Introduction to Hong Kong Shipping Law and Recent Updates
Southampton University
20 October 2021
Mr. Lianjun Li
1
发言者 : 李连君律師
Speaker : Mr. Lianjun Li
李连君先生为礼德律师事务所香港办公室高级合伙人及该所商业及航运诉讼部资深
合伙人暨负责人拥有香港、英格兰及威尔士律师执照。李律师在国际贸易、商事、
运输、航运、航运融资、跨境投资、国际商事、海事争议解决、诉讼及仲裁等方面
拥有广泛经验。
李律师是英国皇家特许仲裁员协会的资深会员，香港律师会名册仲裁员。他也是香
港国际仲裁中心、中国国际经济贸易仲裁委员会、中国海事仲裁委员会、新加坡海
事仲裁院、新加坡国际仲裁中心等知名仲裁机构的仲裁员。
李律师还兼任中华人民共和国河北省政治协商会议委员、政府委任的香港海运港口
局成员，大连海事大学、上海海事大学、集美大学和韩国高丽大学的客座教授、伦
敦海事仲裁员协会支持会员远东联络委员会委员、新加坡海事仲裁院程序委员会委
员及香港律师会运输及物流委员会委员。李律师也积极参加学术、实务会议及参加
撰写专业书籍，最近参与合著的书籍包括由英国及香港著名法律出版社出版的中国
海事法律与实践及香港海事法律与实践。
2
Lianjun Li is a senior partner and head of the transportation and commercial litigation department of Reed
Smith Richards Butler Hong Kong. He qualified as a solicitor in Hong Kong, England and Wales.
He has extensive experience in dealing with legal issues and disputes relating to international trade,
commercial transactions, transportation, shipping, ship finance and sale and purchase, cross-border
investments and international commercial and shipping litigation and arbitration.
He is a fellow of the Chartered Institute of Arbitrators and a Panel Arbitrator of the Law Society of Hong
Kong. He is also a panel arbitrator of Hong Kong International Arbitrator Centre (“HKIAC”), China
International Economic Arbitration Commission (“CIETAC”), China Maritime Arbitration Commission
(“CMAC”), Singapore International Arbitration Center,(“SIAC”), Singapore Chamber of Maritime
Arbitration (“SCMA”) and other well-known arbitration institutions. He has been appointed by his clients or
arbitration institutions as an arbitrator.
李律师在1993年到港工作前就学并任职于大连海事大学及瑞典斯德哥尔摩大学。李
律师还拥有远洋轮船二副资格，具有两年以上的航海经验。
He also serves as a member of the Hebei Provincial Committee of the Chinese People’s Political
Consultative Conference. He is a visiting professor to Dalian Maritime University, Shanghai Maritime
University, Jimei University and Korean University. He is also a member of Hong Kong Maritime and Port
Board appointed by the Hong Kong Government, LMAA Supporting Members Liaison Committee (Asia
Pacific) of LMAA, the Transport and Logistics Committee of the Law Society of Hong Kong and the SCMA
Procedure Committee.
李连君律师连续多年受到包括钱伯斯、法律500强、法律名人榜、洞察、中国商法期
刊等著名法律评级机构的认可并评为航运、运输界领军律师，并在国际海事、贸易
争议解决及商务谈判中代表中国民企、大型国企及世界500强企业。
Lianjun studied and worked at Dalian Maritime University and Stockholm University before he came to
work in Hong Kong in 1993. He qualified as second officer for ocean going vessel and worked at seas over
two years.
Reed Smith
Lianjun has been recognized by Chambers, Legal 500, and Who’s Who Legal as a leading shipping lawyer
for many years.
Li Lianjun
Reed Smith Richards Butler
17/F, One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong
Tel：（852）2810 8008
Direct Line：（852）2507 9857
Mobile：（852）9835 5039/ (86) 13923829039 (WeChat)
Fax： (852）3014 4857
Email：
Website:
3
Reed Smith
lianjun.li@reedsmith.com
www.reedsmith.com
List of Contents
1.
Introduction to
Hong Kong
Shipping and
Hong Kong
Legal System
4
Reed Smith
2.
Hong Kong
Shipping Law
3.
