Members who have built ships in China should be familiar with the SAFE regulations, which have recently been updated by the authorities with effect from 1 June 2014. It is important to note, however, that the SAFE regulations have a broader ambit than merely Yards’ Refund Guarantees.

The development is significant as it presents a re-structuring of the previous 12 regulations and notices, which should mean a more user friendly regulatory system.

In the attached article from Ince & Co., the main changes are discussed, as well as their impact on shipping interests.

Practical advice

For any party which is planning on engaging business with a PR China counterparty, and for which a guarantee document may be envisaged to form part of the transaction, it would still be recommended to seek bespoke advice on their particular situation. In particular in order to ensure that the new regulations are properly being complied with.

Further, it must be kept in mind that PR China does not have a system of legal precedent in the way that is operated in a common law jurisdiction such as the UK and as such it is necessary to appreciate that any one particular court decision is not necessarily followed in a future case, especially if in a different court.