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16.1 The CMC 1992 does not include provisions on marine pollution although it is a traditional and important component of maritime law. Marine pollution in China is governed by the relevant conventions concluded or acceded to by the PRC and national law including the General Principles of the Civil Law 2009, the Tort Liability Law 2009 and the Marine Environment Protection Law 2013.1 Other relevant authorities for marine pollution include administrative regulations, namely the Administrative Regulations on the Prevention of Marine Pollution Caused by Vessels 2009, as amended in 2013, 2014 and 2016 (Regulations on Marine Pollution 2016),2 and judicial interpretations including the relevant provisions in the Minutes of the Second National Working Conference on the Trial of Foreign-Related Commercial and Maritime Cases 2005 (Minutes of the Second National Working Conference 2005)3 and the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Cases involving Disputes over Compensation for Vessel Oil Pollution Damage 2011 (Provisions on Oil Pollution Damage 2011).4
International regime
16.2 Compensation for pollution damage caused by spills from oil tankers is governed by an international regime elaborated under the auspices of the IMO. The framework for the regime was originally the International Convention on Civil Liability for Oil Pollution Damage, 1969 (CLC 1969) and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1971 (FUND 1971). The current international compensation regime is based on the International Convention on Civil Liability for Oil Pollution Damage, 1992 (CLC 1992) based on the Protocol of 1992 to amend the CLC 1969, and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 (FUND 1992) based on the Protocol of 1992 to amend the FUNC 1971. The purpose of the CLC 1992 is to ensure that adequate compensation is available to persons who suffer damage caused
by pollution resulting from the escape or discharge of oil from ships. The FUND 1992 is supplementary to the CLC 1992, which establishes a regime for compensating victims when the compensation under the CLC Protocol 1992 is inadequate. China is a State party to the CLC Protocol 1992 but not to the FUND Protocol 1992.5 China has also adopted the 2000 Amendments of the Limitation Amount in the CLC 1992.616.3 The CLC 1992 only concerns pollution caused by tankers including bunkers of tankers, not by bunkers of vessels other than tankers. It was found that the escape or discharge of oil from the bunkers were also an important cause of marine pollution.7 The International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (Bunker Convention 2001) was adopted to ensure that adequate, prompt, and effective compensation is available to persons who suffer damage caused by spills of oil, when carried as fuel in ships’ bunkers. China is a State party to the Bunker Convention 2001. The SPC’s Provisions on Oil Pollution Damage 2011 apply to disputes over compensation for vessel oil pollution damage under the CLC 1992 and the Bunker Convention 2001.
Concepts and applications
Concepts
16.4 Under the CLC 1992, a “ship” means any sea-going vessel and seaborne craft of any type whatsoever constructed or adapted for the carriage of oil in bulk as cargo, provided that a ship capable of carrying oil and other cargoes shall be regarded as a ship only when it is actually carrying oil in bulk as cargo and during any voyage following such carriage unless it is proved that it has no residues of such carriage of oil in bulk aboard.8 Unlike the CLC 1992, which is for oil pollution from tankers, a “ship” under the Bunker Convention 2001 means any seagoing vessel and seaborne craft, of any type whatsoever.9 For the purposes of the Provisions on Oil Pollution Damage 2011, “ship” refers to seagoing ships and other vehicles used for travelling in the sea for non-military and non-governmental purposes, including oil tankers and other vessels operating on international and domestic routes, and oil tankers refer to vessels built or reconstructed for persistent cargo oil bulk transportation, and other vessels actually used for persistent cargo oil bulk transportation.10 It means that the Provisions on Oil Pollution Damage 2011 covers oil pollution under both the CLC 1992 and the Bunker Convention 2001.
16.5 An “owner” under the CLC 1992 means the person or persons registered as the owner of the ship or, in the absence of registration, the person or persons owning the ship. However, in the case of a ship owned by a State and operated by a company that in that State is registered as the ship’s operator, “owner” mean such company.11 “Shipowner”
under the Bunker Convention 2001 means the owner, including the registered owner, bare-boat charterer, manager and operator of the ship.12 Obviously, for oil pollution caused by bunkers, the shipowner under the Bunker Convention 2001 covers a wider class of persons as shipowners compared to the CLC 1992.
