Daebo International Shipping Co Ltd (Daebo) is a Korean marine cargo company incorporated in 2008. Due to the recession in the shipping industry from 2009, Daebo found itself in economic collapse. In March 2015, the Seoul Central District Court made orders that rehabilitation proceedings should be commenced with respect to Daebo, as a debtor, and that Mr Kim (the plaintiff) as a representative director of Daebo, would be considered the custodian of Daebo.

In his capacity as representative of Daebo, Mr Kim sought orders that the Korean proceedings be recognised as a foreign proceeding within the meaning of the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law (the Model Law); that he be recognised as a foreign representative; and that the Korean proceedings be recognised as a foreign main proceeding.

Held:

In granting the orders, Rares J highlighted that a plaintiff may have a proprietary or secured claim that can be enforced by an action in rem under the Admiralty Act 1988 (Cth), which may be enforceable and not affected by any stay under the Model Law and s 16 of the Cross-Border Insolvency Act. For example, a plaintiff who commenced a proceeding on a maritime claim against a ship as an action in rem before any stay came into effect under the Model Law, will have a secured interest in respect of that claim simply because of the timing of the commencement of the proceeding in rem.

The Australian Admiralty Act reflects long established principles of international maritime law developed to protect the interests of those who trade or have encounters with a ship engaged in international voyages. International conventions reflect some of those principles, including the Arrest Convention 1952 and the Arrest Convention 1999, as do domestic laws relating to the bringing of actions in rem or against ships. It is unlikely that the Model Law was understood or to supervene or impliedly repeal the domestic statutory remedies, including those in the Admiralty Act, in respect of maritime creditors’ rights to proceed in rem on a secured or proprietary claim that existed before any interim or final orders recognising a foreign proceeding under the Model Law.

Therefore, once a foreign proceeding has been recognised or an interim stay granted, and before an arrest warrant is issued, a judge ought to consider the nature of the plaintiff’s proceeding in rem, including where a general maritime claim is asserted when that proceeding was filed, to determine whether the arrest ought occur. That is in contrast to the usual position where the registrar will issue an arrest warrant as a matter of course once the requirements of the Admiralty Rules 1988 are satisfied.