Case Law
Updates
Introduction to Hong Kong Shipping and Hong Kong Legal System
5
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Introduction to Hong Kong and Hong Kong Shipping
• Handover of Hong Kong: On 1 July 1997 sovereignty over the British colony of Hong
Kong has formally transferred to the People’s Republic of China.
• Population: The total population in Hong Kong has increased from 6,516,700 in 1997
to 7,394,700 in 2021.
• Tax: Hong Kong also has a low tax rate system. There is no sales tax, no investment
withholding tax, no capital gains tax, no estate tax, no wine tax, and no tax on dividends
or interest from savings, no tax on international shipping income
• In June 2020, the Inland Revenue (Amendment) (Ship Leasing Tax Concessions)
Ordinance 2020 was enacted to offer tax concessions for ship-leasing management
activities.
• The Inland Revenue (Amendment) (Profits Tax Concessions for Insurance-related
Businesses) Ordinance 2020 was also enacted in July 2020 to reduce profits tax rate
for eligible marine insurance businesses in Hong Kong
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Introduction to Hong Kong and Hong Kong Shipping
Location / Hong Kong Port:
• Hong Kong is located at China's southern coast, and is fortunate in having a
sheltered natural harbour, which provides good access and a safe haven for
vessels calling at the port from around the world.
• The port has always been a key factor in the development and prosperity of
Hong Kong, which is strategically located on the Far East trade routes and is in
the geographical centre of the now fast-developing Asia- Pacific Basin.
• As one of the busiest ports in the world, Hong Kong Port has the capacity to
handle some 67 000 twenty-foot equivalent units (TEUs) of containers on
average per day.
• It handled around 18 million TEUs of containers in 2020.
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Introduction to Hong Kong and Hong Kong Shipping
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Introduction to Hong Kong and Hong Kong Shipping
Shipping Registry:
• The Hong Kong Shipping Register has ranked 4th in the world, providing quality
services to over 2,500 vessels with a gross tonnage over 110 million
Hong Kong Maritime and Port Board:
• In 2016, Hong Kong Maritime and Port Board was set up to promote the
continuous development of the shipping industry in Hong Kong and set the
direction for the long-term development of Hong Kong's port and maritime services
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Hong Kong as an International Maritime Hub
• According to the Baltic International Shipping Centre Development Index in 2020,
Hong Kong is one of the top four international shipping centers, ranked only after
Singapore, London and Shanghai
• BIMCO has included Hong Kong law and arbitration as one of the four standard
arbitration options in its standard law and arbitration clauses
• 12 of 13 International P and I Clubs and China P and I Club have Hong Kong
Offices
• All the major international shipping law firms, surveyors firms, accountants
firms have Hong Kong Offices
• Largest ship managers are located in Hong Kong
• Major ship leashing companies are based in Hong Kong
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Introduction to Hong Kong Legal System
• The legal system of the HKSAR is based on the rule of law and the independence
of the judiciary.
• The constitutional framework for the legal system is provided by the Basic Law
sanctioned by the National People’s Congress of the People’s Public of China.
• Under the principle of ‘One Country, Two Systems’, the Hong Kong legal system is
different from that of the mainland China and is based on the common law,
supplemented by local legislation.’
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Sources of law in Hong Kong – National Law
• Several national laws of the People's Republic of China apply in Hong Kong by
virtue of Article 18 of the Basic Law and are listed in Annex III of the Basic Law
• Under Article 158 of the Basic Law, an interpretation of a provision of the Basic
Law by the Standing Committee of the National People's Congress is to be
followed by the courts of Hong Kong in applying the relevant provision
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Sources of law in Hong Kong – Basic Law
• It is akin to a mini-constitution for the HKSAR.
• It took effect on 1 July 1997 on the establishment of the HKSAR.
• The most prominent feature of the Basic Law is the underlying principle of "One
Country, Two Systems" whereby the socialist system and policies shall not be
practised in the HKSAR, and the previous capitalist system and way of life is to
remain unchanged for 50 years.
• Under the Basic Law, all the laws previously in force in Hong Kong shall be
maintained, except for any that contravene the Basic Law.
