Law & Society

If you are going to arrest a ship who will call Chinese port, please make sure you have prepared full counter warranty for the arrest plus an acceptable cause. The shipowner or the bare-boat charterer shall be liable for the debt. How to apply for arrest of ships in mainland China?

1. Please give an overview of ship arrest practice in your country.
The Maritime Procedure Law of the People’s Republic of China, 1999 (hereinafter referred to as MPL) provides specific rules for the arrest of ships. Pursuant to Article 15 of the MPL an application for ship arrest should be submitted to the Maritime courts in writing, stating the maritime claim, the course of action, the ship’s name, as well as the amount of security required, along with relevant supporting evidence. The Maritime Court shall grant a ruling within forty-eight hours upon receipt of the application. The order for ship arrest shall be enforced forthwith. The Maritime Court should discharge the ship arrest order immediately upon the provision of securities by the respondent, or upon the request of any party on justifiable grounds. The claimant shall be liable for any loss sustained by the respondent or any other interested party due to a wrongful arrest.
2. Which International Convention applies to arrest of ships in your country?
China has not acceded to the Arrest Conventions.

3. Is there any other way to arrest a ship in your jurisdiction?
No, there is no other way to arrest a ship with the purpose of security of the claim. However, a ship may also be arrested and sold for enforcement of a judgment, arbitration award or other enforceable legal document.

4. Are these alternatives e.g. saisie conservatoire or freezing order?
Apart from arrest, no other alternatives are available.

5. For which types of claims can you arrest a ship?
There are 22 types of claims for which a ship may be arrested specifically provided for in Article 21 of the MPL. They are specified as follows: (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 a ship to the environment, coastline or related interests; measures taken to prevent, minimize or remove such damage; compensation paid in respect of such damage; costs of reasonable measures of reinstatement of the environment actually undertaken or to be undertaken; loss incurred or likely to be incurred by third parties in connection with such damage; and damage, costs, or loss of a similar nature to those identified in this subparagraph; (5) Expenses relating to the raising, removal, recovery, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship, and expenses relating to the preservation of an abandoned ship and maintenance of its crew; (6) Any agreement relating to the use or hire of a ship; (7) Any agreement relating to the carriage of goods or passengers; (8) Loss of or damage to or in connection with goods (including luggage) carried on board a ship; (9) General average; (10) Towage; (11) Pilotage; (12) Goods supplied or services rendered to a ship for its operation, management, preservation or maintenance; (13) Construction, re-construction, repair, conversion or equipment of a ship; (14) Dues and charges of port, canal, dock, harbor and other waterway; (15) Crew’s wages and other moneys, including costs of repatriation and social insurance contributions payable on behalf of the crew; (16) Disbursements incurred on behalf of a ship or its ship-owner; (17) Insurance premiums (including mutual insurance calls) in respect of a ship, payable by or on behalf of the ship-owner or demise charterer; (18) Any commissions, brokerages or agency fees payable in respect of a ship by or on behalf of the ship-owner or demise charterer; (19) Any dispute in connection with ownership or possession of a ship; (20) Any dispute between co-owners of a ship in connection with the employment or earnings of the ship; (21) A ship mortgage or rights of the same nature; and (22) Any dispute arising out of a ship sale and purchase contract.

6. Can you arrest a ship irrespectively of her flag?
Yes, you can arrest a ship in China irrespective of her flag. However, Chinese Courts recognize sovereign immunity for ships engaged in military or governmental services.

7. Can you arrest a ship irrespectively of the debtor?
No. An arrest will not be granted if the time charterer or voyage charterer is the debtor of the claim.

8. What is the position as regards sister ships and ships in associated ownership?
The claimant may apply to arrest a sister ship which, when the arrest is effected, is owned by the person who is liable for the maritime claim. However, basing upon the claims concerning ownership or possession of a ship, it is only the offending ship may be arrested. The sister ship in the sense of the Chinese law refers to vessel(s) of the same registered owner, and there is no express legal definition for “associated ownership” in Chinese law.

9. What is the position as regards Bareboat and Time-Chartered vessels?
According to the MPL, the Maritime Court may arrest a bareboat chartered ship when the bareboat charterer of the ship is liable for the maritime claim and is the bareboat charterer or owner of the ship when the arrest is effected. A time chartered ship may not be arrested for a claim against the time charterer.

10. Do your Courts require counter-security in order to arrest a ship?
In principle, the maritime court, having entertained an application for ship arrest, may require the claimant to provide counter-security for possible damage to the ship owner for wrongful arrest. The application will be rejected if the maritime claimant fails to put up a counter-security as required. The form and amount of counter-security are determined by the maritime court. In practice, such counter-security can be made in form of cash, negotiable instruments or a guaranty letter from a Chinese bank or other Chinese financial institution. However, in some circumstances the maritime courts do not require the claimant to provide counter-security, e.g. in the case of a crew wages claim or a personal injury claim.