Chinese Maritime Code - Chapter IV - Changes in Effect

China's New Maritime Code Is Now in Effect

On May 1, 2026, four days ago, China's revised Maritime Code came into force. This marks the first comprehensive revision of the Code since its original enactment in 1993, and the changes are not minor adjustments around the edges. They affect cargo liability, limitation of liability amounts, the scope of who qualifies as a carrier, how damages are calculated, how limitation periods work, and, most significantly for international operators, whether your choice of governing law clause still means what you think it means.

If your business loads or discharges cargo at a Chinese port, this Code now governs your contract whether you chose it or not. That sentence is worth sitting with before we get into the specifics.

Why This Matters Right Now

China handles roughly a third of global container throughput. For breakbulk operators, bulk carriers, tanker companies, and project cargo interests, Chinese ports are not peripheral, they are central to the trade. The revised Code was passed on October 28, 2025, at the eighteenth meeting of the Standing Committee of the Fourteenth National People's Congress and took effect on May 1, 2026. The PRC Supreme People's Court has issued transitional guidance indicating that the Code will apply to matters continuing beyond, or arising after, May 1, 2026, though the position may vary depending on the nature of the case. That transition provision matters for existing contracts: voyages that commenced under the old regime but discharge after May 1 sit in a grey zone that will require careful analysis.

Article 295(2): The Provision That Changes Everything for International Operators

The single most consequential change for international carriers and cargo interests is Article 295(2). This newly introduced provision stipulates that contracts for the international carriage of goods by sea where the port of loading or the port of discharge is located within the territory of the People's Republic of China shall be governed by Chapter IV of the revised Maritime Code. This means that choice-of-law clauses in international maritime cargo transport contracts or bills of lading that designate a foreign law, such as English law, as the governing law cannot override the mandatory application of Chapter IV.

This is a structural shift. The overwhelming majority of international carrier bills of lading are issued on forms that designate English law and London arbitration or a specific foreign jurisdiction as the governing framework. Those clauses remain valid and enforceable for matters outside the mandatory scope of Chapter IV, but for cargo liability, the Chinese Code now sets the floor, and parties cannot contract below it. Chapter IV of the Code applies mandatorily to contracts for international carriage where either the port of loading or discharge is in China, meaning that choice of law clauses in bills of lading that designate a foreign law cannot override the mandatory application of Chapter IV where the port of loading or discharge is in China.

In practical terms, this means that a carrier issuing a Conlinebill or a house bill of lading with an English law clause for a voyage loading in Shanghai is now subject to mandatory Chinese cargo liability standards, including liability limits, defenses, and damage calculation methodology, regardless of what the bill of lading says. The carrier can still arbitrate in London and apply English law to matters outside Chapter IV's scope, but the minimum standards of the Chinese Code apply to cargo claims on that voyage.

How Cargo Damage Is Now Calculated — Article 56

Under the original 1993 Code, the calculation of compensation for lost or damaged cargo was based on the CIF value at the port of shipment — a relatively predictable and widely understood standard familiar to English law practitioners. Article 56 of the new Code modifies the calculation method for the actual value of goods: the actual value shall be calculated based on the market price at the time of delivery at the place of delivery, with CIF value at the port of shipment applied only where the market price cannot be determined.

The shift from CIF-at-shipment to market-price-at-delivery has two immediate implications. First, it increases the potential quantum of cargo claims in markets where goods appreciate between shipment and delivery, which is common in commodity trades, energy products, and project cargo with long lead times. Second, it introduces a new area of dispute. In practice, it may be difficult for parties to demonstrate what constitutes a reliable market price at the place of delivery, particularly in volatile or fragmented markets. This may increase the scope for valuation disputes and inconsistent outcomes. In a market already dealing with the price volatility generated by the Hormuz crisis and energy disruption, the timing of this change is commercially significant.

Carriers writing bills of lading for China trades should review whether their cargo liability insurance, particularly their P&I club rules, adequately covers the expanded valuation basis. A claim calculated on market price at delivery may substantially exceed the CIF value that prior policy structures were designed around.

The Expanded Definition of "Actual Carrier" — Article 44(2)

Under the original Code, the definition of actual carrier was relatively narrow. Article 44(2) of the revised Code expands the definition of actual carrier to include parties who are entrusted by the carrier, or by way of sub-entrustment, who actually perform all or part of the carrier's cargo-handling obligations, including receipt, loading, stowage, movement, discharge, and delivery. This makes terminal operators and others potentially liable for cargo loss or damage, but also allows them to benefit from package or unit limitations.

This is a double-edged change. Terminal operators at Chinese ports, including large container terminals, ro-ro facilities, and breakbulk handling operations, now fall within the definition of actual carrier for the purposes of cargo liability where they are performing cargo handling functions under sub-entrustment from the carrier. That means cargo interests may now have a direct cause of action against the terminal operator in circumstances where the original carrier may have limited liability or be difficult to pursue. It also means that terminal operators can themselves invoke the package or unit limitation provisions of the Code, which is a defensive benefit they did not previously have in all circumstances.

For carriers, the practical implication is that the subcontracting chain, from liner operator to feeder carrier to terminal, now carries a clearer statutory liability framework. Indemnity provisions in contracts between carriers and their sub-contractors need to be reviewed in light of this expanded definition.