• The National People's Congress through the Basic Law authorises the HKSAR to
exercise a high degree of autonomy – the HKSAR enjoys executive, legislative
and independent judicial power, including that of final adjudication.
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Sources of law in Hong Kong – Statutory Law
• The vast majority of statute law in force in Hong Kong is made locally and
contained in the Laws of Hong Kong.
• A great deal of legislation is made under delegated powers – subsidiary legislation.
• For example, an ordinance may delegate to the Chief Executive in Council (the
Chief Executive with the advice of the Executive Council) the power to make
regulations to deal with the details of the implementation of a legislative scheme.
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Sources of law in Hong Kong – Common Law and Rules of Equity
• Common law and the rules of equity are to be found primarily in the judgments of
the superior courts in Hong Kong and other common law jurisdictions.
• The common law's most distinguishing hallmark is reliance on a system of case
precedent, not restricted to judicial decisions generated within any single
jurisdiction, but case law from all jurisdictions throughout the common law world.
• In addition, the Court of Final Appeal and the Judiciary of the HKSAR is given
power to invite judges from other common law jurisdictions to participate in the
judicial processes.
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Sources of law in Hong Kong – Chinese Customary Law
• Some aspects of Chinese customary law apply in Hong Kong.
• For example, under section 13 of the New Territories Ordinance (Cap 97) the
courts may recognise and enforce Chinese customs or customary rights in relation
to land in the New Territories; and Chinese law and custom is recognised in the
Legitimacy Ordinance (Cap 184).
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Sources of law in Hong Kong – International law
• Over 200 international treaties and agreements have been applied to Hong Kong.
A treaty does not constitute part of Hong Kong‘s domestic law until given effect by
legislation.
• The rapidly developing rules of customary international law can also become
absorbed into the common law.
• An example of international treaties being applied to Hong Kong in the context of
maritime law is the Hague-Visby Rules being adopted in Hong Kong by way of the
Sales of Goods by Sea Ordinance (Cap. 462)
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The Courts
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The Courts – Court of Final Appeal
• The Sino-British Joint Declaration and the Basic Law specifically guarantee the
establishment on 1 July 1997 of Court of Final Appeal, and this replaced the
Judicial Committee of the Privy Council.
• It has jurisdiction conferred on it by the Hong Kong Court of Final Appeal
Ordinance (Cap 484).
• Judges of the Court of Final Appeal are appointed by the Chief Executive, in
accordance with the recommendations of an independent commission, and those
appointments must be endorsed by the legislature.
• Leave to appeal is required – An application for leave to appeal must be filed within
28 days from the date of the judgment or decision
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The Courts – Court of Final Appeal
• Overseas Non-Permanent Judges includes:
• The Right Honourable the Lord HOFFMANN from South Africa
• The Honourable Mr Justice Anthony Murray GLEESON from Australia
• The Right Honourable the Lord NEUBERGER from the UK
• The Right Honourable the Lord WALKER from the UK
• The Right Honourable the Lord COLLIN from the UK
• The Right Honourable the Lord PHILLIPS from the UK
• The Honourable Mr Justice William Montague Charles GUMMOW from Australia
• The Honourable Mr Justice Robert FRENCH from Australia
• The Right Honourable the Lord REED from Scotland
• The Right Honourable Madam Justice Beverley McLACHLIN from Canada
• The Right Honourable Lord SUMPTION from the UK
• The Right Honourable Lord HODGE from Scotland
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The Courts – High Court
The Court of Appeal
• The Court of Appeal hears appeals on all matters, civil and criminal, from the Court
of First Instance and the District Court, as well as appeals from the Lands Tribunal.
• It also makes rulings on questions of law referred to it by the lower courts.
The Court of First Instance
• The Court of First Instance has unlimited jurisdiction in both criminal and civil
matters.
• It also exercises appellate jurisdiction in hearing appeals from the Magistrates'
Courts, Labour Tribunal, Small Claims Tribunal and Obscene Articles Tribunal.
• It has admiralty jurisdiction conferred under the High Court Ordinance (Cap. 4)
and can determine questions and claims detailed in Section 12A of the High Court
Ordinance.
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The Courts – District Court
• The District Court has limited jurisdiction in both civil and criminal matters.
