The Zeus, which was owned by the retrial applicant, Shinhan Capital, grounded on a reef due to the effects of a typhoon on 24 September 2008. As a result of the grounding, its bunkers leaked and caused severe marine pollution. To reduce the effects of the pollution, the defendant, Jiangmen Maritime Safety Administration (Jiangmen MSA), conducted clean-up work which generated an expense of RMB 13,406,484 in total. The expenses covered the personnel and equipment used by Jiangmen MSA itself and the purchase of decontamination products from a third party.

Jiangmen MSA claimed for the aforementioned expenses, which Shinhan Capital failed to pay. Shinhan Capital claimed that it was entitled to limit its liability according to art 207 of Chinese Maritime Code since the cost was in respect of rendering harmless damage caused to the environment. Shinhan further claimed that Jiangmen MSA had no right to recover the costs since it had a duty to conduct the clean-up work.

In the first instance, Guangdong Maritime Court held that the cost claimed by Jiangmen MSA was an expense that should be paid pursuant to a contract. Therefore, according to art 207.4 of the Chinese Maritime Code, Shinhan Capital was not entitled to invoke the provisions on limitation of liability. The first instance Court further held that, according to art 207 of the Chinese Maritime Code, claims in respect of costs incurred to render damage harmless are not claims in respect of which the person liable may limit its liability. Therefore, Shinhan Capital’s claim failed.

On appeal, Guangdong People’s High Court upheld the first instance court’s judgment. Shinhan Capital then applied for retrial to the Supreme People’s Court.

Held: Application for retrial dismissed.

Article 207 of the Chinese Maritime Code was drafted in light of the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976). However, art 207 of the Chinese Maritime Code did not adopt arts 2.1.b and 2.1.e of the LLMC 1976.

Therefore, according to art 17.1 of Several Provisions of the Supreme People’s Court Concerning Trial of Cases Involving Disputes over the Limitation of Liability for Maritime Claims, 'claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship' are not subject to limitation of liability.

Furthermore, according to art 20 of the Provision of the Supreme People’s Court on Several Issues Concerning the Trial of Cases Involving Disputes over Compensation for Ship Oil Pollution Damage, the shipowner also cannot limit its liability for expenses that are generated from measures taken to prevent fuel and oil on board from causing damage.

Therefore, the claimant was not entitled to limit its liability regarding the clean-up costs incurred by Jiangmen MSA.