Maritime Law and Policy in China

Sharon Li, Colin Ingram

• Publisher: Routledge-Cavendish
• Year: 2013
• ISBN:
  9781135337278
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

On 11 November 2001, the People's Republic of China officially became a member of the World Trade Organisation. During the preceding two decades China emerged as a major trading and maritime nation, has adopted more than twenty maritime related laws and has ratified most of the important international maritime conventions.

Maritime Law and Policy in China contains new translations of all the major maritime laws of the People's Republic of China together with detailed explanations of the rationale behind the legislation. A comprehensive examination of the Maritime Code 1992 is included as is a new translation of the Maritime Procedure Law of the People's Republic of China 1999, which lays down the jurisdiction of the maritime courts in China and provides for matters such as arrest of ships, orders for security and maritime injunctions. China's ratification of the international maritime conventions is also examined in detail.

This title will be an indispensable reference work for maritime lawyers, marine insurers, P I Clubs, shipping companies and all trading companies conducting business with China.

PART 1
MARITIME POLICY AND LEGAL SYSTEM IN CHINA

1 INTRODUCTION

China has emerged as one of the major maritime nations in the last two decades. In 1980, China had only 955 ships totalling 6 million gross tons (gt). By 1990, this had increased to 1,948 (13 million gt), and by 1998, to 3,175 (16 million gt).¹ The annual growth rate is about 13% in number of ships and 7.7% in tonnage, which is much higher than the world average of 1.1% and 1.3% respectively.² According to Lloyd’s List,³ the population of China was 1.28 billion in July 2001. Gross Domestic Product (GDP) based on purchasing power parity was estimated at US$ 4.5 trillion, and the GDP real growth rate was estimated at 8%. Chinese GDP was composed of 50% industrial, 35% services and 15% agriculture. Its industries included iron and steel, coal, machine building, armaments, textiles and apparel, petroleum, cement, chemical fertilisers, footwear, toys, food processing, motors, consumer electronics and telecommunications. China’s foreign trade is predicted to be worth about US$ 550–600 billion by 2005, up from US$ 320 billion in 1998.⁴ Studies reveal that, after meeting its own domestic needs, China could supply as many as 91,000 officers and 150,000 ratings, exceeding the Philippines as the top maritime labour supplier.⁵ Studies show also that China maintains one of the best quality fleets in the world.⁶

Maritime related cases accepted by the Maritime Courts reached 5,166, representing a 20% average annual growth from 1990 (Table 1). To cope with increasing pressure from shipping and trade, China has passed more than 20 maritime-related laws, the most significant being the Maritime Code 1992 and the Maritime Procedure Law (MPL) 1999. China has also ratified most of the maritime conventions, in particular those adopted by the International Maritime Organization (IMO) (Table 2). As a whole, it constitutes a complete maritime legal system in line with the general international practice.

One of the pillars of this legal system is the Maritime Code, adopted on 7 November 1992, at the 28th Meeting of the Standing Committee of the 7th National People’s Congress of the People’s Republic of China (PRC), and entered into force on 1 July 1993. It was a milestone for China in completing its maritime legal framework. The history of the drafting of the Maritime Code reflects China’s economic, political and legal development. The drafting originated in the early 1950s, just a few years after the founding of the new China, at a time when most of its fleet had moved to Taiwan and shipping facilities had been seriously damaged or destroyed. The new government took a series of policy decisions and measures in an attempt to keep the maritime transportation system in survival. Establishing a maritime law framework was one of these measures. The drafting of the Maritime Code began with the study and translation of the Russian Maritime Law. A drafting committee was established by the Ministry of Communications (MOC) consisting of law professors, lawyers and shipping practitioners from governmental agencies, shipping companies and maritime universities, and the first official draft was finished in 1963.

