Toplis and Harding (Marine) Ltd

華 証 行 ( 海 事 ) 有 限 公 司

Friday, June 15, 2007


China acceded to the 1969 Civil Liability Convention in the 1990 and to the CLC 92 Protocol in 1999. Currently all Chinese ocean going ships carrying more than 2000 tons of oil in bulk are compulsorily insured for oil pollution liability. China is also a party to the Fund Convention (Fund 71) but it is only applicable to Hong Kong SAR but not to the rest of China.

The bulk of the oil and chemical pollutions along the Chinese coasts and rivers are caused by coastal tankers or tankers of less than 2000 grt. Hence in reality, there is no proper compensation regime in existence for oil pollution or for that matter chemical pollution in China which is caused by vessels of this category.

There have been much consultation on this but as of today, no agreement has been reached to set up a domestic compensation regime which requires coastal ships to have mandatory insurance for oil pollution liability and neither is there any compensation fund set up by cargo receivers. Today PRC is the third largest importer of crude oil and the largest importing country of chemical refined products. China has yet to accede to the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS), 1996 and it is unlikely to accede to it any time soon largely for the same reason to protect the viability of the local fleets and businesses.

While this policy is understandable, the negative impact of such a policy is that the country’s environment, its industries and its people will have to bear the brunt of the effects of inadequate or non existent compensation regime. More insidious is the chemical pollution where the resultant impact on the environment and the well being of its people is long term and its effects are not so easily identifiable. This loophole is also subject to exploitation by both local and foreign ships engaged in the carriage of oil and chemical products to China.

The paper will examine the growth of China as a key player in the oil, gas and chemical industry, its comparative development of a compensatory legal regime, its shortcomings and how this situation is being exploited by local and foreign shipowners in a perfectly legal way but at the expense of the local environment, water sources and the well being of the population.

The historical records of marine oil spills in PRC

As mentioned above, PRC has now emerged as the third-largest oil importer in the world. Statistics from the Ministry of Communications of PRC indicated that cargo landed by sea reached around 1.8 billion tons in 2005 and the throughput in ports across the country amounted to 4.17 billion tons. This also included the 61.8 million TEUs handled in PRC which is one-eighth of the world’s total. According to the statistics published by the Customs Administration of PRC, the country imported more than 100 million tons of crude oil in 2003 for the first time. By 2004, the crude oil imported had exceeded 120 million tons, and in the case of refined oil and chemical products, more than 40 million tons. In 2005, crude oil imported had exceeded 130 million tons. It is estimated that given the rapid growth of high powered PRC’s economy, the insatiable demand for crude and refined oil and chemicals will continue its spiraling growth.

It is also reckoned that at least 90 per cent of the nation’s imported crude oil would continue to be transported by sea. Even if the pipelines into China from Kazakhstan and Russia are completed and in operation, it is estimated that 80% of the imported oil would still be transported by sea. The phenomenal rise in the movement of goods and people along the Chinese coasts had led to surging growth in maritime traffic. Collisions between ships and incidents of groundings are also on parallel increase and resultant oil pollution occurrences of all descriptions could not be avoided. Between 1973 and 2003, there were more than 2,353 reported oil spills along the Chinese coasts and rivers. This figure includes oil spillages of big and small spills. In PRC, a big spill is in excess of 50 metric tons. Over a period of 30 years, it would work out to be one oil spill every 54 days. Of this figure, there were 62 major spills, each in excess of 50 metric tons and to be precise, more than 34,189 metric tons of oil had been spilt into coastal waters and rivers. This figure represents oil pollution caused by vessels of all descriptions.

If this is broken down into specific details, there were a total of 29 oil spills in PRC between 1973 and 2003 which were caused by oil tankers (according to a statistics ). Each of these spills was in excess of 50 metric tons. 7 of these oil tanker related oil spills were caused by foreign vessels and all of them had paid compensation for the damage caused. Excluding the compensation for cleaning up costs, the compensation for these 7 cases averaged 8.28 million RMB, the highest being 17.75 million RMB. The remaining 22 oil spill accidents were caused by Chinese vessels and only 9 of them had paid compensation. Excluding the compensation for cleaning up resources, their compensation amount averaged 1.53 million RMB, the highest being 5.5 million RMB.

For example on 14 November 2000, a Chinese tanker “DeHang 298” collided with Norwegian chemical tanker “Bow Cecil” at the mouth of Pearl River. Dehang 298 eventually sank with loss of five crew members and 230 cubic meters of heavy oil were leaked into the sea. China’s Maritime Safety Department took timely action to clean up the oil spill and expanded around 6.5 million RMB on the cleaning-up operation. The owner of the tanker DeHang 298 is a single ship owner and did not have the financial ability to pay the compensation. On the other hand, Bow Cecil was found not liable for the collision and hence was not responsible for the cleaning up costs. Due to the absence of clear law governing the compensation regime in PRC, the State ended up having to pay for the entire cleaning up cost.

Prevailing Situation of Damage to Environment Arising from Carriage of Hazardous and Noxious Substances by Sea in PRC

Whilst researching for historical records and data on compensation models concerning damage to environment arising from carriage of hazardous and noxious substances in PRC, the writer had met with little success because of the paucity of information. The Chinese State Oceanic Administration began to publish the Ocean Environment Quality Yearbook in 1990 to indicate important happenings to the ocean environment, but incidents of pollution and damage to environment caused by the carriage of hazardous and noxious substances within PRC waters was not recorded. Up to the year 2005, this situation has not changed. To understand the seriousness of the impact to environment arising from carriage of hazardous and noxious substances, the writer would summarize the example of one collision case near the estuary of Yangtze River.

On the morning of April 17, 2001, a chemical tanker of the Republic of Korea which had onboard 2000 metric tons of styrene, was involved in a collision with a Hong Kong registered cargo ship near the estuary of Yangtze River. This collision resulted in more than 700 metric tons of styrene spillage into the sea causing serious damage to the marine environment and ecosystems.

This was the world’s most serious incident of styrene spillage and the relevant department claimed a ‘state indemnification’ of US$8 million from the wrongful parties. The term "state indemnification" is still a new terminology in China and was used for the first time in judiciary practice since the promulgation of the "Law on State Ocean Environment Protection of the People's Republic of China" in April 2000. Pursuant to the relevant provisions of the law, the Chinese Government shall have the right to demand the ship in question to indemnify the State for damage caused to the Chinese marine environment arising from serious leakages of crude oil or other chemical products within the territorial waters of PRC.

