merchant Shipping (Registration) Ordinance (Chapter 415).

In essence, Hong Kong’s pro-leasing policies and global market shifts are making leasing a dominant force, challenging traditional bank lending by offering unique capital and risk management benefits, especially for Chinese owners.

The liability of owners and interested parties for marine pollution and wreck removal is governed by a combination of domestic legislation, which gives local effect to several key international conventions.

Several international conventions concerning marine pollution liability are implemented in Hong Kong through local ordinances. These include:

• MARPOL 73/78 (enacted via the Merchant Shipping (Prevention and Control of Pollution) Ordinance (Chapter 413));
• the International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992 and the Fund Convention 1992 (implemented by the Merchant Shipping (Liability and Compensation for Oil Pollution) Ordinance (Chapter 414)); and
• the Bunker Pollution Convention 2001 (given effect by the Bunker Oil Pollution (Liability and Compensation) Ordinance (Chapter 605)).

Hong Kong has not adopted the Nairobi Wreck Removal Convention 2007, although its registered ships must obtain the required insurance when operating in countries that are party to it. Wreck removal liability is instead addressed by local law, with the Shipping and Port Control Ordinance (Chapter 313) allowing the Director of Marine to order wreck removal.

Liability for marine collisions and salvage is mainly governed by the Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (Chapter 508), which puts international conventions into effect. The overall framework for limiting liability is set out in the Merchant Shipping (Limitation of Shipowner’s Liability) Ordinance (Chapter 434).

Collision

The 1910 Collision Convention (via Chapter 508) divides property damage liability based on fault. Liability for loss of life or personal injury is joint and several. The International Regulations for Preventing Collisions at Sea 1972, which help determine fault, are enforced by the Merchant Shipping (Safety) (Signals of Distress and Prevention of Collisions) Regulations (Chapter 369N).

The LLMC 1976/1996 is implemented through Chapter 434. This allows ship-owners to limit liability for collision claims and related maritime claims based on the vessel’s tonnage, subject to statutory conditions.

Salvage

The 1989 Salvage Convention is implemented through Chapter 508. It governs the rights to salvage reward, criteria for determining salvage remuneration, special compensation for environmental protection and duties of salvors and owners. Contract terms can modify the convention, except for certain mandatory duties.

The 1976 Convention on Limitation of Liability for Maritime Claims was incorporated by the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Chapter 434). Amendments to this Ordinance were made to give effect to the increased limits of liability, as set out in the 1996 Protocol and the subsequent 2012 amendments, in 2015 and 2017, respectively.

The Vienna Convention on the Law of Treaties (1969) (VCLT) only applies as a relevant interpretive aid when construing international treaty-derived regimes, instead of as a treaty. The VCLT is listed in the Hong Kong Department of Justice’s official list of treaties as one of the multilateral agreements in force and applicable to Hong Kong. Although Hong Kong cannot independently accede as a separate treaty party, since China acceded to the VCLT in 1997, China’s treaties can apply to the Hong Kong Special Administrative Region (HKSAR) after consulting the Hong Kong government under Article 153 of the Basic Law.

The Merchant Shipping Ordinance (Chapter 434) governs the process of establishment of a limitation fund. The right to constitute a fund is available to ship-owners, charterers, managers, operators and salvors. The fund’s value is based on the ship’s limitation tonnage (or cargo tonnage for specific claims), plus interest.

The party claiming entitlement to limit starts a limitation action, often by issuing a writ in the court of first instance against potential claimants. The court issues a limitation decree, staying other proceedings and setting a deadline for claims. Payment into court (constituting the fund) is required, acting as the deposit to cover potential liabilities up to the limit. Competing claimants must file their claims within the set period against the fund.

Applicable Domestic Legislation

The requirements of the MLC, 2006, were implemented in Hong Kong in 2018. The primary legislation that incorporates the requirements of the MLC into local law is the Merchant Shipping (Seafarers) Ordinance (Chapter 478) and its associated subsidiary legislation. The requirements include:

• those regarding seafarers’ working and living conditions, such as minimum age, employment agreements, hours of rest, accommodation, food and catering, and repatriation;
• ensuring seafarers hold valid medical fitness certificates; and
• ensuring general health and safety protection and accident prevention on board ships, in compliance with relevant accommodation standards.

