On the Legal Application of Maritime Relations Involving Foreign Interests

Abstract: The legal application of maritime relations involving foreign interests refers to the choice of a law from different countries to regulate the mutual relations between the parties in maritime relations involving foreign interests. This article will focus on the legal choice of maritime relations involving foreign interests in private maritime law, and combine with the relevant provisions of China's Maritime Law to analyze and discuss the legal application principles and specific rules of maritime relations involving foreign interests.

 

Keywords: Foreign Maritime Relations | Application of Law | Maritime Code

 

I. Basic Concepts of the Legal Application of Maritime Relations Involving Foreign Interests

（I）Adjustment Object of the Legal Application of Maritime Laws Involving Foreign Interests

The norms on the application of foreign-related maritime laws are a general term for the legal norms specially adjusting foreign-related maritime relations formulated by a state for the purpose of solving foreign-related maritime law conflicts.

The Legal Application of Maritime Relations Involving Foreign Interests Involving Foreign Interests refers to the relations of rights and obligations which constitute the object or one of the legal facts of the subject of maritime affairs. That is, where one party or both parties to a civil maritime relation are foreigners, stateless persons or foreign legal persons, and the legal facts of the occurrence, alteration or termination of the civil rights and obligations of the subject matter in the civil relation occur in a foreign country, such relations are all foreign-related maritime relations. Foreign-related maritime relations are the core content of the Legal Application of Maritime Laws Involving Foreign Interests. Foreign-related maritime relations are specifically manifested in various maritime legal relations with foreign interests regulated by the Maritime Law, such as property right relation of ship, relation of crew, contract relation of international carriage of goods by sea, charter relation, passenger transport relation, ship collision and other maritime tort relations with foreign interests, general average, limitation of liability of ship, marine insurance and other maritime legal relations with foreign interests.

（II）Types of Legal Application of Maritime Laws Involving Foreign Interests

Legal Application of Maritime Laws Involving Foreign Interests mainly include maritime conflict rules, maritime entity rules and maritime procedure rules.

Maritime conflict rules, also known as the Maritime Application Law, are the basic norms regulating foreign-related maritime relations. When regulating foreign-related maritime relations, the Legal Application specifically refers to the application of substantive law of certain countries or international conventions, also known as governing law, which means the indirect solution of foreign-related maritime conflict. For example, Chapter 14 of the Maritime Law of the People's Republic of China is a typical maritime conflict rule, in which Article 273 provides that the laws of the place where the infringement is committed shall apply to claims for damages arising from ship collision.

Maritime entity rules directly regulate the rights and obligations of the parties to foreign-related maritime relations, and the application of such rules can only be determined through specific guidelines on conflict rules. For example, in a ship collision case, the laws of the place where the infringement is committed shall apply in accordance with the above provisions of the Maritime Law of the People's Republic of China; if the place where the infringement is committed is the South China Sea, the laws of China shall apply to directly regulate the rights and obligations of the parties to the ship collision case.

Maritime procedure rules are the procedural rules specifically applicable to foreign-related maritime cases, the core of which is to solve the issues such as the jurisdiction of different types of foreign-related maritime cases, the status of foreign parties in litigation, and whether the judgments or arbitral awards of foreign courts can be recognized and enforced by domestic courts. For example, Chapter II of the Special Maritime Procedure Law of the People's Republic of China specifically provides for the jurisdiction of various types of maritime cases, in which Article 6 provides that, apart from the provisions of Articles 29 to 31 of the Civil Procedure Law of the People's Republic of China, a lawsuit brought for maritime torts may also be under the jurisdiction of the maritime court of the place where the ship's port of registry is located.

 

II.Main Principles for the Application of Laws to Foreign-related Maritime Relations

(I) Principle of Application of International Treaties

According to Article 268 of the Maritime Law of the People's Republic of China, if the provisions of an international treaty concluded or acceded to by China are different from those of the Maritime Law of the People's Republic of China, the provisions of the international treaty shall apply, except for those articles on which China has announced reservations.

