CHINA MARITIME LAW NEWSLETTER
Vol. 2, No.1 - January 7, 2002
Special Edition: Regulations of the People's Republic of China on International Maritime Transportation For more information on this new law and its effects on the industry, please send email to mail@chinalaw.cc. |
(Adopted at the 49th Session of the Standing Committee of the State Council on December 5, 2001, promulgated by Order No. 335 of the State Council of the People's Republic of China, and effective as of January 1, 2002)
Prime Minister: Zhu Rongji
December 11, 2001
Chapter I General Provisions
Article 1 These Regulations are formulated in order to regulate the international maritime transportation, to safeguard the fair competition, to maintain the market order of the international maritime transportation, and to protect the lawful rights and interests of various parties involved in the international maritime transportation activities.
Article 2 These Regulations shall apply to the international maritime transportation and operation activities entering or leaving the ports of the People's Republic of China, and all the other auxiliary operation activities of international maritime transportation.
"Other auxiliary operation activities to the international maritime transportation" include international shipping agency, international ship management, the loading and unloading of international maritime goods, the storage of international maritime goods, the establishment and operation of international maritime containerization stations, and other businesses stipulated in this Regulations.
Article 3 All the international maritime transportation and operation activities and auxiliary activities must be conducted in good faith, and the principles of legal operations and fair competition shall be followed.
Article 4 The competent Departments for Communications of the State Council of the People's Republic of China and local governments shall, according to the Regulations, be responsible for the administration and supervision of the operations of international maritime transportation and auxiliary activities.
Chapter II Operators of the International Maritime Transportation and Other Auxiliary Activities
Article 5 The operation activities engaged in international maritime transportation must satisfy the following conditions:
(1) to have transport vessels, at least some of which must be registered in China that correspond to the needs of the international maritime transportation;
(2) to have transport vessels that meet all technical standards stipulated by the State for marine traffic safety;
(3) to have the bill of lading, passenger ticket or multimodal transport documents;
(4) to have specialized senior administrative personnel meeting the occupational requirements stipulated by the competent department for communications of the State Council.
Article 6 The application for the operation of international maritime transportation shall be submitted to the competent department for communications of the State Council, and the relevant materials that meet the conditions stipulated in Article 5 of this Law should be also attached. The process of examination conducted by the competent department for communications of the State Council for the application should be finished within 30 days beginning from the day when it starts. "License on the Operation of International Maritime Transportation" shall be granted to the applicant if the application is approved; the reasons shall be notified in written form to the applicant if the application is not approved.
In examining and approving the application for the operation of international maritime transportation, the competent Department for Communications of the State Council shall consider the state's policy on the development of international maritime transportation and the competition situation in this market.
If the application for international liner services is submitted with the application for the operation of international maritime transportation, the relevant materials that meet the conditions stipulated in Article 17 of this Law should also be attached and sent to the competent Department of Communications of the State Council of the People's Republic of China for examination.
Article 7 The bill of lading shall be registered in the competent Department for Communications of the State Council, if the applicant is conducting a non-vessel operation, and a security deposit shall be submitted.
"Non-vessel operation" refers to an international maritime transportation activity that the operator of a non-vessel operation accepts and whereby the operator takes on all the responsibilities of the shipper, in the name of the shipper, by shipping order, by issuing his own bill of lading or other shipping document or by charging the freight from the consignor.
An enterprise shall be established within the territory of the People's Republic of China if a non-vessel operation business is conducted in China.
Article 8 In submitting the application for the registration of bill of lading to the competent Department of Communications of the State Council, the applicant should also enclose the relevant materials demonstrating that the security deposit stipulated in this Law has been handed in.
"Security deposit" mentioned above amounts to RMB 800,000; an additional RMB 200,000 shall be added when a new branch is established. The security deposit shall be saved in a special account opened in a bank within the territory of the People's Republic of China.
The security deposit is used to satisfy the liabilities and fines due to the non-vessel operation carrier's failure in completely and correctly performing a shipper's duty. The security deposit and its interest belong to the operator of non-vessel operation business. The special account opened for the security deposit shall be supervised by the competent department for communications of the State Council.
