LongBench v2 / 66f3c1c3821e116aacb2eaf6 / What is the difference in the focus of the two departments in terms of creating…

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Nanjing Maritime Court Report on Trials  
(December 2019 to November 2020) 
 
TABLE OF CONTENTS 
 
Preface ..............................................................................................- 3 - 
Ⅰ. General Information ...................................................................- 4 - 
(1) General Performance 
.............................................................- 4 - 
(2) Case Classification ................................................................- 5 - 
(3) The Openness of the Justice System .....................................- 8 - 
II. Highlights of Activities 
................................................................- 8 - 
(1) Prospective Systematic Planning ..........................................- 8 - 
(2) Refining the Trial Process .....................................................- 9 - 
(3) Systematic Formulation of Rules and Regulations .............- 11 - 
(4) Additional Intelligent Litigation Services ...........................- 12 - 
(5) Building a Professional Team .............................................- 14 - 
III. Typical Cases............................................................................- 15 - 
Case 1:BOA BARGES AS vs. Nanjing Yichun Shipbuilding Co., 
Ltd. Dispute over International Shipbuilding Contract 
.............- 15 - 
Case 2:Zhang vs. the People's Government of Jianye District, 
Nanjing, Disputes over Administrative Punishment 
.................- 19 - 
Case 3:Dongxing Branch of Jiangsu Jingjiang Rural Commercial 
Bank Co., Ltd. vs. Hu et al.Dispute over Financial Loan Contract 
and Ship Mortgage Contract .....................................................- 22 - 


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Case 4:Case of China Grain Storage Oil Co., Ltd.’s Application to 
Detain theKELLY Ship ............................................................ - 27 - 
Case 5:Qin vs. Su: A Dispute over Maritime Personal Injury 
Liabilities 
.................................................................................. - 30 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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Preface 
The 11th maritime court in China, Nanjing Maritime Court 
officially started operating on December 4, 2019. In its first year, 
under the guidance of Xi Jinping thoughts on Socialism with Chinese 
Characteristics in a New Era, Nanjing Maritime Court (hereinafter 
referred to as “the Court”) implements the guiding principles of the 
19th National Congress of the Communist Party of China and the 
Second, the Third, the Fourth and the Fifth Plenary Sessions of the 
19th CPC Central Committee.  Focused on “building a first-class 
maritime court with its influence spreading across the country and 
even across the globe”, the Court always put political building as the 
overarching principle, made unremitting efforts to refine the trial 
process and make systematic plans and progress, and leveraged the 
role of the maritime trial to support national strategies such as the 
building of a powerful maritime country as well as the re-start of the 
construction of new Jiangsu Province featuring a strong economy, 
wealthy people, beautiful environment, and a high degree of social 
civilization. With a promising beginning in various efforts, the Court 
was recognized by Zhou Qiang, President of the Supreme People's 
Court of China, and Lou Qinjian, Secretary of the CPC Committee of 
Jiangsu Province for its operating performance. The Work Report of 
the Supreme People’s Court of China (2020) also mentions, “Based on 
its geographical advantages, Nanjing Maritime Court actively supports 
the development of the marine economy.” 


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Ⅰ. General Information  
(1) General Performance 
As of November 2020, the Court has accepted 2,127 cases of 
various types and closed 1,312cases, ranking 7th and 9th respectively 
among maritime courts in China concerning the number of accepted 
and closed cases. There are 94 types of cases among all 108 types in 
six categories determined by the Provisions of the Supreme People's 
Court on the Scope of Cases to Be Accepted by Maritime Courts, 
88.06% cases were closed within the time limit for trial, 96.23% cases 
were settled without appeal in the first trial and 63.88% civil cases 
were withdrawn after meditation. Moreover, it accepted the 8th highest 
number of civil cases, the highest number of administrative cases, and 
the 11th highest number of enforcement cases among maritime courts 
in China. The subject matter of all actions valued RMB 7.066billion, 
of which RMB 5.002 billion came from trial cases and RMB 2.064 
billion came from enforcement cases. 


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(2) Case Classification 
1. Civil Cases: As for the civil cases, 1,269 cases were accepted, 
and 693 cases were closed. The top three in the ranking of 
subcategories with the most accepted cases are listed below: disputes 
over contracts for freight forwarding by sea or by waters leading to the 
sea (127 cases), disputes over contracts for freight transport by sea or 
by waters leading to the sea (123 cases), and disputes over contracts 
for the supply of ship stores and spares (95 cases). There are a total of 
561 cases in the top ten subcategories with the exact number of cases 
in each subcategory shown below.  
 


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2. Administrative Cases: As for administrative cases, 130 cases 
were accepted and 45 cases were closed. The top three in the ranking 
of subcategories with the most accepted cases are listed below: 
disputes over administrative compulsion on marine resources (64 
cases), disputes over administrative penalty on water transportation 
(19 cases) and disputes over administrative license on marine 
resources (10 cases). 
3. Enforcement Cases: As for enforcement cases, 477 cases were 
accepted and 361 cases were closed. 
4. Seizure of Ships: 112 ships were seized, of which 5 were from 
foreign countries, Hongkong,  Macau, and Taiwan. 
5. Cases involving foreign, Hong Kong, Macau, and Taiwan 
elements: 100 cases were accepted and accounted for 7.88% of the 


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total accepted cases by the Court; the subject matter of these actions 
valued for RMB443 million and involved the elements of more than 
30 countries and regions such as the United Kingdom, France, 
Germany, South Korea, India, Singapore, Greece, and Brazil. 
6. Cases of Detached Tribunals: Four detached tribunals in 
Lianyungang, Nantong, Taizhou, and Suzhou accepted 1028 cases, 
accounting for 48.33% of the cases accepted by the Court; closed 610 
cases, accounting for 46.49% of the cases closed by the Court. Among 
them, Lianyungang Detached Tribunal accepted 424cases, Nantong 
Detached Tribunal accepted 188 cases, Taizhou Detached Tribunal 
accepted 165 cases, and Suzhou Detached Tribunal accepted 151 
cases.  
 
 
 
 


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(3) The Openness of the Justice System 
943 judgments which account for 71.88% of the total cases were 
uploaded through China Judgments Online. 72 trials were broadcasted 
live on China Court Trial Live Broadcast Online with a total of 47,515 
viewers. 1,304 cases which account for 98.79% of the total went 
through effective judicial process and information disclosure on China 
Judicial Process Information Online. 
II. Highlights of Activities 
(1) Prospective Systematic Planning 
The Court carried out prospective research to reach the targets 
and prioritized leverage of maritime justice in supporting national 
strategies such as the building of a powerful maritime country, the 
development of the Yangtze River Economic Belt, the integrated 
regional development of the Yangtze River Delta, as well as the Belt 
and Road Initiative, in order to promote economic and social 
development with high-quality maritime judicial service; promulgated 
the Opinions on Fully Leveraging the Role of Maritime Trial to 
Provide Judicial Services and Guarantees for the Re-start of the 
Construction of New Jiangsu Province Featuring Strong Economy, 
Wealthy People, Beautiful Environment and a High Degree of Social 
Civilization, which clarifies 4 main tasks, 8 key fields and 10 
guarantee mechanisms for maritime justice; established a regular 
analysis and notification system for cases involving the Belt and Road 
Initiative, conducted special investigations on admiralty and maritime 
cases involving the Free Trade Zone, the construction of the Grand 


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Canal Cultural Belt, and marine ecological environment protection, 
and introduced 10 measures to make business environment more 
international, facilitating and making it compatible with the rule of 
law; closed 38 maritime administrative cases involving unlicensed 
ships on the Yangtze River in accordance with the law, promoted 
substantive progress in resolving administrative disputes through 
demonstrative court trials, and supported the elimination of unlicensed 
ships on the Yangtze River—all these judicial efforts led to a better 
protection of the Yangtze River; proposed 15 measures on maritime 
justice for pandemic prevention, published 14 issues of articles on the 
“interpretation of maritime laws by maritime judges”, organized the 
preparation and distribution of more than 1,000 copies of the Manual 
on Legal Risk Avoidance in the Shipping, Port, Logistics, Shipbuilding 
and Other Industries, provided relief to companies in difficulties and 
worked to ensure stability in employment, financial operations, 
foreign trade, foreign investment, domestic investment, and 
expectations as well as security in job, basic human needs, operations 
of market entities, food and energy security, stable industrial and 
supply chains, and the normal functioning of primary-level 
governments. 
 (2) Refining the Trial Process 
Given that maritime jurisdiction is internationally involved and 
requires professionalism, the Court made vigorous efforts to refine its 
trial process and guaranteed fair and efficient trial of cases. It 
formulated the Opinions on Refining the Maritime Trial Process and 


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Selecting a Collection of Well-tried Cases, set up a group of 
consulting experts, recommended experts to serve as the jurors, 
carefully paid attention to complex and troublesome major cases with 
significance for rulemaking and demonstration, and presented a batch 
of well-tried cases; formulated 12 guidelines for collecting maritime 
evidence, judicial review of maritime arbitration and other trial 
procedures and prepared trial guidelines for typical cases such as 
cargo delivery by sea without a bill of lading and disputes over freight 
forwarding by sea to standardize judicial behaviors and unify 
judgment standards. In the early stage of its establishment, the Court 
overcame a series of difficulties such as lack of experience in the 
seizure of foreign ships, and actively coordinated with maritime and 
defense departments to its first foreign ship seizure case—the seizure 
of “Kelly”, and developed its initial procedure for the seizure of ships; 
properly handled a ship seizure case involving multiple sensitive 
factors such as foreign affairs, the pandemic, floods and effectively 
mitigated pandemic and flood risks faced by the ship "New Orion" 
during its seizure, and protected the legitimate rights and interests of 
both Chinese and foreign litigants; effectively closed an international 
case involving disputes over a shipbuilding contract that was actively 
handed by the foreign litigant to Nanjing Maritime Court and won the 
trust of the international community in China's maritime justice with 
professionalism. During the tour of inspection to courts in Jiangsu, a 
deputy to National People’s Congress fully recognized Nanjing 
Maritime Court for its professionalism, as well as its efforts to refine 


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the maritime trial process and support the development of the marine 
economy. 
(3) Systematic Formulation of Rules and Regulations 
The Court gave priority to rules and regulations, accelerating 
their formulation and ensuring they remain systematic, coordinative, 
and operable. The Court prepared the Development Plan for Nanjing 
Maritime Court (2021-2025), and issued more than 60 rules and 
regulations, covering case trial, team management, Party building, and 
judicial affairs; improved the operating mechanism of maritime 
jurisdiction, issued a complete set of trial management documents to 
clarify jurisdictions and responsibilities of judges, the responsibility of 
trial supervision of the Court’s president, vice president, and division 
chief judges, and the working rules of the adjudication committee and 
the presiding judges' meeting, and fully implemented the judicial 
responsibility system. The Court further developed a communication 
mechanism between detached courts and local CPC committees, 
governments, and local courts, and better leveraged the role of 
detached courts in serving the overall interests in accordance with the 
law, ensuring justice is served, training officials, and improving social 
governance. Moreover, it co-signed the Memorandum on the Strategic 
Cooperation in the Administrative Enforcement of the Maritime Law 
and Maritime Justice in Jiangsu Province with the Department of 
Transportation of Jiangsu Province, Jiangsu Maritime Safety 
Administration and Lianyungang Maritime Safety Administration to 
actively explore a new cooperation model for the administrative 


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enforcement of the maritime law and maritime justice in Jiangsu, an 
innovative measure which was successfully selected as one of the 
representative cases of judicial reform in courts of Jiangsu; established 
strategic partnerships with Dalian Maritime University and Nanjing 
University of Information Science and Technology, carrying out 
pragmatic and in-depth cooperation in talent training, academic 
platform construction, and personnel exchanges and interactions; 
promoted the establishment of the Maritime Litigation Research 
Society, Jiangsu Law Society to bring together experts on the 
admiralty and maritime laws in the province and make constant 
theoretical and practical innovation on maritime justice, and 
successfully held its first annual meeting through live streaming with a 
total of 25,000 viewers and positive social repercussions. Besides, the 
Court appointed deputies to NPC, CPPCC members, and maritime 
experts as special supervisors, and regularly arranged activities such 
as court hearings, inspections, and investigations. During the trial of a 
maritime administrative case in which the administrative officer 
appeared in court, deputies to NPC and CPPCC members as hearers 
spoke highly of the judgment of the court. 
 (4) Additional Intelligent Litigation Services 
The Court made full leverage of the achievements from the 
construction of smart courts in Jiangsu to promote the construction of 
a one-stop multi-component dispute resolution and litigation service 
system and enable smart service, smart trial, smart enforcement, and 
smart management; optimized online litigation services to enable 


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cross-domain case filing, electronic delivery,  online payment, and 
online case review and installed self-service facilities in Nanjing 
Yangtze River International Shipping & Logistics Center and 
Maritime Rule of Law Square to provide litigation services day and 
night.  It further developed construction planning for the trial building 
in the Nanjing Rule of Law Park and infrastructure of detached courts, 
integrated the information system of the Court's headquarters and 
detached courts, established a remote conference system for judges 
and an online court, developed an online ship inspection and control 
system, and improved the 854 operation model of the executive 
command center by formulating the Online Trial Norms of Nanjing 
Maritime Court and closed 154 cases on the Internet during the 
COVID-19 pandemic to guarantee continued case trial and 
administration of justice. Moreover, it set up one-stop dispute 
resolution centers for disputes over marine accidents, port disputes, 
and fishery disputes in Nanjing, Suzhou, and Lianyungang as well as 
circuit trial courts and trial work stations for dispute resolution at the 
source in the four detached courts, and specially invited six mediation 
organizations and 89 mediators. Based on these efforts, a maritime 
dispute resolution network was shaped to provide various needed 
judicial services to people. Besides, it became the first court in Jiangsu 
to develop a bilingual website (Chinese and English) where it released 
its first bilingual maritime report on trials. It also created accounts on 
online platforms such as WeChat, Weibo, and Toutiao where it 
published more than 800 posts, with 450,000 reads and 15 news 


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reports shared by People’s Court Daily, Xinhua Daily, Jiangsu Legal 
Daily, andsome other mainstream media. 
(5) Building a Professional Team 
The Court strived to build a politically solid and professionally 
competent maritime trial team with an international perspective by 
adhering to the requirements of constant reform, regularized operation, 
specialization and professionalism and giving priority to self-
betterment and the sense of responsibility; always putting the Party’s 
political building first, continued to guide itself with theory and put 
into practice the requesting and reporting system for major affairs; 
established its own CPC committee, commission for disciplinary 
inspection, labor union, youth league, and women's federation to 
promote the solid integration of Party building and trial work, 
prepared personal archives for court personnel and warned them with 
negative cases, and put into action the responsibility of its CPC 
committee and the supervision responsibility of its commission for 
disciplinary inspection. Moreover, it focused on equipping maritime 
judges with knowledge about the law, foreign languages, maritime 
affairs, trade, and shipping,  as well as held the “lectures on maritime 
affairs” every month, and organized judicial officers to train sea safety 
skills on ships in order to improve their professionalism; it further 
built a translation team of young staffers to regularly conduct 
translation training and academic exchanges; set up 10 professional 
teams of  judges and pooled efforts to conduct in-depth discussions on 
professional cases; introduced an assessment mechanism based on 


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seven objectives, established a pool of researchers, and encouraged 
them to “delve deep into research problems, summarize their 
experiences, and present their findings.” In the past year, the judicial 
officers of the Court have undertaken one province-level key research 
project and wrote 21 papers, which were either published in journals 
such as People’s Judicature and Journal of Law Application or won 
awards in the state- and province-level conferences. It participated in a 
series of conferences, including the 28th National Maritime Trial 
Seminar, the Special Symposium of the Supreme People's Court on 
Judicial Protection of Marine Ecological Environment, and the Annual 
Meeting of the China Maritime Law Association, and delivered more 
than 10 keynote speeches. 
III. Typical Cases 
 
Case 1:BOA BARGES AS vs. Nanjing Yichun Shipbuilding Co., 
Ltd. Dispute over International Shipbuilding Contract 
 
[Case Details] 
On April 18, 2007, Norwegian shipowner BOA OFFSHORE AS, 
ordered ships from Nanjing Yichun Shipbuilding Co., Ltd. 
(hereinafter referred to as “Nanjing Yichun Company”) and signed 
three Semi-Submersible Heavy-duty Deck Barge Contracts with a 
total price of nearly US$50 million.The contracts agreed that disputes 


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shall be arbitrated in London and governed by English law. On May 
17, 2010, Norwegian shipowner BOA BARGES AS, as the new 
purchaser, assumed the rights and obligations of the original three 
contracts. With the occurrence of the dispute over the contract 
performance, both parties decided to terminate the Contract on 
December 8, 2015, but failed to reach an agreement on a series of 
issues after the termination of the contract. By the beginning of 2020, 
the dispute cannot be solved by negotiation due to its escalation.Thus, 
both partiesshall apply to the London Court of International 
Arbitration for arbitration in accordance with the relevant contract to 
solve the dispute.  
The sudden outbreak of COVID-19 in February 2020 has a great 
impact on international arbitration. Especially with the increasingly 
severe situation of global epidemic, many European countries 
adoptentry restrictions and other prevention and control measures. 
Based on various factors, both parties signed the Supplementary 
Agreement on May 16, which agreed to submit the dispute to Nanjing 
Maritime Court for adjudication and apply Chinese laws. On June 11, 
the plaintiff BOA BARGES AS entrusted lawyers with a lawsuit to 
Nanjing Maritime Court, requesting the defendant Nanjing Yichun 
Company to return the advance payment and the accrued interest. 
[Verdict] 


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At the acceptance of this case, it was found through examination 
that the power of attorney of the plaintiff's attorney shall be notarized 
by the Norwegian notary office and authenticated by the embassy of 
the People's Republic of China in Norway. However, due to the 
influence of the pandemic situation, the plaintiff failed to submit the 
authenticated notarial documents to the court. In view of the actual 
impact of the pandemic on notarization and authentication and the 
complete specifications of other relevant filing materials of the case, 
and the plaintiff's attorney promised to complete the authenticated 
notarial documents before the trial, Nanjing Maritime Court decided 
to file the case first, allowing the attorney to delay submitting and 
authorization procedures. In the process of trial, in order to reduce the 
risks brought about by the flow and gathering of people during the 
pandemic, the undertaking judge, on the basis of carefully examining 
the evidence materials involved in the case, facilitated the parties to 
reach a mediation agreement by handling the case through the Internet, 
and concluded the case in 27 days. 
[Significance] 
Jiangsu is a major shipbuilding province in China, with 
shipbuilding completion, order placement and existing orders ranking 
first in China for consecutive years, and all indicators accounting for 
more than 30% of the national total. There are a large number of ship 
cases accepted by Nanjing Maritime Court, accounting for 29.71% of 


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the total number of civil cases. The discussed case is an international 
ship construction contract dispute case. Against the backdrop of the 
increasingly severe global COVID-19 epidemic, the foreign party took 
the initiative to alter the dispute resolution method from arbitration in 
London to filing a lawsuit to Nanjing Maritime Court and applying 
Chinese law, which is not only based on the trust in China's efforts to 
build the International Maritime judicial center and optimize the 
judicial environment, but also fully recognized the Nanjing Maritime 
Court's service to ensure the construction of "the Belt and Road 
Initiative" and actively build a preferred place for maritime litigation. 
During the COVID-19 epidemic, Nanjing Maritime Court allows 
foreign parties to postpone the submission of relevant notarization and 
authentication documents according to the relevant guidelines of the 
Guiding Opinions of the Supreme People's Court on Several Issues 
Concerning the Proper Trial of Civil Cases Involving COVID-19, and 
actively used the Internet in handling cases to promote the resolution 
of disputes in a timely manner, which truly realized thevision of 
normal trial and execution without halt the justice during COVID-19 
epidemic. It is a great practice of equally protecting the legitimate 
rights and interests of Chinese and foreign parties, actively optimizing 
the rule of law, internationalization and facilitating the business 
environment, which fully embodies the advantages of the socialist 
judicial system with Chinese characteristics. 


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[First-instance Trial, Case Number] (2020) Jiangsu72,Civil 
Case First Instance No.611 
 
Case 2:Zhang vs. the People's Government of Jianye District, 
Nanjing, Disputes over Administrative Punishment 
 
[Case Details] 
In May 2018, seven administrative agencies including Nanjing 
Jianye District People's Government, Nanjing Transportation Bureau, 
Nanjing Maritime Safety Administration, the Water Branch of 
Nanjing Public Security Bureau, the Nanjing Branch of Yangtze River 
Shipping Public Security Bureau, Nanjing Water Affairs Bureau, and 
Nanjing Agriculture and Rural Bureau set up a joint team to carry out 
special actions to rectify the “Three Withouts” (“without name and 
number”, “without ship certificate” and “without registry port”) ships 
in some waters of the Nanjing section of the Yangtze River, 
identifying 19 vessels owned by 14 persons, including Zhang, as 
“Three Withouts” vessels, and towing them to the temporary detention 
area for confiscation and dismantlement. Upon learning of the 
confiscation and dismantling of the vessels, Zhang et al. started 
seeking help from government authorities at all levels in the forms of 
letters and visits. In June 2020, Zhang et al. filed an administrative 
lawsuit with Nanjing Maritime Court, demanding confirmation that 


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the seven administrative organs of the joint team confiscated and 
dismantled ships illegally, and filed an administrative compensation 
lawsuit, requiring that the administrative organs to compensate each 
ship for losses ranging from several hundred thousand yuan to more 
than one million yuan. 
[Verdict] 
After the case acceptance according to law, Nanjing Maritime 
Court acquired a deep understanding of the background, progress and 
early dispute handling of the rectification of the “ThreeWithouts” 
ships in the Yangtze River, combed the relevant laws, regulations and 
policies, analyzed and judged the practices, common disputes and 
judicial decisions of the rectification of the “ThreeWithouts” ships in 
various provinces and cities. In order to properly handle the discussed 
disputes according to law, Nanjing Maritime Court decided to take the 
lead in arranging 12 typical cases for trial, and notify the person in 
charge of the sued administrative organ to appear in court to respond 
to the lawsuit, and arrange the parties in other 26 cases to attend the 
trial. On the basis of finding out the facts of the cases, the 
prosecutions of the above 12 cases were rejected on the grounds that 
the cases exceeded the time limit for prosecution. After the trial, the 
court patiently explained the applied laws and regulations and 
clarified the legal relationship. On the basis of fully considering the 
actual situation of the ships and the specific policies of the local 


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government, the parties in other 26 cases voluntarily withdrew the 
lawsuits requesting confirmation of the administrative organ’s 
illegality, and reached a mediation agreement with the sued 
administrative organs on the administrative compensation, which was 
confirmed by the Nanjing Maritime Court. 
[Significance] 
Maritime administrative cases are one of the six categories of 
cases accepted by maritime courts. The discussed disputes over 
maritime administration involving the “Three Withouts” ships on the 
Yangtze River were properly concluded according to law, which is a 
successful practice for Nanjing Maritime Court to deepen the 
connection between administrative law enforcement and judicial 
disposal. It strongly supports the zero clearing of “Three Withouts” 
ships on the Yangtze River and demonstrates the maritime judicial 
protection of the Yangtze River. “Three Withouts” ships evade 
supervision and illegally engage in passenger traffic, cabin cleaning, 
sand excavation & fishing, electric welding repair and other business 
activities on the Yangtze River, which easily causes potential safety 
hazards of waterways and environmental pollution on the Yangtze 
River waters. Additionally, it is hard to investigate and handle the 
“ThreeWithouts” ships, and these situations turn to occur repeatedly. 
In the trial of this case, Nanjing Maritime Court conscientiously 
implemented the concept of “joint efforts rather than mass 


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development”, based on the objective of resolving administrative 
disputes substantively, and guided the parties to such cases involving 
the “Three Withouts” ships of the Yangtze River to defend their rights 
rationally by organizing demonstration trials and rejecting Zhang’s 
lawsuit in advance according to law, thus laying a solid foundation for 
resolving contradictions and disputes and ensuring the detailed 
implementation of the relevant strategic arrangements for the 
protection of the Yangtze River. The successful conclusion of these 
disputes safeguardthe rights and interests of people’s livelihood to the 
utmost extent, supportand supervise the law-based administration of 
maritime administrative organs, and provided guidance for the 
maritime administrative organs to further improve the standardization 
of administrative law enforcement, which fully demonstrates the 
functional role of maritime trials in promoting the development of the 
Yangtze River Economic Belt and regional integration in the Yangtze 
River Delta in accordance with the law. 
[First-instance Trial, Case Number] (2020) Jiangsu 72, 
Administrative Case First Instance No.9-14, No.59-71, (2020) Jiangsu 
72, Administrative Compensation Case First Instance No.3-21 
 
Case 3:Dongxing Branch of Jiangsu Jingjiang Rural Commercial 
Bank Co., Ltd. vs. Hu et al.Dispute over Financial Loan Contract and 
Ship Mortgage Contract 


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[Case Details] 
On December 3, 2013, Hu signed a loan contract with Dongxing 
Branch of Jingjiang Rural Commercial Bank Co., Ltd. (hereinafter 
referred to as “the Bank”), stipulating that Hu applied a loan of 28 
million yuan from the Bank. On the same day, Taizhou Jintai 
Shipping Co., Ltd. (hereinafter referred to as “Jintai Company”), XX 
Zhang, X Zhang, Wu, and Mao signed a guarantee contract with the 
Bank, stipulating that Jintai Company, XX Zhang, X Zhang, Wu, and 
Mao shall provide joint liability guarantee for all principal, interest, 
overdue interest, penalty interest, compound interest, damages, 
expenses for realizing creditor’s rights and all other expenses for 
realizing creditor’s rights under the above contract. Hu and Jintai 
Company signed a mortgage contract with the Bank, stipulating that 
all “Jintai 528” bulk carriers of Hu and Jintai Company provide 
mortgage guarantee for the above loan, with the guarantee amount of 
28 million yuan, and the guarantee scope covers the principal, interest, 
overdue interest, penalty interest, compound interest, damages, 
expenses for realizing creditor’s rights and all other expenses for 
realizing creditor’s rights under the main contract. After the expiration 
of the repayment period, Hu still owed a principal of 26.93 million 
yuan and failed to return it according to the contract. The Bank 
appealed to Nanjing Maritime Court, requesting that Hu immediately 


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repay the loan principal of 26.93 million yuan and the interest until the 
date of repayment. Jintai Company, XX Zhang, X Zhang, Wu and 
Mao shall bear joint and several liability.The Bank has the priority to 
be compensated for the price obtained from auction, sale and discount 
of “Jintai 528” bulk carriers mortgaged by Xx Hu and Jintai Company 
for the above debts. 
[Verdict] 
Nanjing Maritime Court held upon trial that, according to Article 
58 of theMinutes of Civil and Commercial Trial Work of National 
Courts issued by the Supreme People’s Court on November 8, 2019, 
in the confirmation of the scope of guarantee for real estate security, if 
the scope of guarantee agreed in the contract is inconsistent with the 
registration due to the setting of regional registration system and 
registration rules, it is an appropriate choice for the People’s Court to 
confirm the scope of guarantee for real estate security by contract. In 
the practice of Jiangsu’s ship mortgage registration authority, the 
registration system does not set the column of “guarantee scope”, and 
generally only has the expression of “amount of creditor’s rights”, and 
only a fixed number can be filled in. Due to the technical conditions, 
the registration authority usually only registers the amount of principal 
creditor’s rights in it. In this case, the registration authority recorded 
the amount of creditor's rights of 28 million yuan in the mortgage of 
“Jintai 528” bulk carriers, which only indicated the amount of 


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principal creditor’s rights, but did not limit the guarantee scope of ship 
mortgage to 28 million yuan. In this case, the mortgage of “Jintai 528” 
bulk carrier involved in this case, as a special movable property, is 
inconsistent with the contract agreement due to the setting of the 
registration system of the ship mortgage registration authority. 
Therefore, the scope of mortgage guarantee may be determined as 
covering the principal creditor’s rights, interest, penalty interest and 
other expenses by reference to the spirit of meeting minutes, instead of 
simply confirming the registered creditor’s rights amount of 28 
million yuan as the guarantee scope of ship mortgage. Therefore, the 
defendant, Hu, repaid the plaintiff,the Bank, the loan principal of 
26.93 million yuan and accrued interest, and the defendants, Jintai 
Company, XX Zhang, X Zhang, Wu and Mao bore joint and several 
liabilities for liquidation.The plaintiff,the Bank, was given the priority 
of compensation for the proceeds from the auction, sale and discount 
of “Jintai 528” bulk carrier. After the judgement of the first instance 
was pronounced, neither party lodges an appeal. 
[Significance] 
There are disputes in practice as to whether the guarantee scope 
of ship mortgage shall be based on the amount of creditor’s rights 
registered in mortgage or the guarantee scope agreed in contract. The 
typical significance of this case lies in the establishment of the rules 
for the determination of the scope of creditor’s rights guaranteed by 


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ship mortgage, that is, if the scope of ship mortgage secured as agreed 
in the contract is inconsistent with that of the mortgage registration, 
the contract shall prevail. At present, due to the technical conditions, 
the ship mortgage registration authorities in some areas of China 
usually only register the amount of the principal creditor's rights on 
the ship mortgage certificate, which leads to disputes over whether the 
scope of the creditor’s rights guaranteed by ship mortgage cover 
interest, penalty interest and other expenses. In the trial process of this 
case, instead of simply equating “the amount of creditor's rights” with 
“the scope of guarantee”, based on the analysis of the current legal 
provisions and referring to the rules for determining the scope of 
guarantee of real property rights in the Minutes of Civil and 
Commercial Trial Work of National Courts, it is determined that the 
scope of ship mortgage should be based on the contractual agreement 
of the parties, which provides targeted referee guidance for the 
people’s court to determine the scope of creditor’s rights guaranteed 
by ship mortgage, and can also promote the maritime department to 
further improve the ship mortgage registration system, which is 
conducive to standardizing the ship financing order and ensuring ship 
financing safety and the health of the whole shipping industry. 
[First-instance Trial, Case Number] (2020) Jiangsu 72,Civil 
CaseFirst Instance No.19 
 


- 27 - 
 
Case 4:Case of China Grain Storage Oil Co., Ltd.’s Application 
to Detain theKELLY Ship 
 
[Case Details] 
In August, 2019, KELLY, a Marshall Islands cargo ship carrying 
a load of 80,000 tons of soybean from Richelief Port, Louisiana, USA 
arrived at Dafeng Port and Zhenjiang Port, respectively, and the cargo 
was found seriously damaged after inspection. On December 25, 2019, 
the consignee of this batch of goods, China Grain Storage Oil Co., 
Ltd., applied to Nanjing Maritime Court for detaining the “KELLY”, 
which was anchored in Zhenjiang Port, on the grounds of serious 
damage to the goods, and requested the shipper to provide a guarantee 
of US$4 million. 
[Execution Process] 
In the process of handling this case, Nanjing Maritime Court, 
after strictly examining the subject qualification, basic evidence and 
guarantee provided by the applicant, considered that the case met the 
requirements for maritime claim preservation, and immediately made 
a ruling on arrest of the ship and an arrest order, and decided to arrest 
the ship on the same day. On the premise of comprehensively 
considering many factors such as the port environment where the ship 
was located, the weather conditions of the day and the arrival of 
Christmas Day in western world, a detailed plan for ship arrest has 


- 28 - 
 
been worked out, and a team of police officers with rich experience in 
ship arrest and good English skill has been organizedto perform the 
ship arrest. The leaders of the court conducted real-time command of 
the ship arrest process by implementing the command system. In the 
afternoon of December 25, 2019, the executive police officers arrived 
in Zhenjiang, and delivered the notice of assisting in the arrest of ships 
to Zhenjiang Maritime Safety Administration and Zhenjiang Border 
Inspection Station in time. The Maritime Safety Administration and 
Border Inspection Station immediately assisted in handling the 
procedures of prohibiting the ships involved from leaving the port and 
boarding the ship. The executive police officers boarded the ship 
smoothly, issued an order to arrest the ship to the captain in 
accordance with the law, seized the ship certificate, and ordered the 
requested party to provide guarantee. After explaining the operation 
status and ownership of the ship to the judge, the captain signed the 
legal documents for arresting the ship, and agreed with the 
standardized law enforcement of Nanjing Maritime Court. Nine days 
after the arrest of the ship, the applicant applied for lifting the arrest 
on the grounds that the defendant had provided guarantee, and the 
Nanjing Maritime Court ruled and lifted the arrest according to law. 
[Significance] 
Seizure and auction of ships is a judicial function exclusively 
vested in maritime courts. Seizure of ships before litigation is a special 


