Chapter 15 Maritime law

Chapter 15 Maritime law
Contract for carriage of goods
Charter parties
Sea towage
Collision of vessels
Marine salvage
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
1.1.3 Personality
(1) Each vessel has its own name, such as the Queen, the
the Pacific, the Goddess and so on
(2) Each vessel has its nationality
(3) Each vessel has its registered port identical to the
registered 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
Gross tonnage
Personal injury (units of account) Non-personal injury (units of account)
1+ 500/ increased ton
1+2+333/ increased ton
1+2+3+250/increased ton
1+2+125/ increased ton
70001 or more
1+2+3+4+167/ increased ton
1+2+4+83/ increased ton
1+167/ increased ton
46666 units of account ╳ verified passenger capacity
Ceiling: 25000000
2 Mariners
2.1 Mariner’s rights and obligations
(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
(1) loyal to job and follow the instructions of shipowner or ship
(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
Written form
When the hold is not full
Types of charge
Voyage period and route
Shipowner may accept new shippers
Fixed schedule and route
3.2 Formation and discharge of contract
3.2.1 Formation
COA: shipper and shipowner/carrier
B/L: shipper and carrier, consignee is not a party to B/L
C/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
• Due to force majeure at loading port or force majeure at
discharge port
• Former situation: either carrier or shipper may propose to
discharge 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
Containerized goods
Non-containerized goods
Taking over the goods Loading goods onto vessel
at loading port
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: 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.
3.3.3 Reasonable route
3.3.4 Prompt delivery and liabilities for failure Liabilities for late delivery, loss of and damage
to goods
• 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 Exemptions
(1) Fault of the master, crew members, pilot or servant of the carrier in the
navigation 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
navigable 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 special
risks inherent in the carriage
(13) Any other cause arising without the fault of the carrier or his servant or
agent 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 On board B/L and received for shipment B/L Straight B/L, bearer B/L and order B/L
Straight B/L: not assignable
Order B/L: assignable with endorsement
Bearer B/L: assignable without any endorsement 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/L
Voyage C/P
Private carrier
Common carrier
Standard form contract
Charges of remuneration
Responsibility of loading and unloading
4.1.2 Voyage C/P v time C/P
Voyage C/P, time C/P and demise C/P
Voyage C/P
Time C/P
Demise C/P
Vessel’s operation
Shipowner as carrier
Basis of rental
Weight of goods,
tonnage of vessel
Time of lease +
hiring rate
Time of lease + hiring
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
4.2.1 Formation of the contract
• 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
4.2.2 Shipowner’s responsibilities Conforming vessel & seaworthiness Reasonable route Issuance of B/L
Shipowner: issue B/L to the shipper
4.2.3 Charterer’s responsibilities Payment of freight Provision of conforming goods 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. 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
• Contractual provisions take precedence over the provisions of law
4.3.2 Shipowner’s responsibilities Prompt delivery of the vessel Seaworthy vessel 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
Payment of rentals and other charges
Trading area
Intended goods
Right of instruction
Charterer may instruct master with respect to
operation and employment of vessel Right of subletting
Charterer may sublet vessel to third party 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. Surrender of vessel 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 Delivery of seaworthy vessel Mortgage banned
Without written consent of charterer, shipowner cannot create
any mortgage on such vessel.
4.4.2 Charter’s responsibilities Payment of rentals Maintenance and insurance
Charterer is responsible for the maintenance and repair of the
vessel during the charter period. Elimination of adverse affect 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. 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
• May be discharged due to force majeure either before or
after 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 owner
in the navigation and management of the tug;
(2) Fault of the tug in saving or attempting to save life or
property at sea.
Death of or personal injury to a third party or damage to
property thereof has occurred during the sea towage due
to the fault of the tug owner or the tow party, tug owner
and 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 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. Direct consequence of the collision
Only direct consequences of the collision are recoverable. 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
(2) Consensual salvage: most common type of marine
salvage. “No cure, no payment” applies.
(3) Voluntary salvage: salvage voluntarily rendered by salvor
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
commencement of salvage operation
Master of the vessel in distress shall have the
authority 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
(2) payment under contract is in excessively too large or
small in relation to salvage services actually rendered
7.2.2 Responsibility of the parties The salvor
(1) carry out the salvage operation with due care
(2) exercise due care to prevent or minimize the pollution
damage to the environment
(3) seek the assistance of other salvors if reasonably necessary
(4) accept reasonable request of salved party to seek the
participation in the salvage operation of other salvors The salved party
(1) cooperate fully with the salvor
(2) exercise due care to prevent or minimize the pollution
damage to the environment
(3) promptly accept the request of the salvor to take delivery
of 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
(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
(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
• Distribution of salvage reward among salvors: their
• Else, court or arbitrage tribunal’s final decision
8 General average
Extraordinary sacrifice or expenditure intentionally and
reasonably made or incurred for the common safety for
the purpose of preserving from peril the vessel, goods or
other 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
damaged 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
(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
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
under 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

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