A London Law Clause and a Chinese Port: What Article 295(2) Changes

A bill of lading for a shipment loaded at Shanghai, consigned to Rotterdam, clause 32: "This bill of lading shall be governed by English law and all disputes arising hereunder shall be determined by the High Court of Justice in London." Until 1 May 2026, whether a Chinese court would apply that clause to a cargo claim depended on how the mandatory-rules route was argued: the result was often Chapter 4 in practice, but never on the face of the statute. Since 1 May 2026, it is a statute. Article 295(2) of the revised Maritime Code provides that a contract of international carriage of goods by sea where the port of loading or the port of discharge is within China is governed by the provisions of Chapter 4 of that Code.

Read quickly, that looks like the end of the clause. Read properly, it is narrower and more awkward than either side assumes. Answering three questions in order gets you to the real position.

Question one: does the clause still choose the law?

Mostly yes. Article 295(1) preserves party autonomy in the ordinary terms: the parties may choose the law applicable to the contract, unless the law provides otherwise, and failing a choice the law of the country most closely connected applies. Article 295(2) is the exception carved out of that sentence, and it is a narrow one — it disapplies the chosen law only as to Chapter 4.

Chapter 4 is the contract of carriage chapter: the definitions of carrier, actual carrier, shipper and consignee; the carrier's obligations of seaworthiness and care for the cargo; deck carriage; deviation; the liability regime and its exclusions; the measure of damages in Article 56 and the limitation in Article 57; the bill of lading provisions; electronic transport records; and delivery from Article 87 onwards. Those are the questions Article 295(2) pulls back to Chinese law.

Everything else in the contract stays where the parties put it. Questions of formation, authority, assignment, set-off, agency, the construction of a jurisdiction or arbitration clause, and the procedural conduct of the reference are outside Chapter 4. A well-drafted English law clause therefore still does a great deal of work. It just no longer decides what the carrier owes you.

Question two: what exactly does it no longer reach?

The commercial answer is: the parts of the dispute where the money is. Four points do most of the damage.

Two of these are less dramatic than they look, and one is more. On the limitation amounts, the Chinese figures follow the Hague-Visby package, so the headline number rarely moves much — which is why parties assume nothing has changed. On notice, the difference is real: three days under the Hague-Visby Rules against seven or fifteen here, and the consequence of missing it is the same, in that delivery becomes prima facie evidence that the carrier delivered in good order.

The point that is more dramatic is the one nobody lists. Chapter 4 also contains the definitions. "Carrier", "actual carrier", "shipper", "consignee", "transport document" and "bill of lading" all take their meaning from Article 44, and those definitions decide who owes what to whom. The one to watch is "shipper", which Article 44(3) defines twice — the person who contracts with the carrier, and the person who hands the goods over. Under FOB terms those are different parties, and which of them a carrier can pursue under a Chapter 4 obligation changes who your counterparty actually is. A buyer who has been advised that its English law clause survives has usually not been told that the identities doing the owing are now fixed by Chinese statute.

Question three: where does the clause still work?

In a foreign forum. This is the part that is consistently missed in English-language commentary, which has tended to report Article 295(2) as though a London arbitration clause had been invalidated. It has not.

Article 295(2) is a rule for Chinese courts, and for arbitrations seated in China. A tribunal sitting in London, applying English law because the parties agreed it, is not applying Chinese conflict rules and is not bound by Article 295(2). The clause is not void; it is inoperative in one forum. Whether that forum is the one you can actually use is a separate question, and usually it is not — a Chinese defendant with assets in China is enforced against in China, and an award you cannot enforce is a document.

The line therefore runs through the dispute resolution clause, not the governing law clause. If you want English law in practice, you need a foreign seat and you need to accept that you will not litigate in China. If you intend to sue in China, Article 295(2) means Chapter 4 applies whether or not you paid for a clause saying otherwise, and the clause's only remaining function is to govern the questions Chapter 4 does not reach.

Which contracts are caught

Four points of scope, each of which decides cases.

