Arbitration And Ship Arrest In Hong Kong Post-Award Arrest In Handytankers KS v. Owners Of The Alas

Keywords: ship arrest, Hong Kong, arbitration awards

The maritime industry has traditionally favoured arbitration as a method of dispute resolution. Disputes under charterparties, shipbuilding contracts, ship management and sale & purchase agreements will typically be subject to arbitration. Given the international character of shipping, obtaining financial security for arbitration claims through the arrest of ships has always been of vital importance.

As would be expected of a leading maritime centre, Hong Kong is supportive of arbitration, with strong legal institutions and a favourable statutory framework. Arbitration awards made in countries that are parties to the New York Convention are readily enforceable, and any court proceedings brought in breach of an arbitration agreement are subject to a mandatory stay. In addition, section 20(6) of Hong Kong's Arbitration Ordinance provides that the court may order that the ship arrested, or the security given, be retained for the satisfaction of any award made in the arbitration. The court will so order if there is a risk that the award may not be satisfied due to the defendant shipowner's inability or refusal to pay.

Generally, a claimant will try to obtain security for its claim at the outset of a dispute, as there is little point incurring costs in proceeding to an 'empty' judgment or award which cannot be enforced...