The following articles in the Special Maritime Procedure Law of the People’s Republic of China (PRC) establish the authorities of both maritime and appellate courts:
There are 11 maritime courts in the PRC. In practice, maritime and shipping claims are generally categorised into claims of maritime tort, maritime contract, maritime lien, marine insurance, ship ownership/possessory lien/mortgage, salvage, general average, and other claims as stipulated by law.
The appellate courts for these claims are the Higher People’s Courts of the provinces where the maritime courts are located. Those Higher Courts can also entertain maritime/shipping claims as courts of first instance with an amount equal to or above CNY5 billion or which have a major impact in that area (although there is no clear standard for “major impact”). In that scenario, the Supreme People’s Court will be the appellate court for those cases.
The PRC is a member of the Tokyo Memorandum of Understanding on Port State Control in the Asia-Pacific Region. The Maritime Safety Administration and its branches (MSA) are the port state control authorities in the PRC. The MSA is responsible for maritime safety supervision on vessels registered outside mainland China.
Where the MSA notices serious deficiencies affecting the seaworthiness of the vessel or the crew’s safety or causing damages to the marine environment, they will detain the foreign ship, and that ship may not be permitted to leave the PRC port until the deficiencies are rectified.
In cases of marine casualties, such as grounding, pollution, and wreck-removal, the MSA are responsible for effecting emergency response and developing/implementing plans according to the circumstances. The MSA’s above responsibilities apply to seafarers’ casualties caused by marine casualties.
When possible, the MSA will also attend on board to undertake investigations of the marine casualties and issue investigation reports in which the cause and liability of the marine casualties will be analysed and determined. The MSA will release their investigation reports to the public through their websites. The MSA’s above responsibilities also apply to seafarers’ casualties caused by marine casualties.
Domestic Legislation Applicable to Ship Registration
For registration of vessels other than fishing vessels, the Regulations of the PRC Governing the Registration of Ships shall apply.
For registration of fishing vessels, the Measures of PRC on the Registration of Fishing Vessels shall apply.
Competent Authority of Ship Registration
The Ministry of Transport and the MSA handle the registration of vessels other than fishing vessels.
The Ministry of Agriculture and the affiliated fishery administration handle the fishing vessels’ registration.
As a general rule, the vessels owned by domestic individuals and/or enterprises can be registered at the ship registration authorities. If an enterprise possessing foreign capital is registering a vessel, it is required that the domestic capital be no less than 50% of the whole.
As an exception, PRC authorities will accept those registrations of international trading vessels filed by those China-invested enterprises or foreign-invested enterprises that are established in the free trade zones in accordance with PRC law, and those filed by the wholly foreign-owned enterprises and wholly Hong Kong-Macao-Taiwan-owned enterprises that are established in accordance with the regime of free trade zones specified by the State Council. The international trading vessels registered under this exceptional rule shall sail international routes and/or Hong Kong, Macao and Taiwan routes only.
Furthermore, from 5 May 2022, for vessels registered in Hainan free trade port, if they will carry out the service only within the Hainan free trade zone, there is no requirement for the minimum limit of domestic capital.
For the ownership registration of fishing vessels, domestic ownership is required.
PRC law permits the registration of vessels that are still under construction.
PRC law permits the temporary registration of vessels.
For vessels other than fishing vessels, temporary registration can be granted, and a temporary certificate of ship’s nationality can be obtained in the following circumstances:
For fishing vessels, normally the temporary registration of the ship’s nationality will be granted by the ship registration authority if the fishing vessel is bareboat-chartered from abroad. If the ship’s nationality certificate is lost or missing overseas, temporary registration may also be granted.
Dual nationality of a vessel is banned under PRC law.
The mortgage of a ship may be registered in the MSA where the port of registry is located.
The following documents are required for registering a mortgage:
In registering the mortgage of a ship under construction, except as provided for in the first four points above, an affidavit by the mortgagor shall be submitted, warranting that the ship is not registered for mortgage in other ship registration authorities, nor that any law or regulation prohibits the ship from being mortgaged.
