Case of dispute over compensation for vessel-involved pollution damage between Shinhan Capital Co., Ltd. and Jiangmen Maritime Safety Administration of PRC

2016-09-29 10:59:34 BJT
The Guangdong Higher People¡¯s Court of the People¡¯s Republic of China

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡Civil Judgment

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ (2010) YGFMSZZ No.241

Appellant (the defendant in the first instance): Shinhan Capital Co., Ltd.
Address: 530-1,Gojan-Dong£¬Danwon-Gu£¬Ansan, Gyunggi-Do, South Korea.
Legal Representative: Han Daoxi
Agent ad litem: Zhou Qi, lawyer of Sloma & Co.
Agent ad litem: Zhu Chengkang, lawyer of Sloma & Co.

The respondent (the plaintiff in the first instance): Jiangmen Maritime Safety Administration of the People¡¯s Republic of China.
Address: No.72, Jiang Hai Er Road, Jiangmen City, Guangdong Province, China.
Legal representative: Xie Zhuoting, managing director of the Administration.
Agent ad litem: Xu Guangyu, lawyer of Guangyu & Co.
Agent ad litem: Lin Xiaomei, intern lawyer of Guangyu & Co.

With regard to the case of disputes over compensation for vessel- involved pollution damage between the appellant Shinhan Capital Co., Ltd. (hereinafter referred to as Shinhan Company) and the respondent Jiangmen Maritime Safety Administration of the People¡¯s Republic of China (hereinafter referred to as Jiangmen MSA), the appellant appeal to this court against the civil ruling of (2010) Guang Hai Fa Chu Zi No.201 rendered by Guangzhou Maritime Court. This court has formed collegiate bench in accordance with law and tried this case. Now the trial has been closed.

Jiangmen MSA alleged in the first instance that: On 24 September 2008, suffered from typhoon Hagupit, MV ¡°ZEUS¡± owned by Shinhan Company stroke the reefs on waters to the east of Shangchuang Island in Taishan City, Guangdong Province, P. R. China, leading to the break of the hull and massive leakage of fuel oil and causing ocean pollution. In order to reduce the pollution damage to fishery resources, marine ecology, fishing and breeding industry in near waters, Jiangmen MSA organized vessels and personnel to clean the oil pollution, cost of labor, materials, vessels and pollution disposal occurred therefrom was RMB 13406484. The abovementioned clean-up cost is incurred by the oil leakage of MV ¡°ZEUS¡±. The owner of MV ¡°ZEUS¡± Shinhan Company should bear the compensation liability for the clean-up cost. Therefore, Jiangmen MSA appeal to the court claiming against Shinhan Company for the clean-up cost RMB 13406484 plus interests in accordance with the loan interest rate stipulated by the People's Bank of China for the corresponding period from 15 October 2008 to the actual payment date, and bear all the litigation costs.

Shinhan Company replied in the first instance that: 1. The clean-up cost in this case has no particularity, its nature of claim is different from which stipulated as ¡°making it harmless¡± in Article 9 of Several Provisions of the Supreme People¡¯s Court Concerning Trial over Ships Collision Disputes (hereinafter referred to as Collision Regulations). Besides, the disposal of making the shipwreck of MV ¡°ZEUS¡± harmless includes wreck removal and oil pumping, which Shinhan Company has already settled with Jiangmen MSA by agreement. The clean-up cost appealed by Jiangmen MSA belongs to claims subject to limitation stipulated in the Maritime Code of the P.R. China (hereinafter referred to as Maritime Code), such loss should be compensated according to due proportion of the limitation fund for maritime claims established by Shinhan Company. 2. Though MV ¡°ZEUS¡± was bareboat chartered without registration, its management complies with the International Management Code for the Safe Operation of Ships and for Pollution Prevention (the ISM Code). Shinhan Company and the master of MV ¡°ZEUS¡± have no fault for the accident, Shinhan Company does not lose the right to enjoy the limitation of liability for maritime claim. 3. Daily rent of the cleaning vessels appealed by Jiangmen MSA is obviously unreasonable, and claim of labor cost for the cleaning personnel has no legal basis.

