ENFORCING ARBITRATION AWARDS: INJUNCTIONS AND .WFO: the definition & history A worldwide...
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ENFORCING ARBITRATION AWARDS:
INJUNCTIONS AND PENAL SANCTIONS
KINGSMAN ASIA SUGAR CONFERENCE
Suzanne Meiklejohn, Associate
T: +65 6411 5346
WFO: the definition & history
A worldwide freezing order is an interim injunction that restrains a
party from disposing of or dealing with its assets.
Usually with ancillary disclosure obligations requiring a defendant to
reveal the value and location of its assets.
Key part of claimant/ creditor's armoury. Also for awards.
English law remedy, available in other jurisdictions.
Until 1975, arrest and freezing of assets reliefs were restricted to
In 1975, in the case of Mareva Compania Naviera SA v
International Bulk Carriers SA, the Court of Appeal decided that:
"If it appears that the debt is due and owing and there is a danger that
the debtor may dispose of his assets so as to defeat it before judgment
the Court has jurisdiction in a proper case to grant an interlocutory
judgment so as to prevent him disposing of those assets."
To issue WFO the court must be satisfied that:
1. The court has jurisdiction;
2. The applicant has an arguable underlying case;
3. There is a real risk of dissipation of assets; and
4. That in view of all the circumstances it is just and convenient to grant
1. English Court or Arbitration jurisdiction clause in the contract, or
2. Assets in jurisdiction
Similar provisions in Singapore, Hong Kong
English Court's jurisdiction
S37(1) of the Senior Courts Act 1981:
"The High Court may by order (whether interlocutory or final) grant an injunctionin all
cases in which it appears to the court to be just and convenient to do so."
S37(3) of the Senior Courts Act 1981:
"The power of the High Court under subsection (1) () shall be exercisable in cases
where that party is, as well as in cases where he is not, domiciled, resident or present
within that jurisdiction.
44(1) of the Arbitration Act 1996:
"Unless otherwise agreed by the parties, the court has for the purposes of and in relation
to arbitral proceedings the same power of making orders () as it has for the purposes
and in relation to legal proceedings."
A good arguable case
The Niedersachsen  2 Lloyd's Rep. 600:
"A good arguable case is no doubt the minimum which the plaintiff must show
in order to cross what the judge rightly described as the threshold for the
exercise of the jurisdiction."
I consider that the right course is to adopt the test of a good arguable case,
in the sense of a case which is more than barely capable of serious argument,
and yet not necessarily one which the Judge believes to have a better than 50
per cent chance of success.
Real risk of dissipation
There is a sufficient risk of dissipation if it can be shown that:
(i) there is a real risk that a judgment or award will go unsatisfied, in the sense of a real risk
that, unless restrained by injunction, the defendant will dissipate or dispose of his assets other
than in the ordinary course of business; or
(ii) that unless the defendant is restrained by injunction, assets are likely to be dealt with in
such a way as to make enforcement of any award or judgment more difficult, unless those
dealings can be justified for normal and proper business purposes...
per Flaux J, in Congentra AG v Sixteen Thirteen Marine SA  EWHC 1615 (Comm).
Is the defendant evasive?
What is the nature of the assets?
Are they easily disposable?
What is the defendant's financial standing ?
How long has the defendant been trading for?
Where is the defendant domiciled?
Just and convenient
Above all the court must be satisfied that in all the circumstances it
is "just and convenient" to grant the injunction.
Thus, WFO is unlikely to be granted or continued if it
disproportionately affects the defendant
Pressurefast Ltd v Hall and Brushett Ltd, Court of Appeal Transcript No 336 of 1993:
In my judgment.... it is plain ... that its effect has exerted considerable hardship on
the defendants, going beyond merely preventing them from disposing of their assets
so as to defeat the plaintiffs' claim. The interference with their lives and businesses,
so long as the injunction was imposed, in my judgment went beyond what was
appropriate for the legitimate protection of the plaintiffs.
Consequences of ignoring a WFO: Contempt of Court
WFOs carry a penal notice to enforce compliance . An example is
"If you disobey this Order, you may be held to be in contempt of
court and any of your directors or officers or those exercising control
over your affairs may be imprisoned or fined or their assets may be
seized and you may be fined or your assets may be seized. Any
person who knows of this Order and does anything that helps or
permits any Defendant to breach the terms of this Order may also
be held to be in contempt of court and may be imprisoned, fined or
have their assets seized."
Thus, not only the defendant (including its directors, officers and
persons otherwise in control) but also third parties who aid a breach
of a WFO may be found in contempt of court.
Under the Contempt of Court Act 1981 the court has powers to
impose a sentence of up to 24 months.
In order to be able to bring contempt of court proceedings against
the defendant it is crucial that the penal notice is clearly visible on
the first page and is brought to the defendant's attention.
For this reason, especially in the case of evasive defendants, it is
crucial to apply for service by alternative means such as email since
physical service may be difficult to give effect to.
Conclusion benefits of WFOs
WFOs preserve assets for enforcement purposes;
WFOs require the defendant to disclose details of its assets and
thus enforcement proceedings can be targeted at known assets;
Freezing injunctions affect the defendant materially as they can be
served on banks or trading partners;
Freezing injunctions also create disclosure obligations on directors
and officers of the Defendant which are enforceable by the courts
WFOs are rigorously policed by the English court. Failure to comply
with a freezing order may result in contempt of court proceedings.
The maximum sentence for contempt of court is 2 years
imprisonment. Related common law jurisdictions such as
Singapore and Hong Kong have similar provisions.
Appropriate jurisdiction clauses in the contract are key for access to
this remedy available.
LIMITS ON CHARTERERS LIABILITY
SIGNIFICANCE OF THE GLOBAL
KINGSMAN ASIA SUGAR CONFERENCE
Adam Richardson, Senior Associate
T: +65 6411 5327
A simple division of responsibility?
.or, a more detailed investigation?
Responsibility for acts/omissions of Charterers agents
Who are Charterers agents?
Which acts/omissions are Charterers responsible for?
Liabilities often not clear cut
The Global Santosh : A surprising decision for
Sigma Shipping Ltd
NYK time chartered MV GLOBAL SANTOSH to
Cargill sub-chartered vessel to Transclear, assumed
to be voyage charter;
Transclear sold cargo of cement to IBG;
IBG named as notify party on B/L.
Discharge delayed at Port Harcourt due to
congestion caused by IBGs equipment;
IBG liable to pay demurrage to Transclear;
Transclear arrested cargo (and by mistake court
also ordered arrest of the vessel) to secure
Arrest caused further delay.
The Global Santosh Relevant Provisions
Clause 49: Capture, Seizure, Arrest
Should the vessel be captured or seizured [sic] or detained or
arrested by any authority or by any legal process during the
currency of this Charter Party, the payment of hire shall be
suspended until the time of her release, unless such capture or
seizure or detention or arrest is occasioned by any personal act or
omission or default of the Charterers or their agents
1. Were Transclear and/or IBG agents for the purpose of the
2. If so, were their acts within the scope of the provision?
The Global Santosh First Instance
Were Transclear and/or IBG
Were their acts within scope of
Transclear was a sub-contractor.