In 1966, China began the ‘Cultural Revolution’ and the drafting was therefore stopped for political reasons, and was not resumed until 1981. The Maritime Code was at last completed after more than 40 years’ work, a milestone in regulating its maritime industry and in forming its maritime policy. At the time, it was one of the longest codes in China in terms of the number of Articles. During the discussion in the National People’s Congress, it was widely accepted that the Code had been very well drafted in terms of policy-making and structure as well as wording. It was passed with an overwhelming majority, 98 votes in favour out of a total of 101 votes, which was rare in Chinese legislation. The success of the drafting may be attributed to the following factors:

1. China has a group of professional maritime law experts who are familiar with both international maritime law and the Chinese legal system;
2. government accords a top priority to the maritime industry and the drafting of the Code;
3. the pressure arising out the development of economy and trade; Maritime Law and Policy in China Part 1: Maritime Policy and Legal System in China
4. the assistance from international organisations and foreign maritime law experts;⁷
5. a long germination period. The fact that it was drafted over a 40 year period meant that there was enough time to collect information, to develop new policy, to get comments and to undertake revisions.

To implement the Maritime Code, China has also promulgated a series of Regulations in accordance with its Maritime Legislative Plan. These include the Ship Registration Regulations which were promulgated on 2 June 1994 and came into force on 1 January 1995. The MOC, in pursuance of Articles 210(2) and 211(2) of the Maritime Code, approved by the State Council of the PRC, promulgated two special Regulations on 15 November 1993, the Provisions Concerning Limitation of Liability for Small and Coastal Ships (the Coastal Provisions) and the Provisions Concerning Limitation of Liability for Passenger Ships Sailing between Chinese Ports (the Passenger Provisions). Both entered into force on 1 January 1994.

The Maritime Procedure Law (the MPL) of the PRC is another important piece of legislation. It represents a significant step in achieving a cohesive maritime legal system. Passed on 25 December 1999 by the 9th National People’s Congress (NPC) and entering into force on 1 July 2000, the MPL consolidates previous laws and practice, and adopted the substantial provisions of the International Convention on Arrest of Ships 1999 (the 1999 Convention).⁸ The MPL is expected to have a great impact on maritime practice in China.

The MPL consists of 12 chapters, on General Principles, Maritime Preservation, Jurisdiction, Maritime Injunctions, Preservation of Maritime Evidence, Maritime Security, Service, Trial Procedure, Constitution of Limitation Funds, Registration and Payment of Claims, Maritime Lien and Addendum (coming into force). However, this Part focuses on maritime jurisdiction and arrest of ships, which are the key elements of the new law.⁹ The MPL is a specific law on maritime procedure under the general principles set out in the Civil Procedure Law of the PRC (the Civil Procedure Law) 1991.¹⁰ The MPL is to prevail where there is a difference between the Civil Procedure Law and the MPL (Article 2).¹¹

The enactment of the Maritime Code, the MPL and other maritime-related laws and regulations was also a sign of establishing a comprehensive legal framework for the Chinese maritime industry. Previously, Chinese maritime polices relied largely on administrative decisions and documents – the so called Red Title Document – which could be changed according to political and social events. This resulted in criticism concerning the lack of stability and openness in Chinese shipping administration and policy-making.

The ‘open door’ policy and the fast development of foreign trade and the shipping industry required a long term maritime policy. In this sense, the publication of the Maritime Code and regulations is a very important step in maritime development and reform of the country. These legislative maritime policies, some of which have been practised for a long time and others which are new philosophies, will influence the Chinese shipping industry in the future for the long term.

China had been seeking GATT/WTO membership since 1986. After 15 years of negotiation with trading partners, China officially became a member of the World Trade Organisation (WTO) in November 2001. China’s accession to the WTO was a significant event to the world as well as to China. WTO membership will compel China to change its current commercial laws and practices to conform to WTO rules. Trade disputes would be resolved through the WTO adjudication procedures rather than through bilateral bargaining. This has already had a dynamic effect in drawing the Chinese maritime legal system toward openness and transparency.

2 THE ROLE OF THE MOC UNDER THE MARITIME CODE

During the period of planned economy in China, administrative decisions and State interventions were the main measures used to regulate industry and its activities. With the economy developing and reforming, administrative measures have been largely scaled down in many industries, including the maritime transport sector.