Fact proven by the first instance is as follow: On 24 September 2008, suffered from typhoon Hagupit, MV ¡°ZEUS¡± stroke the reefs on waters to the east of Shangchuang Island in Taishan City, Guangdong Province, P. R. China, leading to the break of the hull and massive leakage of fuel oil and causing ocean pollution.

In order to reduce the pollution damage to near waters, Jiangmen MSA organized 14 vessels and personnel to clean the oil pollution. Cost of labor, materials, vessels and pollution disposal appealed by Jiangmen MSA was RMB 13406484 in total, including:

1. Cost of cleaning vessels: From 24 to 25 September, 2008, Jiangmen MSA signed the leasing contract of cleaning vessels with Lin Jilian, Zhang Weiguo, Cai Huoji, Lin Tongsheng, Lin Guilan, Zhang Xiaodong and Chen Long respectively, leasing their own vessels for the clean-up operation, and promising the daily rent (includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). Rent occurred till the end of clean-up operation was RMB 106116, RMB 212002, RMB 112630, RMB 92840, RMB 116452, RMB 292400 and RMB 292400 respectively.

On 24 and 27 September, 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Jiangmen Jianghai Ship Technology Service Company and Guangdong Guohua Yuedian Taishan Power Plant respectively, asking two companies to dispatch their own vessels to participate the clean-up operation, and informed in written of the daily cost of each vessel (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). Rent occurred till the end of clean-up operation was RMB 474450 and RMB 2485440 respectively.

On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Guangdong MSA, asking the said MSA to dispatch MV ¡°HAIXUN 31¡± to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 464000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 9 days and cost occurred was RMB 4176000 in total.

On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Xinhui MSA, asking the said MSA to dispatch MV ¡°HAIXUN 1522¡± to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 16000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 8 days and cost occurred was RMB 128000 in total.

On 24 September 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Taishan MSA, asking the said MSA to dispatch MV ¡°HAIXUN 15072¡± to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 16000 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 15 days and cost occurred was RMB 240000 in total.

On 3 October 2008, Jiangmen MSA issued the letter of dispatching vessels to assist clean-up operation to Zhuhai MSA, asking the said MSA to dispatch MV ¡°HAIXUN 151¡± to participate the clean-up operation, and informed in written that the daily cost of the vessel should be calculated as RMB 109920 (which includes vessels cost, fuel cost, labor cost, wastage cost and any other cost occurred during lease term). The vessel participated in the operation for 2 days and cost occurred was RMB 219840 in total.

The Abovementioned cost for cleaning vessels alleged by Jiangmen MSA was RMB 8948570 in total.
2.¡¡Labor cost: Jiangmen MSA alleged that all of its 68 staffs had participated the clean-up operation, labor cost was RMB 1188000 in total.

3. Material cost: Jiangmen MSA purchased 10 tons of oil absorption felt and 3.25 tons of oil dispersant from Jiangmen Xinhui Jinye Pier Pollution Prevention Engineering Co., Ltd, the total cost was RMB 662500 in total.

4. Cost of pollutant transport and disposal: according to the delivery receipt of disposing oily water and oily felt signed by Jiangmen MSA and Jiangmen Xinhui Jinye Pier Pollution Prevention Engineering Co., Ltd, cost arising therefrom was RMB 550000 in total.

5. Vehicle cost: Jiangmen MSA signed the vehicle leasing contract with the owner of agricultural vehicle JK2583 Wen Beiqun, promising the daily rent in RMB 3000; Jiangmen MSA dispatched four vehicles of its own unit Yue J04841, Yue JK2583, Yue JL3101, Yue J22563 to participate the operation and cost arising therefrom was RMB171000.

In addition, Jiangmen MSA alleged for management cost in RMB 1117207, tax in RMB 1117207 without submitting any relevant evidence.

