Case 43: MAL 7(2)
Hong Kong: High Court of Hong Kong (Mayo J.)
8 September 1992
Hissan Trading Co. Ltd. v. Orkin Shipping Corporation
Published in English: 1992, Hong Kong Law Digest, H8
(Abstract prepared by Kaplan J.)
The plaintiff, sub-charterer, filed an action against the defendant, ship-owner, for loss of cargo occasioned by the vessel's sinking. The claim was made under a bill of lading subject to Japanese law, which incorporated the arbitration clause of a charter-party to which neither the plaintiff nor the defendant were parties. The bill of lading itself contained an exclusive jurisdiction clause in favour of the Tokyo District Court. At the commencement of the action the plaintiff obtained an injunction against the defendant with regard to the proceeds of the insurance policy on the vessel.
The defendant applied for a stay of court proceedings on the ground of the arbitration clause, alternatively on the basis of the exclusive jurisdiction clause, contained in the bill of lading. The defendant also sought to have the injunction set aside.
The court found that, since the bill of lading was not signed by both parties, there was no written agreement to arbitrate contained in a document signed by both parties, as required by article 7(2) MAL. The correspondence between the parties was held to be insufficient as article 7(2) MAL precluded the adoption of memoranda being relied upon, which were issued after the conclusion of the agreement to arbitrate [see, however, [...], case 44]. In addition, the court could not apply the relevant arbitration clause, even if it were a written agreement in the meaning of article 7(2) MAL, since it was not clear whether the parties had agreed to resolve their disputes through arbitration or through court proceedings before the Tokyo District Court. In order to apply the arbitration clause the court would have to manipulate the language of the agreement of the parties in a substantial and, thus, impermissible way. The court dismissed the application for a stay of proceedings.
The court dismissed also the defendant's application to have the injunction set aside.
The court held that there was sufficient evidence that the main asset of the defendants,
the proceeds of the insurance policy on the vessel, might be dissipated, as the defendant
was a one-ship-owning Panamanian company which was unlikely to continue trading after the
vessel had sunk.
Additional Information published in later CLOUT issue (on "14 October 1994"):
Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994.
Additional Information published in later CLOUT issue (on "10 April 1995"):
Commented on by Kaplan in Asia LawJanuary/February 1995, 23.
Additional Information published in later CLOUT issue (on "9 February 2000"):
Abstract published in English:  Model Arbitration Law Quarterly Reports, Vol. 1, issue 4, 13
Text of the court decision published in English:  Model Arbitration Law Quarterly Reports, Vol. 1, issue 4, 19
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