The settlement of Marine insurance disputes in China is unique and different from that in other countries in respect of jurisdiction, application of law and the mode of resolution.
The Application of Law in Marine Insurance Disputes
In respect of the application of substantive law. Marine insurance disputes mainly refer to The Insurance Law of the PRC and The Maritime Code of the PRC. The first is a general law and the second is a special law within the Chinese legal system. In other words, The Maritime Code of the PRC shall prevail if both laws are applied. The Contract Law of the PRC and The General Principles of Civil Law of the PRC may also be applied if neither the Insurance or Maritime law can be applied. The Maritime Code of the PRC and The Insurance Law of the PRC came into effect in 1993 and 1995 respectively. Both laws were created by reference to the relevant laws and legislation of foreign countries. In particular the relevant marine and insurance provisions of Britain, the USA and Germany, played a dominant role.
The judicial interpretations entitled, The Provision of the Supreme People’s Court on Several Issues about the Trail of Cases Concerning Marine Insurance Disputes, promulgated by the SPC (Supreme People’ Court) in 2006, clarify the application of maritime insurance law. The interpretation stipulates "the trial of cases involving the disputes over marine insurance contracts shall be governed by the Maritime Law; if there is no such provision in the Maritime Law, the relevant provisions in the Insurance Law shall apply; and if there is no such provision in the Maritime Law and the Insurance Law, the relevant legal provisions in the Contract Law shall apply" and "The trial of the cases concerning the disputes over marine insurance contracts with the port facilities or docks as insurance objects that do not result from marine accidents shall be governed by the legal provisions in the Insurance Law" and "the trial of the cases in which the insurer exercises the right of subrogation due to an insurance accident arising out of collision of vessels with the port facilities or docks, and claims for compensation from the third person that causes the insurance accident shall be governed by the provisions in the Maritime Law".
It is noteworthy to remind the reader that case-law precedent has no binding effect in China. Thus, a series of judicial interpretations were promulgated to guide trials of low level courts and effectively serve as a judicial basis. With regard to disputes concerning Marine insurance, various judicial interpretations were promulgated to compensate for legislative omissions and deficiencies.