The abovementioned cost added up to RMB 13406484.

Jiangmen MSA informed Shinhan Company when organizing the clean-up operation, Shinhan Company did visit the cleaning site but did not stayed through the whole process. Jiangmen MSA had sent evidences of abovementioned cost to Shinhan Company two months before the court session of claim-confirming proceeding. Shinhan Company communicated with Jiangmen MSA after receiving the evidences, saying the calculation of cost was unreasonable and asked for investigation, but Shinhan Company haven¡¯t submitted any relevant evidence of investigation so far.
According to the Certificate of Ship Nationality, owner of MV ¡°ZEUS¡± is Shinhan Company, port of registry is Jeju, Korea. The Cargo Ship Safety Construction Certificate shows that type of ship is other cargo ship. Korean Register of Shipping issued the International Load Line Certificate and Cargo Ship Safety Equipment Certificate to the said vessel, both valid till 20 September 2009.

On 21 July 2006, Shinhan Company signed the vessel leasing contract with Changhe Shipping Co., Ltd (hereinafter referred to as Changhe Company), promising: Shinhan Company chartered MV ¡°ZEUS¡± to Changhe Company; Changhe Company was responsible for the crew¡¯s appointment, command and supervision; and Shinhan Company was not responsible for any accident caused by the crew and such attached loss of life and property as well as relevant debt.

On 1 January 2008, Changhe Company singed the vessel management contract with First Marine Co., Ltd, promising: First Marine Co., Ltd performed the management obligation to MV ¡°ZEUS¡± according to Korean administrative law and international convention; business handled by First Marine Co., Ltd includes the selection, arrangement, command and supervision of the master, senior officers and the seamen.

Certificate of Compliance No. KOR-0171-C issued by Korean Register of Shipping shows that the license holder is Changhe Company; applicable type of ship is other cargo ship; date of issue is 25 August 2004, valid till 26 July 2012.

Certificate of Compliance No. KOR-0218-C issued by Korean Register of Shipping shows that the license holder is First Marine Co., Ltd; applicable type of ship is other cargo ship; date of issue is 11 June 2007, valid from 16 May 2007 till 11 August 2009.

Safety Management Certificate No. KOR-1298-S issued by Korean Register of Shipping shows that name of the vessel is ¡°ZEUS¡±, license holder is First Marine Co., Ltd; completion date of inspection is 27 July 2007, valid till 26 July, 2012.

Certificate of Competency No. BS-D2-06-0267 issued by Busan Regional Maritime Affairs and Fisheries Office in 26 June 2006 shows that license holder Jeong A Jang is qualified as a master, valid till 25 June 2011.

In the crew list of MV ¡°ZEUS¡± submitted by Shinhan Company and approved by notarization, the master¡¯s name is Jeong A Jang.

Telegram sent to the shipowner one day before the accident, which was 23 September 2008, reading: Due to No.0814 typhoon Hagupit, the ship anchored to take shelter from the wind. Ship¡¯s position 21¡ã42.190¡äN, 112¡ã50.50.763¡äE. MV ¡°ZEUS¡± loaded with heavy oil 221.80 tons, light oil 18.35 tons, fresh water 60 tons, cylinder lubricating oil 2.830 tons, system lubricating oil 5.08 tons. Estimated time of leaving the shelter is the afternoon of 24.

After the accident, Jiangmen MSA signed the Operation Agreement of Underwater Oil Pumping and Shipwreck Removal and the Settlement Agreement of Claims over Cost of Rescue Missing Crew Member and Salvage, Transport and Disposal of Bodies, Cost of Setting, Maintain and Withdraw the Buoy, and Cost of Onsite Safeguard with Shinhan Company respectively on 7 November 2008 and 11 December 2009. Two parties settled the costs of the underwater oil pumping, shipwreck removal, buoy setting, maintain and withdraw, and onsite safeguard.

