Claims Handling

1.NEWLY REGISTERED CLAIMS
A. All policy years
In policy year 2003, there are a total of 1,024 newly registered claims for all policy years (including newly registered claims of year 2003) with an aggregated claim amount of US$ 57.07 million, the highest in the past 7 years. It represents a respective increase of 9.9% and 91.96% as compared with the same period last year (as illustrated by Table 1&2). In brief, the claims situation in 2003 experienced substantial deterioration. Under such severe situation, it is imprudent for us to be over optimistic.

Table 1

　　　　Newly Registered Claims for Policy Year 2003

Table 2

B. Policy year 2003

There are totally 965 newly registered claims for policy year 2003 with an aggregated claim amount of US$ 51.34 million, a respective 22% and 172% increase as compared to 791 and US$ 18.87 million of the same period last year in respect of number and amount of claim. ( Table 3, 4 )

Table 3
　　　Risk Type Number of Claim 2003 Number of Claim 2002

　　　　　　　　　　　　　　　US$1,000

Table 4

　　Number and amount of claim for the following policy years

Notes:
a. The increase rate is 2003/2002 figure.
b. Please refer the above statistics to various annual reports of the Association. The period of statistics starts from 21st February of the current policy year and as off on 20th February the next.

C. Major claims incurred in policy year 2003 (claim amount over US$ 400,000 )
There are 13 major claims incurred in 2003 with total claim amount of US$ 33.06 million. The number and amount of claim increased 160% and 257% respectively compared with last year's figures (Table 5).

Table 5:
　　Major claims incurred in 2003 ( claim amount over US$ 400,000 )

　　　　　　　　　　　　　　　In US$ 10,000

Brief of these claims are as follows:
a. M.V. "Tong Shan Hai" of Qingdao Ocean Shipping Co., Ltd. accidentally damaged the dock crane when discharging at Dunkirk, France, on 26th March 2003. The accident affected the daily operation and caused indirect loss to the port. The port authority has raised a claim of Euro 410,000 by far for that indirect loss. The Association is now actively providing assistance to the owner to handle the claim.

b. M.V. "De Feng Hai" of Guangdong Sunfont Shipping Co., Ltd. grounded at Zhujiangkou on 26th March 2003, while carrying 29,000tons of coal from Tianjin to Huangpu,. The Association dispatched expert promptly to assist the owner. Then we arranged relevant surveys and achieved positive results in salvage and oil pollution prevention. The cargo owner claimed RMB 5.42 million for damage and shortage of cargo, breach of contract and loss of profit. Although according to relevant statute, the shipowner can not raise negligence in navigation as defence in carriage between Chinese ports, the Association effectively defended the interest of the owner and achieved a satisfactory amicable settlement at RMB 1.38 million. Currently the Association and the owner focus on claim of bunker and general average contribution against relevant party.

c. M.V. "Fortuna Reefer" of Shandong Zhonglu Fishery Shipping Co., Ltd. carried a shipment of tuna to South Korea on 28th March 2004. Contamination was found upon discharge. The consignee rejected the cargo and claimed damage of US$ 1.63 million. The owner carried out negotiation with the consignee through the charterer. The consignee was eventually persuaded into accepting the cargo, settling the claim at US$ 45,000 on the spot.

d. M.V. 'Le Tong" of Guangzhou Ocean Shipping Co. carried prefabricated modules for mancamps from Houston to Qatar in February 2003. Collapse of deck cargo forced the vessel to recondition the cargo at Las Palmas. When the vessel arrived at her destination on 31st March 2003, the consignee and cargo underwriter raised a huge claim of US$ 14.27 million against the owner and charterer. They also made a claim of US$ 1 million for the reconditioning cost at Las Palmas. The Association has appointed lawyers on behalf of the owner and well prepared for defence of the case.