The money obtained from the ‘state indemnification’ will mainly be used for i) measure taken to neutralize the damage caused by the chemical and ii) to monitor the condition of the affected marine areas. As the impact is often far reaching, such monitoring and supervision will take years if not decades to determine the true extent of damage. To be realistic, the US$8 million is just an initial estimation by environmental experts and the actual losses to the marine environment and damage to its ecosystems would certainly be much higher.

As the writer is given to understand, the owners of the two ships involved had paid only US$1 million each as fines, hardly sufficient for costs to neutralize the styrene contamination. The final agreement on the "state indemnification" has still to be finalized.

In retrospect, the compensation demanded by the Chinese authority paled in comparison with that of a recent heavy oil spill in the port of Odessa involving 74 m/tons of bunker fuel. The State Ecological Inspection presented a claim of US$24.5 million for environmental damage which amounted to US$329 per kg of oil spilt. The Port Authority also put up a claim of US$7.6 million for cleaning up cost which worked out to US$84 per kilo of oil spilt.

Another trend in the maritime transportation chain which warrants attention in PRC is the importation of high tech refined products such as lubricating oil from United States, South Korea and Singapore. Many of the shipments of refined products are shipped from South Korea or Singapore using small chemical tankers of 2000 dwt or below. This practice is to evade the compensation regime of the CLC and also to take advantage of the absence or lack of a well defined national compensation regime in PRC.

CLC only applies to ship carrying more than 2,000 m/tons of oil in bulk as cargo, and in this case, a ship carrying less than 2000 m/tons can totally evade the governance of CLC should a pollution occur. And since China has not acceded to the HNS Convention or push for a comparable national compensation regime to be put in place, a ship found to be have caused spillage is only governed by the limits of limitation of liability as found in Chapter XI of the Maritime Code of PRC. The limitation amount as set in Chapter XI of the Chinese Maritime Code is actually much lower than that of CLC.

In the case of an oil spill caused by a foreign ship carrying less than 2000 m/tons of oil in bulk within China’s territorial waters, the shipowner can actually escape liability by paying a security deposit into the maritime court in accordance with the stipulations of the Chinese Maritime Code. Once this limitation fund is set up, the wrongful vessel can continue to trade freely without any fear of being arrested or detained by any parties in PRC.

Reasons for the inadequate compensation for oil and chemical spills in PRC

PRC as of to date, does not have a specific legal regime which introduces strict liability for the shipowners and a system of compulsory insurance and insurance certificates for ships of all tonnages operating within Chinese waters. She has a patchwork of articles in laws and regulations which are inadequate and does not address the changing situations confronting the country in the present as well as into the future. Perhaps a highlight of some of these regulations and articles in law would give readers a better picture.

Article 124 of the General Principles of the Civil Law of PRC stipulates “Any person who pollutes the environment and causes damage to others in violation of state provisions for environmental protection and the prevention of pollution shall bear civil liability in accordance with the law.” This is the basic principle for civil compensation regarding oil spill pollution.

Article 90 of the Marine Environment Protection Law of PRC stipulates that “Whoever causes pollution damage to the marine environment shall remove the pollution and compensate the losses; in case of pollution damage to the marine environment resulting entirely from the intentional act or fault of a third party, that third party, shall remove the pollution and be liable for the compensation. For damages to marine ecosystems, marine fishery resources and marine protected areas which cause heavy losses to the State, the department invested with power by the provisions of this law to conduct marine environment supervision and administration shall, on behalf of the State, put forward compensation demand to those held responsible for the damages.”

Article 39 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In case of violation by vessels of the Marine Environmental Protection Law of the People's Republic of China and these Regulations that has caused pollution damage to the marine environment, the harbor superintendency may order the payment of a fee for eliminating the pollution, and compensation for the state's losses. If the party concerned does not accept the order, he may bring a suit before the people's court in accordance with the stipulation of Article 41 of the Marine Environmental Protection Law of the People's Republic of China.”

Article 40 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In the event that units or individuals that have suffered pollution damage as a result of the marine environmental pollution by vessels demand civil liability compensation, the matter shall be handled in accordance with the handling procedures stipulated in Article 42 of the Marine Environmental Protection Law of the People's Republic of China. Disputes over liability for and the amount of compensation may be handled by the harbor superintendency through conciliation. If a party does not agree, a suit may be brought before the people's court. Cases involving foreign vessels may also be solved in accordance with arbitration procedures.”

Article 44 of the Regulations of the PRC on the Prevention of Vessel-Induced Sea Pollution stipulates that “In case of vessel-induced pollution,the ship owners who request exemption from liability for compensation shall submit to the harbor superintendency a report,which shall be able to prove that the pollution damage has been caused entirely by one of the circumstances as listed in Article 43 of the Marine Environmental Protection Law of the People's Republic of China,and that the pollution damage to the marine environment could not be avoided despite all prompt and reasonable measures.

But the above-mentioned rules are too ambiguously drafted to be firmly applied in judicial practices. Due to a lack of a uniform, standard and fixed criterion, the judges in many instances, have to apply their discretions in interpretation and this is one reason which explained for the different conclusions arrived at by the judges of different districts or even from judges of the same court. The inconsistencies of the judicial decisions have led to poor compensation for victims of the pollution incidents.

Another reason for the inadequate compensation in PRC is the loophole in the application of the CLC. According to an analysis , PRC’s domestic oil tankers navigating along the coast with a deadweight of less than 2,000 tons accounts for 77.6 percent while oil tankers on inland rivers below 2,000 tons in deadweight accounts for 87 percent. Fully 47 percent of these inland tankers are less than 500 tons. All these vessels do not come under the governance of CLC and China has such a large diverse fleet of small and old vessels plying within its waters and rivers that any attempt to impose strict liability on them and or compulsory insurance would certainly kill off this important leg of the transport chain which kept the China’s economy beating.