Court of the first instance made a ruling of Guang Hai Fa Chu Zi No.509, permitting the responsible person of MV ¡°ZEUS¡± to set up a limitation fund for maritime claims with special drawing right of USD796256, equivalent to RMB 8537377.20. In this limitation fund, besides the registration of claims in RMB 13406484 applied by Jiangmen MSA, there was also a registration of claims in RMB 14466145 as fishery loss applied by 40 fishermen.

As for the clean-up cost, the China Reinsurance (Group) Corporation provided a credit guarantee in RMB 9 million to Jiangmen MSA for Shinhan Company.

The judicial committee of the first instance thought that the case was a dispute over compensation of vessel-involved pollution damage. According to Article 4 of Several Provisions of the Supreme People¡¯s Court on the Scope of Cases to be Heard by Maritime Court, the case was under the specific jurisdiction of maritime court. The accident and damages occurred in waters of Shangchuang Island in Taishan City Guangdong Province, a place under jurisdiction of the said court. According to Paragraph 2, Article 7 of the Special Maritime Procedure Law of the P. R. China, the court of first instance had the right of jurisdiction.

Since the accident vessel ¡°ZEUS¡± is owned by Shinhan Company, a Korean company, this case involves foreign elements. In addition, the accident and the damages occurred in the China Sea. As per Article 146 of General Principles of the Civil Law of the People's Republic, ¡°The law of the place where an infringing act is committed shall apply in handling compensation claims for any damage caused by the act. If both parties are citizens of the same country or have established domicile in another country, the law of their own country or the country of domicile may be applied¡±, the law of the P. R. China should be the applicable law to settle the dispute entity.

With respect to the nature of the claim, the clean-up cost alleged by Jiangmen MSA in this case is the claim not subject to limitation. Reasons are as follow: first, the claim raised by Jiangmen MSA belongs to ¡°Claims of a person other than the person liable in respect of measures taken to avert or minimize loss for which the person liable may limit his liability in accordance with the provisions of this Chapter¡± provided in Paragraph 4 of Article 207 of the Maritime Code. The party held responsible for the accident is Shinhan Company. Since Shinhan Company did not fulfill its duty of pollution clearance, Jiangmen MSA organizing pollution clearance by means of official authority is actually a vicarious performance of signing contract with clean-up units for the responsible party to entrust the said units of clean-up operation, thus the clean-up cost claimed by Jiangmen MSA belongs to ¡°the payment as agreed upon in the contract¡±. As per Paragraph 2 of Article 207 of the Maritime Code, ¡°However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on limitation of liability of this Article¡±, the claim in this case belongs to claims not subject to limitations. Secondly, stipulation of Article 207 of the Maritime Code regarding the limitation of liability for maritime claims partially took in the stipulations in Convention on Limitation of Liability for Maritime Claims, 1976 but retains the Article of ¡°Claims in respect of raising, removal, 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¡± The party held liable shall not enjoy limitation of liability for maritime claims concerning the aforesaid retained stipulation. By comparison, it can be perceived that clean-up cost does not belong to claims subject to limitation. Thirdly, Article 9 of the Collision Regulations stipulates that ¡°In case compensation is required for expense of refloating, clearing and demolishing the sunken, wrecked, grounded and abandoned ship and cargo on board or making it harmless, the responsible party shall not be entitled to the benefit of limitation of liability for maritime claims provided for in Chapter XI of Maritime Law¡±, which is for solving the unsettled problems in the provisions of the retained part of the Convention as well as Article 207 of Maritime Code by means of judicial interpretation. The nature and consequence of oil pollution in captioned case are the same as that of oil pollution caused by ship collision; therefore, the nature of claim for clean-up cost in this case is the same as that of claim for cost of making it harmless. Thus, it should be determined that the clean-up cost in this case belongs to claims not subject to limitation. Moreover, in marine pollution accident by ship, the responsible party is obliged to clean up pollution. In the case that the responsible party did not fulfill its obligation, national competent departments in respect of maritime affair shall perform duties in place of the said party by means of official authority, and claim against the responsible party for clean-up cost, i.e. cost of vicarious performance are based on the actual cost incurred. In this case, Shinhan Company did not fulfill its duty of pollution cleaning. As a national maritime competent department, Jiangmen MSA organized clean-up units to clean pollution and required Shinhan Company to pay the cost of vicarious performance. As a maritime competent department, ,Jiangmen MSA organized the clean-up and made actual payment out of public interests and marine environment protection. Should the responsible party enjoy limitation of liability, Jiangmen MSA will not receive due compensation for its clean-up expense, which may severely discourage the initiative of pollution cleaning by maritime administrative departments and is not conducive to marine environmental protection. Therefore, the clean-up cost shall be paid in full by the responsible party Shinhan Company to the administrative substituted executor Jiangmen MSA, and Shinhan Company shall not enjoy limitation of liability for maritime claims.