The ship ownership and mortgages’ registry in the PRC is available to interested parties.
Apart from the owners, the following entities and persons may apply to the competent authority to view the ship registration file as interested parties:
For the purpose of viewing the ship registration file, the following documents shall be submitted:
From 9 September 2022, the mortgage information of Chinese registered vessels can be accessed publicly on the website of the Maritime Safety Administration.
The following are the applicable international conventions and relevant laws which have been ratified by the PRC and will impact upon the liability of owners and interested parties in events of pollution and wreck removal:
The following international conventions and relevant laws have been ratified by the PRC and will impact the liability of owners and interested parties in events of collision and salvage:
The 1976 Convention on Limitation of Liability for Maritime Claims is not applicable in PRC jurisdiction. The Maritime Code of the PRC, as a domestic legislation, applies in this regard, and its specific provisions are set out as follows:
Article 207 states:
“Except as provided otherwise in Article 208 and 209 of this Law, the person liable may limit his liability in accordance with the provisions of this Chapter, whatever the basis of liability may be, with respect to the following maritime claims:
(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 occurring on board or in direct connection with the operation of the ship or with salvage operations, as well as consequential damages resulting therefrom;
(2) Claims in respect of loss 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 loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations;
(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.
All the claims set out in the preceding paragraph, in whatever way they are lodged, may be entitled to limitation of liability. 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 limitation of liability of this Article.”
Article 208 states:
“The provisions of this Chapter shall not be applicable to the following claims:
(1) Claims for salvage payment or contribution in general average;
(2) Claims for oil pollution damage under the International Convention on Civil Liability for Oil Pollution Damage to which the PRC is a party;
(3) Claims for nuclear damage under the International Convention on Limitation of Liability for Nuclear Damage to which the PRC is a party;
(4) Claims against the ship-owners of a nuclear ship for nuclear damage;
(5) Claims by the servants of the ship-owners or salvor, if under the law governing the contract of employment, the ship-owner or salvor is not entitled to limit his liability or if he is by such law only permitted to limit his liability to an amount greater than that provided for in this Chapter.”
Articles 210 and 211 regulate the calculation of limitations of liability, which is generally identical to the limitation level regulated by the 1976 Convention on Limitation of Liability for Maritime Claims.
The PRC sets a relatively low standard for limitations of liability for ships with a gross tonnage ranging from 20 tons to 300 tons and those exceeding 300 tons but engaged in domestic transport services and other coastal works.
Application for the constitution of a limitation fund can be made before or during litigation proceedings, but no later than the issuance of the first-instance judgment.
The court will notify known interested parties and make an announcement to unknown interested parties via public media within seven days after the application.
Announcement of the constitution shall be produced in public media for three days consecutively; the announcing period is 30 days from the last announcement.
Notified parties can raise dissension against the constitution within seven days upon receipt of the notice; parties not notified can raise dissention against the constitution within 30 days from the last announcement date.
The court’s decision shall be made within 15 days upon receipt of dissension against the constitution. The time limit to appeal against the court’s decision is seven days upon receipt. The Appeal Court’s decision on dissension is 15 days upon receipt.
If no dissent is received, the court will permit the constitution within 30 days from the last announcement made on public media.
The creditor’s registration period against the limitation fund is 60 days, beginning from when the last announcement is made.
The ship-owner, charter, operator, salvor and insurer may apply to the maritime court to constitute a limitation fund.
Cash or a guarantee shall be made available for the fund within three days after the court’s decision to allow constitution, otherwise the application will be treated as withdrawn. A limitation fund is successfully constituted by a successful cash deposit or guarantee.
Seafarers’ Safety and Owners’ Liability
The Maritime Labour Convention 2006 is applicable in the PRC (except Hong Kong and Macau).
