Chapter 15 Maritime law Chapter 15 Maritime law

1 1 Vessels 2 2 Mariners 3 3 Contract for carriage of goods 4 4 Charter parties 5 5 Sea towage 6 6 Collision of vessels 7 7 Marine salvage 8 General average

1 Vessels

1.1 Legal features Sea-going vessel and other marine mobile units, exclusive of the ships or craft to be used for military or public purposes, and the small ships of less than twenty tons gross tonnage in maritime law

1.1.1 Composition

• Hull, equipment and dependence • Hull and equipment may be divided into more than thirty interdependent parts. None of them can be separately acquired or assigned.

1.1.2 Movable property with immovable property treatment

1.1.3 Personality

(1) Each vessel has its own name, such as the Queen, the Columbia,

the Pacific, the Goddess and so on(2) Each vessel has its nationality(3) Each vessel has its registered port identical to the register

ed domicile of the natural person and the legal address of the legal person

(4) It can be declared as missing if its whereabouts is unknown for a prescribed period of time, also similar to the declaration as missing for the natural person.

1.2 Types

1.2.1 Chinese and foreign vessels 1.2.2 Commercial and non-commercial vessels 1.2.3 Small and large vessels

1.3 Ownership and registration 1.3.1 Ownership and SOE’s right of management and operation

3 types of persons may acquire the vessel ownership:

(1) State organs and institutions (2) SOEs, collective-owned enterprises and JVs established in China (3) natural persons with registered domicile in China

1.3.2 Acquisition of vessel ownership • Primary methods: shipbuilding, appropriation, forfeiture and capture• Secondary methods: inheritance, present, subrogation and purchase 

• Acquisition, assignment or termination of such ownership: registration with vessel registry office. Else, cannot act against the third party

• Required documents on vessel: (1) certificate of nationality (2) certificate of seaworthiness (3) tonnage certificate (4) load-line certificate (5) passenger capacity certificate (6) inspection certificate (7) deck log book (8) engine log book (9) wireless book (10) crew list

1.4 Limitation of liability for marine claims • Marine claims arising from vessel operations may be limited• 3 types of persons may do so: (1) Shipowners including charterers and operators, and salvors (2) Persons for whose act, neglect or default the shipowners or salvors

are responsible

(3) Insurers of the foregoing persons

Ceiling on the liability Ceiling on the liability

Gross tonnage Personal injury (units of account) Non-personal injury (units of account)

1 300-500 333000 167000

2 501-3000 1+ 500/ increased ton 1+167/ increased ton

3 3001-30000 1+2+333/ increased ton

4 30001-70000 1+2+3+250/increased ton 1+2+125/ increased ton

5 70001 or more 1+2+3+4+167/ increased ton 1+2+4+83/ increased ton

Passenger carriage

46666 units of account ╳ verified passenger capacity

Ceiling: 25000000

2 Mariners

2.1 Mariner’s rights and obligations

Rights: (1) Claims in respect of wages and remuneration(2) Claim in respect of support money for sickness and injury(3) Right to repatriation to original port(4) Claim for insurance premium(5) Claim in respect of pension(6) Claim in respect of funeral expenses or pension for the disabled 

Obligations:(1) loyal to job and follow the instructions of shipowner or ship operator(2) not to privately carry any illegal goods or materials

2.2 Master

2.2.1 Authority of direction and management

2.2.2 Protection from crime

2.2.3 Certification of birth and death

2.2.4 Abandonment of vessel

2.2.5 Period of responsibility

His duty in the management and navigation of the vessel survives even with the presence of pilot piloting the vessel

3 Contract for carriage of goods

3.1 COA, B/L and C/P B/L and C/P in comparison B/L and C/P in comparison

B/L C/P

Written form Optional Compulsory

When the hold is not full Shipowner may accept new shippers ╳

Types of charge Freight Rental

Voyage period and route Fixed schedule and route ╳

3.2 Formation and discharge of contract 3.2.1 Formation

COA: shipper and shipowner/carrierB/L: shipper and carrier, consignee is not a party to B/LC/P: charterer and shipowne

Clause assigning insurable interest of goods to carrier or any similar clause is null and void.

