News / Shipping contracts face scrutiny as China’s new maritime code looms

Photo: © Chuyu

Freight forwarders and shippers with China exposure are being warned to review their contracts ahead of 1 May, when a key provision in the country’s revised Maritime Code comes into force, which could cut across long-standing assumptions on governing law.

The change centres on Article 295, which mandates the application of Chinese maritime law to contracts for the carriage of goods by sea where either the loading or discharge port is in China.

“This seems to potentially be a big deal for anyone shipping to or from China,” noted container shipping analyst Lars Jensen, pointing out the impact could extend to transhipment cargo.

In practical terms, that puts widely used English law and London arbitration clauses on shakier ground than many in the industry may realise, at least where disputes end up before Chinese courts.

“In certain scenarios before Chinese courts, yes – and that’s not commentary, that’s the statute,” said Adam Clermont, consultant at Lee Law Firm (Hong Kong), speaking to The Loadstar. “Even if a bill of lading contains a clause designating the law of another country… Chinese courts will apply the maritime code.”

Crucially, he stressed, this was not something parties could contract out of.

“Article 295 is a mandatory application provision… If the port of loading or discharge is in China, Chapter IV applies, full stop,” he said.

However, the impact is not absolute. The key dividing line is jurisdiction.

“If a cargo claim is litigated in a Chinese maritime court… your English law clause is effectively dead,” Mr Clermont, a columnist for Loadstar Premium, said. “But if the same dispute is arbitrated in London… the English tribunal will likely apply English law as agreed.”

The complication comes at the enforcement stage. He explained: “If you need to enforce that London award against assets in China, you’re back in Chinese courts… and foreign parties should not assume automatic enforcement.”

Others argue the shift may be less dramatic than some early commentary suggests. Jim Leighton, consultant at NorthStandard, noted on social media that English courts would still seek to uphold agreed arbitration and jurisdiction clauses, including through anti-suit injunctions.

And for some operators, the issue is less about legal theory than operational reality. One logistics executive noted that for shipments involving China, courts had long had the ability to apply domestic law regardless of what is written on the bill of lading.

“What matters isn’t just what’s written in the contract, but where disputes are handled and how liability is structured,” he said.

But as China tightens the application of its maritime law, the margin for relying on standard contract wording alone appears to be narrowing.