- 29 - 
 
form of preservation in maritime courts, which can effectively urge 
the defendant to fulfill his legal obligations in a timely manner and 
promote the rapid resolution of maritime contradictions and disputes. 
Since performing their duties, Nanjing Maritime Court has detained 
all types of ships according to law, amounted to 112, including 5 
foreign ships. This is the first case accepted by Nanjing Maritime 
Court to apply for detaining a foreign ship, which is of great 
significance to broaden the way for domestic parties, standardize the 
work flow, protect the rights and interests of the foreign applicants 
and safeguard the judicial authority. First, establish the appraisal 
system of arresting ships before litigation. Before applying for the 
arrest of a ship before litigation, the judge studies and evaluates the 
materials, guarantees and controversial issues provided by the parties, 
prompting the parties to provide complete and standardized materials 
in time to ensure the smooth and efficient seizure of the ship. Second, 
establish a guarantee system in line with the reality of Yangtze River 
shipping. In view of the special situation of many functional 
departments, high density of ships and fast service cycle of docks on 
the Yangtze River route, a guarantee system of “letter of 
guarantee&cash guarantee” shall be established, and the calculation 
rules of cash guarantee required by different ships and docks shall be 
clarified to deal with various expenses and possible risks during the 
seizure of ship. Third, establish a cooperative working mechanism 
with various maritime functional departments. In this case, Nanjing 


- 30 - 
 
Maritime Court made full use of communication means such as 
platform network, and immediately docked with maritime affairs, 
border defense and other departments to handle the procedures of 
arresting and boarding ships, and coordinate the dispatching of 
berthing docks, so as to effectively improve the implementation 
efficiency of arresting ships and equally protect the legitimate rights 
and interests of the parties. 
[Execution 
Case 
Number] 
(2019) 
Jiangsu 
72,Property 
Preservation Case No.2, (2019) Jiangsu 72,Evidence Preservation 
Case No.1 
 
Case 5:Qin vs. Su: A Dispute over Maritime Personal Injury 
Liabilities 
 
[Case Details] 
Qin was rendering service on Su’s fishing vessel. When he was 
trying to moor the vessel during a fishing task on the sea, an injury 
was inflicted on his right foot by the mooring line. He was 
immediately brought back to the port and treated at a local hospital in 
Qingdao. When his conditions stabilized, he was transferred to a 
hospital in Ganyu District, Lianyungang City for further treatment, but 
he ended up with an authenticated Grade-9 disability, which would 


- 31 - 
 
exert adverse effects on his future life, labor, and income. When Qin 
was hospitalized, one of Su’s family members kept him company all 
the time and paid over 180,000 yuan for the medical expenses. 
Afterwards, the two parties failed to agree on the due amount of 
indemnities for Qin’s disability, nursing expenditure, and lost income. 
Thus, a dispute arose and Qin later filed a lawsuit to Nanjing Maritime 
Court, requesting the defendant Su to compensate him with a total of 
307,830.64 yuan for the miscellaneous losses caused by the accident 
in the course of his service rendering. 
[Verdict] 
Nanjing Maritime Court tried the case in a timely manner and 
ascertained the facts by organizing both parties to present evidence 
and cross-examine. When it came to fees such as disability 
compensation and nursing expenditures, the two parties kept arguing 
whether the injured person was at fault, as well as about his average 
income and the nursing staff, which made it difficult for the court 
investigations to proceed, so the presiding judge promptly announced 
adjournment, summarized the trial, and analyzed the pertinent factual 
evidence and liabilities. The presiding judge maintained that the 
sustained accompaniment from defendant Su’s family following Qin’s 
injury and the 180,000-yuan payment for medical expenses 
demonstrated that Su has complied with the local shipowner’s norms 
for handling an injured crew member, and that the rules recognized by 


- 32 - 
 
the local fishermen, therefore, should be applied to resolving the 
dispute. Thanks to the trial, especially the judge’s summary, both 
parties adjusted their expectations into more practical directions, 
which might well eventually lead to mediation. Given the hostility 
between the two parties when the trial was concluded, it was 
inappropriate to conduct mediation immediately. Therefore, the court 
announced the scheduled time and place for mediation and entrusted it 
to a special mediator at the one-stop fishery dispute resolution center 
under Nanjing Maritime Court. The special mediator has lived in the 
local fishing village for a long time and thus acquires professional 
knowledge of fishery and rich experience in handling related disputes. 
The efforts of the special mediator enabled the two parties to reach an 
agreement: the defendant Su should compensate the plaintiff Qin for 
his disability, moral damage, follow-up treatment fees, and other 
legitimate indemnities, totaling 164,000 yuan, to be paid by three 
installments. The court issued a mediation document confirming this 
agreement. 
[Significance] 
In the coastal area of Jiangsu, fishery disputes mostly occurred in 
traditional fishing ports, villages and townships. They are typical of 
what are termed“cases concerning people’s livelihood.” In most cases, 
one of the parties usually has an urgent need of aid and support, or is 
led a life troubled by injury or illness. In view of this, Nanjing 


- 33 - 
 
Maritime Court attaches great importance to the resolution of fishery-
related disputes and stays committed to “resolving disputes through a 
non-litigation mechanism.” To this end, a one-stop mediation center 
for fishery disputes has been established in Xiakou Village, Qingkou 
Town, Ganyu District, Lianyungang City. A special mediator, Qi 
Honggui, who is based at the center, provides the fisherman 
community with convenient, efficient, and low-cost maritime judicial 
services. Despite the current availability of relatively sound law 
theories and comprehensive law-based evidence for fishermen’s 
disputes over maritime personal injury liabilities, the twoparties often 
have substantial disagreements to the amount of compensation. This, 
along with the plethora of witnesses and testimonies as well as the 
insufficiency of key documentary evidence, poses a great and time-
consuming challenge to the court in ascertaining the facts, handling 
the disputes, and ensuring timely relief for the injured.  
The presiding judge of this case made a summary of the trial after 
combing through the evidence presented by both parties, so as to 
mentally prepare them for the direction of the trial. Then, the judge 
entrusted the mediation work to an experienced special mediator, who 
is acquainted with fishery practices and fishermen’s life, to spare 
much energy and time in the course of fact ascertaining. Giving full 
play to the special mediator’s role has proved to be quite productive 
and conducive to timely and efficient settlement of cases concerning 


- 34 - 
 
people’s livelihood. The settlement of this case through mediation 
manifests Nanjing Maritime Court’s efforts in upholding people-
centered administration of justice, developing its one-stop multi-
dispute resolution mechanism and litigation service system with 
maritime characteristics, and meeting the diverse judicial needs of the 
people in a better way. 
[First-instance Trial, Case Number] (2020) Jiangsu 72 Civil 
Case No. 231 
 
(The above information provided by Nanjing Maritime Court） 
 
 
 
 
 


 
Guangzhou Maritime Court 
Report on Trials 2020 
 
Preface 
 
2020 was an extraordinary year in the history of the People’s Republic of China. The year 
witnessed the country’s efforts in completing the building of a moderately prosperous 
society in all respects and attaining a decisive victory in the fight against poverty. It was 
also the year China made successful conclusion of the 13th Five Year Plan. However, the 
outbreak of COVID-19 has sent the world economy into a severe downturn, disrupted 
production, and caused a contraction in international trade. In UN’s “World Economic 
Situation and Prospects”, in 2020, the world economy shrank by 4.3 per cent, over two 
and half times more than during the global financial crisis of 2009. Marine shipping, the 
artery of the global trade and a barometer for the global economy, was facing severe 
impact of the epidemic, which was evidenced by the shrinking demand, shipment delays, 
shipping space shortage, and continuous rise of freight rates. The global shipping supply 
chain was stuck in a deep recession.  
 
In 2020, facing the challenging international environments and the complicated domestic 
work relating to reform, development and stability, especially the shock of COVID-19, 
under the firm leadership of the Party Central Committee with Comrade Xi Jinping at its 
core, China has made major strategic achievements in the response to COVID-19, and 
achieved positive results in the epidemic prevention and control and in the advancement 
of the economic and social development. According to the data released by the National 
Bureau of Statistics, China’s GDP in 2020 exceeded 100 trillion yuan, increasing by 2.3% 
in comparable prices compared with 2019, making a tremendous progress in the overall 
national strength. China is also pursuing higher-standard opening up, as is evidenced by 
the Master Plan for the Construction of Hainan Free Trade Port issued by the State Council, a 
momentum to boost the development of free trade port, and the Opinions on Accelerating 
the Construction of Tianjin as An International Shipping Hub in North China jointly released by 
the National Development and Reform Commission and the Ministry of Transport, with 
a view to promoting positive interplay between domestic circulation and international 
circulation. In the 2020 Xinhua-Baltic International Shipping Centre Development Index, 
Shanghai has ascended to the top three international shipping centers for the first time.  
 
In 2020, following the guidance of the Xi Jinping Thought on Socialism with Chinese 
Characteristics for a New Era and focusing on administrating justice for the people and 
maintaining judicial fairness, Guangzhou Maritime Court has been pioneering in building 


 
 
itself into an international maritime judicial center and offering its wisdom and strength 
in supporting the advancement of the Belt and Road Initiative and the Greater Bay Area, 
in supporting Shenzhen in constructing the socialist pilot demonstration area of Chinese 
characteristics and Guangzhou in regaining vitality and scoring new achievements in four 
aspects which aim at improving its city functions, cultural strength, service industry, and 
international business environment, and in supporting the rollout of the province’s new 
development model featuring “one core, one belt, one zone”, i.e. the Pearl River Delta as 
the core, the coastal economic belt, and the ecological development zone in the north of 
the province. In the year, Guangzhou Maritime Court retained its place among the top 
three maritime courts of China on the openness of judicial process. The court was also 
awarded for its efforts in the international communication of the rule of law, which was 
listed in China’s ten typical cases of international communication of the rule of law. It 
also succeeded, inter alia, in completing the first judicial confirmation case by opening an 
online court session that connected the parties involved in Guangdong and Hong Kong 
simultaneously.       
  
In 2020, through case study on issues such as maritime administrative litigation, freight 
forwarding, time charter, personal injuries, rights and interests of crew, and limitation 
fund for maritime claims, we would like to pinpoint the risks and present some solutions 
and suggestions to shipping market participants and relevant authorities for reference, to 
help boost healthy development of the ocean economy. 
  


 
 
Contents 
 
I. 
General Information of  Maritime Trials ..............................................................................  
Significant fall of new cases compared with last year. ................................................................  
Large portion of cases involving foreign affairs and Hong Kong, Macao, Taiwan........................  
A record high of administrative litigation cases accepted in first instance ...................................  
A small number of cases involving the new coronavirus epidemic .............................................  
Initial results achieved in diversified dispute resolution ..............................................................  
The support of smart court in trial...........................................................................................  
Satisfactory results achieved by the multiple measures in advancing the campaign of solving the 
difficulties in enforcement. ......................................................................................................  
Successful practice to deliver quality cases. The case 
..................................................................  
II. Participating in Maritime Litigation According to Law ......................................................  
— Analysis and suggestions concerning procedural issues in maritime litigation 
......................  
Appropriateness of insurer as a subject in administrative litigation .............................................  
Jurisdiction of crew labor (service) contract disputes .................................................................  
Chinese seller’s right to sue under contract of carriage of goods by sea on FOB term 
..................  
III. Maintaining Legal the Order of  Freight Forwarding Market According to Law ................  
—Issues and suggestions concerning maritime administrative litigation cases .............................  
Review of legality in disputes related to administrative agreements .............................................  
Res judicata of effective judgment 
............................................................................................  
Basis for administrative acts 
.....................................................................................................  
IV. Maintaining the Order of  Rule of  Law of Freight Forwarding Market According to Law 
—Issues and suggestions concerning marine freight forwarding disputes ...................................  
Disposal of goods rejected by customs .....................................................................................  
Sub-entrustment of freight forwarding contract ........................................................................  
Representative of a branch company pending scheduled deregistration.......................................  
V. 
Maintaining the Order of  Rule of  Law of Chartering Market According to Law ..............  
—Issues and suggestions concerning time charterparty disputes ................................................  
General rules on ascertaining the legal effect of ship’s stamp in the conclusion of contract 
..........  
Exception on ascertaining the legal effect of ship’s stamp in the conclusion of contract ..............  
Identification of unnamed agency under charterparty ................................................................  
VI. Protecting People’s Rights and Interests in Sea-related Disputes According to Law .........  
—Issues and suggestions concerning disputes over personal injury at sea 
...................................  
Identification of the legal relationship under seafarers’ service contracts ....................................  
Ascertainment of liability between employers and ship operators 
...............................................  
Ascertainment of liability between concurrent tortfeasors without a common design 
..................  
VII. Maintaining the Order of  Rule of  Law of Seafarer Labour Market According to Law ......  
—Issues and suggestions concerning seafarer service contract disputes 
......................................  
Ascertainment of seafarer’s wages when no written labor contract is signed ...............................  
Identification of false records in seafarer’s identity documents 
...................................................  
Ascertainment of seafarers’ wage periods .................................................................................  
VIII.Constituting Limitation of  Liability Funds for Maritime Claims According to Law..........  


 
 
—Issues and suggestions concerning application for constituting limitation of liability funds 
Whether voyage charterers may seek limitation of liability for maritime claims ...........................  
Whether port operators may seek limitation of liability for maritime claims 
................................  
When to invoke the right to limitation of liability for maritime claims ........................................  
IX. Advancing Enforcement Processes According to Law ........................................................  
—Issues and suggestions concerning arrest and auction of ships during enforcement.................  
Ship’s sailing away from the place of arrest without permission .................................................  
Assumption of liability when a successful buyer pulls out of an auction 
.....................................  
Application of the principle of restricting futile auctions in sales of ship ...................................  


 
 
I. 
General Information of Maritime Trials 
 
(I) Overall performance 
 
 
In 2020, Guangzhou Maritime Court accepted 3454 cases, including 2860 new cases and 
594 pending cases of the previous year. 2865 cases were closed, indicating a closing rate 
of 82.95%. New cases involved a total value of 9.554 billion yuan, falling 1.76% from the 
previous year, and the value involved in the closed cases totaled 5.987 billion yuan, falling 
46.17% from the year earlier. Throughout the year, the ratio of closed cases to accepted 
cases was 100.17%, up 1.51 percentage points.     
 
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Pending cases 
of previous yearNew cases
Closed cases
Pending cases
535
4260
4203
594
594
2860
2865
589
Unit: case
Cases accepted, closed, and pending in 2020 compared with 
last year over the same period
2019
2020
 
Among the new cases accepted by the court, there were 1544 civil cases (non-litigation 
cases included), accounting for 53.99% of the new accepted cases, 102 administrative 
cases (non-litigation review cases included), accounting for 3.57%, and 1214 enforcement 
cases, accounting for 42.45%.  
 
 
 
 
 


 
 
53.99%
3.57%
42.45%
The proportion of different new cases in 2020
Civil cases
Administrative cases
Enforcement cases
 
Of the 1298 new civil cases accepted in first instance, 93 causes of action were involved. 
The top three causes were disputes over contract of carriage of goods by sea or waters 
connected to sea, disputes over freight agency contract for carriage of goods by sea and 
sea-connected waters, and crew labor disputes.  
 
 


 
 
 
Among the cases closed by the court, there were 1366 litigation cases (inclusive of 1343 
first-instance civil cases and 23 first-instance administrative cases), accounting for 47.68% 
of the total cases closed, 244 non-litigation cases, with a percentage of 8.52%, and 1255 
enforcement cases, accounting for 43.80% of the total closed cases.  
 
Among the litigation cases closed in first instance, there were 537 cases concluded by 
judgment, accounting for 39.31%, 381 concluded by mediation, accounting for 27.89%, 
358 allowed to be withdrawn by a ruling or ruled to be withdrawn, taking up 26.20%, and 
90 closed by other means, accounting for 6.59%.     
 
In 2020, the court accepted 1214 new enforcement cases, while there were 144 pending 
cases of previous year. With 1255 cases effectively enforced, 92.42% of the enforcement 
cases were concluded by the court, up 2.54 percentage points compared with last year. 
Among the closed cases, 95.83% with available property for enforcement were enforced 
within the statutory period, 100% were successfully enforced or discontinued according 
to law, 100% of the cases with letters and visits involving enforcement were resolved or 
concluded, and online auction had covered all cases, with total enforced value amounting 
to 812.881 million yuan.  
 
(II) Characteristics of  the trial and enforcement work in 2020 
 
1. 
Significant fall of new cases compared with last year. Since the implementation of 
the case filing registration system by the people’s courts in 2015, the new cases accepted 
by this court in each year (except 2019) varied between 2500 and 3500. The number of 
new cases accepted in 2020 was also among the normal range at 2860, although falling 
significantly by 32.86% compared with a record high of 4260 cases accepted in 2019. 
 
2. Large portion of cases involving foreign affairs and Hong Kong, Macao, Taiwan. In 
3150
2562
2614
3378
4260
2860
3137
2000
2500
3000
3500
4000
4500
2015
2016
2017
2018
2019
2020
Unit: case
The number of  new cases accepted during 2015-2020
New cases
Average


 
 
2020, the court accepted 322 first-instance civil cases involving foreign affairs and Hong 
Kong, Macao, Taiwan, which accounted for 24.81% of the new first-instance civil cases. 
Among them, there were 269 new first-instance civil cases involving foreign affairs, 64 
involving Hong Kong, 2 involving Macao, and 13 involving Taiwan. There were 385 of 
first-instance civil cases involving foreign affairs and Hong Kong, Macao, Taiwan closed, 
accounting for 29.32% of all the civil cases concluded in first instance. By trying such 
cases according to law, Guangzhou Maritime Court was performing its responsibility and 
judicial capability to safeguard the advancement of the Belt and Road Initiative and the 
construction of the Greater Bay Area.    
 
3. A record high of administrative litigation cases accepted in first instance. In 2020, 
the court accepted 89 administrative litigation cases in first instance, an all-time high 
surging 122.5% from the previous year, while it only accepted 12, 63, 10, 29 and 40 cases 
respectively during 2015-2019. The majority of these cases were caused by administrative 
acts, such as fishery administration and environmental protection administration. Facing 
the challenges in the trial of maritime administrative disputes brought by the increasing 
number of administrative cases in first instance, the court, by visiting and doing research 
in maritime administrative organs and allowing judges to observe and learn skills from 
adjudication of administrative cases, ensured that such cases were handled with fairness 
and justice. 
 
4. A small number of cases involving the new coronavirus epidemic. Throughout the 
year, the court accepted only 17 litigation cases in relation to the impact of COVID-19 
(inclusive of the liability or litigation acts related to the epidemic and the prevention and 
control of the epidemic), accounting for only 1.23% of the new cases accepted in first 
instance. The handling of these cases were progressing at a steady pace, with 8 cases 
having been concluded, accounting for 47.06% of all the epidemic-related cases in first 
instance. In the light of the strong recovery of the shipping industry in the second half of 
2020, it is expected that the impact of COVID-19 on the shipping industry is limited and 
the number of maritime cases following such impact is also limited.   
 
5. Initial results achieved in diversified dispute resolution. In 2020, the court accepted 
20 new mediation cases applying for judicial confirmation, surging 566.67% compared 
with last year, an evidence of the efforts of Guangzhou Maritime Court in the launch and 
implementation of related measures under the campaign of building the two “one-stop 
services” litigation service system. By collaborating with maritime administrative organs, 
industry associations, bar associations, arbitration bodies, crew’s trade unions, conducting 
court hearings and publicity of law in communities, and establishing diversified dispute 


 
 
resolution channels online and offline, the court aimed at providing more comprehensive 
and high-quality judicial services to the people. 
 
6. The support of smart court in trial. Throughout the year, the court conducted 211 
hearings on the internet. Nearly all the cases handled by the head office and the detached 
tribunals of the court could be handled by internet court. The court also witnessed two 
authorization cases involving parties form Hong Kong and Macao respectively by means 
of the cross-border authorization platform, and it also succeeded in the delivery of an 
auctioned vessel outside the province through the enforcement command center.  
 
7. Satisfactory results achieved by the multiple measures in advancing the campaign of 
solving the difficulties in enforcement. In the year, the court initiated and developed new 
enforcement methods, such as launching the special enforcement campaigns of “Nanyue 
Enforcement Operation 2020” and “Exercising enforcement function to ensure stability 
on six key fronts and maintain security in six key areas”. In March, the court held China’s 
first live streaming promotion of judicial auctions, which was reprinted by the official Tik 
Tok and WeChat accounts of the High People’s Court of Guangdong Province and the 
Supreme People’s Court. In July, the court sent the first warning notice for enforcement 
punishment in the province. In November on the occasion of the double 11 shopping 
spree, the court introduced its online judicial auctions to netizens through live streaming, 
transferred a case that was contemplated to be discontinued for bankruptcy examination, 
and confiscated the deposits of two buyers who repudiated bids and ordered them to pay 
balance of the transaction prices of the judicial auctions. Throughout the year, the court 
successfully enforced 117 cases involved the people’s livelihood, such as crew service 
contract disputes, and completed the enforcement of the existing and new wage arrears 
cases, with 7.745 million yuan enforced.  
 
8. Successful practice to deliver quality cases. The case Shenzhen Hengtonghai Shipping Co., 
Ltd. v. Ji'an Hengkang Shipping Co., Ltd. on dispute over voyage charterparty was listed by the 
Supreme People’s Court in the Typical Maritime Cases of China 2019; Xiamen Mingsui 
Grains & Oils Co., Ltd v. Atlantic Mexico Pte. Ltd. on dispute over contract of  carriage of  goods by 
sea” and “Taiwan Fire & Marine Insurance Co., Ltd v. All Oceans Transportation Inc. on dispute 
over liability for collision of  ships were awarded second prize and recognition prize for the 
2020 excellent cases of the people’s courts in China. The case Application of  Farenco 
Shipping Pte. Ltd. for enforcement of  arbitration award made in Hong Kong was listed as case 4 of 
the Supplementary Arrangement for the Mutual Enforcement of  Arbitral Awards between the 
Mainland and the Hong Kong Special Administrative Region released by the Supreme People’s 
Court on 26 November 2020.  


 
 
II. Participating in Maritime Litigation According to Law 
—Analysis and suggestions concerning procedural issues in maritime litigation 
 
 (I) Appropriateness of insurer as a subject in administrative litigation 
 
In August 2019, A Vessel sank in the waters 3.4 nautical miles to the south of Dawoshan 
of Hengqin Island. The department of the maritime safety administration in charge made 
the Investigation Conclusions on the maritime accident (hereinafter the “Investigation 
Conclusions”), which determined that the gale (Beaufort scale 8) was the major cause of 
the tragedy and the loose hatch cover and change of the ship’s hull strength might also 
contribute to the accident. The insurer A, however, disagreed with the conclusion of the 
gale of Beaufort scale 8. In its opinion, there is no available wind data to prove the wind 
blowing on the accident site as strong as a gale of Beaufort scale 8.On the contrary, they 
believed that the change of hull strength(fracture) caused by allowing in a flood of water 
from the loose hatch cover, was the primary cause of the accident. Insurer A thus applied 
with the court to annul the Investigation Conclusions and draw a new conclusion. The 
first-instance court rejected the case on the ground that insurer A was not an appropriate 
subject to initiate an administrative lawsuit in respect of the Investigation Conclusions. 
The insurer filed an appeal, which was dismissed by the second-instance court who 
maintained the decision of first instance.      
 
According to the effective decision of the court, pursuant to paragraph 1 of Article 25 of 
the Administrative Procedure Law of the People’s Republic of China, “The persons subject to an 
administrative act and other citizens, legal persons or other organizations having interests 
in the administrative act are entitled to bring a lawsuit”. Insurer A was not the 
administrative conterpart to the Investigation Conclusions involved. There was no 
interests between the insurer and the Investigation Conclusions in administrative law,  
because the latter didn’t set any rights and obligations for the former directly. Although 
the Investigation Conclusions might be used as an evidence in the litigation of the 
maritime accident dispute that followed and might have some impact on the insured and 
thus on the insurer, it did not directly impair the insurer’s legitimate rights and interests. 
So, the insurer could not act in the capacity of claimant in this case based on the 
insurance contract relationship with the insured. The insurer could seek civil remedies to 
protect its interests under the insurance contract. 
 
In the Reply to the Consultation Letter of  the Maritime Safety Administration of  the Ministry of  
Transport on the Actionability of  Maritime Investigation Conclusions on 20 May 2019, the Fourth 
Civil Division of the Supreme People’s Court made it clear: “Currently, traffic accident 


 
 
liability decisions in China not only find the facts, but also determine the liabilities of the 
parties. They therefore actually affect the rights and obligations of the private parties and 
are used as the evidence in civil cases involving traffic accidents. Such decisions could not 
be an excuse to invalidate the right of the private parties to bring an administrative 
lawsuit to the court.…There is no legal basis to exclude such decisions on the liability of 
maritime accidents from the scope of actionable administrative cases.” Later on, several 
other administrative lawsuits were brought to our court in respect of decisions on the 
liability of maritime accidents. 
 
We suggest that the parties involved in this new type of administrative lawsuits should 
properly and timely exercise the right to sue pursuant to the relevant provisions of the 
administrative procedure law, to protect their legitimate rights and interests, and that 
maritime administrative organs should perform governance strictly following the law to 
ensure that the administrative procedures are lawful and the related persons are treated 
with fairness. In the event of an administrative action, the maritime administrative organs 
should prepare evidential materials carefully and respond to the action actively, to ensure 
the smooth advancement of the law enforcement.  
 
(II) Jurisdiction of crew labor (service) contract disputes  
 
Feng belonged to the crew of a liquefied petroleum gas carrier. In May 2019, he was hit 
by cable by accident aboard the ship berthed at terminal. After discharged from hospital, 
Feng applied to the social security administration of Shenzhen for confirmation of 
employment injury, and the administration issued a decision to confirm the employment 
injury and also made a disability grading identification certificate. In October 2020, Feng 
brought a lawsuit against the ship management company headquartered in Tianjin and its 
branch in Shenzhen on dispute over employment injury compensation, whereby he 
requested the court to dissolve the labor contract relationship and demand the 
defendants to pay the disability subsidy, salary during injury, loss of working time, and 
the retrospective pay of social security contributions.  
 
After examining the complaint materials, this court found that there was an agreement 
under the Crew Embarkation Agreement signed by Feng and the defendants, which read 
“Any dispute arising from this Agreement, if not settled by negotiation, shall be 
referred to Qingdao Maritime Court for judgment”. Upon the court’s explanation on 
the jurisdiction clause, the claimant lodged a lawsuit before Qingdao Maritime Court.    
 
By hearing the case, Qingdao Maritime Court concluded that as the Crew Embarkation 


 
 
Agreement established an employment agency relationship between the two parties, the 
jurisdiction clause point to Qingdao Maritime Court only applied when a dispute was 
arising from the agency contract. However, in this case, Feng brought a suit for 
employment injury compensation, which was based on a labor contract relationship. The 
case was indeed a labor dispute. Pursuant to Article 8 of the Interpretation of  the Supreme 
People’s Court on Several Issues Concerning the Application of  Law for the Handling of  Labor 
Dispute Cases, “Labor dispute cases shall be governed by the primary people’s court at 
the place where the employer is located or where the labor contract is performed. Where 
the place of performance of the labor contract is not clear, the dispute shall be governed 
by the primary people’s court at the place where the employer is located.” In the case, 
since the employer was a Shenzhen company located within the jurisdiction of 
Guangzhou Maritime Court and the case was a crew labor contract dispute as defined in 
Article 24 of the Provisions of  the Supreme People’
s Court on the Scope of  Cases to be Accepted by 
Maritime Courts, which shall be accepted by maritime courts, Qingdao Maritime Court 
thus ruled to transfer the case to Guangzhou Maritime Court. 
 
We held that as crew related disputes often involved maritime liens, pursuant to Article 8 
of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application 
of  the Special Maritime Procedure Law of  the People’
s Republic of  China,
“A maritime court shall 
accept lawsuits directly brought to it which are arising from disputes over crew service 
contracts.” In the Provisions on the Scope of  Cases to be Accepted by Maritime Courts released 
by the Supreme People’s Court in 2016, a distinction is made between “crew labor 
contract” and “labor service contract” under Article 24, which reads: “Cases of 
disputes over the payment of remunerations and the compensation for personal injuries 
and death that are related to the embarkation of crew, services provided on board, and 
disembarkation and repatriation of crew under crew labor contract or labor service 
contract (including crew labor service dispatch agreement)”
. As there are special laws and 
procedures in China to deal with labor dispute cases, if a seafarer is involved, the two 
different disputes shall be settled by different resolution schemes. In recent years, there 
were cases that crew were making litigation requests unrelated to on-board services or 
maritime liens. Pursuant to Article 1 of the Provisions on Some Issues Concerning the Trial of  
Cases Involving Crew-related Disputes implemented by the Supreme People’s Court on 29 
September 2020, if a crew labor contract dispute does not involve embarkation of crew, 
services provided on-board, or disembarkation and repatriation of crew, i.e. maritime lien 
is not involved, the dispute shall be deemed as a general labor dispute, and the party shall 
be instructed to follow the preceding procedure as provided in the Labor Dispute Mediation 
and Arbitration Law of  the People's Republic of  China and refer the case to arbitration as will 
be done by other general labor disputes, and bring a lawsuit if not satisfied with the 


 
 
arbitration. The disputes related to crew service contract or those disputes related to 
embarkation of crew, services provided on-board, and disembarkation and repatriation 
of crew shall still be directly governed by a competent maritime court pursuant to Article 
2 of the judicial interpretation. Thus, the subject dispute was a labor dispute arising from 
personal injury during his service on board, which was within the scope of cases to be 
directly accepted by maritime courts. It is worth noting that crew’s litigation requests 
may cover matters with or without relation to maritime liens. To facilitate crew’s 
participation in ligation, it is not encouraged that maritime courts should require crew to 
seek justice by means of arbitration and litigation separately. Maritime courts should 
address these requests at the same time. 
 
    
(III) Chinese seller’s right to sue under contract of carriage of goods by sea on 
FOB term 
 
The claimant Company A, operating in Foshan, lodged a suit before this court on dispute 
over contract of carriage of goods by sea, requesting that Company B (an international 
freight forwarder) and its Shenzhen branch and Company C (an international carrier) and 
its Zhongshan branch to jointly compensate Company A for the cargo loss at an amount 
of USD47,665 and othe relevant costs. In March 2020, Company A signed a purchase 
contract with Company D (a Hong Kong enterprise) whereby Company D agreed to buy 
coffee makers from Company A on FOB term, and Company D was responsible for the 
transportation of goods and would make cargo payment upon the receipt of a copy of 
bill of lading presented by Company A. After signing the contract, Company D assigned 
Company B to act as freight forwarder and Company C as actual carrier. In September, 
Company A delivered the goods to Company C at Shenzhen Port as per instructions of 
Company D and thus obtained the manifest and original bill of lading (noting Company 
A as shipper) for the shipment of goods. When the goods arrived at the destination port 
at Jakarta, Indonesia, Company D told Company B to arrange telex release of the goods. 
However, after Company A presented the copy bill of lading to Company D, Company 
D did not make cargo payment as agreed. Company A hence lodged the suit complaining 
that it was the actual shipper on the bill of lading and lawful holder of the original bill of 
lading, and it had established a contractual relationship for the carriage of goods by sea 
with the defendants Company B, Company C and their branches, but the defendants’ 
release of cargo without the presentation of original bill of lading had made it lose the 
control of the cargo, due to which it was unable to collect cargo payment. The claimant 
therefore demanded compensation from the four defendants.   
 


