Guiding Case No. 16 (Discussed and Passed by the Adjudication Committee of the Supreme People s Court Released on January 31, 2013)
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1 China Shipping Development Co., Ltd. Tramp Company, A Case of an Application for the Establishment of a Limitation of Liability Fund for Maritime Claims Guiding Case No. 16 (Discussed and Passed by the Adjudication Committee of the Supreme People s Court Released on January 31, 2013) CHINA GUIDING CASES PROJECT English Guiding Case (EGC16) April 10, 2013 Edition * * The citation of this translation of the Guiding Case is: 中海发展股份有限公司货轮公司申请设立海事赔偿责任限制基金案 (China Shipping Development Co., Ltd. Tramp Company, A Case of an Application for the Establishment of a Limitation of Liability Fund for Maritime Claims), CHINA GUIDING CASES PROJECT, English Guiding Case (EGC16), Apr. 10, 2013 Edition, available at This document was primarily prepared by CHEN Qian, Emily Wenyao Fu, JIANG Runzhou, Ringo Li, Thomas Rimmer, and Randy Wu. The document was finalized by Dimitri Phillips and Dr. Mei Gechlik. Minor editing, such as splitting long paragraphs, adding a few words included in square brackets, and boldfacing the headings to correspond with those boldfaced in the original Chinese version, was done to make the piece more comprehensible to readers. The following text, otherwise, is a direct translation of the original text and reflects formatting of the Chinese document released by the Supreme People s Court. The following Guiding Case was discussed and passed by the Adjudication Committee of the Supreme People s Court of the People s Republic of China and was released on January 31, 2013, available at See also 最高人民法院关于发布第四批指导性案例的通知 (The Supreme People s Court s Notice Concerning the Release of the Fourth Batch of Guiding Cases), Jan. 31, 2013, available at
2 2 Keywords Maritime Litigation Limitation of Liability Fund for Maritime Claims Calculation of the Liability Limit for Maritime Claims Main Points of the Adjudication 1. With respect to an application for the establishment of a limitation of liability fund for maritime claims, the court only conducts a procedural review of the applicant s subject qualifications, the nature of the claims involved in the accident, and the amount of the fund applied to be established. Issues such as those concerning whether the applicant should substantively enjoy limitation of liability for maritime claims and whether, apart from the restrictive claims, there existed at the same time other non-restrictive claims for the claims involved in the accident do not affect the ruling rendered by the court in accordance with law approving the establishment of a limitation of liability fund for maritime claims. 2. [The phrase] ships engaged in transportation between the ports of the People s Republic of China, as stipulated in Article 210, Paragraph 2 of the Maritime Law of the People s Republic of China, should be understood to mean ships engaged in transportation between the ports of the People s Republic of China during the voyage when a maritime accident occurred. Related Legal Rule(s) 1. Article 106, Paragraph 2 of the Special Procedure Law of the People s Republic of China on Maritime Litigation 2. Article 210, Paragraph 2 of the Maritime Law of the People s Republic of China Basic Facts of the Case On May 23, 2008, the vessel Ning An 11, which belonged to the China Shipping Development Co., Ltd. Tramp Company ( 中海发展股份有限公司货轮公司 ) (hereinafter referred to as Tramp Company ), carried coal for electricity generation from Qinhuangdao to the Shanghai Waigaoqiao Wharf. During the process of berthing at the wharf on May 26, it came into contact with the wharf s No. 2 ship unloader, causing damage to the wharf and the machine. Tramp Company thus applied on March 9, 2009 to the Shanghai Maritime Court for the establishment of a limitation of liability fund for maritime claims. Tramp Company applied to establish a limitation of liability fund for maritime claims not involving personal injury or death
3 3 in the amount of 2,242,643 calculation units (amounting to RMB 25,442,784.84) and interest calculated from the date of the accident to the date of the establishment of the fund. Shanghai Waigaoqiao Electric Generation Co., Ltd. and Shanghai Waigaoqiao No. 2 Electric Generation Co., Ltd. constituted the No. 1 Opposer. The No. 2 Opposer consisted of seven opposers: PICC Property and Casualty Co., Ltd. Shanghai Branch, China Continent Property & Casualty Insurance Company Ltd. Shanghai Branch, Ping An Property & Casualty Insurance Company of China, Ltd. Shanghai Branch, Ancheng Property & Casualty Insurance Co., Ltd. Shanghai Branch, China Pacific Insurance (Group) Co., Ltd. Shanghai Branch, China Continent Property & Casualty Insurance Company Ltd. Business Department, and Alltrust Property Insurance Company Ltd. Shanghai Branch. Each [opposer] filed a written opposition to the Shanghai Maritime Court against the aforementioned application made by Tramp Company. On May 27, 2009, the Shanghai Maritime Court convened a hearing for the application and oppositions. The No. 1 Opposer claimed: the vessel Ning An 11 caused the accident because of the captain s erroneous operational conduct. [It] should take full responsibility for this accident, and thus the applicant was not entitled to a limitation of liability for maritime claims. The vessel Ning An 11 was a ship that could engage in international ocean transportation and was not a type of ship engaged in transportation of cargo between the ports of China. The limit as stipulated in Article 4 of the Ministry of Communications Provisions Concerning the Liability Limit for Maritime Claims for Ships Below 300 Tons and Ships for Coastal Transportation or Other Coastal Operations (hereinafter referred to as the Ship Liability Limit Provisions ) 1 was not applicable, but the limit as stipulated in Article 210, Paragraph 1, Item (2) of the Maritime Law of the People s Republic of China (hereinafter referred to as the Maritime Law ) was. The No. 2 Opposer claimed: although the claims involved in the accident were mostly restrictive claims by their nature, the expense of cleaning the wreck should be considered a nonrestrictive claim, and the applicant was not entitled to apply for limitation of liability for this expense. Other opposing opinions and reasons were the same as those of the No. 1 Opposer. The Shanghai Maritime Court handled the case and ascertained: the applicant was registered as the ship owner of the vessel Ning An 11. The damage to the wharf and the machine caused by the ship-contact accident involved in this case was of a type of property loss directly related to the operation of the ship. In addition, the gross tonnage of the Ning An 11 was 26,358 tons and the approved scope of business, as clearly stated in the business transport certificate, was ordinary cargo transportation along the domestic coast and between the ports of the middle and lower reaches of the Yangtze River. 1 Translators note: this legislation, the Ship Liability Limit Provisions, was issued by the Ministry of Communications in November Since March 2008, that ministry has become part of the Ministry of Transport (the name on the official website).
