In maritime litigation, some claimants may apply to the court for arrest and auction of the ship concerned. The ship-owner, charterer, operator, salvor, or insurer who intend to limit their liability for a maritime accident in accordance with the maritime law, may file the application with the maritime court for constitution of a limitation fund for maritime claims. In PR China, after the announcement of order by the maritime court for the forced auction of a ship or for constitution of limitation fund for maritime claims, the creditors who request to be satisfied from the proceeds of the auction or the limitation fund, shall first apply to the maritime court for registration of claims in accordance with procedure for registration and satisfaction of claims contained in chapter X of Maritime Procedure Law of PRC (hereinafter referred to as MPL of PRC). This paper tries to introduce this procedure.
1.Jurisdiction.
    Although MPL of PRC does not stipulate clearly jurisdiction over registration of claims, it shall be seen from the wording of article 111 and 112 of MPL of PRC that registration of claims shall be under exclusive jurisdiction of the maritime court conducting the auction of a ship or accepting the application for constitution of limitation fund for maritime claims. The law specially designates only one competent court to centralize registration of claims, unify determining the ranking of claims’ satisfaction in favor of balancing and protecting fairly the interests of all the creditors concerned. If some creditors apply for registration of claims to the other court than the competent maritime court aforesaid in PRC, the other court may not entertain, or even if having entertained the application, it shall refer the cases of claim registration to the competent maritime court, otherwise, the maritime court conducting the auction of a ship or accepting the application for constitution of fund for maritime claims may refuse to distribute the proceeds of the ship auction or the limitation fund to the creditors who apply for claim registration to other court that have no jurisdiction over such cases. 
2.The claims which may be registered.
2.1In respect of the proceeds of the auction of a ship
    Under article 111 of MPL of PRC, the claims which may be registered are “claims pertaining to the ship to be auctioned ”. As to how to understand “claims pertaining to the ship to be auctioned”, there exist two opinions in PRC. One holds that the claims pertaining to the ship to be auctioned shall be limited to the claims secured by maritime lien, possessory lien over ship, ship mortgage, for maritime lien, possessory lien over ship, ship mortgage would be extinguished with enforced auction of the ship, while other common claims are not be affected by the enforced auction. It is unnecessary to have common claims satisfied from the proceeds of the auction under the procedure for registration and satisfaction of claims. The other holds that claims pertaining to the ship to be auctioned shall be understood in a broad sense to include the claims secured by maritime lien, possessory lien over ship, ship mortgage and other common maritime claims pertaining to the ship. 
    Opinions of the Supreme People’s Court regarding Law Application Matters of MPL of PRC (draft) intends to interpret “the claims pertaining to the ship to be auctioned” as “the maritime claims pertained to the ship to be auctioned” without any further restrictive provisions. As far as I know, the “maritime claims” shall include but not be limited to the 22 types of maritime claims enumerated in article 21 of MPL of PRC or in article 1.1 of the international convention arrest of ships, 1999. At present, in judicial practice, maritime court of PRC adopted that latter opinion aforesaid. Both the claims secured by maritime lien, possessory lien over a ship, ship mortgage and other common maritime claims pertaining to the ship to be auctioned may be registered to be satisfied from the proceeds of ship auction. 
    What is more, I suggests the maritime claims pertaining to the “sister ship” shall also be registered to be satisfied from the proceeds of ship auction, although they are different in wording from “ the claims pertaining to the ship to be auctioned”, which are defined clearly as ones only to be registered and to be satisfied from the proceeds of the auction of a ship under article 111 of MPL of PRC. Paragraph 2 of article 23 of MPL of PRC stipulates for arrest of sister ship as: “the maritime court may arrest other ship or ships which, when the arrest is effected, is or are owned by the ship-owner, demise charterer, time charterer or voyage charterer who is liable for the maritime claim, except for claims with respect to ownership or possession of a ship.” Since the maritime claimant may apply for arresting the sister ship or ships for the claims pertaining to another sister ship, the claims pertaining to another sister ship shall be permitted to be satisfied from the proceeds of the sister ship arrested and auctioned, otherwise, the stipulation of permitting arrest of sister ship will become impractical, even seem ridiculous.
2.2  In respect of the limitation fund for maritime claims.
    Under 112 of MPL of PRC, the claims which may be registered to be satisfied from the limitation fund are “claims pertaining to the maritime accident that occurred in the particular circumstance”, which in fact are limited maritime claims specified in article 207 of Maritime Code of PRC, but excluded in article 208 of the Code. 
    According to International Convention on Civil Liability of Oil Pollution Damage, 1969, the claims which may be registered to be satisfied from the limitation fund for maritime claims in respect of the oil pollution damage, are limited to the 3 sorts of damages as following: (1) loss or damage caused outside the ship carrying oil by contamination resulting from the escape or discharge may occur; (2) costs of preventive measures; (3)  further loss or damages caused by preventive measures.
3.Application for registration of maritime claims.
3.1The time limit for application
(1)As to application for registration of the claims pertaining to the ship to be auctioned.