The MOC plays a vital role in Chinese shipping administration. It lost its function as a ‘Ministry of Transportation’ in 1975 when it became no longer responsible for railways and civil aviation transport. It covers only sea, waterway and highway transportation. Key features in achieving this include maritime strategy-making and maritime policy-making. The MOC also exercises other duties as law or regulations authorise. Under the Maritime Code, for example, the MOC has the following functions:

1. to give permission to foreign ships to engage in the maritime transport or towage services between the ports of the PRC (Article 4);
2. to prohibit and fine any illegal flying of the national flag of the PRC (Article 5);
3. to work as a general administrator of the national shipping industry, to develop specific regulations concerning its administration and to implement these after they have been submitted to and approved by the State Council (Article 6);
4. to issue Seaman’s Books and other relevant certificates (Article 33);
5. to work out the limits of liability of carriers with respect to the carriage of passengers by sea between the ports of the PRC (Articles 116, 211);
6. to work out the limits of liability for ships with a gross tonnage not exceeding 300 tons and those engaged in transport services between the ports of the PRC as well as those for other coastal works (Article 210);
7. to perform or control salvage operations (Article 192).

According to Article 8 of the Ship Registration Regulations of the PRC, the Bureau of Harbour Superintendency (BHS) of the PRC under the MOC is the competent authority in charge of ship registration. The Harbour Superintendency Administrations at various ports are the designated agencies conducting the registration of ships. The scope of their authority shall be defined by the BHS. From the above discussion, one can see that the MOC not only is a maritime rule and policy-maker and a maritime administrator, but also plays an important role in implementing the Maritime Code.

3 INTERNATIONAL STANDARDS

It is one of the guiding principles of China’s foreign policy to work within the confines of international law and to respect the commonly accepted international practice. As one of the main drafters of the Maritime Code, the adviser of the Standing Committee of the People’s Congress, Guo Riqi, pointed out: ‘The Maritime Code has been drafted strictly according to international standards, either from a general point of view or from specific points of view.’¹² For example, in Chapter 2, concerning maritime mortgages and liens, it adopts the provisions of the 1967 Convention on Maritime Liens and Mortgage. Concerning contracts of carriage of goods by sea in Chapter 4, it adopts the substantial provisions of the Hague-Visby Rules with due consideration to the Hamburg Rules. Concerning contracts of carriage of passengers by sea in Chapter 5, it adopts the substantial provisions of the 1974 Athens Convention. In Chapter 8, concerning collision at sea, it adopts the substantial provisions of the 1910 Collision Convention. In Chapter 9, concerning salvage, it adopts the substantial provisions of the 1989 International Convention on Salvage. In Chapter 10, concerning limitation of liability for maritime claims, it adopts the substantial provisions of the 1976 Convention on Limitation of Liability.

There are several reasons for China to adopt international maritime conventions and practices. First, since China adopted its ‘open door’ policy as a long term strategy to accelerate its ambitious modernisation programme, foreign trade with more and more countries and regions has grown dramatically. Over 90% of China’s international trade is transported by ships and passes through its ports. To meet the needs of its steadily developing foreign trade, China needs not only an expansion of its fleet, but also a globally recognised maritime legal system. As Article 1 of the Maritime Code provides:

This Code is enacted for the purpose of regulating the relations arising from maritime transport and those pertaining to ships, securing and protecting the legitimate rights and interests of the parties concerned, and promoting the development of maritime transport, economy and trade.

Second, an attractive environment for foreign investors has to be established, not only in terms of its foundation, but superstructure as well. To achieve this, laws and regulations concerning foreign investment, particularly joint-ventures, taxation and technology transfer are important. Shipping-related laws and regulations also constitute a very important component of China’s economic legislation.

Third, the implementation of international conventions has to be given priority for both economic and political reasons. As is widely recognised, one of the existing problems in the world maritime industry is that conventions adopted by international organisations have not been implemented adequately,...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• Table of Abbreviations
• Part 1 Maritime Policy and Legal System in China
• Part 2 The Maritime Code of the PRC 1993
• Part 3 The Maritime Procedure Law of the PRC 1999
• Part 4 The Arbitration Law of the PRC 1994
• Part 5 Arbitration Rules of the China Maritime Arbitration Commission 2001
• Part 6 Insurance Law of the PRC 1995
• Part 7 The Ship Registration Regulations of the PRC 1994