1. CREW CLAIMS

The well-known 1992 Judicial Note [FA Fa (1992) No.16], namely Rules of the PRC Supreme People’s Court on Trying Cases of Compensation for Damages for Marine Personal Casualties Concerning Foreign Interests, effective since1^st July 1992, with maximum compensation of RMB800, 000 each person (around US$132,013.20 at USD100/RMB606 ) was revoked on 18^th Jan. 2013, it was NO longer effective since then.

Now personal injury claims shall be referred to China Maritime Code (CMC); while for claims not falling within the CMC, the Supreme Court 2003 Judicial Interpretation (2003 Judicial Note), effective as of 1^st May 2004, shall apply.  The 2003 Judicial Note has NO cap / limit of compensation, under which claims items include:

Medical expenses, treatment fee, nursing costs, transportation and accommodation;

Loss of income-

Disability Compensation-subject to judicial assessment on level of disability, total 10 levels, plus necessary rehabilitation and nursing costs; or

Death compensation plus funeral costs, living costs to be paid to dependent of the deceased;

Mental trauma /consolation money.

For assessment of crew claims, it is important to consider factors including - vessel’s flag state law, place of injury, compensation level, tort-feasor (traffic incident) and motor car insurer’s liability regime, assessment on liability and level of disability, time/expenses to obtain successful effective judgment, prospects of settlement; compensation to family for mental trauma /consolation.

In practice, apart from Crew dispatching/ Crew Employment Contract, there are often Collective Bargaining Agreement available on board vessel with terms that have been approved by the International Transport Workers’ Federation (ITF) and employers, known as (IBF) CBA.  In recent years, some crew claims were amicably concluded based on the figure of ITF CBA, a bit higher than the level under the 2003 Judicial Interpretation of the Supreme Court of PRC.

Case 1: MV Q Y

Capt. of Chinese nationality, was missing on board in good weather condition moring time 16/06/2011 during public sea near to Korean waters, vessel flied Hong Kong flag, final settlement figure was based on level of HK law – Employee ‘s Compensation Ordinance , Chapter 282 of Laws of Hong Kong (HK$1,325,000. Around USD171, 000), plus ex graciamoney (of four months wages).

Case 2: MV S Q

Seaman collided by car to death caused by road traffic accident in Japan in around Feb. 2012

The crew family in addition to compensation received from motor car insurer in Japan, claimed against vessel owner/Club and reached settlement of RMB600, 000 (around USD100, 000) with crew family, which was paid by CASH?! - Which should be evidenced by proper bank T/T slip /wire transfer slip with clear route of Payment.

Case 3: MV V. Vii - Compensation under CBA

It is said that Panamanian flagged vessels abide strictly by ITF standard of crew wages, accordingly, it seems reasonable for Club/owners to consider w/p lump sum settlement per the CBA (collective bargaining agreement) , namely aroundUSD126,785.00 (including death compensation USD93,154 + compensation to dependent the crew son USD18,631+funeral expenses USD15,000). Eventually, the Owner settled at CNY950, 000 (around USD150, 000), but the recoverable amount from the vessel’s P&I Club was limited to the ITF figure.

2. Compulsory Liability Insurance regime & Right to Claim Against Liability Insurer

Traditionally, vessel P&I Club may rely on “pay to be paid” or “no loss, no payment”,  such doctrine has recently been considered unfair in terms of protection of innocent third party’s’ rights in marine environmental pollution casualties under compulsory liability insurance regime.

2.1  Third Parties’ Rights of Compensation are Conferred by International Conventions.

CLC1969/CLC1992, provides that- “any claims arising from vessel carrying over 2,000 tons of oil in bulk, the aggrieved party can address claims against the vessel’s liability insurer or financial guarantor who covers the vessel’s marine oil pollution damages”.  China is a party to CLC 1969/ 1992 (effective to China as of 5^th Jan, 2000).

Art. VII 8 of CLC 1969/CLC1992 – “any claim for compensation for pollution damage may be brought directly against the insurer or other person providing financial security for owner’s liability for pollution damage. In such case, the defendant may, irrespective of the actual fault or privity of the owner, avail himself of the limits of liability prescribed in Art.V, para.1.  He may further avail himself of the defences (other than bankruptcy or winding up of the owner which the owner himself

would have been entitled. Furthermore, the defendant may avail himself of the defense that the pollution damage resulted from the willful misconduct of the owner himself or any other defence which he might have been entitled to invoke in proceedings brought by the owner against him.  The defendant shall in any event have the right to require the owner to be joined in the proceedings.

