Frontier International Shipping Corporation v The owners and all others interested in the ship ‘Tavros’ and anr - Federal Ct (Trial Div) Hargrave P - 5 November 1999

Practice - Federal Court action stayed in favour of New York arbitration - Security for costs - Whether defendants entitled to counter security for their counterclaim in the arbitration, for the costs of the arbitration, and for the costs of the Federal Court action

The plaintiff charterers commenced proceedings and arrested the vessel Tavros at Vancouver in order to force security for any arbitration award which might arise out of existing arbitration in New York. Having obtained security in the form of a bank guarantee applicable to both the action and to the arbitration, thus allowing the Tavros to sail, the plaintiff now moved to stay the Federal Court action in favour of New York arbitration. The defendant shipowners challenged the fairness of an arrest to obtain security for an arbitration. They also said that if a stay was to be granted, the Court should also order the plaintiffs to give counter security for (1) the defendants’ counterclaim, (2) the costs of the arbitration, and (3) the costs of the present Federal Court action, including the costs of the bank guarantee by which the Tavros had been released from arrest.