• President of Guangzhou Maritime Court Chen Chao: Studying and Implementing Xi Jinping Thought on the Rule of Law and Improving the Quality of Foreign-Related Maritime Trial

    2022-08-31

    General Secretary Xi Jinping's concepts of coordinating domestic and foreign-related rule of law, promoting domestic and global governance, and building a community with a shared future for mankind are of great significance to advancing foreign-related maritime trials. Being committed to significant national strategies, including marine power enhancement, Belt and Road Initiative, and Guangdong-Hong Kong-Macao Greater Bay Area (GBA), the Guangzhou Maritime Court (GZMC) supports the efforts to build Shenzhen into the Pilot Demonstration Area of Socialism with Chinese Characteristics and Hengqin and Qianhai Cooperation Zones. GZMC has been implementing Xi Jinping Thought on the Rule of Law in foreign-related maritime trials in an effort to enhance its judicial influence and provide maritime judicial protection for a higher level of opening-up. I. Safeguard Judicial Sovereignty As General Secretary Xi Jinping pointed out, "China must be good at exerting the rule of law while opening up and engaging in international affairs as a responsible big power. In the face of international conflicts, we must use laws as a weapon, claim the legal high ground, and dare to oppose saboteurs and disruptors." Maritime jurisdiction is a matter of national judicial sovereignty, which tolerates no ambiguity. Moreover, foreign-related maritime trial is a matter of national judicial authority and dignity, which must be defended with resolution and approached with no concessions. Always keeping in mind the big picture as well as national interests and judicial sovereignty, GZMC faithfully performs its constitutional duties and actively and properly exercises jurisdiction over maritime judicial affairs. For example, it has defined the personal injury compensation case regarding South China Sea Coral Island Area as a domestic case, putting an end to all the hype and bringing it to trial under domestic laws. This served to demonstrate national sovereignty and indicated that China could effectively exercise jurisdiction over all cases in the area. In the trial of the "Cassos" cargo damage dispute, GZMC defended China's jurisdiction and the legitimate interests of Chinese enterprises with an anti-anti-suit injunction. II. Promote Reforms of International Maritime Judicial Rules General Secretary Xi stressed that "during the critical period of global governance system transformation, we have to actively participate in international rule-making and be a participant, promoter and leader of global governance changes." Taking advantage of its location in the GBA, GZMC devotes extra efforts to the trial of selected typical cases that may involve the interpretation, modification and improvement of international maritime judicial rules, to express China's stance, make China's voice heard and create new international rules for maritime trials. For example, in the trial of the "Archangelos Gabriel" salvage case, GZMC interpreted the purposes and relevant provisions of International Convention on Salvage 1989 and determined applicable laws of commissioned salvage and the criteria for salvage remuneration. This practice was an innovation, improving relevant international maritime rules. In the trial of the YangMing Hope case of delivery of cargo without production of original bills of lading, GZMC established carriers' obligation of reasonably and prudently reviewing order B/L at the delivery of goods, and regulated the international practice of delivering goods upon the receipt of B/L advocated by carriers. This has offered a reference for similar international maritime cases and guaranteed control over exports of shippers, especially foreign trade firms in developing countries. III. Equally Protect Chinese and Foreign Parties As General Secretary Xi pointed out, "the essence of law lies in its implementation, and it is the responsibility of all countries to uphold the international rule of law, exercise their rights in accordance with law and fulfill their obligations in good faith. The essence of law also lies in fairness and justice, and national and international judicial institutions should ensure the equal and uniform application of international laws, with no double standards, no deliberate choice of favorable provisions, and no biases." Judicial authorities should adhere to their obligations under the international treaties they signed, fully respect the customs and practices of international transactions, protect the legitimate rights and interests of Chinese and foreign parties in accordance with law, and create a market-oriented, law-based, and internationalized business environment. In judicial trials, GZMC sticks to the idea of equal protection, complies with international maritime rules, selects expert jurors from Hong Kong SAR and Macao SAR on a pilot basis and lets them participate in the trial of major complex cases involving Hong Kong SAR, Macao SAR, and Taiwan Province, as well as some foreign-related cases. For instance, in the trial of the "Voyager" vessel mortgage dispute, GZMC was widely praised by the international shipping community for accurately applying the law of the flag state, i.e. the Bahamas Merchant Shipping Act, setting out standards of evidence and ensuring a fair judgment. In the trial of the "Zhenhe" vessel collision dispute, GZMC won an international reputation for finding that the Chinese vessel, which had started the main engine but was drifting awaiting berth, was not a "vessel not under command" or a "vessel restricted in her ability to maneuver" in the International Regulations for Preventing Collisions at Sea 1972, and that both parties were at fault and shall assume their respective responsibilities. IV. Provide China's Judicial Protection for a Marine Community with a Shared Future As required by General Secretary Xi, "we should take good care of sea as we take good care of our own lives", "attach great importance to building marine ecological civilization", and "leave a blue sea and blue sky for future generations". China has rich marine resources, so does Guangdong Province, where the eco-environmental security of Pearl River Estuary and South China Sea has profound implications for national marine development strategy, people's health and lives, and the sustainability of marine economy, which receives widespread international attention. As a court specializing in trying cases where marine environmental damage is involved, GZMC hears every such case in a strict and fair manner, providing strong judicial support for marine environmental protection. In the trial of the "Minghui 8" collision case, GZMC ordered the shipowner to compensate for the cost of compulsory cargo oil removal in response to the shipowner's failure to remove oil in time to prevent pollution as instructed by the Maritime Safety Administration. This serves as an example for other shipping enterprises to protect the marine eco-environment. As for the "Athena" marine eco-environment