Applicable conventions and laws in Hong Kong include:

• Carriage of Goods by Sea Ordinance (Chapter 462) – this ordinance incorporates the Hague-Visby Rules into Hong Kong law, governing carrier liabilities and immunities for goods shipped from Hong Kong or under bills of lading; and
• Bills of Lading and Analogous Shipping Documents Ordinance (Chapter 440) – this statute governs the transfer of rights and title to sue on bills of lading.

The Rotterdam Rules have not been ratified or implemented in Hong Kong.

The lawful holder of a bill of lading has the title to sue the carrier, as established by the Bills of Lading and Analogous Shipping Documents Ordinance (Chapter 440). Hong Kong recognises the transfer of this right through assignment, allowing a party to transfer their right to sue to another. However, the assignee steps into the assignor’s shoes, meaning any limitations (like time bars) remain.

A lawful holder includes the consignee named in the bill of lading, any endorsee to whom the bill has been transferred, and any person who becomes the lawful holder through possession and endorsement.

Assignment of Title to Sue

Hong Kong recognises that sea waybills and ship’s delivery orders confer contractual rights to the person entitled to delivery under Chapter 440. When rights are assigned, the assignee (new holder) can sue in their own name, but they cannot be in a better position than the original holder (assignor).

Hong Kong does not recognise a mere bare contractual assignment of rights under a bill of lading as sufficient to confer statutory title to sue against the carrier. Such assignments may be effective between parties for contractual purposes but cannot override the statutory mechanism.

In Hong Kong, ship-owners’ liability for cargo damage is governed by the Carriage of Goods by Sea Ordinance (Chapter 462), which incorporates the Hague-Visby Rules. Limitation of liability is governed by the Merchant Shipping (Limitation of Shipowners’ Liability) Ordinance (Chapter 434), which implements the LLMC 1976/1996 Protocol.

Under the Hague-Visby Rules, the carrier must provide a seaworthy vessel and properly man, equip and fit holds for cargo. Defences include fire (unless due to owner’s fault), perils of the sea, saving life or property, inherent vice and shipper’s fault. Liability is limited to approximately 670 Special Drawing Rights (SDR)/package or 2 SDR/kg, unless the cargo’s declared value exceeds this limit.

The LLMC allows ship-owners and other entitled parties (charterers, managers, operators) to limit liability based on ship tonnage, creating a limitation fund in the court of first instance. To access the fund, security must be deposited or guaranteed.

Under Chapter 462, the contractual carrier is always subject to the Hague-Visby Rules, while the liability depends on whether the bill of lading or contract extends the carrier obligations to the performing party if the ship-owner is not the contractual carrier. A contractual carrier may attempt to claim LLMC tonnage limits by establishing that they qualify as a “shipowner” under Chapter 434, while cargo claimants may attempt to “break” the package limit by proving fault.

A carrier can sue a shipper for misdeclaration of cargo if the shipper’s inaccurate description causes loss, damage or expense, as this duty is imposed under Chapter 462, incorporating the Hague-Visby Rules. Under Article III, Rule 5 of those Rules, the shipper guarantees the accuracy of cargo particulars and must indemnify the carrier for losses arising from inaccuracies.

There is very little reported Hong Kong case law specifically on misdeclaration claims.

Claims for loss of or damage to cargo against a carrier are generally governed by the Hague-Visby Rules, as applied by the Carriage of Goods by Sea Ordinance (Chapter 462).

A one-year time bar applies to all claims arising under the contract of carriage, running from the date of delivery of the goods or the date when they should have been delivered. The one-year period may be extended only by express agreement, and such agreement must be made after the cause of action has arisen. Courts cannot extend the time bar unilaterally. If no extension is agreed, the claim is extinguished.

If the Hague-Visby Rules do not apply (eg, in certain scenarios not involving a bill of lading or specific types of carriage), limitation is governed by the Limitation Ordinance (Chapter 347). The general time limit is six years from the date the cause of action accrued (eg, the date of breach of contract or the date on which damage occurred in tort).

Claims by carriers against shippers (such as indemnity or misdeclaration claims) are not subject to the Hague-Visby one-year bar falling within the six-year limitation regime.

International Convention

Hong Kong implements the 1952 Arrest Convention via its legislation, extending the UK’s application to Hong Kong.

Domestic Laws

High Court Ordinance (Chapter 4) Section 12A–12E lists specific maritime claims (eg, ownership, charterparty, salvage, crew wages, ship supplies, damage) that bring a ship under the court’s admiralty jurisdiction and govern how the court exercises its jurisdiction, allowing action in rem against the vessel in question – or a sister ship for certain claims.