Being a party to CLC, China only requires owners of oil tankers engaged on international route carrying more than 2,000 tons of cargo oil to buy insurance to protect their pollution liability. CLC as a whole, did not achieve its objective well in PRC because insurance for oil pollution is not widely promoted. In PRC only vessels carrying more than 2,000 tons of cargo oil and for international transport are obligated to insure their risks against oil pollution. Vessels for internal transport and vessels with a deadweight under 2,000 tons are not covered with liability insurance for cost reasons.

Next, the FC, of which PRC is a party, is only applicable to Hong Kong SAR and not to the mainland proper. Again for economic reasons, PRC has not set up any oil pollution compensation fund, hence for any excess amount above the limitation amount stipulated by CLC, the victims have no remedy in PRC against the guilty parties. The Chinese authority is apparently reluctant to impose financial burdens on many nascent shipowners who have yet to find their feet.

Finally, the low limitation amount of the limitation of liability regime as stipulated by the Maritime Code of PRC, as mentioned before, also contributed to the inadequate compensation regime available to victims of oil or chemical pollution incidents. Furthermore though the rules are present, the actual implementation and enforcement of the rules are rare and hard to be applied .

The prevalent compensation regimes for oil/chemical spill pollutions in the world which could be models for PRC to adopt

(1) Compensation regime established by CLC and FC

Many countries choose to become a party to both CLC and FC and to follow the stipulations in their entirety. At the end of May 2006 there are 93 countries and regions which have joined both the CLC and FC. But this compensation regime is hard to be promoted in China, because China is now the third largest importer of oil and the largest importer of refined oil products and chemicals. Oil importers would have to shoulder a heavy burden for contributions made to the FC. It will also increase the operating costs of the Chinese oil tanker fleets and any such increases of their operating costs would certainly meet with strong resistance. It is also inevitable that the owners would pass all the cost increases down the line to the consumers. There is a huge social costs to be considered.

(2) US model : Internal Compensation Fund Regime only
Due to the limitation amount stipulated by FC 1971, it was deemed too low by US. It did not join in the FC and after the major oil pollution accident of 1989, US promulgated the OPA 1990, and set up the OSLTF (Oil Spill Liability Trust Fund) accordingly. This kind of compensation regime may be suitable for PRC as it has the liberty to impose a regime which is uniquely suitable for the Chinese economic and social conditions.

(3) Double compensation regime: International Conventions and Internal Legislations

In 1971, Canada promulgated a code to set up an ocean oil pollution compensation fund, and in 1987 promulgated the amended SOPF (Ship Source Oil Pollution Fund). Canada is at the same time a party to the CLC and FC and so the internal fund is mainly for making up shortfalls not covered by the CLC and FC.

Can PRC wait any longer to push for and implement a compulsory compensation regime?

In 2005 while promoting compulsory insurance against oil pollution from ships, China’s Maritime Safety Administration (MSA) began the work to establish a compensation regime for oil pollution from ships to guarantee financial support for cleaning up operations and compensation for victims of such incidents. This fund will be set up by levying a charge on ship owners and cargo consignors to ensure that they in take responsibility for oil pollution and compensating the victims of oil spills. But till now the fund has yet to be set up.

PRC in my view, is faced with a difficult choice of trying to protect and nurture a viable shipping and oil/chemical industry but at the same time, pinned down with a pressing need to come to terms with the harsh reality of a fast degrading maritime environment. A weak and feeble legal regime with no bite, will not serve its long term purpose and it is critical that PRC must design a feasible compensation regime to protect its environment adequately and to ensure that victims of such incidents are realistically compensated. PRC cannot afford to remain status quo because with the wide range of industrial chemicals being imported into the country, the impact of any spills whether in small or large quantity, would be far reaching in its impact to its marine ecosystems, marine resources and the health of the Chinese people.

A major source of protein needs of the population is derived from its rivers and coastal waters where large scale aqua farming are undertaken to harvest fish, crabs, shell fish, oysters, scallops, shrimps etc. It cannot depend on catches landed from the surrounding seas and the far oceans as these alone, are not able to meet the demands from a increasingly affluent society. The rivers and lakes are also water sources for PRC. The coastal regions, beside supporting large industrial installations, are also increasingly being used for recreational purposes. Any contamination of such areas by chemicals would be far reaching in its implications. It is unrealistic to draw on the country’s financial resources to clean up such pollution or to implement measures to minimize its damage whilst the guilty parties can get away easily.

Rising health care costs is already a serious concerns for the Chinese people and any additional burdens imposed on the population because of long term contaminated related illnesses will surely lead to social tensions and high social costs.

Imposition of a strict compensation regime will close the loophole now being exploited by local and foreign shipping entities. More importantly, a strict compensation regime will force shipowners to upgrade their fleets and to improve manning standards. The implementation of such a national compensation regime should be taken proactively rather than taking the traditional route of implementing reactive legislation to deal with the effects after a major disaster.

A good example for PRC to consider is the International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea (HNS) 1996. This Convention was adopted by IMO on 3 May 1996. The HNS Convention is based on the two tier system established under the CLC and FC. However it goes further in that it covers not only pollution damage but also risks of fire and explosions, including loss of life or personal injury as well as loss of or damage to property.
Hazardous and noxious substances are defined by reference to lists of substances included in various IMO Conventions and Codes. These include oils; other liquid substances defined as noxious or dangerous; liquefied gases; liquefied substances with a flashpoint not exceeding 60C; dangerous, hazardous and harmful materials and substances carried in packaged form; and solid bulk materials defined as possessing chemical hazards. The Convention also covers residues left by the previous carriage of HNS, other than those carried in packaged form.

The Convention defines damage as including loss of life or personal injury; loss of or damage to property outside the ship; loss or damage by contamination of the environment; the costs of preventative measures and further loss or damage caused by them.

The Convention introduces strict liability for the shipowner and a system of compulsory insurance and insurance certificates。 For ships not exceeding 2000 GRT, the limits of liability is set at 10 million SDR and above that, additional 1500 SDR is added for each gross ton until it reaches 50,000 GRT and above that, 360 SDR per gross ton until the limit of 100 million SDR is reached or roughly about US$128 million.

In order to ensure that shipowners engaged in the transport of HNS are able to meet their liabilities, the Convention makes insurance compulsory for them. A certificate of insurance must be carried onboard and a copy is kept by the authorities who keep record of the ship’s registry.

