DANA SHIPPING AND TRADING SA v. SINO CHANNEL ASIA LTD

HCMP 1676/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 1676 OF 2016

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D E C I S I O N

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Background

1.  I have separately handed down a decision on the application made by Dana on 24 May 2016 to set aside the Enforcement Order (“Decision”). The nomenclature in that Decision is adopted for this.  The history of the dealings between Dana and Sino is set out in the Decision, and will not be repeated here.

2.  Dana intends to commence arbitration against Sino afresh, in view of the English Judgment which has set aside the Award.  Dana applies to this court for a Mareva injunction to be made against Sino as an interim measure under s 45 of the Ordinance, in aid of such intended arbitration proceedings to be commenced in London under the contract of affreightment made between Dana and Sino (“Contract”) and the arbitration clause contained therein.

3.  Under s 45 (2) and (5) of the Ordinance, the court may grant an interim measure in relation to any arbitral proceedings which have been or are to be commenced in or outside Hong Kong, if the arbitral proceedings are capable of giving rise to an arbitral award that may be enforced in Hong Kong, and the interim measure sought belongs to a type or description of interim measure that may be granted in Hong Kong in relation to arbitral proceedings by the court. 

4.  The fact that the arbitration has yet to be commenced by Dana against Sino is no bar to the application for or the grant of the relief.  It is indisputable that the arbitration in London is capable of giving rise to an award which may be enforced as a Convention award in Hong Kong.  The Mareva injunction sought belongs to a type of interim measure that the Hong Kong Court may grant in relation to arbitral proceedings, so long as the tests for the grant of the Mareva injunction are satisfied on the facts of the case.

5.  I am satisfied that Dana has a good arguable case that Sino is liable to it for the freight charges payable under the Contract made between Sino and Dana.  In fact, Sino has never been able to identify in the enforcement proceedings in Hong Kong what defence it has to the claims made by Dana under the Contract, or what arguable issues can be raised in its defence to the claims made in the arbitration.

6.  In my decision of 14 March 2016 leading to the Security Order, I referred to Sino’s conduct, and my conclusion at that time that there was a real risk that Sino would remove or dissipate its assets to prejudice the enforcement of the Award should there be further delay in the enforcement.  Since 14 March 2016, there has been no evidence of any conduct on the part of Sino which can allay my concerns as to such risk, if the Mareva is discharged and no injunction is put in place.  Sino has not made any full and frank disclosure of its assets, or of its ability or intention to satisfy any award or order which may be made against it for payment of any sum which is ordered to be paid by it to Dana.  In the course of seeking extension of time to furnish security as ordered by this court, it did not disclose why and how it was able to fund the proceedings in London, despite its claims that it was not able to raise the funds required under the Security Order.

7.  Sino has referred to the difficulties it faced in its business as a result of the Mareva being put in place since April 2016. If there are indeed genuine trade debts and expenses which Sino incurred and which has to discharge in the ordinary course of its business, it was and will remain open to Sino to apply to the court for variations to the Mareva and any new injunction order to be issued, to enable such payments to be made.  It is trite that it is not the purpose of any Mareva injunction to give security or priority to a claimant. 

8.  For the above reasons, on a balance of the risks of doing an injustice, I will grant a new injunction in terms of Dana’s summons of 30 June 2016, until further order of this court or of the tribunal to be appointed.  The costs of the application for the injunction are to be in the cause.