The examination on application for registering the bill of lading shall be finished within 15 days after the competent Department of Communications of the State Council receives the application and the relevant materials regarding the security deposit. The bill of lading shall be registered if the application is true and complete, and the applicant shall be notified thereafter. The bill of lading shall not be registered if the application is not true or complete and the reasons shall be notified to the applicant in written form. The names of operators of non-vessel operations that have registered their bills of lading shall be proclaimed by the competent Department of Communications of the State Council.
Article 9 Any enterprise engaged in the operation of international shipping agency must satisfy the following conditions:
(1) to have specialized senior administrative personnel, among which at least 2 persons have over three years experience in the operation of international maritime transportation;
(2) to have a fixed site for setting up their business office and necessary facilities for operation.
Article 10 The application for the operation of international shipping agency shall be submitted to the competent department for communications of the State Council, and the relevant materials that meet the conditions stipulated in Article 9 of this Law should also be attached. The time limits for the competent department for communications of the State Council to finish examination on the application shall be limited to no more than 15 days, beginning from the day when they receive the application. The application shall be registered if it is true and complete, and the applicant shall be notified thereafter; the application shall not be registered if it is not true or complete, and the reasons shall be notified to the applicant in written form.
Article 11 Any enterprise engaged in the operation of international ship management must satisfy the following conditions:
(1) to have specialized senior administrative personnel, among which at least 2 persons have over three years experience in the operation of international maritime transportation;
(2) to have the shipmasters and chief engineers bearing the certificates suitable for the vessels and navigating zones they are engaged in ;
(3) to have the necessary equipment and facilities for the operation of international ship management.
Article 12 The application for the operation of international ship management shall be submitted for examination and approval to the competent Department of Communications of the provinces, autonomous regions or municipalities directly under the Central Government. The relevant materials that meet the conditions stipulated in Article 11 of this Law should also be enclosed. The application shall be registered if it is true and complete, and the applicant shall be notified thereafter; the application shall not be registered if it is not true or complete, and the reasons shall be notified to the applicant in written form.
Article 13 The operators of international maritime transportation, non-vessel operation business, international shipping agencies and international ship management, who have obtained the registration according to this Law shall apply and go through the registration procedures by presenting the relevant approval documents to the Administrative Department for Industry and Commerce.
Article 14 The operators of international maritime transportation, the operators of non-vessel businesses, the operators of international shipping agencies, and the operators of international ship management must not provide their legal qualifications for operation by others.
Article 15 The operators of international maritime transportation, non-vessel operation businesses, international shipping agencies and international ship management, who have, in accordance with this Law, obtained their qualifications for various operations, shall be immediately disqualified by the competent Department of Communications of the State Council, or of the provinces, autonomous regions or municipalities directly under the Central Government, if they no longer satisfy the conditions regulated by this Law.
Chapter III International Maritime Transportation and Other Auxiliary Activities
Article 16 Any operator of international maritime transportation, who is engaged in international liner service must obtain the qualification for the operation according to this Law.
The operators who do not have the qualifications for the operation of international liner service must not be engaged in the operation of international liner service, nor are they allowed to proclaim the liner time or accept a booking note.
The first paragraph of this Article shall be applied to the operators who are engaged in the operation of international liner services by providing joint ship-dispatching, berth exchange, joint management, etc.
Article 17 Any operator engaged in international liner service must file an application to the competent Department of Communications of the State Council and submit following materials:
(1) Name, place of registration, duplicate of business license and principal subscribers of the operator engaged in the international liner service;
(2) Name and certificate of identification of the principal administrative personnel of the operator;
(3) Information of vessels engaged in the operation;
(4) Proposed shipping line, liner time and all ports of call;
(5) List of freight rate;
(6) Bill of lading, passenger ticket or multimodal transport document.
The application for the operation of international liner service shall be submitted to the competent Department of Communications of the State Council. The time limits for the competent Department of Communications of the State Council to finish examination on the application shall be limited to no more than 30 days, beginning from the day when they receive the application. The application shall be registered if it is true and complete, and the applicant shall be notified thereafter; the application shall not be registered if it is not true or complete, and the reasons shall be notified to the applicant in written form.
Article 18 The time limits for operators who have obtained the qualification for the operation of international liner services, to commence sailing shall be limited to no more than 180 days, beginning from the day when the operator acquires the qualification. The date of sailing can be postponed at most 90 days in case a force majeure event is encountered and an approval from the competent Department of Communications of the State Council is obtained. If the operator fails to commence the sailing during the regulated period of time the operator's qualification for the operation of international liner services shall be cancelled after its current operating life has matured.