 
 
In the understanding of the court, when cargo is transported by sea on FOB term, buyer 
is responsible for chartering or booking space and paying freight, and seller is responsible 
for delivering the cargo to the vessel designated by buyer at the time or within the period 
agreed in contract, and shall notify buyer and provide general documents to prove that 
the cargo has been delivered on board. Buyer will receive the cargo upon receipt of the 
delivery documents and make payment. And the risks associated with the cargo will be 
transferred from seller to buyer when the cargo pass ship’s rail. FOB term is widely used 
by Chinese traders for many years due to the convenient delivery under the term. In this 
case, the claimant was seller to the sales contract of goods, but before it obtained the bill 
of lading and presented the same to buyer, the carrier had released the cargo to buyer. 
The carrier violated the general procedures that required delivery of cargo against the 
presentation of transportation documents, due to which the seller failed to receive cargo 
payment. Although the claimant did conclude a carriage contract with the carrier, it was 
the party noted on the bill of lading issued by the carrier as shipper and had actually sent 
the cargo to carrier for transportation, and the claimant also provided evidence to prove 
that it had established cargo carriage relationship with the defendants. The lawsuit met 
the requirements set forth under Article 119 of the Civil Procedure Law of  the People’s 
Republic of  China and was accepted by the court.  
 
We suggest that Chinese sellers should pay special attention to the legal risks for trading 
on the FOB term: while foreign buyer is bound by a contractual relationship for carriage 
of goods by sea with carrier when booking shipping space, Chinese seller is usually not a 
party to the carriage contract. That means, the Chinese seller, if it encounters difficulties 
in negotiating transportation documents or shipping frauds when settling accounts with 
buyer after it has delivered the goods to carrier for shipment, it is possible that seller may 
be unable to collect cargo payment and recover the goods. If Chinese seller loses money 
or goods, it may initiate a lawsuit in the capacity of actual shipper or consignor pursuant 
to paragraph 3 of Article 42 of the Maritime Law of  the People’s Republic of  China to recover 
its loss to the extent possible.   
 
 
 
 


 
 
 
III. Maintaining the Order of Rule of Law of Maritime Administration According 
to Law  
— Issues and suggestions concerning maritime administrative litigation cases  
 
(I)Review of legality in disputes related to administrative agreements  
 
In December 2012, Government A signed a Project Agreement with Company C for the 
restoration of marine ecology, infrastructure, and real estate development that would last 
for eight years with a total investment of more than ten billion yuan. In October 2013, 
the Oceanic and Fishery Bureau A signed a Project Franchise Agreement with Company 
C. In March 2017, Government A and the Oceanic and Fishery Bureau A issued a notice 
to dissolve the Project Agreement and the Project Franchise Agreement, claiming that 
Company C did not make investment and advance the project as agreed, and had failed 
the purposes of the agreements and constituted material breach. Thus, they decided to 
reclaim the right of investment, development and operation of the project. Company C 
hence brought a lawsuit and requested the court to order Government A to continue to 
perform the Project Agreement on the ground that the Project Agreement was valid and 
effective and qualified for further performance, and that there was no factual basis for 
Government A to take such action.   
 
According to the effective judgment of the court, Company C violated the contract since 
it did not perform obligations within the given time as agreed after it signed the Project 
Agreement. Pursuant to the Project Agreement and paragraph 2 of Article 93 of the 
Contract Law of  the People’s Republic of  China, as Company C failed to perform the primary 
obligations under the contract, Government A was entitled to terminate contract without 
the consent of Company C. However, the Project Franchise Agreement concluded by 
Company C and the Oceanic and Fishery Bureau A involved franchised operations, and 
it was indeed inappropriate for Government A to dissolve the administrative agreement 
before consulting and making an agreement with Company C, which was in violation of 
Article 38 of the Measures for the Administration of  Franchise of  Infrastructure and Public 
Utilities. Further, although the parties had negotiated with each other for several times in 
respect of the termination of contract before the termination of the Project Agreement, 
and Government A had given Company C opportunities to make statements and defense, 
Government A did not notify Company C in writing of the right to make statement or 
defense and the way to seek remedies, nor did it notify Company C of specific judicial 
remedies in the termination notice. Government A’s act violated the statutory procedures. 
Considering that the administrative agreement concerned public benefits in ecological 


 
 
conservation, environmental protection and infrastructure, if the administrative act of 
Government A, though in violation of law, was rescinded, it would cause serious damage 
to the national interest and the public benefits. Therefore, in accordance with paragraph 
1(1) of Article 74 of the Administrative Procedure Law of  the People’s Republic of  China, the 
court adjudged that Government A was in violation of law by issuing the notice of 
dissolving the Project Agreement, but the act shall not be withdrawn.  
 
This is a typical case involving administrative agreement. Administrative agreement is in 
nature a contract based on administrative mandate. When handling disputes arising from 
the conclusion, performance, amendment and termination of administrative agreements 
brought against an administrative organ, the people’s court should, on one hand, examine 
the validity of the administrative act in such aspects as whether the administrative organ 
is acting in statutory capacities, whether it is abusing authorities, whether it applies laws 
and regulations correctly, whether it follows the statutory procedures, whether it is acting 
appropriately, and whether it performs statutory duties; on the other hand, in addition to 
the application of administrative laws and regulations, the people’s court may also apply 
relevant civil laws and regulations and the agreements of the parties involved, provided 
that such application does not violate the mandatory provisions of the administrative law 
and the administrative procedure law.   
 
We suggest that when concluding, performing, amending, and terminating administrative 
agreements, administrative organs should ensure that they act in a way compliant with 
the administrative laws and regulations, and they should also observe the relevant civil 
laws and regulations. Especially when an act is to be taken during the conclusion, 
performance, amendment, and termination of administrative agreement that may impair 
the rights and interests of the persons subject to such administrative act, the 
administrative organs shall give full opportunity so that the private parties are able to 
make statement or defense, and guide them to seek remedy according to law. Further, 
administrative agreement is made for administration or public service purpose which will 
affect people’s immediate interests and the performance of which usually necessitates a 
great deal of administrative approvals, reviews, and planning, and a large volume of 
capital flow and deployment of labor force and supplies. We suggest that after signing an 
administrative agreement, both parties shall actively and fully fulfill the agreed rights and 
obligations during performance of the agreement, so as to avoid the waste of public 
resources and damage to the public interests.   
 
(II) Res judicata of effective judgment  
 


 
 
In October 2017, the Oceanic and Fishery Bureau A made a decision of administrative 
penalty, which ascertained that Company B had built an impermeable pioneer road and a 
permeable construction platform without authorization, reclaiming sea areas of 2237 m2 
and 1335 m2 respectively. The penalty decision ordered Company B to return the illegally 
occupied sea areas and restore them to the original state, and to pay a penalty in the sum 
of 2,321,390 yuan. In June 2018, the Oceanic and Fishery Bureau A applied with the 
court for enforcement of the administrative penalty decision, requesting the court: 1. to 
order Company B to return the illegally occupied sea areas and restore them to the 
original state; 2. to order Company B to pay the penalty in the amount of 2,321,390 yuan; 
and 3. to order Company B to bear the enforcement costs.   
 
The court found that, upon the notice of the Oceanic and Fishery Bureau A, Company 
B removed the impermeable pioneer road and the permeable construction platform, but 
it did not pay the penalty of 2,321,390 yuan. In its effective judgment, the court held that 
the Oceanic and Fishery Bureau had conducted investigation, notification, and approval 
following the statutory procedures and the Decision of Administrative Penalty was valid 
as it was made by an appropriate administrative subject which acted in a way compliant 
with administrative procedures and regulations and was served on Company B according 
to law and became effective. Company B did not apply for administrative reconsideration 
or lodge a lawsuit before the people’s court within the time prescribed by law, nor did it 
fulfill its obligations, and therefore the court ruled to enforce the penalty 2,321,390 yuan 
under the administrative penalty decision.       
 
Upon the receipt of the administrative ruling of the court, Company B lodged a lawsuit 
before the court, requesting to withdraw the Decision of Administrative Penalty made by 
the Oceanic and Fishery Bureau A. Company B alleged that it only became aware that an 
administrative penalty decision had been made by the Oceanic and Fishery Bureau after 
it received the administrative ruling of the court. Company B held that the administrative 
penalty decision was not served according to law, the penalty was made against statutory 
procedures, the facts ascertained therein were wrong, and that there was no legal basis 
for the penalty amount. Although the court ruled to enforce the administrative penalty, 
Company B did not receive the notice of enforcement application from the Oceanic and 
Fishery Bureau A, and the court did not listen to the statements or defense of Company 
B during examination of the case.  
 
Upon examination, the court held that, in accordance with paragraph 1 of Article 69 of 
the Interpretation of  the Supreme People’s Court on Application of  the Administrative Procedure Law 
of  the People's Republic of  China, “A complaint which has been docketed shall be dismissed 


 
 
by the people’s court under any of the following circumstances… (9) The subject matter 
of the complaint is bound by an effective judgment or consent judgment”. In this case, 
the court’s administrative ruling in favor of enforcement had examined the validity of 
the administrative penalty decision in question, and the ruling had taken effect. Company 
B lodged a lawsuit against the administrative penalty decision, but the decision had been 
bound by the effective administrative ruling. If Company B insisted that the decision was 
in violation of the law and be withdrawn, it shall refer the dispute to the trial supervision 
procedures. The court thus dismissed the compliant of Company B according to law.  
 
We suggest that when private parties believe that their legitimate rights and interests are 
impaired by administrative organs, they shall timely and actively seek remedies within the 
statutory period, for example, applying for administrative reconsideration or lodging an 
administrative lawsuit before the court. Private parties shall bear the adverse consequence 
for delay in exercise of such remedies. If private parties exercise remedies in a manner 
beyond the statutory scope, the people’s court will dismiss such request according to law.   
 
(III) Basis for administrative acts  
 
In 2015, A applied with the Oceanic and Fishery Bureau B for diesel oil subsidy of the 
previous year for the 10 fishing boating operating under his name, and the Oceanic and 
Fishery Bureau B completed the subsidy approval and public disclosure. In 2016, A was 
sentenced to imprisonment and fine by a court located at B for assisting other fishing 
boats to gain diesel oil subsidy by cheating. In 2017, the Oceanic and Fishery Bureau B 
issued a notice based on the criminal judgment and decided not to allow subsidy to the 
10 fishing boats operating in the name of A. A hence applied for administrative 
reconsideration to Government B, but Government B maintained the notice. He was not 
satisfied with the reply and brought a lawsuit before the court, requesting the court to 
rescind the notice and the administrative reconsideration decision and to order the 
Oceanic and Fishery Bureau and the government to amend their administrative acts. In 
the effective judgment, the court held that the evidence provided by the Oceanic and 
Fishery Bureau B was not sufficient to prove that when it issued the notice, A was acting 
in a way as prescribed in the circumstances under Article 20 of the Provisional Measures for 
Administration of  Special Funds to the Fishery Industry for Finished Oils Price Subsidy. The court 
thus ruled to withdraw the notice of the Oceanic and Fishery Bureau B and the 
administrative reconsideration decision of Government B, and ordered the Oceanic and 
Fishery Bureau to amend its administrative act.  
 
Public authorities shall follow the principle that administrative bodies should not take any 


 
 
action that is not mandated by law. Administrative bodies should always act on legal basis. 
Article 20 of the Provisional Measures for Administration of  Special Funds to the Fishery Industry 
for Finished Oils Price Subsidy delimits the circumstances where fishery subsidy shall not be 
allowed: “the subsidy fund shall be managed by a special account and is used for special 
purpose only, and no unit or individual is allowed to gain access to the subsidy fund by 
cheating (such as applying for subsidy by presenting a license but without a fishing boat 
at all, or presenting several licenses for only one fishing boat, or applying for subsidy for 
an illegal boat, or counterfeiting licenses), or give subsidy in a wider range of benefits, or 
occupy, withhold or misappropriate the subsidy fund or operating funds. In the event of 
any of such circumstances, financial authorities will recover the illegally occupied subsidy 
according to law, and the person in charge and other liable personnel shall undertake the 
legal liabilities according to law. For those who present false documents to gain subsidy 
by cheating, once found, they will be disqualified for fishery subsidy forever and will be 
disclosed nationwide.” Although the court ascertained that A assisted others to cheat the 
authority for subsidy, the evidence presented by the Oceanic and Fishery Bureau B was 
not sufficient to prove that when it issued the notice the 10 fishing boats operating in the 
name of A were applying for subsidy in such a manner as “presenting a license but 
without a fishing boat at all, or presenting several licenses for only one fishing boat, or 
applying for subsidy for an illegal boat, or counterfeiting licenses”. It was against the 
provision given above and there was no other legal basis for the Oceanic and Fishery 
Bureau B to disqualify A for the subsidy by referring to the criminal judgment. Thus, the 
court ruled to withdraw the administrative decision of the Oceanic and Fishery Bureau B 
and ordered it to amend its administrative act.    
 
We suggest that administrative organs should learn more about the laws and regulations 
in relation to their functions and duties and apply the laws and regulations properly and 
improve their administration according to law. When taking an administrative act, they 
shall act strictly as mandated by law, interpret and apply the laws and regulations correctly, 
follow the statutory procedures, and protect the legitimate rights of the person subject to 
the administrative act.     
 
 
 


 
 
  
IV. Maintaining Legal the Order of Freight Forwarding Market According to 
Law 
— Issues and suggestions concerning marine freight forwarding disputes  
 
(I) Disposal of goods rejected by customs 
 
Company A entrusted Company B to carry a shipment of polarizer from Pusan, South 
Korea to Shenzhen, China. The parties signed an agreement, whereby it was agreed that: 
“Company A promises to receive the containers no matter the container is rejected by 
the customs or is allowed for customs clearance. If the customs allows the importation 
of the container but Company A refuses to accept the container, Company B shall have 
the right to unpack the container and dispose of the goods, including, but not limited to, 
to sell, depreciate, auction off, mortgage or pawn the goods. Company B will withhold 
the proceeds from such disposal, and Company A shall bear the costs on the disposal of 
the goods. If the customs rejects the container but Company A refuses to take delivery 
of the container after Company B has returned the same to Hong Kong, Company B 
shall have the right to dispose of the goods in an appropriate manner , including, but not 
limited to, to abandon or dispose of the goods as waste or scrap, or to return the same to 
South Korea. And Company A shall bear the disposal costs incurred thereby.” When the 
goods arrived at Shenzhen, Shenzhen Dapeng Customs rejected the importation of the 
goods, as it found that the goods were actually some composite materials made up of 
waste and scraps. So Company B notified Company A by sending letters to the address 
given under the agreement for three times by EMS, requiring Company A to confirm the 
contact details for the return. But the mails were rejected and Company A also refused to 
give information for the return. Company B had no choice but returned the goods to 
South Korea, but later Company A sued against Company B for disposal of goods 
without consent and demanded compensation from Company B. In its effective 
judgment, the court held that Company A, although well aware that EMS postmen had 
delivered mails to its address specified in the agreement, did not inquire about where the 
mails came from, nor did it notify Company B of its new address. Company A shall 
therefore undertake the unfavorable consequences for the rejection of mails. Company B 
was disposing of the goods according to the term of the agreement and shall not be 
deemed in breach of contract. The claims of Company A were untenable.  
 
In this case, Company B had properly served notice by EMS for three times to Company 
A at the address specified in the agreement. Company A, although aware of such mails, 
did not receive the mails, which shall be deemed a rejection of the goods. Company B 


 
 
shall not be held at fault by disposing of the goods in an appropriate way as agreed in the 
contract, and Company A shall bear the adverse consequences thereof.       
 
We suggest that when facing cargo transportation difficulties, consignor and forwarder 
shall maintain good communication and notify the other party of any changes in its 
service address or contact details in time. Escaping the problems is not a good way to 
improve the situation. The parties should work together to solve problems. If consignor 
is out of contact, forwarder shall dispose of cargo appropriately following the laws , 
regulations and the contracts between them, and it should preserve evidence to prove its 
innocence and notify consignor of the situation once it gets in touch with the consignor.   
 
(II) Sub-entrustment of freight forwarding contract  
 
Company A and Company B signed a freight forwarding contract for export of goods by 
sea, whereby Company B agreed to arrange export transportation of the goods by sea. It 
was agreed that “in case of any change in the transportation conditions due to objective 
reasons or third party, Company B shall notify Company A in writing promptly and only 
ship the goods upon confirmation of Company A.” After signing the contract, the legal 
representative of Company B, although without confirmation of Company A, entrusted 
Company C to arrange shipment for the goods. After the carriage service was performed, 
Company A paid the freight and related costs to Company B, and Company C issued 
invoice to Company B. Yet Company B only made partial payment to Company C. Now 
Company C, based on the freight forwarding contract with Company A, lodged a suit to 
demand Company A to pay the outstanding freight and related costs. According to the 
effective judgment of the court, although Company A and Company B did not make any 
agreement in respect of the sub-entrustment, Company C did not produce evidence to 
prove that Company A explicitly agreed that Company B might sub-entrust Company C 
to perform the contract. Thus, Company A and Company C did not establish contractual 
relationship under the freight forwarding contract. The court thus dismissed the litigation 
request of Company C.        
 
Article 5 of the Provisions of  the Supreme People's Court on Several Issues Concerning the Trial of  
Cases of  Disputes over Marine Freight Forwarding provides that “Where there is no agreement 
in respect of sub-entrustment, if the freight forwarder or a third party alleges that the 
consignor has agreed on sub-entrustment of the marine freight forwarding operation on 
the ground that the consignor knows and does not object that the freight forwarder has 
sub-entrusted all or part of the marine freight forwarding operation to the third party, the 
people’s court shall not uphold such a claim, unless the consignor acts in a way to make 


 
 
it clear that it accepts the sub-entrustment arrangement.” In this case, as Company A and 
Company B did not agree on the sub-entrustment arrangement, namely, Company C was 
sub-entrusted by Company B without the consent of Company A, and there was no 
evidence proving that Company A had given explicit consent on the sub-entrustment, so 
Company B shall assume the liability thereof.   
 
We suggest that freight forwarder shall fulfill obligations to the benefit of consignor and 
arrange sub-entrustment according to agreement of the parties (if any), or (if no such 
agreement) do so after obtaining the consignor’s explicit consent. If sub-entrustment is 
in urgent need to protect the interests of the consignor, the forwarder should preserve 
relevant evidence and notify the consignor of the situation in a timely manner.    
 
(III) Representative of a branch company pending scheduled deregistration  
 
A was the person in charge registered by the Guangzhou Branch of Company B at the 
industrial and commercial bureau. During the period when the Guangzhou Branch of 
Company B was waiting for deregistration as scheduled, A entrusted Company C to 
provide freight forwarding service in the name of the Branch. A showed his title when 
communicating with Company C. During the freight forwarding operation, A continued 
to assign Company B’s agent in America as consignee and notify party on bill of lading, 
and the personnel of Company B was responsible for contacting the American agent for 
the release of cargo. Company B knew that A continued to trade in its name although A 
did not possess the company seal and license at all, but Company B did nothing to stop 
him. Now Company C brought a lawsuit against Company B and demanded the latter to 
pay the outstanding freight and costs payable by its Guangzhou Branch. According to the 
effective judgment of the court, industrial and commercial registration was a kind of 
public notice, and it was natural that Company C would act by relying on the capacity of 
A, assuming that A was acting on behalf of the Guangzhou Branch of Company B. As 
A was entrusting Company C for the carriage in the name of the Guangzhou Branch of 
Company B and did not tell Company C about the deregistration that was to be taken by 
the Branch, Company B could not deny the validity of A to act as representative of the 
Guangzhou Branch on the ground that it had suspended the capacity of A. The court 
therefore upheld the litigation requests of Company C.   
 
According to Article 14 of the Company Law of  the People’s Republic of  China, “A company 
may set up branches. To set up a branch, the company shall file a registration application 
with the company registration authority and shall obtain a business license. If a branch is 
not a legal person, its civil liabilities shall be borne by its parent company.” In this case, 


 
 
although Company B had decided to cease the operation of its Guangzhou Branch, it did 
not complete deregistration at the industrial and commercial bureau in a timely manner 
or give notice to announce deregistration of its Guangzhou branch and the suspension 
of the company seal of the branch company. Now A was entrusting Company C to carry 
the goods, and the agent of Company B in America released the cargo under the bill of 
lading. As the registration at the industrial and commercial bureau remained unchanged 
and Company C had exercised the duty of caution, the freight forwarding business 
operating between A in the name of the Guangzhou Branch of Company B and 
Company C, shall be deemed an operation under a freight forwarding contract between 
the Guangzhou Branch of Company B and Company C. The freight and costs owed by 
the Guangzhou Branch of Company B to Company C shall be borne by Company B as 
it is provided by law that if a branch is not a legal person, its civil liabilities shall be borne 
by its parent company. 
 
We suggest that if parent company decides to cease the operation of a branch, it should 
timely retrieve the company seal and licenses, complete deregistration formalities at the 
industrial and commercial bureau, and make public announcement. When trading with a 
branch, a commercial entity should make a check carefully to see whether the person in 
charge of the branch has the power to conduct the business and whether the branch has 
ceased operation or is deregistered. It would be better to contact the parent company to 
check the information of the person in charge of the branch and the operation of the 
branch, to avoid invalid representation.     
 


 
 
 
V. Maintaining the Order of Rule of Law of Chartering Market According to 
Law 
— Issues and suggestions concerning time charterparty disputes  
 
(I) General rules on ascertaining the legal effect of ship’s stamp in the conclusion 
of contract  
 
In a time charterparty dispute, A and B (as Party A) signed a charterparty with Vessel E 
(as Party B), whereby Party B agreed to charter Vessel E to Party A. Party B affixed the 
stamp of Vessel E on the contract, and D signed the contract as the legal representative 
of Party B. Company C was the registered owner and operator of Vessel E, and D was 
the actual owner and operator of Vessel E. A and B paid hire to D, but Vessel E was 
resumed by Company C before maturity. A and B therefore requested the court to order 
Company C to compensate the hire loss. The court held that A and B had no reason to 
believe that D was acting on behalf of Company C to sign the charterparty, and that the 
ship stamp of Vessel E affixed upon the contract did not surely have the legal effect of 
representing the act of owner. Therefore, A and B did not establish a time charterparty 
relationship with Company C, and the litigation requests of A and B shall be dismissed.     
 
Pursuant to paragraph 1 of Article 64 of the Civil Procedure Law of the People’s Republic of 
China and Article 90 of the Interpretation of the Supreme People’s Court on the Application of the 
Civil Procedure Law of the People’s Republic of China, A and B shall bear the burden of proof 
to prove that they had established a time charterparty relationship with Company C. But 
A and B mainly relied on the fact that the charterparty bore the stamp of Vessel E. In 
fact, the ship’s stamp was not the official seal of Company C. A ship’s stamp is usually 
carried with the ship and used by the actual owner in daily operation and management of 
the ship. When it is used in the conclusion of contract with other parties, generally such 
contract is not surely binding on the company that operates the vessel. Namely, such 
contract has not legal effect on the registered owner or operator of the vessel. Therefore, 
it was groundless for A and B to hold Company C as opposite party to the charterparty.      
 
We suggest that when establishing a time charterparty relationship, especially concluding 
a charterparty, the parties should notice the different functions of a ship’s stamp and a 
stamp under the legal person matrix. A ship’s stamp is no more than an in-house seal and 
is not used for external business. In general, a contract bearing a ship’s stamp has no 
apparent agency effect on the owner and operator of the ship.     
 


 
 
(II)Exception on ascertaining the legal effect of ship’s stamp in the conclusion of 
contract  
 
In a time charterparty dispute, Vessel C (as owner) signed a charterparty with A and B (as 
charterer). The charterparty bore the stamp of Vessel C at the bottom and the signature 
of E as representative. Later, the parties signed a supplementary agreement bearing the 
stamp of Vessel C. The stamp of Vessel C placed on the charterparty and supplementary 
agreement indicated the name of Company D. However, Vessel C was arrested by the 
court W due to Company D’s failure in performing the obligations determined by the 
effective legal instrument in a another case. A and B could not employ the vessel as a 
result. A and B applied with this court to order the termination of the charterparty with 
Company D and demanded compensation. The court held that, A and B said they were 
signing the charterparty and supplementary agreement with E (alleged owner of Vessel C) 
and F (alleged operator of the vessel), F placed ship’s stamp, and that A and B obtained 
the documents of Vessel C when concluding the contracts and knew that Company D 
was the registered owner and operator of the vessel. Before paying deposit, A and B also 
contacted Company D for confirmation, and the staff of Company D did not deny or 
confirm the identity of E. After the subject dispute arose, Company D also did not give 
reasonable explanation as regards whether Vessel C was under the actual control of E 
during the dispute. Based on above descriptions, A and B had exercised the duty of care 
when concluding the charterparty and supplementary agreement, and they had reason to 
believe that E and F had the authorization to rent out Vessel C on behalf of Company D. 
Pursuant to Article 172 of the General Provisions of  the Civil Law of  the People's Republic of  
China, “Where an actor still performs an act of agency without a power of agency, 
beyond his or her power of attorney, or after his or her power of attorney terminates, 
the act shall be valid if the opposite party has reason to believe that the actor has the 
power of attorney.” The charterparty and supplementary agreement concluded by E and 
F on behalf of Company D shall be binding on Company D. As Company D breached 
the contract, in accordance with paragraph 4 of Article 94 of the Contract Law of  the 
People’s Republic of  China, the requests of A and B to dissolve the charterparty was in 
compliance with the law and shall be supported by the court.    
 
We suggest that charterer should exercise the duty of care before signing a charterparty 
and examine all the relevant certificates and documents of the vessel it indents to charter. 
When the charterparty bears the vessel’s stamp by the owner, charterer should carefully 
examine whether the actor or personnel onboard has the power of attorney at the time 
the contract is concluded, and should preserve evidence, to protect its interests to the 
extent possible, and to avoid the failure of recovery of loss for breach of contract on the 


 
 
part of the opponent party as the charterparty bearing ship’s stamp may not be binding 
on the shipowner or operator. 
 
(III) Identification of unnamed agency under charterparty  
 
In a time charterparty dispute, B was the registered owner of Vessel D. B issued a power 
of attorney to engage C and E to provide intermediary services in the introduction and 
negotiation of sand-mining service contract. B also concluded sand-mining contract with 
C and E in respect of dredging and mining operations at a terminal by Vessel D. C, as 
lessor, signed a ship employment contract with Company A, whereby C agreed to deliver 
the vessel at the designated location for operation. Later, C (as lessor) signed a guarantee 
contract with Company A in respect of the chartering, whereby C agreed to return the 
deposit and pay liquidated damages to Company A if it failed to dispatch Vessel D at the 
designated terminal within the given time. However, later B failed to send Vessel D to the 
designated working area within the given time, Company A brought a lawsuit before the 
court, requesting the court to order B to return the guaranty money to Company A and 
repay the deposit in double. The court held that, although it had presented a power of 
attorney to Company A, C was in fact concluding the ship employment contract in its 
own name, which did not constitute unnamed agency. Thus, Company A and B did not 
establish a relationship under the ship employment contract. The court thus dismissed 
the litigation requests of Company A.        
 
Pursuant to Article 402 of the Contract Law of  the People's Republic of  China, “Where the 
agent, acting within the scope of authority granted by the principal, enters into a contract 
in its own name with a third party who is aware of the agency relationship between the 
principal and agent, the contract is directly binding upon the principal and such third 
party, except where there is conclusive evidence establishing that the contract is only 
binding upon the agent and such third party.” Unnamed agency is conditional on the fact 
that principal and agent have established an agency relationship. B only issued the power 
of attorney to engage C and E to provide intermediary service, rather than to entrust C 
to sign contract on its behalf. B had signed the sand-mining contract with C and E in 
respect of Vessel D the previous day before the ship employment contract was signed. B 
was relying on the sand-mining contract in respect of receiving the guaranty money from 
C, instructing C for site survey, or inquiring about the progress of sand-mining approvals, 
and these activities was not ratification or implied consent under the ship employment 
contract signed by C on behalf of B as alleged. Although B indeed entrusted C and E to 
negotiate and sign a sand-mining service contract, there was no evidence proving that B 
and C agreed that C might act independently or that C directly disclosed the conclusion 


 
 
of contract to B when signing the ship employment contract with Company A to obtain 
B’s consent in signing such contract. On the contrary, there was evidence that C and E 
had signed a separate sand-mining contract with B to pocket the difference. C was not 
acting for the purpose of fulfilling obligations under an agency contract, in which by 
receiving agency fees, it shall follow the principal’s instructions, report to the principal, 
and to transfer the properties received by operation of the entrustment to the principal. 
Hence, B and C did not establish a relationship bound by agency contract. C’s conclusion 
of the ship employment contract in its own name did not constitute unnamed agency.   
 
Identifying the subject of contract correctly is important to the handling of ship leasing 
contract dispute properly. Unnamed agency is a common practice in the legal activities of 
the ship leasing market. It should be noticed that unnamed agency is different from both 
named agency and unauthorized agency. It has important conditions and characteristics: 
1. Principal has granted authorization to agent, or agent is authorized by operation of law; 
2. Agent is exercising civil juristic act on behalf of principal, and such act is authorized 
by principal or mandated by law; 3. Agent performs the civil juristic acts in its own name 
against the opposite party; 4. Results achieved by such act shall be transferred to principal 
according to law. It follows that unnamed agency differs from unauthorized agency in 
that agent has the authorization and performs the civil juristic acts within the limit of 
authority. To identify whether a subject act under unnamed agency to sign a ship leasing 
contract, first of all, the court should focus on the core issue, i.e. whether the agent has 
authorization. Further, the court should strictly follow the provisions of Article 402 and 
Article 403 of the Contract Law of  the People's Republic of  China to examine the legal effect 
according to the regulations on legal elements, to strike a balance of interests among 
principal, agent and the opposite party.   


 
 
VI. Protecting People’s Rights and Interests in Sea-related Disputes According to 
Law 
— Issues and suggestions concerning disputes over personal injury at sea 
 
(I) Identification of  the legal relationship under seafarers’ service contracts 
 
In a dispute arising out of a seafarer’s contract for services, A was employed by G and 
worked on a ship but no written contract for services was concluded. Around 0705hrs 
on the morning of 7 May 2017, A had a headache and went into a coma. The ship clerk 
contacted the emergency services in Hong Kong and transported A to Tuen Mun 
Hospital. As shown on the hospital records dated 16 May, A had acute intracranial 
bleeding on 7 May, and brain CT scans showed excessive bleeding in left temporal lobe 
and extensive damage to both hemispheres of the brain; he was minimally conscious, 
had stable vital signs, and was unable to speak. On 1 November A’s wife engaged an 
assessment agency to assess the extent of A’s injury and disability,  subsequent 
treatment cost and related matters. The assessment opinions described A as in a 
persistent vegetative state and rated his disability at Grade I. A requested the court to 
order Company F, registered owner of the ship, and G, the labour hire agency, for joint 
and several liability for medical cost, subsequent treatment cost, and disability 
compensation in the sum of about 1 million yuan. The first-instance court passed a 
judgment ordering Company F and G to compensate A in a sum of about 900,000 yuan 
for medical cost, subsequent treatment cost and disability compensation. During the 
second instance, A’s wife B, daughter C, mother D, and father E made a statement to the 
court of second instance that A had passed away on 5 June 2018 and as his legal 
inheritors they duly applied to participate in the proceedings. The court of second 
instance affirmed the identification of the legal relationship and apportionment of 
liability but made amendments to the claimants and the contents of the damages. Its 
judgment ordered F and G to compensate B, C, D and E for medical cost, subsequent 
treatment cost, subsequent care cost, death compensation, and funeral expenses in a sum 
of about 900,000 yuan. 
 
As stated in the court’s effective judgment, although Company F and G argued that the 
dispute should be under a seafarer employment agreement and liability should be 
determined through a work-related injury evaluation, ascertained facts showed it was 
expressly agreed in the ship management agreement between Company F and G that the 
latter was in charge of actually operating the ship and recruiting the crew. The parties 
concerned did not deny that A was engaged by G to work on the ship. As G was not an 
employer as described in the Labour Law of  the People’s Republic of  China, the relationship 


 
 
between A and G should be a relationship under a seafarer’s contract for services rather 
than that under an employment contract. Thus the Labour Law and related legal 
provisions did not apply to the case. Instead, the case should be tried by applying the Tort 
Law of  the People's Republic of  China and the Interpretation of  the Supreme People's Court on 
Some Issues concerning the Application of  Law in Trying Cases regarding Compensation for Personal 
Injuries.  
 