The following main domestic laws and regulations have been ratified by the PRC in regard to seafarers’ rights and safety:
The laws and regulations applicable to the carriage of goods by sea and bills of lading (B/L) in the PRC are:
The PRC is not a party to the Hague Rules (except Hong Kong and Macau), the Hague-Visby Rules (except Hong Kong), the Hamburg Rules, or the Rotterdam Rules.
The shipper, the lawful holder of the B/L, and the carrier have the title to sue.
The Shipper
In PRC law, “shipper” means both the contractual shipper who concludes the contract of carriage of goods by sea with the carrier and the actual shipper who delivers the goods to the carrier.
The contractual shipper has the title to sue the carrier directly under the contract of carriage of goods by sea. The B/L serves as evidence of the contract.
The actual shipper who holds the original “to-order” B/L, even if their name is absent from the B/L, is still entitled to sue the carrier. The Supreme Court held that the actual shipper who holds the straight B/L also has the right to sue the carrier for the delivery of the goods without the original B/L in the case: (2016) Supreme Court Min Shen No 2284.
The Holder of the Bill of Lading/Consignee
The lawful holder of the B/L has the right to sue the carrier under the B/L.
The Carrier
The contractual and actual carriers have the title to sue the shipper under the contract of carriage of goods by sea and the B/L.
Ship-Owner’s Liability
The ship-owner, whether it is a contractual or actual carrier, shall be liable for the loss of or damage to the goods during the period in which the carrier is in charge of the goods (with the exception stipulated in Article 51 of the Provisions of Delivery of Goods without B/L) and the loss caused by the delay in delivery within the time expressly agreed upon, if any; in general, the ship-owners (two types of carriers) should:
However, the actual carrier may not have the obligation to issue the B/L or deliver the cargo, subject to their charterparty with the charterers. In addition, the contractual carrier shall be responsible for the entire carriage, while the actual carrier is responsible for their segment only. They can both seek recovery from each other under Article 65 of the CMC.
Limitation of Liability for Cargo Damages
Article 56 of the CMC states:
“The liability of the carrier for the loss resulting from loss of or damage to goods shall be limited to an amount equivalent to 666.67 Units of Account per package or other shipping unit, or 2 Units of Account per kilogram of the gross weight of the goods lost or damaged, whichever is the higher, except where the nature and value of the goods had been declared by the shipper before shipment and inserted in the bill of lading, or where a higher amount than the amount of limitation of liability set out in this Article had been agreed upon between the carrier and the shipper...
Where the article of transport is not owned or furnished by the carrier, such article of transport shall be deemed to be one package or one shipping unit.”
According to Article 61, the above limitation of liability applies to both the contractual and the actual carrier.
In addition, according to Articles 204 and 207, except for the unit limitation of limitation for the carrier, the ship-owner (including the charterer and the ship operator) and the salvor could be protected by the limitation of liability for maritime claims stipulated in Article 210 of the same law.
However, the carrier or the person liable will not be entitled to the benefit of limitations of liabilities stipulated in Articles 56 and 207 if the loss, damage or delay in delivery of the goods resulted from an act or omission of the carrier or the person which was done with the intention to cause that loss, damage or delay, or recklessly and with the knowledge that such a loss, damage or delay would probably result under Articles 59 and 209.
“A person liable” in Article 209 refers to the person themself and does not include their servant and agent. Therefore, the ship-owner is still entitled to benefit from the limitation of liability for a maritime claim if it is proved that the loss, damages or delay in delivery of goods resulted from the wilful or reckless acts of the Master, crews or agent, rather than themself.
The shipper shall indemnify the carrier against any loss resulting from the misdeclaration of general and dangerous cargo.
In practice, for general cargo, in order to lodge a successful claim, the carrier needs to prove that the damage was caused by the fault of the shipper or their servant or agent.
