The vessel Yanjiuyou 2, which was owned by the plaintiff, was an oil transport vessel. In the course of its voyage, in attempting to avoid a typhoon, it hit a reef and there was an oil spill which resulted in the death of marine aquatic life in a mariculture zone. The total economic loss of this oil pollution was RMB 33,127,989.

The defendant sued for losses. In light of the International Convention on Civil Liability for Oil Pollution Damage 1969 (CLC 1969), the plaintiff shipowner made an application for limitation of liability for maritime claims. In the first trial, the Qingdao Maritime Court rejected the shipowner’s application.

The first trial court held that, first, the Yanjiuyou 2 was a vessel used for domestic transportation. Therefore, the CLC 1969 was inapplicable. Secondly, civil liability for oil pollution should be dealt with by reference to both the CLC 1969 and the International Oil Pollution Compensation Fund 1971 (Fund Convention 1971). Since China was not a contracting state to the Fund Convention 1971, it was unfair to limit the shipowner’s liability solely according to the CLC 1969.

The plaintiff appealed to the Shandong Higher People’s Court. However, the appellant’s case was rejected for the same reasons as given by the first instance court. The plaintiff appealed to the Supreme People’s Court.

Held: Appeal allowed.

The Supreme People’s Court held that there is no need to consider the applicability of international conventions in this case. The dispute of this case should be governed by domestic administrative regulations and the Chinese Maritime Code. According to the Provisions Concerning the Limitation of Liability for Maritime Claims for Ships With a Gross Tonnage Not Exceeding 300 Tons and Those Engaging in Coastal Transport Services As Well As Those for Other Coastal Operations 1994 (Letter No 155 [1993] of the State Council), the appellant’s application for limitation of liability should be granted.