• It has civil jurisdiction to hear monetary claims not more than $3,000,000.
• In the case of claims for recovery of land, or where the title to an interest in land
comes in question, the annual rent or rateable value or the annual value must not
exceed $320,000
• In criminal matters, the District Court may hear cases and impose sentences of
less than 7 years’ imprisonment.
• It may not try serious offences such as murder, manslaughter and rape.
• A district court judge sits alone without jury.
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The Courts – Magistrates Court
• Magistrates only exercise a criminal jurisdiction, which covers a wide range of
indictable and summary offences.
• Their powers of punishment are generally restricted to a maximum of two years'
imprisonment, or a fine of $100,000
• All indictable offences originate before a magistrate.
• The Secretary for Justice may apply to have a case transferred to the District Court
or committed to the Court of First Instance.
• Appeals are brought from a magistrate to a judge of the Court of First Instance.
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The Legal Professionals – Barristers and Solicitors
• The legal profession in Hong Kong is divided into two distinct branches - barristers
(also known as "counsel") and solicitors.
• Solicitors have limited rights of audience before the courts whereas barristers have
unlimited rights of audience in all courts and tribunals where legal representation is
allowed.
• Lawyers practising within one branch of the profession are not, at the same time,
allowed to practise within the other.
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The Legal Professionals – Barristers
• They are all members of the Hong Kong Bar Association ("HKBA").
• The conduct of members are governed by the HKBA's Code of Conduct.
• Barristers can only accept instructions from a firm of solicitors, or members of
professional bodies recognised by the Bar Association.
• They can also be employed, or instructed, as the case may be, by the Department
of Justice, the Legal Aid Department or the Duty Lawyer Service.
• Barristers must practise as sole-proprietors.
• While barristers usually practise in a set of chambers, their legal, financial and
professional duties are separate and distinct from those of the other barristers
sharing those chambers.
• There are around 1,600 barristers practising in Hong Kong as of today.
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The Legal Professionals – Solicitors
• The Law Society is the governing body of the profession, which is largely selfregulatory.
• The Law Society sets and monitors education and training standards for solicitors
and administers a scheme of Continuing Professional Development (CPD) which is
mandatory for all trainee solicitors and all solicitors with practising certificates.
• Foreign lawyers can be admitted as Hong Kong solicitors either by obtaining an
exemption from, or by passing, the Overseas Lawyers Qualification Examination,
administered by the Law Society.
• There are 8,508 solicitors with practising certificate in Hong Kong as of today.
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Hong Kong Shipping Law
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Sources of Hong Kong Shipping Law
•
•
•
•
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The Basic Law
Domestic legislation
Case law
International Conventions / Treaties applying to Hong Kong SAR
Reed Smith
Admiralty Jurisdiction
• Hong Kong’s admiralty jurisdiction can be found in sections 12A-12E of the
High Court Ordinance (Cap 4) (“HCO”) implementing the Arrest Convention of
1952.
• Hong Kong Courts will construe local legislative provisions relating to the arrest
of vessels in rem consistently with the Arrest Convention 1952 (The Oriental
Dragon [2014] 1 HKLRD 649).
• However, if the wording of the HCO is sufficiently clear, it will be unnecessary
to refer to the Arrest Convention 1952 as interpretative aid (The Halla Liberty
[2000] 1 HKC 659; The King Coal [2013] 2 HKLRD 620).
• In actions commenced in the Admiralty List, there is an option to pursue a claim
by issuing either an in personam or an in rem writ. Admiralty Court opens 24
hours per day and 7 days a week.
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In rem Claims for Arrest of the Vessels
• An action in rem is an action against a res.
• A res is usually a ship, but it can also be cargo, freight, aircraft or hovercraft.
• Maritime claims can be divided into two types:
• (1) statutory rights; and
• (2) maritime liens.
• To arrest a “res”, the claimant must first bring his claims within the admiralty
jurisdiction.
• In other words, the claim must fall into one of the categories of claim
prescribed in Section 12A.
• “Where the admiralty jurisdiction of the Court of First Instance may be and is
invoked by an action in rem the res proceeded against may be arrested if it is
within the territorial jurisdiction of the court.” (Whitebook para. 75/5/2)
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In rem Claims for Arrest of the Vessels
Statutory rights
• A list of statutory rights is provided in section 12A(2) of the HCO.