16.6 “Oil” under the CLC 1992 means any persistent hydrocarbon mineral oil such as crude oil, fuel oil, heavy diesel oil and lubricating oil, whether carried on board a ship as cargo or in the bunkers of such a ship.13 “Bunker oil” under the Bunker Convention 2001 means any hydrocarbon mineral oil, including lubricating oil, used or intended to be used for the operation or propulsion of the ship, and any residues of such oil.14 “Oil” under the Provisions on Oil Pollution Damage 2011 covers both oil under the CLC 1992 and bunker oil under the Bunker Convention 2001 excluding non-persistent cargo oil carried as goods by ships.15
Applications
16.7 The CLC 1992 applies exclusively to pollution damage caused in the territory, including the territorial sea, of a contracting State, and in the exclusive economic zone of a contracting State, established in accordance with international law, or, if a contracting State has not established such a zone, in an area beyond and adjacent to the territorial sea of that State determined by that State in accordance with international law and extending not more than 200 nautical miles from the baselines from which the breadth of its territorial sea is measured. The CLC 1992 also applies to preventive measures, wherever taken, to prevent or minimise such damage.16 However, the CLC 1992 does not apply to warships or other ships owned or operated by a State and used, for the time being, only on government non-commercial service. With respect to ships owned by a contracting State and used for commercial purposes, each State shall waive all defences based on its status as a sovereign State.1716.8 Like the CLC 1992, the Bunker Convention 2001 applies to pollution damage caused in the territory, including the territorial sea, of a State party, and in the exclusive economic zone of a State party.18 Similarly, the provisions of the Convention shall not apply to warships, naval auxiliary or other ships owned or operated by a State and used, for the time being, only on government non-commercial service. With respect to ships owned by a State party and used for commercial purposes, each State shall be subject to suit in the jurisdictions set forth in article 9 and shall waive all defences based on its status as a sovereign State. Furthermore, the Bunker Convention 2001 does not apply to pollution damage as defined in the CLC 1992, whether or not compensation is payable in respect of it under the CLC 1992.19
16.9 In the litigation of marine pollution in China, any citizens, legal persons, or other organisations who incur property losses directly from oil pollution are entitled to claim for compensation against the parties liable for pollution.20 Besides the claimants for property losses, the competent maritime administrative authority of the State or other enterprises and institutions may directly lodge lawsuits against the parties liable for oil pollution, by claiming for compensation for the cost for preventing or mitigating oil pollution damage, including the costs for cleaning up pollution.21 Besides these maritime authorities, Chinese local governments may also lodge such lawsuits as claimants if they partake in activities for preventing or mitigating oil pollution damage, including cleaning up any pollution.22 Fur thermore, maritime environmental supervision and administrative authorities, authorised by the Maritime Environment Protection Law 2013,23 are entitled to lodge lawsuits against liable parties on behalf of the State within the authorised scope for maritime environmental losses caused by oil pollution.24 In disputes over compensation for oil pollution damage, where parties request compensation for clean-up costs incurred and damages for pollution, they shall be paid in proportion to the amount of the parties’ rights as determined by the courts.25
Pollution damage
16.10 “Pollution damage” in the CLC 1992 means: (a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to the costs for reasonable measures of reinstatement actually undertaken or to be undertaken; and (b) the costs of preventive measures and further loss or damage caused by preventive measures.26 Similarly, “pollution damage” in the Bunker Convention 2001 means: (a) loss or damage caused outside the ship by contamination resulting from the escape or discharge of bunker oil from the ship, wherever such escape or discharge may occur, provided that compensation for impairment of the environment other than loss of profit from such impairment shall be limited to the costs of reasonable measures of reinstatement actually undertaken or to be undertaken; and (b) the costs of preventive measures and further loss or damage caused by preventive measures. The difference between them is that the pollution damage under the CLC 1992 is caused by the oil from the ship but under the Bunker Convention 2001 it is caused by the bunker oil.