Rules of the High Court (Chapter 4A) govern the procedural aspects, such as lodging writs, affidavits and warrants for arrest.

Maritime Liens in Hong Kong

Hong Kong recognises traditional maritime liens under common law, typically for:

• damage caused by a ship;
• salvage;
• seamen’s wages;
• master’s wages and disbursements; and
• bottomry (a form of ship/cargo pledge for loans).

Maritime lien for crew injury indemnities?

Crew injury claims generally give rise to maritime claims but not maritime liens. A vessel can be arrested for the claim, but the claim is not fixed to the ship like wages or salvage.

Maritime Liens Versus Maritime Claims

Maritime lien is a proprietary right in rem (against the ship itself) that attaches automatically to the vessel and travels with the ship, surviving change of ownership and ranking ahead of mortgages and most other claims.

Maritime claim is a statutory category of claim that does not attach automatically. Defined under the High Court Ordinance (Chapter 4), it includes a wide range of contractual and statutory claims, allowing action against that specific ship or another of the defendant’s ships, but often defeated by a sale to a new owner. Arrest depends on statutory conditions being satisfied. Liabilities like unpaid charter hire (eg, time or voyage charter) will create maritime claims that allow for ship arrest.

Arrestable Maritime Claims

A vessel may be arrested for maritime liens, and for statutory maritime claims, under Sections 12A–12B of the High Court Ordinance (Chapter 4).

Maritime liens (eg, damage done by a ship, salvage, seamen’s wages, master’s wages and disbursements) attach automatically to the vessel and are enforceable in rem without further ownership conditions.

In addition, a vessel may be arrested for statutory maritime claims, even though these do not constitute maritime liens. These include claims relating to:

• possession or ownership of a ship;
• mortgages or charges over a ship;
• cargo, freight or hire (including loss of or damage to cargo);
• charterparty disputes;
• questions between co-owners as to the possession, employment or earnings of the ship; and
• towage, pilotage, bunkers, port charges and crew claims.

Arrest may be against the offending ship or a sister ship, subject to statutory ownership requirements.

Time Bars and Validity

Maritime liens

These arise immediately when the cause of action occurs and have no fixed time bar. They must be enforced whilst the ship remains a ship to retain priority, and may be lost or extinguished when:

• there is full payment of the underlying debt;
• there is a judicial sale of the vessel;
• the underlying claim becomes time-barred;
• waiver, destruction or abandonment occurs; or
• in case of laches (unreasonable delay), there is a failure to act diligently to enforce the lien, causing prejudice to the other party.

Maritime claims

The right to arrest for statutory claims (like charter hire) requires action within time limits or risks losing priority; this is governed by applicable statutory or contractual limitation periods (one year under the Hague-Visby Rules for cargo claims, six years for charterparty claims, etc). The right to enforce a maritime lien through waiver (relying on owner’s credit and contract terms), laches (unreasonable delay causing prejudice), sale/destruction of the ship or payment will be lost/expired, though specific time limits (often one year for liens; longer for wages) vary by jurisdiction and claim type, with prompt action being vital to avoid extinguishment.

Maritime Liens

The right to arrest for a maritime lien (eg, crew wages, salvage, collision damage) travels with the ship and is enforceable in rem alone. A vessel may be arrested even if the current owner has no personal liability. Neither the owner nor the demise charterer needs to be personally liable in an action in personam at the time of arrest.

Non-Lien Maritime Claims

For all other maritime claims under Section 12A of the High Court Ordinance (Chapter 4) (eg, charterparty disputes, cargo claims, necessaries, towage, pilotage), arrest depends on satisfying the statutory in rem requirements. The claimant must show that the person liable in personam was, when the cause of action arose, the owner, charterer, or in possession or control of the ship, and is, when proceedings are commenced, the beneficial owner (as to all shares) or demise charterer of the ship to be arrested, including in the case of a sister-ship arrest.

Under Section 12A-B of the High Court Ordinance (Chapter 4), a bunker supplier may arrest a vessel for unpaid bunkers, subject to satisfaction of the statutory in rem requirements.

Contractual suppliers (ie, the party that contracted with the owner or charterer) will usually have standing to arrest, subject to the statutory ownership/control requirements.