According to Article 1 of the Notice of  the Ministry of  Labour and Social Security on 
Identification of  Labour Relationship (LSBF [2005] No.12), “Where no written employment 
agreement is concluded between an employer and a worker, an employment relationship 
exists when the following conditions are met. (I) The employer and worker both qualify 
as such under applicable laws and regulations…” In this case, G was not an employer 
and was not qualified as an employer, thus the Labour Law and related legal provisions 
did not apply to the dispute over compensation for personal injury arising out of the 
labour hire arrangements. It should be noted that the seafarer had not entered into a 
written contract for services with either of the other parties before he started to perform 
services. In some sense A’s action had posed great risks to the exercise of his rights. This 
was due to his lack of legal literacy, but it also had a lot to do with the vulnerable 
position that seafarers found themselves in as labour providers. China is transitioning 
from a “large shipping nation” to a “shipping power”. During this transition, seafarers as 
important participants should enjoy full protection of their lawful rights. In order to fully 
protect seafarers’ rights, it is advisable to set up seafarers’ unions, and maritime 
administration should tighten regulation on seafarer service agencies, shipping companies 
and ship owners.  
 
(II) Ascertainment of  liability between employers and ship operators 
 
In the above case, as shown by the records of Tuen Mun Hospital, Hong Kong and the 
expert assessment opinions issued by the assessment agency, A was in a persistent 
vegetative state due to brain arteriovenous malformation and intracranial hematoma. 
However, there was no evidence that A’s unique physiology was the only cause of his 
illness. The particularity of working on the ship, transition between day and night shifts, 
workplace noise in the engine rooms, and chronic fatigue from work could all have 
played a part in inducing the attack of illness suffered by A who had a unique physiology. 
Company F and G argued that the other 7 crew members had been working in the same 
environment and condition but had not fallen ill. However, they failed to produce 
sufficient evidence to rule out the work environment and condition on the ship as a 
cause of A’s illness, and therefore should bear the adverse consequence of such failure. 


 
 
Summing up all facts, the court of first instance held at its discretion that A should 
assume 50% liability due to his unique physiology while Company F and G should 
assume the other 50% liability for A’s illness which put him in a persistent vegetative 
state.   
 
Article 35 of the Tort Law provides that “in a client/contractor relationship, the client 
shall be liable for any damage to a third party caused by the contractor in performing the 
agreed services. If damage is sustained by the contractor himself in performing the 
services, liability shall be shared by the parties in proportion to their respective levels of 
fault.” This is the first time China has referred to terms such as “contractor services 
(laowu)” and “client/contractor relationship (laowu guanxi)” in legislation. In Chinese 
legislation and judicial practice, they are associated with “employment” and “employment 
relationship”. In the relationship under a seafarer’s contract for services, the client is 
obliged to protect the seafarer’s life, health and personal safety for the period in which he 
is performing services on the ship. In other words, if the contractor suffers personal 
injury in performing the agreed services, the client shall be liable for compensation. In 
this case, Company F was not only the registered owner of the ship but also the ship 
operator. It was responsible for ensuring the safe navigation of the ship and providing a 
good working environment for the crew. The existence of a ship management agreement 
did not relieve it of its obligation to manage the crew. Under the principle of fairness, 
both the client and the ship operator should be liable for personal injury suffered by a 
seafarer.  
 
The shipping industry plays a key role in the growth of the national economy, whereas 
the occupation of seafarers involves great risks and a fair amount of hard work. Some 
seafarers start their career young and after years of unbalanced diet on ships, chronic 
homesickness, and fatigue from work combined with aging, they suffer high blood 
pressure, heart disease or other illnesses. If no compensation is made to a seafarer who 
falls ill on a ship and subsequently dies, it would be a total disregard for the seafarer’s 
long-time devotion and would be against morals and humanity. It would also put the 
seafarer’s family into financial difficulty. Moreover, insufficient protection of seafarers 
would drive young people away from the occupation, which would in turn have adverse 
effect on the growth of the shipping industry. For the sake of people’s livelihood and 
humanity, we advise ship owners to compensate seafarers who fall ill on ships and pass 
away, and ship owners’ liability insurers should settle the ship owners’ claims. Insurers 
who thus incur increased insurance cost may charge higher premiums to protect their 
interests.  
 


 
 
(III) Ascertainment of  liability between concurrent tortfeasors without a common 
design 
 
In a dispute over liability for personal injury at sea and in waters leading to the seas, the 
yacht “ZI YOU ZHI XING” navigated by A who was engaged by B collided with an 
unnamed fishing boat navigated by C at 2000hrs on 3 June 2017 in the northeast waters 
of Sanmen Island, Huizhou. The accident caused injuries to different extents to 
navigator C and 4 passengers, including D, on the fishing boat. D subsequently died 
despite medical efforts. The Maritime Safety Administration of Huizhou Port issued an 
accident liability report, apportioning the liability equally between the vessels on the 
grounds of their equal level of fault. D had been married to E and they had a son, F, 
who was born on 19 February 2015. And G was D’s mother. E, F and G requested the 
court to order A, B and C to be jointly and severally liable for death compensation, 
medical cost, funeral expenses, living expenses of the dependent, and emotional distress 
damages in the sum of about 2 million yuan. The court of first instance passed a 
judgment ordering B and C to jointly and severally compensate E, F and G a sum of 
about 1.8 million yuan. The court of second instance affirmed the determination of 
amounts of expenses and damages, but made amendments to the modes of liability 
assumed by B and C to the damages. Instead, B and C were ordered to respectively pay 
about 900,000 yuan as compensation.  
 
The effective judgment rendered by the court held that B and C were both at fault for 
the collision between the yacht and the boat but the two parties acted without a common 
design. Rather, they concurrently committed related wrongs. The joint and several 
liability prescribed in Article 8 of the Tort Law did not apply to the case. Moreover, 
existing evidence was insufficient to prove that either of the parties’ respective wrongful 
acts would have sufficed to cause the whole injury. Therefore, Article 12 of the Tort Law 
should apply, which provides that “when two or more persons respectively commit 
tortious acts leading to the same injury, the tortfeasors shall be held proportionately 
liable if it is possible to determine their respective levels of fault, or equally liable if it is 
impossible to make such determination.” Accordingly, B and C should be liable for the 
accident in proportion to their respective levels of fault. The accident liability report 
issued by the Maritime Safety Administration of Huizhou Port determined that both 
vessels had committed equal level of fault in the accident and should be held equally 
liable. B and C had no objection to the above decision. Accordingly, B and C should 
respectively assume 50% liability for the compensation.  
 
When two or more persons respectively commit different acts without a common design 


 
 
or negligence leading to the same injury, they are concurrent tortfeasors without a 
common design, and Article 12 of the Tort Law should apply to the determination of 
liability based on their respective levels of fault. Each tortfeasor commits an independent 
wrongful action and should only be liable for the injury caused by such action. Where 
each tortfeasor’s wrongful action is sufficient to cause the whole injury, the tortfeasors 
shall assume joint and several liabilities; the tortfeasors shall be held proportionately 
liable if it is possible to determine their respective levels of fault, or equally liable if it is 
impossible to make such determination. To some extent, the Tort Law shows the 
legislation trend towards stricter criteria for and limitations on the application of joint 
and several liabilities. For instance, it holds concurrent tortfeasors without a common 
design proportionately liable for their concurrent wrongful actions. This restricts 
excessive application of joint and several liability and conflicts with the generally 
accepted practice in judicial trials that are familiar to most people. For victims and their 
relatives seeking dispute resolution through legal proceedings in similar circumstances, it 
is advisable to bring actions after distinguishing in good faith and based on facts the 
modes of liability attribution for different tortious acts. This will help to avoid inefficient 
trials and facilitate the fair and proper satisfaction of the victims’ claims.  


 
 
 
VII. 
Maintaining the Order of Rule of Law of Seafarer Labour Market According 
to Law 
— Issues and suggestions concerning seafarer service contract disputes 
 
(I) Ascertainment of  seafarer’s wages when no written labor contract is signed  
 
On 5 November 2018, Seafarer C served as chief officer on Ship B operated by 
Company A. No written employment agreement had been signed between Company A 
and Seafarer C for the period in which Seafarer C is performing services on the ship B. 
Company A had paid Seafarer C 6 months’ wages at a rate of 20,000 yuan per month. As 
Company A failed to pay the full remuneration on time, Seafarer C resigned and 
disembarked from the ship on 4 September 2019. The employment relationship between 
Seafarer C and Company A was affirmed in the court effective judgement considering 
that Seafarer C had been serving as chief officer on Ship B for nearly one year even 
though no written employment agreement had been entered into between Seafarer C and 
Company A. In accordance with applicable provisions of the Labour Contract Law, the 
court supported Seafarer C’s claims for the unpaid wages of 80,000 yuan plus interest 
thereon, a double time pay of 180,000 yuan due to no written employment agreement 
being concluded, and the severance pay of 20,000 yuan.  
 
Due to the particularity of seafarer jobs, a number of seafarers do not enter into a written 
employment agreement with their employers before starting their services. The 
determination of the existence of an employment relationship does not rely on an 
employment agreement. However, when a dispute arises over unpaid wages without 
written employment agreement, the seafarer has to prove the fact that he has been 
performing services on the ship and with whom he has established an employment 
relationship. In compliance with Article 38.1.2, Article 46.1, Article 47.1 and Article 82.1 
of the Labour Contract Law of the People’s Republic of China, and Article 6 of the Regulation on 
the Implementation of the Labour Contract Law of the People's Republic of China, the employer 
may be required to pay the arrears of wages, an amount to make up for the double time 
pay due to no written employment agreement, plus severance pay for the arrears of 
wages once such facts are proved. The double time pay shall be calculated from the first 
day of the second month following the commencement of services to the day preceding 
the date on which a written employment agreement is concluded, but no later than the 
day preceding the last day of the year following the commencement of services. The 
severance shall be paid based on the duration of the seafarer’s service to the employer, at 
a rate of one month’s wage for each year; any period not less than six months but shorter 


 
 
than one year shall be counted as one year, and any period less than six months shall be 
counted as six months.  
 
To protect seafarers’ and employers’ lawful rights and interests, it is advisable for 
employers to enter into written employment agreements with seafarers to set out rights 
and duties before they start performing services. If a seafarer has to board a ship in a city 
or port outside the domicile of the employer under emergency circumstances, the 
employer may enter into a written employment agreement with the seafarer through 
email, facsimile, instant messaging means or otherwise delegate to the officer who is in 
charge of shipping matters. If the employer is negligent in the above responsibilities, the 
seafarer may actively request the employer to fulfill his/her responsibilities.  
 
(II) Identification of  false records in seafarer’s identity documents 
 
In a dispute arising out of a seafarer’s employment agreement, Seafarer C brought an 
action against Company A claiming payment of wage arrears based on the records in his 
seafarer’s identity document. The records showed that Seafarer C had served as chief 
officer from 2 June to 30 September 2017 and as captain from 1 October 2017 to 20 
September 2018 and from 1 October 2018 to 18 June 2020 on Ship B owned by 
Company A. Seafarer C thus claimed against Company A for unpaid wages earned after 1 
October 2018. Company A argued that Seafarer C had not performed services on Ship B 
after 1 October 2018; the officer who held the position of business representative and 
was in charge of the safekeeping of Ship B’s stamp and seafarer service stamp, had filled 
in and stamped Seafarer C’s identity document without permission to help Seafarer C 
polish up his resume. When questioned by the court about the details of his service on 
the ship, Seafarer C voluntarily admitted that he had made a false statement and 
withdrew his claims in court. Seafarer C was thus admonished by the court and wrote a 
letter of apology.  
 
A seafarer’s identity document is a seafarer’s professional identification, which is an 
important record of services performed by the seafarer to preliminarily proof that the 
seafarer has worked on a ship. Therefore, the entries in the document are significant for 
both the seafarer and the company. In this case, Seafarer C took advantage of the 
business representative’s role in safekeeping the stamps and conspired with the 
representative to fabricate his service on the ship in an attempt to gain benefits. In doing 
this, Seafarer C not only violated regulations on crew management but also involved the 
company in litigation. Eventually, Seafarer C was admonished by the court.  
 


 
 
It is important for ship companies to safe keep ship stamps, seafarer service stamps and 
other important items and documents. All important items and documents to be carried 
on board should be kept by persons selected with prudence in order to avoid 
unnecessary legal risks. Seafarers should be honest and trustworthy at work. In particular, 
captains who have the right to act at their discretion on behalf of the ship should observe 
strict self-discipline and abstain from momentary greed that will impair their career in the 
long run.  
 
(III) Ascertainment of  seafarers’ wage periods 
 
Starting from 21 November 2018, Seafarer C performed services on Ship B owned by 
Company A. No written employment agreement was concluded between the parties. On 
14 June 2019, Company A delegated its business representative on board to give Seafarer 
C notice of termination of employment due to operational difficulty. However, Seafarer 
C continued his service on Ship B after receiving the notice given that Company A was 
in arrears with wages. He temporarily left the ship from 26 June to 1 July, from the 
afternoon of 28 August to the morning of 29 August, and from the afternoon of 1 
September to the noon of 2 September. During these periods, Ship B remained in its 
anchorage. On 4 September, Seafarer C resigned, disembarked the ship, and completed 
the formalities for the separation with the maritime safety administration. As Company A 
failed to pay his wages on time, Seafarer C claimed to the court against Company A for 
unpaid wages earned up to 4 September, which amounted to 92,427 yuan, plus interest. 
Company A argued that it was not required to pay wages after 14 June as it had 
terminated its employment relationship with Seafarer C on that date when it gave the 
notice of termination, and Seafarer C had subsequently left work on multiple occasions. 
The court passed an effective judgment which held that after an employment relationship 
had been established between Seafarer C and Company A, it could not be terminated by 
Company A unilaterally by giving notice of termination; thus Seafarer C should be paid 
his wages until the date of termination, namely 4 September. Although Seafarer C had 
temporarily left the ship three times during the existence of the employment relationship, 
there was no evidence that such leave taken by Seafarer C while the ship was at berth had 
any substantial effect on the management or operation of the ship. Company A had not 
reached any agreement with or explained to Seafarer C about the wage deduction 
consequence of leaving the ship while she was at berth. For these reasons, Company A 
should pay Seafarer C wages for the periods in which he was temporarily off the ship.. 
 
The employment relationship between a ship company and a seafarer is under strict 
protection once established. Without an agreement, the ship company may only 


 
 
terminate the employment agreement unilaterally under circumstances in which an 
employer is allowed to terminate an employment contract as provided for in Article 39, 
Article 40 and Article 41 of the Labour Contract Law of the People’s Republic of China. 
Accordingly, a ship company may not stop paying a seafarer’s wages simply based on a 
unilateral notice of termination. If a seafarer temporarily leaves the ship for personal 
reasons during the existence of the employment agreement, the payment or non-payment 
of wages during such leave should be determined taking into account relevant 
agreements between the parties, relevant policies published by the ship company, and the 
effect of such leave on the management and operation of the ship.  
 
Seafarers’ wages are paid by ship companies in consideration of the services performed 
by seafarers. We suggest that ship companies should pay seafarers’ wages as agreed and 
in compliance with law, and not to make deductions for various reasons. Both ship 
companies and seafarers should be serious about their employment relationships. The 
parties should enter into a written employment agreement setting out rights and 
obligations. A ship company intending to prematurely terminate an employment 
agreement and stop paying wages for operational reasons should strictly comply with 
relevant agreement and applicable provisions. Where there is no agreement or provisions, 
the ship company should in good faith try to reach an agreement with the seafarer. The 
cooperation, mutual respect and common efforts between seafarers and ship companies 
are essential to the growth of the shipping market.  


 
 
VIII. Constituting Limitation of Liability Funds for Maritime Claims According 
to Law 
— Issues and suggestions concerning application for constituting limitation of  
liability funds 
 
(I) Whether voyage charterers may seek limitation of  liability for maritime claims 
 
Under a contract of carriage of goods by sea which gave rise to a dispute, Company A 
entrusted Company B with the carriage of a shipment from Tangshan, Hebei to 
Guangzhou, Guangdong. Company B as the charterer entered into a voyage charter with 
Company C, the lessor, for the carriage of the shipment by Ship No. 1. During the 
carriage, Ship No. 1 collided with Ship No. 2 and sank with the shipment on board. 
Company A’s insurer settled its insurance claims and brought an action with us, 
requesting Company B for compensation. Company B argued that it was entitled to 
limitation of liability for the damage to the shipment in dispute. The court rendered an 
effective judgement which found Party B’s defence of limitation of liability legally 
groundless and invalid because Company B was not among the persons entitled to 
limitation of liability for maritime claims.  
 
The Maritime Law entitles ship owners, operators and charterers to limitation of liability 
for maritime claims. Such special protection is granted mainly based on the maritime 
risks involved in ship operations. A charterer under a voyage charter does not own the 
ship or control her operations or bear the risks involved in her operations. Such charterer 
is engaged in the carriage of goods rather than the operations of the ship. A voyage 
charterer in effect has the legal status of a shipper and holds the position of the cargo 
interests; they do not fall into the definition of “ship owners” in a broad sense and are 
not engaged in the specific operations of ships. Entitling voyage charterers to limitation 
of liability for maritime claims does not conform to the purpose or trend of the 
provisions on limiting liability for maritime claims. The charterers described in Article 
204 of the Maritime Law include charterers under bareboat charters or time charters, but 
not charterers under voyage charters. Voyage charterers are not among the persons 
entitled to limitation of liability for maritime claims.  
 
We advise litigants and their agents ad litem to comply with applicable Chinese laws on 
the entitlement to limitation of liability for maritime claims. Any defence of voyage 
charterers of entitlement to limit their liability for maritime claims will be dismissed by 
courts.  
 


 
 
(II) Whether port operators may seek limitation of  liability for maritime claims 
 
In relation to a dispute over liability for damage to marine property, a loaded container in 
Yantian Port, Shenzhen was found damaged and the cargo inside suffered damage. 
Company A as the cargo insurer settled the insurance claims with the cargo owner and 
was duly subrogated to the claims. Company A made a cargo claim against the carrier on 
the grounds of improper safekeeping and care by the carrier, and requested to hold the 
port operator jointly and severally liable for the cargo damage on the grounds of its 
improper handling that led to the damage to the container which in turned caused the 
cargo damage. The port operator defended itself by arguing that it would be entitled to 
limitation of liability for maritime claims even if it was liable for compensation. The 
court rendered an effective judgment which found the port operator not entitled to 
limitation of liability for maritime claims and dismissed its argument for such 
entitlement.  
 
Where a port operator causes cargo damage in the course of port operations and the 
shipper or consignee concerned brings an action in tort against the port operator, the 
port operator may not claim entitlement to limitation of liability for maritime claims 
under Article 58 of the Maritime Law, which provides for the limitation of liability 
enjoyed by carriers, whereas a port operator is neither a carrier nor an actual carrier. 
Moreover, the carriers’ rights granted by the Maritime Law to exemption or limitation of 
liability are simply based on the particularity of maritime risks, which are not normally 
borne by port operators. For these reasons, port operators may not defend themselves by 
claiming carriers’ entitlement to limitation of liability under Article 58 of the Maritime 
Law. Moreover, port operators are not ship charterers, operators or salvors as described 
in Article 204 of the Maritime Law, who are persons entitled to limit their liability for 
maritime claims. Port operators are therefore not entitled to limitation of liability for 
maritime claims.  
 
If a port operator argues against liability for compensation in a dispute over damage to 
marine property, it is advisable for such port operator to prove that it is not an infringer 
and that the cargo damage is not due to its fault or caused by any of its actions. Any 
defence of port operators of entitlement to limit their liability for maritime claims will 
not be accepted by courts.  
 
(III) When to invoke the right to limitation of  liability for maritime claims 
 
In a dispute over liability for damage caused by a ship collision, the fishing boat owned 


 
 
by A collided with the fishing boat owned by B when they were engaged in shrimp 
trawling in the waters of Wanshan Port. The fishing boat owned by A sank as a result of 
the collision. A thus brought an action with us and claimed against B for compensation. 
The court of first instance made a judgment ordering B to compensate A for the 
economic loss caused by the accident. B lodged an appeal and claimed it had the right to 
limit its liability for maritime claims as provided in Article 207 of the Maritime Law. The 
court of second instance gave a judgment which, referring to Article 15 of Several 
Provisions of  the Supreme People's Court on the Trial of  Cases of  Disputes over the Limitation of  
Liability for Maritime Claims, did not support B’s defence of limitation of liability for 
maritime claims during the second instance. The appeal was thus dismissed and the 
original judgment affirmed. B applied for a retrial, arguing that the court of first instance 
had not explained to it the limitation of liability for maritime claims, which was a 
procedural error, and that the second-instance judgment made a mistake by rejecting its 
argument on the grounds that it had failed to invoke the right to limitation of liability for 
maritime claims within the specified time limit. The retrial court held that the court of 
second instance made no mistake in rejecting B’s defence of limitation of liability for 
maritime claims. Such defence of a litigant in maritime proceedings should be raised by 
the litigant himself. B was legally groundless in arguing that the court of first instance 
had made a procedural error by not explaining its right to limitation of liability for 
maritime claims, and its application for retrial was thus dismissed.  
 
Article 15 of Several Provisions of  the Supreme People's Court on the Trial of  Cases of  Disputes 
over the Limitation of  Liability for Maritime Claims provides that “where a liable person fails 
to raise the defence of limitation of liability for maritime claims before the first instance 
judgment is rendered, but raises such defence in the second instance or during retrial, the 
people’s court shall not uphold such defence.” Claims of a litigant should be made in the 
first instance. According to the principles of civil procedure, a court cannot arbitrarily 
make any decision as regards any independent claim added by the litigant in the second 
instance.  
 
The right to limitation of liability for maritime claims is a defence that can be raised by a 
litigant, and a privilege vested in persons liable for marine accidents under the Maritime 
Law. A litigant’s defence of limitation of liability is a defence of substantive rights and 
shall be raised by the litigant himself at his discretion. When a liable person is not raising 
the defence of limitation of liability, the competent court should not on its own initiative 
explain such right or render any judgment with reference to legal provisions on limitation 
of liability for maritime claims. We advise litigants to follow Article 15 of the above 
Provisions and raise a defence of limitation of liability for maritime claims before the 


 
 
first-instance judgment is passed. Courts should not on their own initiative provide 
explanation or give judgments with reference to legal provisions on limitation of liability 
for maritime claims. Such defence should be raised by the litigants themselves.  


 
 
 
IX. Advancing Enforcement Processes According to Law 
— Issues and suggestions concerning arrest and auction of  ships during 
enforcement 
 
(I) Ship’s sailing away from the place of  arrest without permission  
 
In the enforcement with relation to a dispute under a financial loan contract, the court 
had acted on the informaiton received from Shareholder A of Company C, the debtor, 
and arrested Ship B, which was owned by the debtor and berthed at a shipyard in Nansha, 
Guangzhou. The court had also ordered the debtor to take responsibility for safekeeping 
the ship and not to allow her to depart from the place of arrest without the court’s 
permission. Subsequently the ship was sold by the court through a judicial auction on 
Taobao.com. During the period from the arrest to transfer after auction, the court did 
not received an application for the ship to be moved.  
 
In the investigation related to a separate case, the court found that the ship might have 
left her place of arrest without permission during the time she was under arrest. To 
verify the suspicion, the court applied to the maritime safety administration for access to 
the ship’s historical movements recorded while she was under arrest, which showed that 
the ship had departed from her place of arrest in the evening of the same day she was 
arrested and had made a number of round trips between the waters of Xiaochan Island, 
Shenzhen and Xiaowanshan Island, Zhuhai. The court then summoned Shareholder A 
and the legal representative of the debtor to appear in court for investigation. 
Shareholder A spontaneously admitted their fault, actively cooperated with the court and 
informed other persons concerned of appearing in court for the investigation. 
Eventually the court found that the ship under arrest had departed from her place of 
arrest without permission for engagement in transportation under Shareholder A’s 
instruction. In compliance with the Civil Procedure Law of  the People's Republic of  China, the 
court decided to impose a penalty of 80,000 yuan on Shareholder A. Shareholder A paid 
the fine as soon as he received the decision.  
 
In accordance with Article 7.1 of the Provisions of  the Supreme People's Court on Several Issues 
concerning the Application of  Law in the Arrest and Auction of  Ships, which provided that 
“during the period when a ship is under arrest, the ship shall be under the management 
of the shipowner or bareboat charterer”, the ship owner or manager shall duly fulfil their 
obligations of managing the arrested ship and, without the court’s permission, shall not 
allow the ship to depart from her place of arrest or engage the ship in any operations. 


 
 
 
If any special circumstances arise during the period of arrest of a ship, such as typhoon, 
which renders precautions or change of berth necessary, the interested parties of the 
ship are advised to promptly apply to the local maritime administration and report to the 
court for permission. If the ship departs or escapes without permission, a penalty 
and/or detention will be imposed accordingly, and criminal liabilities may arise in relation 
to serious offences.  
 
(II) Assumption of  liability when a successful buyer pulls out of  an auction 
 
In the enforcement with relation to a dispute under a ship sale and purchase contract, the 
court intended to auction off the ship owned by the debtor. An objective and 
comprehensive disclosure of the ship’s condition was given in the published auction 
instructions. The appraised value of the ship was 326,900 yuan, the opening bid was 
230,000 yuan, and the deposit was 20,000 yuan. At the first online judicial auction, Bidder 
A won the bid by offering 502,000 yuan. Under the influence of the COVID-19 
pandemic, Bidder A was allegedly unable to pay the balance on time and take delivery of 
the ship on site. The collegial panel had a discussion and granted Bidder A’s request to 
postpone the payment of the balance. However, after the granted extension Bidder A 
expressed its unwillingness to pay the balance. In accordance with Article 24 of the 
Provisions of  the Supreme People's Court on Several Issues Concerning Online Judicial Auctions 
Hosted by People's Courts (Interpretation [2016] No. 18, hereafter referred to as Online 
Auctions Provisions), “where a successful buyer pulls out after an auction is closed, the 
deposit paid by such buyer shall be forfeit and applied, in turn, to cover the costs of the 
auction, make up for any deficiency if the re-opened auction is concluded at a price 
lower than the original purchase price, and offset the debts of the debtor(s) in the case 
and the debts of the debtor(s) in relation to the auction items. The original successful 
buyer may not bid in the auction re-opened after such pullout.” According to these 
provisions and the published auction instructions, the court put the ship up for another 
auction. At the second auction, Bidder B won the bid at 538,000 yuan, with an excess of 
36,000 yuan over the first hammer price. However, Bidder B decided to pull out of the 
sale alleging that it had offered too high a bid. Once again, the court had to re-initiate the 
auction process. Eventually at the third auction, Bidder C won the bid at 492,000 yuan 
and paid the balance.  
 
Article 25.2 of the Provisions of  the Supreme People's Court about Auction and Sale of  Property by 
the People's Courts in Civil Enforcement (Interpretation [2004] No. 16, hereafter referred to as 
Provisions on Auction and Sale) provides that “the original successful buyer shall bear 


 
 
any deficiency if the re-opened auction is concluded at a price lower than the original 
purchase price as well as the costs and commission incurred in the original auction. A 
people’s court may deduct such amounts from the deposit paid by the buyer and shall 
return the balance thereof, if any, to the buyer; where the deposit is insufficient for such 
purpose, the buyer may be ordered to make up the sum required; such order may be 
enforced if rejected by the buyer.” Accordingly, the deposit paid by Bidder B was 
withheld. As the online auction did not induce other costs, Bidder B who pulled out of 
the second auction sale was ordered to pay 26,000 yuan to make up for the deficiency. In 
compliance with Article 24.1 of the Online Auctions Provisions, it was decided that the 
deposit of 20,000 yuan paid by Bidder A would be forfeit. The sum of 66,000 yuan 
gained from the two failed auctions was thus kept as part of the auction proceeds of the 
ship.  
 
Online judicial auction is no trifling matter. It reflects reverence for the law. When 
participating in a judicial auction, it is advisable to carefully read through the auction 
announcement and instructions, and not to casually pull out of the auction once it is 
concluded. Such prudence will contribute to the maintenance of a good auction order 
and the credibility of judicial auction.  
 
(III) Application of  the principle of  restricting futile auctions in sales of  ship 
 
In a case regarding the dispute between A and B under a sale and purchase contract, A 
owed B a principal of 650,000 yuan and interest, and B applied to a court in Place D for 
enforcement. An investigation found no enforceable assets in A’s name other than ships. 
Thus B applied for auctioning off Ship No. 1 and Ship No. 2 in A’s name. The local 
court subsequently entrusted us with the auction of the ships. We found out that Bank C 
had already put a mortgage lien on the ships for a sum of 1.8 million yuan which was not 
at all paid. However, B as an ordinary creditor still insisted on auctioning off the ships, 
whereas Bank C as a known mortgagee had not applied for the arrest of the ships.  
 
The ships were arrested, and a subsequent appraisal determined that Ship No. 1 had a 
value of 1,138,500 yuan and Ship No. 2 had a value of 993,600 yuan. Article 10 of the 
Online Auctions Provisions provides that “a reserve price shall be determined at an 
online judicial auction, and the reserve price shall be the opening bid. The opening bid 
shall be determined by a people's court with reference to the appraised value; where no 
appraisal is conducted, it shall be determined with reference to the market price, and the 
opinions of the parties concerned shall be consulted. The opening bid shall not be lower 
than 70% of the appraised value or the market price.” Accordingly, the reserve prices of 


 
 
the ships would only need to be over 70% of their appraised values. However, as stated 
in Article 9 of the Provisions on Auction and Sale, “after the reserve price has been set, 
if a calculation based on the reserve price of the current auction renders any surplus 
improbable after paying off priority claims and the enforcement fees out of the auction 
proceeds, the enforcement applicant shall be notified the relevant information prior to 
the auction. If, within 5 days after it has received the notice, the enforcement applicant 
requested to proceed, the people's court shall grant such request but shall determine a 
new reserve price, which shall exceed the sum of the priority claims and the enforcement 
fees. If the auction so conducted fails, the costs of the auction shall be borne by the 
enforcement applicant.” As there were known priority claims on the ships, it was 
necessary to prevent a futile auction when setting the reserve prices, which means that 
the reserve prices should cover the priority claims and the enforcement fees. Faced with 
the thin demolition market and the ongoing expenses it incurred after the arrest if the 
ships were not disposed of promptly, Applicant B handed in 100,000 yuan as security 
that it would bear all the costs of a futile auction. The court thus initiated the online 
auction procedure. The ships were put up for public auction on Taobao.com and were 
eventually sold for a sum of 2,172,000 yuan.  
 
During the announcement of the pending auction, Bank C and a non-party, D, came 
forward to register their creditor’s rights and bring actions to ascertain related rights. Out 
of the auction proceeds of the ships, about 100,000 yuan was eventually paid to B who 
was an ordinary creditor. 
 
Auction as a means of enforcement involves high costs. To decide whether to conduct 
an auction, we need to take into account its benefit to enforcement-related parties as well 
as its burdens on and benefit to the society. Enforcement that would not produce 
tangible benefits to any party concerned should be avoided to the greatest extent. 
However, a request for auction should not be dismissed casually in anticipation of a 
futile auction. The value of an asset cannot be determined until such asset comes onto 
the market. A futile auction in a real sense should feature an auction object with negative 
value, such auction not benefiting anyone in any way. For an ordinary creditor requesting 
for the auction of a ship owned by the debtor, it is advisable to find out in as much and 
accurate detail as possible whether any priority claim on the ship exists; where any 
existing secured creditor does not initiate an auction procedure, it is also advisable for the 
ordinary creditor to assess its capacity to bear all enforcement costs incurred in relation 
to the auction of the ship if such auction turns out futile.  
 