The HNS also set up a second tier fund which is financed by cargo interests. Contributions to the second tier will be levied on persons in the contracting parties who receive a certain minimum quantity of HNS cargo in a calendar year. This second tier will consist of one general account and three separate accounts for oil, liquefied natural gas and liquefied petroleum gas. The HNS Convention excludes pollution damage as defined in the CLC and FC to avoid an overlap with these Conventions.

The HNS in the writer’s view, is not entirely perfect but it serves to provide a good template for PRC to study and to create a compensation model which will suit the Chinese economic model whilst at the same time, represent a bold step to ensure at least some certainty of compensation for the victims of oil or chemical substance pollution. This will also relieve the State from having to shoulder the burden of dealing with the consequences of long term damage to its maritime environment, ecosystems and the health of the Chinese people.

Capt Lee Fook Choon
International Congress of Maritime Arbitrators
Singapore 27 Feb 2007



































在一些大型的索赔案中,有必要提供样品进行专业的分析。可以是农学家、园艺家、植物学家、微生物专家、真菌专家、细菌学家或农业部门的专业人士。商业实验室通常也比较擅长,例如:英国的CAB国际微生物研究院,以及荷兰的Centraalbureau voor Schimmelcultures。

Capt Lee Fook Choon
China International Marine Insurance Seminar
Nanjing 27 April 2007


Saturday, April 28, 2007

The Development of Chinese Law and Its Impact on International Trade

Legal System

Legal System refers in general to the legislative, the executive and the judicial system of a country. This paper attempts to discuss some significant aspects of the Chinese legal system such as the law making process, interpretation of law and the judiciary.

1. Law Making

The National People’s Congress (NPC) together with its permanent body – the Standing Committee, is the highest organ of state power in making laws for the country.

NPC deputies elected from the provinces, autonomous regions and municipalities and from the armed forces

3000 members and met once each year for about 2 weeks

A session of NPC may also be convened at any time if the Standing Committee deems it necessary or if 1/5 of the
deputies so decide

In principle, NPC has power to enact and to amend basic laws but in reality, it has neither the skill nor adequate time to consider draft bills for enactment

On the other hand, the Standing Committee is much smaller in size and meets every two months and many of its members are full time with the Standing Committee.

The Standing Committee cannot however amend the Constitution but can interpret the Constitution and supervise its enforcement

Chairman of provincial people congresses are invited to attend the standing committee meeting but with no voting rights.

In addition, State Council (Central People’s Govt of PRC) and local governments of provinces, autonomous regions and municipalities directly under the Central Government can also have legislative power like the NPC and its Standing Committee provided it is for local regulations and must not contravene with the provisions of the Constitution, the law and administrative rules and regulations.

In effect, Chinese law can be divided into 4 levels, namely : the Constitution, laws adopted by the NPC and its Standing Committee, administrative regulations adopted by the State Council and local regulations by the people’s congresses of provinces, autonomous regions and cities.

2. Interpretation of Law

In China, the Court has the power to implement the law but not to interpret the law. The Constitution entrusts the NPC Standing Committee with the power to interpret the Constitution and Laws. As mentioned earlier, the State Council and people’s congresses at various levels may enact administrative and local regulations respectively. The basis of legislative interpretation is that those who make the law are in the best position to interpret the law. It therefore follows that in addition to NPC and its standing committee, the State Council and the standing committees of the various local people’s congresses can also interpret the law.

3. Judicial Interpretation

A resolution adopted by the NPC Standing Committee dated 10 June 1981 allowed the Supreme People’s Court to interpret all questions arising from court trials concerning specific application of laws and decrees. The lack of action on the part of the NPC Standing Committee to interpret various laws have left much room to the court to fill in the void. Since the 1981 decision, the Supreme Court has issued thousands of judicial interpretation to guide the lower courts

Such judicial interpretations have binding force on all the courts in China and covers almost every aspect of the legal system.

The Judiciary

The people’s courts of the PRC are the judicial organs of the State and it is tasked to try criminal, civil, economic, administrative, maritime and other cases prescribed by law

Judicial power is exercised by the courts at four levels namely :basic people’s court, intermediate people’s court and special court, high people’s court and the Supreme People’s Court. Except for the Supreme People’s Court, all other courts are referred to as local courts. There is only one Supreme People’s Court which is located in Beijing.

The Supreme People’s Court handles cases of first instance assigned by law such as major criminal cases of national importance, economic, administrative, communications and transportation matters affecting whole nation. It also handles appeals and protests lodged against judgements handed down by local people’s high courts and special courts.

The high people’s courts include all the high people’s courts of the provinces, autonomous regions and municipalities under the Central government. A high people’s court handles cases of first instance assigned by law as well as appeals and protests lodged against judgements made by intermediate or special courts. It also supervises the administration of justice by people’s courts at lower levels.

The intermediate people’s courts include those established in the prefectures of a province or autonomous region or municipalities under the jurisdiction of a province and those established in the municipalities under the Central Government. It handles cases of first instance assigned by law as well as appeals and protest against judgements of the basic people’s courts. It also supervises the administration of justice of the basic people’s courts.

The basic people’s courts include the people’s courts of counties, autonomous counties, cities (at county level) and municipal districts. It handles all criminal, civil, economic and administrative cases of first instance. It also directs the work of people’s mediation committees A basic people’s court may also set up a number of people’s tribunals as agencies within its jurisdictions. A people’s tribunal is part of the people’s basic court and its judgements and orders are judgements and orders of basic people’s court.

The special people’s courts are set up for specific designated cases and these are military courts, railway transport courts and maritime courts. These special courts are deemed at the same level as intermediate courts.

According to the Constitution, each people’s court is composed of one president, vice-presidents, chief judges and associate chief judges of divisions and judges.

Only the people’s courts can exercise judicial power. No other government agencies, department has the right to exercise this power.

In principle, a people’s court is independent and not subject to interference by any administrative organ or public organization.

Jurisdiction by Level

1. Hierarchy Jurisdiction

Jurisdiction of court is sub-divided into hierarchically and geographically.

