Discretion

The English courts have jurisdiction to grant interim relief in support of both English and foreign arbitrations, generally in the form of an order freezing the assets of the defendant by way of security for any future award. An order will be made if there is a real risk that the defendant’s assets will be dissipated and if it is otherwise just and equitqable for an order to be made. In Swift-Fortune Ltd v Magnifica Marine SA, The Capaz Duckling [2007] EWHC 1630 (Comm), David Steel J refused an injunction, on the grounds both of delay and of the claimant’s failure to disclose material facts to a foreign court in support of an ultimately misguided application for relief to that court.

The Capaz Duckling: the facts

By a memorandum of agreement dated 31 August 2004 the claimant, a Liberian corporation which was one of five ship-owning companies in the Granite Holding group, agreed to buy the vessel Capaz Duckling from the defendant – a Panamanian one-ship company – for the sum of US$9.2m. The contract required the claimant to pay a deposit of 20% into a joint account, with the balance paid into the defendant’s account on delivery. The anticipated date of delivery was in the period October to December 2004, although the defendant obtained from the claimant five extensions of time, and the vessel was ultimately delivered on 9 March 2005. The extensions were granted by the claimant without prejudice to its rights of compensation. The claimant indeed indicated that it intended to invoke the arbitration clause in the contract with respect to its losses, and on 8 March 2005 it obtained a without notice freezing order from the Singapore courts in respect of US$2m. The following month the defendant successfully applied to have the freezing order set aside, the Court holding that the Singapore court had no jurisdiction to issue a freezing order in support of a foreign arbitration.