An actual or physical supplier who has no contract with the owner/demise charterer (eg, supplied through an intermediary trader) cannot arrest the vessel unless it can show the owner/demise charterer is personally liable, since Hong Kong does not recognise a maritime lien for necessaries.

Where bunkers are ordered by a time or voyage charterer, arrest of the vessel is usually not available, because a time or voyage charterer is not the beneficial owner or demise charterer at the time proceedings are commenced. Therefore, a time charterer does not have authority to create a lien or bind the vessel itself merely by ordering necessaries. Arrest may nevertheless be possible if the charterer later becomes the beneficial owner of the vessel or a sister ship, or where the charter is a demise (bareboat) charter.

Governed by Order 75 of the Rules of the High Court (Chapter 4A), the following documents must be filed with the court to obtain a warrant of arrest:

• a writ of summons for an action in rem identifying the vessel;
• a praecipe for the service of a writ and for the warrant of arrest;
• a warrant of arrest;
• an affidavit or affirmation setting out the nature of the claim, confirmation that the claim falls within Section 12A–12B of High Court Ordinance and the vessel is within Hong Kong jurisdiction, the ship’s details, the basis for the right to arrest, address ownership/control and full disclosure of all material facts; and
• an undertaking by the claimant’s solicitors to the bailiff to cover all costs and expenses incurred during the arrest, custody and release of the vessel.

Additionally, a search of the caveat book for any existing caveats against arrest must be conducted before the warrant is issued.

Document Specifics

Power of attorney is not mandatory. Original documents, or the notarised or apostilled certification of these documents, are not required for arrest. Scanned or certified copies are routinely accepted. Documents require translation only if they are not in English or Chinese. If they are in a foreign language, a translation should be provided, and it does not need to be sworn/notarised at the arrest stage.

Security Deposit

The arresting party is not required to provide a security deposit or any form of counter-security to the court itself as a condition of arrest. However, an undertaking to the bailiff is required to pay the costs and expenses for the arrest, custody and preservation of the vessel. The bailiff will normally require an initial deposit on account of these expenses after the arrest.

Freight may be arrested, as freight is recognised as arrestable property under admiralty jurisdiction where it is payable to the person liable in personam and is identifiable within the jurisdiction. By contrast, although arresting bunkers is not theoretically impossible, bunkers are not expressly recognised as independently arrestable property in Hong Kong; therefore, bunker-only arrest is generally impractical. Bunkers may only be caught incidentally upon arrest of the vessel itself, and only while they form part of the ship.

In practice, claimants typically arrest the vessel as primary security or seek alternative remedies such as injunctions, while Hong Kong law provides a clear mechanism for arresting freight directly in appropriate cases.

A claimant may arrest a sister-ship only if:

• the claim is a maritime claim; and
• the same person who was liable in personam for the claim (i) was the beneficial owner (as to all shares) or demise charterer of the offending ship when the cause of action arose, and (ii) is the beneficial owner (as to all shares) or demise charterer of the sister-ship at the time the writ in rem is issued.

Important Considerations

Only one vessel can be arrested per claim, even though multiple ships can be named in the in rem writ. The claimant must prove identical beneficial ownership of both vessels. Hong Kong does not allow arrest of an “associated ship”. Time charterers and voyage charterers do not qualify.

Besides ship arrests, Hong Kong courts offer other possibilities of obtaining attachment orders to obtain security.

Mareva (Freezing) Injunctions

These restrain a defendant from removing or dissipating assets, in order to preserve assets pending judgment or arbitration. They can cover assets domestic or worldwide (eg, bank accounts, receivables, shares, properties).

Plaintiff must show and provide:

• a good arguable case and full disclosure;
• a real risk of dissipation or removal of assets; and
• almost invariably, an undertaking to compensate the defendant if the injunction is wrongly granted.

Attachment/Garnishee Proceedings

These allow a claimant to attach debts owed to the defendant by third parties (eg, freight or charter hire), most commonly post-judgment, thereby creating security.

Interim Injunctions Over Specific Property

The court may restrain dealings with identifiable property (such as cargo, bunkers, or sale proceeds) located within Hong Kong to preserve it pending determination of the dispute.

Security in Arbitration

Arbitral tribunals can order security for a claim, including requiring security for unliquidated claims. A party involved in maritime arbitration can apply to the court for an order to arrest a vessel to obtain security for their claim. This ensures that if the claimant wins the arbitration, there will be assets available to satisfy the award.