Under the Civil Procedure Law, a basic people’s court could hear all civil cases as courts of first instance

Intermediate courts have jurisdiction as courts of first instance over major cases involving foreign interests and cases that have substantial impact on the community within their geographical jurisdiction’s well as cases which are assigned by the Supreme People’s Court

The maritime people’s court has jurisdiction as courts of first instance over maritime cases and related commercial cases

High people’s court has jurisdiction as courts of first instance which have substantial impact on the community within their geographical jurisdiction

The Supreme People’s Court has jurisdiction as the court of first instance to hear cases which have substantial impact on the whole country

Prior to the adoption of the Civil Procedure Law, all cases involving foreign interests must be heard by an intermediate court but now it could also be heard before a basic people’s court. This is a reflection of the gradual maturity of the system and the fact that there is a need to share the case load of the intermediate courts.

2. Jurisdiction by Geographical Locality

A civil lawsuit brought against a citizen, a legal person or any other organization shall be under the jurisdiction of eh court in the place where the defendant is domiciled If the defendant’s domicle is different from his habitual residence, the lawsuit shall be under the jurisdiction of the court of the place of his habitual residence

Actions from contractual disputes come under the jurisdiction of the people’s court where the defendant is domiciled or the place of implementation of the contract. However parties may specify in writing to choose the jurisdiction of the people’s court with regard to the defendant’s place of domicle, or the place for honoring the contract, or the place where the contract is signed, or the plaintiff’s domicle and the place of the subject matter but they must never violate the rule of jurisdiction by level or exclusive jurisdiction like the maritime courts or the railway courts

Actions arising from disputes over insurance contracts come under the jurisdiction of the people’s court at the place of the defendant’s domicle or at the place of the insured subject matter

Actions arising from disputes over negotiable instruments come under the jurisdiction of the people’s court at the place where payment is to be made or at the place where the defendant is domiciled.

Actions arising from disputes over contracts on carriage by rail, road, water, air or combined transportation come under the jurisdiction of people’s court at the place of departure, destination or the place where the defendant is domiciled.

Actions against acts of infringement come under the jurisdiction of the people’s court at the place where such acts are committed or at the place where the defendant is domiciled.

Actions claiming compensation for damage arising from rail, road, water and air accidents come under the jurisdiction of the people’s court at the place where such accidents occurred, or at the place where the vehicles or ships first arrived, or at the place where the aircraft first landed, or at the place where the defendant is domiciled.

Actions claiming compensation for damage from ship collisions or other maritime accidents come under the jurisdiction of the people’s court where such collision took place, or at the port where the collided ship first arrived, or at the port where the ship responsible for the damage is detained or at the place where the defendant is domiciled.

Actions claiming salvage come under the jurisdiction of the people’s court at the place of the rescue or at the prot where the rescued ship first arrived.

Actions arising from general average come under the jurisdiction of the people’s court at the port where the ship first arrived, or at the place where the general average is adjusted, or at the port where the voyage terminates.

If more than one court has jurisdiction over the same dispute, the court that first accepts the case should exercise jurisdictions.

Systems of Adjudication

The people’s courts try cases in public, except for those involving state secrets, individual privacy and the commission of crimes by minors. For public hearing, announcements will be made in advance and citizens are allowed to attend.

Cases of first instance are tried by a collegial panel of judges except for very simple civil cases and minor criminal cases where a single judge by adjudicate. Appeals and protests are heard by a collegial panel of judges. The presiding judge of the panel is appointed by the president of the court or the chief judge of a division. Majority view will prevail but dissenting view is also entered into minutes.

The parties and their legal representatives have the right to demand the withdrawal of members of the judicial panel, clerks, public prosecutors, expert witnesses or interpreters, who they think have an interest in the case or related to a party in the case. Such persons may also withdraw on their own accord.

China practises a two instances final adjudication system

In China, there is a system known as supervision of adjudication system. If errors are discovered concerning the finding of facts or application of the law in the judgements or orders that have already become legally effective, they can still be corrected through the procedure of trial supervision or what we may call judicial review.

Special Provisions for Procedure of Civil Action Involving Foreign Interests.

In the event that the provisions of any Internationa Treaty which China had acceded to but such provisions are in conflict with the Chinese local law, the provisions of international treaty shall apply.

If foreigners or foreign enterprises and organizations are going to have agent ad litem in taking or responding to actions in PRC on their behalf, they must appoint an attorney-at-law of the PRC

Parties involved in disputes over contractual or property rights may specify in writing to choose the jurisdiction of the people’s court at the place having actual relation with the dispute. But actions over disputes arising from contracts for Sino-foreign equity joint ventures etc shall be under the jurisdiction of the people’s court

Judgement made by foreign court or award rendered by a foreign arbitration organization have to apply for recognition and enforcement of the people’s court, if the parties to such judgement or award wanted to have it enforced in PRC

Special Maritime Procedure

China has adopted the Special Maritime Procedure Law (SMP) on 25 Dec 1999. SMP is a special law. When the people’s court tries any maritime cases, the SMP takes precedent over the Civil Procedure Law. It means that Civil Procedure Law will only apply if there is no relevant provision under the SMP.

Maritime tortuous actions also come under the jurisdiction of the maritime court of the place where the ship’s port of registry is located.

Actions arising from a charter party dispute of a seagoing ship shall be under the jurisdiction of the maritime court of the place of the port of delivery, the port of re-delivery, the ship’s port of registry and the defendant’s place of domicle

Actions arising from a dispute over a protection and indemnity contract shall be under the jurisdiction of the maritime court where the subject matter of insurance is located, where the accident occurred or where the defendant is domiciled.

Actions arising from the service contract of crew, shall be under the jurisdiction of the maritime court of the place where the plaintiff is located.or where the contract is signed, where the port of embarkation and disembarkation of the crews is located or where the defendant is domiciled.

Actions arising from a dispute over maritime security shall be under the jurisdiction of the maritime court of the place where the collateral is located or where the domicle of the defendant is located, actions arising from a dispute over a ship mortgage may also be under the jurisdiction of the maritime court where the ship’s port of registry is located.

Actions arising from a dispute over the ownership, possession, employment and maritime lien of a sea going ship shall be under the jurisdiction of the maritime court of the place where the ship is located, where the ship’s port of registry is located or where the defendant’s domicle is located.

Where all the parties to a maritime dispute are foreigners, foreign enterprises have agreed in writing to be subject to the jurisdiction of a maritime court of PRC though the place actually related to the casualty is not within the territory of PRC, the said maritime court shall have jurisdiction over the dispute.