damage case, the sister ship of "Athena" was seized to save money and time for vessel salvage and prevent severe pollution at sea. In the trial of the "Xiachang" ship fuel leak cases, GZMC guided hundreds of fishers in suing for damages, helped the victims of marine environment pollution to defend their rights by preserving evidence and sorting out the key points through court sessions, and pushed for a package of solutions that safeguarded people's core interests. In addition, GZMC has been hearing pro bono cases on marine ecosystem and environment in which the People's Procuratorate serves as the supporting prosecutor, and exploring the establishment of a punitive compensation system for such cases. This provides useful reference for enriching and improving the judicial protection mechanism for marine environment. V. Share China's Maritime Judicial Stories General Secretary Xi emphasized that "international communications need to be improved by innovating the publicity philosophy and mechanism and gathering more resources." In consistence with his instructions, GZMC has been strengthening international maritime communications, and using innovative ways to globally communicate the rule of law, such as creating websites and holding forums on maritime rule of law, to make China's voice and stories in this field heard by the international community in a practical, accessible and convincing way. In 1998, GZMC took the lead in setting up its web portal, becoming the first court in China with a professional website for trials; in 2012, it launched its English website and began to offer live streams of hearings of typical and influential foreign-related maritime cases in both Chinese and English; in 2021, it took charge of building the Chinese and English websites of "China Maritime Trial" under the direction of the Supreme People's Court and High People's Court of Guangdong Province. Since the launch of "The Voice of Judge" program in 2015, GZMC has recorded its young judges explaining classic maritime cases in English every quarter and won the excellent event award entitled "Who Shall Enforce the Law, Who Shall Popularize Knowledge of the Law" in 2019 for national organs of Guangdong Province. Its Guangzhou Maritime Court Report on Trials 2019 in Chinese, English and Portuguese and public video courses in English enabled it to gain the award of "Top Ten Typical Cases of International Communication of China's Rule of Law" in 2020. In 2018, GZMC and the Law School of Dalian Maritime University co-organized the 11th East Asia Maritime Law Forum between China, Japan and South Korea to enhance the communication of China's international maritime rule of law; from 2018 to 2021, the Guangzhou Maritime Law Forum has been held for four years and become the highest-level academic event in South China with a national reputation and international influence. VI. Implement the Idea of Building a Community with a Shared Future for Mankind General Secretary Xi proposed that "we should uphold the belief of building a community with a shared future for mankind", "resolutely safeguard the lives and health of the Chinese people and peoples of other countries, and devote ourselves to protecting global public health security." Under this belief, China has provided assistance as best it can to many nations around the world while effectively controlling COVID-19, a pandemic unseen in a century. GZMC has also implemented this belief in hearing maritime cases with respect to the protection of the legitimate rights and interests of foreign crew members during the pandemic. In the Greek ship "Angel Power" auction case, for example, 15 Greek and Filipino crew members on board were abandoned and did not get paid by the shipowner, and thus they were trapped at sea for a long time due to the pandemic – after ship management was given up, supplies were depleted and the generator failed. In response to this humanitarian crisis, GZMC offered third-party safety trusteeship services while guiding the foreign crew members to file lawsuits. It also provided cross-border litigation services with online video witnessing, and helped urge the flag state government to fulfill its fundamental responsibility of repatriating sailors under the Maritime Labor Convention 2006. After more than four months' efforts of GZMC, the 15 trapped foreign crew members were eventually sent home. At the 108th session of the International Maritime Organization Legal Committee in 2021, the Greek delegation expressed their gratitude for GZMC's impartial handling of cases amid the pandemic and Chinese government's protection over the legitimate rights and interests of abandoned crew members through a linkage mechanism. VII. Build a Professional Foreign-related Maritime Trial Team General Secretary Xi pointed out that "law-based governance in all respects is a systemic project, of which legal talent cultivation is an essential part", and that "legal talent cultivation and the continuous emergence of legal talents are the prerequisites for improving law-based governance in all respects." The high-quality development of foreign-related maritime trials is built on competent judicial personnel specialized in this area. Foreign-related maritime cases are international, highly professional, complex in legal relations, difficult to handle, and have wide implications for society, which requires judges to have a strong sense of political responsibility, deep expertise in policies and foreign-related laws, and rich trial experience. GZMC highly values the cultivation of professionals in foreign-related maritime trials. By leveraging the two academic exchange platforms, i.e., the International Maritime Justice (Guangzhou) Base of No.4 Civil Division of the Supreme People's Court and Guangzhou International Shipping Judicial Research Center, GZMC has been engaging in active interactions and exchanges in the frontiers of international maritime justice and training legal teams in various forms. For example, GZMC has invited the Dean of the Southampton Law School to share knowledge about international maritime justice in an academic exchange, and sent young and middle-aged judges abroad to attend academic seminars, develop their international perspective, and enhance their foreign-related judicial capability. It has created a legal English study group dedicated to legal case explanation in English, aiming to train legal staff in legal English, trial skills, maritime practice, international trade rules, etc. It also encourages legal staff to publish papers introducing China's maritime judicial work in English legal journals to improve their English literacy of maritime justice. Through a variety of measures, GZMC is building a cross-disciplinary, application-oriented and internationalized foreign-related maritime trial team, with a firm political stance, international vision, and expertise in international maritime law and shipping practices. (Authored by the 4th National Trial Expert, President and Secretary of the Party Secretary of GZMC)
  • Study on Insured's Obligations for the Time Bar for Insurer's Right of Subrogation

