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Gard News 204, November 2011/January 2012

New Pollution Regulations
in China - FAQs II

Gard News presents answers to additional frequently asked questions regarding the new Chinese regulations on prevention and control of marine pollution.

The article "New Pollution Regulations in China - FAQs", published in Gard News issue No. 197, contained answers to frequently asked questions (FAQs) about the Regulations of the People's Republic of China on the Prevention and Control of Marine Pollution from Ships (the main Regulations) which were effective on 1st March 2010. Since the first FAQs, further implementing legislation, rules and interpretation have been issued to give effect to the main Regulations and in relation to the handling of disputes in a pollution incident. This article contains a new set of FAQs to update Gard News readers on the developments.

Updates

Are there any further legislation and updates following Gard News' first FAQs?Yes. Various implementing legislation, rules and interpretation have been issued since then, providing further explanation and detailed rules to implement and supplement the main Regulations. The table below  provides an at-a-glance chart setting out the major legislation, rules and interpretation.

art_11_1.jpg
The above table provides an at-a-glance chart setting out the major
legislation, rules and interpretation.

Pollution liability

Who is liable for pollution damage?
The previous FAQs discussed who is liable for pollution damage, defences and limit of liability as provided under the main Regulations. On pollution liability, the Supreme Court's Interpretation (Article 3) gives further guidance that if the oil pollution is caused by oil leakage from two or more ships and if the claimants request the leaking ships to compensate, each shipowner shall be individually responsible for the damages which can be reasonably apportioned to his particular ship. If the damages can not be reasonably apportioned, the shipowners shall bear joint liability subject to any applicable defences and exemptions.

Will Club LOU be accepted as security in a pollution incident?
The new legislation has not changed the existing position. It is still the case that only guarantees/undertakings from local recognised financial institutions/insurance companies will be accepted by the MSA (Maritime Safety Agency) and the maritime courts as security for pollution liability, with very few exceptions. It is possible, however, to negotiate with claimants to provide a Club LOU or other alternative forms of security if they agree to that.

Pollution clean-up contract

When do I need to sign the clean-up contract?
Readers may recall from the previous FAQs that the operators of (a) any ship carrying polluting and hazardous liquid cargoes in bulk or (b) any other vessel above 10,000 GT is required under the main Regulations to sign a pollution clean-up contract with an approved pollution response company prior to the vessel's operations or entry into/departure from Chinese ports. The enforcement date of this requirement has now been postponed to 1st January 2012.

Those who trade regularly into the PRC are recommended to sign the pollution clean-up contract before 1st January 2012, otherwise they will be subject to administrative penalties and other measures.

Who should sign the clean-up contract?
Under the main Regulations, the "operator" of the ship should sign the pollution clean-up contract. "Operator" has now been defined in the MSA Detailed Rules as "the owner, manager or actual operator" of a ship . In respect of those operators not domiciled in China, it is understood that the ship's agent in port, Club correspondent, local law firm or another legal entity located in mainland China (not Hong Kong or Macau) may sign the contract on behalf of the operator if authorised by the operator to do so. It is understood  that the Master may also sign the contract, which may be necessary in certain circumstances, for example where there is urgency, although an authorisation would still be necessary for the Master to sign on behalf of the operator. The International Group of P&I Clubs (IG) is considering the development of a standard form authorisation letter for overseas operators for this purpose.

Who are the approved clean-up contractors?
Approved clean-up contractors will be categorised by the MSA in accordance with their qualifications and response capabilities and will be assigned 1, 2, 3 or 4 status.

Operators will need to contract with an approved clean-up contractor in accordance with the size, type and intended operation of the ship as set out in the MOT ( Ministry of Transport) Emergency Response Regulations and MSA Detailed Rules.1 It is understood that the list of all approved contractors will be issued in October 2011 on the dedicated MSA website at www.osp.cn. As mentioned above, the requirement to contract with an approved clean-up contractor will be enforced in all Chinese ports from 1st January 2012. There will therefore be a relatively short period of time for operators to contract with approved clean-up contractors.

What will be the content of the clean-up contract?
On 20th May 2011 the MSA published a Sample Agreement, which is in both English and Chinese, together with an introduction to the agreement. The introduction states that the articles of the agreement on rights and obligations are mandatory and the parties can not amend them, whilst for matters not covered in the agreement the parties may enter a supplementary agreement Members are recommended not to sign any clean-up contract until the list of approved clean-up contractors is issued and their contracts reviewed to see whether they conform with IG guidelines on vessel response contracts. The IG is currently reviewing the Sample Agreement and will provide further guidance after the review. The IG will also consider the development of supplemental clauses for inclusion in the Sample Agreement.

Sludge disposal contract

Is the oil clean-up contract requirement the same as the sludge disposal contract requirement?
No, they are different. The requirement in relation to disposal and discharge of ship's garbage, residue water waste, oil waste and sludge is set out in the MOT Operational/Sludge Regulations which came into effect on 1st February 2011. Owners/operators of all vessels are required to discharge all waste residues (primarily sludge) at least once at a PRC port, and are required to contract with a registered service provider of such services.Shipowners/operators should check with their local agents and the local MSA websites to ascertain the updated lists of such registered service providers for each Chinese port. The websites of the MSA head office and their major branch offices are the following:

MSA head office:       http://www.msa.gov.cn/
Shanghai MSA:          http://www.shmsa.gov.cn/
Liaoning MSA:           http://www.lnmsa.gov.cn/
Hebei MSA:               http://www.hebeimsa.gov.cn/
Shandong MSA:         http://www.sdmsa.gov.cn/
Jiangsu MSA:            http://www.jsmsa.gov.cn/
Zhejiang MSA:           http://www.zjmsa.gov.cn/
Fujian MSA:              http://www.fjmsa.gov.cn/
Guangdong MSA:       http://www.gdmsa.gov.cn/
Guangxi MSA:           http://www.gxmsa.gov.cn/
Hainan MSA:             http://www.hnmsa.gov.cn/
Shenzhen MSA:         http://www.szmsa.gov.cn/
Changjiang MSA:       http://www.cjmsa.gov.cn/
Heilongjiang MSA:      http://www.hljmsa.gov.cn/

Ship Oil Pollution Compensation Fund

Are the details of the Ship Oil Pollution Compensation Fund available now?
The detailed rules as to the collection and administration of the funds have not been released but there is currently a draft on this.

Further questions

Whom should I contact if I have further queries?
Any further enquiries canbe sent to sara.burgess@gard.no or catherine.wong@gard.no.

Footnotes
1 Readers should refer to Gard Circular No. 4/2011 for details.

 

Any comments on this article can be e-mailed to the Gard News Editorial Team.