ABOITIZ JEBSEN BULK TRANSPORT CORPORATION v. K.I.T. SHIPPING AGENCY LTD

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HEADNOTE

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WHEN THE QUESTION IS WHETHER OR NOT THERE HAS BEEN A SUBMISSION TO ARBITRATION, THE LAW OF HONG KONG, LIKE THAT OF ENGLAND, DOES NOT PERMIT AN ARBITRATOR TO DECIDE THAT VERY QUESTION, THE ONLY TRIBUNAL HAVING JURISDICTION TO DECIDE THAT QUESTION BEING THE COURT.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

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BETWEEN

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JUDGMENT

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1. There are two applications before me. One application is the plaintiff's for the continuation of a Mareva injunction granted ex parte by my brother Barnes on the 2nd of this month. The other is the defendant's application for a stay of proceedings in favour of arbitration in Tokyo.

2. The plaintiff's claim is a very straightforward one for US$56,552.77 by way of unpaid hire under a charterparty concluded in Tokyo on December 11, 1987. The plaintiff is a company headquartered in Manila and affiliated with the Jebsen's group based in Bergen.

3. The defendant denies that it was a party to the charterparty. The charterparty was in respect of the plaintiff's vessel, "The Don Antonio Botelho", a vessel of Manila registration.

4. As far as the stay is concerned, the defendant's position is simply this : It did not charter the vessel. Its understanding is that the vessel was chartered by a Japanese company by the name of Pioneer Line Co. Ltd. The vessel having been chartered by Pioneer, the defendant - as it puts it - took and operated it on a "consignment" basis. As far as the amount of unpaid hire is concerned, the defendant's position is that it does not know whether the figure put forward by the plaintiff is correct, but it understands from Pioneer that Pioneer alleges that a lower figure is due.

5. Now there seems to me to be a very short answer to the application for a stay. The law, as I understand it, is that when the question is whether or not there has been a submission to arbitration, the law of Hong Kong, like that of England, does not permit an arbitrator to decide that very question, the only tribunal having jurisdiction to decide that question being the Court. I do not propose to go through the authorities although it is worth mentioning that the clearest statement of the principle which I have just mentioned appears to be the one found in the judgment of Roskill, L.J. (as he then was) in Willcock v. Pickfords Removals Ltd [1979]1 Lloyd's Rep. 244 at pp. 245 - 246. It is perhaps also worth mentioning that the principle was applied by my brother Sears in the decision which he gave on December 15, 1987, in Permtek Ltd v. China Resources Machinery & Equipment Co. Ltd, High Action No. 5350 of 1987 (unreported). It seems to me that the application for a stay of proceedings in favour of arbitration must be refused since the party seeking it, the defendant, denies that it is a party to the contract in which the arbitration clause is contained, the charterparty here in question.

6. As far as the Mareva injunction is concerned, it seems to me, on the material before me, perfectly plain that the plaintiff has at least a good arguable case.

7. What the case is all about, as Mr Stone for the defendant puts it, is whether there is a real risk of dissipation leading to an empty judgment absent Mareva relief. When the matter was before my brother Barnes on an ex party basis what the plaintiff was relying on as to such risk was, to quote from the affidavit of its Solicitor which it relied upon, as follows :

"I am informed by Mr Stene and verily believe that the intended Defendant is the Hong Kong subsidiary of Pioneer Line Co. Ltd of Tokyo, Japan who in turn is a subisdiary of Sankyo Kaiun Kaisho who have gone into bankruptcy. I have caused a search to be made of the Companies Registry in Hong Kong of the Intended Defendant. To my surprise the Intended Defendant is not registered as a company in Hong Kong either as a local incorporation or as a foreign company under Part XI. The charterparty describes the Intended Defendant "of Hong Kong". The Intended Defendant has a place of business in Hong Kong at 14A East Exchange Tower, 38-40 Leighton Road, Causeway Bay, Hong Kong. That is the same address as shown on the bank remittance slip. In addition the Intended Defendant operates a bank account in Hong Kong as indicated in paragraph 23. I am also informed by Mr William Wong and verily believe that in the office of the Intended Defendant there is an individual by the name of Mr Yamasaki. The business telephone directory, has an entry for the Intended Defendant as follows:-