With respect to the calculation of the clean-up cost, as a national maritime competent department, Jiangmen MSA organized the pollution clearance out of public interests rather than seeking for undue interests. Though the clean-up cost has not yet been paid, Jiangmen MSA had signed the contract with owners of the vessels and vehicles participating in the cleaning operation and sent letters with agreed expenses to the relevant departments. Since the said units actually participated in the pollution cleaning operation, Jiangmen MSA is obliged to pay for the clean-up cost incurred by virtue of law. In the meantime, when carrying out the pollution cleaning operation, Jiangmen MSA had noticed Shinhan Company, and the latter also arrived at the operation site. After completing pollution cleaning, and two months before the court session date, Jiangmen MSA had submitted the settlement of the clean-up cost and related evidence to Shinhan Company. Shinhan Company indicated that it would investigate the irrational parts of the cost, but so far it has not provided any rebuttal evidence. Taking into consideration the actual situation of the case, RMB 8948570 for clean-up vessels, RMB 662500 for clean-up materials, RMB 550000 for transportation and disposal of pollutant, RMB 171000 for vehicles, altogether in RMB 10332070 claimed by Jiangmen MSA are confirmed and approved. As a maritime competent department, staff of Jiangmen MSA participating in pollution cleaning operation belongs to its scope of official duty, thus the compensation claim of labor cost for its own staff alleged by Jiangmen MSA has no legal basis and shall not be supported. With respect to claims alleged by Jiangmen MSA for RMB 1117207 of administrative fee and RMB 1117207 of tax roll, since the said MSA has not submitted any relevant evidence to support, the claim shall not be supported, either.

Jiangmen MSA alleged that interest should calculate since 15 October 2008, which lacks evidence to prove its validness and shall not be supported. The interest should be calculated from 18 December 2008, the date Jiangmen MSA filed the lawsuit till the actual payment date at the rate of loan interest rate for circulating fund of the People¡¯s Bank of China of the corresponding period.

In conclusion, as per Paragraph 2 of Article 207 of Maritime Code and Article 90 of Marine Environmental Protection Law of the P. R. China, court of first instance adjudged as follows: 1. Shinhan Company compensates Jiangmen MSA for clean-up cost in total amount of RMB 10332070 plus interest (interest calculated from 18 December 2008 to the actual payment date at the rate of loan interest rate for circulating fund of the People¡¯s Bank of China of the corresponding period), such compensation shall be paid separately from limitation fund for maritime claims established by Shinhan Company; 2. Reject other claims of Jiangmen MSA. The processing fee of the case is RMB 102239, in which Jiangmen MSA shall bear RMB 23446 and Shinhan Company shall bear RMB 78793.

