New York has long been a critical enforcement venue for parties holding unsatisfied arbitral awards and/or judgments. New York is the financial capital of the United States, and that reality, coupled with the state’s expert courts and a body of law that affords award and judgment creditors a broad array of effective remedies to satisfy judgments, means that many award and judgment creditors seek judicial enforcement in New York as a key component of their enforcement strategy. Two recent rulings by New York federal courts illustrate the approach and legal tools available to creditors seeking to enforce adjudicated, but unsatisfied, liabilities.
Arbitral Enforcement – Quasi In Rem Jurisdiction/Forum Non Conveniens/Arbitral Jurisdiction Crescendo Maritime Co. v. Bank of Communications Co., Ltd.
Crescendo Maritime arose out of a dispute over a shipbuilding contract. Crescendo Maritime Co. (Crescendo) is a special purpose entity incorporated and doing business in the Marshall Islands. In 2007, it entered into an agreement for the construction of a large cargo ship. Bank of Communications (BOC), a Chinese bank, guaranteed any refunds that might become due to Crescendo under the shipbuilding agreement. The guarantee agreement was governed by English law, and the parties agreed to refer any dispute to arbitration in London. Following several delays in the construction of the vessel, the parties to the shipbuilding agreement attempted unsuccessfully to renegotiate the terms, and the sellers terminated the shipbuilding agreement one day before Crescendo would have been entitled to cancel it. The sellers commenced arbitration under the shipbuilding contract, and Crescendo demanded a refund of the installment payments that it had made to date. Crescendo demanded repayment from BOC under the refund guarantee, and BOC refused to make payment, leading Crescendo to commence arbitration against BOC. Because Crescendo had, in connection with financing it had obtained, assigned its rights under the shipbuilding and refund guarantee contracts to Alpha, its lender, BOC claimed that the arbitration was invalid because Crescendo lacked the ability to commence it. BOC did not attend the arbitration hearings, despite the tribunal’s demand that it do so; it instead commenced litigation in a Chinese court, which issued a ruling that prohibited BOC from paying on the guarantees. In response, Crescendo and Alpha sought and obtained an anti-suit injunction from a London court prohibiting BOC from prosecuting the Chinese court proceedings. The tribunal ultimately issued several awards in Crescendo’s favor, totaling $18.6 million.
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