4 4 Results of the Adjudication On June 10, 2009, the Shanghai Maritime Court rendered the (2009) Hu Hai Fa Xian Zi No. 1 Civil Ruling, rejecting the opposers oppositions and approving the applicant s establishment of a limitation of liability fund for maritime claims, with the fund amount being RMB 25,442, plus the bank interest this amount incurred from May 26, 2008 to the date of the establishment of the fund. After the ruling was pronounced, the opposer PICC Property and Casualty Company, Limited Shanghai Branch appealed. On July 27, 2009, the Higher People s Court of Shanghai Municipality rendered the (2009) Hu Gao Min Si (Hai) Xian Zi No. 1 Civil Ruling, rejecting the appeal and upholding the original ruling. Reasons for the Adjudication In the effective ruling, the court opined: according to Article 83 of the Interpretation of the Supreme People s Court on Several Issues Concerning the Application of the Special Procedure Law of the People s Republic of China on Maritime Litigation, regarding an application for the establishment of a limitation of liability fund for maritime claims, [the court] should review the applicant s subject qualifications, the nature of the claims involved in the accident, and the amount of the fund applied to be established. Tramp Company was registered as the ship owner of the vessel Ning An 11, and was a type of subject who could apply for the establishment of a limitation of liability fund for maritime claims, as stipulated in Article 204 of the Maritime Law and Article 101, Paragraph 1 of the Special Procedure Law of the People s Republic of China on Maritime Litigation. As for the opinions advanced by the opposers that the applicant s ship should take full responsibility for the accident and was not entitled to limitation of liability, since these involved a determination of whether the applicant had substantive rights to limitation of liability, and this issue should be resolved during the substantive handling of the case, the No. 1 Opposer s opposition was not handled. Given that the damage to the wharf and the machine caused by the ship-contact accident involved in this case was of a type of property loss directly related to operation of the ship, the liable person could limit the liability for claims in accordance with Article 207 of the Maritime Law. Therefore, the opinions advanced by the No. 2 Opposer that the expense of cleaning the wreck should be a type of non-restrictive claim and that the applicant was not entitled to limitation of liability for that claim did not affect the court s approval of the applicant s application for the establishment of a limitation of liability fund for maritime claims for matters involving restrictive claims. As for the questions of whether the vessel Ning An 11 was a type of ship engaged in transportation between the ports of the People s Republic of China, as stipulated in Article 210, Paragraph 2 of the Maritime Law, and then which standard should be followed to calculate the
5 5 liability limit: since the approved scope of business of the vessel Ning An 11 clearly stated in the business transport certificate was ordinary cargo transportation along the domestic coast and between the ports of the middle and lower reaches of the Yangtze River, and that when the accident involved in this case occurred, the business operation it was engaged in was a voyage from the Qinhuangdao Port to the Shanghai Port, this ship should therefore be determined to be a ship engaged in transportation between the ports of the People s Republic of China, and it was not appropriate to make the determination according to the navigation areas of the ship as stated on the ship s seaworthiness certificate or the areas where the ship had the capacity to navigate. Therefore, the opinions advanced by the opposers that the approved navigation areas of the vessel Ning An 11 were offshore areas and that the vessel was a ship that could engage in international ocean transportation were not adopted. It was not inappropriate for the applicant to accordingly apply for the use of the standards stipulated in Article 210, Paragraph 2 of the Maritime Law and Article 4 of the Ship Liability Limit Provisions to calculate the amount of the limitation of liability fund involved in this case. The opposers assertion and reasons concerning the applicability of Article 210, Paragraph 1, Item (2) of the Maritime Law in the calculation of the amount of the fund involved in this case did not have an adequate basis and were not adopted. Given that on the date when the accident occurred, the International Monetary Fund had not published the exchange rate between the Special Drawing Right and the Renminbi, the applicant did the calculation in accordance with the rate of 1: published on the following day, which the opposers did not oppose. The gross tonnage of the ship involved in this case was 26,358 tons. Therefore, the liability limit for maritime claims involved in this case was ((26, ) ,000) 50% = 2,242,643 Special Drawing Rights, amounting to RMB 25,442, The amount of the fund should be RMB 25,442, plus interest calculated from the date of the accident to the date of the establishment of the fund at the demand deposit rate of the People s Bank of China for the same period.
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