    Under MPL of PRC, the maritime court shall, after receipt of an application for auction of a ship, examine the application and make an order to allow or disallow the auction. The maritime court that orders auction of a ship shall issue an announcement in newspapers or other news media. The announcement period for ship auction shall not be less than 30 days. In judicial practice, the maritime court issue an announcement for ship auction, which contains some matters necessary for auction, such as name and nationality of the ship for auction; reason and grounds for auction of the ship; constitution of the ship auction committee; time and venue of the ship auction; time and venue for demonstration of the ship for auction; formalities to be completed for taking part in bidding; particulars necessary for registration of claims, etc, meanwhile notes the creditors to register the claims within the announcement period. So the announcement period is the time limit for application for registration of the claims pertaining to the ship to be auctioned.
    According to article 111 of MPL of PRC, the creditors who fail to register their claims on the expiry of the time limit of the announcement shall be deemed to have waived their rights to be satisfied from the proceeds of the auction. 
(2)As to application for registration of the claims in respect of limitation fund.
    The maritime court, having entertained an application for constitution of a limitation fund for maritime claims, shall notify all the interested persons known within 7 days, and issue all announcement in the newspaper or other news media. However, MPL of PRC does not specify directly the announcement period for constitution of a limitation fund for maritime claims. Article 106 of MPL of PRC stipulates as: an interested person who objects to the application filed by the applicant for constitution of a limitation fund for maritime claims shall file the objection in writing with the maritime court within 7 days after the receipt of the notice or within 30 days after the day of the announcement if no such notice is received. The objection period “within 30 days after the day of the announcement” stipulated therein shall be interpreted as the announcement period for constitution of a limitation fund for maritime claims, the time limit for claim registration. 
    According to article 112 of MPL of PRC, the creditor who fail to register their claims on the expiry of the time limit of the announcement shall be deemed to have waived their claims.
3.2Procedural requirements of application.
    The applicant shall perform the requirements for registration of claim as follows:
(1)file the application in writing.
    The creditor shall file the written application, which shall state the creditor and debtor, and their address, methods of communication, the debtor-creditor relationship, the amount and nature of claims, etc.
(2)furnish evidence of the claim.
    The creditor shall furnish evidence of the claim, which may be divided into two sorts: (a) enforceable legal instrument, such as legally-binding judgments, written orders, conciliation documents, arbitral awards and notarized documents substantiating the claims; (b) other evidential materials substantiating the maritime claims.
(3)pay registration fee.
    At present, the creditor shall pay registration fee RMB 500 yuan as per case of claim registration, regardless of amount of claim.
    Through a prima facie examination, the maritime court will make an order to allow the registration if the procedural requirements above-mentioned are met, and to reject the application in failure of the requirements. The law is silent as to whether the party concerned against this order may appeal or apply for review, this order shall be deemed as final.
4.examination and confirmation of claims.
    The maritime court shall examine the two kinds of evidence of claim in two different manners and confirm the claim. 
4.1examination and confirmation of effective judicial documents.
    Article 115 of MPL of PRC stipulates as: the maritime court shall examine the judgments, written orders, conciliation document, arbitral awards, or notarized documents provided by the creditors to substantiate the claims, and shall confirm such evidence by order if it is found to be true and lawful. 
    If the maritime court examine the effective judicial documents and find the documents are true and lawful, and the claim confirmed therein is pertaining to the ship to be auctioned or to the maritime accident that occurred in the particular circumstance, it shall make an order to confirm the claim and correspondingly permit the creditor to participate in distribution of the auction proceeds or limitation fund. If the judicial documents rendered by the applicant are found to be untrue and unlawful, or the claim confirmed therein is not pertaining to the ship to be auctioned or the maritime accident that occurred in the particular circumstance, the maritime court will make an order to reject the application for registration and satisfaction of claims.
    If when applying for claim registration, the creditor submits to the maritime court the effective judicial documents, which are made by foreign courts or foreign arbitral organ, but has not applied to the court of PRC for recognition and enforcement thereof, the creditor shall file application with the maritime court entertaining the claim registration for recognition and enforcement of the foreign judgment or order, or foreign arbitral award in accordance with the MPL of PRC, the Civil Procedural Law of PRC and international convention or treaties relevant. The court shall, after examining it in accordance with the international treaties concluded or acceded to by the PRC or with the principle of reciprocity and arriving at the conclusion that it does not contradict the basic principles of the law of PRC nor violates state sovereignty, security and social and public interest of the country, recognize the validity of the judgment or written order or foreign arbitral award. 
4.2 Action for confirmation and payment ── examination of other evidential materials than effective judicial documents. 
    Article 116 of MPL of PRC stipulates as: A creditor who provides other evidence of a maritime claim shall, after having registered the claim, bring an action in the maritime court that has accepted registration of the claim to have the claim confirmed. Where there is an arbitration agreement between the parties, arbitration shall be promptly applied for. A judgment or an order made by a maritime court confirming the claim is legally binding subject to no appeal by any party.
    In judicial practice, the following points are noteworthy:
(1)jurisdiction. 