    2015-08-17


    ----by way of "Consequentialism"

    LI Shanchuan  LI Tong

    The right of subrogation in marine insurance means after the insurer indemnifies the insured for its loss caused by insured event and within the indemnification scope the insured's right to pursue against a third party for its loss transfers to the insurer. In practice, cases exist that when the insurer obtains the right of subrogation, the time bar for pursuing against the third party has expired. In such case, the insurer usually invokes Article 253 of the Maritime Code of the People's Republic of China (Maritime Code), to deduct insurance indemnity on the ground that insured fails to protect the time bar for its right of subrogation. However, there is a major debate in respect of the insured's obligations for the time bar for insurer's right of subrogation in academic and in practice. Also, there is an inadvertence and scarcity of provisions both in the existing laws and insurance contract.

    To cope with the above issue, the authors want to introduce the argumentation of consequentialism to consider this issue in reverse: first, find out the value conflict between the claims involving the disputed issue, weigh the same and make the election of value, select the preferential interest, so as to make a determination in maximizing the benefits of parties concerned. Second, seeking for proper laws interpretations and reasoning to examine the determination to ensure the same in accord with the existing laws and regulations. Third, to balance the values in conflict, to give relief to the party who suffers loss, so as to maximize the integral benefits and minimize the loss.

    Step one: weigh the interests. This article focuses on value conflict between insurer and insured, whose interests are of the same level and legal. From the perspective of fairness and good-faith, since it's difficult for the insured to substantively modify the insurance clause provided by the insurer unilaterally, thus the balance of interests shall be under the guidance of regaining equity, i.e. to balance the benefits distribution between both parties by limiting the interest of the insurer who is in the superior position. From the aspect of legislative purpose, the emphasis of insurance interests protection provided by the contemporary insurance law was transferred from the insurer to the insured, thus to place the insured's interests in priority is more in accord with the legislative purpose. From the aspect of social demand, by taking out insurance the insured aims at transferring its own risk to the insurer so as to restore to the situation as it does not suffer loss the soonest possible. Imposing too much obligations upon the insured is not in accord with the common knowledge by the masses on the insurance system, which is also likely to encourage the insurer to exempt itself from responsibility by making use of its advantageous position. Upon balancing, we have the conclusion that in case of value conflict, the insured's interest shall be deemed as preferential interest, i.e. the insured shall bear passive non-damnification obligation and assistance obligation for the time bar for insurer's right of subrogation.

    Step two: justification of the conclusion. The authors intend to seek for legal ground for the value orientation illustrated above by means of interpreting and explaining Paragraph 2 of Article 252, Article 253 of the Maritime Code and Article 62 of the Insurance Law. First, semantic interpretation. The terms "endeavor to assist" provided in Paragraph 2 of Article 252 literally mean to provide assistance, which means the provider is passive in providing such assistance subject to the receiver's demand or request. In this paragraph, the terms "endeavor to assist" shall be interpreted as the insured shall merely effectively perform the assistance obligation as per insurer's specific and clear instruction and notification. If the insurer fails to give instruction, the insured shall not bear the liability to take the initiative to lodge an action, commence an arbitration or property preservation. Secondly, systematic interpretation. The first principle of the Insurance Law is the "indemnification principle", it is against the requirement of prompt payment under the indemnification principle for the insurer to claim, under the circumstance that it delays to perform its compensation liability, for deduction the insurance indemnification on the ground that the insured fails to pursue the third party. Thirdly, teleological interpretation. According to Article 1 of the Insurance Law, one of the purpose of enacting this law is to "protect the legitimate rights and interests of the parties involved". Here the "fairness" shall mean substantive fairness, i.e. break the fetter of fairness in form in respect of the legal status of the parties to the insurance contract, and pursue the substantively equal relationship of both parties with regard to the rights and obligations, which in practice was reflected by providing more protection for the insured in the course of legislation and justice. Given the interpretation of law, the aforesaid conclusion could be perfectly proved to be established based on sound legislative ground.