      (The above information provided by Guangzhou Maritime Court）

- 1 - 
 
Nanjing Maritime Court Report on Trials  
(December 2019 to November 2020) 
 
TABLE OF CONTENTS 
 
Preface ..............................................................................................- 3 - 
Ⅰ. General Information ...................................................................- 4 - 
(1) General Performance 
.............................................................- 4 - 
(2) Case Classification ................................................................- 5 - 
(3) The Openness of the Justice System .....................................- 8 - 
II. Highlights of Activities 
................................................................- 8 - 
(1) Prospective Systematic Planning ..........................................- 8 - 
(2) Refining the Trial Process .....................................................- 9 - 
(3) Systematic Formulation of Rules and Regulations .............- 11 - 
(4) Additional Intelligent Litigation Services ...........................- 12 - 
(5) Building a Professional Team .............................................- 14 - 
III. Typical Cases............................................................................- 15 - 
Case 1:BOA BARGES AS vs. Nanjing Yichun Shipbuilding Co., 
Ltd. Dispute over International Shipbuilding Contract 
.............- 15 - 
Case 2:Zhang vs. the People's Government of Jianye District, 
Nanjing, Disputes over Administrative Punishment 
.................- 19 - 
Case 3:Dongxing Branch of Jiangsu Jingjiang Rural Commercial 
Bank Co., Ltd. vs. Hu et al.Dispute over Financial Loan Contract 
and Ship Mortgage Contract .....................................................- 22 - 


- 2 - 
 
Case 4:Case of China Grain Storage Oil Co., Ltd.’s Application to 
Detain theKELLY Ship ............................................................ - 27 - 
Case 5:Qin vs. Su: A Dispute over Maritime Personal Injury 
Liabilities 
.................................................................................. - 30 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


- 3 - 
 
 
Preface 
The 11th maritime court in China, Nanjing Maritime Court 
officially started operating on December 4, 2019. In its first year, 
under the guidance of Xi Jinping thoughts on Socialism with Chinese 
Characteristics in a New Era, Nanjing Maritime Court (hereinafter 
referred to as “the Court”) implements the guiding principles of the 
19th National Congress of the Communist Party of China and the 
Second, the Third, the Fourth and the Fifth Plenary Sessions of the 
19th CPC Central Committee.  Focused on “building a first-class 
maritime court with its influence spreading across the country and 
even across the globe”, the Court always put political building as the 
overarching principle, made unremitting efforts to refine the trial 
process and make systematic plans and progress, and leveraged the 
role of the maritime trial to support national strategies such as the 
building of a powerful maritime country as well as the re-start of the 
construction of new Jiangsu Province featuring a strong economy, 
wealthy people, beautiful environment, and a high degree of social 
civilization. With a promising beginning in various efforts, the Court 
was recognized by Zhou Qiang, President of the Supreme People's 
Court of China, and Lou Qinjian, Secretary of the CPC Committee of 
Jiangsu Province for its operating performance. The Work Report of 
the Supreme People’s Court of China (2020) also mentions, “Based on 
its geographical advantages, Nanjing Maritime Court actively supports 
the development of the marine economy.” 


- 4 - 
 
Ⅰ. General Information  
(1) General Performance 
As of November 2020, the Court has accepted 2,127 cases of 
various types and closed 1,312cases, ranking 7th and 9th respectively 
among maritime courts in China concerning the number of accepted 
and closed cases. There are 94 types of cases among all 108 types in 
six categories determined by the Provisions of the Supreme People's 
Court on the Scope of Cases to Be Accepted by Maritime Courts, 
88.06% cases were closed within the time limit for trial, 96.23% cases 
were settled without appeal in the first trial and 63.88% civil cases 
were withdrawn after meditation. Moreover, it accepted the 8th highest 
number of civil cases, the highest number of administrative cases, and 
the 11th highest number of enforcement cases among maritime courts 
in China. The subject matter of all actions valued RMB 7.066billion, 
of which RMB 5.002 billion came from trial cases and RMB 2.064 
billion came from enforcement cases. 


- 5 - 
 
 
 
(2) Case Classification 
1. Civil Cases: As for the civil cases, 1,269 cases were accepted, 
and 693 cases were closed. The top three in the ranking of 
subcategories with the most accepted cases are listed below: disputes 
over contracts for freight forwarding by sea or by waters leading to the 
sea (127 cases), disputes over contracts for freight transport by sea or 
by waters leading to the sea (123 cases), and disputes over contracts 
for the supply of ship stores and spares (95 cases). There are a total of 
561 cases in the top ten subcategories with the exact number of cases 
in each subcategory shown below.  
 


- 6 - 
 
 
 
2. Administrative Cases: As for administrative cases, 130 cases 
were accepted and 45 cases were closed. The top three in the ranking 
of subcategories with the most accepted cases are listed below: 
disputes over administrative compulsion on marine resources (64 
cases), disputes over administrative penalty on water transportation 
(19 cases) and disputes over administrative license on marine 
resources (10 cases). 
3. Enforcement Cases: As for enforcement cases, 477 cases were 
accepted and 361 cases were closed. 
4. Seizure of Ships: 112 ships were seized, of which 5 were from 
foreign countries, Hongkong,  Macau, and Taiwan. 
5. Cases involving foreign, Hong Kong, Macau, and Taiwan 
elements: 100 cases were accepted and accounted for 7.88% of the 


- 7 - 
 
total accepted cases by the Court; the subject matter of these actions 
valued for RMB443 million and involved the elements of more than 
30 countries and regions such as the United Kingdom, France, 
Germany, South Korea, India, Singapore, Greece, and Brazil. 
6. Cases of Detached Tribunals: Four detached tribunals in 
Lianyungang, Nantong, Taizhou, and Suzhou accepted 1028 cases, 
accounting for 48.33% of the cases accepted by the Court; closed 610 
cases, accounting for 46.49% of the cases closed by the Court. Among 
them, Lianyungang Detached Tribunal accepted 424cases, Nantong 
Detached Tribunal accepted 188 cases, Taizhou Detached Tribunal 
accepted 165 cases, and Suzhou Detached Tribunal accepted 151 
cases.  
 
 
 
 


- 8 - 
 
(3) The Openness of the Justice System 
943 judgments which account for 71.88% of the total cases were 
uploaded through China Judgments Online. 72 trials were broadcasted 
live on China Court Trial Live Broadcast Online with a total of 47,515 
viewers. 1,304 cases which account for 98.79% of the total went 
through effective judicial process and information disclosure on China 
Judicial Process Information Online. 
II. Highlights of Activities 
(1) Prospective Systematic Planning 
The Court carried out prospective research to reach the targets 
and prioritized leverage of maritime justice in supporting national 
strategies such as the building of a powerful maritime country, the 
development of the Yangtze River Economic Belt, the integrated 
regional development of the Yangtze River Delta, as well as the Belt 
and Road Initiative, in order to promote economic and social 
development with high-quality maritime judicial service; promulgated 
the Opinions on Fully Leveraging the Role of Maritime Trial to 
Provide Judicial Services and Guarantees for the Re-start of the 
Construction of New Jiangsu Province Featuring Strong Economy, 
Wealthy People, Beautiful Environment and a High Degree of Social 
Civilization, which clarifies 4 main tasks, 8 key fields and 10 
guarantee mechanisms for maritime justice; established a regular 
analysis and notification system for cases involving the Belt and Road 
Initiative, conducted special investigations on admiralty and maritime 
cases involving the Free Trade Zone, the construction of the Grand 


- 9 - 
 
Canal Cultural Belt, and marine ecological environment protection, 
and introduced 10 measures to make business environment more 
international, facilitating and making it compatible with the rule of 
law; closed 38 maritime administrative cases involving unlicensed 
ships on the Yangtze River in accordance with the law, promoted 
substantive progress in resolving administrative disputes through 
demonstrative court trials, and supported the elimination of unlicensed 
ships on the Yangtze River—all these judicial efforts led to a better 
protection of the Yangtze River; proposed 15 measures on maritime 
justice for pandemic prevention, published 14 issues of articles on the 
“interpretation of maritime laws by maritime judges”, organized the 
preparation and distribution of more than 1,000 copies of the Manual 
on Legal Risk Avoidance in the Shipping, Port, Logistics, Shipbuilding 
and Other Industries, provided relief to companies in difficulties and 
worked to ensure stability in employment, financial operations, 
foreign trade, foreign investment, domestic investment, and 
expectations as well as security in job, basic human needs, operations 
of market entities, food and energy security, stable industrial and 
supply chains, and the normal functioning of primary-level 
governments. 
 (2) Refining the Trial Process 
Given that maritime jurisdiction is internationally involved and 
requires professionalism, the Court made vigorous efforts to refine its 
trial process and guaranteed fair and efficient trial of cases. It 
formulated the Opinions on Refining the Maritime Trial Process and 


- 10 - 
 
Selecting a Collection of Well-tried Cases, set up a group of 
consulting experts, recommended experts to serve as the jurors, 
carefully paid attention to complex and troublesome major cases with 
significance for rulemaking and demonstration, and presented a batch 
of well-tried cases; formulated 12 guidelines for collecting maritime 
evidence, judicial review of maritime arbitration and other trial 
procedures and prepared trial guidelines for typical cases such as 
cargo delivery by sea without a bill of lading and disputes over freight 
forwarding by sea to standardize judicial behaviors and unify 
judgment standards. In the early stage of its establishment, the Court 
overcame a series of difficulties such as lack of experience in the 
seizure of foreign ships, and actively coordinated with maritime and 
defense departments to its first foreign ship seizure case—the seizure 
of “Kelly”, and developed its initial procedure for the seizure of ships; 
properly handled a ship seizure case involving multiple sensitive 
factors such as foreign affairs, the pandemic, floods and effectively 
mitigated pandemic and flood risks faced by the ship "New Orion" 
during its seizure, and protected the legitimate rights and interests of 
both Chinese and foreign litigants; effectively closed an international 
case involving disputes over a shipbuilding contract that was actively 
handed by the foreign litigant to Nanjing Maritime Court and won the 
trust of the international community in China's maritime justice with 
professionalism. During the tour of inspection to courts in Jiangsu, a 
deputy to National People’s Congress fully recognized Nanjing 
Maritime Court for its professionalism, as well as its efforts to refine 


- 11 - 
 
the maritime trial process and support the development of the marine 
economy. 
(3) Systematic Formulation of Rules and Regulations 
The Court gave priority to rules and regulations, accelerating 
their formulation and ensuring they remain systematic, coordinative, 
and operable. The Court prepared the Development Plan for Nanjing 
Maritime Court (2021-2025), and issued more than 60 rules and 
regulations, covering case trial, team management, Party building, and 
judicial affairs; improved the operating mechanism of maritime 
jurisdiction, issued a complete set of trial management documents to 
clarify jurisdictions and responsibilities of judges, the responsibility of 
trial supervision of the Court’s president, vice president, and division 
chief judges, and the working rules of the adjudication committee and 
the presiding judges' meeting, and fully implemented the judicial 
responsibility system. The Court further developed a communication 
mechanism between detached courts and local CPC committees, 
governments, and local courts, and better leveraged the role of 
detached courts in serving the overall interests in accordance with the 
law, ensuring justice is served, training officials, and improving social 
governance. Moreover, it co-signed the Memorandum on the Strategic 
Cooperation in the Administrative Enforcement of the Maritime Law 
and Maritime Justice in Jiangsu Province with the Department of 
Transportation of Jiangsu Province, Jiangsu Maritime Safety 
Administration and Lianyungang Maritime Safety Administration to 
actively explore a new cooperation model for the administrative 


- 12 - 
 
enforcement of the maritime law and maritime justice in Jiangsu, an 
innovative measure which was successfully selected as one of the 
representative cases of judicial reform in courts of Jiangsu; established 
strategic partnerships with Dalian Maritime University and Nanjing 
University of Information Science and Technology, carrying out 
pragmatic and in-depth cooperation in talent training, academic 
platform construction, and personnel exchanges and interactions; 
promoted the establishment of the Maritime Litigation Research 
Society, Jiangsu Law Society to bring together experts on the 
admiralty and maritime laws in the province and make constant 
theoretical and practical innovation on maritime justice, and 
successfully held its first annual meeting through live streaming with a 
total of 25,000 viewers and positive social repercussions. Besides, the 
Court appointed deputies to NPC, CPPCC members, and maritime 
experts as special supervisors, and regularly arranged activities such 
as court hearings, inspections, and investigations. During the trial of a 
maritime administrative case in which the administrative officer 
appeared in court, deputies to NPC and CPPCC members as hearers 
spoke highly of the judgment of the court. 
 (4) Additional Intelligent Litigation Services 
The Court made full leverage of the achievements from the 
construction of smart courts in Jiangsu to promote the construction of 
a one-stop multi-component dispute resolution and litigation service 
system and enable smart service, smart trial, smart enforcement, and 
smart management; optimized online litigation services to enable 


- 13 - 
 
cross-domain case filing, electronic delivery,  online payment, and 
online case review and installed self-service facilities in Nanjing 
Yangtze River International Shipping & Logistics Center and 
Maritime Rule of Law Square to provide litigation services day and 
night.  It further developed construction planning for the trial building 
in the Nanjing Rule of Law Park and infrastructure of detached courts, 
integrated the information system of the Court's headquarters and 
detached courts, established a remote conference system for judges 
and an online court, developed an online ship inspection and control 
system, and improved the 854 operation model of the executive 
command center by formulating the Online Trial Norms of Nanjing 
Maritime Court and closed 154 cases on the Internet during the 
COVID-19 pandemic to guarantee continued case trial and 
administration of justice. Moreover, it set up one-stop dispute 
resolution centers for disputes over marine accidents, port disputes, 
and fishery disputes in Nanjing, Suzhou, and Lianyungang as well as 
circuit trial courts and trial work stations for dispute resolution at the 
source in the four detached courts, and specially invited six mediation 
organizations and 89 mediators. Based on these efforts, a maritime 
dispute resolution network was shaped to provide various needed 
judicial services to people. Besides, it became the first court in Jiangsu 
to develop a bilingual website (Chinese and English) where it released 
its first bilingual maritime report on trials. It also created accounts on 
online platforms such as WeChat, Weibo, and Toutiao where it 
published more than 800 posts, with 450,000 reads and 15 news 


- 14 - 
 
reports shared by People’s Court Daily, Xinhua Daily, Jiangsu Legal 
Daily, andsome other mainstream media. 
(5) Building a Professional Team 
The Court strived to build a politically solid and professionally 
competent maritime trial team with an international perspective by 
adhering to the requirements of constant reform, regularized operation, 
specialization and professionalism and giving priority to self-
betterment and the sense of responsibility; always putting the Party’s 
political building first, continued to guide itself with theory and put 
into practice the requesting and reporting system for major affairs; 
established its own CPC committee, commission for disciplinary 
inspection, labor union, youth league, and women's federation to 
promote the solid integration of Party building and trial work, 
prepared personal archives for court personnel and warned them with 
negative cases, and put into action the responsibility of its CPC 
committee and the supervision responsibility of its commission for 
disciplinary inspection. Moreover, it focused on equipping maritime 
judges with knowledge about the law, foreign languages, maritime 
affairs, trade, and shipping,  as well as held the “lectures on maritime 
affairs” every month, and organized judicial officers to train sea safety 
skills on ships in order to improve their professionalism; it further 
built a translation team of young staffers to regularly conduct 
translation training and academic exchanges; set up 10 professional 
teams of  judges and pooled efforts to conduct in-depth discussions on 
professional cases; introduced an assessment mechanism based on 


- 15 - 
 
seven objectives, established a pool of researchers, and encouraged 
them to “delve deep into research problems, summarize their 
experiences, and present their findings.” In the past year, the judicial 
officers of the Court have undertaken one province-level key research 
project and wrote 21 papers, which were either published in journals 
such as People’s Judicature and Journal of Law Application or won 
awards in the state- and province-level conferences. It participated in a 
series of conferences, including the 28th National Maritime Trial 
Seminar, the Special Symposium of the Supreme People's Court on 
Judicial Protection of Marine Ecological Environment, and the Annual 
Meeting of the China Maritime Law Association, and delivered more 
than 10 keynote speeches. 
III. Typical Cases 
 
Case 1:BOA BARGES AS vs. Nanjing Yichun Shipbuilding Co., 
Ltd. Dispute over International Shipbuilding Contract 
 
[Case Details] 
On April 18, 2007, Norwegian shipowner BOA OFFSHORE AS, 
ordered ships from Nanjing Yichun Shipbuilding Co., Ltd. 
(hereinafter referred to as “Nanjing Yichun Company”) and signed 
three Semi-Submersible Heavy-duty Deck Barge Contracts with a 
total price of nearly US$50 million.The contracts agreed that disputes 


- 16 - 
 
shall be arbitrated in London and governed by English law. On May 
17, 2010, Norwegian shipowner BOA BARGES AS, as the new 
purchaser, assumed the rights and obligations of the original three 
contracts. With the occurrence of the dispute over the contract 
performance, both parties decided to terminate the Contract on 
December 8, 2015, but failed to reach an agreement on a series of 
issues after the termination of the contract. By the beginning of 2020, 
the dispute cannot be solved by negotiation due to its escalation.Thus, 
both partiesshall apply to the London Court of International 
Arbitration for arbitration in accordance with the relevant contract to 
solve the dispute.  
The sudden outbreak of COVID-19 in February 2020 has a great 
impact on international arbitration. Especially with the increasingly 
severe situation of global epidemic, many European countries 
adoptentry restrictions and other prevention and control measures. 
Based on various factors, both parties signed the Supplementary 
Agreement on May 16, which agreed to submit the dispute to Nanjing 
Maritime Court for adjudication and apply Chinese laws. On June 11, 
the plaintiff BOA BARGES AS entrusted lawyers with a lawsuit to 
Nanjing Maritime Court, requesting the defendant Nanjing Yichun 
Company to return the advance payment and the accrued interest. 
[Verdict] 


- 17 - 
 
At the acceptance of this case, it was found through examination 
that the power of attorney of the plaintiff's attorney shall be notarized 
by the Norwegian notary office and authenticated by the embassy of 
the People's Republic of China in Norway. However, due to the 
influence of the pandemic situation, the plaintiff failed to submit the 
authenticated notarial documents to the court. In view of the actual 
impact of the pandemic on notarization and authentication and the 
complete specifications of other relevant filing materials of the case, 
and the plaintiff's attorney promised to complete the authenticated 
notarial documents before the trial, Nanjing Maritime Court decided 
to file the case first, allowing the attorney to delay submitting and 
authorization procedures. In the process of trial, in order to reduce the 
risks brought about by the flow and gathering of people during the 
pandemic, the undertaking judge, on the basis of carefully examining 
the evidence materials involved in the case, facilitated the parties to 
reach a mediation agreement by handling the case through the Internet, 
and concluded the case in 27 days. 
[Significance] 
Jiangsu is a major shipbuilding province in China, with 
shipbuilding completion, order placement and existing orders ranking 
first in China for consecutive years, and all indicators accounting for 
more than 30% of the national total. There are a large number of ship 
cases accepted by Nanjing Maritime Court, accounting for 29.71% of 


- 18 - 
 
the total number of civil cases. The discussed case is an international 
ship construction contract dispute case. Against the backdrop of the 
increasingly severe global COVID-19 epidemic, the foreign party took 
the initiative to alter the dispute resolution method from arbitration in 
London to filing a lawsuit to Nanjing Maritime Court and applying 
Chinese law, which is not only based on the trust in China's efforts to 
build the International Maritime judicial center and optimize the 
judicial environment, but also fully recognized the Nanjing Maritime 
Court's service to ensure the construction of "the Belt and Road 
Initiative" and actively build a preferred place for maritime litigation. 
During the COVID-19 epidemic, Nanjing Maritime Court allows 
foreign parties to postpone the submission of relevant notarization and 
authentication documents according to the relevant guidelines of the 
Guiding Opinions of the Supreme People's Court on Several Issues 
Concerning the Proper Trial of Civil Cases Involving COVID-19, and 
actively used the Internet in handling cases to promote the resolution 
of disputes in a timely manner, which truly realized thevision of 
normal trial and execution without halt the justice during COVID-19 
epidemic. It is a great practice of equally protecting the legitimate 
rights and interests of Chinese and foreign parties, actively optimizing 
the rule of law, internationalization and facilitating the business 
environment, which fully embodies the advantages of the socialist 
judicial system with Chinese characteristics. 


- 19 - 
 
[First-instance Trial, Case Number] (2020) Jiangsu72,Civil 
Case First Instance No.611 
 
Case 2:Zhang vs. the People's Government of Jianye District, 
Nanjing, Disputes over Administrative Punishment 
 
[Case Details] 
In May 2018, seven administrative agencies including Nanjing 
Jianye District People's Government, Nanjing Transportation Bureau, 
Nanjing Maritime Safety Administration, the Water Branch of 
Nanjing Public Security Bureau, the Nanjing Branch of Yangtze River 
Shipping Public Security Bureau, Nanjing Water Affairs Bureau, and 
Nanjing Agriculture and Rural Bureau set up a joint team to carry out 
special actions to rectify the “Three Withouts” (“without name and 
number”, “without ship certificate” and “without registry port”) ships 
in some waters of the Nanjing section of the Yangtze River, 
identifying 19 vessels owned by 14 persons, including Zhang, as 
“Three Withouts” vessels, and towing them to the temporary detention 
area for confiscation and dismantlement. Upon learning of the 
confiscation and dismantling of the vessels, Zhang et al. started 
seeking help from government authorities at all levels in the forms of 
letters and visits. In June 2020, Zhang et al. filed an administrative 
lawsuit with Nanjing Maritime Court, demanding confirmation that 


- 20 - 
 
the seven administrative organs of the joint team confiscated and 
dismantled ships illegally, and filed an administrative compensation 
lawsuit, requiring that the administrative organs to compensate each 
ship for losses ranging from several hundred thousand yuan to more 
than one million yuan. 
[Verdict] 
After the case acceptance according to law, Nanjing Maritime 
Court acquired a deep understanding of the background, progress and 
early dispute handling of the rectification of the “ThreeWithouts” 
ships in the Yangtze River, combed the relevant laws, regulations and 
policies, analyzed and judged the practices, common disputes and 
judicial decisions of the rectification of the “ThreeWithouts” ships in 
various provinces and cities. In order to properly handle the discussed 
disputes according to law, Nanjing Maritime Court decided to take the 
lead in arranging 12 typical cases for trial, and notify the person in 
charge of the sued administrative organ to appear in court to respond 
to the lawsuit, and arrange the parties in other 26 cases to attend the 
trial. On the basis of finding out the facts of the cases, the 
prosecutions of the above 12 cases were rejected on the grounds that 
the cases exceeded the time limit for prosecution. After the trial, the 
court patiently explained the applied laws and regulations and 
clarified the legal relationship. On the basis of fully considering the 
actual situation of the ships and the specific policies of the local 


- 21 - 
 
government, the parties in other 26 cases voluntarily withdrew the 
lawsuits requesting confirmation of the administrative organ’s 
illegality, and reached a mediation agreement with the sued 
administrative organs on the administrative compensation, which was 
confirmed by the Nanjing Maritime Court. 
[Significance] 
Maritime administrative cases are one of the six categories of 
cases accepted by maritime courts. The discussed disputes over 
maritime administration involving the “Three Withouts” ships on the 
Yangtze River were properly concluded according to law, which is a 
successful practice for Nanjing Maritime Court to deepen the 
connection between administrative law enforcement and judicial 
disposal. It strongly supports the zero clearing of “Three Withouts” 
ships on the Yangtze River and demonstrates the maritime judicial 
protection of the Yangtze River. “Three Withouts” ships evade 
supervision and illegally engage in passenger traffic, cabin cleaning, 
sand excavation & fishing, electric welding repair and other business 
activities on the Yangtze River, which easily causes potential safety 
hazards of waterways and environmental pollution on the Yangtze 
River waters. Additionally, it is hard to investigate and handle the 
“ThreeWithouts” ships, and these situations turn to occur repeatedly. 
In the trial of this case, Nanjing Maritime Court conscientiously 
implemented the concept of “joint efforts rather than mass 


- 22 - 
 
development”, based on the objective of resolving administrative 
disputes substantively, and guided the parties to such cases involving 
the “Three Withouts” ships of the Yangtze River to defend their rights 
rationally by organizing demonstration trials and rejecting Zhang’s 
lawsuit in advance according to law, thus laying a solid foundation for 
resolving contradictions and disputes and ensuring the detailed 
implementation of the relevant strategic arrangements for the 
protection of the Yangtze River. The successful conclusion of these 
disputes safeguardthe rights and interests of people’s livelihood to the 
utmost extent, supportand supervise the law-based administration of 
maritime administrative organs, and provided guidance for the 
maritime administrative organs to further improve the standardization 
of administrative law enforcement, which fully demonstrates the 
functional role of maritime trials in promoting the development of the 
Yangtze River Economic Belt and regional integration in the Yangtze 
River Delta in accordance with the law. 
[First-instance Trial, Case Number] (2020) Jiangsu 72, 
Administrative Case First Instance No.9-14, No.59-71, (2020) Jiangsu 
72, Administrative Compensation Case First Instance No.3-21 
 
Case 3:Dongxing Branch of Jiangsu Jingjiang Rural Commercial 
Bank Co., Ltd. vs. Hu et al.Dispute over Financial Loan Contract and 
Ship Mortgage Contract 


- 23 - 
 
 
[Case Details] 
On December 3, 2013, Hu signed a loan contract with Dongxing 
Branch of Jingjiang Rural Commercial Bank Co., Ltd. (hereinafter 
referred to as “the Bank”), stipulating that Hu applied a loan of 28 
million yuan from the Bank. On the same day, Taizhou Jintai 
Shipping Co., Ltd. (hereinafter referred to as “Jintai Company”), XX 
Zhang, X Zhang, Wu, and Mao signed a guarantee contract with the 
Bank, stipulating that Jintai Company, XX Zhang, X Zhang, Wu, and 
Mao shall provide joint liability guarantee for all principal, interest, 
overdue interest, penalty interest, compound interest, damages, 
expenses for realizing creditor’s rights and all other expenses for 
realizing creditor’s rights under the above contract. Hu and Jintai 
Company signed a mortgage contract with the Bank, stipulating that 
all “Jintai 528” bulk carriers of Hu and Jintai Company provide 
mortgage guarantee for the above loan, with the guarantee amount of 
28 million yuan, and the guarantee scope covers the principal, interest, 
overdue interest, penalty interest, compound interest, damages, 
expenses for realizing creditor’s rights and all other expenses for 
realizing creditor’s rights under the main contract. After the expiration 
of the repayment period, Hu still owed a principal of 26.93 million 
yuan and failed to return it according to the contract. The Bank 
appealed to Nanjing Maritime Court, requesting that Hu immediately 


- 24 - 
 
repay the loan principal of 26.93 million yuan and the interest until the 
date of repayment. Jintai Company, XX Zhang, X Zhang, Wu and 
Mao shall bear joint and several liability.The Bank has the priority to 
be compensated for the price obtained from auction, sale and discount 
of “Jintai 528” bulk carriers mortgaged by Xx Hu and Jintai Company 
for the above debts. 
[Verdict] 
Nanjing Maritime Court held upon trial that, according to Article 
58 of theMinutes of Civil and Commercial Trial Work of National 
Courts issued by the Supreme People’s Court on November 8, 2019, 
in the confirmation of the scope of guarantee for real estate security, if 
the scope of guarantee agreed in the contract is inconsistent with the 
registration due to the setting of regional registration system and 
registration rules, it is an appropriate choice for the People’s Court to 
confirm the scope of guarantee for real estate security by contract. In 
the practice of Jiangsu’s ship mortgage registration authority, the 
registration system does not set the column of “guarantee scope”, and 
generally only has the expression of “amount of creditor’s rights”, and 
only a fixed number can be filled in. Due to the technical conditions, 
the registration authority usually only registers the amount of principal 
creditor’s rights in it. In this case, the registration authority recorded 
the amount of creditor's rights of 28 million yuan in the mortgage of 
“Jintai 528” bulk carriers, which only indicated the amount of 


- 25 - 
 
principal creditor’s rights, but did not limit the guarantee scope of ship 
mortgage to 28 million yuan. In this case, the mortgage of “Jintai 528” 
bulk carrier involved in this case, as a special movable property, is 
inconsistent with the contract agreement due to the setting of the 
registration system of the ship mortgage registration authority. 
Therefore, the scope of mortgage guarantee may be determined as 
covering the principal creditor’s rights, interest, penalty interest and 
other expenses by reference to the spirit of meeting minutes, instead of 
simply confirming the registered creditor’s rights amount of 28 
million yuan as the guarantee scope of ship mortgage. Therefore, the 
defendant, Hu, repaid the plaintiff,the Bank, the loan principal of 
26.93 million yuan and accrued interest, and the defendants, Jintai 
Company, XX Zhang, X Zhang, Wu and Mao bore joint and several 
liabilities for liquidation.The plaintiff,the Bank, was given the priority 
of compensation for the proceeds from the auction, sale and discount 
of “Jintai 528” bulk carrier. After the judgement of the first instance 
was pronounced, neither party lodges an appeal. 
[Significance] 
There are disputes in practice as to whether the guarantee scope 
of ship mortgage shall be based on the amount of creditor’s rights 
registered in mortgage or the guarantee scope agreed in contract. The 
typical significance of this case lies in the establishment of the rules 
for the determination of the scope of creditor’s rights guaranteed by 


- 26 - 
 
ship mortgage, that is, if the scope of ship mortgage secured as agreed 
in the contract is inconsistent with that of the mortgage registration, 
the contract shall prevail. At present, due to the technical conditions, 
the ship mortgage registration authorities in some areas of China 
usually only register the amount of the principal creditor's rights on 
the ship mortgage certificate, which leads to disputes over whether the 
scope of the creditor’s rights guaranteed by ship mortgage cover 
interest, penalty interest and other expenses. In the trial process of this 
case, instead of simply equating “the amount of creditor's rights” with 
“the scope of guarantee”, based on the analysis of the current legal 
provisions and referring to the rules for determining the scope of 
guarantee of real property rights in the Minutes of Civil and 
Commercial Trial Work of National Courts, it is determined that the 
scope of ship mortgage should be based on the contractual agreement 
of the parties, which provides targeted referee guidance for the 
people’s court to determine the scope of creditor’s rights guaranteed 
by ship mortgage, and can also promote the maritime department to 
further improve the ship mortgage registration system, which is 
conducive to standardizing the ship financing order and ensuring ship 
financing safety and the health of the whole shipping industry. 
[First-instance Trial, Case Number] (2020) Jiangsu 72,Civil 
CaseFirst Instance No.19 
 


- 27 - 
 
Case 4:Case of China Grain Storage Oil Co., Ltd.’s Application 
to Detain theKELLY Ship 
 
[Case Details] 
In August, 2019, KELLY, a Marshall Islands cargo ship carrying 
a load of 80,000 tons of soybean from Richelief Port, Louisiana, USA 
arrived at Dafeng Port and Zhenjiang Port, respectively, and the cargo 
was found seriously damaged after inspection. On December 25, 2019, 
the consignee of this batch of goods, China Grain Storage Oil Co., 
Ltd., applied to Nanjing Maritime Court for detaining the “KELLY”, 
which was anchored in Zhenjiang Port, on the grounds of serious 
damage to the goods, and requested the shipper to provide a guarantee 
of US$4 million. 
[Execution Process] 
In the process of handling this case, Nanjing Maritime Court, 
after strictly examining the subject qualification, basic evidence and 
guarantee provided by the applicant, considered that the case met the 
requirements for maritime claim preservation, and immediately made 
a ruling on arrest of the ship and an arrest order, and decided to arrest 
the ship on the same day. On the premise of comprehensively 
considering many factors such as the port environment where the ship 
was located, the weather conditions of the day and the arrival of 
Christmas Day in western world, a detailed plan for ship arrest has 