However, for dangerous goods, the court would normally apply the principle of strict liability. Per the case (2016) Supreme Court Min Shen No 1271, the Supreme Court held that, for dangerous cargo, if:
the shipper shall be liable for the loss or damage resulting from the misdeclaration of dangerous cargo.
Time Bar
The time limit for bringing a claim against the carrier for damaged or lost cargo (either for breach of contract or in tort) is one year, counting from the day on which the goods were delivered or should have been delivered by the carrier and within the limitation period or after the expiry thereof. If the person allegedly liable has brought a recourse claim against a third party, that claim has a time limit of 90 days, counting from the day on which the person claiming for the recourse settled the claim, or was served with a copy of the claim documents by the court.
Extension, Suspension and Discontinuance
The time limit for actions for maritime disputes cannot be extended by agreement. It can be suspended or discontinued pursuant to the CMC.
Regarding suspension, Article 266 states: “Within the last six months of the limitation period if, on account of force majeure or other causes, the claims could not be made, the limitation period shall be suspended. The counting of the limitation period shall be resumed when the cause of suspension no longer exists.”
Regarding the discontinuance, Article 267 states: “The limitation of time shall be discontinued as a result of the claimant bringing an action or submitting the case for arbitration or the admission to fulfil obligations by the person against whom the claim was brought. However, the limitation of time shall not be discontinued if the claimant withdraws his action or his submission for arbitration, or if his action has been rejected by a decision of the court... The limitation period shall be counted anew from the time of discontinuance.”
The PRC has not participated in any international convention regarding the arrests of vessels. The domestic laws that cover vessel arrests in China are:
PRC law differentiates between maritime liens and maritime claims. The following maritime claims are entitled to maritime liens:
However, claims for oil pollution damage caused by a ship carrying more than 2,000 tons of oil that has a valid certificate attesting that the ship has oil pollution liability insurance coverage or other appropriate financial security are not within the scope of the above-mentioned maritime liens.
The following maritime claims are entitled to require the arrest of a ship:
A ship can be arrested regardless of its owners’ or demise charterers’ personal liability on the merits constituting a recognised maritime lien on the ship. Even if the ship’s ownership has changed, the ship can be arrested within the time limit to exercise a maritime lien.
A bunker supplier is entitled to arrest a vessel for unpaid bunkers, and there is no difference whether it is a contractual or an actual supplier.
However, if the bunkers were supplied to a chartered vessel and the bunkers were ordered by the charterer and not by the owner, things will be different. A vessel operated or chartered by a time charterer or voyage charterer may not be arrested.
A time charterer shall be entitled to give master instructions consistent with stipulations of time charter with respect to the operation of a vessel. However, a voyage charterer is not considered to have the authority to bind a vessel.
The following formalities are required to arrest a ship:
These documents shall be duly notarised and legalised:
The court always requires the applicant to lodge a counter-security in the case of a wrongful arrest.
The applicant is entitled to arrest bunkers. However, it is very difficult to enforce such an arrest, due to complex customs formalities, safety, and storage requirements, etc.
The applicant is entitled to apply for a court order to preserve the freight for due debts.
The maritime court may arrest a sister vessel which is owned, at the time of arrest, by the ship-owner, the demise charterer, the time charterer or the voyage charterer who is liable for the maritime claim, except for claims related to the ownership or possession of the vessel.
The applicant may apply for the arrest of cargo, or property preservation against the respondent’s real estate or other assets.
The owner or any interested party may lodge a satisfied security to release the vessel. The court only accepts security lodged in cash or a Letter of Undertaking (LOU) issued by a domestic bank or insurance company or any other entity they deem appropriate. Nonetheless, the ship-owner or the interested party is at liberty to negotiate the security with the applicant. In the event that the applicant agrees to accept a club LOU or a foreign bank’s guarantee, the court may release the vessel.
A judicial sale of an arrested ship must follow the steps set out below:
While the ship is under arrest, the ship-owner or bareboat charterer is liable for maintaining the ship until it has been sold by the court.