These provisions have reflected that the courts of our country adopt the principle of application priority to the international treaties that our country is a party when solving the application of law in foreign-related maritime relations. Because treaties must be respected as a fundamental norm of international law, China, as a responsible power, has always strictly abided by the relevant provisions of international law and formulated its own laws accordingly. In judicial practice, if a party claims that an international treaty shall be applied to a specific case, it shall bear the corresponding burden of proof.

At present, there is a precedent of directly applying international treaties to deal with contract disputes, and relevant ministries and commissions have also formulated specific implementation rules. When the domestic laws or some internal regulations conflict with the treaty obligations undertaken by our country, the relevant provisions of the international treaties shall prevail.

(II) Supplementary Principles of International Practice

According to Article 268 (2) of the Maritime Law of the People's Republic of China, international practice shall apply to cases where there are no relevant provisions in Chinese law or in any international treaty concluded or acceded to by China.

International practice is recognized as the source of law by our country, and it plays an important supplementary role in solving the application of law in foreign-related maritime relations.

(III) Principle of autonomy of will

The principle of autonomy of will has always been an important principle in solving the contractual relations, and it is also an important principle in solving the application of law in maritime relations.

In judicial practice, China's courts have made the following restrictions on the application of this principle:

(1) Restrictions on the choice of law. There are two ways of choice: express and implied. In judicial practice, China's courts require that the consent of the parties must be express, which excludes the implied way of choice.

(2) Restrictions on the choice of law. In practice, the parties can make a choice at the time of conclusion of the contract, or after a dispute arises, or even after the court accepts the case until the court holds a hearing.

(3) Restrictions on the choice of law. In judicial practice, the parties to the contract may choose laws, i.e. Chinese law or the law of Hong Kong, Macao, or Taiwan or foreign law, but these laws must be the existing substantive law excluding their conflict of law rules and procedural law.

(4) Restrictions on the scope of choice of law. It mainly includes two aspects: firstly, it is expressly provided for in legislation that "but" clauses, for example, "unless otherwise stipulated by law"; secondly, it is expressly provided for in legislation that autonomy of will is inapplicable, for example, issues concerning the capacity to enter into a contract and the form of a contract are not included in the scope of autonomy of parties to the contract.

(IV) Principle of closest connection

The principle of closest connection means the laws of the country with the closest connection to the contract when the parties have not chosen the applicable law in their contract. This principle is a supplementary principle to the principle of autonomy of will. Factors related to the transaction such as the domicile of the parties, the place where the contract is signed, the place where the contract is performed, the location of the subject matter, etc. shall be taken into full consideration to avoid the arbitrariness thereof. This principle is affirmed by the Law of Application of Foreign-related Civil Legal Relations and the Civil Procedure Law of the People's Republic of China.

Since the principle of closest connection is flexible in operation, in practice, Chinese courts adopt the principle of characteristic performance as the basis for defining the place of closest connection to the contract. For example, according to Article 41 of the Law of Application of Law for Foreign-related Civil Relations, laws of the habitual residence of one party whose performance of obligations best reflects characteristics of the contract or other laws with the closest connection to the contract shall govern. According to Article 40 of the Answers to Practical Issues on Foreign-related Commercial and Maritime Trials (I), when determining the laws of the place in closest connection to the transaction such as the domicile of the parties, the place where the contract is signed, the place where the contract is performed, the location of the subject matter, etc. shall be taken into full consideration. If there are more than one jurisdiction in a country chosen by the parties, the people's court shall apply the laws of a jurisdiction of that country chosen by the parties; if the parties fail to make a choice, the laws of the jurisdiction most closely connected to the dispute shall apply. The applicable laws agreed upon by the parties in the arbitration clause shall be applicable to the determination of the validity of the arbitration clause in the charter party; if the parties fail to agree upon such applicable laws or their agreement is ambiguous, the laws of the place of arbitration as agreed upon by the parties shall apply; if the parties fail to agree upon the applicable laws or to agree upon the place of arbitration, the laws of the place where the court is located shall apply.

