In contrast to the Chinese legislation on this point, the United Kingdom legislation is specific in this respect. According to section 55(2)(a) of the MIA 1906, the
insurer is not liable for any loss attributable to the willful misconduct of the assured.
It is generally accepted that the word “willful” means “reckless” in that context.
61 In
any event, whether it is United Kingdom law or Chinese law, the insured amount
might be higher than the statutory limit of liability, which means that the liability
insurer will have to pay more to the third-party claimant even though he can rely on
the terms of the insurance contract. But in respect of the Chinese legal regime,
regardless of whether liability insurance is compulsory or not, an independent mode
of entitlement to limitation is needed, even though as stated previously, the independent mode is compatible with compulsory insurance.
The other peculiar problem under Chinese law is caused by the application of
international conventions in China. Among the international conventions conferring
the rights of limitation on marine liability insurers, China has acceded to or ratified
two of them so far, namely, the CLC 1992 and the Bunkers Convention, 2001, which
have the force of law in China. However, under a basic principle of private
international law in China, an international convention to which China is a party,
is merely applicable to legal relationships involving foreign elements, such as
foreigners or subject matters involving foreign law or foreign jurisdiction. Only
the liability insurer providing cover for foreign-related oil pollution damage within
the meaning of these two conventions, may have a separate and independent right of
limitation. For those liability insurers providing the same coverage as aforesaid but
without foreign-related elements, or contracts covering risks other than oil pollution
damage under the CLC 1992 or Bunkers 2001, would have to invoke limitation
rights in accordance with Article 206 of the CMC.
This situation has not changed even though a special regulation
62 prescribing
compulsory insurance or financial guarantee for domestic oil pollution damage at sea
has been promulgated by the Ministry of Transport in 2010. Similar to their status
under the relevant international conventions, the liability insurers’ rights of limitation of liability under current Chinese legislation are also parasitical in most cases.
This is undoubtedly a disadvantage to insurers of liability and would discourage
healthy development of liability insurance in the shipping field in China. An
amendment to the law is therefore needed.
Unlike international conventions, the CMC is an integrated piece of legislation
which comprises nearly all aspects of maritime law. In order to uniformly confer
upon the liability insurer an independent right of limitation, the clear and economical
way is not to amend Article 206 and to make two supplements to Chapter 4
63 and
61 See Griggs et al. (2005), supra note 31, p. 41.
62 See the Measures of the People’s Republic of China for Implementation of Civil Liability
Insurance for Oil Pollution Damage Caused by Vessels, 2010, Order No. 3 [2010] of the Ministry
of Transport of the P. R. China.
63 The title of Chapter 4 is “Contract of Carriage of Goods by Sea”.
Liability Insurer’s Right to Limit Liability for Maritime Claims:. . .
673
insurer is not liable for any loss attributable to the willful misconduct of the assured.
It is generally accepted that the word “willful” means “reckless” in that context.
61 In
any event, whether it is United Kingdom law or Chinese law, the insured amount
might be higher than the statutory limit of liability, which means that the liability
insurer will have to pay more to the third-party claimant even though he can rely on
the terms of the insurance contract. But in respect of the Chinese legal regime,
regardless of whether liability insurance is compulsory or not, an independent mode
of entitlement to limitation is needed, even though as stated previously, the independent mode is compatible with compulsory insurance.
The other peculiar problem under Chinese law is caused by the application of
international conventions in China. Among the international conventions conferring
the rights of limitation on marine liability insurers, China has acceded to or ratified
two of them so far, namely, the CLC 1992 and the Bunkers Convention, 2001, which
have the force of law in China. However, under a basic principle of private
international law in China, an international convention to which China is a party,
is merely applicable to legal relationships involving foreign elements, such as
foreigners or subject matters involving foreign law or foreign jurisdiction. Only
the liability insurer providing cover for foreign-related oil pollution damage within
the meaning of these two conventions, may have a separate and independent right of
limitation. For those liability insurers providing the same coverage as aforesaid but
without foreign-related elements, or contracts covering risks other than oil pollution
damage under the CLC 1992 or Bunkers 2001, would have to invoke limitation
rights in accordance with Article 206 of the CMC.
This situation has not changed even though a special regulation
62 prescribing
compulsory insurance or financial guarantee for domestic oil pollution damage at sea
has been promulgated by the Ministry of Transport in 2010. Similar to their status
under the relevant international conventions, the liability insurers’ rights of limitation of liability under current Chinese legislation are also parasitical in most cases.
This is undoubtedly a disadvantage to insurers of liability and would discourage
healthy development of liability insurance in the shipping field in China. An
amendment to the law is therefore needed.
Unlike international conventions, the CMC is an integrated piece of legislation
which comprises nearly all aspects of maritime law. In order to uniformly confer
upon the liability insurer an independent right of limitation, the clear and economical
way is not to amend Article 206 and to make two supplements to Chapter 4
63 and
61 See Griggs et al. (2005), supra note 31, p. 41.
62 See the Measures of the People’s Republic of China for Implementation of Civil Liability
Insurance for Oil Pollution Damage Caused by Vessels, 2010, Order No. 3 [2010] of the Ministry
of Transport of the P. R. China.
63 The title of Chapter 4 is “Contract of Carriage of Goods by Sea”.
Liability Insurer’s Right to Limit Liability for Maritime Claims:. . .
673