16.11 In Chinese judicial practice, oil pollution damage caused by both oil from a ship and bunker oil covers: (1) the costs of preventive measures to prevent or minimise the damage caused by oil pollution, and further loss or damage caused by such preventive measures; (2) damage caused by oil pollution incidents to properties other than the ships involved, and the consequential loss of income; (3) loss of income arising from environmental damage caused by oil pollution; and (4) expenses incurred by reasonable restoration measures taken or to be taken for the polluted environment.27 Compared with pollution damage under the CLC 1992 and the Bunker Convention 2001, oil pollution damage in Chinese judicial practice covers additional loss of profit, namely the consequential loss of income of the polluted properties and the loss of income arising from environmental damage. The loss of profit recognised is based on the Chinese judicial practice of Chinese tort law, which is subject to causation and remoteness.2816.12 Chinese courts will determine the costs of preventive measures and further loss and damage caused by such preventive measures by taking into consideration all relevant factors such as the scale and degree of pollution, amount of oil leakage, the appropriateness of the preventive measures, and manpower and equipment costs involved in oil cleaning operations.29 In the case of pollution prevention measures adopted for ships involved in an accident, if the sole objective at the beginning of the operation is to prevent or minimise oil pollution damage, expenses so incurred shall be identified as the cost of preventive measures. Where an operation is intended both for rescuing the ship in distress and other property and for mini-mising oil pollution damage, the cost of preventive measures and the cost of rescue measures shall be determined according to the priority given to the two objectives respectively. Where there is no reasonable grounds on which primary and secondary objectives can be identified, relevant costs shall be shared equally. However, costs incurred after the elimination of relevant pollution hazards shall not be included in the cost of preventive measures.3016.13 In the case of pollution caused by oil leakage from ships to other ships, fishing gear, fishery facilities and other properties, the victims can claim compensation against the parties liable for the oil pollution, for reasonable expenses paid for cleaning and/or repairing polluted properties. Where the polluted properties cannot be cleaned or repaired, or the relevant cleaning or repairing costs exceed the value of such properties, the victims can request compensation from the parties liable for oil pollution, for reasonable replacement costs, provided that reasonable deductions shall be made according to the difference between the actual in-service term and the expected service life of the polluted properties.31 Claims for loss of income by victims engaging in marine cultivation and/or ocean fishing without the permission of relevant competent administrative departments are not allowed; however, those victims may claim for compensation for reasonable costs of cleaning, repairing or replacing cultivation or fishery facilities.3216.14 Where the victim is unable to carry on normal business operations due to the effect of ship oil pollution on its property, its loss of income is calculated based on the reasonable
length of time needed for cleaning, repairing or replacing such properties.33 Ocean fishing and coastal tourism industries and other organisations or individuals engaging in sea/offshore-related businesses may claim for loss of income caused by environmental pollution, if they satisfy all the following conditions so that a causal relationship is established between such loss of income and environmental pollution: (1) the claimant’s production and operating activities are conducted within or near the polluted area; (2) the claimant’s production and operating activities mainly rely on the polluted resources or the coastal areas; (3) the claimant is unable to find any alternative resources or business opportunities; and (4) the claimant’s production and operating businesses belong to relatively stable local industries.3416.15 Where the victim claims for loss of income caused by polluted properties or environmental pollution, such loss shall be reasonably calculated by deducting the actual net income during the affected period of time from the average net income for the same period during the last three years, and taking into appropriate consideration any other factors that have a bearing on income. Where the loss of income cannot be so determined, such losses shall be reasonably determined by making reference to relevant statistics and information released by government departments, or the average income of the producers and operators within the same area and engaging in the same businesses during the affected period of time. Victims may claim for compensation for reasonable expenses incurred in taking reasonable measures to prevent loss of income, but the claim shall be limited to the amount of income loss actually prevented.35 Where environmental damage is caused by ship oil pollution, compensation for such environmental damage shall be limited to the cost for reasonable restoration measures already taken or to be taken. The cost of restoration measures shall include the cost for reasonable monitoring, assessment and research.36
Liability and proportion
Liability under the conventions
16.16 Where the CLC 1992 applies, no claim for compensation for pollution damage may be made against the owner otherwise than in accordance with the CLC 1992.37 Under the CLC 1992, the owner of a ship at the time of an incident, or, where the incident consists of a series of occurrences, at the time of the first such occurrence, shall be liable for any pollution damage caused by the ship as a result of the incident.38 However, no liability for pollution damage shall attach to the owner if he proves that the damage: (a) resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character, or (b) was wholly caused by an act or omission done with intent to cause damage by a third party, or (c) was wholly caused by the negligence or other wrongful act of any government or other authority responsible for the maintenance of lights or other navigational aids in the exercise of that function.39
16.17 Nothing in the CLC 1992 shall prejudice any right of recourse of the owner against third parties.40 Subject to this right of recourse, no claim for compensation for pollution damage under the Convention or otherwise may be made against: (a) the servants or agents of the owner or the members of the crew; (b) the pilot or any other person who, without being a member of the crew, performs services for the ship; (c) any charterer (how ever described, including a bareboat charterer), manager or operator of the ship; (d) any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority; (e) any person taking preventive measures; (f) all servants or agents of persons mentioned in subparagraphs (c), (d) and (e); unless the damage resulted from their personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.41 If the owner proves that the pollution damage resulted wholly or partially either from an act or omission done with intent to cause damage by the person who suffered the damage or from the negligence of that person, the owner may be exonerated wholly or partially from his liability to such person.4216.18 Where the Bunker Convention 2001 applies, no claim for compensation for pollution damage shall be made against the shipowner otherwise than in accordance with the Convention.43 Similar to an owner’s liability under the CLC 1992, the shipowner under the Bunker Convention 2001 at the time of an incident shall be liable for pollution damage caused by any bunker oil on board or originating from the ship, provided that, if an incident consists of a series of occurrences having the same origin, the liability attaches to the shipowner at the time of the first of such occurrences. Where more than one person is liable, under the Bunker Convention 2001, their liability shall be joint and several.44 However, nothing in the Bunker Convention 2001 shall prejudice any right of recourse of the shipowner that exists independently of the Convention.45 Like the owner under the CLC 1992, the shipowner under the Bunker Convention 2001 has the same exemption of liability and exoneration of liability.46 Unlike the CLC 1992, there is no restriction of claims against the servants or agents of the owner or the members of the crew, against the pilot or any other person who, without being a member of the crew, performs services for the ship, any charterer, manager or operator of the ship,47 any person performing salvage operations with the consent of the owner or on the instructions of a competent public authority, and any person taking preventive measures.
