This case arose out of a collision between the CMA CGM Florida and the Chou Shan in the East China Sea, which caused bunker oil to leak from the CMA CGM Florida and resulted in pollution damage. Shanghai Xin'an Shipping Co Ltd (Xin'an) participated in pollution prevention and clean-up operations organised by the maritime authorities. It claimed the costs of those operations from Provence Shipowner 2008-1 Ltd (Provence), the owner of the CMA CGM Florida, CMA CGM SA, the bareboat charterer of that vessel, and Rockwell Shipping Ltd (Rockwell), the owner of the Chou Shan. The first instance Court confirmed Xin'an's claim for clean-up costs against Provence and CMA CGM, but rejected its claim against Rockwell. The appellate Court upheld that decision. Xin'an applied to the Supreme People's Court for retrial.

Xin'an argued that the pollution prevention and clean-up costs were the costs of preventive measures falling within pollution damage, and that Provence and CMA CGM were liable for them. It also argued that the collision had been caused by the fault of both vessels. Although the Chou Shan was not the vessel from which the bunker oil leaked, its fault had caused the CMA CGM Florida to leak oil, and Rockwell should therefore be liable in proportion to the Chou Shan's 50% share of fault. Provence, CMA CGM, and Rockwell argued that liability for pollution damage should fall on the leaking vessel only, that the owner of the non-leaking vessel should not be directly liable for the clean-up costs, and that the claim for pollution prevention and clean-up costs was subject to limitation of liability.

Held: Retrial application allowed in part: Provence and CMA CGM liable for RMB 6,514,516.47 plus interest as pollution prevention and clean-up costs; Rockwell liable for RMB 3,257,258.24 plus interest, representing 50% of those costs; aggregate recovery from Provence, CMA CGM and Rockwell capped at RMB 6,514,516.47 plus interest.

The Court held that China was a party to the Bunker Convention 2001 and that the case fell within the scope of that Convention. The Convention therefore applied in priority, while matters not governed by it were to be determined under Chinese law. Article 1.7 of the Bunker Convention 2001 defines preventive measures as reasonable measures taken after an incident to prevent or minimise pollution damage. Article 1.9 defines pollution damage to include the costs of preventive measures and further loss or damage caused by preventive measures. Xin'an's pollution prevention and clean-up operations therefore constituted preventive measures under the Convention, and its reasonable costs fell within the scope of recoverable pollution damage. Xin'an was entitled to claim those costs.

As to the liability of leaking vessel, the Court applied art 3.1 of the Bunker Convention 2001. That provision makes the shipowner at the time of an incident liable for pollution damage caused by bunker oil on board or originating from the ship, subject to the exceptions in the Convention. The Court also relied on the definition of shipowner in art 1.3. It held that Provence, as the owner of the CMA CGM Florida, and CMA CGM, as the bareboat charterer and operator of that vessel, were shipowners within the meaning of the Convention and were liable for the costs of preventive measures caused by the bunker oil spill.

As to the liability of the non-leaking vessel, the Court held that art 3.1 of the Bunker Convention 2001 is a positive rule on the liability of the owner of the leaking vessel, but it cannot be read in reverse as excluding the liability of other persons at fault. Article 3.6 preserves the shipowner's right of recourse, and art 3.3.b concerns exoneration where damage is wholly caused by the intentional act or omission of a third party. However, the Convention does not determine whether the owner of a negligent non-leaking vessel is directly liable to the pollution claimant where a collision between two vessels at fault causes one vessel to leak bunker oil. That issue was therefore governed by domestic law.

The Court applied Chinese law on environmental pollution caused by the fault of a third party. Although the Chou Shan did not leak oil, its navigational fault contributed to the collision with the CMA CGM Florida and caused the latter to leak bunker oil. Rockwell, as the owner of the Chou Shan, was a third party at fault and was liable for pollution damage in proportion to the 50% share of fault attributed to the Chou Shan in the earlier collision judgment. The Court therefore corrected the lower courts that the owner of the non-leaking vessel was not liable.

The Court also considered limitation of liability. Article 6 of the Bunker Convention 2001 provides that nothing in the Convention affects the right of the shipowner, or the person providing insurance or other financial security, to limit liability under any applicable national or international regime, such as the LLMC 1976. Whether the pollution prevention and clean-up costs were subject to limitation was therefore to be determined under the limitation provisions of the Maritime Code of the PRC. The Court held that Ch XI of the Maritime Code of the PRC drew on the LLMC 1976, but Chinese law did not include within limitable claims the claims described in arts 2.1.d and 2.1.e of the LLMC 1976 concerning the raising, removal, destruction or rendering harmless of sunken, wrecked, stranded or abandoned ships or their cargo. Since the CMA CGM Florida was not sunken, wrecked, stranded, or abandoned, Xin'an's claim for pollution prevention and clean-up costs remained subject to limitation of liability, and was to be satisfied from the relevant limitation funds.

The Court confirmed Xin'an's recoverable pollution prevention and clean-up costs at RMB 6,514,516.47 plus interest. Provence and CMA CGM were liable for the full amount. Rockwell was liable in proportion to its 50% share of fault, but the aggregate amount payable by Provence, CMA CGM and Rockwell to Xin'an was capped at RMB 6,514,516.47 plus interest.