- 28 - 
 
been worked out, and a team of police officers with rich experience in 
ship arrest and good English skill has been organizedto perform the 
ship arrest. The leaders of the court conducted real-time command of 
the ship arrest process by implementing the command system. In the 
afternoon of December 25, 2019, the executive police officers arrived 
in Zhenjiang, and delivered the notice of assisting in the arrest of ships 
to Zhenjiang Maritime Safety Administration and Zhenjiang Border 
Inspection Station in time. The Maritime Safety Administration and 
Border Inspection Station immediately assisted in handling the 
procedures of prohibiting the ships involved from leaving the port and 
boarding the ship. The executive police officers boarded the ship 
smoothly, issued an order to arrest the ship to the captain in 
accordance with the law, seized the ship certificate, and ordered the 
requested party to provide guarantee. After explaining the operation 
status and ownership of the ship to the judge, the captain signed the 
legal documents for arresting the ship, and agreed with the 
standardized law enforcement of Nanjing Maritime Court. Nine days 
after the arrest of the ship, the applicant applied for lifting the arrest 
on the grounds that the defendant had provided guarantee, and the 
Nanjing Maritime Court ruled and lifted the arrest according to law. 
[Significance] 
Seizure and auction of ships is a judicial function exclusively 
vested in maritime courts. Seizure of ships before litigation is a special 


- 29 - 
 
form of preservation in maritime courts, which can effectively urge 
the defendant to fulfill his legal obligations in a timely manner and 
promote the rapid resolution of maritime contradictions and disputes. 
Since performing their duties, Nanjing Maritime Court has detained 
all types of ships according to law, amounted to 112, including 5 
foreign ships. This is the first case accepted by Nanjing Maritime 
Court to apply for detaining a foreign ship, which is of great 
significance to broaden the way for domestic parties, standardize the 
work flow, protect the rights and interests of the foreign applicants 
and safeguard the judicial authority. First, establish the appraisal 
system of arresting ships before litigation. Before applying for the 
arrest of a ship before litigation, the judge studies and evaluates the 
materials, guarantees and controversial issues provided by the parties, 
prompting the parties to provide complete and standardized materials 
in time to ensure the smooth and efficient seizure of the ship. Second, 
establish a guarantee system in line with the reality of Yangtze River 
shipping. In view of the special situation of many functional 
departments, high density of ships and fast service cycle of docks on 
the Yangtze River route, a guarantee system of “letter of 
guarantee&cash guarantee” shall be established, and the calculation 
rules of cash guarantee required by different ships and docks shall be 
clarified to deal with various expenses and possible risks during the 
seizure of ship. Third, establish a cooperative working mechanism 
with various maritime functional departments. In this case, Nanjing 


- 30 - 
 
Maritime Court made full use of communication means such as 
platform network, and immediately docked with maritime affairs, 
border defense and other departments to handle the procedures of 
arresting and boarding ships, and coordinate the dispatching of 
berthing docks, so as to effectively improve the implementation 
efficiency of arresting ships and equally protect the legitimate rights 
and interests of the parties. 
[Execution 
Case 
Number] 
(2019) 
Jiangsu 
72,Property 
Preservation Case No.2, (2019) Jiangsu 72,Evidence Preservation 
Case No.1 
 
Case 5:Qin vs. Su: A Dispute over Maritime Personal Injury 
Liabilities 
 
[Case Details] 
Qin was rendering service on Su’s fishing vessel. When he was 
trying to moor the vessel during a fishing task on the sea, an injury 
was inflicted on his right foot by the mooring line. He was 
immediately brought back to the port and treated at a local hospital in 
Qingdao. When his conditions stabilized, he was transferred to a 
hospital in Ganyu District, Lianyungang City for further treatment, but 
he ended up with an authenticated Grade-9 disability, which would 


- 31 - 
 
exert adverse effects on his future life, labor, and income. When Qin 
was hospitalized, one of Su’s family members kept him company all 
the time and paid over 180,000 yuan for the medical expenses. 
Afterwards, the two parties failed to agree on the due amount of 
indemnities for Qin’s disability, nursing expenditure, and lost income. 
Thus, a dispute arose and Qin later filed a lawsuit to Nanjing Maritime 
Court, requesting the defendant Su to compensate him with a total of 
307,830.64 yuan for the miscellaneous losses caused by the accident 
in the course of his service rendering. 
[Verdict] 
Nanjing Maritime Court tried the case in a timely manner and 
ascertained the facts by organizing both parties to present evidence 
and cross-examine. When it came to fees such as disability 
compensation and nursing expenditures, the two parties kept arguing 
whether the injured person was at fault, as well as about his average 
income and the nursing staff, which made it difficult for the court 
investigations to proceed, so the presiding judge promptly announced 
adjournment, summarized the trial, and analyzed the pertinent factual 
evidence and liabilities. The presiding judge maintained that the 
sustained accompaniment from defendant Su’s family following Qin’s 
injury and the 180,000-yuan payment for medical expenses 
demonstrated that Su has complied with the local shipowner’s norms 
for handling an injured crew member, and that the rules recognized by 


- 32 - 
 
the local fishermen, therefore, should be applied to resolving the 
dispute. Thanks to the trial, especially the judge’s summary, both 
parties adjusted their expectations into more practical directions, 
which might well eventually lead to mediation. Given the hostility 
between the two parties when the trial was concluded, it was 
inappropriate to conduct mediation immediately. Therefore, the court 
announced the scheduled time and place for mediation and entrusted it 
to a special mediator at the one-stop fishery dispute resolution center 
under Nanjing Maritime Court. The special mediator has lived in the 
local fishing village for a long time and thus acquires professional 
knowledge of fishery and rich experience in handling related disputes. 
The efforts of the special mediator enabled the two parties to reach an 
agreement: the defendant Su should compensate the plaintiff Qin for 
his disability, moral damage, follow-up treatment fees, and other 
legitimate indemnities, totaling 164,000 yuan, to be paid by three 
installments. The court issued a mediation document confirming this 
agreement. 
[Significance] 
In the coastal area of Jiangsu, fishery disputes mostly occurred in 
traditional fishing ports, villages and townships. They are typical of 
what are termed“cases concerning people’s livelihood.” In most cases, 
one of the parties usually has an urgent need of aid and support, or is 
led a life troubled by injury or illness. In view of this, Nanjing 


- 33 - 
 
Maritime Court attaches great importance to the resolution of fishery-
related disputes and stays committed to “resolving disputes through a 
non-litigation mechanism.” To this end, a one-stop mediation center 
for fishery disputes has been established in Xiakou Village, Qingkou 
Town, Ganyu District, Lianyungang City. A special mediator, Qi 
Honggui, who is based at the center, provides the fisherman 
community with convenient, efficient, and low-cost maritime judicial 
services. Despite the current availability of relatively sound law 
theories and comprehensive law-based evidence for fishermen’s 
disputes over maritime personal injury liabilities, the twoparties often 
have substantial disagreements to the amount of compensation. This, 
along with the plethora of witnesses and testimonies as well as the 
insufficiency of key documentary evidence, poses a great and time-
consuming challenge to the court in ascertaining the facts, handling 
the disputes, and ensuring timely relief for the injured.  
The presiding judge of this case made a summary of the trial after 
combing through the evidence presented by both parties, so as to 
mentally prepare them for the direction of the trial. Then, the judge 
entrusted the mediation work to an experienced special mediator, who 
is acquainted with fishery practices and fishermen’s life, to spare 
much energy and time in the course of fact ascertaining. Giving full 
play to the special mediator’s role has proved to be quite productive 
and conducive to timely and efficient settlement of cases concerning 


- 34 - 
 
people’s livelihood. The settlement of this case through mediation 
manifests Nanjing Maritime Court’s efforts in upholding people-
centered administration of justice, developing its one-stop multi-
dispute resolution mechanism and litigation service system with 
maritime characteristics, and meeting the diverse judicial needs of the 
people in a better way. 
[First-instance Trial, Case Number] (2020) Jiangsu 72 Civil 
Case No. 231 
 
(The above information provided by Nanjing Maritime Court） 
 
 
 
 
 


 
Guangzhou Maritime Court 
Report on Trials 2020 
 
Preface 
 
2020 was an extraordinary year in the history of the People’s Republic of China. The year 
witnessed the country’s efforts in completing the building of a moderately prosperous 
society in all respects and attaining a decisive victory in the fight against poverty. It was 
also the year China made successful conclusion of the 13th Five Year Plan. However, the 
outbreak of COVID-19 has sent the world economy into a severe downturn, disrupted 
production, and caused a contraction in international trade. In UN’s “World Economic 
Situation and Prospects”, in 2020, the world economy shrank by 4.3 per cent, over two 
and half times more than during the global financial crisis of 2009. Marine shipping, the 
artery of the global trade and a barometer for the global economy, was facing severe 
impact of the epidemic, which was evidenced by the shrinking demand, shipment delays, 
shipping space shortage, and continuous rise of freight rates. The global shipping supply 
chain was stuck in a deep recession.  
 
In 2020, facing the challenging international environments and the complicated domestic 
work relating to reform, development and stability, especially the shock of COVID-19, 
under the firm leadership of the Party Central Committee with Comrade Xi Jinping at its 
core, China has made major strategic achievements in the response to COVID-19, and 
achieved positive results in the epidemic prevention and control and in the advancement 
of the economic and social development. According to the data released by the National 
Bureau of Statistics, China’s GDP in 2020 exceeded 100 trillion yuan, increasing by 2.3% 
in comparable prices compared with 2019, making a tremendous progress in the overall 
national strength. China is also pursuing higher-standard opening up, as is evidenced by 
the Master Plan for the Construction of Hainan Free Trade Port issued by the State Council, a 
momentum to boost the development of free trade port, and the Opinions on Accelerating 
the Construction of Tianjin as An International Shipping Hub in North China jointly released by 
the National Development and Reform Commission and the Ministry of Transport, with 
a view to promoting positive interplay between domestic circulation and international 
circulation. In the 2020 Xinhua-Baltic International Shipping Centre Development Index, 
Shanghai has ascended to the top three international shipping centers for the first time.  
 
In 2020, following the guidance of the Xi Jinping Thought on Socialism with Chinese 
Characteristics for a New Era and focusing on administrating justice for the people and 
maintaining judicial fairness, Guangzhou Maritime Court has been pioneering in building 


 
 
itself into an international maritime judicial center and offering its wisdom and strength 
in supporting the advancement of the Belt and Road Initiative and the Greater Bay Area, 
in supporting Shenzhen in constructing the socialist pilot demonstration area of Chinese 
characteristics and Guangzhou in regaining vitality and scoring new achievements in four 
aspects which aim at improving its city functions, cultural strength, service industry, and 
international business environment, and in supporting the rollout of the province’s new 
development model featuring “one core, one belt, one zone”, i.e. the Pearl River Delta as 
the core, the coastal economic belt, and the ecological development zone in the north of 
the province. In the year, Guangzhou Maritime Court retained its place among the top 
three maritime courts of China on the openness of judicial process. The court was also 
awarded for its efforts in the international communication of the rule of law, which was 
listed in China’s ten typical cases of international communication of the rule of law. It 
also succeeded, inter alia, in completing the first judicial confirmation case by opening an 
online court session that connected the parties involved in Guangdong and Hong Kong 
simultaneously.       
  
In 2020, through case study on issues such as maritime administrative litigation, freight 
forwarding, time charter, personal injuries, rights and interests of crew, and limitation 
fund for maritime claims, we would like to pinpoint the risks and present some solutions 
and suggestions to shipping market participants and relevant authorities for reference, to 
help boost healthy development of the ocean economy. 
  


 
 
Contents 
 
I. 
General Information of  Maritime Trials ..............................................................................  
Significant fall of new cases compared with last year. ................................................................  
Large portion of cases involving foreign affairs and Hong Kong, Macao, Taiwan........................  
A record high of administrative litigation cases accepted in first instance ...................................  
A small number of cases involving the new coronavirus epidemic .............................................  
Initial results achieved in diversified dispute resolution ..............................................................  
The support of smart court in trial...........................................................................................  
Satisfactory results achieved by the multiple measures in advancing the campaign of solving the 
difficulties in enforcement. ......................................................................................................  
Successful practice to deliver quality cases. The case 
..................................................................  
II. Participating in Maritime Litigation According to Law ......................................................  
— Analysis and suggestions concerning procedural issues in maritime litigation 
......................  
Appropriateness of insurer as a subject in administrative litigation .............................................  
Jurisdiction of crew labor (service) contract disputes .................................................................  
Chinese seller’s right to sue under contract of carriage of goods by sea on FOB term 
..................  
III. Maintaining Legal the Order of  Freight Forwarding Market According to Law ................  
—Issues and suggestions concerning maritime administrative litigation cases .............................  
Review of legality in disputes related to administrative agreements .............................................  
Res judicata of effective judgment 
............................................................................................  
Basis for administrative acts 
.....................................................................................................  
IV. Maintaining the Order of  Rule of  Law of Freight Forwarding Market According to Law 
—Issues and suggestions concerning marine freight forwarding disputes ...................................  
Disposal of goods rejected by customs .....................................................................................  
Sub-entrustment of freight forwarding contract ........................................................................  
Representative of a branch company pending scheduled deregistration.......................................  
V. 
Maintaining the Order of  Rule of  Law of Chartering Market According to Law ..............  
—Issues and suggestions concerning time charterparty disputes ................................................  
General rules on ascertaining the legal effect of ship’s stamp in the conclusion of contract 
..........  
Exception on ascertaining the legal effect of ship’s stamp in the conclusion of contract ..............  
Identification of unnamed agency under charterparty ................................................................  
VI. Protecting People’s Rights and Interests in Sea-related Disputes According to Law .........  
—Issues and suggestions concerning disputes over personal injury at sea 
...................................  
Identification of the legal relationship under seafarers’ service contracts ....................................  
Ascertainment of liability between employers and ship operators 
...............................................  
Ascertainment of liability between concurrent tortfeasors without a common design 
..................  
VII. Maintaining the Order of  Rule of  Law of Seafarer Labour Market According to Law ......  
—Issues and suggestions concerning seafarer service contract disputes 
......................................  
Ascertainment of seafarer’s wages when no written labor contract is signed ...............................  
Identification of false records in seafarer’s identity documents 
...................................................  
Ascertainment of seafarers’ wage periods .................................................................................  
VIII.Constituting Limitation of  Liability Funds for Maritime Claims According to Law..........  


 
 
—Issues and suggestions concerning application for constituting limitation of liability funds 
Whether voyage charterers may seek limitation of liability for maritime claims ...........................  
Whether port operators may seek limitation of liability for maritime claims 
................................  
When to invoke the right to limitation of liability for maritime claims ........................................  
IX. Advancing Enforcement Processes According to Law ........................................................  
—Issues and suggestions concerning arrest and auction of ships during enforcement.................  
Ship’s sailing away from the place of arrest without permission .................................................  
Assumption of liability when a successful buyer pulls out of an auction 
.....................................  
Application of the principle of restricting futile auctions in sales of ship ...................................  


 
 
I. 
General Information of Maritime Trials 
 
(I) Overall performance 
 
 
In 2020, Guangzhou Maritime Court accepted 3454 cases, including 2860 new cases and 
594 pending cases of the previous year. 2865 cases were closed, indicating a closing rate 
of 82.95%. New cases involved a total value of 9.554 billion yuan, falling 1.76% from the 
previous year, and the value involved in the closed cases totaled 5.987 billion yuan, falling 
46.17% from the year earlier. Throughout the year, the ratio of closed cases to accepted 
cases was 100.17%, up 1.51 percentage points.     
 
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Pending cases 
of previous yearNew cases
Closed cases
Pending cases
535
4260
4203
594
594
2860
2865
589
Unit: case
Cases accepted, closed, and pending in 2020 compared with 
last year over the same period
2019
2020
 
Among the new cases accepted by the court, there were 1544 civil cases (non-litigation 
cases included), accounting for 53.99% of the new accepted cases, 102 administrative 
cases (non-litigation review cases included), accounting for 3.57%, and 1214 enforcement 
cases, accounting for 42.45%.  
 
 
 
 
 


 
 
53.99%
3.57%
42.45%
The proportion of different new cases in 2020
Civil cases
Administrative cases
Enforcement cases
 
Of the 1298 new civil cases accepted in first instance, 93 causes of action were involved. 
The top three causes were disputes over contract of carriage of goods by sea or waters 
connected to sea, disputes over freight agency contract for carriage of goods by sea and 
sea-connected waters, and crew labor disputes.  
 
 


 
 
 
Among the cases closed by the court, there were 1366 litigation cases (inclusive of 1343 
first-instance civil cases and 23 first-instance administrative cases), accounting for 47.68% 
of the total cases closed, 244 non-litigation cases, with a percentage of 8.52%, and 1255 
enforcement cases, accounting for 43.80% of the total closed cases.  
 
Among the litigation cases closed in first instance, there were 537 cases concluded by 
judgment, accounting for 39.31%, 381 concluded by mediation, accounting for 27.89%, 
358 allowed to be withdrawn by a ruling or ruled to be withdrawn, taking up 26.20%, and 
90 closed by other means, accounting for 6.59%.     
 
In 2020, the court accepted 1214 new enforcement cases, while there were 144 pending 
cases of previous year. With 1255 cases effectively enforced, 92.42% of the enforcement 
cases were concluded by the court, up 2.54 percentage points compared with last year. 
Among the closed cases, 95.83% with available property for enforcement were enforced 
within the statutory period, 100% were successfully enforced or discontinued according 
to law, 100% of the cases with letters and visits involving enforcement were resolved or 
concluded, and online auction had covered all cases, with total enforced value amounting 
to 812.881 million yuan.  
 
(II) Characteristics of  the trial and enforcement work in 2020 
 
1. 
Significant fall of new cases compared with last year. Since the implementation of 
the case filing registration system by the people’s courts in 2015, the new cases accepted 
by this court in each year (except 2019) varied between 2500 and 3500. The number of 
new cases accepted in 2020 was also among the normal range at 2860, although falling 
significantly by 32.86% compared with a record high of 4260 cases accepted in 2019. 
 
2. Large portion of cases involving foreign affairs and Hong Kong, Macao, Taiwan. In 
3150
2562
2614
3378
4260
2860
3137
2000
2500
3000
3500
4000
4500
2015
2016
2017
2018
2019
2020
Unit: case
The number of  new cases accepted during 2015-2020
New cases
Average


 
 
2020, the court accepted 322 first-instance civil cases involving foreign affairs and Hong 
Kong, Macao, Taiwan, which accounted for 24.81% of the new first-instance civil cases. 
Among them, there were 269 new first-instance civil cases involving foreign affairs, 64 
involving Hong Kong, 2 involving Macao, and 13 involving Taiwan. There were 385 of 
first-instance civil cases involving foreign affairs and Hong Kong, Macao, Taiwan closed, 
accounting for 29.32% of all the civil cases concluded in first instance. By trying such 
cases according to law, Guangzhou Maritime Court was performing its responsibility and 
judicial capability to safeguard the advancement of the Belt and Road Initiative and the 
construction of the Greater Bay Area.    
 
3. A record high of administrative litigation cases accepted in first instance. In 2020, 
the court accepted 89 administrative litigation cases in first instance, an all-time high 
surging 122.5% from the previous year, while it only accepted 12, 63, 10, 29 and 40 cases 
respectively during 2015-2019. The majority of these cases were caused by administrative 
acts, such as fishery administration and environmental protection administration. Facing 
the challenges in the trial of maritime administrative disputes brought by the increasing 
number of administrative cases in first instance, the court, by visiting and doing research 
in maritime administrative organs and allowing judges to observe and learn skills from 
adjudication of administrative cases, ensured that such cases were handled with fairness 
and justice. 
 
4. A small number of cases involving the new coronavirus epidemic. Throughout the 
year, the court accepted only 17 litigation cases in relation to the impact of COVID-19 
(inclusive of the liability or litigation acts related to the epidemic and the prevention and 
control of the epidemic), accounting for only 1.23% of the new cases accepted in first 
instance. The handling of these cases were progressing at a steady pace, with 8 cases 
having been concluded, accounting for 47.06% of all the epidemic-related cases in first 
instance. In the light of the strong recovery of the shipping industry in the second half of 
2020, it is expected that the impact of COVID-19 on the shipping industry is limited and 
the number of maritime cases following such impact is also limited.   
 
5. Initial results achieved in diversified dispute resolution. In 2020, the court accepted 
20 new mediation cases applying for judicial confirmation, surging 566.67% compared 
with last year, an evidence of the efforts of Guangzhou Maritime Court in the launch and 
implementation of related measures under the campaign of building the two “one-stop 
services” litigation service system. By collaborating with maritime administrative organs, 
industry associations, bar associations, arbitration bodies, crew’s trade unions, conducting 
court hearings and publicity of law in communities, and establishing diversified dispute 


 
 
resolution channels online and offline, the court aimed at providing more comprehensive 
and high-quality judicial services to the people. 
 
6. The support of smart court in trial. Throughout the year, the court conducted 211 
hearings on the internet. Nearly all the cases handled by the head office and the detached 
tribunals of the court could be handled by internet court. The court also witnessed two 
authorization cases involving parties form Hong Kong and Macao respectively by means 
of the cross-border authorization platform, and it also succeeded in the delivery of an 
auctioned vessel outside the province through the enforcement command center.  
 
7. Satisfactory results achieved by the multiple measures in advancing the campaign of 
solving the difficulties in enforcement. In the year, the court initiated and developed new 
enforcement methods, such as launching the special enforcement campaigns of “Nanyue 
Enforcement Operation 2020” and “Exercising enforcement function to ensure stability 
on six key fronts and maintain security in six key areas”. In March, the court held China’s 
first live streaming promotion of judicial auctions, which was reprinted by the official Tik 
Tok and WeChat accounts of the High People’s Court of Guangdong Province and the 
Supreme People’s Court. In July, the court sent the first warning notice for enforcement 
punishment in the province. In November on the occasion of the double 11 shopping 
spree, the court introduced its online judicial auctions to netizens through live streaming, 
transferred a case that was contemplated to be discontinued for bankruptcy examination, 
and confiscated the deposits of two buyers who repudiated bids and ordered them to pay 
balance of the transaction prices of the judicial auctions. Throughout the year, the court 
successfully enforced 117 cases involved the people’s livelihood, such as crew service 
contract disputes, and completed the enforcement of the existing and new wage arrears 
cases, with 7.745 million yuan enforced.  
 
8. Successful practice to deliver quality cases. The case Shenzhen Hengtonghai Shipping Co., 
Ltd. v. Ji'an Hengkang Shipping Co., Ltd. on dispute over voyage charterparty was listed by the 
Supreme People’s Court in the Typical Maritime Cases of China 2019; Xiamen Mingsui 
Grains & Oils Co., Ltd v. Atlantic Mexico Pte. Ltd. on dispute over contract of  carriage of  goods by 
sea” and “Taiwan Fire & Marine Insurance Co., Ltd v. All Oceans Transportation Inc. on dispute 
over liability for collision of  ships were awarded second prize and recognition prize for the 
2020 excellent cases of the people’s courts in China. The case Application of  Farenco 
Shipping Pte. Ltd. for enforcement of  arbitration award made in Hong Kong was listed as case 4 of 
the Supplementary Arrangement for the Mutual Enforcement of  Arbitral Awards between the 
Mainland and the Hong Kong Special Administrative Region released by the Supreme People’s 
Court on 26 November 2020.  


 
 
II. Participating in Maritime Litigation According to Law 
—Analysis and suggestions concerning procedural issues in maritime litigation 
 
 (I) Appropriateness of insurer as a subject in administrative litigation 
 
In August 2019, A Vessel sank in the waters 3.4 nautical miles to the south of Dawoshan 
of Hengqin Island. The department of the maritime safety administration in charge made 
the Investigation Conclusions on the maritime accident (hereinafter the “Investigation 
Conclusions”), which determined that the gale (Beaufort scale 8) was the major cause of 
the tragedy and the loose hatch cover and change of the ship’s hull strength might also 
contribute to the accident. The insurer A, however, disagreed with the conclusion of the 
gale of Beaufort scale 8. In its opinion, there is no available wind data to prove the wind 
blowing on the accident site as strong as a gale of Beaufort scale 8.On the contrary, they 
believed that the change of hull strength(fracture) caused by allowing in a flood of water 
from the loose hatch cover, was the primary cause of the accident. Insurer A thus applied 
with the court to annul the Investigation Conclusions and draw a new conclusion. The 
first-instance court rejected the case on the ground that insurer A was not an appropriate 
subject to initiate an administrative lawsuit in respect of the Investigation Conclusions. 
The insurer filed an appeal, which was dismissed by the second-instance court who 
maintained the decision of first instance.      
 
According to the effective decision of the court, pursuant to paragraph 1 of Article 25 of 
the Administrative Procedure Law of the People’s Republic of China, “The persons subject to an 
administrative act and other citizens, legal persons or other organizations having interests 
in the administrative act are entitled to bring a lawsuit”. Insurer A was not the 
administrative conterpart to the Investigation Conclusions involved. There was no 
interests between the insurer and the Investigation Conclusions in administrative law,  
because the latter didn’t set any rights and obligations for the former directly. Although 
the Investigation Conclusions might be used as an evidence in the litigation of the 
maritime accident dispute that followed and might have some impact on the insured and 
thus on the insurer, it did not directly impair the insurer’s legitimate rights and interests. 
So, the insurer could not act in the capacity of claimant in this case based on the 
insurance contract relationship with the insured. The insurer could seek civil remedies to 
protect its interests under the insurance contract. 
 
In the Reply to the Consultation Letter of  the Maritime Safety Administration of  the Ministry of  
Transport on the Actionability of  Maritime Investigation Conclusions on 20 May 2019, the Fourth 
Civil Division of the Supreme People’s Court made it clear: “Currently, traffic accident 


 
 
liability decisions in China not only find the facts, but also determine the liabilities of the 
parties. They therefore actually affect the rights and obligations of the private parties and 
are used as the evidence in civil cases involving traffic accidents. Such decisions could not 
be an excuse to invalidate the right of the private parties to bring an administrative 
lawsuit to the court.…There is no legal basis to exclude such decisions on the liability of 
maritime accidents from the scope of actionable administrative cases.” Later on, several 
other administrative lawsuits were brought to our court in respect of decisions on the 
liability of maritime accidents. 
 
We suggest that the parties involved in this new type of administrative lawsuits should 
properly and timely exercise the right to sue pursuant to the relevant provisions of the 
administrative procedure law, to protect their legitimate rights and interests, and that 
maritime administrative organs should perform governance strictly following the law to 
ensure that the administrative procedures are lawful and the related persons are treated 
with fairness. In the event of an administrative action, the maritime administrative organs 
should prepare evidential materials carefully and respond to the action actively, to ensure 
the smooth advancement of the law enforcement.  
 
(II) Jurisdiction of crew labor (service) contract disputes  
 
Feng belonged to the crew of a liquefied petroleum gas carrier. In May 2019, he was hit 
by cable by accident aboard the ship berthed at terminal. After discharged from hospital, 
Feng applied to the social security administration of Shenzhen for confirmation of 
employment injury, and the administration issued a decision to confirm the employment 
injury and also made a disability grading identification certificate. In October 2020, Feng 
brought a lawsuit against the ship management company headquartered in Tianjin and its 
branch in Shenzhen on dispute over employment injury compensation, whereby he 
requested the court to dissolve the labor contract relationship and demand the 
defendants to pay the disability subsidy, salary during injury, loss of working time, and 
the retrospective pay of social security contributions.  
 
After examining the complaint materials, this court found that there was an agreement 
under the Crew Embarkation Agreement signed by Feng and the defendants, which read 
“Any dispute arising from this Agreement, if not settled by negotiation, shall be 
referred to Qingdao Maritime Court for judgment”. Upon the court’s explanation on 
the jurisdiction clause, the claimant lodged a lawsuit before Qingdao Maritime Court.    
 
By hearing the case, Qingdao Maritime Court concluded that as the Crew Embarkation 


 
 
Agreement established an employment agency relationship between the two parties, the 
jurisdiction clause point to Qingdao Maritime Court only applied when a dispute was 
arising from the agency contract. However, in this case, Feng brought a suit for 
employment injury compensation, which was based on a labor contract relationship. The 
case was indeed a labor dispute. Pursuant to Article 8 of the Interpretation of  the Supreme 
People’s Court on Several Issues Concerning the Application of  Law for the Handling of  Labor 
Dispute Cases, “Labor dispute cases shall be governed by the primary people’s court at 
the place where the employer is located or where the labor contract is performed. Where 
the place of performance of the labor contract is not clear, the dispute shall be governed 
by the primary people’s court at the place where the employer is located.” In the case, 
since the employer was a Shenzhen company located within the jurisdiction of 
Guangzhou Maritime Court and the case was a crew labor contract dispute as defined in 
Article 24 of the Provisions of  the Supreme People’
s Court on the Scope of  Cases to be Accepted by 
Maritime Courts, which shall be accepted by maritime courts, Qingdao Maritime Court 
thus ruled to transfer the case to Guangzhou Maritime Court. 
 
We held that as crew related disputes often involved maritime liens, pursuant to Article 8 
of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application 
of  the Special Maritime Procedure Law of  the People’
s Republic of  China,
“A maritime court shall 
accept lawsuits directly brought to it which are arising from disputes over crew service 
contracts.” In the Provisions on the Scope of  Cases to be Accepted by Maritime Courts released 
by the Supreme People’s Court in 2016, a distinction is made between “crew labor 
contract” and “labor service contract” under Article 24, which reads: “Cases of 
disputes over the payment of remunerations and the compensation for personal injuries 
and death that are related to the embarkation of crew, services provided on board, and 
disembarkation and repatriation of crew under crew labor contract or labor service 
contract (including crew labor service dispatch agreement)”
. As there are special laws and 
procedures in China to deal with labor dispute cases, if a seafarer is involved, the two 
different disputes shall be settled by different resolution schemes. In recent years, there 
were cases that crew were making litigation requests unrelated to on-board services or 
maritime liens. Pursuant to Article 1 of the Provisions on Some Issues Concerning the Trial of  
Cases Involving Crew-related Disputes implemented by the Supreme People’s Court on 29 
September 2020, if a crew labor contract dispute does not involve embarkation of crew, 
services provided on-board, or disembarkation and repatriation of crew, i.e. maritime lien 
is not involved, the dispute shall be deemed as a general labor dispute, and the party shall 
be instructed to follow the preceding procedure as provided in the Labor Dispute Mediation 
and Arbitration Law of  the People's Republic of  China and refer the case to arbitration as will 
be done by other general labor disputes, and bring a lawsuit if not satisfied with the 


 
 
arbitration. The disputes related to crew service contract or those disputes related to 
embarkation of crew, services provided on-board, and disembarkation and repatriation 
of crew shall still be directly governed by a competent maritime court pursuant to Article 
2 of the judicial interpretation. Thus, the subject dispute was a labor dispute arising from 
personal injury during his service on board, which was within the scope of cases to be 
directly accepted by maritime courts. It is worth noting that crew’s litigation requests 
may cover matters with or without relation to maritime liens. To facilitate crew’s 
participation in ligation, it is not encouraged that maritime courts should require crew to 
seek justice by means of arbitration and litigation separately. Maritime courts should 
address these requests at the same time. 
 
    
(III) Chinese seller’s right to sue under contract of carriage of goods by sea on 
FOB term 
 
The claimant Company A, operating in Foshan, lodged a suit before this court on dispute 
over contract of carriage of goods by sea, requesting that Company B (an international 
freight forwarder) and its Shenzhen branch and Company C (an international carrier) and 
its Zhongshan branch to jointly compensate Company A for the cargo loss at an amount 
of USD47,665 and othe relevant costs. In March 2020, Company A signed a purchase 
contract with Company D (a Hong Kong enterprise) whereby Company D agreed to buy 
coffee makers from Company A on FOB term, and Company D was responsible for the 
transportation of goods and would make cargo payment upon the receipt of a copy of 
bill of lading presented by Company A. After signing the contract, Company D assigned 
Company B to act as freight forwarder and Company C as actual carrier. In September, 
Company A delivered the goods to Company C at Shenzhen Port as per instructions of 
Company D and thus obtained the manifest and original bill of lading (noting Company 
A as shipper) for the shipment of goods. When the goods arrived at the destination port 
at Jakarta, Indonesia, Company D told Company B to arrange telex release of the goods. 
However, after Company A presented the copy bill of lading to Company D, Company 
D did not make cargo payment as agreed. Company A hence lodged the suit complaining 
that it was the actual shipper on the bill of lading and lawful holder of the original bill of 
lading, and it had established a contractual relationship for the carriage of goods by sea 
with the defendants Company B, Company C and their branches, but the defendants’ 
release of cargo without the presentation of original bill of lading had made it lose the 
control of the cargo, due to which it was unable to collect cargo payment. The claimant 
therefore demanded compensation from the four defendants.   
 