After being sold by auction, the payment sequence is:
The PRC has its Enterprise Bankruptcy Law, which provides that all bankruptcy cases shall be submitted to the Intermediate People’s Court instead of the maritime court. According to the Interpretations to the Civil Procedure Law and the Interpretations to the Special Maritime Procedure Law, the Intermediate People’s Court may request the maritime court to assist in the arrest and/or auction of the vessel owned by owners that are under bankruptcy proceedings. However, the enforcement of such a request or arrest is subject to communication and co-ordination between the courts.
The applicant shall indemnify the respondent for the wrongful arrest of a vessel. It is clear that the arrest is wrongful if the applicant loses in the substantive proceeding. In other scenarios, it is subject to the court’s discretion.
The Applicable Laws and Conventions to the Resolution of Passenger Claims in China
The applicable laws and conventions are as follows:
Time Bar
Article 258 of the CMC states:
“The time limit for bringing a claim against the carrier with regard to the carriage of passengers by sea is two years, counting respectively as follows:
(1) Claims for personal injury: counting from the day on which the passengers disembarked or should have disembarked;
(2) Claims for death of passengers that occurred during the carriage period: counting from the day on which the passenger should have disembarked; whereas those for the death of passengers that occurred after the disembarkation but resulted from an injury during the carriage period by sea, counting from the day of the death of the passenger concerned, provided that this period does not exceed three years from the time of disembarkation;
(3) Claims for loss of or damage to the luggage: counting from the day of disembarkation or the day on which the passenger should have disembarked.”
Limitation of Liabilities for a Ship-Owner
Article 117 of the CMC states:
“Except the circumstances specified in paragraph 4 of this Article, the limitation of liability of the carrier under each carriage of passengers by sea shall be governed by the following:
(1) For death of or personal injury to the passenger: not exceeding 46,666 Units of Account per passenger;
(2) For loss of or damage to the passengers’ cabin luggage: not exceeding 833 Units of Account per passenger;
(3) For loss of or damage to the passengers’ vehicles including the luggage carried therein: not exceeding 3,333 Units of Account per vehicle;
(4) For loss of or damage to luggage other than that mentioned in subparagraphs (2) and (3) in this Article: not exceeding 1,200 Units of Account per passenger.
An agreement may be reached between the carrier and the passengers with respect to the deductibles applicable to the compensation for loss of or damage to the passengers’ vehicles and luggage other than their vehicles…
A higher limitation of liability than that set out in sub-paragraph (1) above may be agreed upon between the carrier and the passenger in writing...”
In addition, according to Article 207, a ship-owner (including a charterer and a ship-operator) or a salvor could enjoy the limitation of liability for maritime claims stipulated in Article 211 of the same law.
However, Articles 118 and 209 regulate that the carrier or a person liable shall not be entitled to limit their liability based on the above provisions if it is proved that the loss resulted from their act or omission done with the intent to cause that loss or damage or recklessly and with the knowledge that such loss would probably result.
Meanwhile “a person liable” in Article 209 refers to the carrier/owner rather than the Master, crew or agent. This means that the carrier/owner is still entitled to benefit from the limitation of liability for maritime claims if it is proved that the loss, damages or delay in delivery of goods resulted from the wilful or reckless acts of the Master or crews rather than the carrier/owner.
PRC courts rarely recognise the validity of law or jurisdiction clauses stated in the B/L, due to the lack of negotiation between the consignee, the receiver, the holder of the original B/L, the cargo underwriters and the carrier about such clauses.
PRC courts rarely recognise the validity of law and arbitration clauses incorporated into a B/L.
The PRC joined the 1958 New York Convention in 1986. Civil Procedure Law is the domestic law that governs the recognition and enforcement of foreign arbitral awards.
A foreign arbitral award needs to be notarised and legalised before being submitted to the PRC courts for recognition and enforcement.
