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Client Update
May 2009
Shanghai Kai-Rong Law Firm
By Jin Yu-Lai
How to arrest ships in China
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In accordance with “Special Maritime Procedure Law of PRC” going into
Contents:
Lawful Maritime claims
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effect as of July 1, 2000 and “Interpretations of the Supreme People's
The scope of the ships maybe
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Court on Some Issues concerning the Application of Special Maritime
Arrested
The procedures of arrest of
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Procedure Law of PRC” going into effect as of February 1, 2003,
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preservation of maritime claims means the compulsory measures adopted
Ships
Consequent Lawsuit
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by a maritime court on the application of a maritime claimant against the
Some successful case handled
by Shanghai Kai-Rong Law Firm
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property of the person against whom a claim is made, for the purpose of
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Appendix
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ensuring fulfillment of the claim of the maritime claimant. The property of
the person against whom a claim is made includes the ships. So a
maritime claimant is entitled to apply to the maritime court for arresting the
related ships in China.
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Lawful Maritime claims related to arresting ships
With respect to the following maritime claims, an application may be made
for the arrest of a ship:
(1) loss of or damage to property caused by ship operation;
(2) loss of life or personal injury in direct connection with ship operation;
(3) salvage at sea;
(4) damage or threat of damage caused by ship to environment, coast or
relevant interested persons; measures adopted to prevent, diminish or
eliminate such damage; compensation paid for such damage; expenses
for reasonable measures actually adopted or to be adopted to restore
environment; losses caused by such damage to or likely to a third party;
and damage, expenses or losses of a similar nature as those specified in this
subparagraph;
(5) expenses related to re-floating, removal, reclamation or destroying of a sunken ship,
wreck, aground ship, abandoned ship or to making them harmless, including the expenses
related to refloating, removal, reclamation or destroying of the things which have or no
longer remained on board the ship or to making them harmless and expenses related to
maintaining of an abandoned ship and her crew;
(6) agreement in respect of employment or charting of a ship;
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(7) agreement in respect of carriage of goods or passengers;
(8) cargo (including luggage) carried by a ship or loss or damage relating thereto;
(9) general average;
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(10) towage;
(11) pilotage;
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(12)providing of supplies or rendering of services in respect of ship operation,
management, maintenance or repair;
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(13)Construction, re-construction, repair, refurbishment or equipment of a ship;
(14) dues or expenses for ports, canals, docks, harbours or other waterways;
(15)crew’s wages and other moneys, including repatriation expenses and social insurance
premium payable for the crew;
(16)expenses paid for a ship or a ship-owner;
(17)insurance premium for a ship (including protection and indemnity calls) payable by or
paid for a ship-owner or bareboat charterer;
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(18) commission, brokage or agency fee related to ships payable by or paid for a shipowner or bareboat charterer;
(19) a dispute over ownership or possession of a ship;
(20) a dispute between joint owners of a ship over the employment or earnings of the ship;
(21) ship mortgage or rights of a similar nature; and
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(22) a dispute arising out of a ship sale contract.
The scope of the ships maybe arrested
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The maritime court may arrest ships owned, at the time of arrest, by the ship-owner,
bareboat charterer, time charterer or voyage charterer who is liable for the maritime claim,
except for claims related to ownership or possession of a ship (in such circumstances only
the concerned ship can be arrested). No ships engaged in military or governmental
services may be subject to arrest.
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The procedures of arrest of ships
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A maritime claimant who wishes to apply for arrest of ships shall file an application in
writing with a maritime court of the place where the vessel is located. In the application the
particulars of the maritime claim, reasons for the application, subject-matter to be
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preserved and the amount of security required shall be specified with prima facie evidence
attached. Such as property or debt certificate, contract, bill of lading, tally report, laytime
statement, maritime report, ship damage report, cargo survey report, sea pollution report,
notice of loss of or damage to cargo, photos and so on.
The maritime court, having entertained an application for arrest of ships, may enjoin the
maritime claimant to provide security normally. If the maritime claimant fails to do so, the
court will reject the application. The type, method and amount of the security shall be
decided by the maritime court, and cash, guarantee issued by banks and insurance
companies can be accepted by the court normally. The maritime court, having accepted
an application, shall make an order within 48 hours. Where the order involves adoption of
measures for arrest of ships, it shall be executed forthwith;
where the conditions for the
arrest of ships are not met, it shall make an order to reject the application.
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The legal instruments for arresting the ships shall be served by the officer of maritime
court to the master of the arrested ship. The master shall sign on the acknowledgement of
receipt. When serving the order for arresting the ships aboard, the officer shall present the
order to the master and put up the order on the bottom of the mainmast of the ship or
other obvious place. While issuing the order for arresting the ships, the maritime court
may also send a notice to port authorities, frontier defence department and other
authorities for assistance in execution of the order. If necessary, the maritime court may
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directly send bailiff or guard to go aboard for purposes of supervision.
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Any party who is dissatisfied with such an order may, within 5 days after receipt thereof,
apply for review not more than once. The maritime court shall give the result of the review
within 5 days after receipt of the application therefor. Execution of the order shall not be
suspended during the period of review. Where arrest of ships is objected by an interested
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party, the maritime court, having examined the objection and considering the reasons
justified, shall discharge arrest against his ships.