Joint and several liabilities
16.19 Under the CLC 1992, when an incident involving two or more ships occurs and pollution damage results, the owners of all the ships concerned, unless otherwise
exonerated, shall be jointly and severally liable for all such damage that is not reasonably separable.48 Like in the CLC 2001, under the Bunker Convention 2001 there is the same joint and several liability on the shipowners of all ships involved where an incident occurs with two or more ships, and pollution damage results.4916.20 In Chinese judicial practice, in the case of oil pollution damage caused by leakage from two or more ships, if the victim requests that the owners of all oil-leaking ships be liable for compensation, the owners shall assume their respective liabilities where it is possible to reasonably differentiate between damages caused by them according to the amount of oil leakage, damages caused by different types of oil and other factors; where it is impossible to differentiate between damages caused by them respectively, the owners shall assume joint and several liability, except where owners are exempt from liability. Where the owners of all the oil-leaking ships assume joint and several liability, the amount of compensation for which they are liable shall be determined according to their respective shares of relevant responsibility; where it is impossible to determine the share of responsibility, responsibility shall be shared equally between the owners. In the event that any of the owners makes payment of compensation in excess of the payable amount, it shall be entitled to recover the overpaid amount from other owners of oil-leaking ships.5016.21 Furthermore, in the case of oil pollution damage caused by oil leakage resulting from collisions of ships that are both at fault, the victim may request that the owners of oil-leaking ships bear full compensation liability.51 However, if the colliding ships are all in fault, each ship shall be liable for the damage caused by oil pollution in proportion to the extent of its fault.52 If the respective faults are equal in proportion or it is impossible to determine the extent of the proportion of the respective faults, the liability of the colliding ships for the damage caused by oil pollution shall be apportioned equally.53 However, if only one of the colliding ships is the oil-leaking ship, only the owner of the oil-leaking ship shall be liable for the damage caused by oil pollution even if the owner may exercise the right of recourse to claim against the other colliding ship for compensation.54 If one of the colliding ships in the accident has been bareboat chartered when the accident occurs but the bareboat charter was not registered, the shipowner and the charterer shall be joint and severally liable for the damage caused by oil pollution in the accident.55
Liability not under the conventions
16.22 According to the Marine Environment Protection Law 2013, any party that is directly liable for pollution damage to the marine environment shall relieve the damage and
compensate for the losses; where the pollution damage to the marine environment is entirely caused by an intentional act or a fault of a third party, that third party shall relieve the damage and be liable for the compensation.56 In judicial practice of disputes over the damage to marine environment, Chinese court may apply the Tort Liability Law 2009, which provides the regime of liability without fault for damage to the marine environment.57 It means that the polluter shall compensate for the damage to the marine environment regardless of whether the polluter is at fault in the pollution incident.58 However, where the damage to the marine environment caused by pollution cannot be avoided despite prompt and reasonable measures, the parties concerned held responsible shall be exempt from liability where the pollution is entirely attributable to any of the following circumstances: (1) war; (2) unpreventable natural calamities; or (3) negligence or other wrongful acts in the performance of a department responsible for the maintenance of beacons or other navigation aids.59
Evidence and burden of proof
16.23 Without evidence to the contrary, the investigation reports made by the State competent maritime administrative authority may serve as the basis for the maritime court in trials.60 In judicial practice, the proportion of liability to the extent of the fault of the ship-owners determined by the maritime administrative authority may also be accepted if there is no evidence to the contrary.61 In the case of indemnification litigation with respect to oil pollution caused by ships, the affected parties shall be responsible for providing evidence of oil pollution damage, and the parties subject to liability shall be responsible for providing evidence use to support their general defences, and that there is no causal relationship between oil pollution and the damage.62
Limitation of liability