3.2.2 Discharge

• Discharged either by agreement or operation of the law

• Before sailing from loading port, shipper may propose to discharge the contract. If agreed, shipper shall pay 1/2 freight + loading and unloading expenses and other related charges

 • Due to force majeure at loading port or force majeure at dis

charge port• Former situation: either carrier or shipper may propose to d

ischarge the contract and neither party is liable to the other• Latter situation: master may discharge the goods at the safe

port or place near port of destination and contract is deemed to have been fulfilled

3.3 Carrier’s responsibilities and exemptions

3.3.1 Period of responsibility

Carrier’s period of responsibility Carrier’s period of responsibility

Containerized goods Non-containerized goods

Commencement Taking over the goods at loading port

Loading goods onto vessel

Termination Delivering goods at discharge port

Discharging goods from vessel

3.3.2 Vessel’s seaworthiness

Before and at the beginning of the voyage the carrier shall exercise due diligence to make the vessel seaworthy.

Illustration:Illustration: HK Fir Shipping Co v KK Ltd (1962) HK Fir Shipping Co v KK Ltd (1962) KK, defendant chartered a ship from plaintiff for 24 months. The engines were in poor condition and the crew was inefficient. They lost 5 weeks immediately and another 15 weeks for carrying out the repairs. After repair they still had 20 months to operate. One term saying the ship should be “in every way fitted for ordinary cargo service”. Defendant cancelled the contract. Plaintiff disagreed and argued it was merely warranty.

Court of appeal:  Innominate term, which could not be classified in advance. The defendant’s whole benefits of the contract were not deprived substantially. There unable call the contract off.

• Primary duty to deliver the goods to the consignee within specified time limit.

• Failure to do so within 60 days after expiry of such time limit, the person entitled to make a claim for the loss of goods may treat the goods as lost.

• Liable for the loss of or damage to goods caused by delay in delivery

3.3.3 Reasonable route

3.3.4 Prompt delivery and liabilities for failure

3.3.4.1 Liabilities for late delivery, loss of and damage to goods

3.3.4.2 Exemptions (1) Fault of the master, crew members, pilot or servant of the carrier in the n

avigation or management of the vessel(2) Fire unless caused by the actual fault of the carrier(3) Force majeure and perils, dangers and accidents of the sea or other navig

able waters(4) War or armed conflict(5) Acts of the government or competent authorities, quarantine restrictions

or seizure under legal process(6) Strikes, stoppages or restraint of labor(7) Saving or attempting to save life or property at sea(8) Act of the shipper, owner of the goods or their agents(9) Nature or inherent defects of the goods(10) Inadequacy of packing or insufficiency or illegibility of marks(11) Latent defect of the vessel undiscoverable by due diligence(12) Loss of or damage to the live animals arising or resulting from the specia

l risks inherent in the carriage (13) Any other cause arising without the fault of the carrier or his servant or

agent

3.3.4.3 Limitation of liability

3.3.5 Deck cargo Goods on deck: subject to shipper’s consent, or do so in accordance with the custom and practice of the trade or the relevant laws or administrative regulations

3.3.6 Carrier and actual carrier jointly liable

3.4 Shipper’s responsibilities

3.4.1 Proper packing

3.4.2 Government formalities  

3.4.3 Dangerous materials

Shipper: properly packed, clearly marked and labeled and notify the carrier in writing of their proper description, nature and the precautions to be taken. Else, carrier may have such goods landed, destroyed or rendered innocuous without compensation when and where circumstances so require

3.4.4 Payment of freight

3.5 Bill of lading 3.5.1 Overview (1) evidence of the contract of carriage of goods by sea (2) evidence of taking over or loading the goods by the carrier (3) certificate of the title and ownership of such goods

3.5.2 Types of B/L

3.5.2.1 On board B/L and received for shipment B/L

3.5.2.2 Straight B/L, bearer B/L and order B/L Straight B/L: not assignableOrder B/L: assignable with endorsementBearer B/L: assignable without any endorsement

3.5.2.3 Clean B/L and unclean B/L

3.5.3 Issuance and assignment

• Carrier issues B/L to the shipper when he has taken over

or loaded the goods on board.• Signed and issued by person authorized by the carrier. • B/L signed by master is deemed as the B/L signed on

behalf of carrier

Minimal items: (1) description of the goods, the mark, the number of packages or pieces,

weight or quantity, and an express statement, if applicable, as to the dangerous nature of the goods

(2) name and principal place of business of the carrier

(3) name of the vessel

(4) name of the shipper

(5) name of the consignee

(6) port of loading and the date on which the goods were taken over by the carrier at the port of loading

(7) port of discharge

(8) place where the goods were taken over and the place where the goods are to be delivered in case of the multi-modal transport B/L