    From the beginning of registration procedure, all the relevant cases of action for confirmation and payment, shall under the exclusive jurisdiction of the maritime court accepting the claims registration, even if there is an agreement regarding another jurisdiction between the parties, unless there is an arbitration agreement between the parties.
    Opinions of the Supreme’ s People’s Court regarding Law Application Matters of MPL of PRC (draft) intends to stipulate as: the creditor concerned filed suit with the other court than the maritime court entertaining the claims registration before the registration of the claims, the other court entertaining the suit shall refer the case to the maritime court accepting registration of claims, thus the maritime court accepting registration of claims can lump all the relevant cases together to examine fairly and determine timely.
(2)In respect of the case for confirmation filed after registration of claim, the first instance shall be final.
    The system of the court of second instance being the final instance applies in civil action of PRC as one of general and fundamental principles. However, in order to have the creditors satisfied from the auction proceeds or limitation fund as soon as possible, the article 116 of MPL of PRC has established a peculiar system whereby the first instance is final in respect of the case for confirmation filed after registration of claims to avoid the case from being outstanding for a long time. From the wording of article 116 of MPL of PRC, it seems that the system of the first instance being final only applies to the case for confirmation after registration of claims, while the case filed before registration of claims still is governed by the system of the court of second instance being the final instance. At present, maritime courts of PRC deal with the cases for confirmation filed before and after registration of claims in such different ways.
 
(3)conciliation in action for confirmation.
    Conciliation is a peculiar and effective way of court settling civil cases in PRC. Article 9 of Civil Procedure Law of PRC stipulates as: in trying civil cases, the people’s court shall conduct conciliation for the parties on a voluntary and lawful basis; if conciliation fails, judgments shall be rendered without delay. During the civil action of PRC, when a settlement agreement through conciliation is reached, the court shall draw up a conciliation statement, which shall become legally effective once it is receipted by all the parties concerned. The conciliation on a lawful basis means that the conciliation settlement may not harm the interests of others. In respect of the series cases for confirmation in the procedure of registration and satisfaction of claims, if the maritime court find that the conciliation between both parties is likely to harm the interests of others, it will directly make judgments without conducting any conciliation. For instance, a ship is arrested and auctioned by a maritime court, the shipowner is in arrears with the ship crews’ wages, the shipowner and ship crews are likely to exaggerate debt of wages through intentional collusion, for claims for wages take the first ranking in maritime liens and shall be satisfied first from the proceeds of ship’s auction. If the conciliation between the shipowner and ship crews is permitted, the other creditors such as ship’s mortgagee, common creditor will be satisfied less than usual from the proceeds of ship auction. In the similar circumstances, the maritime court does not only prohibit the conciliation aforesaid, but also request the shipowner and ship crews to furnish more adequate evidence of wages such as employment contract, previous brochures of wages, and accounts of wages, etc to examine carefully the amount of wages. In brief, maritime courts of PRC will settle the series cases in due course to protect fairly the interests of all the parties concerned.
5.satisfaction of claims.
    The maritime court shall, after having examined and confirmed the claims, distribute the proceeds of the ship auction or limitation fund according to the agreed ranking and proportion or statutory ranking. 
5.1plan for satisfaction agreed by the creditor’s meeting.
    After having examined and confirmed the claims, the maritime court shall issue a notice to the creditors for a creditors’ meeting, the creditors may put forward a plan for distribution of proceeds of auction of the ship or the limitation fund, upon reaching unanimity through consultation, sign an agreement for satisfaction, which contains the ranking and proportion of the claims.
    The agreement for satisfaction shall be legally binding after it has been approved by the maritime court by order. Up to now, there is few cases of the creditors consulting the plan for satisfaction successfully.
5.2statutory ranking and proportion of claims’ satisfaction.
    Where consultation fails at the creditors’ meeting, the maritime court shall determine a plan for distribution of the proceeds of auction of the ship or the limitation fund for maritime claims in accordance with the ranking of the claims provided for in Maritime Code of PRC and other related laws. 
5.3  Multiple – distributions of the proceeds of the ship auction or limitation fund.
    In judicial practice, usually, the maritime court may finish the procedure of claims satisfaction through once distributing the proceeds of ship auction or limitation fund. However, where among the series cases for confirmation, some cases will take much more time before final settlement, or where the creditor submitted to foreign arbitral organ for arbitration or file lawsuit with foreign court before registration of claims, and it is difficult to predict how long the lawsuit or arbitration will be settled finally, thus, in order to have the creditors whose claims have been confirmed, satisfied partly from the proceeds of ship auction or limitation fund earlier, the maritime court may first distribute the proceeds or limitation fund over all the creditors on the basis of supposing the amount claimed of outstanding cases will be confirmed fully in future, and then keep temporarily the proportion supposed to be distributed to the creditor of outstanding case. When the outstanding case is settled finally, the amount claimed is confirmed legally in full, the proportion originally supposed to be distributed to the creditor of outstanding case will be formally paid to the creditor. If the amount of claim is legally confirmed in part or is not confirmed at all, the whole or corresponding part of proceeds supposed to be distributed to the creditor of originally outstanding case will be distribute to other creditors once more as per the agreed plan or statutory ranking or proportion.