ATLAS NAVIOS NAVEGACAO LDA V THE SHIP "XIN TAI HAI"

[2012] FCA 715, Federal Court of Australia, in Admiralty, Mr Justice Rares, 5 June 2012

Collision - Arrest - Letter of undertaking - Anti-suit injunction sought by claimant - Limitation of liability

A collision occurred off the coast of Malaysia between the ships of the claimant and defendant as a result of which the claimant's ship sunk. Xin Tai Hai arrived at Port of Qingdao (China) and the defendant applied to the Qingdao Maritime Court to constitute a limitation fund in respect of the ship's liabilities against the claimant which was accepted. The claimant then applied for arrest of Xin Tai Hai in Australia, and to the Maritime Court to recover other costs incurred as a result of the collision. The vessel was arrested and released against a letter of undertaking by Skuld which contained a reservation providing that the security did not preclude any proceeding to be brought by the defendants in Australia or in another jurisdiction. Meanwhile the defendant applied to set aside the arrest and also obtained an injunction from the Maritime Court ordering that obstructive measures against the defendant's property should no more be taken. The defendant subsequently made a supplementary application so that the claimant immediately returns the letter of undertaking, which was not yet heard at the time of this judgment and which was the subject of the claimant's anti-suit injunction in Australia. The defendant contended that they had such a right according to Chinese law and the letter of undertaking was sufficiently clear that they were free to make such applications seeking return of the letter of undertaking in any jurisdiction they sought to move: accordingly their right ought not be interfered with by order of the court in Australia.