• Section 12B of the HCO provides that:
1) all of the statutory rights listed above can be enforced in personam;
2) except section 12A(2)(d) and 12A(2)(s), all statutory rights can also be
enforced in rem; and
3) for section 12A(2)(e)-(q), if the conditions set out in section 12B(4) are
satisfied, a sister ship arrest is also available.
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In rem Claims for Arrest of the Vessels
Statutory rights
• It should be noted that there are some notable omissions from the list of
“maritime claims” recognised under Hong Kong law.
• Claims for insurance premiums (The Oriental Dragon) and contracts for the
sale of vessels (The Hong Ming [2011] 5 HKLRD 139) are not within the courts’
Admiralty jurisdiction.
• However, ship management services giving rise to a claim for unpaid
management fees can fall within the court’s Admiralty jurisdiction,
notwithstanding the fact that s 12A(2)(l) of the HCO refers to “goods or
materials” supplied to a ship for her operation or maintenance, and it is on the
face of it difficult to regard ship management “services” as “goods or materials”.
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In rem Claims for Arrest of the Vessels
Maritime liens
• Section 12B(3) of the HCO provides that an in rem action may be brought
against a ship where there is a maritime lien or other charge against the ship.
• Under common law, the claims which arise from (1) damages caused by a
ship; (2) salvage; (3) seaman’s wages; (4) master’s wages and disbursements;
(5) bottomry; and (6) respondentia (the pledging of ship or cargo respectively
to raise funds to complete a voyage in circumstances of unforeseen necessity
or distress) give rise to recognised maritime liens.
• There is a corresponding statutory right in Section 12 for each of the
recognised maritime liens, save for the outmoded respondentia.
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International Conventions adopted in Hong Kong
Carriage of Goods
• International Convention for the Unification of Certain Rules of Law Relating to
Bills of Lading, 1924, Hague-Visby Rules 1968
Ship’s Collision
• International Convention for the Unification of Certain Rules of Law with
Respect to Collision between Vessels, 1910
• International Convention on Certain Rules Concerning Civil Jurisdiction in
Matters of Collision, 1952
• International Convention for the Unification of Certain Rules Relating to Penal
Jurisdiction in Matters of Collision or other Incidents of Navigation, 1952
• Convention on the International Regulations for Preventing Collisions at Sea,
1972
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International Conventions adopted in Hong Kong
Salvage
• Convention for the Unification of Certain Rules of Law Relating to Assistance
and Salvage at Sea, 1910
• International Convention on Maritime Search and Rescue, 1979, as amended
in 1998 and 2004
• International Convention on Salvage, 1989
Limitation of Liabilities
• Convention on Limitation of Liability for Maritime Claims, 1976
• Protocol of 1976 Convention on Limitation of Liability for Maritime Claims,
1996
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International Conventions adopted in Hong Kong
Oil Pollution and Environmental Damages
•
•
•
•
•
•
•
•
•
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International Convention Relating to Intervention on the High Seas in Cases of Oil
Pollution Casualties, 1969
Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other
Matter,1972
International Convention for the Prevention of Pollution from Ships, 1973
International Convention on Oil Pollution Preparedness, Response and Co-operation,
1990
International Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage, 1992
International Convention on Civil Liability for Oil Pollution Damage, 1992
Protocol of 1996 to the Convention on the Prevention of Marine Pollution by Dumping of
Wastes and Other Matter, 1996
International Convention on the Control of Harmful Anti-fouling Systems on Ships, 2001
International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001
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International Conventions adopted in Hong Kong
Crew, Manning and Labour Convention
•
•
International Convention on Standards of Training, Certification and Watchkeeping for
Seafarers, 1978
The Seafarers' Training, Certification and Watchkeeping Code, 1995
Navigation, Flags and Ports
•
•
•
•
•
•
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Convention and Statute on Freedom of Transit, 1921
Convention and Statute on the Regime of Navigable Waterways of International
Concern, 1921
Declaration Recognising the Right to a Flag of States Having No Sea-coast, 1921
