Facts
On March 9th 2017, a collision happened between the Chinese vessel M/V “ZHONG RAN 39” owned by CHIMBUSCO Shipping（Dalian）Co., Ltd. (hereinafter referred to as “CHIMBUSCO Ltd.”) and the North-Korean vessel M/V “KUM SAN” in Lianyungang waters and caused losses to these two vessels.
M/V “ZHONG RAN 39” is a vessel engaged in coastal transport services with a gross tonnage of 2,548 tons. With respect to the maritime claims other than that for loss of life or personal injury caused by the collision, CHIMBUSCO Ltd. applied to Dalian Maritime Court for the establishment of the Limitation Fund(hereinafter referred to as ‘the Fund’). The amount of the Fund is the amount of RMB (Chinese Yuan) and its interests converted from 254,508 Special Drawing Right (hereinafter referred to “SDR”) in accordance with the “Provisions on Limitation of Liability for Maritime Claims for Ships with a Gross Tonnage not Exceeding 300 Tons and Those Engaged in Coastal Transport or Other Coastal Works” (hereinafter referred to as ‘Provisions on Limitation of Liability’).
KOREA KUMSAN SHIPPING CO., the owners of M/V “KUM SAN”, did not apply for establishment of limitation fund in the court. The owners of M/V “KUM SAN” and Dalian Ouya Trading Limited, the consignee of the goods carried on board M/V “KUM SAN” raised objections against the establishment of the Fund, and argued that the amount of the Fund should be ascertained according to the provisions of Article 210 of the Maritime Code of the People's Republic of China (hereinafter referred as to “CMC”).
Held by Dalian Maritime Court
M/V “ZHONG RAN 39” is a vessel with a gross tonnage of 2,548 tons and engaged in transport services between the ports of the People’s Republic of China. According to paragraph 2 of Article 210 of the CMC which provides that “the limitation of liability for ships with a gross tonnage not exceeding 300 tons and those engaging in transport services between the ports of the People's Republic of China as well as those for other coastal works shall be worked out by the competent authorities of transport and communications under the State Council and implemented after its being submitted to and approved by the State Council”, the amount of the limitation of liability of M/V “ZHONG RAN 39” shall be governed by the Provisions on Limitation of Liability.
However, according to Article 5 of the Provisions on Limitation of Liability, the limitation of liability under Article 210 of the CMC or Article 3 of the Provisions on Limitation of Liability which apply to one of the ships in an accident shall apply to the other ships in the same accident.
Although the owners of M/V “KUM SAN” that collided with M/V “ZHONG RAN 39” did not apply to establish a limitation fund in the court, M/V “KUM SAN” is a vessel with a gross tonnage 5,852 tons and engaged in international transport services, and the limitation of liability for M/V “KUM SAN” shall be governed by Article 210 of the CMC. Therefore, the provisions of Article 210 of the CMC shall apply equally to the limitation of liability of M/V “ZHONG RAN 39” as the other ship in the same accident.
Overall, the court held that CHIMBUSCO Ltd was allowed to establish the Fund for the claims other than that for loss of life or personal injury, the amount of which is the amount of Chinese Yuan and its interests converted from 509,016 SDR.
The judgment of the first instance has come into force.
Typical Significance
According to the Provisions of Limitation of Liability approved and promulgated by the State Council, the limitation of liability for maritime claims where the ships with a gross tonnage not exceeding 300 tons and those engaged in coastal transport services as well as those for other coastal works shall be 50% of the amount of limitation of liability for the ships engaged in international transport services and other works. However, there is an exception, i.e. the rule that the ships in the same accident shall be subject to the same limitation of liability for maritime claims (between different limitations of liability), whichever is the higher.
CHIMBUSCO Ltd. alleged that “the rule that the ships in the same accident shall be subject to the same limitation of liability” shall be applicable only when all the owners of ships in the same accident claim for the limitation of liability for maritime claims or apply for establishment of the limitation fund. Since the owners of M/V “KUM SAN” did not apply to the court for establishing the fund, the aforementioned rule shall not apply to this case.
The court held that, if the limitation of liability of one of the ships in the accident is subject to Article 210 of the CMC, the other ship in the same accident shall be governed by Article 210 of the CMC as well, regardless of whether the owners have actually applied to establish the fund.
The court properly interpreted “the rule that the ships in the same accident shall be subject to the same limitation of liability”, equally protected the legitimate interests of both Chinese and foreign parties and fully embodied the attitude of impartiality of Chinese courts in the trials of foreign-related maritime cases.