In this article, with valuable input from maritime specialist Michael Chen of JunHe, we jointly examine the revisions in the Code and the how it might affect those in the industry.
Key changes
Application – the Code is enacted to regulate relations arising from maritime transport and those pertaining to ships. While "Ship" as referred to in the Code means sea-going ships and other mobile units, it does not include ships or craft used for military or official government business purposes, nor small ships of less than 20 gross tonnage.
One code to rule them all - both international and costal carriage of goods by sea are governed by the Code, removing the previous exclusion on domestic carriage. However, the Code imposes stricter liability standards on domestic coastal carriage.
Time-bar restrictions removed – previously cargo claims were subject to a strict one-year time-bar and parties could not extend this, even if they were in agreement to do so. The Code revisions mean that a claimant can now stop the clock on limitation by sending a letter of claim. Accordingly, it is no longer necessary to race to issue proceedings to pause limitation. This is a significant cargo interests’ friendly revision, which makes it easier for cargo interests to preserve claims. This will open the door for many claims which may have been previously abandoned because of the obligation to commence formal proceedings within a year (especially low value claims). In addition, General Average claims are now subject to a six-year long-stop limitation period, running from the end of the common maritime adventure.
Extended responsibility – a carrier’s scope of responsibility now expressly includes “receipt” and “delivery” of goods. This may give rise to additional disputes concerning where and when the damage occurred, particularly if the damage may have occurred at the terminal. This underscores the importance of maintaining records and preserving evidence early and comprehensively.
Cargo valuation globally aligned – the Code brings the calculation of lost or damaged cargo into line with international practice. The starting point is now the market price at the place of delivery; the CIF value at the port of shipment is now only applied where the market price cannot be determined. This will provide greater certainty for marine insurers used to this type of assessment, as we might see for matters before the English Courts.
“Actual” carrier – the definition of the carrier has been expanded. It now also includes parties contracted or subcontracted by the contractual carrier to perform cargo handling functions, such as stevedores and terminal operators. This may result in cargo claimants pursuing local parties as well as their direct contractual parties, such as the shipowners or charterers.
Turning a green leaf - the Code now covers compensation for property damage (beyond that of the polluting ship itself) and loss of income caused by oil pollution, as well as the costs of preventive measures taken to minimise pollution damage. Marine insurers (especially P&I Clubs) may face broader, more predictable but materially larger liability exposure, with increased economic loss claims, more subrogation disputes, and upward pressure on premiums and reinsurance.
Shift of risk for uncollected cargo - the liability for costs and risks arising from cargo not being taken delivery of at the discharging port has been transferred from the consignee to the shipper, provided that the carrier must give timely notice to the shipper. However, where the consignee has exercised its rights under the contract of carriage of goods by sea but delays or refuses to take delivery, the costs and risks shall remain with the consignee.
Increased limitation amounts - the limitation amounts for maritime claims under Chapter 11 of the Code have been raised. Nevertheless, they remain significantly lower than those under the Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol.
Jurisdictional changes – The Code introduces the mandatory application of PRC law in Chinese proceedings, specifically for contracts of carriage of goods by sea where loading or discharge is in China. Under Article 295(2) of the Code, where the port of loading or discharge is in China and proceedings are brought before a Chinese maritime court, the court must apply Chapter IV of the Maritime Law (Contracts of Carriage of Goods by Sea), regardless of any foreign governing law clause in the bill of lading or charterparty. This impacts forum selection and choice-of-law clauses in international shipping and carriage of goods contracts, which often designate English or other foreign law as the governing law. Foreign law clauses are not invalidated, but they may not be applied in Chinese proceedings to the extent they conflict with mandatory provisions of PRC law. This development can raise new considerations, for example, as to how Hague-Visby-based defences are used and construed. For cargo interests, it should encourage careful thought as to where and how any cargo claim should be advanced, in addition to how documents relating to the sale or purchase, insurance cover, and counterparty risk are aligned with the desired outcome. Financial institutions and insurers who have an interest in an international transaction should also review the quality of the underlying documents.
Comment
The revised Maritime Code marks a decisive evolution in China’s maritime legal framework, with important effects on contractual certainty, alignment with international practice, and allocation of risk.
For cargo interests and their insurers, many of the changes can be useful: extended time-bars, broader carrier responsibility, expanded pools of potential defendants, and more familiar approaches to cargo valuation all improve the practical prospects of recovery.
At the same time, the Code underscores the need for more deliberate transactional and dispute-planning discipline. Jurisdiction, governing law, and the structuring of contractual relationships can no longer be treated as boilerplate where China is in the trade chain. Instead, cargo interests, financiers, and insurers alike should ensure that documentation, insurance cover, and litigation strategy are aligned with the realities of the new regime, particularly where proceedings may be anchored in Chinese maritime courts.
In short, the Code does not simply redistribute risk; it rewards those who anticipate it. For cargo interests prepared to engage with its framework, it offers new opportunities to pursue claims more effectively.