16.24 There is a limitation of liability in the CLC 1992, as amended by the 2000 Amendments to CLC Protocol 1992,63 which applies to China, including the Hong Kong SAR.64 The owner of a ship shall be entitled to limit his liability under the CLC 1992 in respect of any one incident to an aggregate amount calculated as follows: (a) 4,510,000 units of account for a ship not exceeding 5,000 units of tonnage; (b) for a ship with a tonnage in excess thereof, for each additional unit of tonnage, 631 units of account in addition to the amount mentioned in sub-paragraph (a); provided, however, that this aggregate amount shall not in any event exceed 89,770,000 units of account.65 For the purpose of the
limitation of liability, the ship’s tonnage shall be the gross tonnage calculated in accordance with the tonnage measurement regulations of the International Convention on Tonnage Measurement of Ships, 1969.66 The owner shall not be entitled to limit his liability under the CLC 1992 if it is proved that the pollution damage resulted from his own personal act or omission, committed with the intent to cause such damage, or recklessly and with knowledge that such damage would probably result.6716.25 China has ratified the CLC 1992 without reservation, so the CLC 1992 should apply without any restrictions. The CMC 1992 also provides that the provisions in respect of the limitation of liability in the CMC 1992 shall not apply to claims for oil pollution damage under the CLC 1992.68 However, the SPC interpreted that the CLC 1992 applies only to ships sailing on international lines. For oil pollution caused by ships sailing on non-international lines, the CMC 1992, the Marine Environment Protection Law 2013 and other relevant administrative regulations apply. Therefore, the limitation of liability for maritime claims for oil pollution caused by ships sailing on non-international lines is governed by the CMC 1992.69 This judicial interpretation is obviously inconsistent with the concept of the ship in the CLC 1992 and the requirement for the application of the CLC 1992.7016.26 Unlike the CLC 1992, there is no independent limitation of liability in the Bunker Convection 2001. The shipowners and the person or persons providing insurance or other financial security may limit liability under any applicable national or international regime, such as the Convention on Limitation of Liability for Maritime Claims, 1976 (LLMC 1976).71 China is not a State party to the LLMC 1976 but the CMC 1992 provides the same limitation of liability as the LLMC 1976. Like the owner in the CLC 1992, where the bunker oil pollution damage is proved to be caused by the shipowner’s intentional act or reckless act or omission with the knowledge of possible occurrence of the damage, the shipowner under the Bunker Convention 2001 shall not be entitled to limit his liability according to the CMC 1992.7216.27 In practice, in the case of oil pollution damage caused by persistent oil substances carried by oil tankers, limitation of liability is determined in accordance with the CLC 1992. In the case of oil pollution damage caused by non-persistent fuel carried by oil tankers, or by fuel carried by vessels other than oil tankers, limitation of liability shall be determined in accordance with provisions concerning limitation of liability for maritime claim in the CMC 1992.73 Where the same maritime incident causes the damage by non-persistent fuel carried by oil tankers, or by fuel carried by vessels other than oil tankers and other damage eligible for the limitation of liability in the CMC 1992, the relevant shipowner may apply for limitation of liability for compensation within the same limitation of liability under the CMC 1992.74
16.28 With respect to cases involving disputes over compensation for oil pollution caused by ships that are subject to the CLC 1992, the relevant shipowners and the insurers or persons providing financial guarantee, for the purpose of obtaining the right of liability limitation under the CLC 1992, may constitute a limitation fund with a Chinese maritime court for claims in respect to oil pollution damage according to Special Maritime Procedure Law 1999.75
Insurance and financial guarantee
16.29 Under the CLC 1992, the owner of a ship registered in China and carrying more than 2,000 tons of oil in bulk as cargo is required to maintain insurance or other financial security, such as the guarantee of a bank or a certificate delivered by an international compensation fund, in the sums fixed by applying the limits of liability under the CLC 1992 to cover his liability for pollution damage under the CLC 1992.76 Any sums provided by insurance or by other financial security maintained under the CLC 1992 shall be available exclusively for the satisfaction of claims under the CLC 1992.77 If the requirements for insurance or financial security have been complied with, a certificate attesting for insurance or other financial security shall be issued by Chinese maritime authorities. The certificate shall be in Chinese, with a translation in English. The certificate is to be carried on board the ship and a copy shall be deposited with Chinese maritime authorities or, if the ship is not registered in China, with the authorities of the State issuing or certifying the certificate.78 China does