Katran Shipping Co. Ltd. v. Kenven Transportation Ltd.
Read the full judgment text of HCCT 7/1992 on BabelCite. This HIGH COURT judgment was delivered on 29 June 1992 before The Hon. Mr. Justice Kaplan in Chambers.
Arbitration—Article 9 of the Model Law—Jurisdiction of Hong Kong High Court to grant interim measures of protection—Whether Mareva injunction qualifies as such measure—Court holds Article 9 permits interim relief before or during arbitration proceedings—Mareva injunction aimed at preventing dissipation of assets is within scope—Parties were Hong Kong companies but dispute classified as international as substantive obligations were to be performed outside Hong Kong—Court relied on travaux preparatoire, commentary, and commission reports confirming wide scope of Article 9 measures—Confirmed similarities of court's jurisdiction under Model Law and Arbitration Ordinance for interim injunctions in arbitration—Decision noted, without deciding, that jurisdiction differs for arbitrations seated outside Hong Kong—English Court of Appeal decision on related issue pending House of Lords consideration—Order granted ex parte on 19 June 1992 continued on 29 June 1992 with defendant absent—Jurisdictional issue conclusively addressed in favour of plaintiff's application.
Legal issues: Whether a Mareva Injunction is an 'interim measure of protection' under Article 9 of the Model Law
Outcome: The Mareva injunction was continued and the court confirmed it had jurisdiction under the Model Law to grant such interim measures of protection.
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HCCT000007/1992 HEADNOTE Arbitration -Article 9 of Model Law - whether a Mareva Injuction is 'an interim measure of protection'. Construction List No.7 of 1992
BETWEEN
---------------- Coram: The Hon. Mr. Justice Kaplan in Chambers Date of Hearing: 29th June 1992 Date of Judgment: 29th June 1992 ---------------------- J U D G M E N T ---------------------- 1. On 19th June 1992, I granted the plaintiffs an ex parte Mareva Injunction. The return day for the summons was 29th June 1992. The defendant did not appear despite having been served with the original order and inter partes summons. I continued the injunction until trial or further order. 2. I was satisfied that the plaintiffs were entitled to the order they sought and I have prepared this judgment to deal with a jurisdictional issue under Article 9 of the Model Law. 3. I am satisfied that, despite the fact that both parties are Hong Kong Companies and have their places of business in Hong Kong, this dispute, which they agreed should go to arbitration, is covered by the Uncitral Model Law which appears as the 5th Schedule to the Arbritration ordinance, Cap. 341. 4. Article 1(3)(b)(ii) of the Model Law provides that an arbitration is international if,
is situate outside of Hong Kong. 5. In the present case, the plaintiffs and the defendant entered into a time charterparty agreement on the Baltime form on 28th January 1992. By this charterparty, the defendants agreed to time charter the general cargo vessel 'Anh Dao" for an initial period of 6 months. 6. The plaintiff's vessel received voyage instructions on 24th April 1992 from its Hong Kong broker which passed on the defendants' instructions to proceed to Qingdoo, China, to load a cargo of cement and discharge at Mongla/Chittagong Bangladesh. 7. Clause 45 of the charterparty provided that 'any dispute will be settled before Hong Kong Arbritators and under British Maritime law will be applied'. (sic) 8. Relying upon the terms of Article 1(3) and also upon my decision in Fung Sang 'Trading v. Kai Sun Sea Products and Food Co. Ltd. (1992) 1 HKLR 40, Mr. Rostron of Sinclair Roche, for the Plaintiffs, accepted, in my judgment correctly, that this arbitration agreement was governed by the Model Law. That being the case it is necessary for me to consider the terms of Article 9 which provides:-
9. It is further relevant to note the terms of Article 17 which provides:-
10. Section 2 (3) of the Arbitration ordinance enables the court to have regard to the international origin of the Model Law and the need for uniformity of interpretation and further to have specific regard to the 6th schedule documents which include the travaux preparatoire of the Model Law including the report of the Commission on the work of its 18th session. 11. The interim measure of protection referred to in Article 9 is clearly intended to be of wider application than a mere order preserving the subject matter of the dispute. 12. On the basis of the clear language used, I have no difficulty whatsoever in concluding that 'an interim measure of protection' is wide enough to cover a Mareva injunction. The protection afforded by a Mareva Injunction is the reduction in the risk of the amount of the claim, or part of it, being dissipated or otherwise put out of the plaintiffs reach before the resolution of the dispute. If such an injunction is granted and, if obeyed, (and assuming that there was in fact sufficient assets in the defendants's possession to cover the plaintiff's claim or part thereof), the plaintiff is protected until trial against any steps the defendant may wish to take to render the judgment against him nugatory. This clearly protects the plaintiff during the period between the application and the resolution of the claim. 13. Paragraph 96 of the Commission Report dated 21st August 1985 states as follows :-
14. Holtzmann and Neuhaus in their comprehensive Guide to the Uncitral Model Law at pages 332/3 put the matter in this way:
15. At pages 51/2 of Aron Broche's Commentary on the Model Law it is stated:- "At its fourth session the Working Group
16. I am thus wholly satisfied that I have jurisdiction under Article 9 of the Model Law to grant a Mareva injunction as an interim measure of protection. In this regard, the jurisdiction of the court under the Model Law is identical to the jurisdiction of the court under the Arbitration ordinance in relation to domestic arbitration. Section 14(6) gives the court power for the purpose of and in relation to a reference the same power of making orders in respect of 'securing the amount in dispute in the reference' and 'interim injunction' as the court has for the purpose of and in relation to an action or matter in the Court.' It is quite clear that the Court has jurisdiction to grant a Mareva injunction in support of a domestic arbitration being carried out in Hong Kong. The issue whether either under the section 14(6) of the Arbitration ordinance or under Article 9 of the Model Law, the Court can grant an injunction in support of an arbitration whose seat is outside Hong Kong is not raised by the instant case. The decision of the English Court of Appeal, which held there was no such jurisdiction, in Channel Tunnel Group v. Balfour Beatty Construction Ltd. (1992) 2 WLR 741 is about to be considered by the House of Lords.
Representation: Appearances Mr. Rostron of Sinclair Roche for Plaintiff. |