e. M.V. "Sha He Kou" of Cosco Shipping Co., Ltd. grounded and spilled oil at the anchorage of port San Ya on 4th April 2003, while discharging heavy cement box. The accident was caused by ingress of water into engine room due to collapse of cargo stow. The Association immediately arranged salvage operation to pump out the oil and carry out efficient measures to prevent the oil spill from spreading. The local environment protection authorities and fishermen put forward a huge oil pollution compensation claim of RMB 35 million. Through the joint effort of the Association and the owner, a settlement was reached at RMB 2 million, effectively minimized the risk. The Association is currently assisting the owner in recovery claim against the cargo owner.

f. M.T. "Jian She 33" of China Shipping Development Co., Ltd., Tanker Co. discharged palm oil at Qin Huang Dao in April 2003. On 21st April, the cargo owner suddenly interrupted the discharge operation alleging contamination of cargo. The cargo owner demanded a Letter of Guarantee in the amount of US$ 800,000. The Association appointed a cargo surveyor without delay to investigate the cause of the contamination and monitor the discharging operation. The Association currently handles the case on behalf of the owner.

g. M.V. "Hui Yang" of Guangdong Sonfont Shipping Co., Ltd. collided with M.V. "Da Qing 767" at Wen Zhou Bay on 23rd April 2003. The later vessel sank with 3 crew missing. By request of the owner, the Association provided guarantees with aggregated amount of RMB 7.5 million covering salvage, wreck removal, pollution and crew liabilities. The Association appointed lawyers on behalf of the owner. The investigation of the accident has ended. The parties involved will commence arbitration at the China Maritime Arbitration Committee in pursuant of the arbitration agreement.

h.M.V. "Ocean Join" of Friendship Shipping Management and Consultation (Shenzhen) carried 13,543 tons of fertilizer in bulk from Saudi Arabia, and arrived at Subic, Philippine on 29th September 2003. The cargo receiver applied for arrest of the vessel to local court alleging shortage of 2000 tons and wet damage to cargo and demanded guarantee of US$ 1.27 million, only bank guarantee or guarantee from local insurance companies were acceptable. The Association immediately dispatched expert to assist the owner on the spot. Although the owner did not have a strong defence, the Association sufficiently explored the price limitation of the vessel and maritime liens on the vessel. The cargo owner finally agreed to settle the case at US$ 310,000.

i. M.V. "Cheng Yun" of Guangzhou Ocean Shipping Co. carried 1,910 bundle of copper cathodes from Isabel, Philippine to Shanghai and Inchon in October 2003. Due to ingress of water into cargo holds, the vessel entered Tai Zhong as port of refuge on 7th October. General average was declared on 15th October. After discharge, the cargo receiver raised a claim of US$ 1.54 million through recovery agent, expenses excluded. Under the guidance of the Association, the owner timely carried out procedures to minimize the loss, given them a better position in negotiation. The Association is currently under negotiation with the claimant on behalf of the owner.

j. M.V. "Fu Niu Shan" of Tianjin Tianhui Shipping Enterprises Co., Ltd. carried 15,236 tons of steel products from India to South Korea in October 2003. She encountered heavy weather en route. On 21st October. 2003, at her destination ports, Pushan and Inchon, the cargo receivers refused to discharge, because of cargo corrosion, and demanded huge amount of guarantee. The Association appointed surveyor to inspect the cargo and provided guarantee up to US$ 4.67 million for cargo damage, US$ 277,000 for freight, KRW 45.7 million for discharging cost and KRW 38 million for extra discharging cost. To date, the cargo receivers have not put forward their formal claims.

k. M.V. "Golden Bridge" of Shanghai CP INT'L Ship Management Co., Ltd. carried 2,000 ton of sodium carbonate from Qingdao to Inchon in October 2003, and encountered severe weather. When the vessel entered Inchon port on 28th October, the cargo receiver refused to discharge due to cargo damage. The Association immediately appointed cargo survey through local club correspondent. After the Association provided letter of guarantee in amount of US$ 600,000, the discharge operation resumed. The Association is under negotiation with the cargo receiver on behalf of the owner.

