Provisions of the Supreme People's Court on Several Issues regarding Trial of Cases Involving Marine Insurance Disputes

Fa Shi [2006] No.10

November 23, 2006

In order to try cases involving marine insurance disputes accurately, these provisions are formulated in accordance with the relevant provisions of the Maritime Law of the People's Republic of China, the Insurance Law of the People's Republic of China, the Special Procedure Law of the People's Republic of China on Admiralty and the Civil Procedure Law of the People's Republic of China.

Article 1 The trial of cases involving disputes over marine insurance contracts shall be governed by the Maritime Law; if there is no applicable provision in the Maritime Law, the relevant provisions of the Insurance Law shall apply; and if there is no applicable provision in the Maritime Law and the Insurance Law, other relevant provisions of the Contract Law, etc. shall apply.

Article 2 The trial of cases involving disputes over marine insurance contracts with port facilities or docks as insurance objects that do not result from marine accidents shall be governed by the legal provisions of the Insurance Law, etc.

Article 3 The trial of a case, where the insurer exercises the subrogation right due to an insurance accident arising from collision of vessels with port facilities or docks, and claims for compensation from the third person that causes the insurance accident, shall be governed by the provisions of the Maritime Law.

Article 4 Where the insurer knows that the insured has filed to report truthfully the important information as prescribed in Paragraph 1 of Article 222 of the Maritime Law, but still collects insurance premiums or pays insurance compensation, if later the insurer claims rescission of the contract for the reason that the insured has failed to report truthfully the important information, the people's court shall not support its claim.

Article 5 Where, before the insurance liability begins, the insured fails to pay the insurance premiums as stipulated to the insurer in accordance with Article 234 of the Maritime Law, the insurer is entitled to rescind the insurance contract, unless the insurer has issued insurance documents; if, after the insurance liability has begun, the insurer claims rescission of the contract, for the reason that the insured has failed to pay insurance premiums, the people's court shall not support its claim.

Article 6 Where the insurer claims rescission of the contract starting from the day when the guarantee clause is violated for the reason that the insured has violated the guarantee clause and failed to inform the insurer in writing immediately, the people's court shall support its claim.

Article 7 Where the insurer still pays insurance compensation after having received the written notice notifying that the insured has violated the guarantee clause stipulated in the contract, but later claims rescission of the contract for the reason that the insured has violated the guarantee clause stipulated in the contract, the people's court shall not support its claim.

Article 8 Where the insurer, after having received the written notice notifying that the insured has violated the guarantee clause stipulated in the contract, fails to reach agreement on such matters as insurance acceptance conditions and increase of insurance premiums, the insurance contract shall be rescinded on the day when the guarantee clause is violated.

Article 9 Where transfer of vessel occurs during voyage, the vessel insurance contract of which the transfer has not been approved by the insurer shall be rescinded at the end of the voyage. From the transfer of vessel till the end of the voyage, the rights and obligations of the vessel insurance contract shall be enjoyed and born by the vessel tranferor, may also be succeeded by the vessel transferee.
The vessel transferee shall, when claims for compensation to the insurer in accordance with the provision of the previous paragraph, provide effective insurance documents and proof of vessel transfer contract.

Article 10 Where both of the insurer and the insured, by the time of concluding the insurance contract, do not know the insurance object has suffered loss owing to insurance accident, or the insurance object can not possibly suffer any loss owing to insurance accident, the effect of the insurance contract shall not be influenced.

Article 11 The loss, caused by the carrier for having no original bill of lading for delivery of goods during transportation of marine goods, shall not belong to the scope of insurance liability of the insurer. Where it is prescribed otherwise between the parties of the insurance contract, the otherwise prescribed stipulation shall prevail.

Article 12 Where the reasonable measure adopted by the insured, after an insurance accident occurs, to prevent from or decrease loss has no effect, and the insured claims the reasonable expenses incurred thereof to be paid by the insurer, the people's court shall support its claim.

Article 13 Where the insurer, when exercising the subrogation right and claiming for compensation, fails to submit the vouchers for the insurance compensation actually paid to the insured as required by the provisions of the Special Maritime Procedure Law, the people's court shall not accept the case, or determine to dismiss the prosecution, if the case has been accepted.

Article 14 The people's court, which accepts the case where the insurer exercises the subrogation right and claims for compensation, shall try only the part of the legal relation between the third person and the insured, which caused the insurance accident.

Article 15 Where the insurer, after having acquired the right to indemnity by subrogation, claims interruption of statute of limitation for the reason that the insured has brought a suit against the third person, referred to arbitration or applied for detainment of a ship, or the third person has agreed to fulfill its obligation, the people's court shall support its claim.

Article 16 Where the insurer, after having acquired the right to indemnity by subrogation, claims to enjoy the guarantee right acquired by the insured for applying for detainment of a ship, the people's court shall support its claim.

Article 17 These Provisions shall come into force as of January 1, 2007.