A shipping company that sues another in Shanghai and applies to the court to seal or hold custody of the ship or cargo belonging to the defendant can now purchase insurance to take on the loss of the defendant or a third party if the defendant eventually wins the lawsuit.
The Shanghai Maritime Court and the Shanghai Bureau of China Insurance Regulatory Commission signed a memorandum of cooperation of this practice on Thursday, the first of such in the country.
Jia Zhenkun, deputy director of the court, said that such application from a plaintiff is quite common to prevent the defendant from transferring, hiding and selling the property before a court decision. However, the plaintiff used to turn to financing guarantee companies and other entities to act as the guarantee, and their reliability is inferior to an insurance company.
The court has also provided a sample document that an insurance company should submit to the court when it works as a guarantee of a plaintiff.
"We strive to offer high-quality judicial service when the construction of Shanghai as an international shipping center is quickly gathering pace," said Zhao Hong, director of the court.