(9) date and place of issue of the B/L and the number of originals issued

(10) payment of freight

(11) signature of the carrier or of a person acting on his behalf

3.6 Delivery of goods 3.6.1 Notice of non-conforming goods

Notification in 7 consecutive days from the next day of the delivery, or in the case of containerized goods, within 15 days from the next day of delivery

3.6.2 Inspection 3.6.3 Delay and failure in taking delivery

Master may discharge the goods into warehouse or other appropriate places, and any expenses or risks shall be borne by consignee

3.6.4 Possessory lien Carrier enjoys possessory lien on a reasonable part of goods if freight, contribution in general average, demurrage and other necessary charges paid by carrier on behalf of owner of goods as well as other charges to be paid to carrier have not been paid in full, or no appropriate security has been given.

4 Charter parties

4.1 Voyage C/P, time C/P and demise C/P

4.1.1 Voyage C/P v B/L

Voyage C/P v B/LVoyage C/P v B/L

Voyage C/P B/L

Nature Private carrier Common carrier

Standard form contract ╳ √

Charges of remuneration Rental Freight

Responsibility of loading and unloading Charterer Carrier

4.1.2 Voyage C/P v time C/P

Voyage C/P, time C/P and demise C/PVoyage C/P, time C/P and demise C/P

Voyage C/P Time C/P Demise C/P

Vessel’s operation Shipowner Charterer Charterer

Shipowner as carrier √ ╳ ╳

Basis of rental Weight of goods, tonnage of vessel

Time of lease + hiring rate

Time of lease + hiring rate

Limit on scope of operation and area of navigation

√ ╳ ╳

Charterer as shipper √ Not necessarily Not necessarily

Primary goal Carriage of goods Carriage of goods Vessel’s operation rights

Charterer’s employment relation with mariners

╳ ╳ √

4.1.3 Time C/P v demise C/P

4.2 Voyage C/P

• Normally in writing

• Principal terms: name of shipowner, name of charterer, name and nationality of vessel, its bale or grain capacity, description of goods to be loaded, port of loading, port of destination, lay-days, time for loading and discharge, payment of freight, demurrage, quick dispatch and other relevant matters

• Contractual terms prevail over the law

• Parties enjoy freedom to make their own law

4.2.1 Formation of the contract

4.2.2 Shipowner’s responsibilities 4.2.2.1 Conforming vessel & seaworthiness

4.2.2.2 Reasonable route

4.2.2.3 Issuance of B/L Shipowner: issue B/L to the shipper

4.2.3 Charterer’s responsibilities

4.2.3.1 Payment of freight

4.2.3.2 Provision of conforming goods

4.2.3.3 Right of sub-letting Charterer may sublet the vessel to a third party, but such sub-lease cannot affect the rights and obligations specified in the original C/P.

4.2.3.4 Notification of discharge port

4.3 Time C/P 4.3.1 Formation of the contract • Must be in writing• Principal terms: name of shipowner, name of charterer; name, nationality, class, tonnage, capacity, speed and fuel consumption of vessel; trading area; agreed service,contractual period, time, place and conditions of delivery and redelivery of the vessel; hire and way of its payment and other relevant matters• Contractual provisions take precedence over the provisions of law

4.3.2 Shipowner’s responsibilities

4.3.2.1 Prompt delivery of the vessel 4.3.2.2 Seaworthy vessel 4.3.2.3 Right of assignment

• Shipowner may transfer vessel ownership to third party. • After assignment, assignee and charterer should continue to perform the original C/P

4.3.3 Charterer’s responsibilities

4.3.3.1 Payment of rentals and other charges

4.3.3.2 Trading area

4.3.3.3 Intended goods

4.3.3.4 Right of instruction Charterer may instruct master with respect to operation and employment of vessel

4.3.3.5 Right of subletting

Charterer may sublet vessel to third party

4.3.3.6 Right to salvage payment

If it is engaged in salvage operation during term of C/P, charterer is entitled to 1/2 salvage payment for salvage operation after deducting salvage expenses, damages, portion due to the mariners and other relevant costs.

4.3.3.7 Surrender of vessel

4.3.3.8 Last voyage On the basis of reasonable calculation, if it may complete its last voyage at around the specified time of surrender and probably thereafter, the charterer may continue to employ it in order to complete such last voyage even if her time of surrender will be overdue.

4.4 Demise C/P

4.4.1 Shipowner’s responsibility

4.4.1.1 Delivery of seaworthy vessel 4.4.1.2 Mortgage banned

Without written consent of charterer, shipowner cannot create any mortgage on such vessel.