Article 19 A public notice must be proclaimed 15 days in advance if a shipping line is newly commenced or cancelled, or if a vessel or liner time is changed. The notice must then be reported to the competent Department of Communications of the State Council within 15 days from the day when the change occurs.
Article 20 The freight rate of the international maritime transportation operators engaged in international liner services and the freight rate of the operators engaged in non-vessel operation businesses shall be reported, in the prescribed form, to the competent Department of Communications of the State Council. A specialized institution handling the reports and records shall be established by the competent Department of Communications of the State Council.
The freight rate recorded in the competent Department of Communications of the State Council shall include two categories: proclaimed freight and negotiated freight. "Proclaimed freight" refers to the freight rate indicated on the list of freight rate that is provided by the operators engaged in international maritime transportation and non-vessel operation business. "Negotiated freight" refers to the freight rate produced through negotiation between the operator engaged in international maritime transportation and the owner of the goods or the operator engaged in non-vessel operation business.
The proclaimed freight shall take effect 30 days after the day when the competent Department of Communications of the State Council accepts. The Negotiated freight shall take effect 24 hours after the time the competent Department of Communications of the State Council accepts it.
The freight rate to be adopted by the operators engaged in international maritime transportation and non-vessel operation business, must be an effective one that has been reported to the competent Department of Communications of the State Council.
Article 21 In making a negotiated freight with the operator of a non-vessel operation business, the operator of international maritime transportation shall ascertain that the operator of the non-vessel operation business has registered the bill of lading and submitted the security deposit.
Article 22 Duplicates of the liner conference agreement, the operation agreement and the freight rate agreement involving ports of the People's Republic of China shall be submitted, within 15 days from the day when the agreements are made, to the competent Department of Communications of the State Council if the aforesaid agreements are to be formed between two operators engaged in international liner service.
Article 23 The following particulars that may happen to the operators engaged in international liner service shall be reported to the competent Department of Communications of the State Council within 15 days from the day when they occur:
Suspension of the operation;
reduction of the number of vessels engaged in the operation;
changes to the bill of lading, passenger tickets or multimodal transport documents;
establishment of branches or subsidiary companies engaged in the operation of international maritime transportation;
having vessels registered overseas bearing foreign flags.
The vessels that the operators intend to add for the operation of international maritime transportation shall meet all technical standards stipulated by the State for the marine traffic safety. The report shall be made to the competent department for communications of the State Council 15 days before it is engaged in the operation. The time limits for the competent Department for Communications of the State Council to issue proving documents shall be limited to no more than 3 days, beginning from the day when they receive the documents regarding the vessels.
If one of the circumstances regulated in item (4) and item (5) of this Article happens to other Chinese enterprises, the procedures of putting the documents on record shall be adopted in accordance with the provisions of the first paragraph of this Article.
Article 24 The agreements on mergers or acquisitions shall be submitted to the competent Department of Communications of the State Council for examination and approval if the aforesaid particulars take place between operators engaged in the operation of international maritime transportation.
The time limits for the competent Department of Communications of the State Council to make a decision of approval shall be limited to no more than 60 days, beginning from the day when they receive the agreements on mergers or acquisitions from the operators engaged in the operation of international maritime transportation. The State's policy on the development of international maritime transportation and the competition situation in this market shall be considered when the decision is formed. The operators engaged in the operation of international maritime transportation shall be notified of the decision in written form.
Article 25 If the operators engaged in the operation of international maritime transportation, non-vessel business and international shipping agency charge, or collect as agent, the freight rate or other fees within the territory of the People's Republic of China, they must provide the payers invoices that are uniformly printed by tax authorities of the PRC.
Article 26 The operators who do not apply for the registrations of bill of lading and submit the deposit in accordance with the regulations of this Ordinance shall not manage the non-vessel carrier operation.
Article 27 The following behaviors are prohibited during the business of international ship transportation and non-vessel carrier operation:
(1) To provide services with abnormal and unreasonable prices;
(2) To pay kickbacks to shippers;
(3) To cause damage to dealers through discrimination prices or applying limiting terms;
(4) Other behaviors that will cause damage to dealers or the system of international transportation.
Article 28 The foreign operators of international ship transportation who manage the activities regulated in this Chapter shall be governed by the regulations of the Ordinance.