Convention and Statute on the International Regime of Maritime Ports, 1923
Convention on Facilitation of International Maritime Traffic, 1965
Convention for the Suppression of Unlawful Acts Against the Safety of Maritime
Navigation, 1988
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International Conventions adopted in Hong Kong
Others
•
•
•
•
•
•
•
•
•
•
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International Convention Relating to the Arrest of Sea-going Ships, 1952
International Convention on Load Lines, 1966
International Convention on Tonnage Measurement of Ships, 1969
Special Trade Passenger Ships Agreement, 1971
International Convention for Safe Containers, 1972
Convention on a Code of Conduct for Liner Conferences, 1974
International Convention for the Safety of Life at Sea, 1974, as modified and
supplemented by Protocols in 1978 and 1988
Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea,
1974
Convention on the International Maritime Satellite Organization, 1976
International Convention for the Control and Management of Ships' Ballast Water and
Sediments, 2004
Reed Smith
Case Law Updates
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CF Crystal c/w Sanchi - Limitation and Jurisdiction
The Sanchi oil tanker collision occurred on 6 January 2018
when the Panamanian-flagged, Iranian-owned tanker Sanchi,
with a full natural-gas condensate cargo of 136,000 tonnes
(960,000 barrels), sailing from Iran to South Korea, collided
with the Hong Kong-flagged cargo ship CF Crystal 160 nautical
miles (300 km) off Shanghai, China. Sanchi caught fire shortly
after the collision; after burning and drifting for over a week, it
sank on 14 January.
None of Sanchi's 32 crew members survived. The crew of CF
Crystal was rescued and the ship made port in China. The
financial damage of the sinking of Sanchi, based on NIOC
estimates, is around USD 110 million: USD 60 million for the
cargo and US$50 million for the vessel itself.
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CF Crystal c/w Sanchi
Facts
•
•
•
41
On 9 January 2018, Owners of Sanchi (Bright Shipping Ltd) commenced proceeding against the
Owners of CF Crystal (Changhong Group (HK) Ltd) for the loss and damages arising out of the
collision.
Shortly afterwards, Changhong applied to constitute two limitations funds at the Shanghai Maritime
Court (“SMC”)
Changhong then applied to the Hong Kong court for stay of the Hong Kong proceedings on the
ground of forum non conveniens
• Other claims are filed in Shanghai Maritme Court
• The collision occurred in the exclusive economic zone of China
• The limitation of liability difference between Hong Kong and the PRC: The relevant monetary limit
applied in Hong Kong is about 3.6 times higher than those in the PRC
Reed Smith
CF Crystal c/w Sanchi
Held
•
•
•
Court of First Instance dismissed the application (but leave was granted to appeal – very rare)
Court of Appeal upheld Court of First Instance’s decision
Court of Final Appeal refused to grant leave for appeal
•
The Hong Kong Courts applied The Spiliada [1987] AC 460 principles:
1) applicant shows that there is some other available forum;
2) applicant shows that Hong Kong is not the natural or appropriate forum (ie the forum with the most real
and substantial connection with the action) and there is another forum which is clearly or distinctly
more appropriate;
3) respondent shows that he will be deprived of a legitimate personal or judicial disadvantage;
4) court balances the advantages of the alternative forum with the disadvantages that the respondent
may suffer
42
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CF Crystal c/w Sanchi
Held
Existence of parallel proceedings in Hong Kong Court and SMC
• It is normal for liability and limitation actions to take place in different jurisdictions
• Lack of progress of the PRC action
• Limitation of liability can take into account the sum previously paid by him in respect of the claim in the
distribution of the fund
Incident occurred in the EEZ of the PRC
• Sovereign rights under Article 56.1 of the United Nation Convention on the Law of the Sea do not
apply to navigation activity but only to the sovereign rights for exploring and exploiting natural
resources (cf SMC asserted that the PRC court had jurisdiction due to EEZ without explanation)
Difference in tonnage limitation in Hong Kong and the PRC (Orbiter)
• Significant disparity in the tonnage limitation is a personal judicial advantage
43
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Antea c/w Star Centurion – Limitation Convention:
Interpretation of Article 2 and Scope of Application
Facts
44
•
On 13 January 2019, the plaintiff's vessel Antea collided with the defendant's vessel Star Centurion
(the "Collision") and the Star Centurion sank.
