Read the full judgment text of HCA 335/2010 on BabelCite. This Court of First Instance judgment was delivered on 23 March 2010 before Chu J.
Civil procedure – Mareva injunction – worldwide freezing order – continuation and discharge – ex parte application – delay in service – good arguable case – real risk of dissipation – standard of commercial morality – balance of convenience – stay of proceedings pending arbitration – whether court has power to continue Mareva injunction during stay. The parties entered into a written contract dated 9 December 2009 for the sale of 150,000 WMT of iron ore products (75,000 WMT special sinter feed and 75,000 WMT concentrates) for delivery before 10 February 2010. The plaintiff issued an irrevocable letter of credit on 18 December 2009. The defendant, having only secured one shipment from its supplier Namisa, subsequently contracted on 8 January 2010 to sell the same products to a 'Long Term Customer' on the same delivery date, and never delivered to the plaintiff. The plaintiff obtained an ex parte worldwide Mareva injunction on 5 March 2010 up to US$6,435,000. The defendant sought to discharge the injunction, and also sought a stay of proceedings on the basis of an arbitration clause and/or exclusive jurisdiction clause in favour of the Courts of England and Wales. The court held that (1) delay in serving the ex parte order did not by itself justify discharge; (2) non-compliance with paragraph 26(c) of Practice Direction 11.1 did not by itself justify discharge; (3) the plaintiff had a good arguable case for breach of contract and damages for non-delivery; (4) the plaintiff established a real risk of dissipation, given the defendant's devious conduct, including entering into the second sale of the same goods with only one shipment secured, misleading the plaintiff through emails about the vessel MV CHS Cosmos, and giving demonstrably false explanations for non-delivery; (5) the balance of convenience favoured continuing the injunction; and (6) the court has jurisdiction and power to continue a Mareva injunction while proceedings are stayed, under section 2GC of the Arbitration Ordinance, Cap.341 and section 21M of the High Court Ordinance, Cap.4. The application to discharge the Mareva injunction was refused and the injunction was continued until further order. A stay of the proceedings was granted, with liberty to the parties to apply in connection with the injunction. Costs: defendant to pay the plaintiff's costs of the ex parte application and the summonses dated 8 and 11 March 2010 (order nisi); no order as to costs of the summons dated 12 March 2010 (order nisi).
Legal issues: Effect of delay in serving ex parte Mareva injunction · Propriety of proceeding ex parte with Mareva application · Good arguable case for breach of contract · Real risk of dissipation of assets · Balance of convenience for continuation of Mareva injunction · Power to grant Mareva injunction while proceedings are stayed
Outcome: Application to discharge the Mareva injunction refused; Mareva injunction continued; stay of proceedings granted.
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