Keywords

Ship collision; damage compensation; limitation of liability for maritime claims; declaratory action

Case Overview

On 6 November 2020, m/v “Ken Breeze” owned by Delica Shipping S.A. (“Delica”) and m/v “Pacific Grace” owned by Gemadept Shipping Singapore Pte. Ltd. (“Gemadept”), both flying the Panamanian flag, collided in the waters of the Qiongzhou Strait. After the accident, Gemadept applied to Haikou Maritime Court for constituting a limitation fund for maritime claims in respect of the liabilities to be assumed by m/v “Pacific Grace” for the accident. During the public announcement, Delica registered its claims with the court for the loss sustained by m/v “Ken Breeze” due to the accident and initiated a declaratory action, requesting the court to confirm its loss amounts and apply the limitation fund constituted by m/v “Pacific Grace” to such claims.

According to Article 2 of the Law of the People’s Republic of China on the Laws Applicable to Foreign-related Civil Relationships and Article 273 and Article 275 of the Maritime Code of the People’s Republic of China, the captioned case involved a collision between two ships of the same nationality in waters under the jurisdiction of China, and therefore the laws of the flag state, i.e. the Republic of Panama, shall apply to determine the damage liabilities of the ships, and the laws of the forum, i.e. the Chinese laws, shall govern the limitation of liabilities for maritime claims. Upon the consent of both parties, the court adopted those Panamanian laws ascertained in similar cases by other courts and entrusted the original ascertainment institute and the same foreign law expert to update and replenish the ascertainment of the Panamanian laws. Pursuant to the ascertained Panamanian laws, the court determined the proportions of liability on both ships for the accident and the recoverable losses and amounts fairly and reasonably. The court further determined that the losses sustained by both ships were entitled to limitation of liabilities according to the Maritime Code and shall be set off against each other before applying the limitation fund to the balance and that Delica could only recover the balance of its claims from the limitation fund constituted by m/v “Pacific Grace”.

Judgment

Gemadept shall compensate Delica for the economic loss amounting to CNY 14,257,838 plus interest accrued thereon; the balance after the claims of Delica awarded in the first adjudication conclusion of this judgment setting off against its debts as determined in the case [(2021) Qiong 72 Minchu No.13] shall be paid from the limitation fund for maritime claims constituted by Gemadept; other litigation requests of Delica shall be dismissed.

Significance

China has been more frequently engaged in civil and commercial exchanges with the outside world following its continuous progress in opening-up, and the increasing cases involving foreign elements have brought rising demands for applying and ascertaining foreign laws. Identifying the applicable foreign laws and ascertaining and applying these laws correctly is the paramount task in the trial of cases involving foreign elements and a key step to ensure the quality of the trial of foreign-related cases. In this case, the court explores a way to adopt the foreign laws ascertained in other cases and ascertain foreign laws efficiently and economically. This helps improve the mechanism for ascertainment of foreign laws and broaden the ascertainment channels, hence improving the quality and efficiency of the trial of foreign-related cases and giving good reference for the handling of similar cases. The judgment, winning high remarks from the parties, helps improve the influence and credibility of China in the adjudication of foreign-related cases.