 
 
In the understanding of the court, when cargo is transported by sea on FOB term, buyer 
is responsible for chartering or booking space and paying freight, and seller is responsible 
for delivering the cargo to the vessel designated by buyer at the time or within the period 
agreed in contract, and shall notify buyer and provide general documents to prove that 
the cargo has been delivered on board. Buyer will receive the cargo upon receipt of the 
delivery documents and make payment. And the risks associated with the cargo will be 
transferred from seller to buyer when the cargo pass ship’s rail. FOB term is widely used 
by Chinese traders for many years due to the convenient delivery under the term. In this 
case, the claimant was seller to the sales contract of goods, but before it obtained the bill 
of lading and presented the same to buyer, the carrier had released the cargo to buyer. 
The carrier violated the general procedures that required delivery of cargo against the 
presentation of transportation documents, due to which the seller failed to receive cargo 
payment. Although the claimant did conclude a carriage contract with the carrier, it was 
the party noted on the bill of lading issued by the carrier as shipper and had actually sent 
the cargo to carrier for transportation, and the claimant also provided evidence to prove 
that it had established cargo carriage relationship with the defendants. The lawsuit met 
the requirements set forth under Article 119 of the Civil Procedure Law of  the People’s 
Republic of  China and was accepted by the court.  
 
We suggest that Chinese sellers should pay special attention to the legal risks for trading 
on the FOB term: while foreign buyer is bound by a contractual relationship for carriage 
of goods by sea with carrier when booking shipping space, Chinese seller is usually not a 
party to the carriage contract. That means, the Chinese seller, if it encounters difficulties 
in negotiating transportation documents or shipping frauds when settling accounts with 
buyer after it has delivered the goods to carrier for shipment, it is possible that seller may 
be unable to collect cargo payment and recover the goods. If Chinese seller loses money 
or goods, it may initiate a lawsuit in the capacity of actual shipper or consignor pursuant 
to paragraph 3 of Article 42 of the Maritime Law of  the People’s Republic of  China to recover 
its loss to the extent possible.   
 
 
 
 


 
 
 
III. Maintaining the Order of Rule of Law of Maritime Administration According 
to Law  
— Issues and suggestions concerning maritime administrative litigation cases  
 
(I)Review of legality in disputes related to administrative agreements  
 
In December 2012, Government A signed a Project Agreement with Company C for the 
restoration of marine ecology, infrastructure, and real estate development that would last 
for eight years with a total investment of more than ten billion yuan. In October 2013, 
the Oceanic and Fishery Bureau A signed a Project Franchise Agreement with Company 
C. In March 2017, Government A and the Oceanic and Fishery Bureau A issued a notice 
to dissolve the Project Agreement and the Project Franchise Agreement, claiming that 
Company C did not make investment and advance the project as agreed, and had failed 
the purposes of the agreements and constituted material breach. Thus, they decided to 
reclaim the right of investment, development and operation of the project. Company C 
hence brought a lawsuit and requested the court to order Government A to continue to 
perform the Project Agreement on the ground that the Project Agreement was valid and 
effective and qualified for further performance, and that there was no factual basis for 
Government A to take such action.   
 
According to the effective judgment of the court, Company C violated the contract since 
it did not perform obligations within the given time as agreed after it signed the Project 
Agreement. Pursuant to the Project Agreement and paragraph 2 of Article 93 of the 
Contract Law of  the People’s Republic of  China, as Company C failed to perform the primary 
obligations under the contract, Government A was entitled to terminate contract without 
the consent of Company C. However, the Project Franchise Agreement concluded by 
Company C and the Oceanic and Fishery Bureau A involved franchised operations, and 
it was indeed inappropriate for Government A to dissolve the administrative agreement 
before consulting and making an agreement with Company C, which was in violation of 
Article 38 of the Measures for the Administration of  Franchise of  Infrastructure and Public 
Utilities. Further, although the parties had negotiated with each other for several times in 
respect of the termination of contract before the termination of the Project Agreement, 
and Government A had given Company C opportunities to make statements and defense, 
Government A did not notify Company C in writing of the right to make statement or 
defense and the way to seek remedies, nor did it notify Company C of specific judicial 
remedies in the termination notice. Government A’s act violated the statutory procedures. 
Considering that the administrative agreement concerned public benefits in ecological 


 
 
conservation, environmental protection and infrastructure, if the administrative act of 
Government A, though in violation of law, was rescinded, it would cause serious damage 
to the national interest and the public benefits. Therefore, in accordance with paragraph 
1(1) of Article 74 of the Administrative Procedure Law of  the People’s Republic of  China, the 
court adjudged that Government A was in violation of law by issuing the notice of 
dissolving the Project Agreement, but the act shall not be withdrawn.  
 
This is a typical case involving administrative agreement. Administrative agreement is in 
nature a contract based on administrative mandate. When handling disputes arising from 
the conclusion, performance, amendment and termination of administrative agreements 
brought against an administrative organ, the people’s court should, on one hand, examine 
the validity of the administrative act in such aspects as whether the administrative organ 
is acting in statutory capacities, whether it is abusing authorities, whether it applies laws 
and regulations correctly, whether it follows the statutory procedures, whether it is acting 
appropriately, and whether it performs statutory duties; on the other hand, in addition to 
the application of administrative laws and regulations, the people’s court may also apply 
relevant civil laws and regulations and the agreements of the parties involved, provided 
that such application does not violate the mandatory provisions of the administrative law 
and the administrative procedure law.   
 
We suggest that when concluding, performing, amending, and terminating administrative 
agreements, administrative organs should ensure that they act in a way compliant with 
the administrative laws and regulations, and they should also observe the relevant civil 
laws and regulations. Especially when an act is to be taken during the conclusion, 
performance, amendment, and termination of administrative agreement that may impair 
the rights and interests of the persons subject to such administrative act, the 
administrative organs shall give full opportunity so that the private parties are able to 
make statement or defense, and guide them to seek remedy according to law. Further, 
administrative agreement is made for administration or public service purpose which will 
affect people’s immediate interests and the performance of which usually necessitates a 
great deal of administrative approvals, reviews, and planning, and a large volume of 
capital flow and deployment of labor force and supplies. We suggest that after signing an 
administrative agreement, both parties shall actively and fully fulfill the agreed rights and 
obligations during performance of the agreement, so as to avoid the waste of public 
resources and damage to the public interests.   
 
(II) Res judicata of effective judgment  
 


 
 
In October 2017, the Oceanic and Fishery Bureau A made a decision of administrative 
penalty, which ascertained that Company B had built an impermeable pioneer road and a 
permeable construction platform without authorization, reclaiming sea areas of 2237 m2 
and 1335 m2 respectively. The penalty decision ordered Company B to return the illegally 
occupied sea areas and restore them to the original state, and to pay a penalty in the sum 
of 2,321,390 yuan. In June 2018, the Oceanic and Fishery Bureau A applied with the 
court for enforcement of the administrative penalty decision, requesting the court: 1. to 
order Company B to return the illegally occupied sea areas and restore them to the 
original state; 2. to order Company B to pay the penalty in the amount of 2,321,390 yuan; 
and 3. to order Company B to bear the enforcement costs.   
 
The court found that, upon the notice of the Oceanic and Fishery Bureau A, Company 
B removed the impermeable pioneer road and the permeable construction platform, but 
it did not pay the penalty of 2,321,390 yuan. In its effective judgment, the court held that 
the Oceanic and Fishery Bureau had conducted investigation, notification, and approval 
following the statutory procedures and the Decision of Administrative Penalty was valid 
as it was made by an appropriate administrative subject which acted in a way compliant 
with administrative procedures and regulations and was served on Company B according 
to law and became effective. Company B did not apply for administrative reconsideration 
or lodge a lawsuit before the people’s court within the time prescribed by law, nor did it 
fulfill its obligations, and therefore the court ruled to enforce the penalty 2,321,390 yuan 
under the administrative penalty decision.       
 
Upon the receipt of the administrative ruling of the court, Company B lodged a lawsuit 
before the court, requesting to withdraw the Decision of Administrative Penalty made by 
the Oceanic and Fishery Bureau A. Company B alleged that it only became aware that an 
administrative penalty decision had been made by the Oceanic and Fishery Bureau after 
it received the administrative ruling of the court. Company B held that the administrative 
penalty decision was not served according to law, the penalty was made against statutory 
procedures, the facts ascertained therein were wrong, and that there was no legal basis 
for the penalty amount. Although the court ruled to enforce the administrative penalty, 
Company B did not receive the notice of enforcement application from the Oceanic and 
Fishery Bureau A, and the court did not listen to the statements or defense of Company 
B during examination of the case.  
 
Upon examination, the court held that, in accordance with paragraph 1 of Article 69 of 
the Interpretation of  the Supreme People’s Court on Application of  the Administrative Procedure Law 
of  the People's Republic of  China, “A complaint which has been docketed shall be dismissed 


 
 
by the people’s court under any of the following circumstances… (9) The subject matter 
of the complaint is bound by an effective judgment or consent judgment”. In this case, 
the court’s administrative ruling in favor of enforcement had examined the validity of 
the administrative penalty decision in question, and the ruling had taken effect. Company 
B lodged a lawsuit against the administrative penalty decision, but the decision had been 
bound by the effective administrative ruling. If Company B insisted that the decision was 
in violation of the law and be withdrawn, it shall refer the dispute to the trial supervision 
procedures. The court thus dismissed the compliant of Company B according to law.  
 
We suggest that when private parties believe that their legitimate rights and interests are 
impaired by administrative organs, they shall timely and actively seek remedies within the 
statutory period, for example, applying for administrative reconsideration or lodging an 
administrative lawsuit before the court. Private parties shall bear the adverse consequence 
for delay in exercise of such remedies. If private parties exercise remedies in a manner 
beyond the statutory scope, the people’s court will dismiss such request according to law.   
 
(III) Basis for administrative acts  
 
In 2015, A applied with the Oceanic and Fishery Bureau B for diesel oil subsidy of the 
previous year for the 10 fishing boating operating under his name, and the Oceanic and 
Fishery Bureau B completed the subsidy approval and public disclosure. In 2016, A was 
sentenced to imprisonment and fine by a court located at B for assisting other fishing 
boats to gain diesel oil subsidy by cheating. In 2017, the Oceanic and Fishery Bureau B 
issued a notice based on the criminal judgment and decided not to allow subsidy to the 
10 fishing boats operating in the name of A. A hence applied for administrative 
reconsideration to Government B, but Government B maintained the notice. He was not 
satisfied with the reply and brought a lawsuit before the court, requesting the court to 
rescind the notice and the administrative reconsideration decision and to order the 
Oceanic and Fishery Bureau and the government to amend their administrative acts. In 
the effective judgment, the court held that the evidence provided by the Oceanic and 
Fishery Bureau B was not sufficient to prove that when it issued the notice, A was acting 
in a way as prescribed in the circumstances under Article 20 of the Provisional Measures for 
Administration of  Special Funds to the Fishery Industry for Finished Oils Price Subsidy. The court 
thus ruled to withdraw the notice of the Oceanic and Fishery Bureau B and the 
administrative reconsideration decision of Government B, and ordered the Oceanic and 
Fishery Bureau to amend its administrative act.  
 
Public authorities shall follow the principle that administrative bodies should not take any 


 
 
action that is not mandated by law. Administrative bodies should always act on legal basis. 
Article 20 of the Provisional Measures for Administration of  Special Funds to the Fishery Industry 
for Finished Oils Price Subsidy delimits the circumstances where fishery subsidy shall not be 
allowed: “the subsidy fund shall be managed by a special account and is used for special 
purpose only, and no unit or individual is allowed to gain access to the subsidy fund by 
cheating (such as applying for subsidy by presenting a license but without a fishing boat 
at all, or presenting several licenses for only one fishing boat, or applying for subsidy for 
an illegal boat, or counterfeiting licenses), or give subsidy in a wider range of benefits, or 
occupy, withhold or misappropriate the subsidy fund or operating funds. In the event of 
any of such circumstances, financial authorities will recover the illegally occupied subsidy 
according to law, and the person in charge and other liable personnel shall undertake the 
legal liabilities according to law. For those who present false documents to gain subsidy 
by cheating, once found, they will be disqualified for fishery subsidy forever and will be 
disclosed nationwide.” Although the court ascertained that A assisted others to cheat the 
authority for subsidy, the evidence presented by the Oceanic and Fishery Bureau B was 
not sufficient to prove that when it issued the notice the 10 fishing boats operating in the 
name of A were applying for subsidy in such a manner as “presenting a license but 
without a fishing boat at all, or presenting several licenses for only one fishing boat, or 
applying for subsidy for an illegal boat, or counterfeiting licenses”. It was against the 
provision given above and there was no other legal basis for the Oceanic and Fishery 
Bureau B to disqualify A for the subsidy by referring to the criminal judgment. Thus, the 
court ruled to withdraw the administrative decision of the Oceanic and Fishery Bureau B 
and ordered it to amend its administrative act.    
 
We suggest that administrative organs should learn more about the laws and regulations 
in relation to their functions and duties and apply the laws and regulations properly and 
improve their administration according to law. When taking an administrative act, they 
shall act strictly as mandated by law, interpret and apply the laws and regulations correctly, 
follow the statutory procedures, and protect the legitimate rights of the person subject to 
the administrative act.     
 
 
 


 
 
  
IV. Maintaining Legal the Order of Freight Forwarding Market According to 
Law 
— Issues and suggestions concerning marine freight forwarding disputes  
 
(I) Disposal of goods rejected by customs 
 
Company A entrusted Company B to carry a shipment of polarizer from Pusan, South 
Korea to Shenzhen, China. The parties signed an agreement, whereby it was agreed that: 
“Company A promises to receive the containers no matter the container is rejected by 
the customs or is allowed for customs clearance. If the customs allows the importation 
of the container but Company A refuses to accept the container, Company B shall have 
the right to unpack the container and dispose of the goods, including, but not limited to, 
to sell, depreciate, auction off, mortgage or pawn the goods. Company B will withhold 
the proceeds from such disposal, and Company A shall bear the costs on the disposal of 
the goods. If the customs rejects the container but Company A refuses to take delivery 
of the container after Company B has returned the same to Hong Kong, Company B 
shall have the right to dispose of the goods in an appropriate manner , including, but not 
limited to, to abandon or dispose of the goods as waste or scrap, or to return the same to 
South Korea. And Company A shall bear the disposal costs incurred thereby.” When the 
goods arrived at Shenzhen, Shenzhen Dapeng Customs rejected the importation of the 
goods, as it found that the goods were actually some composite materials made up of 
waste and scraps. So Company B notified Company A by sending letters to the address 
given under the agreement for three times by EMS, requiring Company A to confirm the 
contact details for the return. But the mails were rejected and Company A also refused to 
give information for the return. Company B had no choice but returned the goods to 
South Korea, but later Company A sued against Company B for disposal of goods 
without consent and demanded compensation from Company B. In its effective 
judgment, the court held that Company A, although well aware that EMS postmen had 
delivered mails to its address specified in the agreement, did not inquire about where the 
mails came from, nor did it notify Company B of its new address. Company A shall 
therefore undertake the unfavorable consequences for the rejection of mails. Company B 
was disposing of the goods according to the term of the agreement and shall not be 
deemed in breach of contract. The claims of Company A were untenable.  
 
In this case, Company B had properly served notice by EMS for three times to Company 
A at the address specified in the agreement. Company A, although aware of such mails, 
did not receive the mails, which shall be deemed a rejection of the goods. Company B 


 
 
shall not be held at fault by disposing of the goods in an appropriate way as agreed in the 
contract, and Company A shall bear the adverse consequences thereof.       
 
We suggest that when facing cargo transportation difficulties, consignor and forwarder 
shall maintain good communication and notify the other party of any changes in its 
service address or contact details in time. Escaping the problems is not a good way to 
improve the situation. The parties should work together to solve problems. If consignor 
is out of contact, forwarder shall dispose of cargo appropriately following the laws , 
regulations and the contracts between them, and it should preserve evidence to prove its 
innocence and notify consignor of the situation once it gets in touch with the consignor.   
 
(II) Sub-entrustment of freight forwarding contract  
 
Company A and Company B signed a freight forwarding contract for export of goods by 
sea, whereby Company B agreed to arrange export transportation of the goods by sea. It 
was agreed that “in case of any change in the transportation conditions due to objective 
reasons or third party, Company B shall notify Company A in writing promptly and only 
ship the goods upon confirmation of Company A.” After signing the contract, the legal 
representative of Company B, although without confirmation of Company A, entrusted 
Company C to arrange shipment for the goods. After the carriage service was performed, 
Company A paid the freight and related costs to Company B, and Company C issued 
invoice to Company B. Yet Company B only made partial payment to Company C. Now 
Company C, based on the freight forwarding contract with Company A, lodged a suit to 
demand Company A to pay the outstanding freight and related costs. According to the 
effective judgment of the court, although Company A and Company B did not make any 
agreement in respect of the sub-entrustment, Company C did not produce evidence to 
prove that Company A explicitly agreed that Company B might sub-entrust Company C 
to perform the contract. Thus, Company A and Company C did not establish contractual 
relationship under the freight forwarding contract. The court thus dismissed the litigation 
request of Company C.        
 
Article 5 of the Provisions of  the Supreme People's Court on Several Issues Concerning the Trial of  
Cases of  Disputes over Marine Freight Forwarding provides that “Where there is no agreement 
in respect of sub-entrustment, if the freight forwarder or a third party alleges that the 
consignor has agreed on sub-entrustment of the marine freight forwarding operation on 
the ground that the consignor knows and does not object that the freight forwarder has 
sub-entrusted all or part of the marine freight forwarding operation to the third party, the 
people’s court shall not uphold such a claim, unless the consignor acts in a way to make 


 
 
it clear that it accepts the sub-entrustment arrangement.” In this case, as Company A and 
Company B did not agree on the sub-entrustment arrangement, namely, Company C was 
sub-entrusted by Company B without the consent of Company A, and there was no 
evidence proving that Company A had given explicit consent on the sub-entrustment, so 
Company B shall assume the liability thereof.   
 
We suggest that freight forwarder shall fulfill obligations to the benefit of consignor and 
arrange sub-entrustment according to agreement of the parties (if any), or (if no such 
agreement) do so after obtaining the consignor’s explicit consent. If sub-entrustment is 
in urgent need to protect the interests of the consignor, the forwarder should preserve 
relevant evidence and notify the consignor of the situation in a timely manner.    
 
(III) Representative of a branch company pending scheduled deregistration  
 
A was the person in charge registered by the Guangzhou Branch of Company B at the 
industrial and commercial bureau. During the period when the Guangzhou Branch of 
Company B was waiting for deregistration as scheduled, A entrusted Company C to 
provide freight forwarding service in the name of the Branch. A showed his title when 
communicating with Company C. During the freight forwarding operation, A continued 
to assign Company B’s agent in America as consignee and notify party on bill of lading, 
and the personnel of Company B was responsible for contacting the American agent for 
the release of cargo. Company B knew that A continued to trade in its name although A 
did not possess the company seal and license at all, but Company B did nothing to stop 
him. Now Company C brought a lawsuit against Company B and demanded the latter to 
pay the outstanding freight and costs payable by its Guangzhou Branch. According to the 
effective judgment of the court, industrial and commercial registration was a kind of 
public notice, and it was natural that Company C would act by relying on the capacity of 
A, assuming that A was acting on behalf of the Guangzhou Branch of Company B. As 
A was entrusting Company C for the carriage in the name of the Guangzhou Branch of 
Company B and did not tell Company C about the deregistration that was to be taken by 
the Branch, Company B could not deny the validity of A to act as representative of the 
Guangzhou Branch on the ground that it had suspended the capacity of A. The court 
therefore upheld the litigation requests of Company C.   
 
According to Article 14 of the Company Law of  the People’s Republic of  China, “A company 
may set up branches. To set up a branch, the company shall file a registration application 
with the company registration authority and shall obtain a business license. If a branch is 
not a legal person, its civil liabilities shall be borne by its parent company.” In this case, 


 
 
although Company B had decided to cease the operation of its Guangzhou Branch, it did 
not complete deregistration at the industrial and commercial bureau in a timely manner 
or give notice to announce deregistration of its Guangzhou branch and the suspension 
of the company seal of the branch company. Now A was entrusting Company C to carry 
the goods, and the agent of Company B in America released the cargo under the bill of 
lading. As the registration at the industrial and commercial bureau remained unchanged 
and Company C had exercised the duty of caution, the freight forwarding business 
operating between A in the name of the Guangzhou Branch of Company B and 
Company C, shall be deemed an operation under a freight forwarding contract between 
the Guangzhou Branch of Company B and Company C. The freight and costs owed by 
the Guangzhou Branch of Company B to Company C shall be borne by Company B as 
it is provided by law that if a branch is not a legal person, its civil liabilities shall be borne 
by its parent company. 
 
We suggest that if parent company decides to cease the operation of a branch, it should 
timely retrieve the company seal and licenses, complete deregistration formalities at the 
industrial and commercial bureau, and make public announcement. When trading with a 
branch, a commercial entity should make a check carefully to see whether the person in 
charge of the branch has the power to conduct the business and whether the branch has 
ceased operation or is deregistered. It would be better to contact the parent company to 
check the information of the person in charge of the branch and the operation of the 
branch, to avoid invalid representation.     
 


 
 
 
V. Maintaining the Order of Rule of Law of Chartering Market According to 
Law 
— Issues and suggestions concerning time charterparty disputes  
 
(I) General rules on ascertaining the legal effect of ship’s stamp in the conclusion 
of contract  
 
In a time charterparty dispute, A and B (as Party A) signed a charterparty with Vessel E 
(as Party B), whereby Party B agreed to charter Vessel E to Party A. Party B affixed the 
stamp of Vessel E on the contract, and D signed the contract as the legal representative 
of Party B. Company C was the registered owner and operator of Vessel E, and D was 
the actual owner and operator of Vessel E. A and B paid hire to D, but Vessel E was 
resumed by Company C before maturity. A and B therefore requested the court to order 
Company C to compensate the hire loss. The court held that A and B had no reason to 
believe that D was acting on behalf of Company C to sign the charterparty, and that the 
ship stamp of Vessel E affixed upon the contract did not surely have the legal effect of 
representing the act of owner. Therefore, A and B did not establish a time charterparty 
relationship with Company C, and the litigation requests of A and B shall be dismissed.     
 
Pursuant to paragraph 1 of Article 64 of the Civil Procedure Law of the People’s Republic of 
China and Article 90 of the Interpretation of the Supreme People’s Court on the Application of the 
Civil Procedure Law of the People’s Republic of China, A and B shall bear the burden of proof 
to prove that they had established a time charterparty relationship with Company C. But 
A and B mainly relied on the fact that the charterparty bore the stamp of Vessel E. In 
fact, the ship’s stamp was not the official seal of Company C. A ship’s stamp is usually 
carried with the ship and used by the actual owner in daily operation and management of 
the ship. When it is used in the conclusion of contract with other parties, generally such 
contract is not surely binding on the company that operates the vessel. Namely, such 
contract has not legal effect on the registered owner or operator of the vessel. Therefore, 
it was groundless for A and B to hold Company C as opposite party to the charterparty.      
 
We suggest that when establishing a time charterparty relationship, especially concluding 
a charterparty, the parties should notice the different functions of a ship’s stamp and a 
stamp under the legal person matrix. A ship’s stamp is no more than an in-house seal and 
is not used for external business. In general, a contract bearing a ship’s stamp has no 
apparent agency effect on the owner and operator of the ship.     
 


 
 
(II)Exception on ascertaining the legal effect of ship’s stamp in the conclusion of 
contract  
 
In a time charterparty dispute, Vessel C (as owner) signed a charterparty with A and B (as 
charterer). The charterparty bore the stamp of Vessel C at the bottom and the signature 
of E as representative. Later, the parties signed a supplementary agreement bearing the 
stamp of Vessel C. The stamp of Vessel C placed on the charterparty and supplementary 
agreement indicated the name of Company D. However, Vessel C was arrested by the 
court W due to Company D’s failure in performing the obligations determined by the 
effective legal instrument in a another case. A and B could not employ the vessel as a 
result. A and B applied with this court to order the termination of the charterparty with 
Company D and demanded compensation. The court held that, A and B said they were 
signing the charterparty and supplementary agreement with E (alleged owner of Vessel C) 
and F (alleged operator of the vessel), F placed ship’s stamp, and that A and B obtained 
the documents of Vessel C when concluding the contracts and knew that Company D 
was the registered owner and operator of the vessel. Before paying deposit, A and B also 
contacted Company D for confirmation, and the staff of Company D did not deny or 
confirm the identity of E. After the subject dispute arose, Company D also did not give 
reasonable explanation as regards whether Vessel C was under the actual control of E 
during the dispute. Based on above descriptions, A and B had exercised the duty of care 
when concluding the charterparty and supplementary agreement, and they had reason to 
believe that E and F had the authorization to rent out Vessel C on behalf of Company D. 
Pursuant to Article 172 of the General Provisions of  the Civil Law of  the People's Republic of  
China, “Where an actor still performs an act of agency without a power of agency, 
beyond his or her power of attorney, or after his or her power of attorney terminates, 
the act shall be valid if the opposite party has reason to believe that the actor has the 
power of attorney.” The charterparty and supplementary agreement concluded by E and 
F on behalf of Company D shall be binding on Company D. As Company D breached 
the contract, in accordance with paragraph 4 of Article 94 of the Contract Law of  the 
People’s Republic of  China, the requests of A and B to dissolve the charterparty was in 
compliance with the law and shall be supported by the court.    
 
We suggest that charterer should exercise the duty of care before signing a charterparty 
and examine all the relevant certificates and documents of the vessel it indents to charter. 
When the charterparty bears the vessel’s stamp by the owner, charterer should carefully 
examine whether the actor or personnel onboard has the power of attorney at the time 
the contract is concluded, and should preserve evidence, to protect its interests to the 
extent possible, and to avoid the failure of recovery of loss for breach of contract on the 


 
 
part of the opponent party as the charterparty bearing ship’s stamp may not be binding 
on the shipowner or operator. 
 
(III) Identification of unnamed agency under charterparty  
 
In a time charterparty dispute, B was the registered owner of Vessel D. B issued a power 
of attorney to engage C and E to provide intermediary services in the introduction and 
negotiation of sand-mining service contract. B also concluded sand-mining contract with 
C and E in respect of dredging and mining operations at a terminal by Vessel D. C, as 
lessor, signed a ship employment contract with Company A, whereby C agreed to deliver 
the vessel at the designated location for operation. Later, C (as lessor) signed a guarantee 
contract with Company A in respect of the chartering, whereby C agreed to return the 
deposit and pay liquidated damages to Company A if it failed to dispatch Vessel D at the 
designated terminal within the given time. However, later B failed to send Vessel D to the 
designated working area within the given time, Company A brought a lawsuit before the 
court, requesting the court to order B to return the guaranty money to Company A and 
repay the deposit in double. The court held that, although it had presented a power of 
attorney to Company A, C was in fact concluding the ship employment contract in its 
own name, which did not constitute unnamed agency. Thus, Company A and B did not 
establish a relationship under the ship employment contract. The court thus dismissed 
the litigation requests of Company A.        
 
Pursuant to Article 402 of the Contract Law of  the People's Republic of  China, “Where the 
agent, acting within the scope of authority granted by the principal, enters into a contract 
in its own name with a third party who is aware of the agency relationship between the 
principal and agent, the contract is directly binding upon the principal and such third 
party, except where there is conclusive evidence establishing that the contract is only 
binding upon the agent and such third party.” Unnamed agency is conditional on the fact 
that principal and agent have established an agency relationship. B only issued the power 
of attorney to engage C and E to provide intermediary service, rather than to entrust C 
to sign contract on its behalf. B had signed the sand-mining contract with C and E in 
respect of Vessel D the previous day before the ship employment contract was signed. B 
was relying on the sand-mining contract in respect of receiving the guaranty money from 
C, instructing C for site survey, or inquiring about the progress of sand-mining approvals, 
and these activities was not ratification or implied consent under the ship employment 
contract signed by C on behalf of B as alleged. Although B indeed entrusted C and E to 
negotiate and sign a sand-mining service contract, there was no evidence proving that B 
and C agreed that C might act independently or that C directly disclosed the conclusion 


 
 
of contract to B when signing the ship employment contract with Company A to obtain 
B’s consent in signing such contract. On the contrary, there was evidence that C and E 
had signed a separate sand-mining contract with B to pocket the difference. C was not 
acting for the purpose of fulfilling obligations under an agency contract, in which by 
receiving agency fees, it shall follow the principal’s instructions, report to the principal, 
and to transfer the properties received by operation of the entrustment to the principal. 
Hence, B and C did not establish a relationship bound by agency contract. C’s conclusion 
of the ship employment contract in its own name did not constitute unnamed agency.   
 
Identifying the subject of contract correctly is important to the handling of ship leasing 
contract dispute properly. Unnamed agency is a common practice in the legal activities of 
the ship leasing market. It should be noticed that unnamed agency is different from both 
named agency and unauthorized agency. It has important conditions and characteristics: 
1. Principal has granted authorization to agent, or agent is authorized by operation of law; 
2. Agent is exercising civil juristic act on behalf of principal, and such act is authorized 
by principal or mandated by law; 3. Agent performs the civil juristic acts in its own name 
against the opposite party; 4. Results achieved by such act shall be transferred to principal 
according to law. It follows that unnamed agency differs from unauthorized agency in 
that agent has the authorization and performs the civil juristic acts within the limit of 
authority. To identify whether a subject act under unnamed agency to sign a ship leasing 
contract, first of all, the court should focus on the core issue, i.e. whether the agent has 
authorization. Further, the court should strictly follow the provisions of Article 402 and 
Article 403 of the Contract Law of  the People's Republic of  China to examine the legal effect 
according to the regulations on legal elements, to strike a balance of interests among 
principal, agent and the opposite party.   


 
 
VI. Protecting People’s Rights and Interests in Sea-related Disputes According to 
Law 
— Issues and suggestions concerning disputes over personal injury at sea 
 
(I) Identification of  the legal relationship under seafarers’ service contracts 
 
In a dispute arising out of a seafarer’s contract for services, A was employed by G and 
worked on a ship but no written contract for services was concluded. Around 0705hrs 
on the morning of 7 May 2017, A had a headache and went into a coma. The ship clerk 
contacted the emergency services in Hong Kong and transported A to Tuen Mun 
Hospital. As shown on the hospital records dated 16 May, A had acute intracranial 
bleeding on 7 May, and brain CT scans showed excessive bleeding in left temporal lobe 
and extensive damage to both hemispheres of the brain; he was minimally conscious, 
had stable vital signs, and was unable to speak. On 1 November A’s wife engaged an 
assessment agency to assess the extent of A’s injury and disability,  subsequent 
treatment cost and related matters. The assessment opinions described A as in a 
persistent vegetative state and rated his disability at Grade I. A requested the court to 
order Company F, registered owner of the ship, and G, the labour hire agency, for joint 
and several liability for medical cost, subsequent treatment cost, and disability 
compensation in the sum of about 1 million yuan. The first-instance court passed a 
judgment ordering Company F and G to compensate A in a sum of about 900,000 yuan 
for medical cost, subsequent treatment cost and disability compensation. During the 
second instance, A’s wife B, daughter C, mother D, and father E made a statement to the 
court of second instance that A had passed away on 5 June 2018 and as his legal 
inheritors they duly applied to participate in the proceedings. The court of second 
instance affirmed the identification of the legal relationship and apportionment of 
liability but made amendments to the claimants and the contents of the damages. Its 
judgment ordered F and G to compensate B, C, D and E for medical cost, subsequent 
treatment cost, subsequent care cost, death compensation, and funeral expenses in a sum 
of about 900,000 yuan. 
 
As stated in the court’s effective judgment, although Company F and G argued that the 
dispute should be under a seafarer employment agreement and liability should be 
determined through a work-related injury evaluation, ascertained facts showed it was 
expressly agreed in the ship management agreement between Company F and G that the 
latter was in charge of actually operating the ship and recruiting the crew. The parties 
concerned did not deny that A was engaged by G to work on the ship. As G was not an 
employer as described in the Labour Law of  the People’s Republic of  China, the relationship 


 
 
between A and G should be a relationship under a seafarer’s contract for services rather 
than that under an employment contract. Thus the Labour Law and related legal 
provisions did not apply to the case. Instead, the case should be tried by applying the Tort 
Law of  the People's Republic of  China and the Interpretation of  the Supreme People's Court on 
Some Issues concerning the Application of  Law in Trying Cases regarding Compensation for Personal 
Injuries.  
 