The foreign operators of international transportation shall not manage the ship transportation among the ports of China, and shall not use or rent the Chinese ships or berths, and shall not manage the ship transportation among the ports of China through exchanging berths.
Article 29 An agent can be entrusted by the ship-owner, charterer or ship operator of international ship transportation to manage the following tasks:
(1) To handle the procedure of ship's entering and leaving port, to arrange the navigation, berthing and loading;
(2) To be entrusted to sign the bill of lading, shipping contracts and accept the orders of berths;
(3) To handle the customs procedures of ships, containers and goods;
(4) To contract goods, organize the carrying and manage the shipping and transshipping of goods and containers;
(5) To receive carriage and handle balance;
(6) To promote the business and handle the sea passenger transportation;
(7) Other related business.
The agents of international transportation shall withhold taxes for their acting foreign operators.
Article 30 Entrusted by the ship-owner, charterer or ship operator, the agents of international transportation can manage the following business:
(1) Ship trading, Lease and other management over ship assets;
(2) Maintenance, machinery, navigation;
(3) Sailor recruiting, training and equipment;
(4) Other services to secure the technical circumstances and normal navigation;
Chapter IV Special Regulations upon Foreign Investors Who Manage International Ship Transportation and Other Auxiliary Business
Article 31 Foreign companies who invest in international transportation and related auxiliary business in China shall be governed by this Chapter;
Article 32 As approved by the Communication Department of the State Council, foreign companies can set up joint ventures or contractual joint ventures to manage international ship transportation, international ship agencies, international ship management, loading of international sea-transport goods, the storage of international sea-transport goods, containerization of international sea transport and depot businesses. The foreign companies can also invest to set up wholly owned foreign enterprises to manage the storage of international sea-transport goods.
The percentage of foreign investment in joint ventures, which manage international ship transportation and international ship agency, shall not exceed 49%.
The percentage of foreign investment in contractual joint ventures, which manage international ship transportation and international ship agency, shall be regulated in accordance with the above Article.
The board chairman and general manager of international ship transport joint ventures and international ship transportation contractual joint ventures shall be appointed by the Chinese parties of the respective enterprise after joint negotiation of the parties.
Article 33 As approved by the Communication Department of State Council, foreign companies can set up joint ventures or contractual joint ventures or wholly foreign owned enterprises to provide the ships, which they own or operate, services such as contracting goods, signing bills of lading, balancing the freight , signing contracts. For those who do not set up joint ventures or contractual joint ventures or wholly foreign owned enterprises in China, they shall entrust other international ship agents in China to handle all the said business.
Article 34 As approved by the Communication Department of the State Council, foreign operators of international ship transportation and foreign auxiliary enterprises of international sea transportation can set up representative offices in China by law.
The representative offices of foreign operators of international ship transportation and foreign auxiliary enterprises of international sea transportation cannot participate in business in China.
Chapter V Investigations (Articles 35-41)
This Chapter regulates the procedures of governmental investigations upon the illegal behaviors and activities of companies.
Chapter VI Punishment (Articles 42-55)
This Chapter regulates the specific punishments for illegal activities.
Chapter 7 Supplementary Articles
Article 56 The investors from Hong Kong, Macao and Taiwan, who operate the business of international sea transportation and other auxiliary business of international sea transportation in the mainland of China, shall be governed by the Ordinance.
Article 57 Without the approval from the Communication Department of the State Council, foreign operators of international ship transportation cannot participate in the ship transportation business on the Chinese mainland, Hong Kong and Macao, and also cannot participate in the round-direction navigation and ship transportation passed between the mainland and Taiwan.
Article 58 The regulations governing the sea transports between the mainland, Hong Kong and Macau shall be regulated by the Communication Department of the State Council in accordance with this Ordinance.
The regulations governing the sea transportation between the mainland and Taiwan shall be regulated by law.
Article 59 When any countries or areas apply discrimination policies upon the operators, ships or sailors of China, the Chinese government will accordingly apply reciprocal policies.
Article 60 The companies, who have already participated in the activities of international ship transportation and auxiliary business related to international sea transportation, shall handle supplementary procedures in accordance with the Ordinance.
Article 61 This Ordinance will be effective as of January 1 2002. The Provisions of the P.R.C on the Administration of Maritime International Container Transport will be forfeited simultaneously
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