The Chinese maritime court also allowed the application by the claimants for the preservation of evidence. Some conditions must be met before such an application is approved. First the claimants must be a party to the dispute, second the evidence to be preserved must substantiates the maritime claims, thirdly, the party against whom an application is made, is a party to the dispute and lastly, there must be fear that the respondents may disperse off the evidence which are hard to obtain.

Arbitration in China

China has been advocating the use of arbitration to resolve commercial disputes. Arbitration has made 4 decades of progress in PRC.

China’s first Arbitration Law was propagated on 31 Oct 1994 and came into effect on 1 Sept 1995

An arbitration agreement means an arb clause stipulated by their parties in the contract or a written agreement to refer their dispute to arbitration. Chinese law requires a valid arb agreement to name the Arb Commission so choose, parties must have capacities to sign the arbitration agreement

A party may object to the jurisdiction of an arbitration commission if he has justifiable reasons and such objection must be raised before the first hearing or in the case of documents only arbitration, before the service of the first defense.

Preservation of Property and Preservation of Evidence can be effected by application to the intermediate people’s courts. Such application is made by the arbitration commission.

Enforcement of arbitration award by a Domestic Arbitration Institution must be lodged with the Intermediate People’s Court. The competent court will only review the arbitration procedures adopted. But it will not require the evidence to be verified, or investigate whether the law is properly applied and neither would the court examine the actual compensation to be paid.

If the party is domiciled outside China, the applicant shall directly request a competent foreign court to recognize its validity and enforce the award

Enforcement of an Award issued by a Foreign Arbitration Commission shall apply directly to the local Maritime Court in China and if there is no maritime court, then to the Intermediate People’s Court for enforcement action. The intermediate People’s Court shall act in accordance to international treaties which China has concluded or to which China is a party on the basis of the principle of reciprocity.

CIETAC, also named as the Court of Arbitration of China Chamber of International Commerce from 1 October 2000. It is headquarted in Beijing with sub branches at Shenzhen and Shangai

CMAC, China Maritime Arbitration Commission, headquartered in Beijing with sub-commission in Shanghai (established Jan 2003). A Fishery Dispute Resolution Center was also established in Jan 2003 within Shanghai CMAC

Capt Lee Fook Choon
Maritime Law Seminar
Jakarta, December 2006


Wednesday, February 08, 2006

The Toplis & Harding Group

The Toplis & Harding Group

The company was originally formed in London in 1790 by James Toplis, who was an upholsterer and cabinet maker. He was later joined by William Daniel Harding in 1844.

In February 1811, James Toplis, was appointed "Surveyor of Stock" to the Sun Fire Office and thus begun our long association with the insurance industry.

Since its early humble beginnings as the founding member of the loss adjusting profession, the Toplis and Harding Group eventually developed into one of the world’s largest and independent International Loss Adjusting and Surveying practices.

In 1995, the majority of the companies within the Group negotiated a Management BuyOuts. This resulted in many changes in trading names, although in many regions the name "Toplis and Harding" was retained.

Hong Kong office - Corporate Structure

The Hong Kong operation is the longest established office in the Asia Pacific Region, commencing operations in 1968. Over the years it has gained for itself an excellent reputation in the local and international insurance markets, starting from the adjustment of simple construction and civil engineering related losses to more complex and substantial infrastructure projects in Hong Kong.

It is a fact that our company has been the training ground for many of the Hong Kong’s indigenous loss adjusters and their growth had contributed to the development of the industry in Hong Kong in recent decades. Our senior executives continue to strive to maintain and further improve the standard of professionalism and integrity.

The Hong Kong office successfully negotiated a Management BuyOut in 1995 and successfully renamed it’s Chinese name to 華証行 (meaning Grand Adjusting) in January 1996.

In order to provide total solution to our clients, the Company established two new subsidiary companies in 1995 - The Toplis & Harding (Marine) Ltd and Toplis & Harding (Recoveries) Ltd.

In May 2000, we have invited Capt Lee Fook Choon from Integral Marine Consultants, Singapore to join our group as Technical Consultant.

From our staff complement of some 50 in 2002, our pool of adjusters and surveyors are grouped into various departments although we encourage inter departmental integration wherever possible. In so doing, our adjusters’ experience are considerably focussed and enhanced, thus better placed to accept the increasing challenges and diversities of modern day insurance claims.

Apart from being the nominated loss adjuster and surveyor of the Insurers in Hong Kong, we have been engaged in various aspects of claims backing activities such as recovery actions, salvage auction and fraudulent claims investigation. In the global insurance market, we are the nominated Survey and Settling Agent for many overseas Insurers.

Our Corporate Logo

The Corporate Identity for Toplis and Harding Group creates a consistent image for every aspect of the Group and its activities. In order to achieve this, a mark has been adopted which utilises a seated figure signifying authority and judgement. This has been resolved into the seal device reinforced by the surrounding motto. The mark embodies the ethos of the group in all its activities.

Our Fee Tariff

A new fee tariff for our Marine Services for 2010 (with effective 1 April 2010) is now availble to our clients upon request.

Marine Hull & P&I Claims:

Marine Cargo Survey:

Marine Cargo Claims Handling/Settling:

Marine Claims Recovery:

Non-Marine / Property Recovery:

Non-Marine / Property Survey:

Telephone enquiry: (852) 2861 2030
Facsimile: (852) 2866 3134

Range of our Services

Survey Agency
We have the human resources to undertake the following surveys: -
Cargo Survey – General Merchandize, Frozen Foods, Vegetable Oils, Machines, Raw Materials,
Hull and Machinery Survey
Pre-shipment / Pre-insurance Survey
General Average Survey
Other Investigation – Total Loss of Ships
Non-marine – Property Losses
Value-added Services – Loss Minimization, Salvage Auction, Risk Improvement Advice, Recovery Advice

Settling Agency
Arranging survey, minimization of loss, protecting recovery rights and evidence, conducting salvage sales, collecting documents necessary for settling and recoveries, adjusting claims, advising on policy liability, arranging settlement, declining liability on Insurers’ behalf.