l. M.V. "Tian Li" of Tianjin Marine Shipping Co., Ltd. collided with M.V. "MOKIHANA" of APL, when leaving the anchorage of Qingdao on 2nd December 2003, resulting in the grounding of M.V. "Tian Li". The Association dispatched expert to assist the owner on the spot immediately. The owner declared general average and arrested the other vessel through maritime court to secure the claim. The Association provided counter guarantee of US$ 500,000 to the maritime court and actively arranged salvage of the vessel. The vessel was redelivered to the owner on 3rd January 2004. The Association is currently handling the case.

m. M.V. "Shou Guang Hai" of Cosco Bulk Carrier Co., Ltd. carried 41,999 tons of wheat in bulk from Melbourne, Australia to Aqaba, Jordan in October 2003. In the loading port, there is a discrepancy of 989 tons between the draft survey figure and the shore scale figure. Although the master issued a notice of shortage to the shippers, the bill of lading was nonetheless signed according to the shore figure. In discharge port, a shortage of 1,037 tons occurred. To eliminate the threat of arrest of vessel, the Association provided guarantees in EURO 270,000 for the cargo shortage and US$ 100,000 for potential custom fees and fines. A thorough investigation disclosed that the cargo receiver only paid for the outturned quantities, hence suffered no loss. The Association has successfully retrieved the guarantee for cargo shortage. The custom fine has been reduced to US$ 6,500. The Association is currently assisting the owner in recovery against the charterer.

2. ARREST OF SHIP AND GUARANTEE
In policy year 2003 the Association arranged security in various forms for 33 entered ships in the total amount of US$ 23 million. Most of the guarantees are in the form of Letter of Guarantee from this Association and/or relevant pool Clubs. The net increase in terms of number and amount of guarantee is 6.5% and 353.6% respectively, by comparison with those of the same period last year.

Table 6:

　　　　　　　　　　　Arrest / Guarantee Cases
　　　　　　　　　　　　　　　　　　　　　　　　　　　　　US$ 1,000

3.CLAIMS HANDLING
A. Settled claims
In policy year 2003 there are 1,095 cases settled and closed occurring in various policy years. The total claim amount is US$ 53.55 million whereas total payment by the Association is US$ 10.74 million, including costs in various kinds of US$ 1.985 million (Table 7).

Table7
　　　　　　　　　　　　　　　　　 　　　　　　　　　US$ 10,000

B. Payment position and the trend of claim
The Association's accounting statistics shows that total payment made in 2003 by the Association for claims of all policy years reached US$ 11.82 million. There are 5 cases of coinsurance recovery with aggregated amount of US$ 710,000. Other recovery amounts to US$ 360,000.

C. Report on major settled claims

1995 policy year
a. M.V. "Jin Han" of Tianjin Navigation Co., Ltd. capsized off the coast of Zhuhai with 8,000 tons of Zinc Concentrates on board on 1st August 1995, while en route from Fangchen, China to Ulsan, South Korea. The cargo on board the vessel was actual total loss. The cargo insurer sued the shipowner at local court for loss of cargo. The Higher People's Court of Guangdong Province delivered the final judgement, holding that Tianjin Navigation Co.,Ltd. was liable for 70% of the cargo damage, that is, US$ 1.11 million. The owner reached an amicable settlement at US$ 690,000 with the claimant through negotiation. Later, it filed for bankruptcy. The court auctioned the asset to pay off the debts. Since the shipowner owed a substantial amount of outstanding Calls to the Association, and it ceased to be a legal entity, the Association was exempted from liability to the member according to the Rules.

1997 Policy Year
b. M.V."Floating Mountain" of Qingdao Ocean Shipping Co. encountered with M.V. "Successor" on 3rd June 1997, while leaving the port of Qingdao. M.V. "Successor" alleged that measures taken to avoid collision with M.V. "Floating Mountain" resulted in her grounding and damage to part of her hull. The case fell in the indirect contact, and the hull underwriter should be liable for the damage. However, the hull underwriter denied liability and refused to take over the case. M.V. "Floating Mountain" was arrested at Singapore on 10th November by the owner of M.V. "Successor". The Association provided a Letter of Guarantee in amount of US$ 3.16 million to release the vessel. Although the High Court of Singapore had delivered two default judgements against the member (holding the member liable for all the damage), the lawyer appointed by the Association succeeded in applying for a retrial on procedural defence. The Association was finally able to reach a settlement with the claimant at 10% of the claim amount. The Association then appointed lawyer on behalf of the owner to sue the hull underwriter at domestic Maritime Court for recovery of the payment and legal costs. The Maritime Court issued first instance judgement holding that the accident (indirect contact) was the collision liability under the hull policy. The hull underwriter appealed. However, the appeal was denied by the court. The shipowner successfully recovered all the payment from the hull insurer.

