The claimant, Yang Moumou 1, a minor, and her mother, Yang Moumou 2, purchased tickets through a third party, China Travel Service Zhejiang Group Co Ltd (CTS), for a four-night cruise aboard the Sapphire Princess on the Shanghai–Jeju Island–Fukuoka–Shanghai route, departing 2 August 2015. On 5 August 2015, while the vessel was sailing on the high seas east of Shanghai, the claimant suffered a drowning accident in the vessel's swimming pool. She was found by another passenger at approximately 15h25 and cardiopulmonary resuscitation was administered. The vessel accelerated its return voyage and arrived at Shanghai Wusongkou International Cruise Terminal at 03h00 on 6 August. The claimant was taken to the hospital and subsequently diagnosed with ischaemic hypoxic encephalopathy caused by drowning, resulting in a permanent vegetative state assessed as First Level Disability with complete nursing dependence. A drowning accident involving an adult had previously occurred in the same pool in August 2014.

The claimant sued the defendant, Carnival Corp, the operator of Sapphire Princess, in tort before the Shanghai Maritime Court, claiming compensation for medical expenses, nursing expenses, transportation expenses, accommodation expenses, nutrition fees, disability compensation, disability aids costs, in-hospital food allowance, disability degree assessment fees, mental damage compensation and lawyer fees totalling CNY 3,948,455.26 on the basis of an 80 per cent liability ratio, as well as a public apology. CTS was initially a defendant but was later joined as a third party following the claimant's withdrawal of the claim against it.

Three issues arose for determination. First, whether PRC or English law applied. The claimant initially argued that English law applied as the law of the flag State, characterising the vessel as floating territory. The defendant argued for Chinese law on the basis that the place where the tort result occurred was the PRC, and that the claimant and the third party had a common place of regular residence in the PRC. The Court rejected the floating territory argument and held that, given the complexity of connecting factors in cruise ship tort cases, the doctrine of the most significant relationship should be applied. Taking into account that the majority of connecting factors pointed to the PRC, including the port of departure and destination, the claimant's residence and treatment, the defendant's long-term operation of cruises from Shanghai Port, and the predominantly Chinese clientele, PRC law was applicable.

Second, whether the defendant was liable and in what proportion. The defendant argued that the absence of lifeguards in cruise ship pools was international common practice, that it had erected sufficient safety notices, that the claimant's guardian was contributorily negligent, and that it was entitled to limit its liability under the PRC Maritime Code and the Athens Convention 1974. The Court found the defendant primarily at fault: it had operated from Shanghai Port for over a year with a predominantly Chinese clientele, it was aware of Chinese legal requirements for lifeguards in pools of under 250 m², it had failed to refer to or comply with those requirements or the relevant UK Health and Safety Executive guidance (HSG179), and despite a prior fatal drowning accident in the same pool it had taken no remedial measures. The defendant's staff had taken no active safety management measures at the pool at the time of the incident. The claimant's mother, as legal guardian, was also found to have been contributorily negligent for leaving the claimant unsupervised. Liability was apportioned 80 per cent to the defendant and 20 per cent to the claimant.

Third, the Court considered whether the defendant was entitled to limit its liability under arts 7, 8, and 10.1 of the Athens Convention 1974 to 46,666 SDRs (approximately CNY 433,700). The Court held that, under art 13.1 of the Convention, limitation was unavailable where the carrier knew of acts or omissions taken rashly which might lead to loss. The defendant's awareness of the prior drowning accident, its failure to implement any remedial measures, and the laissez-faire conduct of its staff at the scene constituted such reckless conduct, and the defendant was accordingly not entitled to limit its liability.

Held: Judgment for the claimant in part.

PRC law applied under the doctrine of the most significant relationship. The defendant bore 80 per cent liability and the claimant 20 per cent. The defendant was not entitled to limit its liability under art 13.1 of the Athens Convention 1974, as its conduct in failing to remedy known safety deficiencies and adopting a laissez-faire attitude at the scene fell within the reckless conduct provision of art 13.1. Total compensation was assessed at CNY 3,933,040.07 across ten heads of damage. The defendant was ordered to pay CNY 2,906,432.06 after deduction of CNY 90,000 paid after the accident and CNY 150,000 paid as an in-advance execution. The claimant's request for a public apology was not supported. The defendant's argument that the claimant's insurance recovery should be deducted from compensation was rejected.