[Basic details of the case] The ship “Hengrun” was a Sierra Leonean steel general cargo ship. The ship was owned by Le and another person. It had been leased to Shunxin (Hong Kong) Company and had been registered for bareboat charter. Le had purchased the all-risk insurance from the insurance company for the ship. The insurance value and insured amount were both RMB 18 million. The insured person was Le. On the evening of July 12, 2015, on the way to Pyongtaek, South Korea, the ship “Hengrun” met a Ningbo ship named “Wanli 8” that was owned by the defendant Commercial Ship Company and was sailing to Kaohsiung, Taiwan on Xiaobanmen waters. The two ships reached an agreement to pass with the red light. Then the ship “Wanli 8” suddenly suffered total power failure. After the power generation was restored, the two ships collided with each other. The ship “Hengrun” sank, the cargo on board was missing, 1 person on board died and 1 person went missing. The ship “Hengrun” filed a claim with the insurance company. The insurance company entrusted an insurance assessment company with the investigation and assessment. According to the assessment report, for purchasing a bulk cargo ship of the same type in the coastal area with the necessary configuration and classification to meet the new Lloyd’s requirements, the ship value was around RMB 9.625 million to 12 million. If the accident had been handled with the combination of salvage and repair, the final expenses would be higher than RMB 12 million. In September 2015, Le signed the compensation agreement and letter of subrogation with the insurance company, agreeing that the insurance company should pay insurance indemnity of RMB 12 million to Le in three installments. The insurance company had already paid RMB 10.8 million for the first two installments. In January 2016, Commercial Ship Company applied for the establishment of a maritime liability limitation fund. The insurance company claimed that Commercial Ship Company should assume 90% of the collision liability and pay insurance compensation of RMB 9.72 million, and confirmed the maritime lien. The focus of the dispute in this case was that: The bareboat registration had been handled for the ship “Hengrun.” So could the ship owner claim against the insurance company and transfer the claim right? If the shipwreck was not salvaged and the compensation amount was determined by the insurance company according to the assessment report as consulted with the insured person, could such amount be deemed as the amount of losses in the accident?

[Main idea of adjudication] Through trial, the Ningbo Maritime Court found that: The ship owner should have the full ownership to the ship, and should definitely have the right to claim when the ship was damaged or lost. Though Le was the only policy holder and insurer person under the insurance contract, it was set forth in the insurance policy for the ship that the ship owners were Le and another person, which meant both parties to the insurance of the ship knew and acknowledged that Le acted on behalf of all the ship owners and had the right to transfer the claim right for collision loss on behalf of the ship owners after receiving the compensation. Since it sank in the collision accident, ship “Hengrun” has not salvaged yet till this day, as the salvage is quite difficult. The expenses needed for the salvage and repair estimated by the assessment company in a scientific and prudent manner through price inquiry with multiple parties were basically reasonable, and the amount was also less than the total loss. Besides, Commercial Ship Company had no counterevidence to prove the loss assessment was unreasonable. Thus, the compensation of RMB 12 million made by the insurance company was recognized.

[Typical Significance] This case demonstrates that after a bareboat charter ship is taken down, the ship owner has the right to claim against the party who causes the accident, and can also transfer the right to claim for the losses in the accident after claiming against the insurer. As prescribed by Article 4 of the Regulations of the Supreme People’s Court on the a Number of Issues Concerning the Trial of Ship Collision Dispute Cases, ship collision liabilities shall be assumed by the bareboat charterer, but it does not prescribe that the right to claim for ship collision can only be exercised by the bareboat charterer. If the defense of Commercial Ship Company was adopted, it would have great impact on the litigation cost, litigation order and ship insurance practice of the damaged ship’s owner. Taking this case for example, the Hong Kong bareboat charterer was not a party to the ship insurance contract. If only the bareboat charterer could initiate a dispute over ship collision liabilities, a Hong Kong-related litigation fee would be incurred. At this time, since the bare charterer had instituted a lawsuit, a predicament of double claims might occur if the ship owner claimed against the insurer..In the event that the ship owner that caused the accident had applied for maritime liability limitation, if the ship owner had not obtained insurance compensation, the insurer would be unable to participate in distribution of the fund through creditor’s right registration. After the fund distribution was completed, the ship owner that caused the accident would be exempted from the liability according to the law, and the unpaid losses had lost legal protection. Accordingly, the insurer would still reject the ship owner’s request for compensation for the unpaid losses. At this point, it was meaningless for the ship owner to insure the bareboat charter ship. The judge in this case confirmed that the ship owner had the right to buy insurance and transfer the right to claim, which reflects the support for Chinese-funded foreign ships to purchase insurance nearby in China.