not permit a ship with a Chinese flag to trade unless a certificate has been issued.7916.30 Under the CLC 1992, any claim for compensation for pollution damage caused by tanker oil may be brought directly against the insurer or other person providing financial security for the owner’s liability for pollution damage. In such case, the defendant may, even if the owner is not entitled to limit his liability under the CLC 1992, avail himself of the owner’s limits of liability under the CLC 1992. He may further avail himself of the defences (other than the bankruptcy or winding up of the owner) to which the owner himself would have been entitled to invoke. Furthermore, the defendant may avail himself of the defence that the pollution damage resulted from the wilful misconduct of the owner himself, but the defendant shall not avail himself of any other defence that he might have been entitled to invoke in proceedings brought by the owner against him. The defendant shall in any event have the right to require the owner to be joined in the proceedings.8016.31 The Bunker Convention 2001 provides a similar regime of compulsory insurance or financial security. Under the Bunker Convention 2001, the registered owner of a ship having a gross tonnage greater than 1,000 tonnes registered in China shall be required to maintain insurance or other financial security, such as the guarantee of a bank or similar financial institution, to cover the liability of the registered owner for pollution damage in
an amount equal to the limits of liability under CMC 1992. A certificate attesting for insurance or other financial security is also required and shall be issued by Chinese maritime authorities.81 The certificate is in Chinese with English translation. The certificate shall be carried on board the ship and a copy shall be deposited with the maritime authorities or, if the ship is not registered in China, with the authorities issuing or certifying the certificate.82 China does not permit a ship with a Chinese flag to operate at any time, unless a certificate has been issued.8316.32 Similar to the CLC 1992, any claim for compensation for pollution damage caused by bunker oil may be brought directly against the insurer or other person providing financial security for the registered owner’s liability for pollution damage. In such a case the defendant may invoke the defences (other than bankruptcy or winding up of the shipowner) that the shipowner would have been entitled to invoke, including limitation pursuant to the CMC 1992. Furthermore, even if the shipowner is not entitled to limitation, the defendant may limit liability to an amount equal to the amount of the insurance or other financial security required to be maintained in an amount equal to the limits of liability under CMC 1992. Moreover, the defendant may invoke the defence that the pollution damage resulted from the wilful misconduct of the shipowner, but the defendant may not invoke any other defence that the defendant might have been entitled to invoke in proceedings brought by the shipowner against the defendant. The defendant shall in any event have the right to require the shipowner to be joined in the proceedings.8416.33 According to the Regulations on Marine Pollution 2016, owners of ships navigating within waters under the jurisdiction of China shall, in accordance with the Measures of the People’s Republic of China for Implementation of Civil Liability Insurance for Oil Pollution Damage Caused by Ships 2010, as amended in 2013,85 ensure that there is insurance for civil liability for oil pollution and damage caused by vessels, or procure corresponding financial guarantees. The insured amount under the insurance on civil liability for oil pollution and damage caused by vessels or the financial guarantees procured by the shipowners shall be no less than the compensation limit prescribed by the CLC 1992 and the CMC 1992.86 Furthermore, owners or agents who receive persistent oily substances carried by sea within waters under the jurisdiction of China should also contribute to the vessel oil pollution compensation fund.8716.34 In judicial practice, where oil pollution damage is caused by an owner’s intentional act, the victim is not allowed to request compensation by the insurer or financial guarantor of liability for vessel oil pollution damage.88 This practice is consistent with the provisions in the CLC 1992 and the Bunker Convention 2001 which provide that the insurer or financial guarantor may avail himself of the defence that the pollution damage resulted from the wilful misconduct of the owner himself.89 Furthermore, when a claim for
compensation for pollution damage caused by bunker oil was brought against both the ship-owner and the insurer for the shipowner’s liability for the pollution damage, the shipowner and the insurer shall bear joint and several liability for the pollution damage.90 Similarly, when a claim for compensation for pollution damage caused by tanker oil may be brought against both the owner of ship and the insurer, the shipowner and the insurer shall bear joint and several liability for the pollution damage.