Continuing Clyde & Co’s analysis of the legal situation relating to Hanjin Shipping’s insolvency, today we look at the United Arab Emirates.
The UAE and Republic of South Korea have not entered into a bi-lateral treaty under which they are obliged to recognize each other’s court orders or judgments. The
UAE rarely recognises or enforces the judgment of foreign courts where there is no such treaty in place.
The rehabilitation proceedings and bankruptcy protection obtained by Hanjin in Korea are therefore unlikely to be recognized and enforced in the UAE. In addition, under UAE law, there are no equivalent provisions to the Korean rehabilitation proceedings, and so Hanjin would be unable to obtain a court order from a court in the UAE granting similar relief.
Accordingly, there is nothing stopping Hanjin’s creditors from arresting a Hanjin-owned vessel (and in certain circumstances a Hanjin- chartered vessel), as security for their claims in the UAE, provided there are grounds for an arrest under the UAE Maritime Code.
Given the litigation risk in the UAE the risk to creditors is that a UAE Court may take jurisdiction over the underlying dispute. This could actually work in the creditors’ favour because it may take the debt owed to the creditors out of the Korean rehabilitation proceedings. The security, depending on the form in which it is provided, may be considered as not being a part of Hanjin’s assets, and any judgment the creditors may obtain in the UAE would be enforceable against that security.