Precedent cited in Samho case
A law firm acting on behalf of Norwegian investors seeking US$3.2 million in charter payments on two ships is expected to be able to pursue the action in Hong Kong. This is despite the South Korean company at the centre of the dispute having filed for bankruptcy protection in South Korea.
Blank Rome had the tanker Samho Garnet arrested in Hong Kong over the non-payment of lease payments by Samho Shipping.
The shipping firm later applied to a Korean court for protection against its creditors.
Sources said the move was intended to give Samho Shipping time to seek a court-mandated restructuring of its business while safeguarding the company from legal action by firms that were owed money.
They added that Blank Rome might be in a grey area over whether it could force a court sale of Samho Garnet in Hong Kong while Samho Shipping was under court protection in South Korea.
But a specialist in admiralty law said there were legal precedents in the territory for the ship sale to go ahead.
He cited the case involving Powick Marine and four container ships that were arrested in Hong Kong in May and June 2003 after the Singapore company collapsed.
The ships were sold in July 2003 after the territory's then admiralty judge, William Waung, ordered public tenders to be invited for the ships.
But liquidators acting on behalf of Powick Marine sought to set aside writs brought by the German charterer of the ships, Rudolf Oetker, and the ship's stevedore, International Transportation Services.
Justice Waung rejected the liquidators' action, a decision that was confirmed in the appeal court.
Dismissing the case, Waung said Powick Marine was voluntarily wound up in Singapore days before the ships were arrested in Hong Kong. He said the liquidators took no action to call the ships back to Singapore or any subsequent action either against the arrests or ship sales in Hong Kong.
The judge said the liquidators only acted in January 2004.
Waung said of the liquidator's action: 'What is being attempted here is unprecedented. It is an attempt to take advantage of a successful execution by others and seeking to take over the fruit of that execution many months later.
'A foreign court, which has ordered liquidation, has no control over the assets in a local court, and local creditors are therefore known to attack successfully the local assets to the frustration of the foreign liquidator and foreign court.'
Legal insiders said the same principles would apply over the Samho Garnet.
One source said because the ship was arrested in Hong Kong on April 15, before Samho Shipping sought court protection on April 21, Blank Rome and its Norwegian clients 'were put in a stronger position'.
The four-year-old ship is worth US$4 million to US$5 million. As unsecured creditors, the Norwegian investors would receive what was left of the proceeds from any court sale after bailiff's costs and outstanding crew wages and bank loans were paid.