c. M.V. "Qing Jiang" of Guangzhou Ocean Shipping Co. carried bagged sugar from Santos, Brazil. to Dubai. Upon discharge in July 1997. Cargo was found short-landed and wet damaged upon arrival. To avoid arrest of the ship, the Associatio issued letter of guarantee in the amount of US$ 800,000. Cargo owner subsequently lodged claim against the owner in the mount of US$ 950,000. Survey report issued by surveyor appointed on behalf of the owner revealed that the cause of the damage was due to entrance of seawater into the hold during heavy weather (8 - 9 on the Beaufort scale). The Association appointed lawyer to investigate the case and collect relevant evident in order to prepare for owner's defence. During settlement negotiations we mainly focused our arguments on title to sue and receiver's failure to mitigate further loss and damage. After hard negotiation opponent accepted settlement in the amount of US$ 200,000 to conclude the claim on low level.

d. M.V. "Gao He" of Cosco Container Liners Co., Ltd was discharging at the container dock of Long Beach, U.S.A. on 17th October 1997, when a 40 feet container suddenly fell over and severely damaged the set of equipment inside the container. The cargo receiver filed a suit at local court against the carrier, the shipowner and the dock, claiming damage for US$ 455,000. The Association assisted the owner in contending that the dock was responsible for the accident. The court accepted the defence and held the dock was liable to the cargo owner. The shipowner was held free from any liability.

e. M.V. "SEA PHOENIX" of Cosco(Singapore) Pet. Ltd. was discharging steel cargo at New Orleans, U.S.A. on 13th October 1997 when damage to cargo was found. Cargo owner sued the shipowner at local court for damage of US$ 450,000. The court held that the shipowner was liable for US$ 70,000 under the package limitation. The Association considered that the local court did not have jurisdiction over the case according to charterparty arbitration clause incorporated into the B/L. Hence, the Association assisted the shipowner to file an appeal. The appeal court accepted our defence and dismissed the case.

1998 Policy Year
f. M.V. "An Kang Jiang" of Guangzhou Ocean Shipping Co. left Baltimore U.S.A. on 9th October 1998. A longshoreman alleged that he was tripped over by the vessel ropes, causing injury to his back. Neither the Association nor the owner was notified at the time. The longshoreman brought a suit against the owner in the U.S.A. for US$ 450,000 in 2001. The Association appointed lawyer to defend the interest of the owner. We contended that the plaintiff's claim lacked sufficient evidentiary support. Therefore, we contended that the alleging accident might not exist. Even though the accident actually occurred, there was no evidence to confirm that the plaintiff's injury was caused by the accident. The plaintiff finally accepted a settlement at US$ 25,000, and withdrew the case.

2000 Policy Year
g. M.V. "JOINT MIRIAM" of Chang Bai Shipping Co., Ltd. collided with M.V. "Hai Rong" of Dalian Shipping Co., Ltd in thick fog on 2nd June 2000 near Chengshantou, Yantai. The latter vessel sank with 5,000 tons of steel produce and 2,340 tons of sodium carbonate on board, causing pollution to sea surface. Local Maritime Safety Administration issued compulsory order of wreck removal. The owner of M.V. "Hai Rong" applied for arrest of M.V. "JOINT MIRIAM" after cleaning up the pollution. The Association provided guarantee of US$ 1million to release the vessel. The Association, on behalf of the owner, actively cooperated with the P&I Club of the other vessel to remove the wreck. Regarding to the RMB 6.26million of wreck removal cost, the Association reached a settlement with the other party at RMB 2.3million, as M.V. "JOINT MIRIAM" should bear 45% of the liability of the collision.

h. M.V. "Lin Hai 24" managed by Dalian Marine Transport (Group)Co. carried 2,548 logs from Papua New Guinea in January 2001. Shortly after commencement of the voyage, the vessel grounded on coral reef. The crew made great efforts to rescue the ship without outside assistance by abandoning the logs stowed on deck. Afterwards, the owner declared general average and appointed Hong Kong GA adjuster. The Coral Reef Protection Association of Papua New Guinea brought a claim of US$ 2 million against the owner. Since the hull underwriter was liable for general average contribution, the Association only paid US$ 5,698 for survey and legal cost in this case.