The applicant is entitled to apply to the PRC courts for the arrest of a vessel in dispute which is subject to foreign arbitration or jurisdiction. This application shall be made before the applicant commences the arbitration/litigation proceeding. Once the arrest is granted, the applicant shall commence the arbitration/litigation proceeding within 30 days.
The China Maritime Arbitration Commission (CMAC) and the China International Economic and Trade Arbitration Commission (CIETAC) specialise in maritime claims.
If the claimant commences proceedings before a PRC court in breach of foreign jurisdiction or arbitration clauses, the respondent is entitled to file a jurisdiction objection within the defence period to challenge the court’s jurisdiction. If the court sustains the objection, it will dismiss the claimant’s action. In that case, the claimant shall bear the court fee, and there will be no further remedies available to the respondent/defendant.
A PRC-incorporated ship-owner is subject to corporate income tax on its worldwide income earned by its vessels and is subject to relief for any tax paid on the same income elsewhere.
Non-performance of a shipping contract due to the implications of the pandemic or Ukraine War may be considered by PRC courts as force majeure or hardship, provided that all statutory requirements have been satisfied. The Supreme Court has recently issued a judicial interpretation on contractual matters in the Civil Code, which provided some guidance and clarifications with regards to hardship.
As China is a contracting state to Annex VI of the MARPOL Convention, the 2020 sulphur content limit applies to China. The China Maritime Safety Administration has issued the Implementation Scheme of Global Marine Fuel Oil Sulphur Limit by 2020, which provides as follows.
PRC law does not incorporate any international trade sanctions. However, if the UN Security Council passes any sanction resolution, the Ministry of Foreign Affairs of the PRC may officially notify relevant governmental authorities for enforcement.
In recent years, certain PRC individuals and entities have been sanctioned by some foreign countries in commercial trading and they have attempted to seek remedy by legal actions. In general terms, the PRC government does not recognise the enforceability of any unilateral trade sanctions (including those imposed in the context of the Russia-Ukraine war) imposed by any foreign country. If any such sanction applies discriminatory and restrictive measures against PRC individuals and entities resulting in interference with public interests, the PRC will consider taking corresponding countermeasures.
Furthermore, if unjustified extraterritorial foreign trade sanctions are applied against PRC individuals and entities, they may apply to the commerce department of the State Council for exemption from compliance with a prohibition order.
PRC law provides for grounds for failing to perform a contract due to force majeure or hardship.
Article 180 of the Civil Code states:
“If civil obligations fail to be performed due to force majeure, no civil liability shall be borne. Where the laws provide otherwise, such provisions shall prevail.
Force majeure is unforeseeable, unavoidable and insurmountable objective events.”
Article 533 of the Civil Code states:
“After a contract has been concluded, if the basic conditions of the contract have undergone a significant change which is unforeseeable by the parties at the time it was concluded and which does not belong to commercial risks, and it is clearly unfair for the party concerned to continue to perform the contract, the party adversely affected may renegotiate with the other party. If negotiation fails within a reasonable period of time, the parties may request a people’s court or an arbitration agency to modify or rescind the contract.
The people’s court or arbitration agency shall, in light of the actual circumstances of the case, amend or rescind the contract under the principle of fairness.”
The determination of whether an event constitutes force majeure or hardship is contingent on the specific circumstances of each case. There are relatively few reported judgments from Chinese courts relating to the Ukraine war. However, in these cases, the courts have applied a stringent standard when assessing the application of force majeure and hardship doctrines to disputes arising from the Ukraine war.
PRC judicial practice is controversial with regard to certain seafarer-related disputes. In 2020, the PRC Supreme Court promulgated Provisions on Several Issues Concerning Trial of Cases Involving Seaman-Related Disputes, which mainly focused on the following aspects.