4.4.2 Charter’s responsibilities

4.4.2.1 Payment of rentals 4.4.2.2 Maintenance and insurance

Charterer is responsible for the maintenance and repair of the vessel during the charter period.

4.4.2.3 Elimination of adverse affect

4.4.2.4 Subletting barred

During charter period, charterer cannot assign its rights and obligations specified in C/P, nor sublet the vessel to third party without the shipowner’s written consent.

4.4.2.5 Hire-purchase

If C/P has a hire-purchase clause, and charterer has paid off full hire-purchase price, charterer acquires ownership of the vessel upon full payment of such hire-purchase price.

5 Sea towage

Tugowner undertakes to tow an object by sea with a tug from one place to another and the tow party pays the towage

5.1 Sea towage contract

• Must be in writing.• Principal terms: name and address of the tugowner, name

and address of the tow party, name and main particulars of the tug and the main particulars of the object to be towed, number of horse power to de generated by the tug, the place of commencement of the towage and the destination, the date of commencement of the towage and the way of payment thereof, as well as other relevant matters.

 • May be discharged due to force majeure either before or af

ter towage commencement.

5.2 Responsibilities of the parties 5.2.1 Tug owner

Before and at beginning of towage, exercise due care to make the tug seaworthy and towworthy and to properly man the tug and equip it with gears and tow lines and to provide all other necessary supplies and appliances for the intended voyage.

5.2.2 Tow party • Before and at beginning of towage, make all necessary preparations and exercise due care to make the object to be towed tow-worthy and give a true account of the object to be towed and submit to the master of the tugboat the certificate of tow-worthiness and other documents issued by the relevant survey and inspection organizations. • Promptly pay towage and other reasonable expenses to the tug owner.

5.2.3 Tort liability

Tug owner is not liable:

(1) Fault of the Master or other crew members of the tug or the pilot or other servants or agents of the tug owne

r in the navigation and management of the tug;(2) Fault of the tug in saving or attempting to save life or p

roperty at sea. 

Death of or personal injury to a third party or damage toproperty thereof has occurred during the sea towage dueto the fault of the tug owner or the tow party, tug ownerand the tow party is jointly liable to that third party.

6 Collision of vessels

Any accident occurring between vessels causing losses or damages even if no actual contact has taken place

6.1 Types of collision • Actual and presumed collision • Unilateral liability collision, both to blame collision and

inevitable accident • Negligent, intentional and inevitable collisions

6.2 Remedies

6.2.1Guiding principles

6.2.1.1 Restitution in integrum Damages should place claimant as nearly as possible in a position equivalent to that which it occupied prior to the incident, giving rise to such claim.

6.2.1.2 Direct consequence of the collision

Only direct consequences of the collision are recoverable.

6.2.1.3 Duty to render assistance and mitigate damage or loss

• Master of each vessel in collision is bound, so far as he can do so without serious danger to his vessel, crew and its passengers, to render assistance to the other vessel, its crew and passengers. • If victim fails to take reasonable measures to mitigate his loss or damage, it may not recover the aggravated loss or damage.

6.2.2 Total loss and constructive total loss Compensation for total loss:(1) value of the vessel(2) damage due to demurrage including loss of freight(3) damages paid or payable to a third party(4) mariner's remunerations and repatriation cost(5) interests(6) other charges 

Compensation for constructive total loss: (1) value of the vessel(2) salvage costs(3) costs for inspection(4) lost freight(5) damages paid or payable to a third party (6) interests

6.2.3 Compensation for partially damaged vessel Expenses in cash and loss for detention

7 Marine salvage

7.1 Four types of salvage

(1) Compulsory salvage normally occurs at the territorial waters (2) Consensual salvage: most common type of marine salvage

. “No cure, no payment” applies.(3) Voluntary salvage: salvage voluntarily rendered by salvo

r to vessel in distress(4) Obligatory salvage: salvage designed to save the life at sea

7.2 Salvage contract 7.2.1 Formation • By and between the salvor and the salved before com

mencement of salvage operation• Master of the vessel in distress shall have the authori

ty to execute such contract on behalf of the shipowner, and property owners on board.