(V) Principle of Reciprocity of Jurisdiction

The principle of reciprocity is a universal principle of international law and applies to the exchanges in any field in the international community. In the adjustment of foreign-related maritime cases, the principle of reciprocity is often introduced into the jurisdiction of a country. The essence of this principle is the recognition of foreign court judgments on the basis of countries' mutual respect for the independence of judicial sovereignty.

(VI) Principle of Preservation of Public Order

Reservation of public order means that when a court of a country tries a foreign-related case, it needs to apply a foreign law (including international practice) according to its own rules of conflict, the contents of the foreign law conflict with the vital national interests, basic morality or basic legal principles, but refuses to apply the reservation system of the foreign law. According to Article 276 of the Maritime Code of the People's Republic of China, the application of foreign laws or international practice shall not violate the public interest of the People's Republic of China.

It is worth noting that the application of the reservation of public order is strictly restricted. This provision can only be applied if it violates the most fundamental principles of a country's law, its mandatory laws and regulations, national sovereignty, national security, customs of good or basic moral principles.

 

III. Specific Rules for the Application of Laws to Foreign-related Maritime Relations

(I) Application of Laws to Ownership of Ships

According to Article 270 of the Maritime Code, the acquisition, transfer and extinction of the ownership of a ship shall be governed by the law of the flag state of the ship.

The applicable scope of this Article includes the relationship between contract and tort. The law of the flag state of the ship shall govern whether the acquisition, transfer and extinction of the ownership of the ship is legal or illegal. All disputes arising out of the aforesaid circumstances, such as disputes over the contract of sale and purchase of the ship, the contract of transfer of the ship, the confirmation of the ownership of the ship, and the contract of ship dismantling, shall be handled in accordance with the law of the flag state of the ship. Once these conflict rules point to the application of Chinese laws, the relevant provisions of Section 1, Chapter II of the Maritime Code of the People's Republic of China shall apply.

(II) Application of Laws to Maritime Liens

According to Article 272 of the Maritime Code, the law of the place where the court hearing the case is located shall apply to maritime liens.

The scope of the applicable law prescribed in this Article includes: the subject matter of maritime liens; the creation, transfer and extinction of maritime liens; projects of maritime liens; the order of claims between projects and between the same project; the order of claims between projects; the order of claims among maritime liens, maritime mortgages and maritime liens; and the manner of exercising maritime liens.

The conflict of laws governing maritime liens by the law of the forum has been generally accepted by all countries, because the exercise of maritime liens is subject to judicial procedures, and the focus is on the exercise and realization of maritime liens by applying for judicial seizure of ships. The seizure of ships is governed by the procedural law, and of course the law of the forum shall apply. Therefore, the law of the forum shall be the same as the law of the place of seizure of ships, which reflects the integration between this issue and the application of law, so as to avoid unnecessary confusion in the application of law to the case.

It is worth noting that if the dispute of a maritime contract involves maritime liens, and the parties to the contract have chosen the governing law of the contract, this causes the same dispute to involve two kinds of application of law, such as the application of English law in the contract of service for a group of Chinese sailors who are employed by the British Shipping Company, and then sue in the Chinese court for a labor dispute. In this case, the English law and the Chinese law shall be applied respectively, and different laws shall be used to solve the problems in different categories. The law of the forum cannot be substituted for the English law on the ground that it involves maritime liens.

(III) Application of Law to the Mortgage of Ships

Article 271 of the Maritime Code provides that the law of the flag State shall apply to the mortgage of a ship. If the mortgage of a ship is established before or during the bareboat charter period, the law of the original country of registry of the ship shall apply.