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The defendant will provide the credible and sufficient security after knowing the arrested
ship in order to release the arrested ship. The claimant and the court will check and
approve such security and then the maritime court will issue an order to release the
arrested ship in time after application of the claimant. However, the security provided by
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the party against who a claim is made does not mean acknowledgement of the liability or
waiver of the liability limitation.
Where on the expiry of the time limit for ship arrest, the party against whom a claim is
made fails to provide security and it is not appropriate to keep the ship under arrest, the
maritime claimant, having brought an action or applied for arbitration, may apply to the
maritime court for auction of the ship.
Application of arrest of ships shall not be bound by the jurisdiction agreement or arbitration
agreement reached between the parties to an action in respect of the maritime claim. The
application of arrest of ships shall be applied for the maritime court of the place where the
ship subject to arrest is located. Provided that the foreign court has accepted such
maritime cases or such disputes has been filed for arbitration, while the involved ships
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are in the territory of China, such Maritime Court shall accept the application filed with the
Maritime Court of the place where the ship subject to arrest is located.
Consequent Lawsuit
An action arising from arrest of ships can be under the jurisdiction of the maritime court of
the place where the ship is located. Meanwhile, where the party against whom a claim is
made provides security for discharge of arrest of ships on justified grounds, the disputed
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parties may in accordance with the original jurisdiction agreement bring an action in
respect of the maritime claim in other court that has jurisdiction, or in accordance with the
original arbitration agreement apply for arbitration.
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However, the time limit for ship arrest in preservation of a maritime claim is only 30 days,
so a maritime claimant brings an action or applies for arbitration within 30 days. Otherwise,
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during the period of arrest of ships, neither does the party against whom a claim is made
provide the security nor does the maritime claimant bring a legal action, the maritime court
shall release the arrested ships. The losses of the party against whom a claim is made due
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to the arrest of ships shall be liable by the maritime claimant. If the party against whom a
claim is made provides the security while the maritime claimant fails to bring a legal action
during the period of arrest of ships, the party against whom a claim is made may apply for
returning his security provided.
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A chart is made to summary the above contents for your easy understanding (pls. see
Appendix)
Some successful cases in arresting ships handled by Kai-Rong
▲ In China United Property Insurance Company Jiangyin Branch vs. Solar Shipping and
Trading S.A., and Songa Shipping Pte. Limited, arresting M/T “Swift Tiger” for claim
Amount over USD 1,200,000.00.
▲ In PICC Jiangyin Branch vs. Dong Myung Shipping Co. Ltd, arresting M/T “103 Dong
Myung” for claim amount over USD 130,000.00.
▲ In PICC Jiangsu Branch vs. Mora Shipping Inc., arresting M/T “Vitoria” for claim
amount over USD 180,000.00.
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▲ In PICC Jiangyin Branch vs. Azia Shipping Holdings Limited, arresting M/V “Tugur” for
claim amount over USD 110,000.00.
▲ In PINGAN Beijing Branch vs. Sea Target Marine Inc., arresting M/V “Gastone” for
claim amount over USD 220,000.00.
▲ In China Grains and Oils Group Corp. vs. Kwang Myong International Shipping
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Company Limited, arresting M/V “Kwang Myong” for claim amount over USD
680,000.00.
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▲ In China United Property Insurance Company Wuxi Branch vs. Dong Bang Chemical
Shipping Co., Ltd, arresting M/T “Dong Bang Chemi” for claim amount over USD
210,000.00.
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▲ In PICC Jiangyin Branch vs. Seaford Wind Shipholding S.A., and Sunwoo Shipping
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Co., Ltd, arresting M/T “Ocean Queen” for claim amount over USD 260,000.00.
▲ In PICC Jiangyin Branch vs. Sky Shipping Co., Ltd. And S. Seagoing 2002 Co., Ltd,
arresting M/T “ Sang Thai Eagle” for claim amount over USD 300,000.00
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▲ In PICC Zhangjiagang Branch vs. Pioneer Tunkers Shipping Co., Ltd, arresting M/T
“Quiri” for claim amount over USD 1,400,000.00.
Shanghai Kai-Rong Law Firm, a leading law firm specializes in international trade, shipping
and aviation, insurance, finance and commerce, has been and will continue to be committed to
serving clients both domestic and overseas with unmitigated zeal and great professionalism.
For further information concerning this topic, please contact:
Mr. Jin Yu-Lai / Managing Partner
Tel: 86 21 5396 1065
Fax: 86 21 5396 1204
[email protected]
www.skrlf.com
This newsletter is intended to provide general information on issues which may be of interest. It is not intended to provide specific
legal advice. Further advice should be taken before relying on the contents of this summary.
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Client Update
Appendix
Chart : How to arrest ships in China
Maritime Claimant
Application in writing:
● One of Lawful Maritime claims
● In the scope of the ships maybe arrested
Maritime court of the place where
the vessel is located
Not provide
Maritime claimant provides
security
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provide
The court Make an order within
48 hours
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Ship-side
dissatisfies Order
The review is
rejected
The court arrests the ships
Within 30 days the
claimant fails to bring an
action or applies for
arbitration
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The court rejects the
application
Within 5 days the
ship-side applies for
review only once
Within 5 days the court
gives the result of the
review
The ships will be public auctioned by
the court in case that the ship-side
fails to provide the proper security
The review
is accepted
The ship-side provides the proper
security
The court releases the ships
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