Recovery Agency
We have a good team in place to handle all aspects of cargo claims recoveries for insurers and uninsured interests in pursuing recovery claims against carriers for loss of or damage to cargo whilst in transit. We have a sound combination of legal and technical expertise to offer value added service to our clients in the sense that all claims are being reviewed and pursued with diligence. Where possible, we will try best to obtain security and enter into substantive negotiation without having to resort to expensive legal expenses to obtain the necessary security. Our in-depth understanding of ship operations and charter party business, will enable us to deal with standard defences raised by shipping companies ie perils of the sea, insufficient packing, pre-shipment damage etc, as well as raising issues with cargo surveyors whose findings may appear ambiguous or in doubt.

Our work is carried out on ‘ No Cure No Pay’ basis. Our fees are inclusive of incidental disbursements but where specific disbursements are concerned (legal fees and search fees for example), prior approval would be sought from the insurers.

Arbitration & Mediation
Alternative Dispute Resolution is an area which is gaining popularity in the resolution of commercial disputes in many jurisdictions as against relying on the local judicial systems which may have yet to gain acceptance and trust by foreign parties. We are able to offer qualified and experienced arbitral and mediation services to resolve cross claims between insurers; between insurers and the assureds; between different contractual parties in international transactions and between insurers and third parties interests.

Capt Lee is a qualified chartered arbitrator and accreditated mediator. He is well placed to adjudicate insurance related disputes or commercial transaction disputes. Subject to the agreement of the parties, he can preside either as a sole arbitrator or as one of the arbitrators in a two men or three men tribunal. Arbitral awards issued in Hongkong or China are binding on the parties and enforceable in more than 120 jurisdictions.

Capt Lee had also acted successfully as a mediator in several transnational claims involving disputants in Scandinavia, China, Vietnam and Singapore. Mediation is a much cheaper option than arbitration and its attraction lies in the fact that the goodwill between the disputing parties is preserved.

Technical & Legal Consultancy
Advice on packaging and stowage.
Advice on policy liability.
Legal Advice on the viability of the case and jurisdictional procedures in China, Japan, Korea, USA and other better known common-law countries.

Our Strength

There is an integration of expertise in our office - Master Mariners, Chartered Arbitrator, Accredited Mediator, Legal Consultants, Recovery Experts, Experienced Surveyors and Claim Handlers. They are in charge of our service sectors and are also responsible for training and guiding junior staff.

Staff Quality
Our staff quality is centered on degree holders in shipping and law. They are encouraged to enhance their skills whenever possible through further education and hand-on field experience.

One-stop Services
We are capable of providing one-stop professional services to Insurers, thus saving Insurers’ time and effort in appointing expertise from different companies and countries. Communication between expertise is fast and accurate. Documents are centralized in one office and the risk of documentary loss by post is minimized.

Strategic Planning
Centralization of expertise enables identification and monitoring of complicated cases at the survey stage and results in well-planned actions throughout the survey, settling and recovery process.

Global Network
Due to our vast network and close local support in Singapore, Malaysia, Indonesia, Myanmar, Vietnam and China and India, we are able to offer multiple-country services managed by a single office.

No Cure No Pay
Our recovery service is provided on a "no cure no pay" basis, enabling simplified budgets.

Time-bar Security
Our unique recovery system protects Insurers’ right of recovery early at the survey stage.


Insurers are free to select our choice of services separately or in package according to their needs. We are flexible to meet Insurers’ different needs by offering a tailor-made service scheme.

Number of Staff

Toplis & Harding Group - over 60

Staff Profile

Master Mariner, MNI, ACII, FCIArb, LL.M(Wales), Chartered Arbitrator,
Listed Mediator
Position : Technical Director

Direct Telephone No: (852) 82268420
Direct E-mail:
Skype Contact: captleesir

Besides holding the post as Technical Director in our Hong Kong Operations, Capt Lee Fook Choon is also the principal officer of Integral Marine Consultants, Singapore and also concurrently acting as consultant to IMC’s associate offices in Malaysia, Indonesia, Myanmar, China. He has been working as an insurance claims loss adjuster for marine insurers for the last 27 years and as a maritime arbitrator since 1993. Over the years, he has also been active as a cross-border dispute mediators in Singapore, China and Vietnam.

As head of the company, he is involved in the day-to day management of the company, business development region wide, conducting surveys and fraud investigations of substantial magnitude, supervision of fellow colleagues, training of new entrants, delivering technical talks to institutions and acting as arbitrators in various maritime disputes. To date, he has handled more than 7000 cases of marine related losses and loss adjustment work either directly or together with his colleagues.

Capt Lee is an experienced Loss Adjuster and Maritime Arbitrator and by qualifications is a master mariner, a chartered arbitrator with the UK Chartered Institute of Arbitrators, holder of ACII and a master degree in maritime law from Cardiff Law School. He is also a Chartered Insurance Practitioner. He is a panel maritime arbitrator with the Singapore International Arbitration Centre, Hongkong International Arbitration Centre, China Maritime Arbitration Commission, Indian Arbitration Council, Regional Arbitration Centre Kuala Lumpur and Institute of Arbitrators UK. His areas of interests are charter party disputes, insurance claims, collision liabilities, ship repairs and ship building disputes and international sales of goods disputes.

As a Loss Adjuster, he had represented many insurers in Singapore, Malaysia, Indonesia, Germany, UK, Scandinavia, China and Hongkong in handling thousands of marine hull and cargo cases. He heads an operation with associate offices in Malaysia, Indonesia, Myanmar, Vietnam and China. With him onboard, we are able to enlarge considerably our scope of services and penetrations to a large network of associates in many countries.


Hull Survey/Investigation / Loss Adjustment
More than 27 years experience in surveying/investigation major hull losses like collision, fire stranding, heavy weather damage and sinking in South East Asia, India, Middle East and China on behalf of hull and machinery insurers in Singapore, Malaysia, China, Norway, Vietnam and Hongkong. Such experience also involved related work on off-shore platforms and production rigs as well as fixed structures like wharf, piers, jetties, dolphins, single buoy moorings etc.

Cargo Losses and Investigations
Had been appointed by major insurers in China, Singapore, UK, Malaysia, Indonesia and Germany to conduct investigations and to limit claims in large cargo losses involving a range of products like machineries, rice, timber, commodities, plant produce, hydrocarbon and vegetable oils.

Loss Prevention and Risk Assessment
Have acted on behalf of many insurers on loss prevention and risk assessment surveys involving ships, suction dredgers, manufacturing plants in Malaysia and Indonesia, risk assessment of movements of heavy machineries in inland transit modes, privatized ports and shipyards in Singapore and Malaysia.

