Author: Victoria Wei Partner E-mail: [email protected] Mob：139 1796 4305

In November 2019, the shipping team of V&T Law Firm released a new issue of its bilingual Shipping Newsletter in both Chinese and English. It analyses some hot, difficult and classic shipping legal issues in depth in the Newsletter. Many corporations and organizations show a strong interest in the Newsletter, praise the team to be able to compile and share the professional Newsletter while being busy with work and hope for continuous reading of the latest Shipping Newsletter in future.

The Contents of the Newsletter

1. Legal Burden of Proof in Cargo Damage Claim

2. Insurer’s Liability for the Loss of an Insured Vessel Caused by Combined Operation of Causes

3. Defeating the Right to Limit Liability is Still Very Difficult though Not Impossible

4. Does a Ship owner have Right to Limit the Liability for the Claim for Removal and Cleaning Costs of the Wreck
of Jetty?

Chinese Law on the Compensation for Seafarer’s Injury, Death or Illness

6. Update on Iran Sanctions by the US and Advice on Risk Control

7. Implementation Scheme of Sulphur 2020 Limit Published by China State MSA

Abstracts of the Articles in the Newsletter

Legal Burden of Proof in Cargo Damage Claim

This article is about the distribution of the burden of proof between the cargo interests and the carrier in cargo damage claim, in other words, how the cargo interests prove the occurrence of the damage to the goods during the carriage and how the carrier proves he should not be liable for the damage. By reference to two cases recently heard by the Chinese Supreme People’s Court and the case of Volcafe Ltd. and Others v. Compania Sud Americana De Vapores SA heard by English Supreme Court in December of 2018, it further analyses the difference between Chinese law and English Law on this issue.

2. Insurer’s Liability for the Loss of an Insured Vessel Caused by Combined Operation of Causes

The Chinese Supreme Court made it clear in the recent re-trial case of Qu Rongmo v. China Continent Insurance Co. Ltd. Weihai Sub-Branch and Shidao Sub-Branch that where the loss or damage of a vessel is caused due to combined operation of covered perils and non-covered perils, the hull and machinery insurer shall be liable to the insured according to the apportionment of those perils’ efficiency to the loss or damage of the insured vessel. The principle as established by the judgment is compared with the English marine insurance law principle which was re-affirmed in the case of “B ATLANTIC” by the English Supreme Court that when a loss arises through a combination of two concurrent proximate causes, one covered and the other excluded, the xclusion will take precedence and the insurer will be entitled to decline cover.

3. Defeating the Right to Limit Liability is Still Very Difficult though Not Impossible

China did not join the Convention on Limitation of Liability for Maritime Claims 1976, but adopted the main provisions of the 1976 Convention in its Maritime Law and Maritime Procedure Law. Article 4 of the 1976 Convention Conduct barring limitation is entirely incorporated into China Maritime Law. The standard of barring limitation is very high and the burden of proof on the part of the person who relies on the rules to defeat the liable party’s right to limit is very heavy. This article aims to introduce and analyze a few typical Mainland China, Hong Kong and English court cases to illustrate the application of the rules.

4. Does a Shipowner have Right to Limit the Liability for the Claim for Removal and Cleaning Costs of the Wreck of Jetty?

The Chinese Supreme People’s Court held in “Zeus” case that claims for oil removal and cleaning of a sunk, wrecked, stranded or abandoned ship are NOT the claim for which a shipowner has right to limit liability. However, the rational of the judgment in “Zeus” case shall not extend to applying in the claim for the removal or cleaning costs of the wreck of jetty or other harbor works. The liable shipowner still has the right to limit the liability for such claim.

5. Chinese Law on the Compensation for Seafarer’s Injury, Death or Illness

According to 2018 Report on Chinese Crew Development published by China Ministry of Transportation, by the end of 2018, there are about 146,000 Chinese seafarers working in overseas employment. China ranks as the second largest country of seafarers working in overseas employment.

There is not a single Chinese law dealing with the compensation issue. There are miscellaneous laws, regulations and rules which are applicable to the
compensation issue, such as Maritime Labor Convention, Tort Law, Labor Law, Labor Contract Law, Social Security Law, Occupational Injury Security Regulations, Seafarer Regulations, the Chinese Supreme People’s Court’s Interpretation of Some Issues of the Application of Law in the Trial of Personal Injury Compensation Cases (the “Judicial Interpretation of Personal Injury Compensation”), the Chinese Supreme People’s Court’s Interpretation of Some Issues of Determining Liability for Compensation for Mental Sufferings Caused by Civil Tort (the “Judicial Interpretation of Compensation for Mental Sufferings”), Administrative Regulations of Seafarer Working in Overseas Employment Administrative, Regulations of Cooperation of Overseas Employment and so on. As to the liability for the injury, death or illness of the seafarer working in overseas employment, it needs to first identify the nature of the contractual relationship between the seafarer and the manning company, overseas ship owner, domestic shipping company or other company, and then properly apply the law governing each individual contract.

It is common practice that the seafarer has an employment contract relationship with an overseas ship owner or de facto employment contract relationship. In such a relationship, the overseas ship owner’s liability shall be determined pursuant to the “Judicial Interpretation of Personal Injury Compensation”.

6. Update on Iran Sanctions by the US and Advice on Risk Control

On 8 May 2018, the US President Donald Trump decided to cease the participation of the United States in the Joint Comprehensive Plan of Action of July 14 2015 (JCPOA) known normally as Iran Unclear Deal. On 6 August 2018, the President issued the Executive Order 13846. As the 180-days window time would expire on 5 November 2018, the US will re-impose the toughest sanctions targeted on the critical sectors of Iran including energy, shipping, shipbuilding and finance as from 5 November 2018. The re-imposed sanctions are to counter Iran’s development of nuclear weapon. The Team mainly introduces and analyses the legal basis of the sanction, sanctionable entities and individuals, sanctionable activities, categories of sanctions, law-forcing agency and safety measures to avoid triggering the Iran Sanctions advised by the Team in this article.

7. Implementation Scheme of Sulphur 2020 Limit Published by China State MSA

On 23 October 2019, China Maritime Safety Administration (the “State MSA”) published “Implementation Scheme of Sulphur 2020 Limit” formally (the “Scheme”). The Team mainly introduces and analyses in the article the requirements of using and loading vessel’s fuel oil and the alternative measures, reporting information about using and loading vessel’s fuel oil, disposal of non-compliant fuel oil, record of bunker supply unit and supervision measures provided in the Scheme.

The shipping team of V&T Law Firm is committed to contentious and non-contentious services to clients in the shipping and related industries. All its members have been educated in the law school in UK and Hong Kong and professional maritime university in China.

Some of its members once practiced in shipping teams of internationally
renowned law firms. At present, the team mainly serves domestic and overseas shipowners, P&I clubs, hull insurance companies, freight forwarding companies, trading companies and shipyards enterprises.