2001 Policy Year
i. M.V. "Tian Shen" of Tianjin Marine Shipping Co., Ltd. collided with M.V. "Tong Tian Shun" near Shibeishan of Shantou, China on 21st June 2001, during its voyage from H.K to Shanghai. Water entered into "Tong Tian Shun" and part of its bunker leaked out from the vessel. In order to prevent arrest of the vessel, the Association put up letters of guarantee in the amount of RMB 4 million and RMB 2 million to the Fishery Bureau of Guangdong Province and the hull underwriters respectively. The Association appointed lawyers to defend the interest of the owner in both the fishery loss and the collision cases. The court held our vessel's collision liability at 40%. Hence the Association shared RMB 750,000 of cost for cleaning up the pollution. As to the oil pollution compensation claim of RMB 13.65 million brought forward by the Fishery Bureau, the Association eventually reached an out of court settlement at RMB 1.7 million.

j. M.V. "Tai Hua Hai" of Cosco Bulk Carriers Co., Ltd carried soybean from Argentina to Kashima and Kobe, Japan in July 2001. Cargo was found heat damaged, caked and mould upon discharge. The Association immediately arranged cargo survey. The cargo owner put forward a claim of US$ 3.47 million. The Association appointed lawyers to defend the owner's interest without delay, and engaged British agricultural expert and surveyor to re-evaluate the cause and extent of damage. Through the mutual efforts of the Association, the owner, and the lawyers, the cargo insurer accepted settlement in the amount of US$ 100,000 to conclude the claim on very low level. The owner subsequently recovered US$ 50,000 from the charterer pursuant to charter party arrangement, which is a satisfactory result to the owner.

k. M.V. "Dong Yang" of Chang Yuan Shipping Co. (H.K) Ltd., encountered typhoon during its voyage from Taizhong to Hongkong on 25th September 2001. 32 containers were washed off board whereas 32 others sustained damage to various extent. The Association and the owner resorted to the defence of severe weather in all the claims received. Two of the consignees brought action in rem in Hong Kong court, and one consignee sued the carrier of the through transport B/L in Taiwan court. We defeated all claims using force majeure and time bar as defence. Although the potential claim amount was significant, the result is very satisfactory.

l. M.V. "An Yue Jiang" of Guangzhou Ocean Shipping Co. carried a shipment of rapeseed to Kunsan, South Korea in November 2001. Cargo wet damage occurred due to water leakage from the hatch-wall. Cargo receiver applied for arrest of the vessel. The Association provided letter of guarantee in amount of US$ 750,000 to secure the release of the vessel. The cargo insurer sued the owner at district court in Seoul. The Association resorted to the jurisdiction clause incorporated into the B/L to raise the defence against the court's jurisdiction over the case. After hard negotiation, an out of court settlement was finally reached at US$ 85,000, successfully avoided the inconveniences of lawsuit.

m. M.V. "Fu An Cheng " of Xiamen Ocean Shipping Co., Ltd. carried a shipment of cocoa beans from Manila to U.S.A. in November 2001. Fire resulted from sparkles accidentally fallen into cargo hold, while the crew performing cutting operation on deck en route from the first discharging port, Miami to the second discharging port, Philadelphia. Three consignees arrested the vessel and lodged legal proceedings in U.S.A. In order to release the vessel, the Association provided letter of guarantee in amount of US$ 2.98 million. The case might involve criminal liability of the crew. The Association immediately appointed lawyer to collect relevant evidences and defend the interests of both the owner and the crew. To avoid unfavorable consequences of lawsuit, the Association actively engaged in negotiation with the other parties, using fire as defence. The case was finally settled out of court for US$ 324,000, best served the interests of the owner and the crew.

