Maritime Law

[FACTS]
  Plaintiff: SHENZHEN GUANGDA SHIPPING LTD.
  Defendant: THE PEOELR’S INSURANCE COMPANY OF CHINA, SHENZHEN BRANCH

   In June 1996,the plaintiff insured to the defendant regarding to the steamship GUANGDA that Liability Insurance of ensuring and indemnity ship-owners, in which the insurance qualifications were based on PICC’s Articles of Liability Insurance of Ship-owner edited in January 1st, 1993. On November 14th, GUANGDA loaded on Sonkhla, Thailand and the plaintiff issued a B/L. In December, during the discharging, when GUANGDA reached Dalian Harbor, part of cargoes was found to be damaged by water. The holder of B/L brought a complaint to Shanghai Admiralty Court on January 24th, 1997, versusing the plaintiff in this case. During the first trail and the second trail of this case, the final judgment ordered the plaintiff in this cases bear the lost of the goods and pay fees for commodity inspection, fees for accepting the case and costs for preservation, totally 11,325,762.84 RMB.
  The plaintiff asked the court to order the defendant to pay the indemnity of 9,949,294.17RMB.
The defendant defended that it should not bear the indemnity liability, based on the following main reasons:
  1.The type of insurance risks of the slip is Ship-owner’s Liability
  Insurance, which means only the ship-owner has insurance benefit from insuring this type of risk. The plaintiff is neither ship-owner, nor the leaseholder of GUANGDA, which does not has insurance benefit from insuring the Ship-owner’s Liability Insurance, thus the slip referred in this case is null and invalid. 
  2.According to the regulations on preconditions of Ship-owner’s Liability
  Insurance, the plaintiff has no right to claim for compensation to the defendant before it pay cargoes interests the indemnity of the damaged goods
  3. Regarding to the civil judgment of the dispute over the damaged cargoes that the holder of B/L vs. the plaintiff of this case, the reason that the plaintiff and the possessor of the ship cannot enjoy the limitation on liabilities, which is held by both Shanghai Admiralty Court and High People’s Court of Shanghai, is: the damage of the cargoes carried by this ship is made the inconsiderate action or inaction, which the plaintiff and the possessor of the ship are fully aware the damage may occur; thus it shall belong to both indirect intentional act and intentional act. Based on the regulations on Ship-owner’s Liability Insurance, the cargo damage is an excluded liability of the defendant and the defendant need not to bear any indemnity liability.  

[JUDGMENT]
  This case has been trailed by Guangzhou Admiralty Court and the facts mentioned above have been found. Collegial bench holds: the original insurance contract sustains. The plaintiff, as the keeper of the steamship, GUANGDA, managing GUANGDA with Unite Company together, has the insurance benefit from the liabilities insured by the guarantee slip.
Regarding to the problem that whether the plaintiff’s act belongs to excluded liability or not, the judgment of Shanghai Admiralty Court and the judgment of High People’s Court of Shanghai held that the reason, why the plaintiff cannot enjoy the limitation of the liabilities, was that the plaintiff had been fully aware that inconsiderately putting GUANGDA into operation may cause damage, however, they do not hold that the damage was made by the intention of the plaintiff, which falls short of the regulations of excluded liability on Ship-owner’s Liability Insurance.
  Regarding to the problem of the preconditions when claiming for compensation, the Ship-owner’s Liability Insurance stipulates: the precondition of the plaintiff, as the insurant, claims for compensation to the defendant, the insurer, is that the plaintiff must pay any and all liability indemnity, fees and expenses in advance. The facts of this case indicate that the efficient judgment has confirmed that the plaintiff must bear indemnity liability and pay the indemnity to the holder of B/L, regarding to the damage of cargoes and the judgment shall be regarded as the accomplishment of the preconditions of claim for compensation. Thereby, the reason of precondition the defendant used to reject the indemnity claims cannot be sustained. 
  Both the judgment of Shanghai Admiralty Court and the judgment of High People’s Court of Shanghai hold that the damage of cargoes under the item of B/L is made by the cargoes-unworthiness of holds and the unnavigability of GUANGDA managed by the plaintiff, thus the indemnity liability of the damage of cargoes the plaintiff bears shall be within the range of accepting the Ship-owner’s Indemnity Insurance. The judgment of High People’s Court of Shanghai orders: the cargo damage of unit 010 the plaintiff bears is 10,917,111RMB; the plaintiff’s claim, on which the defendant compensates the plaintiff 9,949,294.17RMB in accordance with the limitation of indemnity liability, is less than the indemnity sum the plaintiff shall compensates to the unit 010, which shall be supported. Based on Article 237 of MARITIME LAW OF THE PEOPLE’S REPUBLIC OF CHINA, the court adjudges as follows:
The defendant pays the plaintiff the insurance compensation of 9,949,294.17RMB.
  After adjudicate, both the plaintiff and the defendant have not appealed.

