News / China maritime code change could trigger legal scramble for carriers and NVOCCs

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China’s revised Maritime Code may have been in force since 1 May, but its implications are only now beginning to sink in for carriers and freight forwarders.

Indeed, FIATA has warned its members to review contracts, operational processes, and liability exposure. 

The first comprehensive overhaul of China’s maritime legislation in more than 30 years introduced mandatory legal provisions for international sea cargo contracts involving a Chinese load or discharge port, regardless of any foreign governing law clause. 

One industry source told The Loadstar the operational consequences could prove significant, adding: “I think some legal departments will be busy in the headquarters of big carriers and NVOCCs.”

Among the most contentious changes is a narrowing of the traditional fire defence. Under the revised code, carriers can only rely on the exemption where a fire occurs on the vessel, potentially excluding incidents at terminals, container yards, or inland transport facilities. 

The source believes the change is closely linked to the surge in exports of Chinese electric vehicles and lithium batteries, which has heightened industry concerns over fire risks. 

Another change likely to create operational challenges concerns cargo carried on deck. Carriers now have to specify, on the bill of lading, if cargo is stowed on deck rather than below, or could lose important legal protection. 

In practice, the requirement could demand major changes to carriers’ documentation processes. 

“It will not be easy at all for a carrier or an NVOCC to discriminate, when issuing bills of lading, between containers stowed under deck and those stowed on deck,” the source said. “The data process between port agencies and stevedores doesn’t work this way.

“It looks like a small detail, but internally it’s a huge job in terms of processes for carriers – if they decide to comply.” 

FIATA meanwhile highlighted significant implications for non-vessel operating common carriers (NVOCCs) issuing their own FIATA multimodal bills of lading. 

Depending on the role they assume, under the code, forwarders may be regarded as shippers or multimodal transport operators, exposing them to additional liabilities for unclaimed cargo, liens, and claims. 

FIATA advised forwarders to clearly define their contractual role, review standard terms, and preserve evidence identifying where loss or damage occurs during multimodal transport. 

China’s updated code also extends the period before unclaimed cargo may be auctioned.

Where goods remain unclaimed for 60 days after vessel arrival, carriers may apply to the court for sale, compared with much shorter commercial times often seen elsewhere. 

According to The Loadstar‘s source, that provision could be welcomed by many exporters. 

“The 60-day acceptable delay may please a lot of non-Chinese shippers that are more used to a three-month standard,” the source said,  and argued that, overall, the revised legislation offered several advantages from the cargo owner’s perspective. 

“Globally, it’s quite a ‘sexy’ offer from the shipper’s side, at the end of the day,” the source said. 

“It is not only a pure common carrier story, but also an NVOCC story under FIATA multimodal bills of lading, when the NVO is acting as a shipper – and this is a very common practice indeed,” the source warned.