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Navigating the Legal Waters: Chinese Courts' Application of Laws in Torts Occurred on Cruise Ships on High Seas

Sun, 13 Aug 2023
Categories: Insights
Contributors: Meng Yu 余萌

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Key takeaways:

  • In 2018, Shanghai Marimte Court ruled in the case of the "Sapphire Princess", marking Chinese courts' exploration of conflict rules for torts occurred on a cruise ship on the high seas (see Yang v. Carnival Plc and Zhejiang China Travel Service Group Co., Ltd.(2016) Hu 72 Min Chu No. 2336).
  • The Court granted a compensation of over CNY 2.9 million in favor of the plaintiff based on Chinese law and the Athens Convention relating to the carriage of passengers and their luggage by sea, 1974.
  • Faced with the difficulty of applying the conflict rules for general torts, the Court turned to the application of the principle of the closest connection.

The case of the "Sapphire Princess" stands out as the first tort case in China to take place on a cruise ship on the high seas.

In April 2018, Shanghai Marimte Court ruled in the case of the "Sapphire Princess", marking Chinese courts' exploration in conflict rules for torts occurred on a cruise ship on the high seas (see Yang v. Carnival Plc and Zhejiang China Travel Service Group Co., Ltd. (2016) Hu 72 Min Chu No. 2336 ((2016)沪72民初2336号)).

China comes in second to the U.S. as the biggest consumer of cruise tourism worldwide, with European and American cruise companies pretty much dominating the market. The case discussed in this post is a tragic drowning that happened in the swimming pool of the "Sapphire Princess", a cruise ship run by Carnival Plc (hereinafter "Carnival").

Dr. Yan Lingcheng (严凌成) from Sun Yat-sen University published an article delving into the application of law involved in the case. For more information, see Yan Lingcheng, "On Dilemmas and Improvements of the Rules for Application of the Law in Foreign-related Tort on Cruise Line – An Exploration of China’s First Tort Aboard a Cruise Ship on the High Seas" (论涉外邮轮侵权法律适用规则的困境与完善——以我国首例公海邮轮侵权案为例), Wuhan International Law Review (武大国际法评论) (No. 2, 2023).

I. Case overview

On 1 Aug. 2015, Yang, a Chinese citizen, and her mother entered into a contract for international tourism with Zhejiang China Travel Service Group Co., Ltd.(hereinafter "Zhejiang CTS"), agreeing on their travel aboard the “Sapphire Princess”, a cruise ship operated by the defendant, Carnival.

On 5 Aug. 2015, during the return journey of the cruise ship from the high seas to Shanghai Port, Yang tragically almost drowned in the swimming pool of the "Sapphire Princess", resulting in the need for lifelong care.

Subsequently, the plaintiff filed a lawsuit against the defendant, which eventually came before the Shanghai Maritime Court (the "Court"). 

On 26 Apr. 2018, the Court ruled that the defendant should compensate the plaintiff with over CNY 2.9 million based on Chinese law and the Athens Convention relating to the carriage of passengers and their luggage by sea, 1974 (the "Athens Convention").

II. Application of law

1. Plaintiff's view

The plaintiff argues that, on one hand, both the defendant’s nationality and the ship's flag state are British – a crucial fact considering that the alleged tort took place on a British-flagged ship on the high seas; on the other hand, under international law, ships are treated as floating territories. Thus, the laws of the flag state, in this case, British law, should be applicable.

2. Defendant's view

The defendant argues that due to the absence of a clear legal basis under Chinese law, it is difficult to use the floating island (territory) theory as the basis for the application of law in this case.

Additionally, although the tort occurred on the cruise ship on the high seas, there is no specific national or regional law for such instances. As the harm resulting from the tort, in this case, occurred within the territory of China, the applicable law shall be Chinese law.

3. Court's view

The Shanghai Maritime Court held that the dispute arose from the drowning accident of a Chinese passenger in the swimming pool of a foreign ship on the high seas. Therefore, if the plaintiff filed a lawsuit against the defendant for tort liability, this case should be categorized as a foreign-related maritime personal injury liability dispute.

Accordingly, the applicable law shall be determined according to Article 44 (i.e., the conflict of laws rule for torts) of the "Law of the People's Republic of China on the Application of Laws in Foreign-Related Civil Relations" (中华人民共和国涉外民事关系法律适用法, hereinafter the “Law on the Application of Laws”) 

This rule comprises three points:

(1) where the parties have chosen by agreement an applicable law after the tortious act occurs, the agreement shall be followed;

(2) where there is no agreement as mentioned above, and the parties share a common habitual residence, the law of their common habitual residence shall be applied; and

(3) where neither of the above mentioned conditions is fulfilled, the law of the place of tort shall be applied.

Since the parties did not reach an agreement on the law applicable to the tort after the tort occurred, and there was no common habitual residence between the plaintiff and the defendant, neither condition (1) nor (2) was satisfied. Therefore, the applicable law, in this case, shall be the law of the place of tort (lex loci delicti).

According to Article 187 of the "Opinions on Several Issues Concerning the Implementation of the General Principles of the Civil Law of the People's Republic of China (Trial Implementation)" (关于贯彻执行〈中华人民共和国民法通则〉若干问题的意见(试行), hereinafter the “Opinions”) issued by the Supreme People's Court in 1988, "the law of the place of tort includes the law of the place where the tort is committed and the law of the place where the consequence of the tort occurs. If the two places are inconsistent, the court can choose either of them as the applicable law. In this case, both the commission of the tort and the consequence of the tort occurred on the British-flagged ship on the high seas.

Therefore, the Court held that, under such circumstance, the applicable law shall be determined according to Article 44 of the Law on the Application of Laws. 

Furthermore, the floating island (territory) theory invoked by the plaintiff is merely an academic viewpoint and thus cannot be used as a legal basis. Consequently, there is no legal basis for applying British law in this case.

In other words, Chinese law does not contain specific provisions for torts occurring on foreign cruise ships on the high seas.

According to Article 2 of Law on the Application of Laws, "in the absence of provisions in this Law and other laws on the application of laws to foreign-related civil relations, the law that is most closely connected to such foreign-related civil relations shall be applied." Therefore, in this situation, Chinese courts can only determine the applicable law based on the principle of the closest connection.

Ultimately, the Court concluded that the Chinese law, apart from Athens Convention on liability limit,  shall be applied.

 

Contributors: Meng Yu 余萌

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