According to Article 1 of the Notice of  the Ministry of  Labour and Social Security on 
Identification of  Labour Relationship (LSBF [2005] No.12), “Where no written employment 
agreement is concluded between an employer and a worker, an employment relationship 
exists when the following conditions are met. (I) The employer and worker both qualify 
as such under applicable laws and regulations…” In this case, G was not an employer 
and was not qualified as an employer, thus the Labour Law and related legal provisions 
did not apply to the dispute over compensation for personal injury arising out of the 
labour hire arrangements. It should be noted that the seafarer had not entered into a 
written contract for services with either of the other parties before he started to perform 
services. In some sense A’s action had posed great risks to the exercise of his rights. This 
was due to his lack of legal literacy, but it also had a lot to do with the vulnerable 
position that seafarers found themselves in as labour providers. China is transitioning 
from a “large shipping nation” to a “shipping power”. During this transition, seafarers as 
important participants should enjoy full protection of their lawful rights. In order to fully 
protect seafarers’ rights, it is advisable to set up seafarers’ unions, and maritime 
administration should tighten regulation on seafarer service agencies, shipping companies 
and ship owners.  
 
(II) Ascertainment of  liability between employers and ship operators 
 
In the above case, as shown by the records of Tuen Mun Hospital, Hong Kong and the 
expert assessment opinions issued by the assessment agency, A was in a persistent 
vegetative state due to brain arteriovenous malformation and intracranial hematoma. 
However, there was no evidence that A’s unique physiology was the only cause of his 
illness. The particularity of working on the ship, transition between day and night shifts, 
workplace noise in the engine rooms, and chronic fatigue from work could all have 
played a part in inducing the attack of illness suffered by A who had a unique physiology. 
Company F and G argued that the other 7 crew members had been working in the same 
environment and condition but had not fallen ill. However, they failed to produce 
sufficient evidence to rule out the work environment and condition on the ship as a 
cause of A’s illness, and therefore should bear the adverse consequence of such failure. 


 
 
Summing up all facts, the court of first instance held at its discretion that A should 
assume 50% liability due to his unique physiology while Company F and G should 
assume the other 50% liability for A’s illness which put him in a persistent vegetative 
state.   
 
Article 35 of the Tort Law provides that “in a client/contractor relationship, the client 
shall be liable for any damage to a third party caused by the contractor in performing the 
agreed services. If damage is sustained by the contractor himself in performing the 
services, liability shall be shared by the parties in proportion to their respective levels of 
fault.” This is the first time China has referred to terms such as “contractor services 
(laowu)” and “client/contractor relationship (laowu guanxi)” in legislation. In Chinese 
legislation and judicial practice, they are associated with “employment” and “employment 
relationship”. In the relationship under a seafarer’s contract for services, the client is 
obliged to protect the seafarer’s life, health and personal safety for the period in which he 
is performing services on the ship. In other words, if the contractor suffers personal 
injury in performing the agreed services, the client shall be liable for compensation. In 
this case, Company F was not only the registered owner of the ship but also the ship 
operator. It was responsible for ensuring the safe navigation of the ship and providing a 
good working environment for the crew. The existence of a ship management agreement 
did not relieve it of its obligation to manage the crew. Under the principle of fairness, 
both the client and the ship operator should be liable for personal injury suffered by a 
seafarer.  
 
The shipping industry plays a key role in the growth of the national economy, whereas 
the occupation of seafarers involves great risks and a fair amount of hard work. Some 
seafarers start their career young and after years of unbalanced diet on ships, chronic 
homesickness, and fatigue from work combined with aging, they suffer high blood 
pressure, heart disease or other illnesses. If no compensation is made to a seafarer who 
falls ill on a ship and subsequently dies, it would be a total disregard for the seafarer’s 
long-time devotion and would be against morals and humanity. It would also put the 
seafarer’s family into financial difficulty. Moreover, insufficient protection of seafarers 
would drive young people away from the occupation, which would in turn have adverse 
effect on the growth of the shipping industry. For the sake of people’s livelihood and 
humanity, we advise ship owners to compensate seafarers who fall ill on ships and pass 
away, and ship owners’ liability insurers should settle the ship owners’ claims. Insurers 
who thus incur increased insurance cost may charge higher premiums to protect their 
interests.  
 


 
 
(III) Ascertainment of  liability between concurrent tortfeasors without a common 
design 
 
In a dispute over liability for personal injury at sea and in waters leading to the seas, the 
yacht “ZI YOU ZHI XING” navigated by A who was engaged by B collided with an 
unnamed fishing boat navigated by C at 2000hrs on 3 June 2017 in the northeast waters 
of Sanmen Island, Huizhou. The accident caused injuries to different extents to 
navigator C and 4 passengers, including D, on the fishing boat. D subsequently died 
despite medical efforts. The Maritime Safety Administration of Huizhou Port issued an 
accident liability report, apportioning the liability equally between the vessels on the 
grounds of their equal level of fault. D had been married to E and they had a son, F, 
who was born on 19 February 2015. And G was D’s mother. E, F and G requested the 
court to order A, B and C to be jointly and severally liable for death compensation, 
medical cost, funeral expenses, living expenses of the dependent, and emotional distress 
damages in the sum of about 2 million yuan. The court of first instance passed a 
judgment ordering B and C to jointly and severally compensate E, F and G a sum of 
about 1.8 million yuan. The court of second instance affirmed the determination of 
amounts of expenses and damages, but made amendments to the modes of liability 
assumed by B and C to the damages. Instead, B and C were ordered to respectively pay 
about 900,000 yuan as compensation.  
 
The effective judgment rendered by the court held that B and C were both at fault for 
the collision between the yacht and the boat but the two parties acted without a common 
design. Rather, they concurrently committed related wrongs. The joint and several 
liability prescribed in Article 8 of the Tort Law did not apply to the case. Moreover, 
existing evidence was insufficient to prove that either of the parties’ respective wrongful 
acts would have sufficed to cause the whole injury. Therefore, Article 12 of the Tort Law 
should apply, which provides that “when two or more persons respectively commit 
tortious acts leading to the same injury, the tortfeasors shall be held proportionately 
liable if it is possible to determine their respective levels of fault, or equally liable if it is 
impossible to make such determination.” Accordingly, B and C should be liable for the 
accident in proportion to their respective levels of fault. The accident liability report 
issued by the Maritime Safety Administration of Huizhou Port determined that both 
vessels had committed equal level of fault in the accident and should be held equally 
liable. B and C had no objection to the above decision. Accordingly, B and C should 
respectively assume 50% liability for the compensation.  
 
When two or more persons respectively commit different acts without a common design 


 
 
or negligence leading to the same injury, they are concurrent tortfeasors without a 
common design, and Article 12 of the Tort Law should apply to the determination of 
liability based on their respective levels of fault. Each tortfeasor commits an independent 
wrongful action and should only be liable for the injury caused by such action. Where 
each tortfeasor’s wrongful action is sufficient to cause the whole injury, the tortfeasors 
shall assume joint and several liabilities; the tortfeasors shall be held proportionately 
liable if it is possible to determine their respective levels of fault, or equally liable if it is 
impossible to make such determination. To some extent, the Tort Law shows the 
legislation trend towards stricter criteria for and limitations on the application of joint 
and several liabilities. For instance, it holds concurrent tortfeasors without a common 
design proportionately liable for their concurrent wrongful actions. This restricts 
excessive application of joint and several liability and conflicts with the generally 
accepted practice in judicial trials that are familiar to most people. For victims and their 
relatives seeking dispute resolution through legal proceedings in similar circumstances, it 
is advisable to bring actions after distinguishing in good faith and based on facts the 
modes of liability attribution for different tortious acts. This will help to avoid inefficient 
trials and facilitate the fair and proper satisfaction of the victims’ claims.  


 
 
 
VII. 
Maintaining the Order of Rule of Law of Seafarer Labour Market According 
to Law 
— Issues and suggestions concerning seafarer service contract disputes 
 
(I) Ascertainment of  seafarer’s wages when no written labor contract is signed  
 
On 5 November 2018, Seafarer C served as chief officer on Ship B operated by 
Company A. No written employment agreement had been signed between Company A 
and Seafarer C for the period in which Seafarer C is performing services on the ship B. 
Company A had paid Seafarer C 6 months’ wages at a rate of 20,000 yuan per month. As 
Company A failed to pay the full remuneration on time, Seafarer C resigned and 
disembarked from the ship on 4 September 2019. The employment relationship between 
Seafarer C and Company A was affirmed in the court effective judgement considering 
that Seafarer C had been serving as chief officer on Ship B for nearly one year even 
though no written employment agreement had been entered into between Seafarer C and 
Company A. In accordance with applicable provisions of the Labour Contract Law, the 
court supported Seafarer C’s claims for the unpaid wages of 80,000 yuan plus interest 
thereon, a double time pay of 180,000 yuan due to no written employment agreement 
being concluded, and the severance pay of 20,000 yuan.  
 
Due to the particularity of seafarer jobs, a number of seafarers do not enter into a written 
employment agreement with their employers before starting their services. The 
determination of the existence of an employment relationship does not rely on an 
employment agreement. However, when a dispute arises over unpaid wages without 
written employment agreement, the seafarer has to prove the fact that he has been 
performing services on the ship and with whom he has established an employment 
relationship. In compliance with Article 38.1.2, Article 46.1, Article 47.1 and Article 82.1 
of the Labour Contract Law of the People’s Republic of China, and Article 6 of the Regulation on 
the Implementation of the Labour Contract Law of the People's Republic of China, the employer 
may be required to pay the arrears of wages, an amount to make up for the double time 
pay due to no written employment agreement, plus severance pay for the arrears of 
wages once such facts are proved. The double time pay shall be calculated from the first 
day of the second month following the commencement of services to the day preceding 
the date on which a written employment agreement is concluded, but no later than the 
day preceding the last day of the year following the commencement of services. The 
severance shall be paid based on the duration of the seafarer’s service to the employer, at 
a rate of one month’s wage for each year; any period not less than six months but shorter 


 
 
than one year shall be counted as one year, and any period less than six months shall be 
counted as six months.  
 
To protect seafarers’ and employers’ lawful rights and interests, it is advisable for 
employers to enter into written employment agreements with seafarers to set out rights 
and duties before they start performing services. If a seafarer has to board a ship in a city 
or port outside the domicile of the employer under emergency circumstances, the 
employer may enter into a written employment agreement with the seafarer through 
email, facsimile, instant messaging means or otherwise delegate to the officer who is in 
charge of shipping matters. If the employer is negligent in the above responsibilities, the 
seafarer may actively request the employer to fulfill his/her responsibilities.  
 
(II) Identification of  false records in seafarer’s identity documents 
 
In a dispute arising out of a seafarer’s employment agreement, Seafarer C brought an 
action against Company A claiming payment of wage arrears based on the records in his 
seafarer’s identity document. The records showed that Seafarer C had served as chief 
officer from 2 June to 30 September 2017 and as captain from 1 October 2017 to 20 
September 2018 and from 1 October 2018 to 18 June 2020 on Ship B owned by 
Company A. Seafarer C thus claimed against Company A for unpaid wages earned after 1 
October 2018. Company A argued that Seafarer C had not performed services on Ship B 
after 1 October 2018; the officer who held the position of business representative and 
was in charge of the safekeeping of Ship B’s stamp and seafarer service stamp, had filled 
in and stamped Seafarer C’s identity document without permission to help Seafarer C 
polish up his resume. When questioned by the court about the details of his service on 
the ship, Seafarer C voluntarily admitted that he had made a false statement and 
withdrew his claims in court. Seafarer C was thus admonished by the court and wrote a 
letter of apology.  
 
A seafarer’s identity document is a seafarer’s professional identification, which is an 
important record of services performed by the seafarer to preliminarily proof that the 
seafarer has worked on a ship. Therefore, the entries in the document are significant for 
both the seafarer and the company. In this case, Seafarer C took advantage of the 
business representative’s role in safekeeping the stamps and conspired with the 
representative to fabricate his service on the ship in an attempt to gain benefits. In doing 
this, Seafarer C not only violated regulations on crew management but also involved the 
company in litigation. Eventually, Seafarer C was admonished by the court.  
 


 
 
It is important for ship companies to safe keep ship stamps, seafarer service stamps and 
other important items and documents. All important items and documents to be carried 
on board should be kept by persons selected with prudence in order to avoid 
unnecessary legal risks. Seafarers should be honest and trustworthy at work. In particular, 
captains who have the right to act at their discretion on behalf of the ship should observe 
strict self-discipline and abstain from momentary greed that will impair their career in the 
long run.  
 
(III) Ascertainment of  seafarers’ wage periods 
 
Starting from 21 November 2018, Seafarer C performed services on Ship B owned by 
Company A. No written employment agreement was concluded between the parties. On 
14 June 2019, Company A delegated its business representative on board to give Seafarer 
C notice of termination of employment due to operational difficulty. However, Seafarer 
C continued his service on Ship B after receiving the notice given that Company A was 
in arrears with wages. He temporarily left the ship from 26 June to 1 July, from the 
afternoon of 28 August to the morning of 29 August, and from the afternoon of 1 
September to the noon of 2 September. During these periods, Ship B remained in its 
anchorage. On 4 September, Seafarer C resigned, disembarked the ship, and completed 
the formalities for the separation with the maritime safety administration. As Company A 
failed to pay his wages on time, Seafarer C claimed to the court against Company A for 
unpaid wages earned up to 4 September, which amounted to 92,427 yuan, plus interest. 
Company A argued that it was not required to pay wages after 14 June as it had 
terminated its employment relationship with Seafarer C on that date when it gave the 
notice of termination, and Seafarer C had subsequently left work on multiple occasions. 
The court passed an effective judgment which held that after an employment relationship 
had been established between Seafarer C and Company A, it could not be terminated by 
Company A unilaterally by giving notice of termination; thus Seafarer C should be paid 
his wages until the date of termination, namely 4 September. Although Seafarer C had 
temporarily left the ship three times during the existence of the employment relationship, 
there was no evidence that such leave taken by Seafarer C while the ship was at berth had 
any substantial effect on the management or operation of the ship. Company A had not 
reached any agreement with or explained to Seafarer C about the wage deduction 
consequence of leaving the ship while she was at berth. For these reasons, Company A 
should pay Seafarer C wages for the periods in which he was temporarily off the ship.. 
 
The employment relationship between a ship company and a seafarer is under strict 
protection once established. Without an agreement, the ship company may only 


 
 
terminate the employment agreement unilaterally under circumstances in which an 
employer is allowed to terminate an employment contract as provided for in Article 39, 
Article 40 and Article 41 of the Labour Contract Law of the People’s Republic of China. 
Accordingly, a ship company may not stop paying a seafarer’s wages simply based on a 
unilateral notice of termination. If a seafarer temporarily leaves the ship for personal 
reasons during the existence of the employment agreement, the payment or non-payment 
of wages during such leave should be determined taking into account relevant 
agreements between the parties, relevant policies published by the ship company, and the 
effect of such leave on the management and operation of the ship.  
 
Seafarers’ wages are paid by ship companies in consideration of the services performed 
by seafarers. We suggest that ship companies should pay seafarers’ wages as agreed and 
in compliance with law, and not to make deductions for various reasons. Both ship 
companies and seafarers should be serious about their employment relationships. The 
parties should enter into a written employment agreement setting out rights and 
obligations. A ship company intending to prematurely terminate an employment 
agreement and stop paying wages for operational reasons should strictly comply with 
relevant agreement and applicable provisions. Where there is no agreement or provisions, 
the ship company should in good faith try to reach an agreement with the seafarer. The 
cooperation, mutual respect and common efforts between seafarers and ship companies 
are essential to the growth of the shipping market.  


 
 
VIII. Constituting Limitation of Liability Funds for Maritime Claims According 
to Law 
— Issues and suggestions concerning application for constituting limitation of  
liability funds 
 
(I) Whether voyage charterers may seek limitation of  liability for maritime claims 
 
Under a contract of carriage of goods by sea which gave rise to a dispute, Company A 
entrusted Company B with the carriage of a shipment from Tangshan, Hebei to 
Guangzhou, Guangdong. Company B as the charterer entered into a voyage charter with 
Company C, the lessor, for the carriage of the shipment by Ship No. 1. During the 
carriage, Ship No. 1 collided with Ship No. 2 and sank with the shipment on board. 
Company A’s insurer settled its insurance claims and brought an action with us, 
requesting Company B for compensation. Company B argued that it was entitled to 
limitation of liability for the damage to the shipment in dispute. The court rendered an 
effective judgement which found Party B’s defence of limitation of liability legally 
groundless and invalid because Company B was not among the persons entitled to 
limitation of liability for maritime claims.  
 
The Maritime Law entitles ship owners, operators and charterers to limitation of liability 
for maritime claims. Such special protection is granted mainly based on the maritime 
risks involved in ship operations. A charterer under a voyage charter does not own the 
ship or control her operations or bear the risks involved in her operations. Such charterer 
is engaged in the carriage of goods rather than the operations of the ship. A voyage 
charterer in effect has the legal status of a shipper and holds the position of the cargo 
interests; they do not fall into the definition of “ship owners” in a broad sense and are 
not engaged in the specific operations of ships. Entitling voyage charterers to limitation 
of liability for maritime claims does not conform to the purpose or trend of the 
provisions on limiting liability for maritime claims. The charterers described in Article 
204 of the Maritime Law include charterers under bareboat charters or time charters, but 
not charterers under voyage charters. Voyage charterers are not among the persons 
entitled to limitation of liability for maritime claims.  
 
We advise litigants and their agents ad litem to comply with applicable Chinese laws on 
the entitlement to limitation of liability for maritime claims. Any defence of voyage 
charterers of entitlement to limit their liability for maritime claims will be dismissed by 
courts.  
 


 
 
(II) Whether port operators may seek limitation of  liability for maritime claims 
 
In relation to a dispute over liability for damage to marine property, a loaded container in 
Yantian Port, Shenzhen was found damaged and the cargo inside suffered damage. 
Company A as the cargo insurer settled the insurance claims with the cargo owner and 
was duly subrogated to the claims. Company A made a cargo claim against the carrier on 
the grounds of improper safekeeping and care by the carrier, and requested to hold the 
port operator jointly and severally liable for the cargo damage on the grounds of its 
improper handling that led to the damage to the container which in turned caused the 
cargo damage. The port operator defended itself by arguing that it would be entitled to 
limitation of liability for maritime claims even if it was liable for compensation. The 
court rendered an effective judgment which found the port operator not entitled to 
limitation of liability for maritime claims and dismissed its argument for such 
entitlement.  
 
Where a port operator causes cargo damage in the course of port operations and the 
shipper or consignee concerned brings an action in tort against the port operator, the 
port operator may not claim entitlement to limitation of liability for maritime claims 
under Article 58 of the Maritime Law, which provides for the limitation of liability 
enjoyed by carriers, whereas a port operator is neither a carrier nor an actual carrier. 
Moreover, the carriers’ rights granted by the Maritime Law to exemption or limitation of 
liability are simply based on the particularity of maritime risks, which are not normally 
borne by port operators. For these reasons, port operators may not defend themselves by 
claiming carriers’ entitlement to limitation of liability under Article 58 of the Maritime 
Law. Moreover, port operators are not ship charterers, operators or salvors as described 
in Article 204 of the Maritime Law, who are persons entitled to limit their liability for 
maritime claims. Port operators are therefore not entitled to limitation of liability for 
maritime claims.  
 
If a port operator argues against liability for compensation in a dispute over damage to 
marine property, it is advisable for such port operator to prove that it is not an infringer 
and that the cargo damage is not due to its fault or caused by any of its actions. Any 
defence of port operators of entitlement to limit their liability for maritime claims will 
not be accepted by courts.  
 
(III) When to invoke the right to limitation of  liability for maritime claims 
 
In a dispute over liability for damage caused by a ship collision, the fishing boat owned 


 
 
by A collided with the fishing boat owned by B when they were engaged in shrimp 
trawling in the waters of Wanshan Port. The fishing boat owned by A sank as a result of 
the collision. A thus brought an action with us and claimed against B for compensation. 
The court of first instance made a judgment ordering B to compensate A for the 
economic loss caused by the accident. B lodged an appeal and claimed it had the right to 
limit its liability for maritime claims as provided in Article 207 of the Maritime Law. The 
court of second instance gave a judgment which, referring to Article 15 of Several 
Provisions of  the Supreme People's Court on the Trial of  Cases of  Disputes over the Limitation of  
Liability for Maritime Claims, did not support B’s defence of limitation of liability for 
maritime claims during the second instance. The appeal was thus dismissed and the 
original judgment affirmed. B applied for a retrial, arguing that the court of first instance 
had not explained to it the limitation of liability for maritime claims, which was a 
procedural error, and that the second-instance judgment made a mistake by rejecting its 
argument on the grounds that it had failed to invoke the right to limitation of liability for 
maritime claims within the specified time limit. The retrial court held that the court of 
second instance made no mistake in rejecting B’s defence of limitation of liability for 
maritime claims. Such defence of a litigant in maritime proceedings should be raised by 
the litigant himself. B was legally groundless in arguing that the court of first instance 
had made a procedural error by not explaining its right to limitation of liability for 
maritime claims, and its application for retrial was thus dismissed.  
 
Article 15 of Several Provisions of  the Supreme People's Court on the Trial of  Cases of  Disputes 
over the Limitation of  Liability for Maritime Claims provides that “where a liable person fails 
to raise the defence of limitation of liability for maritime claims before the first instance 
judgment is rendered, but raises such defence in the second instance or during retrial, the 
people’s court shall not uphold such defence.” Claims of a litigant should be made in the 
first instance. According to the principles of civil procedure, a court cannot arbitrarily 
make any decision as regards any independent claim added by the litigant in the second 
instance.  
 
The right to limitation of liability for maritime claims is a defence that can be raised by a 
litigant, and a privilege vested in persons liable for marine accidents under the Maritime 
Law. A litigant’s defence of limitation of liability is a defence of substantive rights and 
shall be raised by the litigant himself at his discretion. When a liable person is not raising 
the defence of limitation of liability, the competent court should not on its own initiative 
explain such right or render any judgment with reference to legal provisions on limitation 
of liability for maritime claims. We advise litigants to follow Article 15 of the above 
Provisions and raise a defence of limitation of liability for maritime claims before the 


 
 
first-instance judgment is passed. Courts should not on their own initiative provide 
explanation or give judgments with reference to legal provisions on limitation of liability 
for maritime claims. Such defence should be raised by the litigants themselves.  


 
 
 
IX. Advancing Enforcement Processes According to Law 
— Issues and suggestions concerning arrest and auction of  ships during 
enforcement 
 
(I) Ship’s sailing away from the place of  arrest without permission  
 
In the enforcement with relation to a dispute under a financial loan contract, the court 
had acted on the informaiton received from Shareholder A of Company C, the debtor, 
and arrested Ship B, which was owned by the debtor and berthed at a shipyard in Nansha, 
Guangzhou. The court had also ordered the debtor to take responsibility for safekeeping 
the ship and not to allow her to depart from the place of arrest without the court’s 
permission. Subsequently the ship was sold by the court through a judicial auction on 
Taobao.com. During the period from the arrest to transfer after auction, the court did 
not received an application for the ship to be moved.  
 
In the investigation related to a separate case, the court found that the ship might have 
left her place of arrest without permission during the time she was under arrest. To 
verify the suspicion, the court applied to the maritime safety administration for access to 
the ship’s historical movements recorded while she was under arrest, which showed that 
the ship had departed from her place of arrest in the evening of the same day she was 
arrested and had made a number of round trips between the waters of Xiaochan Island, 
Shenzhen and Xiaowanshan Island, Zhuhai. The court then summoned Shareholder A 
and the legal representative of the debtor to appear in court for investigation. 
Shareholder A spontaneously admitted their fault, actively cooperated with the court and 
informed other persons concerned of appearing in court for the investigation. 
Eventually the court found that the ship under arrest had departed from her place of 
arrest without permission for engagement in transportation under Shareholder A’s 
instruction. In compliance with the Civil Procedure Law of  the People's Republic of  China, the 
court decided to impose a penalty of 80,000 yuan on Shareholder A. Shareholder A paid 
the fine as soon as he received the decision.  
 
In accordance with Article 7.1 of the Provisions of  the Supreme People's Court on Several Issues 
concerning the Application of  Law in the Arrest and Auction of  Ships, which provided that 
“during the period when a ship is under arrest, the ship shall be under the management 
of the shipowner or bareboat charterer”, the ship owner or manager shall duly fulfil their 
obligations of managing the arrested ship and, without the court’s permission, shall not 
allow the ship to depart from her place of arrest or engage the ship in any operations. 


 
 
 
If any special circumstances arise during the period of arrest of a ship, such as typhoon, 
which renders precautions or change of berth necessary, the interested parties of the 
ship are advised to promptly apply to the local maritime administration and report to the 
court for permission. If the ship departs or escapes without permission, a penalty 
and/or detention will be imposed accordingly, and criminal liabilities may arise in relation 
to serious offences.  
 
(II) Assumption of  liability when a successful buyer pulls out of  an auction 
 
In the enforcement with relation to a dispute under a ship sale and purchase contract, the 
court intended to auction off the ship owned by the debtor. An objective and 
comprehensive disclosure of the ship’s condition was given in the published auction 
instructions. The appraised value of the ship was 326,900 yuan, the opening bid was 
230,000 yuan, and the deposit was 20,000 yuan. At the first online judicial auction, Bidder 
A won the bid by offering 502,000 yuan. Under the influence of the COVID-19 
pandemic, Bidder A was allegedly unable to pay the balance on time and take delivery of 
the ship on site. The collegial panel had a discussion and granted Bidder A’s request to 
postpone the payment of the balance. However, after the granted extension Bidder A 
expressed its unwillingness to pay the balance. In accordance with Article 24 of the 
Provisions of  the Supreme People's Court on Several Issues Concerning Online Judicial Auctions 
Hosted by People's Courts (Interpretation [2016] No. 18, hereafter referred to as Online 
Auctions Provisions), “where a successful buyer pulls out after an auction is closed, the 
deposit paid by such buyer shall be forfeit and applied, in turn, to cover the costs of the 
auction, make up for any deficiency if the re-opened auction is concluded at a price 
lower than the original purchase price, and offset the debts of the debtor(s) in the case 
and the debts of the debtor(s) in relation to the auction items. The original successful 
buyer may not bid in the auction re-opened after such pullout.” According to these 
provisions and the published auction instructions, the court put the ship up for another 
auction. At the second auction, Bidder B won the bid at 538,000 yuan, with an excess of 
36,000 yuan over the first hammer price. However, Bidder B decided to pull out of the 
sale alleging that it had offered too high a bid. Once again, the court had to re-initiate the 
auction process. Eventually at the third auction, Bidder C won the bid at 492,000 yuan 
and paid the balance.  
 
Article 25.2 of the Provisions of  the Supreme People's Court about Auction and Sale of  Property by 
the People's Courts in Civil Enforcement (Interpretation [2004] No. 16, hereafter referred to as 
Provisions on Auction and Sale) provides that “the original successful buyer shall bear 


 
 
any deficiency if the re-opened auction is concluded at a price lower than the original 
purchase price as well as the costs and commission incurred in the original auction. A 
people’s court may deduct such amounts from the deposit paid by the buyer and shall 
return the balance thereof, if any, to the buyer; where the deposit is insufficient for such 
purpose, the buyer may be ordered to make up the sum required; such order may be 
enforced if rejected by the buyer.” Accordingly, the deposit paid by Bidder B was 
withheld. As the online auction did not induce other costs, Bidder B who pulled out of 
the second auction sale was ordered to pay 26,000 yuan to make up for the deficiency. In 
compliance with Article 24.1 of the Online Auctions Provisions, it was decided that the 
deposit of 20,000 yuan paid by Bidder A would be forfeit. The sum of 66,000 yuan 
gained from the two failed auctions was thus kept as part of the auction proceeds of the 
ship.  
 
Online judicial auction is no trifling matter. It reflects reverence for the law. When 
participating in a judicial auction, it is advisable to carefully read through the auction 
announcement and instructions, and not to casually pull out of the auction once it is 
concluded. Such prudence will contribute to the maintenance of a good auction order 
and the credibility of judicial auction.  
 
(III) Application of  the principle of  restricting futile auctions in sales of  ship 
 
In a case regarding the dispute between A and B under a sale and purchase contract, A 
owed B a principal of 650,000 yuan and interest, and B applied to a court in Place D for 
enforcement. An investigation found no enforceable assets in A’s name other than ships. 
Thus B applied for auctioning off Ship No. 1 and Ship No. 2 in A’s name. The local 
court subsequently entrusted us with the auction of the ships. We found out that Bank C 
had already put a mortgage lien on the ships for a sum of 1.8 million yuan which was not 
at all paid. However, B as an ordinary creditor still insisted on auctioning off the ships, 
whereas Bank C as a known mortgagee had not applied for the arrest of the ships.  
 
The ships were arrested, and a subsequent appraisal determined that Ship No. 1 had a 
value of 1,138,500 yuan and Ship No. 2 had a value of 993,600 yuan. Article 10 of the 
Online Auctions Provisions provides that “a reserve price shall be determined at an 
online judicial auction, and the reserve price shall be the opening bid. The opening bid 
shall be determined by a people's court with reference to the appraised value; where no 
appraisal is conducted, it shall be determined with reference to the market price, and the 
opinions of the parties concerned shall be consulted. The opening bid shall not be lower 
than 70% of the appraised value or the market price.” Accordingly, the reserve prices of 


 
 
the ships would only need to be over 70% of their appraised values. However, as stated 
in Article 9 of the Provisions on Auction and Sale, “after the reserve price has been set, 
if a calculation based on the reserve price of the current auction renders any surplus 
improbable after paying off priority claims and the enforcement fees out of the auction 
proceeds, the enforcement applicant shall be notified the relevant information prior to 
the auction. If, within 5 days after it has received the notice, the enforcement applicant 
requested to proceed, the people's court shall grant such request but shall determine a 
new reserve price, which shall exceed the sum of the priority claims and the enforcement 
fees. If the auction so conducted fails, the costs of the auction shall be borne by the 
enforcement applicant.” As there were known priority claims on the ships, it was 
necessary to prevent a futile auction when setting the reserve prices, which means that 
the reserve prices should cover the priority claims and the enforcement fees. Faced with 
the thin demolition market and the ongoing expenses it incurred after the arrest if the 
ships were not disposed of promptly, Applicant B handed in 100,000 yuan as security 
that it would bear all the costs of a futile auction. The court thus initiated the online 
auction procedure. The ships were put up for public auction on Taobao.com and were 
eventually sold for a sum of 2,172,000 yuan.  
 
During the announcement of the pending auction, Bank C and a non-party, D, came 
forward to register their creditor’s rights and bring actions to ascertain related rights. Out 
of the auction proceeds of the ships, about 100,000 yuan was eventually paid to B who 
was an ordinary creditor. 
 
Auction as a means of enforcement involves high costs. To decide whether to conduct 
an auction, we need to take into account its benefit to enforcement-related parties as well 
as its burdens on and benefit to the society. Enforcement that would not produce 
tangible benefits to any party concerned should be avoided to the greatest extent. 
However, a request for auction should not be dismissed casually in anticipation of a 
futile auction. The value of an asset cannot be determined until such asset comes onto 
the market. A futile auction in a real sense should feature an auction object with negative 
value, such auction not benefiting anyone in any way. For an ordinary creditor requesting 
for the auction of a ship owned by the debtor, it is advisable to find out in as much and 
accurate detail as possible whether any priority claim on the ship exists; where any 
existing secured creditor does not initiate an auction procedure, it is also advisable for the 
ordinary creditor to assess its capacity to bear all enforcement costs incurred in relation 
to the auction of the ship if such auction turns out futile.  
 
      (The above information provided by Guangzhou Maritime Court）