Limitation Periods — Interruption and Recourse Claims

The revised Code introduces two changes to limitation periods that are operationally important for claims handlers and legal teams on both the carrier and cargo interest sides.

First, the limitation period for claims can now be interrupted not only by commencing legal proceedings or arbitration, but also by a simple demand for performance, such as a letter of claim, upon which the limitation period will run afresh. This makes it easier for claimants to preserve their rights. Under the old Code, sending a letter of claim did not interrupt the limitation period, only commencing formal proceedings did. The practical effect of this change is that cargo claimants operating in the Chinese legal framework now have a more accessible mechanism for preserving their time bar position without immediately escalating to litigation or arbitration.

Second, for recourse claims arising from cargo disputes, if more than 90 days remain in the original one-year limitation period after settlement, that period continues to apply. If fewer than 90 days remain, a new 90-day period is granted. This addresses a practical problem that arises when a carrier settles a cargo claim close to the end of the limitation period and then needs to pursue a recourse action against a sub-contractor or actual carrier. Previously, the carrier might find the limitation period had already expired before they could bring that recourse claim. The new 90-day minimum runway provides a workable floor for recourse recovery.

Limitation of Liability Amounts — Alignment with the 1996 LLMC Protocol

While China is not a party to the Convention on Limitation of Liability for Maritime Claims, the current Code sets limits equivalent to the 1976 LLMC. The amendment raises the limits to the same level as the 1996 Protocol to the LLMC, significantly increasing the amounts shipowners and other parties may be required to pay. This is a substantial upward revision. The 1996 Protocol limits are materially higher than the 1976 figures, in some categories by a factor of three or more, meaning that the financial ceiling for liability in Chinese maritime claims has risen significantly overnight.

For P&I clubs and hull underwriters covering vessels trading to China, this increase in the statutory limitation ceiling is a direct underwriting consideration. Clubs have already been advising members to review their coverage in light of the revised limits. Operators who have not had that conversation with their club or broker since the new Code came into force should do so promptly.

Domestic Coastal Carriage Now Within Scope

Previously, the Maritime Code provided that Chapter IV did not apply to domestic carriage of goods by sea between PRC ports. The Maritime Law 2025 removes this exclusion and effectively ends the long-standing inconsistency in standards. For feeder operators, coastal carriers, and operators running short-sea services between Chinese ports, this is a significant expansion of the Code's reach. However, it should be noted that exemptions for fire and error in navigation, which are recognized in international carriage, remain inapplicable to domestic coastal and maritime carriage even after the amendment. The removal of the nautical fault and fire defenses for domestic coastal carriage meaningfully increases carrier exposure on those trades compared to the international standard.

Uncollected Cargo — A Cleaner Framework

One area of persistent practical difficulty under the old Code was the allocation of costs and risks when cargo went uncollected at the discharge port. The revised Code provides a cleaner framework. The amended Code stipulates that resulting costs and risks shall be borne by the shipper, provided the carrier promptly notifies the shipper. If a consignee has already exercised its rights under the contract of carriage but subsequently delays or refuses to take delivery, such costs and risks shall be borne by the consignee. In the current disrupted environment, where rerouting decisions and port congestion are leaving cargo sitting at discharge ports longer than anticipated, this clarification has immediate practical relevance for carriers trying to manage storage liability and demurrage exposure at Chinese facilities.

Electronic Transport Records

A new section dedicated to electronic transportation records has been introduced to Chapter IV as Part V. China is the world's largest trading nation by volume, and the introduction of a statutory framework for electronic transport records is a significant step toward paperless documentation in the China trades. The practical implementation will take time, existing industry infrastructure for electronic bills of lading remains fragmented, but the legislative foundation is now in place, and operators trading heavily in the China market should begin assessing their documentation systems accordingly.

What Operators Need to Do Now

The Code is already in effect. The window for preparation has closed; the window for response is open.

For carriers: review your bill of lading terms for China trades, particularly your choice of law and jurisdiction clauses, and assess their interaction with the mandatory provisions of the revised Code. Verify with your P&I club that your cargo liability cover is calibrated to the new damage valuation methodology and the increased limitation amounts. Review indemnity provisions in your contracts with terminal operators, feeder carriers, and sub-contractors in light of the expanded actual carrier definition.

For cargo interests and shippers: understand that the mandatory application of Chapter IV to your China trade contracts creates a baseline of carrier liability that cannot be contracted away. The new damage calculation methodology, market price at delivery rather than CIF at shipment, is generally more favorable to cargo claimants, but the evidentiary burden of establishing market price at delivery is on you. Ensure your cargo insurance is structured to respond to claims calculated on this basis.

For freight forwarders and NVOCCs issuing house bills of lading for China trades: the expanded actual carrier definition and mandatory application of Chapter IV apply to you as much as to ocean carriers. Your house bills of lading almost certainly need review.

Market participants with China-related operations are advised to conduct a comprehensive review of existing shipping contract templates, in particular the governing law and jurisdiction clauses on the reverse side of bills of lading, and assess their validity under the new legal framework. They should also engage with their P&I clubs to understand the impact on carrier liability and ensure coverage remains consistent with the requirements of the new law.

This is not a distant regulatory development to monitor. It is in force, it applies to your current voyages, and it changes the liability landscape for any trade touching a Chinese port. The operators who treat it that way will be better positioned than those who don't.