Ship Arrest Abroad Not In Breach Of Undertaking In Worldwide Freezing Order

E v. M [2013] EWHC 895 (Comm)

This Commercial Court decision is of practical importance because there appears to be no previous authority on one of the principal points considered, namely whether a claimant who has obtained a worldwide freezing order ("WFO") from the English Court will be in breach of the standard undertaking in the WFO (not to seek a similar order abroad without the Court's permission) if it subsequently arrests a vessel belonging to the defendant in another jurisdiction in order to obtain security for its claim. Mr Justice Hamblen held that the arrest did not constitute a breach of the Claimant's undertaking in the WFO and refused to discharge the WFO.

The background facts

The underlying dispute related to non-payment of hire under an amended NYPE charterparty that eventually led to early termination of the charterparty by the Owners on the grounds of the Charterers' repudiatory breach of charter. The dispute went to arbitration. The Owners sought and obtained a WFO from the Court against the Charterers in support of their arbitration claims. The WFO contained the usual undertaking that the Claimants would not "without the permission of the court seek to enforce this order in any country outside England and Wales or seek an order of a similar nature including orders conferring a charge or other security against the Respondent or the Respondent's assets."

The Owners subsequently arrested a vessel that belonged to the Charterers in another jurisdiction in order to obtain security for the underlying arbitration proceedings, but did so without first seeking the English Court's permission to make the arrest application. Security was not provided and the vessel remained under arrest. The Charterers sought to have the WFO discharged on the basis that the Owners were in contempt of court for arresting the vessel in breach of the WFO undertaking and contended that the Owners should release the vessel from arrest in order to purge their contempt.

The Commercial Court decision

The Charterers argued that the Owners were in breach of their undertaking as the purpose of the arrest was the same as that of the WFO, namely to ensure that there would be assets against which an award could be enforced. They maintained that the arrest abroad was subjecting them to a separate set of proceedings which was effectively duplicating the English proceedings. The Owners submitted that the arrest order was not of a similar nature to a WFO and that it...