Security for Costs

This refers to a procedural order requiring a claimant to provide security for the defendant’s legal costs where there is a risk of non-recovery, rather than security for the substantive claim.

P&I club letters of undertaking (LOUs) are commonly accepted by the court as security for releasing an arrested vessel, but acceptance is subject to the claimant’s consent. While the court facilitates release, it will not compel acceptance if the claimant objects as the LOU remains a private agreement instead of a direct court bond.

If the claimant does not accept the P&I LOU, the defendant can offer alternative security, such as depositing funds directly with the court, obtaining the claimant’s agreement on alternative security or applying to set aside an improper arrest. Security must usually cover the claim, interest and estimated costs.

Foreign bank guarantees are also acceptable if unconditional, irrevocable, payable on demand, issued by a reputable bank and enforceable in Hong Kong.

The judicial sale process in Hong Kong generally involves the following steps.

• After a vessel is arrested in rem, any interested party (often the arresting party or mortgagee) may apply to the High Court for an order for the vessel’s appraisement and sale. This is often done if circumstances warrant – eg, the ship is a “wasting asset”, with its value diminishing due to ongoing maintenance costs.
• Once the court grants the order, the claimant must file a praecipe for a commission of appraisement and sale. The court’s bailiff determines the appraised value, and executes the selling by public auction or inviting sealed bids (private tender).
• The gross proceeds from the sale are paid into court and held in a deposit account pending the resolution of all claims and the determination of their priority.
• The court determines the order of priority for all claims against the proceeds. Once priorities are agreed upon or determined by the court, the funds are paid out to the relevant parties. The buyer will be granted a clean title, free from all prior claims, liens and encumbrances.

Private Sale

A private sale is only permitted if it is conducted under the authority and supervision of the court, and when it is clearly in the best interest of all claimants, with a credible offer that likely exceeds auction value.

Liability for Maintenance

The arresting party is liable for funding the expenses of maintaining the vessel from the moment of arrest until its sale by the court. The arresting party’s solicitors must provide an undertaking to the court’s bailiff to cover all such costs (eg security, port charges, insurance, crew, bunkers). These expenses are given the highest priority and are reimbursed first from the proceeds of the judicial sale.

Priority Ranking of Claims

Hong Kong follows traditional English Admiralty priorities:

• bailiff’s costs for arrest, preservation and sale of the vessel (including a 1% commission on the gross sale proceeds);
• recoverable legal costs of the arresting party up to and including the arrest;
• maritime liens;
• mortgages;
• statutory liens; and
• unsecured claims (non-maritime debts).

Priority of the Mortgage

Maritime liens outrank mortgages. This means that claims for crew wages, salvage and collision damage will be satisfied from the sale proceeds before a registered mortgagee. The mortgage claim instead outranks most non-lien maritime claims.

Hong Kong has no statutory corporate rescue regime equivalent to Chapter 11 of the US Bankruptcy Code. Its corporate insolvency framework primarily comprises schemes of arrangement and provisional liquidation.

A scheme of arrangement is a court-supervised compromise between a company and its creditors, and requires approval by a specific majority of creditors. It does not automatically impose a stay on proceedings, meaning a dissenting creditor can still pursue winding-up action unless all major creditors agree to an informal standstill. Provisional liquidation is primarily a protective mechanism and, although sometimes used to facilitate restructuring discussions, does not amount to a debtor-in-possession rescue regime.

The Hong Kong maritime court may order the arrest and judicial sale of a vessel owned by owners that are under Chapter 11 proceedings in the USA. Admiralty proceedings are brought in rem against the vessel itself, and a foreign insolvency stay does not automatically bind Hong Kong courts. While Hong Kong courts may recognise and assist foreign insolvency proceedings at common law, such recognition is discretionary and does not necessarily preclude vessel arrest or sale unless a specific stay is granted by the Hong Kong court.

Damages for wrongful arrest are awarded only if the arresting party acted maliciously, in bad faith or with gross negligence, or shows a deliberate abuse of process.

The 1974 Athens Convention governs carrier liability for passenger injury, death and luggage, and the LLMC 1976/1996, which provides a mechanism for ship-owners to limit their overall liability based on a ship’s tonnage, is incorporated into Hong Kong law through the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Chapter 434).

Other relevant domestic laws include the Control of Exemption Clauses Ordinance (Chapter 71), which prohibits carriers from excluding liability for death or injury due to negligence, and the Fatal Accidents Ordinance (Chapter 22) for the death of a passenger.