2002 Policy Year
n. M.V. "Hong Yuan" of Weifang Great Ocean Shipping Co., Ltd. carried 295 coils of silicon steel from Japan to Huangpu in March 2002. Cargo receiver lodged claim in the amount of US$ 1.09 million after delivery, alleging wet damage to cargo. The Association immediately instructed surveyor to ascertain the extent and cause of the damage. It turned out that the wet damage was caused by fresh water. And relevant evidence showed that the cargo was stowed in open area after discharge. The Association then instructed the owner to gather evidence concerning the watertightness of the hatch covers. Cargo receiver commenced arbitration in Japan, the Association assisted the owner in successfully defending the owner's interests and settled the case at US$ 24,000.

o. M.V. "An Shan" of Guangzhou Ocean Shipping Co. carried bagged sugar and arrived at Hodeidah, Yemen on 27th April 2002. Due to rain during loading and hatch cover leakage, 2,900 tons of cargo was found wet damaged upon discharge. Two consignees brought claims against the owner in the total amount of US$ 407,000. The other two consignees commenced legal proceeding in Yemen. The receivers were finally persuaded into accepting bank guarantees in the total amount of US$ 380,000 valid within one year issued by Bank of China. This was the first time bank guarantees with fixed valid period were accepted in Yemen area. Although the owner's defence on merits was weak, the case was settled at 57% of the claim amount.

2003 Policy Year
p. "Fortuna Reefer": please refer to report on newly registered claim-major claims.

4.SPECIAL NOTES FOR CLAIMS INCURRED IN POLICY YEAR 2003
A. Master or agents signing bill of lading not in conformity with draft survey figure
For bulk cargo in large quantity, it is customary to determine the quantity of cargo on board through draft survey, then issue mate's receipt and bill of lading according to the draft survey figure. It can accurately reflect the quantity of cargo at the commencement of carrier's period of responsibility. Draft survey is the basis upon which the carrier could ascertain the quantity of cargo actually loaded on board, and it is an effective measure to protect the carrier's interests. The master should arrange draft survey on his own initiative after loading and request relevant certificates.
In policy year 2003, there are 4 cases involving master or agents signing bill of lading not in conformity with draft survey figure. These cases often occurred in countries without sound legal system. During loading, the shipper may connive with relevant parties to steal the cargo which has already been calculated by shore scale; or the shipper may fail to prepare enough cargo under the sales contract, then he makes a false report of the shore scale figure, the quantity of cargo on board may be far less than that figure. If the bill of lading is issued according to shore scale figure, the shipowner would face cargo shortage claim from the consignee at discharging port. Some countries even impose custom fines against the carriers for short landing of cargo.
Therefore, members are require to clarify with master and chief officer on entered ship that they must issue mate's receipt and/or bill of lading in conformity with draft survey figure; if bills of lading will be issued by agents, then members should clearly state in his authorization that the agent must issue bills of lading according to statement in the mate's receipt, and agents are to accept all consequences that might result from the breach of such duty; in case where the charterers demand to insert into the charter party clauses requesting bills of lading be issued with shore scale figure, such demand must be decisively refused by the shipowner.

B. Serious marine casualties due to high moisture content of mineral concentrates
Some entered ships carrying mineral concentrates suspected with high moisture content encountered heavy seas in their voyage, free flow liquid surface developed in hatches due to constant shifting at sea, resulting in capsizing of the vessel.
The Association will herein recommend that when loading such cargo in bulk, members should require certificates from the shipper regarding to moisture content; measures should be taken to determine whether the moisture content of cargo is in conformity with that declared by the shipper, and whether such moisture content could pass relevant standard in safe transport of such cargo; when there is doubt to the moisture content, formal survey must be arranged; sample of the cargo should be taken and preserved; members should have contingency plans for emergency. During the voyage, mater and crew are recommended to closely monitor the wave, weather, and cargo condition, once free flow liquid surface is formed, relevant procedures should be taken immediately following the contingency plan to avoid total loss of the vessel. (Please refer to the relevant information in former annual report)