2001 Bunker Convention (referred as BC)

Being effective as of Nov. 21 2008, it has been effective to mainland China and Macao since 9^th March 2009; since 22^ndJan 2010, it has been effective also to Hong Kong.

BC – its Art. 6-Limitaiton of liability – “nothing in this convention shall affect the right of shipowner and the person or persons providing insurance or financial security to limit liability under any applicable national or international regime, such as the Convention on Limitation of Liability for Maritime Claim, 1976, as amended”.

Art. 7(1)-

The registered owner of a ship having a gross tonnage greater than 1000 registered in a State Party shall be required to maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution, to cover the liability of the registered owner for pollution damage in an amount equal to the limits of liability under the applicable national or international limitation regime, but in all cases, NOT exceeding an amount calculated in accordance with the Convention on Limitation of Liability for Maritime Claims, 1976 as amended.

Art 7 (10)-“any claim for compensation for pollution damage may be brought directly against the insurer or other person providing financial security for the registered owner’s liability for pollution damage. In such case, the defendant may invoke the defences (other than bankruptcy or winding up of the ship-owner which the ship-owner would be entitled to invoke, including Limitation pursuant to Art.6. . Furthermore, even if the shipowner may NOT be entitled to limit its liability under Art. 6, the defendant may limit its liability to an amount equal to the amount of insurance or other financial security required to be maintained in accordance with paragraph 1.  Moreover, the defendant may invoke the defence that the pollution damage resulted from the willful misconduct or the shipowner, but the ship owner shall NOT invoke any other defence which the defendant might have been entitled to invoke in proceedings brought by the shipowner against the defendant. The defendant shall in any event have the right to require the ship-owner to be joined in the proceedings ”

BC- Provides that third party who suffer from non-tanker or any types of vessel’s bunker oil pollution, can list the vessel’s liability insurer or financial security provider as defendant in legal action in court.

1996 HNS Convention, not effective yet. It also provides right of claim directly against insurer or financial security provider of ship involved.

The above CLC, Bunker & HNS Conventions all approve an aggrieved party’s rights of claims directly against the insurer or security provider,  regardless of whether owner of the vessel is bankrupted or not.

“Pay to be paid” principle traditionally quoted by P&I club will be disregarded and be null and void, which makes P&I Club not able to rely on such defense under compulsory insurance regime.

2.2 Legal basis under related PRC law to sue P&I Club - by third party claimant

Art. 97 of The Special Maritime Procedure Law of PRC provides that- an aggrieved party may claim for oil pollution damage caused by a ship either against owners of the vessel causing pollution damage or directly against the insurer or person who provides financial security for the vessel and liable for the vessel’s oil pollution damage”.

When the insurer/or financial security provider for oil pollution damage is sued in action, such insurer or person is entitledto demand the owner of ship causing oil pollution damage to join the proceedings (ship owners to be listed as third party)”.

Art. 108 of Civil Procedure Law of PRC- provides for the requirements for bringing a lawsuit & entertaining a case by people’s court.

Other related law –The Insurance Law of PRC, Art. 6, Art.65, Art., 183+ 184

Art. 206 of China Maritime Code—when the assured may limit its liability, the insurer liable for maritime claims shall be entitled to the limitation to the same extent as the assured.

“Pay to be paid” principal may apply to Non-Compulsory Insurance, such as liabilities for cargo claims,

for fines/penalty being imposed, ship deviation etc. In order to succeed its claims against vessel liability insurer, claimant will have to exercise the burden of proof on that – the assured ship owners have no money to pay, or unable to pay, or owners may have disappeared. Under such circumstance, P&I Club as vessel’s insurer may be held liable based on the theory of right of subrogation under PRC law.

2.3  The right of subrogation (in sub-debtor’s own name)

The Contract Law of PRC – Art. 73 provides that:

“if obligor is indolent in exercising its due creditor’s right, thus damaging the interests of obligee, the obligee may request the people’s court for subrogation in its own name, except that the creditor’s rights exclusively belongs to the obligor. The subrogation shall be exercised within the scope of the creditor’s right of obligee. The necessary expenses caused to the obligee by exercising subrogation shall be borne by the obligor”.

Disclaimer: This above serves only a resume and it does not pretend to be conclusive, for any particular matter, legal advice to be sought based on law and merits at material time.