The Dalian Maritime Court in Northeast China’s Liaoning province successfully mediated and resolved a complex series of disputes involving Chinese and Italian insurance companies within six months, ending a two-year stalemate in overseas proceedings.
The achievement, marked by fairness, professionalism and efficiency, earned the trust of the Italian parties involved.
Mediation, often celebrated internationally as the "Flower of the East," is a unique non-litigation dispute resolution method originating from China.
The successful mediation in this case exemplifies the cross-border applicability of the traditional Chinese philosophy of "harmony and coexistence," positioning it as a preferred solution for international commercial disputes.
"In cross-border disputes, the increasing number of parties opting for Chinese court jurisdiction is a testament to the credibility of China's judiciary," said Hao Zhipeng, a judge at the Dalian Maritime Court.
The disputes arose in April 2022 at the port of Bremen in Germany, when a fire broke out on a cargo ship carrying plywood, causing significant damage. The incident not only destroyed the goods but also triggered a complex web of international insurance claims.
The goods, purchased by an Italian company from a Chinese company, were insured by a Chinese insurance company as per the trade contract. Additionally, the Italian company had comprehensive insurance coverage from three Italian insurers to further mitigate its risks.
Following the fire, the Italian insurers, having indemnified the Italian company for the losses, filed a subrogation claim against the Chinese insurer at the Dalian Maritime Court, seeking to recover the full amount of the insurance payout of approximately $1.1864 million and 44,700 euros ($50,976).
The courtroom became a battleground of legal interpretations, with both sides entrenched in their positions, primarily due to differences in Chinese and Italian legal systems regarding "double insurance" and the nature of "the buyer's interest insurance".
"This case was rare, with foreign insurers asserting subrogation rights against a domestic insurer," recalled Dong Shihua, head of the maritime tribunal at Dalian Maritime Court.
“The legal teams on the both sides, comprising seasoned maritime lawyers, were prepared for a prolonged battle. A protracted case could lead to related lawsuits, increasing costs and undermining trust in China-Europe trade relations,” Dong added.
Instead of making a straightforward judgment, the Dalian Maritime Court opted for a mediation-first approach, recognizing the underlying willingness of both parties to resolve the dispute. With consent from all parties involved, the court employed "the Chinese experience" — innovatively resolving the dispute through a "one-stop acceptance, comprehensive mediation, and full-chain resolution" strategy.
"Transparency and professionalism in procedures are the best reassurance for the foreign parties," said Hao, the judge at Dalian Maritime Court. He communicated extensively with the Italian representatives, explaining the advantages of China's mediation system. The mediation agreement was meticulously detailed in both Chinese and English, gradually dispelling their apprehensions.
Hao persuaded both parties to compare case precedents, litigation durations and costs, encouraging a rational analysis of the probabilities of support across different jurisdictions. He highlighted the time, economic costs and risks of prolonged litigation, advocating a mediated solution that balanced commercial interests and legal risks.
Ultimately, a comprehensive settlement emerged. The Chinese insurer agreed to pay $500,000 to the Italian insurers as its pro rata share of the insurance indemnity, while the Italian company and the three Italian insurance companies assigned to the Chinese insurer their rights to recover general average contributions in respect of the cargo covered by the bill of lading.
The Italian parties mitigated their losses, and the Chinese party avoided the uncertainties and difficulties of overseas evidence gathering, achieving true win-win results.
The swift resolution within six months exceeded expectations and enhanced the Italian parties' perception of China's judicial fairness and efficiency.
"Every foreign-related case serves as a 'window' showcasing the judicial capacity of the country," said Sun Guang, vice-president of the Dalian Maritime Court.
"The successful mediation of this case once again highlights the international competitiveness of China's litigation service system," Sun added.
Wang Zhixian, a deputy to the National People’s Congress, China’s top legislature, and former CEO of Liaoning Port Group, said that the case exemplifies the professionalism and efficiency of Chinese courts in handling cross-border disputes.
It showcases China's commitment to providing reliable Chinese approach to resolving international commercial disputes, illustrating the wisdom of Chinese courts in serving the high-standard opening-up, Wang added.
