The Minrangong 2 was owned by the plaintiff. The ship was used for domestic transportation only. During the vessel’s voyage from Xiamen to Guangdong, an oil leakage occurred after its collision with another Chinese vessel. The plaintiff applied for limitation of its oil pollution liability according to the International Convention on Civil Liability for Oil Pollution Damage 1969 (CLC 1969) to which China is a contracting state.

During the trial, the issue of the correct governing law of this case was raised by the defendant. The defendant contended that the Minrangong 2 was used for domestic transportation. The collision happened in the Chinese territorial sea. Therefore, no foreign-related factors were involved and the CLC 1969 should not be applied in this case.

Held: The plaintiff’s application for limitation of liability was granted.

Article 2 of the CLC 1969 explicitly states that 'This Convention shall apply exclusively to pollution damage caused on the territory including the territorial sea of a Contracting State and to preventive measures taken to prevent or minimize such damage'.

Guangdong Maritime Court held that China is a contracting state to the CLC 1969. This Convention and its 1976 Protocol are the correct governing law of this case. Article 2 of the CLC 1969 draws no distinction between vessels for domestic transportation and international transportation. Therefore, the defendant’s argument must be rejected.

Therefore, in light of arts 5.1, 5.3 and 10 of the CLC 1969 and art 2.1 of its 1976 protocol, the applicant’s application for the establishment of a fund for the limitation of the compensation for oil pollution damage was granted.