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Lloyd's Maritime and Commercial Law Quarterly

THE CHINESE MARITIME LAW ON GLOBAL LIMITATION OF LIABILITY

Xingang Li*

With the Maritime Code of the People’s Republic of China entering into force, the legal framework concerning limitation of liability in China has been completed but has also become complex. The limits vary for ships according to their functions or sailing areasinternational, coastal or inland. The purpose of this paper is to provide a clear picture of and a guide to the legal framework by comparing it with international maritime practice and by giving diagrams about the limits.

Introduction

All existing laws and regulations, including those concerning maritime matters, were abolished by the founding of the new Chinese government in 1949. The People’s Republic of China (PRC) has been establishing its maritime legal system from that time.
The Several Regulations on Average Claims 1959 (“the 1959 Regulations”), issued by the Ministry of Communications of PRC, was the first piece of maritime regulation relating to limitation of shipowner’s liability. Although simple, it contained the important doctrine of limitation of liability. It stipulates in Art. 4 that “the liability of the shipowner is limited to the total amount of the ship’s value, plus freight revenue and the compensation to the ship”. This is known as the ship’s value system. Obviously, under this system, if the ship is a total loss the claimant will get nothing from the shipowner. Hence, this principle was confirmed by the Regulations on Carriage of Goods by Waterways of the PRC in 1979.
On 1 July 1993, the Maritime Code of the PRC (“the Maritime Code”) entered into force. It changed the principles of limitation of shipowner’s liability from the ship’s value system to the tonnage limitation system. The relevant provisions are in Chap. XI: “Limitation of Liability for Maritime Claims” (Arts 204 to 215) of the Maritime Code, which adopted the principles and the substantial Articles of the International Convention on Limitation of Liability for Maritime Claims 1976 (“the 1976 Convention”). However, some differences exist and will be discussed below.

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