1. "International" carriage. The provision applies to international carriage of goods by sea. A purely domestic movement between two Chinese ports is outside it, and so is carriage that is not by sea.
2. Either port. It is the port of loading or the port of discharge. A shipment from Ningbo to Jebel Ali is caught; so is one from Hamburg to Qingdao. Buyers habitually check only the discharge port.
3. Transhipment. Where the contract covers carriage from a Chinese port with transhipment at Busan, the contract is still one whose port of loading is in China. The provision is directed at the contract, not at each leg. Whether a purely feeder leg performed under a separate contract is caught is a different question, and not one the text answers.
4. Charterparties are not the same thing. Voyage charterparties were moved out of Chapter 4 into the charterparty chapter (Chapter 6) by this revision. Article 129 applies Chapter 4's allocation of rights and obligations to a voyage charter where the charter is silent, but the route is by reference, not by Article 295(2). A bill of lading issued under a charter is the instrument most likely to be caught directly — Article 131 keeps the bill governing the carrier's relationship with a holder who is not the charterer.

Four things the text does not settle

These are the points where I would not give a client a confident answer today, and where an article that gives one is selling certainty it does not have.

Limitation periods. Time bars sit in Chapter 14, not Chapter 4. If Article 295(2) disapplies the chosen law only as to Chapter 4, the argument that an English one-year or six-year period still governs the claim is not frivolous — but it produces the odd result of a Chinese liability regime applied subject to a foreign time bar. No judicial interpretation resolves it, and the Supreme People's Court's temporal-effect rules do not address it either.

Whether Article 295(2) is a conflict rule or a directly applicable rule. The two are reasoned about differently. If it is a unilateral conflict rule, the court selects Chinese law and then applies it in the ordinary way. If it is a rule of immediate application, Chapter 4 applies without any choice-of-law analysis at all. The practical outcomes usually converge; the reasoning, and therefore the room for argument about scope, does not.

Enforcement of an award obtained abroad on English law. If a London tribunal applies English law to a claim that a Chinese court would have decided under Chapter 4, and the award holder seeks enforcement in China, the losing party will argue that the difference in the liability regime offends public policy — a ground of refusal under Article V(2)(b) of the New York Convention and the corresponding provision of the Civil Procedure Law. Note which provision does not supply the test. Article 305 of the Code is a conflict-of-laws reservation: it disapplies a foreign law that would harm China's public interest when a Chinese court is selecting the applicable law under Chapter 15. An enforcement court is not selecting law; it is reviewing an award. Citing Article 305 in this context is a category error, and it is a common one in commentary on the provision. Whether the public policy argument succeeds on the correct test is a different question, and I have seen no decision on it in this configuration.

Bills issued before 1 May 2026. Article 295(2) is not among the express exceptions in Fa Shi [2026] No. 8; those are limited to ship mortgages, electronic transport records and marine insurance. The provision that matters instead is Article 4, which splits a contract formed before commencement whose performance continued afterwards: a dispute arising from performance before 1 May 2026 is governed by the old law, and a dispute arising from performance after that date is governed by the new Code's provisions on performance. For carriage, that is a workable line rather than a comfortable one. Loading under a 2025 bill is old-law performance; discharge and delivery in 2026 is new-law performance. A cargo claim that straddles the two — goods loaded in apparent good order, delivered damaged — turns on delivery, but the cause may lie in loading, in the stow, or in the voyage, and the text does not allocate a mixed cause across the commencement date. Article 1's third paragraph, which applies the new Code to facts continuing across commencement, pulls in the other direction again. No judicial interpretation addresses the split, and this is where the argument will be had.

What the clause in your next bill of lading should say

There is no drafting that gives you English law and a Chinese court at the same time. The choice is structural, and it should be made deliberately.

1. Decide the forum first, then the law. If enforcement will be against assets in China, assume Chapter 4 and stop paying for a clause that will not be applied. If the counterparty's assets are elsewhere, a foreign seat becomes credible.
2. If you keep English law, keep it for a reason. It still governs formation, assignment, set-off and the construction of the arbitration clause. Say so expressly rather than leaving it to be inferred.
3. Do not put the arbitration clause in the same sentence as the governing law. Where the two are bundled, a challenge to one is read as a challenge to both. They are governed by different rules and should be drafted separately.
4. Check the port, not the country. The trigger is the port of loading or discharge. A Chinese-origin shipment transhipped elsewhere is still caught, and a shipment sold CIF Rotterdam from a Chinese factory almost always is.