•
On 14 January 2019, the defendant commenced an action against the plaintiff in personam.
•
In October 2019, the plaintiff commenced this action against the defendant to limit its liability.
•
In May 2020, a limitation decree was granted by consent, without prejudice to the present application
as described before.
•
The plaintiff constituted a limitation fund by paying into Court the sum of HKD 175,062,000.
•
On 22 June 2020, the defendant sought a declaration that the removal, destruction or rendering
harmless of the ship Star Centurion (which sunk, wrecking anything on board) NOT be subject to
limitation under Article 2 of the Convention on Limitation of Liability of Maritime Claims 1976 nor the
Limitation Fund constituted by the plaintiff.
Reed Smith
Antea c/w Star Centurion – Limitation Convention:
Interpretation of Article 2 and Scope of Application
Relevant Legislation
•
The 1976 Convention became part of Hong Kong law in October 1993 upon the enactment of the
Ordinance.
•
Section 15 (“Claims subject to limitation”), which is part of Part III, is important:
• “(1) The Chief Executive may by order provide for –
– (a) the setting up and management of a fund to be used for the making to harbour or conservancy authorities of
payments needed to compensate them for the reduction, in consequence of paragraph 1(d) of Article 2 of the
Convention, of amounts recoverable by them in claims of the kind there mentioned; and
– (b) the maintaining of such a fund by contributions from such authorities raised and collected by them in respect
of vessels in the same manner as other sums so raised by them.
– ……
• (3) Paragraph 1(d) of Article 2 of the Convention shall not apply unless an order has been made under
subsection (1).”
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Antea c/w Star Centurion – Limitation Convention:
Interpretation of Article 2 and Scope of Application
Relevant Legislation
• Article 2 of the scheduled 1976 Convention provides as follows :
“1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation
of liability –
(a) Claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour
works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of
the ship or with salvage operations, and consequential loss resulting therefrom;
…
(c) 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;
(d) Claims in respect of the 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;
(e) Claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship;
…
2. Claims set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for
indemnity under a contract or otherwise. However, claims set out under paragraph 1(d), (e) and (f) shall not be subject
to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.”
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Reed Smith
Antea c/w Star Centurion – Limitation Convention:
Interpretation of Article 2 and Scope of Application
Defendant’s Assertion:
1)
2)
3)
4)
For a claim to be subject to limitation of liability, it must fall within Article 2 of the 1976 Convention;
Section 15(3) specifically suspends the operation of Article 2, para 1(d) from having the force of law
in Hong Kong, until such time as the Chief Executive makes an order under s 15(1) of the Ordinance;
The Chief Executive has not made any such order;
Thus, the clear intention of the legislature is that any claim within the scope of Article 2, para 1(d) is
at present specifically excluded as a limitable claim under the Ordinance.
Plaintiff’s Assertion:
1)
2)
3)
4)
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The Defendants have a claim for consequential loss as a result of the Collision. Such loss is made up
of various constituents, one of which is the cost of wreck removal;
The claim for consequential loss (including wreck removal) clearly falls within Article 2, para 1(a);
It has long been the law that a recourse claim for wreck removal is subject to limitation;
There is nothing in the language of Ordinance to disentitle the Plaintiff from relying on limitation for a
claim within Article 2, para 1(a).
Reed Smith
Antea c/w Star Centurion – Limitation Convention:
Interpretation of Article 2 and Scope of Application
Held:
48
•
According to the ordinary meaning of the relevant provisions, construed in their context and purpose,
the Defendants’ wreck removal claim falls within Article 2, 1(d) exclusively, and is not subject to
limitation under Article 2
•
Plaintiff appealed to the Court of Appeal (pending decision)
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Facts
49
•
P was a manufacturer and seller of computer accessories, while D1 provided logistics services. P
placed shipping orders with D1 in respect of computer accessories in 7 containers (Cargo). D1 issued
7 combined bills of lading (Bs/L) to P as shipper. D1 did not own any vessel and therefore contacted
Yang Ming Transport Corp (Yang Ming) to arrange for the carriage of the Cargo. Yang Ming then
issued two ocean bills of lading naming D1 as shipper.