 • Two situations subject to judicial modifcation: (1) contract executed under undue influence or the influence of danger, with obviously unfair terms and c

onditions (2) payment under contract is in excessively too large or s

mall in relation to salvage services actually rendered

7.2.2 Responsibility of the parties 7.2.2.1 The salvor (1) carry out the salvage operation with due care (2) exercise due care to prevent or minimize the pollution d

amage to the environment (3) seek the assistance of other salvors if reasonably necessary (4) accept reasonable request of salved party to seek the pa

rticipation in the salvage operation of other salvors  

7.2.2.2 The salved party (1) cooperate fully with the salvor (2) exercise due care to prevent or minimize the pollution dam

age to the environment (3) promptly accept the request of the salvor to take delivery o

f the vessel or property salved when such vessel or property has been brought to the safe place

7.3 Salvage payment

Guiding principle: no cure, no payment

7.3.1 Significant factors in assessing salvage payment (1) value of the vessel and other property salved(2) skills and efforts of the salvors in preventing or minimizing the pollution damage to the environment(3) result obtained by the salvors(4) nature and extent of danger(5) skill and efforts of salvors in salving the vessel, other property and life (6) time used and expenses and losses incurred by the salvors (7) risk of liability and other risks run by the salvors or their equipment (8) promptness of salvage services rendered by the salvors (9) availability and use of vessels or other equipment intended for salvage operations (10) state of readiness and efficiency of salvor's equipment and value (11) reward cannot exceed value of vessel and other property salved (12) salvor shall be deprived of the whole or part of the payment payable to it to the extent that the salvage operations have become necessary or more difficult because of its fault or if it has been guilty of fraud or other dishonesty

7.3.2 Rewardless salvage

• Distribution of salvage reward among salvors: their agreement • Else, court or arbitrage tribunal’s final decision

(1) as duty to normally perform a towage contract or other service contract, exception for providing special services beyond the performance of such duty

(2) in spite of express and reasonable objection on the part of he master of the vessel in distress, the owner of the vessel in question and the owner of the other property

7.3.3 Distribution of salvage reward

8 General average Extraordinary sacrifice or expenditure intentionally andreasonably made or incurred for the common safety for the purpose of preserving from peril the vessel, goods orother property involved in a common marine adventure.

4 features: (1) marine perils must be common for the vessel, goods or

other property(2) measures are intentionally and reasonably adopted by

the master of the vessel (3) damage must be extraordinary and direct consequence

of such measures(4) measures must be effective

8.1 Scope of general average (1) When vessel should enter a port or place of refuge after being damage

d in consequence of accident, sacrifice or other extraordinary circumstances which render it necessary for the safe prosecution of the voyage, or, when the vessel should return to its port or place of loading to enable the damage to the vessel repaired, then the port charges paid, the wages and maintenance of the crew reasonably incurred and the fuel and store consumed during the extra period of detention in such port or place, as well as the damages and charges arising from the discharge, storage, reloading and handling of the goods and other property in order to have the repair done are allowable as general average.

 

(2) Any extra expense incurred in place of another one which would have been allowed as general average, is treated as general average but its amount cannot exceed the general average expense so avoided

(3) special sacrifice or expenses cause by the event giving rise to the sacrifice or expenditure may have been due to the fault of one of the parties to the adventure are also allowable as the general average

8.2 Apportionment

• In proportion to contributory values of the respective beneficiaries

• Contributing parties shall provide security for general average contribution upon request of the interested party  

• Contributory value: (1) vessel’s contributory value: sound value of the vessel at the place where the voyage ends, from which any damage that doesn't come unde

r general average sacrifice being deducted; or the actual value of the vessel at the place where the voyage ends plus the amount of general average sacrifice

 

(2) that of goods: their value at the time of shipment plus insurance and freight, from which the damage that does not come under the general average sacrifice and the carrier's freight at risk being deducted. If they had been sold before its arrival at the port of destination, thus their value for contribution is the net proceeds plus the amount of general average sacrifice. The passenger's luggage and personal belongings are excluded from the value for contribution

(3) That of freight: amount of freight at the risk of the carrier and which the carrier is entitled to receive at the end of the voyage, less any expense incurred for the prosecution of the voyage after the general average, in order to earn the freight, plus general average sacrifice  (4) Goods undeclared or wrongfully declared are liable for the contribution in general average, but they remain liable to contribute on the basis of their actual value, if saved. If the value of the goods has been improperly declared below its actual value, the contribution in general average is made on the basis of the actual value of such goods, and if the general average sacrifice has occurred, the amount of sacrifice is calculated on the basis of the declared value  (5) Interest: is allowed on general average sacrifice and general average expenditure incurred. The commission is allowed for the general average disbursements other than the wages and maintenance of the crew and fuel and store consumed