Chapter 15 Maritime law

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Chapter 15 Maritime law

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

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1 Vessels
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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.

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1.1.2 Movable property with immovable property
treatment

• 1.1.3 Personality

• 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 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.

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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 SOEs 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
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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

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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 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 1167/ increased ton
3 3001-30000 12333/ increased ton 1167/ increased ton
4 30001-70000 123250/increased ton 12125/ increased ton
5 70001 or more 1234167/ increased ton 12483/ increased ton
Passenger carriage Passenger carriage 46666 units of account ? verified passenger capacity 46666 units of account ? verified passenger capacity
Passenger carriage Passenger carriage Ceiling 25000000 Ceiling 25000000
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2 Mariners
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2.1 Mariners 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
• loyal to job and follow the instructions of
  shipowner or ship
• operator
• (2) not to privately carry any illegal goods or
  materials

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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
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3 Contract for carriage of goods
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3.1 COA, B/L and C/P

• 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/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.
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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 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

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3.3 Carriers responsibilities and exemptions

• 3.3.1 Period of responsibility

Carriers 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
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3.3.2 Vessels 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
defendants whole benefits of the contract were
not deprived substantially. There unable call the
contract off.
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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

• 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

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3.3.4.2 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

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3.3.4.3 Limitation of liability

• 3.3.5 Deck cargo

Goods on deck subject to shippers 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
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3.4 Shippers 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
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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 assignable Order B/L
assignable with endorsement Bearer B/L
assignable without any endorsement
3.5.2.3 Clean B/L and unclean B/L
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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

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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

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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.
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4 Charter parties
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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 B/L
Nature Private carrier Common carrier
Standard form contract ? v
Charges of remuneration Rental Freight
Responsibility of loading and unloading Charterer Carrier
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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
Vessels operation Shipowner Charterer Charterer
Shipowner as carrier v ? ?
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 v ? ?
Charterer as shipper v Not necessarily Not necessarily
Primary goal Carriage of goods Carriage of goods Vessels operation rights
Charterers employment relation with mariners ? ? v
4.1.3 Time C/P v demise C/P
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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

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4.2.2 Shipowners 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 Charterers 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
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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 Shipowners 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

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4.3.3 Charterers 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
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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.
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4.4 Demise C/P

• 4.4.1 Shipowners 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 Charters 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.
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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
shipowners 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.
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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

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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 after towage commencement.

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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.

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5.2.3 Tort liability

• Tug owner is not liable

• 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.

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

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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
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7 Marine salvage
7.1 Four types of salvage

• 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 salvor to vessel in distress
• (4) Obligatory salvage salvage designed to save
  the life at sea

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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
  
• contract executed under undue influence or the
• influence of danger, with obviously unfair
  terms and conditions
• (2) payment under contract is in excessively too
  large or small in relation to salvage services
  actually rendered

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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 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
•  
• 7.2.2.2 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

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7.3 Salvage payment

• Guiding principle no cure, no payment

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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
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7.3.2 Rewardless salvage

• 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 agreement
• Else, court or arbitrage tribunals final
  decision

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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

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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 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

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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
• vessels 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

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(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