Shinhan Company appealed to this court for revocation of the original civil ruling, rejecting the claims of Jiangmen MSA, ruling the claims of Jiangmen MSA belong to claims subject to limitation, determining Shinhan Company shall enjoy limitation of liability and the processing fees of first instance and second instance shall be borne by Jiangmen MSA. Facts and the reasons are as follows: 1.The clean-up cost in this case belongs to expense incurred from preventing or minimizing pollution damage. In accordance with Summary of the Second National Foreign-related Commercial and Maritime Trial Work, since the clean-up cost incurred in this case is not governed by the International Convention on Civil Liability for Oil Pollution Damage, 1992, it shall applies to provision of limitation of liability for maritime claims stipulated in the Maritime Code. The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 taken effect in China clearly stipulates that claim for clean-up cost belongs to claims subject to limitation under the Maritime Code. 2. Claim for clean-up cost does not equal to claim for cost of wreck removal. Claims subject to limitation stipulated in Article 207 of the Maritime Code is different in nature from ¡°claim for cost of wreck salvaging and removal¡± stipulated in Convention on Limitation of Liability for Maritime Claims, 1976 that retained by the Maritime Code. The former concerns cost of cleaning up pollution caused by leaked oil, while the latter concerns cost of making harmless of the vessel or cargo on board, while cleaning leaked oil and pumping oil from shipwreck are totally different in nature. Article 9 of the Collision Regulations roots in the retained stipulation of Convention on Limitation of Liability for Maritime Claims, 1976, and the claim stipulated has an inconsistent nature with that of claim for clean-up cost in this case. Therefore, Article 9 cannot apply to this case. 3. During pollution cleaning operation, Shinhan Company did not entrust Jiangmen MSA to sign cleaning contract with clean-up units, nor was Jiangmen MSA an employee of Shinhan Company. The contract signed by Jiangmen MSA cannot directly bind Shinhan Company, so there is no ¡°payment as agreed upon in the contract¡± between the two parties. Therefore, the opinions of the original ruling deeming the clean-up cost claimed by Jiangmen MSA belongs to ¡°the payment as agreed upon in the contract by the person liable¡± lacks legal basis. 4. Jiangmen MSA did not make actual payments for any clean-up cost. Therefore, Jiangmen MSA suffered no loss from the accident. Moreover, Jiangmen MSA did not submit any evidence to prove the causal relationship between the clean-up cost and the accident; nor did it prove the reasonability of vessels, staff, materials and vehicles participating in pollution cleaning operation; Jiangmen MSA should bear the legal consequences of inability to provide evidence. In conclusion, the fact determined in the original ruling is unclear and applied the law wrongly.

Jiangmen MSA alleged in the second instance that : 1.After the accident happened, Shinhan Company neither took pollution cleaning actions nor entrusted any third party to clean pollution, which seriously damaged marine environment. According to Article 71 of Marine Environmental Protection Law of the P. R. China (hereafter referred to as Marine Environmental Protection Law), Jiangmen MSA is entitled to take compulsive pollution cleaning. By signing contract with a third party and entrusting clean-up units to clean pollution, Jiangmen MSA fulfilled the duty in place of Shinhan Company to remove risk and impact of pollution. As per paragraph 2 of Article 207 of the Maritime Code, the expense paid by Jiangmen MSA as agreed upon in the contract belongs to compensation paid by the liable person as agreed upon in the contract, thus Shinhan Company cannot enjoy limitation of liability. If Shinhan Company shall enjoy limitation of liability in this case, it would seriously hinder Jiangmen MSA¡¯s duty of administrative law enforcement and disturb the order of marine safety and environment protection; which is against the purpose of legislation of the Marine Environmental Protection Law and the Maritime Code aiming at protecting marine ecology environment and requiring the person liable to strictly perform its obligation of pollution clearance and prevention.

