Disputes wash up far from home
Case of tourists caught up in row between China shipping firms highlights emerging trend to take legal squabbles overseas
When more than 2,000 passengers aboard the mainland's biggest cruise liner found their ship detained in a South Korean port and their holiday in ruins, they had unwittingly become pawns in a five-year legal row between two Chinese shipping firms.
The impounding of the luxury liner Henna last month in a foreign country is the type of incident that may occur more frequently in the future as Chinese firms turn overseas to try to resolve legal disputes and recover debts.
In an embarrassment for the mainland's fledgling cruise industry, most passengers had to be flown home after they were stranded for three days in Jeju island in South Korea. The cruise liner was released only after a bond was posted.
[Some] Chinese companies have [given up on] arbitration within China
Chinese shipbuilders and shipowners are taking a growing number of commercial disputes abroad to bypass a domestic legal system they fear may not guarantee a fair hearing.
Weak enforcement of laws, pressure from well-connected corporate bosses and political interference are some of the hurdles they face, lawyers say.
"In order to avoid local interference at different levels within China, there are Chinese companies which have chosen to give up having arbitration within China and instead choose to arbitrate outside China," said William Leung, head of Hong Kong law and arbitration firm William K.W. Leung & Co.
This is giving a boost to newer centres providing arbitration services such as Hong Kong and Singapore, helped by their proximity to the mainland and familiarity with Chinese firms.
But the involvement of foreign jurisdictions in disputes sometimes has unforeseen consequences, as the Jeju case showed.