Frequently asked questions

Is my English law clause void?

The answer depends on which forum you ask, and the vocabulary matters. Chinese commentary usually calls such a clause invalid, because a contractual choice cannot displace a mandatory provision — and as to the outcome in a Chinese court that is right: the clause does not operate to exclude Chapter 4. It is a less accurate description of the clause's status generally, because the same clause still governs formation, assignment, set-off and the arbitration agreement, and a tribunal seated outside China is not applying Article 295(2) at all. Whether the difference between "void" and "inoperative in a Chinese forum" matters depends on what you are doing with the clause. It matters for the separability of an arbitration clause and for the enforcement of a foreign award. It does not matter if you are simply suing in China.

Does this apply to a contract I signed in 2025?

Probably not to carriage performed and completed before 1 May 2026. Where performance continued after that date, Article 4 of Fa Shi [2026] No. 8 splits the contract: disputes arising from pre-commencement performance take the old law, and disputes arising from post-commencement performance take the new Code. This is the single most common question I get on the provision, and it cannot be answered without the bill, the dates and the discharge date.

Can I still arbitrate in London?

You can, and the tribunal will apply English law. The question is what you do with the award. A London award applied to assets in China runs into an enforcement court that may take a different view of the liability regime. That risk belongs in the decision about the seat, not in a footnote.

Does it matter for a sale contract claim against my seller?

No. Article 295(2) governs the contract of carriage. A claim against your seller for non-conforming goods is a sale contract claim, governed by whatever that contract provides and by the CISG if it applies — see how a Chinese court applies CISG Article 35.

Read the clause against the port, before the bill is issued

Send me the draft bill, the sale contract's law and arbitration clause, and the load and discharge ports, and I will tell you which parts of your clause survive Article 295(2), what the claim looks like under Chapter 4 instead, and whether the seat you have chosen can actually be enforced against. What Chapter 4 pays when the cargo is damaged is set out in how the 2026 rules change the number you recover. If the dispute is one that can go to ad hoc arbitration at all, the gateway is described in what Article 82 allows, and clause drafting for a seated arbitration is in how to draft a CIETAC clause. The wider set of routes is in dispute resolution.

About the author

Li Xinlei (Aaron Li) is a partner at Beijing Huicheng (Jinan) Law Firm in Jinan, Shandong, where he acts for foreign companies and individuals in international trade disputes, cross-border enforcement and construction claims. He has five years of international engineering and market development experience in the Middle East and South Asia, and writes on China trade lawyer practice from the buyer's side — what to check, what it costs, and what can actually be recovered.

Source note: the statutory text discussed is the Maritime Code of the People's Republic of China as revised and adopted by the Standing Committee of the 14th National People's Congress on 28 October 2025 and in force from 1 May 2026, in particular Article 295(1) and (2), and the provisions to which they refer: Articles 44, 56, 57, 88, 129 and 131, Chapter 4, Chapter 6 and Chapter 14. Article 305 is discussed only to explain why it does not govern the enforcement of a foreign award; the applicable test there is Article V(2)(b) of the New York Convention and the corresponding provision of the Civil Procedure Law. Transition is governed by the Supreme People's Court Interpretation on the Temporal Effect of the Maritime Code, Fa Shi [2026] No. 8, adopted 20 April 2026, in force 1 May 2026, in particular Articles 1 and 4. Chinese text is quoted in English translation prepared for this article; the Chinese text governs. The statement that the Code contained no express mandatory-application rule before this revision follows the official explanation of the amendment published by the Standing Committee's Legislative Affairs Commission, which describes Article 295(2) as an added mandatory-application provision; it is not a characterisation of how any particular court decided any particular case. The summary of Chinese commentary as treating such a clause as invalid reflects the general run of published commentary on Article 295(2) and is not attributed to any single author. Where the article says a question is unsettled, that reflects the absence of a judicial interpretation or reported decision on the point as at the date of writing, and is not a prediction of how a court would rule.

Disclaimer: This article provides general legal information and does not constitute legal advice for any specific case. Procedural rules and judicial practice change, and the appropriate route depends on the facts of the individual matter. Please consult and appoint a qualified lawyer for your own case.