Background
The Maritime Traffic Safety Law of the People’s Republic of China (MTSL) was enacted on 2 September 1983 and came into effect on 1 January 1984. The MTSL is the primary law regulating maritime traffic safety in Chinese waters.
In 2016, minor amendments to Article 12, concerning domestic transportation vessels, were made to the MTSL. In 2017, the legal office of the State Council decided that, as a result of the growth in maritime traffic, new issues were arising with regard to maritime traffic safety and the protection of the marine environment, and the MTSL need to be fully amended. The draft prepared by the Ministry of Transport was listed in the 2018 schedule of future legislation. On 23 September 2020, the Draft Amendment was approved by the State Council.
The Draft Amendment makes comprehensive and systematic changes to the MTSL, with 134 articles compared with the MTSL’s 53 articles. There are new requirements, including the requirement for shipowners to manage safety and prevent pollution, and requirements relating to vessel security and the reporting of certain types of foreign vessels. In addition, amendments have been made to existing requirements, such as those relating to the management of crew and transportation safety.
Key changes in the Draft Amendment
The scope of application of the law is extended
Under Article 2, the new law will apply to navigation, berthing, and any work or other activities carried out not only in the PRC’s coastal waters (coastal waters mean the waters between the territorial sea base-line and the coastline) and territorial sea, but also the PRC’s contiguous zone, exclusive economic zone and continental shelf, as well as any other waters subject to the jurisdiction of the PRC.
The scope of facilities subject to inspection is extended
Under Article 7, the requirement to hold valid inspection certificates issued by inspection agencies recognised by the maritime authorities is extended to cover not only vessels and any onboard equipment, but also offshore installations, containers and other equipment, facilities and materials that, in the opinion of the authorities, have a bearing on maritime traffic safety.
Under Article 104 and Article 105, failure to provide valid inspection certificates for a vessel or offshore installation may result in the owners of the vessel and offshore installation, as well as the vessel’s captain and other responsible crew, being subject to fines, and the certificates of competency held by the captain and other responsible crew may be suspended or withdrawn.
Management of safety and pollution prevention, and relevant certificates
Under Article 11, shipowners, ship operators and ship managers are required to set up and operate management systems to ensure vessel safety and the prevention of pollution, and must apply to the maritime authorities for management compliance certificates and vessel safety management certificates.
Under Article 106, failure to provide a management compliance certificate or vessel safety management certificate may result in a shipowner, ship operator or ship manager facing a fine of from RMB 30,000 – RMB 100,000, whilst a failure to operate a management system may result in the withdrawal of certificates.
Vessels’ security systems
Under Article 12, shipowners, ship operators and ship managers are required to establish security systems, have in place a vessel security plan and apply for a security compliance certificate. Security equipment must be installed on the vessel and security exercises must be carried out regularly. Failure to comply with certificate requirements may result in shipowners, ship operators and ship managers being subject to the same penalties as mentioned above in relation to Article 106.
Certificate of competency issued by foreign maritime authority
Under Article 13, if a captain or crew member holding a certificate of competency issued by a foreign maritime authority works on a PRC registered vessel, the certificate of competency must be recognised by the PRC maritime authorities.
The scope of vessels subject to compulsory pilotage is extended
Under Article 34, compulsory pilotage applies not only to foreign vessels, but also to LNG tankers, chemical tankers, VLOCs, ultra-large container vessels and vessels whose ability to manoeuvre is limited when entering into China’s coastal waters and territorial waters.
Article 34 also establishes that even with a pilot on board, the captain is not relieved of the duty to manage the vessel.
Permit system for vessels trading internationally
Under Article 44, vessels trading internationally or domestically must be inspected by the relevant maritime authorities. Vessels trading internationally are also required to apply for a permit for entering or leaving Chinese ports.
Reporting requirements for particular foreign vessels
Under Article 53 and Article 54, foreign vessels are required to report to the maritime authorities if they are submersible, nuclear powered, carry radioactive or poisonous materials or may in any other way endanger safety in navigation.
Search and rescue
Under Article 124, when in the area of a maritime incident, vessels and their crew, as well as those working on offshore installations, must perform their obligations and responsibilities relating to search and rescue, and a failure to do so may result in fines and the suspension or withdrawal of certificates.
It appears from Article 124 that there will be a new obligation for adjacent vessels and their crew, as well as those working on offshore installations, to attempt to save ships in distress. This may result in disagreement over the adoption of LOF contracts, which must be entered into voluntarily, for salvage operations.
Application of international conventions
Under Article 126, vessels in violation of the Convention on the International Regulations for Preventing Collisions at Sea, the Convention on Standards of Training, Certification and Watchkeeping for Seafarers, the Maritime Labour Convention and the Global Maritime Distress and Safety System regulations may be subject to fines.
Under Article 133, if there is any conflict between an international convention and the new law, the international convention shall prevail.
Implications for business
When the Draft Amendment is enacted, shipowners, ship operators and ship managers will be required to enhance the management of vessels’ security, safety and pollution prevention systems. They will also be required to ensure that vessels, and their equipment, cargo, containers and onboard facilities are in compliance with any inspection and certification requirements that may be imposed by the new law. Since inspection approval and certification carries the force of law, the seaworthiness of a vessel may be affected by any failure to comply.
With regard to specific types of ships, such as ultra-large container vessels or ships transporting dangerous cargo, shipowners, ship operators and ship managers must ensure the voyage complies with reporting and pilotage requirements and follows the maritime authorities’ guidance on the deployment of tugs and convoys or any other measures necessary to ensure safety. It is advisable that shipowners consider how to allocate the extra time and costs that may be incurred by the imposition of the new law, and review and amend their in-house contract templates to reflect the changes.
Shipowners, ship operators and ship managers are advised to reinforce the importance of their management’s compliance with the MTSL and international conventions relating to maritime traffic safety, as any non-compliance may not only render owners, operators and managers in breach of their commercial contracts, but also subject to administrative penalties, such as fines to the vessel, captain and responsible crew; suspension or withdrawal of vessel certificates and crew certificates; and detainment of the vessel. If any vessel attempts to flee detention to avoid the consequence of non-compliance, the maritime authorities have the right of hot pursuit.
Conclusion
The Draft Amendment provides more specific and systematic requirements for parties involved in maritime traffic and matters relating to maritime traffic safety. It also gives the maritime authorities wider powers of inspection, certification and sanction for any non-compliance with the maritime traffic safety rules. Once the Draft Amendment is passed by the National People’s Congress and becomes law, shipowners, ship operators and ship managers can expect stricter supervision and administration from the maritime authorities while navigating, berthing or carrying out operations in regulated waters. As stated at the beginning of this article, the Draft Amendment has comprehensively and systematically amended the existing MTSL. It will materially change the regulatory framework applicable to maritime traffic safety in Chinese waters. It will be of benefit to shipping companies to get familiarized with the detailed requirements in the Draft Amendment and, in anticipation of the new law coming into effect, start to plan ahead any upgrade to their management systems and make any necessary changes in the in-house template contract in preparation.
Client Alert 2020-576
