The business of transport, shipping and logistics is global, meaning that liability, loss and damage can arise anywhere in the world. Enforcement of claims however, is a different story. A judgment or award is only worthwhile if it is obtained or can be enforced in a jurisdiction in which a respondent has assets.
Australia is a largely favourable jurisdiction for the enforcement of foreign claims:
- Australia has a well-established judicial system, including a specialist Admiralty and Maritime division within the Federal Court of Australia and specialist lists within many of the State Supreme Courts
- Australia is a very pro-arbitration jurisdiction
meaning that the ultimate enforcement of claims against businesses or assets within Australia is typically reliable and straight-forward.
Added to that, Australia is a pro-arrest jurisdiction and a great ‘catchment area’ for the world’s bulk shipping fleet, meaning that it is an ideal jurisdiction for obtaining security for recognised ‘maritime claims’.
We are commonly asked whether security is also able to be obtained in Australia for claims which are not recognised ‘maritime claims’ and/or where vessel arrest is not an option (e.g. where the respondent does not own vessels). The answer is ‘yes’.
Under Australian law, a claimant and/or judgment/award creditor can apply to freeze the assets of a respondent and/or judgment/award debtor if it can establish that:
- the claimant has a ‘good arguable case’ with ‘reasonable prospects of success’ or a judgment/award
- there is a reasonable prospect that the claim or judgment/award will be sought to be enforced against assets in Australia
- there is a real risk that, if the assets are not frozen, any judgment/award may go unsatisfied as a result of the actual or likely disposition of those assets other than in the ordinary course of business (i.e. through a corporate restructuring or exceptional sale of assets which would have the effect of emptying the accounts before any judgment/award could be enforced).
Freezing orders have been granted in support of both foreign Court and arbitration proceedings and in respect of both actual and prospective (i.e. undetermined) judgments/awards, including in respect of disputes arising out of commodities sales agreements, charter parties and other maritime contracts.
Freezing orders can typically be granted on an urgent basis (where the circumstances require) and ex parte (that is, without prior notice to the affected party).
So apart from Australia being an enforcement and arrest-friendly jurisdiction, it is also an asset freezing-friendly jurisdiction where the above matters can be satisfied. This can be a very valuable litigation and risk management tool where arrest is not an available option.