An action for damages related to a passenger’s death or injury, or loss or damage to luggage, must be filed within a two-year time limit.

Limitations on Liabilities

Under Chapter 434, liability for death or personal injury is limited to 175,000 SDRs per passenger, multiplied by the ship’s authorised passenger capacity. Separate limits apply to different types of luggage. A ship-owner or any person liable for maritime claims may limit liability by reference to the vessel’s tonnage unless the loss was a result of the owners’ intentional or reckless actions with knowledge of the probable outcome.

Chapter 434 also allows the constitution of a limitation fund under the admiralty jurisdiction of the Hong Kong Court of First Instance. Claims for indemnities for passenger personal injury are generally considered maritime claims instead of maritime liens.

Hong Kong courts recognise law and jurisdiction clauses in bills of lading. A properly incorporated jurisdiction or arbitration clause in a bill of lading will almost always be upheld, unless the resisting party shows strong cause such as unreasonable enforcement or serious injustice. Properly incorporated clauses bind third-party bill holders. Arbitration clauses are also routinely enforced under the Arbitration Ordinance (Chapter 609).

Hong Kong courts recognise and enforce law and arbitration clauses in a charterparty when they are properly and effectively incorporated into a bill of lading. Incorporation requires clear, specific and express wording demonstrating an intention to include the dispute resolution clause (eg, “all terms, conditions and arbitration clause of the charterparty are incorporated”). Once validly incorporated, the clause binds third-party bill holders, including consignees and endorsees.

However, incorporation will not be effective if it is ambiguous, where the charterparty is not identifiable or where it does not show clear intention to incorporate the specific arbitration clause.

The 1958 New York Convention is applicable in Hong Kong because the PRC has extended its application to the HKSAR. The Convention is implemented domestically by the Arbitration Ordinance (Chapter 609). Therefore, foreign arbitral awards made in other Convention states are recognisable and enforceable in Hong Kong. However, awards from Mainland China are excluded from the Convention regime and are enforced under a separate statutory arrangement reflected in the Ordinance.

Hong Kong courts will generally order the arrest of a vessel or grant security where the claim is subject to foreign arbitration or a foreign court jurisdiction clause, provided the statutory requirements for arrest are met. Arrest is a procedural, protective remedy based on the court’s admiralty jurisdiction over the underlying statutory maritime claim, not an attempt to enforce an arbitral award.

Claimants may therefore commence an in rem action and obtain arrest or security for claims (eg, under a charterparty or for necessaries), provided statutory requirements are met. The existence of a foreign arbitration or jurisdiction clause must be fully disclosed on the arrest application. The clause does not bar arrest, but allows the ship-owner to apply for a stay of the Hong Kong proceedings in favour of the agreed forum, usually after security has been provided. Hong Kong courts are consistently pro-arrest and pro-arbitration, using arrest to support, not undermine, foreign dispute resolution.

HKMAG is a non-profit body of maritime and commercial professionals focused solely on maritime dispute resolution, offering tailored procedures. HKMAG has its own maritime arbitration rules, adapted from internationally recognised standards (eg, the London Maritime Arbitrators Association rules) and tailored for use in Hong Kong under Hong Kong’s arbitration law.

Despite not being exclusively maritime-focused, other institutions like the Hong Kong International Arbitration Centre (HKIAC) can also administer maritime or commercial arbitrations. Hong Kong supports maritime arbitration, with courts able to grant interim measures for HKMAG and HKIAC-administered arbitrations under a specific arrangement with Mainland China.

If the parties have agreed an exclusive foreign jurisdiction clause, the court will generally grant a stay of proceedings unless the claimant shows strong cause. If the claimant brings proceedings in Hong Kong despite an arbitration agreement, the defendant can apply for a stay under the Arbitration Ordinance (Chapter 609), which generally mandates staying proceedings to give effect to arbitration agreements provided there is a valid arbitration agreement and the dispute falls within its scope. Anti-suit injunctions are available for both cases.

Hong Kong offers specific tax advantages for maritime owners under the Inland Revenue Ordinance (IRO). Profits derived from the international operation of ships (including carriage and chartering) by Hong Kong-resident operators are exempt from profits tax. Only Hong Kong-sourced shipping profits could be taxable under the territorial system, and exempt sums require a substantial activities test (adequate activities, employees and expenditure in Hong Kong). Hong Kong flag registration brings no standalone tax benefit.