This Article shall apply not only to the handling of mortgage disputes by maritime courts and maritime arbitration bodies, but also to the interpretation of the clauses of the contract by the parties. If the rights and obligations arising from the mortgage of a ship are readjusted or disputes arising from the mortgage of the ship is dealt with before or during the bareboat charter period, the law of the original country of registry of the ship shall apply. The law applicable to the adjustment of the mortgage of the ship shall not change with the change of the flag of the ship. Foreign-related bareboat charter often requires the suspension of the original ship registration and the change of the flag of the ship. However, the mortgage established previously shall not be changed as a result thereof, which is subject to the law of the flag State. Although the change of the national flag of the ship results in the separation of the ownership of the ship from the right of operation, this is only a change caused by the special form and temporary needs of the charter party, and the owner and the ownership of the ship remain unchanged. Therefore, the law of the original country of registry of the ship shall apply if the mortgage is established during the bareboat charter period.

(IV) Application of the Law for Maritime Torts

1. Application of the Law of the Place of Tort

The law of the place of the tort is the most basic applicable law for the application of the law of tort, and is generally accepted by the laws of all countries. It is clearly stipulated in Article 44 of the Law Application for Foreign-related Civil Relations and Article 273 of the Maritime Code that the law of the place of the tort shall apply to the tort.

Maritime torts are mainly manifested as ship collision, pollution at sea, illegal fishing, loss of life or personal injury, and other maritime accidents.

Two conditions are required for the application of this paragraph: a. The colliding ships are of different nationalities; b. The place of collision is located in the waters under the jurisdiction of a state, including territorial sea, inland waters and the exclusive economic zone of a coastal state.

2. Application of the Law of the Forum

According to Article 273 (2) of the Maritime Code, the law of the place where the court hearing the case is located shall apply to claims for damages arising from collision of ships on the high sea.

According to Article 29 and 31 of the Civil Procedure Law and Article 6 (1) of the Special Maritime Procedure Law, the plaintiff can choose the court in the place of tort, the defendant's domicile, the place where the collision takes place, the place of first arrival of the ship in collision, the place where the ship at fault was detained or the port of registry is located to exercise his right of action.

3. Application of the Law of the State of Registry

According to Article 273 (3) of the Maritime Code, the law of the flag state shall apply to claims for damages arising from collision between ships of the same nationality, no matter where the collision takes place.

Ships of the same nationality referred to in this paragraph mean ships registered in the same country and flying the national flag of the same country. The place of collision referred to in this paragraph include the waters under the jurisdiction of the State of registry, the foreign waters and the high seas.

(V) Application of the Law for General Average Act

According to Article 203 of the Maritime Code, the adjustment of general average shall be subject to the adjustment rules agreed upon in the relevant contract, and this Chapter shall apply if no such adjustment is agreed upon in the relevant contract.

(VI) Application of the Law for Limitation of Liability for Maritime Claims

According to Article 275 of the Maritime Code, the law of the place where the court hearing the case is located shall apply to the limitation of liability for maritime claims.

The adoption of the law of the locality of the court in this Article embodies the principle of closest connection and is conducive to the timely conclusion of this kind of cases by the courts. According to this Article, which court accepts the application for limitation of liability for maritime claims filed by a person liable, the law of the country where that court is located shall apply. Generally, if a person liable applies for limitation of liability for maritime claims during the course of the maritime action or after the preservation before the action is brought, the two laws are the same, but there are exceptions. For example, if a maritime court in China accepts a dispute arising from the collision of a ship of a foreign nationality, foreign laws shall apply in accordance with conflict rules, while the person liable applies for limitation of liability for maritime claims, the court can only apply Chinese laws.

 

Conclusion

The application of law is a rather complicated process. In addition, the particularity of foreign-related maritime legal relation centering on ships. Therefore, in solving foreign-related maritime cases, it is very important to apply law correctly.

Prev：Opinions Given in Response to Common Contract Disputes Involving Epidemic Situations　
Next：A Brief Analysis of the Obligation of Seaworthiness of the Ship Prescribed in the Maritime Code