    Step three: balance the interests. This article tries to provide some solutions to the disputed issues arising from the insurance practice and suggestions for legislation and judicial adjudication in respect of marine insurance based on the course of contracting and claims settlement of insurance companies. First, in the course of concluding an insurance contract, the insured's interests shall be placed in priority. It's suggested that clause in relation to the time bar under the insurance contract shall be amended as "in case the insurance event is caused due to a third party's fault, the insurer shall have the right to request the insured to take proper measures to protect the insurer's right of recourse, including property preservation measure, legal proceeding or arbitration against the liable third party. The insured has the obligation to exercise its rights of claim as per the insurer's instruction, and the proper and reasonable costs arising therefrom shall be borne by the insurer." This clause has the nature of the clause for exemption of insurer's liability under the Insurance Law, and shall not have legal effect if the insurer fails to point out the same or give clear explanation. Second, at the stage of insurance claim, emphasis shall be placed on proper consideration on the insurer's interests. 1. The insured shall be liable to immediately/promptly notify the insurer after the insurance event. Objective criteria shall be adopted to determine "immediately/promptly", i.e. whether or not the performance of the notification obligation will make it difficult to ascertain the nature, cause and damage extent of the insurance event. 2. Refer to Article 25 of the Insurance Law, it shall be regulated that the insured shall, 60 days prior to the expiry of time bar for claim against the third party at the latest, lodge its insurance claim against the insurer. Third, settlement of insurance claim, both parties' interests shall be balanced and adjusted. 1. Regulate the insurer's duty of care upon the time bar of its right of subrogation. In case the insurance event is caused by a third party's fault or involved a third party, the insured shall, before lodging the insurance claim, bear the duty of care on the time bar, which shall be transferred to the insurer after the insurance claim is brought by the insured, and the insurer shall thereafter bear the obligation to promptly give reasonable instruction to the insured to protect the time bar by lodging a lawsuit or refer to arbitration. If the claim is rejected by the insurer, such obligation will be transferred back to the insured, but the insurer shall, when rejecting the claim, give a reasonable time period for the insured to lodge a lawsuit against the third party. 2. Clarify the legal consequence which shall be borne by the insured, if it fails to fulfill its obligation. In this connection, Article 253 of the Maritime Code shall be interpreted and modified in the following aspects: 1) "negligence" shall be interpreted as "fault", limited to intention and gross negligence. 2) "Corresponding deduction" shall be construed as deduction as per the insurer's discretion after taking into consideration of the specific situation of the case and the insurer's fault, under this circumstance, it shall not be taken into consideration whether the insured's fault is an intention or gross negligence. 3) Distinguish the legal consequences caused by "insured's waiver" and "insured's fault which makes the insurer unable to exercise the right of subrogation". According to the time when the insured waive its right, the legal consequence of such act shall be determined as the insured being exempted from compensation liability or the act of waive is invalid; and the legal consequence of the loss of right of subrogation due to the insured's fault shall be regulated as the insurer may deduct or request the insured to return corresponding indemnity.