[ANALYSIS]
  The key in this case is whether the defendant’s excuses to reject claims can be sustained or not. Within the excuses, if any one was sustained, the plaintiff’s claims had not been sustained.
  1. Whether the plaintiff has the insurance benefits. The INSURANCE LAW of our country stipulates: “ Insurance Benefit is the benefit the policy holder possesses on the insurance object, which has been admitted by law ”. The risk of accepting insurance by the insurance contract in this case is that the liabilities occurred and the fees met with the steamship, GUANGDA, shall be bore by the plaintiff and the plaintiff, as the keeper of GUANGDA, comanaging the steamship with the possessor of the ship, shall bear the liability to the holder of B/L regarding to risks of GUANGDA. Although the name of this type of risk is “ the Liability Insurance on Guarantee and Indemnity of the Ship-owner”, the insurance contract and the term of the Ship-owner’s Liability Insurance do not confine people other than ship-owners to insure this type of risk.
  2. Regarding to the problem whether the plaintiff’s act can be the excluded liability. Article 209 of MARITIME LAW OF THE PEOPLE’S REPUBLIC OF CHINA stipulates: “ After been proved, if the damage which occurs indemnity claims is made by the intention of the person liable, inconsiderately act or omission which may make the damage, the person liable has no right to limit the indemnity liability in accordance with the regulations of this chapter ”. In this Article, “intention” and “inconsiderately act or omission which may make the damage” are two separate situations that the person liable cannot enjoy the limitation on liabilities, which are not cross or comprehensive. The judgment of Shanghai Admiralty Court and the judgment of High People’s Court of Shanghai held that the reason, why the plaintiff cannot enjoy the limitation of the liabilities, was that the plaintiff had been fully aware that inconsiderately putting GUANGDA into operation may cause damage, however, they do not hold that the damage was made by the intention of the plaintiff. As the regulations of Ship-owner’s Liability Insurance puts down in writing that it applies to MARITIME LAW OF THE PEOPLE’S REPUBLIC OF CHINA, thus the meaning of “intention” in the regulations of Ship-owner’s Liability Insurance shall be the same with the “intention” in MARITIME LAW OF THE PEOPLE’S REPUBLIC OF CHINA. Thereby, the defendant’s infer that the fact in the judgment of Shanghai Admiralty Court and the judgment of High People’s Court of Shanghai mentioned above is indirect intention act of the plaintiff, than the intention act is wrongly quoted two configurations of “intention” in CRIMINAL LAW; thus it is not sustained. The plaintiff’s “inconsiderately act or omission which may make the damage” falls short of the regulation of excluded liability in the Ship-owner’s Liability Insurance (it stipulates that the insurance company has no responsibility on any liabilities, damages and losses made by any intention act of the insurant under any situations), thus, the plea of the defendant is also not sustained.
   3. Regarding to the problem of preconditions when claiming for compensation. The “precondition”, in which the Ship-owner’s Liability Insurance stipulates that the plaintiff, as the insurant, claims for compensation to the defendant, the insurer, is that the plaintiff must pay any and all liability indemnity, fees and expenses in advance. In this case, though the plaintiff does not pay the indemnity money to the shipper (actually, the plaintiff has been in the state of incapable paying), the object of the liability insurance is to avoid the insurant’s indemnity liability to the damage of the third part. The insurant company shall bear indemnity liability as long as the insurant’s indemnity liability to the damage of the third part is confirmed. The facts of this case indicate that the plaintiff has been confirmed by the efficient judgment that regarding to the cargo damage, it must bear the indemnity liability and pay the compensation to the holder of B/L. The risk the liability insurance accepted has already occurred, the insurance company shall indemnify the insurant.

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