The Civil Code has attracted widespread attention since its promulgation with most discussions on real rights, personality rights, and marriage and family while research on shipping-related issues has been scarce. Based on construction of the Civil Code and from the perspective of P&I insurance, this article attempts to summarize some key points and analyze how would the legislation guide the handling of P&I claims.

I.        Handling claims for environmental damages

1.      It is provided in Article 9 of the Civil Code that civil entities shall preserve the ecological environment when engaged in civil activities and further requirements are established in Chapter VII Part on Tort Liability.

2.      As provided in Article 1232 of the Civil Code, if a tortfeasor deliberately pollutes the environment or damages the ecosystem in violation of the law and causes serious consequences, the victim of a tort is entitled to demand punitive damages. Referring to Article 55 of the Law of PRC on Protection of Consumer Rights and Interests which has come into effect, the serious consequences here should be understood as causing serious personal injury consequences, serious property losses may not be applicable.

But, considering the efforts on promoting environment protection by introducing “green articles” in the Civil Code, serious ecological and environmental losses may be included in the serious consequences. Its legal application has yet to be clarified by judicial practices. Punitive damages may also have a direct impact over the handling of P&I claims due to its punitive nature and the requirements on subjective intentions.

3.      Responsible parties are no longer called “polluters” but “tortfeasors” and the party have the burden of proof in the event of a dispute is now a “perpetrator”. If the tortfeasor causes serious ecological damages and is slow to remediate, government may conduct remediation by itself or entrusting others at the expense of the tortfeasor.

Although these newly added provisions are yet to be practiced, the Civil Code as a general law would supplement and further improve the established regulations on environmental pollution and damage liabilities. Also, the environmental public interest litigation has highlighted the importance for P&I insurers to be concerned about pollution clean-up and ecological remediation when handling claims, especially for oil pollution damages.

II.     Handling claims for personal injuries

First, detailed provisions regarding compensation for personal injuries can be found in the Part on Tort Liability of the Civil Code. In line with the Supreme Court Interpretation of Some Issues concerning Law Application for Trial of Cases on Compensation for Personal Injury (the 2003 Interpretation), expenses for nutrition and subsidies for board expenses in hospital are included.

Although, same as the provision in the Tort Liability Law, article 1180 stipulates that where the same tort causes the deaths of several persons, a uniform amount of death compensation may be determined, it is proposed in the Opinions of the State Council on Establishing and Improving Country Rural Integrated Development Mechanism and Policies that a sound mechanism that promotes inclusive sharing of public services with a unified compensation standard for urban and rural residents shall be established. As the policy gets implemented in an increasing number of pilot cities and counties, how to determine the amount of compensation in practice will be a focus of particular concern.

Second, the Civil Code has expanded the scope of application for mental damage compensations and strengthened protection on victims, providing that where any harm caused by a tort to a personal right or an object of personal significance inflicts a serious mental distress on the victim of the tort, the victim of the tort may require compensation for the infliction of mental distress. It remains a problem that how the object of “personal significance” is determined in practice. In reference to article 4 of the Supreme Court Interpretation of Some Issues Concerning the Determination of Tort Liability for Mental Damages, which is not exactly the same as the provisions of the Civil Code, compensation for mental damage can only be claimed when the specific object is permanently lost or damaged due to the tort. Such clauses are applied very discreetly in relevant judicial precedents and claims are supported only when there is indeed a serious mental loss.

In addition, protection on personal rights is built in a standalone part of the Civil Code. In some personal injury cases, the injured person or their family members may claim compensation for mental trauma, but decisions will be made at the discretion of the court. Some even believe that compensation on these items is included already.

Finally, it is newly added in the Civil Code that if the whereabouts of a person have been unknown after an accident and proof can be provided by relevant authorities that it is impossible for the person to survive, then the application for declaration of death is not subject to the two-year time limit. The application order of interested parties is cancelled and in such cases the date of the accident in which the person is involved shall be deemed as his/her date of death. However, it remains unexplored and unclarified the scope of relevant authorities and in the event of a seafarer’s death, whether our member shipowner is an interested party that is entitled to apply for declaration of death.

III.  Limitation of action

The General Part of the Civil Code stipulates that the limitation of action regarding applications to a people’s court for protection of civil rights is three years. If the law provides otherwise, those provisions shall be followed. This change may not affect the limitation periods specified in the Maritime Law, but the mandatory provisions on the statute of limitations, that is, the termination, suspension and extension cannot be agreed by the parties, may affect the force of provisions allowing agreement of the parties in some international conventions. Although the Maritime Law stipulates that international conventions with China as a contracting party shall be applied first, conflicts between established special law and new general law may still be a problem here for P&I cases.

IV.  Referring to common practices

Article 10 of the Civil Code mentions the application of common practices in civil disputes, recognizing the important role of customary behaviors in legislation. How some business or industry practices and specific trading habits between entities are considered in the judgment will also have an impact on the handling of P&I cases.

V.     Conclusion

The Civil Code has brought a series of new changes and challenges to the handling of P&I claims. We will continue to focus on relevant judicial practices and provide Members with updated information.

For further information, please contact your manager at the Club.