While Hong Kong does not have “tonnage tax” or accelerated depreciation, many ship-owners achieve an effective 0% Hong Kong profits tax rate in practice.

Performance of a shipping contract, such as late delivery, non-arrival of a chartered vessel, or slow ratio of loading or discharging is very rarely excused.

Force Majeure

Force majeure is purely contractual; it is not recognised as a free-standing doctrine. A party can only rely on it if the contract contains an express force majeure clause.

Non-performance may only be excused when the event falls within the wording of the clause – eg, “Acts of God” (natural disasters), war, embargoes or government actions. The non-performing party must demonstrate that they fulfilled the mitigation requirements.

Frustration

When no force majeure clause is applicable to cover the event, frustration discharges the contract when a supervening event occurs after the contract is formed, without the fault of either party, which was unforeseen and fundamentally changes the nature of the contract. However, the threshold for frustration is very high. The event must render performance impossible, or transform the obligation into something radically different from what was agreed. Mere late delivery/slow loading, increased cost or non-arrival due to operational or commercial reasons does not frustrate a shipping contract.

Hong Kong has implemented domestic regulations that align with, and in some respects preceded, IMO 2020. Under the Air Pollution Control (Fuel for Vessels) Regulation (Chapter 311AB), vessels sailing or at berth within Hong Kong waters must use fuel with a maximum sulphur content of 0.5% by weight, or approved alternatives. Use of equivalent compliance methods such as scrubbers is permitted with approval from the authorities.

In addition, the Merchant Shipping (Prevention of Air Pollution) Regulation (Chapter 413P) gives effect to MARPOL Annex VI, including the IMO “carriage ban” that prohibits the carriage of non-compliant fuel oil (sulphur content above 0.5%) for combustion purposes unless the vessel is fitted with an approved equivalent arrangement.

Enforcement is carried out by the Environmental Protection Department (EPD) through inspections, document checks and fuel sampling. Non-compliance may result in fines and imprisonment.

Hong Kong does not incorporate or recognise unilateral international trade sanctions imposed by foreign governments such as the US, EU or UK. Only sanctions mandated by the United Nations Security Council (UNSC) are given domestic legal effect, implemented through subsidiary legislation under the United Nations Sanctions Ordinance (Chapter 537) and related ordinances.

Unilateral foreign sanctions have no legal force in Hong Kong, and Hong Kong courts and authorities do not enforce them as a matter of law. While the courts may take the practical commercial effects of foreign sanctions into account as facts, they do not treat such sanctions as legally binding within the jurisdiction.

Hong Kong therefore has not imposed Russia-specific sanctions arising from the war in Ukraine, as no UNSC sanctions exist. The main impact on Hong Kong businesses is indirect, stemming from the extraterritorial reach of foreign sanctions regimes.

Limited licensing and exemption mechanisms exist under Hong Kong’s UN-based sanctions framework, administered by the relevant authorities, to authorise activities otherwise prohibited under domestic sanctions legislation.

International conflicts such as the war in Ukraine or the Red Sea crisis can have significant legal and commercial impacts in Hong Kong, particularly for shipping, trade and insurance, but their legal consequences are often fact- and contract-specific.

Frustration is exceptional under Hong Kong law. Increased costs, longer routes (eg, diversion via the Cape of Good Hope) or war-related delays will not normally frustrate shipping or carriage contracts unless performance becomes impossible or the delay defeats the contract’s entire commercial purpose.

More commonly, parties rely on express contractual mechanisms, including war risk and force majeure clauses (eg, the BIMCO War Risks Clause for Time Charter Parties (CONWARTIME)/War Risks Clause for Voyage Charter Parties (VOYWAR)), which may justify deviation, suspension or termination and allocate responsibility for additional costs and war risk premiums.

Conflicts also trigger insurance implications, including increased war risk premiums and disputes over coverage. Constructive total loss typically arises only in insurance contexts involving prolonged detention, capture or deprivation, rather than ordinary delay or cargo deterioration.

For Hong Kong businesses, the practical impact is higher costs, delivery disruption, insurance complexity and increased disputes, underscoring the importance of careful contract and insurance review.

There is no relevant legal information that has not been dealt with in the foregoing sections.

*The contents of this publication are provided for general information and reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.

In research, artificial intelligence tools were used. All legal analysis, interpretation and conclusions were independently reviewed and approved by the author(s), exercising their own professional judgement.