                                   (By Judges of Tianjin High People's Court)

  • Study on Several Practical Problems Concerning the Handling of Cases regarding Disputes over Marine Insurance

    2015-08-12

    Hu Yongqing[ Tribunal Director, the Fourth Civil Court of Higher People’s Court of Shanghai]/Dong Min[ Assistant to Chief Judge, the Fourth Civil Court of Higher People’s Court of Shanghai]

    [Keywords]  Marine Insurance Dispute; Marine Shipping Dispute; Subrogation; Interruption of Statute of Limitations

    I. Issues concerning the insured’s bringing actions on insurance dispute and shipping dispute simultaneously.

    The insured is entitled to two independent petitions to claim for compensation where the loss occurred to the insurance object is caused by the fault or negligence of the carrier. When the insured elects to bring actions on insurance dispute and shipping dispute simultaneously, most of the courts usually give priority in the hearing of the marine insurance case and suspend the hearing of the marine shipping case for later time. The phenomenon owns much to the fact that in a marine insurance dispute the contractual relations are clear and well defined and the trial of such case takes shorter period of time. However, in the trial of a marine insurance dispute, the insurer usually finds it hard to give clear accounts for the actual carriage process, conditions of marine accident, or identification of liabilities, which results in the failure in collection evidence to prove the exemption of liabilities that the insurer may probably enjoy. Usually, it is not until the insurer compensates the insured and recourses to the carrier for recovery of the insurance compensation that the insurer may place itself in a favorable position. That is, it is not until the hearing of the shipping dispute between the insurer and the carrier that the court can identify the cause or the liability of the insured accident differently from that of the same insured accident in an insurance dispute.

    We therefore suggest the two kinds of disputes be handled by one congenial court. In the preliminary stage of the trial, the court may give priority to the trial of marine insurance dispute and suspend the marine shipping case in the event that the insurer has satisfactory competence to collect evidence in respects including situations of the insured accident, findings of causes of cargo damage and identification of liabilities. Otherwise, a simultaneous trail is suggested so as to facilitate investigations and deliver more unified outcomes. Of course, when hearing the cases simultaneously, the court may conclude the marine insurance case before moving towards the judgment of marine shipping case since it takes time for the insurer to effect payment according to the judgment on insurance compensation and apply to the court to put itself in the position of the plaintiff in the marine shipping case. In this way, it defuses a latent problem that the insured may get doubled compensations in the condition of a simultaneous trial.

    II. Issues on the insurer’s participation in actions between the insured and the carrier.

    1.When a full insurance compensation has been made to cover all the losses occurred to the insured, the insurer may apply to take the position of the plaintiff and participate in the marine shipping action between the insured and the carrier. In the event that several co-plaintiffs are co-insured, the insurer may apply to directly replace these co-plaintiffs.

    2.When the insurance compensation does not cover all the losses occurred to the insured, the insurer may apply to join the insured as co-plaintiff and claim compensation from the third party, namely, the carrier, within the scope of the insurance compensation it has actually paid.

