Vessel arrest in Hong Kong — a means to enforce a maritime arbitration award via the backdoor?
In a potentially very significant judgment last month, the Hong Kong High Court upheld the arrest of a vessel despite the plaintiff already having obtained an arbitration award. Ng J, the Admiralty judge, effectively ruled that a ship can still be arrested despite the existence of an arbitration award provided that the claim out of which the award originates properly invokes the in rem jurisdiction of the court. The arrest was allowed to stand because the cause of action in rem remains alive so long as the arbitration award in personam against the owners of the ship remains unsatisfied.
The Kombos was chartered by the plaintiff to PT Arpeni Pratama Ocean Line Tbk (APOL) under a Shelltime 4 form Charterparty for five years. The Charterparty contained an LMAA arbitration clause, pursuant to which the plaintiff brought proceedings in London for damages for breach of the Charterparty and unpaid hire due under it. A Final Award in the region of $9m for damages and unpaid hire was made in favour of the Plaintiff in March 2013.
In April this year, the plaintiff invoked the Hong Kong Court’s in rem jurisdiction by arresting the Dewi Umayi (the vessel) owned by APOL. The arrest papers made two important points clear to the court. First, the arrest of the vessel was sought for the purpose of providing security for the anticipated judgment in rem in the arrest action, not as a means of enforcing the award. Second, the claim as pleaded in the endorsement to the writ was one falling under section 12A(2)(h) of the High Court Ordinance, namely a claim arising out of any agreement relating to the use or hire of a ship…
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A tripartite agreement reached between the owners, the shippers and the receivers provided that demurrage be paid to the owners in the event that the owners were found not liable for cargo contamination by an arbitration tribunal.
The Commercial Court has recently ruled on preliminary issues in a cargo claim. The Court held that the ultimate buyer at the bottom of the chain of contracts had obtained good title to the cargo as a good faith purchaser for value.