 

East Exchange Tower

Telephone No. 5763568

 

In view of the foregoing and in my respectful submission notwithstanding that the Intended Defendant is not registered in Hong Kong it is an overseas company which has a place of business in Hong Kong and subject to Part XI of the Hong Kong Companies Ordinance. The Intended Defendant has not complied with Section 333 of the said Ordinance and under Section 338(2) can, in my respectful submission, be served with the Writ at the address given in the Writ herein."

8. Those statements have been made the subject-matter of a corrective affidavit revealing that upon a further search it was discovered that a company by the name of K.I.T. Shipping Agency Limited did in fact appear on the companies index as being incorporated in Hong Kong.

9. As far as the defendant's status as a subsidiary of Pioneer is concerned, that is denied by the defendant; and certainly there had been no search by the plaintiff to contradict that denial which, I am bound to say, would be a strange one for anybody to make if it was not based on fact. However, what Mr Faulkner for the plaintiff relies on is a document emanating from Pioneer in which Pioneer does describe the defendant as a subsidiary of its. One way or other, it is clear that the fortunes of the defendant are very much tied up with those of Pioneer which, on any view, would be an important customer even if not a parent. And of course the fortunes of Pioneer follow those of its parent Sankyo which is now in grave difficulties to say the least.

10. Before me, Mr Faulkner has criticized the defendant's operations from start to finish suggesting : that it does business in a very strange way; that what is said on its behalf is so odd as to be suspicious; and that there is an aura of unreality - and I suppose therefore of unreliability - about what is said on its behalf. That together with its relationship, whatever it may be, with Pioneer is what, as I understand it, is principally relied upon by the plaintiff in regard to a real risk of dissipation leading to an empty judgment in the absence of Mareva relief. These things are seldom easy. Having given the matter the best consideration I can, I do not think that the plaintiff has gone far enough. One must not forget that Mareva relief - useful and necessary as it maybe - is radical and draconian. I do not think that a real risk of the sort that has to be shown has been shown.

11. Moreover, the ultimate question in these matters is - as it always is when it comes to the grant or withholding of injunctive relief - whether or not the grant would be just and convenient. In my judgment, the whole material before me does not point to the grant of Mareva relief against the defendant being just or convenient.

12. In the evidence filed on behalf of the defendant, this is what is said under the heading "The Demise of Pioneer":-

"Pioneer was a major customer of the Defendant and, prior to their sudden liquidation considered by the Defendant to be a good, reliable, although by no means the only, source of revenue. However, despite the obvious difficulty of a major customer going into liquidation, the Defendant intends to remain in the ship broking business, for which it still receives commission from owners other than Pioneer, and to discharge its debts as and when they fall due."

13. That does not go very far in painting a picture of wreck and ruin befalling the defendant if the Mareva injunction is continued against it. On the other hand, there are two factors to be taken into account here. First of all, as I have already indicated, Mareva relief is by its very nature radical and draconian; and perhaps people often and understandably feel that you do not have to say much to emphasize that. Secondly, brief as what is said on behalf of the defendant may be, there is really very little if anything to be put against it on behalf of the plaintiff.

14. In the result, the application for a stay is dismissed; and the application for the continuation of the injunction made ex parte is likewise dismissed. The only thing that remains, apart from expressing my indebtedness to counsel for their assistance, is to invite them to address me on costs.

[Submissions on Costs]

15. The parties, having been given a moment to put their heads together on it, are agreed on the order that l should make in regard to costs. That order is that each summons be dismissed with costs in any event against the party taking out the summons, such costs to be taxed on a party and party basis if not agreed.