News / China’s maritime code revision a 'substantive change' for cargo

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The upcoming implementation of Article 295 of China’s revised Maritime Code on 1 May is drawing cautious attention across the shipping industry, with legal experts suggesting it could mark a meaningful shift in jurisdictional dynamics.  

According to Jérôme de Ricqlès, senior liner shipping expert at Upply, the change has yet to dominate industry discussions in Asia, where geopolitical tensions, including the Hormuz crisis, are currently taking precedence.  

However, he told The Loadstar that the revised provision could have far-reaching implications for liner bills of lading (BLs), freight forwarder bills, and potentially broader commercial contracts tied to cargo transiting through Chinese ports. 

Where contracts of carriage lack an explicit jurisdiction clause, Chinese law will apply if the goods move through a Chinese port. While parties remain free to negotiate governing law and jurisdiction – as is standard practice in liner shipping – this provision strengthens the position of Chinese courts in cases where such clarity is absent. 

He explained that Chinese courts may assert jurisdiction over disputes involving cargo transiting through their ports and lead the case, “as they wish without opening the access of the case to foreign third parties”.  

“They will not enter into all cases, they would have now the right and he empowerment to cherry-pick,” Mr de Ricqlès added. 

Legal experts at HFW in Shanghai, Lucy Chen and Thilo Jahn, told The Loadstar that the revision would be a “substantive change”. 

“The general understanding by Chinese lawyers is that chapter four of the Chinese Maritime Code will apply to a contract of carriage regardless of whether or not another law has been incorporated or chosen by the parties,” they said.  

Its practical impact may be limited in certain segments, however. 

Ms Chen and Mr Jahn explained that Chinese courts have historically been reluctant to recognise the incorporation of charterparty terms into bills of lading – often citing lack of clarity or the bill holder’s limited awareness of such terms. As a result, courts have frequently defaulted to applying China’s Maritime Code directly, particularly in tramp shipping disputes.  

“Article 295 essentially codifies this established approach,” they explained.  

But the implications could be more complex in a freight forwarder structure, where, in addition to bills of lading issued by the carriers to the shippers/freight forwarders, there will also be a bespoke sea freight agreement between carriers and shippers.  

 These contracts often prioritise English law and London arbitration, but the revised Article 295 raises questions over whether Chinese courts might override such agreements by applying domestic law via the bill of lading. 

HFW explained: “The bespoke sea freight agreement would usually be subject to English law and London arbitration and contain wording that would ensure the bespoke agreement takes precedence over the bill of lading terms.   

“The legal question that arises from the new addition to Article 295 is whether chapter four of the Chinese Maritime Code will apply and effectively take precedent over the bespoke sea freight agreement, via the bill of lading, although the carrier and shippers / freight forwarder, would have expressly agreed English law to apply.  

“It will have to be seen how any such challenges are dealt with by the courts,” they said.  

Despite these uncertainties, Ms Chen and Mr Jahn stress that English law and London arbitration remain robust. The reform applies specifically to contracts of carriage and cargo claims, leaving other maritime agreements, such as charterparties, untouched. 

Moreover, they noted that English courts can still support arbitration agreements through anti-suit injunctions, even if these are not enforceable in China. 

HFW said that although the new addition to Article 295 applies to contracts of carriage regardless of whether they are bespoke contract or standard form contracts, a “review of the contractual agreement” and the “drawing up bespoke sea freight agreements” are more likely to “improve the prospects that a challenge as a consequence of Article 295 will succeed”. 

They explained: “By analogy, in cases where the holder of a bill of lading was also a party to the charterparty, the courts generally consider that the bill of lading no longer operates as evidence of a contract of carriage of goods by sea but is merely as a receipt. In that case the bill of lading holder will be bound by the charterparty terms, including the agreed governing law and dispute resolution mechanism.  

Ms Chen and Mr Jahn noted that a similar logic might be applied to a bespoke sea freight agreement. 

“If the sea freight agreement is a bespoke, rather than a standard form, it is more likely that the agreed terms will be given weight by the courts and is less likely that they will be overridden by Article 295, although the approach remains to be clarified by future judicial practice.” 

But beyond legal mechanics, Mr de Ricqlès described the move from China as part of a broader strategic shift.  

He suggested that the country is seeking greater control over its trade flows and legal exposure, potentially encouraging a transition from FOB (free on board) to CIF (cost insurance freight) terms in retail export contracts. 

“They feel strong enough to play it ‘hard ball, a bit Trump style’. They are self-confident enough that occidental customers will have limited alternatives for sourcing with near shoring or friend shoring,” he explained.  

“The monopolistic common law they find unfair, taking in account their current weight in the game,” he suggested.  

Mr de Ricqlès raised that it could also be seen as a form of “retaliation” after China has taken the brunt of tariff pressure, EU regulations on EVs, the Iran war impact on their economy and the dispute over terminals in Panama.  

“This can be a pretty big game-changer indeed, for ages I was surprised that they did very little use of the incoterms tool in their favour in contracting. Apparently, times are changing and now they feel strong enough to change the status of Chinese exporter to the status of Chinese Shipper.  

“A kind of revolution indeed,” he concluded.  

Law firm Ashurst advises companies with operations in China to start by reviewing their shipping contract templates, especially the governing law and jurisdiction clauses in bills of lading, and assess their validity under the new legal framework. 

They should then speak with their protection and indemnity (P&I) clubs to understand how the revised maritime rules affect carrier liability and to confirm their insurance still meets the new requirements. 

Finally, Ashurst recommend adding clauses about compliance with the new Maritime Code into ship financing and trade finance documents and including these checks as part of the due diligence process.

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