Other issues covered are outlined below:
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info@wjnco.com www.wjnco.comOverview
2023 marked a significant phase in the development of China’s shipping industry, characterised by the implementation of various supportive policies and an enhanced rule of law framework. For instance, some Chinese coastal cities have decided to pursue the strategy of building international shipping centres in order to better integrate into the global shipping and international trade system and enhance efficiency in global resource allocation. In the meantime, there have also been many remarkable breakthroughs in China’s judicial co-operation and legal services in the shipping sector.
Policy Support
Many coastal cities in China have embarked on plans to establish international shipping centres to leverage their respective regional advantages and integrate local resources. This initiative is supported by a range of policies aimed at accelerating the growth of the shipping industry. In various Free Trade Zones, the following support policies have been adopted.
Ship registry
China has currently opened nine zones (“Pilot Zones”) including Nansha, where enterprises with foreign investment accounting for more than 50% of the registered capital are allowed to have their ships registered in these Pilot Zones after the registry of the enterprises therein.
Tax incentives
Enterprise income tax
Companies established in the Nansha Free Trade Zone engaging in third-party logistics and management, ship management, inspection and testing, seaman training, maritime dispute resolution, and other maritime services and shipping information services, which meet certain requirements, are entitled to a 15% preferential enterprise income tax policy.
Individual income tax
For seafarers engaging in international ocean shipping that are legally registered with the maritime authorities of China, where the seafarers sail for 183 days or more accumulatively within a tax year, their taxable income (for the purpose of calculation of individual income tax) will be 50% of their wages and salaries.
Other major Chinese coastal provinces and cities including Shanghai and Hainan province have issued similar preferential policies to boost the shipping industry. These policies are designed to make China an attractive destination for international ship-owners to register their vessels, and for professionals in the shipping industry to work or establish businesses. The anticipated influx of international interest is expected to significantly propel the development of the shipping service industry. This encompasses areas such as ship finance, insurance, and repair, among others. Furthermore, these policies are likely to attract more high-end shipping elements to China, creating a cluster of maritime expertise and resources.
China Accedes to the Convention Abolishing the Requirement of Legalisation for Foreign Public Documents
The Convention Abolishing the Requirement of Legalisation for Foreign Public Documents took legal effect in China on 7 November 2023 (the “Convention”). Prior to the Convention entering into force in China, for documents originating from a foreign country/region (the “country/region of origin” ) to be admissible in legal proceedings in Chinese courts, parties had to be notarised by the country/region of origin, authenticated by the Ministry of Foreign Affairs/other competent authorities of the country/region of origin, and then legalised by the Chinese Embassy/Consulate in the country/region of origin.
The procedures would be more complex if the country/region of origin had no diplomatic relationship with China, in which case, certain procedural steps had to be completed in a third country with such a diplomatic relationship. The countries/regions that have not established diplomatic relationship with China as mentioned above include the Republic of the Marshall Islands, a popular place for company and vessel registration. The aforesaid procedures are often time-consuming and costly and could affect legal proceedings in China.
Now that the Convention is in legal force in China, the formalities are simplified, as foreign-origin documents can be used directly in China after the addition of a certificate (an apostille) issued by the competent authority of the State from which the documents originate, with no need to go through the traditional consular authentication procedures, even if the country of origin has no diplomatic relationship with China. It is noteworthy that ship- or shipping-related legal proceedings initiated by foreign parties in Chinese courts often involve a large number of documents such as documents relating to the parties’ identity and capacity and powers of attorney that need to be notarised and legalised and are crucial for either the acceptance of the case or as key evidence. Therefore, China’s accession to the Convention will facilitate foreign parties’ legal proceedings in Chinese courts, and is likely to be received with great enthusiasm by these foreign parties.
Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts in Mainland PRC and Courts in Hong Kong SAR PRC
Since the signing of the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region (the “Arrangement”) by the Supreme People’s Court of China and the Department of Justice of Hong Kong Special Administrative Region on 18 January 2019, after long discussions and preparations by the two sides for about five years, on 10 November 2023, the government of the Hong Kong Special Administrative Region announced that the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement Ordinance (Chapter 645)) and Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Rules will come into force on 29 January 2024. Therefore, Hong Kong has completed local legislative procedures for the implementation of the Arrangements, and the launch of an updated system of mutual recognition and enforcement of civil and commercial judgments between the Mainland and Hong Kong is just around the corner.
