Chinese Maritime Law (Haishang Fa)
Chinese maritime law is codified in the Maritime Code (Haishang Fa, 海商法), enacted in 1992 and effective 1 July 1993. The Code governs maritime commerce, including carriage of goods by sea, maritime liens, collisions, salvage, general average, limitation of liability, and marine insurance. China also applies international maritime conventions through the Code.
The Maritime Code
The Maritime Code was drafted with reference to international maritime conventions and the maritime laws of major shipping nations. The Code incorporates principles from: the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (Hague-Visby Rules); the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (1974); the International Convention on Salvage (1989); the Convention on Limitation of Liability for Maritime Claims (1976); and the International Convention on Civil Liability for Oil Pollution Damage (1992).
The Code applies to all maritime activities within China’s territorial waters and to Chinese-flagged vessels on the high seas. The Code may also apply to foreign-flagged vessels in Chinese waters where international conventions or bilateral agreements so provide.
Admiralty Jurisdiction
Admiralty jurisdiction in China is exercised by the maritime courts (Haishi Fayuan), which are specialized courts within the regular court system. Ten maritime courts have been established in major port cities: Dalian, Tianjin, Qingdao, Shanghai, Ningbo, Xiamen, Guangzhou, Beihai, Haikou, and Wuhan. The maritime courts have jurisdiction over: maritime torts; maritime contracts; marine insurance; salvage and general average; ship mortgage and maritime liens; collision cases; and pollution damage.
Maritime courts apply specialized procedures, including: arrest of ships (chuanbo kouya); maritime injunctions; preservation of evidence; and recognition and enforcement of foreign maritime judgments and arbitral awards. The SPC’s Maritime Chamber serves as the appellate court for maritime cases.
Maritime Liens
The Maritime Code establishes a hierarchy of maritime liens (haishang youxian quanyi) that take priority over ship mortgages and other claims (Article 21-26). The maritime lien ranks first in priority for: crew wages and other employment claims; claims for loss of life or personal injury occurring in direct connection with the operation of the ship; claims for salvage reward; claims for port, canal, and other waterway dues and pilotage; and claims based on tort resulting from the operation of the ship.
The maritime lien attaches to the ship, regardless of changes in ownership. The lien expires one year from the date of the claim arising, unless the ship is arrested or the claim is otherwise secured. The Chinese regime is broadly consistent with the International Convention on Maritime Liens and Mortgages (1993).
Collision
The Maritime Code (Articles 165-169) governs liability for ship collisions. Liability is based on fault. Where the collision is caused by the fault of one vessel, that vessel bears full liability. Where both vessels are at fault, liability is apportioned according to the degree of fault; where the degree of fault cannot be determined, liability is apportioned equally.
The Code provides that the liability for damage to cargo is joint and several where both vessels are at fault. The innocent cargo owner may recover the full amount of damage from either wrongdoer, with contribution between wrongdoers as determined by their respective degrees of fault.
Salvage
The Maritime Code (Articles 171-190) governs salvage operations. The Code adopts the no cure, no pay principle, under which the salvor is entitled to reward only if the salvage operation has a useful result. The salvage reward is determined by: the salved value of the vessel and property; the skill and effort of the salvors; the degree of danger; the time and expense incurred; the risk of liability; and the availability and use of equipment.
The Code incorporates the special compensation provisions of the 1989 Salvage Convention, providing for enhanced compensation where the salvage operation prevents or minimizes environmental damage. The special compensation is available even where the salvor does not achieve a useful result in saving the vessel or cargo.
Limitation of Liability
The Maritime Code (Articles 204-215) provides for limitation of liability for maritime claims, following the 1976 Limitation Convention. Ship owners, salvors, and their insurers may limit their liability for certain claims, including: loss of life or personal injury; loss of or damage to property; and economic losses resulting from delay.
Limitation amounts are calculated based on the vessel’s tonnage and are adjusted periodically for inflation. The right to limit liability is lost where the claimant proves that the loss resulted from the liable person’s act or omission committed with intent to cause such loss, or recklessly and with knowledge that such loss would probably result.
Marine Insurance
The Maritime Code (Articles 216-256) governs contracts of marine insurance. The Code covers: hull and machinery insurance; cargo insurance; freight insurance; liability insurance (including P&I); and protection and indemnity insurance. The Code provides for: the duty of utmost good faith; disclosure obligations; warranties; causation and proximate cause; measure of indemnity; subrogation; and abandonment.
The Chinese marine insurance market is dominated by PICC Property and Casualty and other domestic insurers. The market has expanded significantly with the growth of Chinese shipping and trade.
HNA Group Case
The HNA Group bankruptcy (2021) was the largest corporate insolvency in Chinese history and involved significant maritime issues. HNA Group, a conglomerate with substantial shipping and aviation assets, filed for bankruptcy reorganization. The case involved: the arrest of HNA vessels in multiple jurisdictions; claims by maritime creditors; and coordination between Chinese bankruptcy proceedings and foreign maritime proceedings.