According to the Article 71 of Marine Environment Protection Law, taking compulsive clean-up measures was executing the rights rather than performing obligation of Jiangmen MSA. 2. The nature and consequence of oil pollution in captioned case are the same as that of oil pollution caused by ship collision. Jiangmen MSA¡¯s cleaning operation is a behavior of making the oil harmless. There is no fundamental different between the clean-up cost involved in the case and the cost of ¡°clearing and demolishing the sunken, wrecked, grounded and abandoned ship or making it harmless¡± stipulated in Article 9 of the Collision Regulations. Such regulation should be applied to identify the clean-up cost as claims not subject to limitations. 3. After the accident happened, Shinhan Company had sent experts for site investigation, and confirmed that there was no other shipwreck or oil leakage happened around. Jiangmen MSA also provided evidences to prove the vessel¡¯s sinking time, spot, damage area, amount and types of leaked oil, which sufficiently demonstrated the causal relationship between the oil leakage of MV ¡°ZEUS¡± and the pollution accident of the subject water. Shinhan Company didn¡¯t provide any rebuttal evidence to counter the arguments. Jiangmen MSA also submitted evidence to prove that the clean-up operation was completed and there was actual cost occurred therefrom. And two months after the Shinhan Company received the evidence from Jiangmen MSA it didn¡¯t provide any rebuttal evidence. Therefore, the clean-up cost occurred in accident waters by Jiangmen MSA is reasonable. 4. According to the evidence provided by Jiangmen MSA in the first instance, it was the grate fault of Shinhan Company that resulted in this accident. As per Article 209 of the Maritime Code, Shinhan Company was not entitled to enjoy the limitation of liability. In view of the above, the judgment of the first instance determined the facts clearly and applied laws properly, and should be upheld. The appeal of Shinhan Company should be rejected.

This court hereby confirmed that the fact determined by the first instance was verified.

This court holds that the captioned case is a dispute over compensation for pollution damage caused by ships. And this court confirmed that both parties involved have no objection towards the court of first trial to execute the right of jurisdiction and the dispute in this case shall apply the law of the P. R. China.

The focus of disputes in this case are: 1. Whether Shinhan Company should bear the responsibility of compensating the clean-up cost; 2. If Shinhan Company should bear such responsibility, what¡¯s the specific amount of clean-up cost they should undertake; 3. Whether Shinhan Company is entitled to limitation of liability for the clean-up cost.

As for the first dispute, Jiangmen MSA filed a lawsuit against Shinhan Company for the clean-up cost arising from the oil leakage of the vessel owned by the latter due an accident caused by typhoon, and they have provided evidence to prove the facts that the damage had happened. According to Sub-paragraph 3 of Paragraph 1 of Article 4 of Several Provisions of the Supreme People¡¯s Court on Evidence in Civil Procedures, if Shinhan Company appeal to exempt from the compensation liability of environmental pollution, they shall provide evidence to prove that the exemptions and pollution accident stipulating in existing law have no causal relationship with the clean-up cost. But Shinhan Company did not provide any above evidence. According to Article 2 of Several Provisions of the Supreme People¡¯s Court on Evidence in Civil Procedures, Shinhan Company should bear the legal consequences of inability to provide evidence. Shinhan Company should bear the compensation responsibility of the clean-up cost in this case. Therefore, Shinhan Company¡¯s appeal of the clean-up cost claimed by Jiangmen MSA did not have causal relationship with the pollution accident lacks factual and legal basis. This court does not support it.

As for the second dispute, accident happened to the vessel owned by Shinhan Company and caused ocean pollution, Shinhan Company ought to perform its obligations of clean-up and restoring the marine environment by virtue of law. Under the circumstance that Shinhan Company failed to fulfill the above obligations, Jiangmen MSA organized compulsive clean-up operation, signed contract with relevant cleaning units and individuals, rent vessels and vehicles, and purchased materials. The clean-up operation was completed and such cost also been proved by relevant contracts. Even if Jiangmen MSA hasn¡¯t effected actual payment of the clean-up cost for the moment, it still has to pay the cost according to the contracts later. Therefore, Shinhan Company¡¯s appeal of Jiangmen MSA suffered no actual loss in the accident lacks basis of facts and this court does not support it.