After the Arrangement takes legal effect in the future, except for a few specific types of excluded matters, most civil and commercial judgments rendered by courts of Mainland China will be able to be enforced in Hong Kong SAR and vice versa.
However, the Arrangement excludes the application of judgments on a few maritime matters: marine pollution, limitation of liability of maritime claims, general average, emergency towage and salvage, maritime liens, and carriage of passengers by sea.
As an important international shipping centre, the Arrangement’s coming into force will undoubtedly facilitate the enforcement of Hong Kong court judgments in the Chinese mainland where the defendants have enforceable assets.
United Nations Convention on the International Effects of Judicial Sales of Ships Opened for Signature
The General Assembly of the United Nations adopted the Convention on the International Effects of Judicial Sales of Ships in December 2022 (the “Beijing Convention”). It is the first international maritime convention named after a city in mainland China. It signifies the recognition of the great contributions China has made to the enactment of international conventions.
On 5 September 2023, the signing ceremony for the Beijing Convention was launched in Beijing, which was attended by delegations from thirty-four countries and regions. Fifteen countries, including China, Switzerland, Singapore, Saudi Arabia, Liberia, and Honduras, became the first signatories to the Beijing Convention.
The Beijing Convention establishes a harmonised regime for the international recognition of judicial ship sales, which is a significant advancement in an area hitherto unaddressed by international maritime law. Given the frequency of disputes stemming from ship operations and the common occurrence of ships being subject to judicial sales, this convention plays an important role. Pursuant to the Beijing Convention, for a judicial sale of a ship where a notice of judicial sale and a certificate of judicial sale has been issued, such a judicial sale conducted in one State Party has the effect of conferring clean title on the purchaser that shall be recognised in every other State Party. The Beijing Convention helps to build up buyers’ confidence to purchase ships through judicial sales, protect the interests of ship buyers, and enhance efficiency, all within a framework of fairness and justice.
Greater Bay Area Lawyer System
Under the “One Country, Two Systems” regime, Mainland China, Hong Kong SAR, and Macao SAR implement different judicial systems, and hence have different and independent practising qualifications. On 11 August 2020, the 21st Session of the Standing Committee of the 13th National People’s Congress adopted a decision to allow lawyers from Hong Kong SAR or Macao SAR to apply for a practising license to practise certain Mainland legal services within a defined scope in nine cities in the Guangdong-Hong Kong-Macao Greater Bay Area after passing the Greater Bay Area Practising Examination. By November 2023, three Greater Bay Area Practising Examinations have been held and a total of 372 Hong Kong and Macao lawyers have so far been granted the Greater Bay Area practising license.
Most of these lawyers holding Greater Bay Area practising licenses have joined law firms in the nine cities in the Guangdong-Hong Kong-Macao Greater Bay Area. Many of them are professionals with many years of experience in the international shipping business in Hong Kong SAR and have a deep understanding of both the Mainland and international shipping markets. The promotion of the lawyer system in the Greater Bay Area is set to streamline the division of roles and encourage fruitful collaboration among professionals in Hong Kong SAR, Macao SAR, and Mainland China, thereby unlocking greater possibilities for the growth of shipping legal services in the the Guangdong-Hong Kong-Macao Greater Bay Area.
Summary
The shipping industry plays an important role in supporting China’s strategy to establish international shipping centres. This strategy encompasses nationwide development plans for these centres, which are further bolstered by regional opening-up and integration policies, such as the Guangdong-Hong Kong-Macau Bay Area and the Belt and Road Initiative. The synergy of these initiatives and policies is set to create a wealth of new opportunities for the Chinese shipping legal services sector in the future.
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