Liability Investigations
Have been appointed by insurers in Malaysia and Singapore to investigate liabilities on hull policies, cargo policies, mortgagee interests insurance policies and seller interests insurance policies.

Arbitration and Mediation
Have seated as sole arbitrator and as a member of a two arbitrator or three arbitrators tribunal in more than 15 maritime arbitration proceedings involving trade, charter party, quality of goods and custom duties disputes. As a mediator, had acted successfully as a transnational mediator in more than 8 cases involving claims between Norwegian and Mainland Chinese interests, between Singapore/Norwegian interests, between Singapore and Vietnamese interests etc.

Conducting Seminars
Have participated as seminar speakers in many international maritime seminars held in London, Rotterdam, Singapore, Kuala Lumpur, Ho Chi Minh City, Shanghai, Beijing, Dalian, Hangzhou and Jakarta. Also conducted customized in-house lectures for insurance companies in Singapore, Malaysia and Hongkong solely for their managers and agents. Had also participated as one of the seminar speakers in regional conferences organized by AIU and CGU. Besides the above, Capt Lee is a regular lecturer with The Singapore College of Insurance, a non-profit making institution owned by the Monetary Authority of Singapore and an approved tutor of the UK Chartered Institute of Arbitrators.

Perrine K. B. Chan LL.B (Hons), MCIArb
Position : Director

Perrine started her insurance career by first joining Asia Insurance Co Ltd in September 1981 in the Marine Claims Department handling marine cargo claims and in November 1984 joined a local recovery company (later renamed as Toplis & Harding (Recoveries) Ltd) chiefly involved in the handling of marine cargo claims adjustment & recoveries and started to involve in assisting the development of business in the insurance market. During mid 1989, Perrine joined another local recovery company assuming the position of Manager and also undertook the supervision of the staff in the non-marine claims recovery matters.

In December 1992, Perrine had set up her business in running an insurance claims consultant company when she had actively involved in the marketing of the Company and also undertook the handling of the work for the Cargo Underwriters. During this period, Perrine had traveled extensively to the Asian countries to develop business with main focus on the People’s Republic of China, at the same time, also looking after the office management and administration work.
In May 1996, Perrine rejoined Toplis to assist in developing the Marine & Recoveries divisions which were formally incorporated as two subsidiary companies of Toplis. With her continuous efforts, the divisions under her supervision have extensively expanded from 3 members to over 20 members including the recent set up of the airport operation office in 2005.

During the past 25 years working in the professional field, Perrine has been involved in investigations in a number of significant marine insurance claims which enable Cargo Underwriters to assess policy liability on technical issues and to enable subrogated Cargo Underwriters to preserve sufficient evidence in pursuing successful recovery actions against responsible parties in the Admiralty Court Actions.

Marine Cargo Claims Survey, Settling and Recoveries
Cargo Loss Investigations
Aviation Claims Handling
Non-Marine & Motor Recoveries
Goods in Transit Claims Handling
Policy Liability Consultant
Bailee / Forwarder’s Liability Consultant

Contact Us

Hong Kong Regional Office
Unit 1506-8, 15/F., Yen Sheng Centre
64 Hoi Yuen Road
Kwun Tong
Kowloon, Hong Kong
Tel: 852-2866 7744
Fax: 852-2858 2633
Person to Contact: Ms Perrine Chan

HK Airport Operation OfficeRoom 6024, South Office Block
HACTL Super Terminal 1
H.K. International Airport
Hong Kong
Tel : 852-2866 7744
Fax : 852-2753 1232
Handphone: 9034 7852
Person to contact : Mr. Kenneth Koo

Our China Associates

Tianjin Huazheng Adjusters Co Ltd
5-501 Shi, No. 1 Lou, Zhu Bo Li
Li Min Dao, Hexi District
Tianjin 300201

利民道珠波裡深方小區 1號樓 5-501室
郵編: 300201

Tel : 86-22-28300418
Fax: 86-22-28316282
Handphone : 86-13902112605
Email :
Person to contact : Mr. Liu Geng Xin(劉更新先生)

Tianjin Huazheng Adjusters Co Ltd (Shanghai Rep. Office)/
Integral Marine Consultants Ltd
Suite 1616, 16/F., Shanhai Tower
No. 1476 Pudong Avenue
Pudong, Shanghai 200135


Tel / Fax: 86-21-3392 6949
Handphone: 86 21 3875 1716
Email :
Person to contact : Capt. F. C. Lee
Personal email :

Recruitment in Hong Kong

  • Junior / Senior Cargo Surveyors;
  • Claims Handler

For interested parties, please send full resume to or via fax no. 3764 5450 for interview arrangement.

Our Worldwide Network


Integral Marine Consultants Pte Ltd
21 Bukit Batok Crescent
#07-76, Wcega Tower
Singapore 658065

Tel : 65-6734 0798
Person to contact : Capt F.C. Lee / Ms Priscilla Tan


Integral Marine Consultants
C/o P.T. Carsurin
Sarana Penjaminan Bldg (Pekaka Bldg)
7th Floor, J1. Angkasa Blok B-9, Kav. 6
Kota Baru Bandar Kemayoran
Jakarta 10720
Tel : 62-21-654 0425
Fax : 62-21-654 0418
Email :
Person to contact : Capt Sunardi
Email :


Integral Marine Consultants Sdn Bhd
No. 25, 2nd Floor
Jalan Chengal
96000Sibu, Sarawak,
East Malaysia
Tel : 60 84-345 916
Fax : 60 84-347 524
Handphone: 019-8866161
Email :
Person to contact : Mr. Peter Lau


Integral Marine Consultants Pte Ltd
Representative Office (Myanmar)
No. F17/F18, Aung San Stadium (North Wing)
Kan Daw Galay Road
Mingalar Taung Nyunt Township Yangon, Myanmar
Tel : 95-1-252259
Fax : 95-1-571086
Person to contact :
Ms Tint Tint Aung

VIETNAMVietminh Marine Services Ltd
59/11 Pham Viet Chanh,
District 1
Ho Chi Minh City, Vietnam
Tel : 84-8-8331648
Fax : 84-8-8334503
Handphone: 84-903908049
Person to contact : Mdm Thu