•
D1 and Yang Ming released the Cargo without presentation of any of the original Bs/L (Release). P
only learnt of the Release after it had enquired with D1 regarding the Cargo more than one year after
the Release. The Cargo was, however, eventually delivered to P’s end buyer, Koodoo Technologies
(Buyer), and that Koodoo made at least part payment to P.
•
P commenced legal action against D1 for damages representing the difference between the invoice
value of the Cargo and the part payment it had received from the Buyer.
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Held
•
D1 admitted that the Cargo had been released without presentation of any of the Bs/L.
Whether D1’s standard trading conditions were incorporated into the carriage agreement between P and
D1 as evidenced by the Bs/L
50
•
D1 argued that the Trading Conditions were incorporated into the carriage agreement through the
following statement contained in documents sent to P: “All business undertaken will be subject to
[D1’s] trading conditions. For details, please study our website.”.
•
The Judge found that the terms of the Bs/L excluded any application of the Trading Conditions.
•
Further, D1 had failed to sufficiently bring the Trading Conditions to P’s attention.
•
The Judge therefore held that the Trading Conditions were not incorporated.
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Held
Whether D1 was Yang Ming’s agent at the relevant times
•
The Judge held that D1 did not issue the Bs/L as agent for Yang Ming because, among other reasons,
Yang Ming was not named as principal on the Bs/L and there was no formal agency agreement
between D1 and Yang Ming.
•
The words “AS AGENT” printed on the Bs/L did not assist D1, as it was not clear whose agent D1
was, nor was D1’s witness certain as to whom the agency related to.
Whether P authorized the release of the Cargo
51
•
D1 argued that P had consented to the release of the Cargo through telex release instructions.
•
However, the Judge found on the facts that there was no actual telex request for the release of the
Cargo, and that P would not have retained the original of the Bs/L had it authorised telex releases of
the Cargo.
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Whether P’s action was time-barred under Article III, rule 6 of the Hague-Visby Rules and/or Clause 8.2.1
of the Bs/L
52
•
First, the Judge held that obligations under Hague Visby Rules applied during ocean carriage and
discharge operations, but not during handling after discharge, and that D1 had failed to establish that
the delivery of the Cargo was part of the discharge operations.
•
As to Clause 8.2.1 of the Bs/L which provided for an 11-month limitation period in the case of “total
loss” of goods, the Judge noted that the terms were D1’s own standard terms and that clear wording
was needed to exclude D1’s liability.
•
The Judge held that the expression “total loss” was ambiguous and should be construed narrowly
and, where appropriate, in favour of the shipper.
•
The Judge concluded that Clause 8.2.1 was not precise enough to cover misdelivery of goods without
production of the original Bs/L, and it was unclear as to whether or not the shipper must be aware of
the loss.
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Whether P proved that it had suffered loss and damage
53
•
P argued that it had proven its loss by “proving loss of dominion of the Cargo by reason of [D1’s] acts
or omissions”, and claimed the invoice value of the Cargo (less the part payment).
•
However, the Judge noted that the Cargo was eventually delivered to the correct buyer and the buyer
had made at least part payment to P.
•
The Judge held that P had the onus to prove is loss a result of the misdelivery but had called no
evidence to do so.
•
There was a “paucity of the documentary evidence” and no credible explanation for the absence of a
few key witnesses from P.
•
The Judge decided to draw adverse inferences from such absence and silence.
•
In contrast, D1 produced a detailed payment record sent from P’s associated company to the Buyer,
which according to the Court “unequivocally disclosed that full payment had been made for the 7
containers in question”.
Reed Smith
Cargo Claim Without Proving Loss – Perfect Best Asset
Management Inc. v. ADL Express Ltd and Another
Held
 Although D1’s liability was established, P had failed to establish its loss.
 The Judge therefore only awarded P nominal damages in the sum of HK$1,000.
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Reed Smith
Disclaimer
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constitute professional advice, whether legal or otherwise, and does not
purport to be comprehensive. You should seek legal or other professional
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accessing or relying upon the information above.
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Reed Smith
Thank you!
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Reed Smith