On 19 March 2013, two ships collided in China’s Exclusive Economic Zone (EEZ). The ships were a container carrier (CMA CGM Florida) and a bulk carrier (Chou Shan). CMA CGM Florida was registered in the United Kingdom. Chou Shan was registered in Panama. The plaintiffs (CMA CGM SA, Provence Shipowner 2008-1 Ltd) were domiciled in France and Ireland. The owner of Chou Shan (Rockwell) was domiciled in the Republic of the Marshall Islands.

After the collision, the two ships immediately proceeded to different Chinese ports, Chou Shan to the port of Qushan and CMA CGM Florida to Yangshan Terminal. CMA CGM Florida subsequently leaked oil and fuel. On 31 March 2013, the owners of both ships were required to provide security to the Shanghai Maritime Safety Administration (the Shanghai MSA) in relation to pollution clean-up costs, each to the value of RMB 70 million (over AUD 10 million). Also in April 2013, they were required to provide security to a Chinese authority in relation to loss or damage to fisheries, each in the value of RMB 20 million (over AUD 3 million).

On 9 April 2013, the plaintiffs filed a writ in rem in the Federal Court of Australia, commencing proceedings against Chou Shan claiming USD 60 million in damages plus interest and costs arising out of the collision.

On 6 May 2013 the owners of Chou Shan applied to the Ningbo Maritime Court to set up a limitation fund in Special Drawing Rights totaling 11,850,278 units and on 21 May 2013, the Ningbo Maritime Court accepted their application. Their rights to limit in this way arose from ch 11 of the Chinese Maritime Code. Although China is not a signatory to the LLMC 1976 nor the LLMC 1996, the substance of ch 11 is taken from the LLMC 1976. Australia is a signatory to both the LLMC 1976 and the LLMC 1996, which significantly increased limitation amounts.

On 9 May 2013, cargo interests arrested Chou Shan in Zhousan and commenced proceedings in the Ningbo Maritime Court. The next day she was released from arrest after her P&I Club gave security. On 17 May 2013, Rockwell arrested CMA CGM Florida and filed a civil complaint against the plaintiffs in the Ningbo Maritime Court, which was accepted on 24 May 2013. Rockwell then applied to increase its security demand against CMA CGM Florida from USD 5 million to USD 40 million. Its application was accepted on 3 June 2013 and CMA CGM Florida was released from arrest after her P&I Club provided security.

On 22 May Chou Shan was arrested in Port Hedland, Western Australia, at the request of the plaintiffs. On 24 May 2013, Rockwell (as owner of Chou Shan) filed a conditional appearance in the Federal Court to apply for the release of Chou Shan. Upon provision of security of USD 61,751,213 by Chou Shan’s P&I Club she was released on 29 May 2013.

Under cl 4 of the letter of undertaking, Chou Shan’s P&I Club would be released from its obligations if Rockwell were to establish a limitation fund in Australia under the LLMC Act 1989 (Cth) and the claims were found to fall within art 2 of the LLMC 1976. On 18 June 2013 Rockwell and Chou Shan filed a stay application in respect of the Federal Court proceedings on the basis that Australia was a clearly inappropriate forum for the hearing and determination of the plaintiff’s claims. In addition, they asserted that the proceedings were vexatious and oppressive as they were substantially the same subject matter as the proceedings in the Ningbo Maritime Court. On 29 July 2013 CMA CGM Florida registered its claims, under protest as to the jurisdiction, in the Ningbo Maritime Court and stated the Federal Court was the forum where the proceedings commenced and where they should proceed.

On 4 and 5 September 2013, the Federal Court heard the stay application. The primary Judge considered the question of the lex causae governing the collision. He found that Chinese law governed the pollution claims by Chinese authorities being a subject matter given over to the coastal state by art 56 of UNCLOS. However, he found that the law governing the maritime tort in connection with a ship collision was not necessarily Chinese. The primary Judge nevertheless held that Australia was a clearly inappropriate forum and granted the stay: see CMA CGM SA v Ship 'Chou Shan' [2014] FCA 74 (CMI68). The plaintiffs appealed.

Held: The appeal was dismissed. The primary Judge's conclusion that China was the natural and obvious forum was both defensible in fact and relevant to the assessment of suitability of Australia. The clear proximity to China in terms of distance, the role of the Shanghai MSA, the commencement of suits there by a variety of parties and the ships steaming to Chinese ports for repair all placed the over-arching control by a competent and skilled Chinese court as a natural and convenient consequence.

In reaching this conclusion, the Court considered the differences as to limitation. It is possible for disputes to arise as to which limitation regime should govern and with what universality. The terms of the conventions seek to deal with this question. In the LLMC 1976, art 11 provides for the constitution of the fund and art 13 provides for the barring of other actions. However, art 13 is expressly predicated on there being a fund constituted in accordance with art 11. China is not a signatory to the LLMC 1976 and so art 13 (as part of Australian law) does not operate. Thus, there is no statutory bar on the plaintiffs bringing their claim in Australia against an asset of the owner notwithstanding the constitution of a fund in China. However, despite this juridical advantage, it was not decisive.

Subject to the matters in art 56 of UNCLOS, China’s EEZ is not under the sovereign control of China and is not part of the territory of China. The primary Judge approached his task on the basis otherwise than that the law of China governed the collision as lex loci delicti. The Collision Regulations (COLREGS 1972) would be the operative rules under which the fault in the collision ought to be determined under general maritime law administered in the forum rather than strictly by the law of any particular country. On the evidence, such rules also form the basis of Chinese law in any event. The conclusion that the lex causae was not Chinese law meant that the Court did not consider whether Chinese limitation provisions necessarily applied to the exclusion of the Australian LLMC Act 1989 (Cth).