C. Members failed to notify the Association about serious claims
Early February 2003, serious cargo claim occurred concerning one entered ship. However, shipping division of the member considered that no liability of shipowner was involved, charterer should be liable for all the claim. Hence, neither claims division of the member nor the Association was informed of the incident. Half a year had past before the Association was surprised by the considerable claim raised by the consignee. By that time, it was impossible for the Association to arrange survey or take other effective measure to ascertain the cause or extent of the damage. Members' failure to notify the Association about claims has significantly jeopardized the Association's effort in protecting members' interest, and prejudiced shipowner's defence. It is serious violation of the interests of both the member and the Association.
According to Rule 8 Section 2 of the Rules, a member must promptly notify the Association of every casualty, event or claim which is liable to give rise to a claim upon the Association, failing which the Directors may in their discretion reject the claim or reduce the sum payable by the Association. The Association requests the close cooperation of every division in member companies to work together. Whenever such a casualty, event, or claim occurred, the Association must be notified at earliest time possible, and members should keep the Association informed of any development.

D. Sharp increase of marine casualties in transportation between Chinese ports
There are 5 serious marine casualties in relation to collision or grounding in policy year 2003, four of which occurred during voyage between Chinese ports. Many of them attributed to master of one or both of the vessels neglected the international regulations for preventing collisions at sea or other operation manuals, or behaved without precaution and vigilance.
In international marine transportation, the carrier is not responsible for loss or damage of cargo caused by negligence or fault of the master or crew in navigation or management of the ship. The carrier can always rely on it to put forward strong defence so as to defeat the claim entirely or reduce the damage payable.
However, according to Chinese Water Transport Regulation, the carrier can not be exempted from liability by negligence or fault of the master or crew in navigation or management of the ship in marine transport between Chinese ports. The shipowner is not only liable for compensation of all the cargo damage, where general average is declared, the shipowner is also responsible for the unrecoverable contribution from other parties, for the other parties have the rights to refuse to contribute for accidents which the carrier can not be exempted from liability. As such, the shipowner will face significant loss in marine casualties occurred during voyage between Chinese ports.
The Association requires great care from members in selecting and training of the crew. The crew must strictly adhere to regulations concerning navigation and management of the ship so as to avoid serious marine casualties.

E. "Highly risk" ports and areas
There are detailed explanations on the captioned topic in Annual Report of policy year 1999, 2001 and 2002. In policy year 2003, Yemen, Iraq, Bangladeshi, and Algeria still rank high in the list of high-risk areas. The Association wishes to remind members that the loss prevention measures listed in Annual Report 2002 must be strictly complied with. Apart from that, members are recommended to appoint crew to take part in the tally operation.
In policy year 2003, Vietnam is a new entry to the list of high-risk areas, however, it is rising fast in the list. Vietnam lies in tropical area, where weather frequently changes. Heavy rain often occurs suddenly. Vessel's failure to shut hatch covers in time unavoidably causes wet damage to cargo. After such accident, the cargo receiver or insurer will immediately apply for arrest of vessel at local court, and claim substantial bank guarantee or demand settlement on the spot. They usually refuse to accept any Club letters of guarantee. Moreover, in the negotiation, they often ignore the usual and reasonable defence of the shipowner. Under the pressure of tight sailing schedule, the shipowner has no choice but to accept settlement on the spot. There were 12 such accidents in policy year 2003. To make things worse, the claims put forward by local cargo receiver and insurer are constantly rising, and the reasonable settlement becomes increasingly difficult to achieve.
In order to minimize the risk of cargo damage and loss of hire, the Association recommends that member should add protective provisions when booking or fixing charter party. Members are also advised to instruct the master and crew to closely monitor the weather changes during discharge and always be prepared to close hatch covers. Once the weather condition appears to be unsuitable for cargo operation, relevant parties should immediately be informed to close hatch covers. If charterers insist to continue cargo operation, owners should require bank guarantee from them to cover all the losses and liabilities that might arise from such operation.