Shinhan Company considered the clean-up cost claimed by Jiangmen MSA is unreasonable and over-price. In the first instance they have submitted the list of clean-up cost of other vessels in the same period. The clean-up cost claimed by Jiangmen MSA was clearly prescribed in the vessel leasing contracts, vehicle leasing contracts and materials purchase contracts. According to the content of these contracts, Jiangmen MSA did not obtain commercial profits during the clean-up operation in this case. The list of clean-up cost of other vessels in the same period submitted by Shinhan Company cannot prove the clean-up cost arising from this accident. There is no comparability. Therefore, Shinhan Company¡¯s assertion that the clean-up cost claimed by Jiangmen MSA unreasonable is inconsistent with the facts. This court does not support it.

As for the third dispute, the vessel owned by Shinhan Company leaked fuel oil and caused ocean pollution due to the typhoon in her voyage, the claimed clean-up cost arising from this situation belongs to ¡°claims in respect of other loss resulting from infringement of rights other than contractual rights occurring in direct connection with the operation of the ship or salvage operations¡± stipulated in Paragraph 3 of Article 207 of Maritime Code. But Shinhan Company was negligent in eliminating the damage after the accident happened. According to Article 71 of Marine Environment Protection Law, ¡°For vessels involved in maritime incidents causing or possibly resulting in major pollution damages to the marine environment, the competent State administrative department in charge of maritime affairs shall have the right to adopt forcible measures to avoid or reduce pollution damage.¡± In order to minimize the pollution damage caused by Shinhan Company, Jiangmen MSA signed contracts with entrusted cleaning units to perform clean-up operation, which was actually a vicarious performance of Shinhan Company¡¯s obligation for clean-up. The clean-up cost arising from abovementioned contracts belongs to claims not subject to limitation stipulated in Article 207 of Maritime Code: ¡°However, with respect to the remuneration set out in sub-paragraph (4) for which the person liable pays as agreed upon in the contract, in relation to the obligation for payment, the person liable may not invoke the provisions on limitation of liability of this Article.¡±

Paragraph 1 of Article 17 of Several Provisions of the Supreme People¡¯s Court Concerning Trial over Disputes on Limitation of Liability for Maritime Claims ( hereinafter referred to as Limitation of Liability for Maritime Claims )stipulates that ¡°The maritime claims subject to limitation of liability provided in Article 207 of the Maritime Code excludes the claims in respect of the refloating, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned or claims in respect of the removal, destruction or rendering harmless of the cargo onboard the ship.¡± The cost of ¡°rendering harmless¡± stipulated in Limitation of Liability for Maritime Claims is consistent with that stipulated in Collision Regulations. Although the object for expense in two abovementioned regulations and the clean-up cost are different, they are all for reducing damage caused by ship-involved accident, their ultimate purpose are to maintain public interest. Now that the previous two expenses belong to claims not subject to limitation, the clean-up cost in this accident should belong to claims not subject to limitation as well. Besides, it is not fair if the person responsible for the accident didn¡¯t take effective action to minimize or eliminate the damage, but take less responsibility than the one taken positive action to minimize or eliminate the damage caused by himself, which will not contribute to the protection of marine environment, either. Therefore, The opinions of the courts of the first instances deeming the clean-up cost as claims not subject to limitation was right. The dispose is beneficial to supervise the person responsible for the marine pollution accident to take his responsibility actively, protect the marine environment, and realize the harmonious development between shipping business and marine protection. This court rule for sustain.

In view of the above, the judgment of the first instance determined the facts clearly and applied laws properly, the original judgment should be affirmed. The ground of appeal is insufficient and the appeal of Shinhan Company should be rejected. In accordance with Sub-paragraphs 1 of Paragraph 1 of Article 153 of the Civil Procedure Law of the P. R. China, it is judged as follows:

Reject the appeal, affirm the original judgment.

The litigation fee of the second instance is RMB 78793, assumed by the Appellant Shinhan Company.

This judgment should be final.


¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Presiding Judge:Hou Xianglei¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Acting Judge:Wang Jing¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Acting Judge:Li Mingtao
¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Guangdong Higher People¡¯s Court (stamped)
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡30 October 2011

Certified as true to the original

¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡
¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡ Court Clerk: Wang Qian


The translation is provided by Huang & Huang CO.













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