    3.When not all the plaintiffs are co-insured, the insurer may apply to take the place of one or more plaintiffs according to the situations of case.
    (1) Where the several plaintiffs, though not the co-insured persons, are joint creditors of the carrier, the insurer may apply to replace the insured and become the plaintiff so as to act as co-plaintiff with other joint creditors.
    (2) Where the several plaintiffs are not the co-insured persons or the joint creditors of a third party, the insurer may apply to replace the insured and become the co-plaintiff with other plaintiffs so as to claim compensation from the carrier within the scope of the insurance compensation it has actually paid.

    4.In a marine shipping dispute, provided that the plaintiff is not a proper subject to raise claims, the court shall not approve the insurer’s application for replacing the plaintiff all at once, regardless of whether the plaintiff is a proper subject or not. The replacement should be in two steps: the plaintiff who is not a proper subject firstly withdraws the lawsuit; then the insurer joints other plaintiffs who are proper subjects in the proceedings. It can be clearly seen that the insurer’s joining the marine shipping action occurred between the insured and the carrier and the improper plaintiff’s withdrawal from the suit are two different litigation processes. They cannot be streamlined or merged into one. When an insurer applies to the court for replacing the insured and other improper plaintiffs in a marine shipping case, the court shall make explanations to the improper plaintiffs, thereby persuading these plaintiffs to withdraw the lawsuit. If the improper plaintiffs reject to withdraw the lawsuit, the court may render an interim judgment to overrule the claims made by the improper plaintiffs and place the insurer in the position of the plaintiff upon the application of the insurer before heading towards the hearing.

    III. Issues concerning the statute of limitations for the insurer’s bringing new action on marine shipping dispute.

    (1)Discussions over interruption of statute of limitations when insurer raises new lawsuit against the carrier.

    Provided that the insurer refuses to assume the subrogation right by participating in the action on marine shipping dispute arising between the insured and the carrier, but elects to bring a new action against the carrier in the name of its own, the insurer shall enjoy the right to call for interruption of statute of limitations according to Article 15 of the Provisions of the Supreme People's Court on Several Issues about the Trial of Cases Concerning Marine Insurance Disputes. But here comes the problem: when will the statute of limitations be resumed? Since there is no legislations to forbidden the insurer to exercise the subrogation right by raising new lawsuit against the carrier, we consider it reasonable to set the date when the insurer effects insurance payment to the insured as the starting point for resumption of the statute of limitations. This starting point, on one hand, ensure the maximum time for the insurer to exercise the right of subrogation by filing new lawsuit against the carrier, and press the insurer to file action against the carrier in a timely manner after it effects insurance payment on the other hand.

    (2) Discussions over whether Article 12 of the Interpretations on Statute of Limitation concerning interruption of statute of limitations is applicable to the lawsuit on indemnity insurer’s subrogation rights.

    Article 10 through Article 19 of Interpretations of the Supreme People’s Court on Several Issues concerning the Application of Statute of Limitation during the Trial of Civil Cases (hereinafter “Interpretations on Statute of Limitation”) set detailed provisions concerning the interruption of statute of limitations, expounding the three reasons for interruption of statute of limitations set forth in the General Principles Of the Civil Law Of the People's Republic Of China. Of these provisions, Article 12 provides: “Where a party files a bill of compliant to or orally brings a lawsuit in the people’s court, the interruption of statute of limitations shall start from the date of filing a bill of complaint or orally brings a lawsuit.” But is this provision applicable to a lawsuit concerning the indemnity insurer’s subrogation rights?

    We consider that it should be subject to the situations of the case. We must keep alert to a circumstance that the party may, by referring to the said Article 12, submit an ineligible statement of claim to the court and extend the marine statute of limitations in disguise.
     
    In some cases, when a party files an action to the court, the court may require the party to supplement the necessary materials missing from the required ones before the party can file a bill of complaints. But it may happen that the statute of limitations has expired before the party manages to supplement the materials and files an action. For this circumstance, we consider that Article 12 of the Interpretations on Statute of Limitations is applicable. This is because the party has always been active to stake out its claims by supplementing the materials required by the court. As long as the case is finally received by the court, the interruption of statute of limitations shall start from the date when the party files the action or orally brings a lawsuit for the first time.

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