BHP Billiton

BHP unit moves to recoup US$39m

PUBLISHED : Saturday, 10 July, 2010, 12:00am
UPDATED : Saturday, 10 July, 2010, 12:00am


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The Swiss subsidiary of Australian iron ore miner BHP Billiton was given the green light yesterday to take enforcement action in Hong Kong against shipping company Transfield ER Cape to recover about US$39 million owed in failed ship charters.

Admiralty judge Mr Justice Anselmo Reyes also granted BHP Billiton Marketing the provisional go-ahead through a garnishee order to take whatever cash was in two HSBC bank accounts as part of the enforcement process.

Mr Justice Reyes said he would give Hong Kong-based Transfield ER Cape time to explain why the order should not be made absolute. But once the order is confirmed, BHP will be allowed to seize any cash up to the amount it is owed.

The judge made his ruling after rejecting an attempt by Transfield ER Cape to stop the enforcement action pending a possible challenge to an arbitration decision in London which found in favour of the BHP Billiton offshoot.

Outlining his decisions, the judge said Transfield ER Cape had left it late in the day before trying to stop the enforcement action and thought any challenge in London was likely to fail.

Mr Justice Reyes added that Transfield ER Cape had also failed to pay US$4 million as interim security as previously instructed by Recorder Benjamin Yu SC. Mr Justice Reyes said that for that reason alone the 'application should be dismissed'.

The enforcement action applies to Transfield ER Cape assets in Hong Kong only. BHP Billiton Marketing would have to launch similar actions in other jurisdictions if it thought assets were being held elsewhere.

BHP Billiton Marketing won a case in London against Transfield ER Cape earlier this year after the company failed to honour freight contracts with the iron ore outfit.

These contracts, which involved the transport of cargo for a given period of time involving multiple ships, were agreed during the shipping boom two years ago.

But Transfield ER Cape was hit by the collapse of dry bulk markets in 2008 which led to a significant drop in charter rates. These fell from around US$225,000 per day in May 2008 on the average of the four main shipping routes for a large 180,000 deadweight capesize dry bulk ship, to less than US$10,000 per day by November 2008. Transfield ER Cape has claimed it was owed US$208.9 million by another shipping firm, Armada Shipping, for several failed ship charters.

Transfield ER Cape and several subsidiaries also face a raft of litigation in Hong Kong and the United States from other shipping companies over charter deals that collapsed.