Followed Hanjin Shipping's global shocking rehabilitation proceeding on 1 September, 2016 before the Seoul Central District Court, on 25 October the Hangzhou Intermediate Court ruled to accept a Chinese state-owned big ship company, Zhejiang Ocean Shipping Company ("ZOSCO") bankruptcy, which owns 11 billion RMB to 14 big creditors, which are not include those small creditors. Under those shipping bankruptcies disasters, the creditors are forced to consider to safeguarding their rights through forum shopping. As one of the biggest shipping and trade country, China's judicial practice is worthwhile to be mentioned for the creditors.
Not like in U.S., on 9 September 2016, the U.S. Bankruptcy Court issued an order recognizing Hanjin's Korean rehabilitation proceedings as a "foreign main proceeding." and granting protection to Hanjin-owned and leased assets, but also includes certain carve-outs, while,since Korean government does not conclude the judicial assistance agreement with Chinese government and China is not a signatory of any international judicial bankruptcy convention, the Chinese courts will not exclude their jurisdictions and the global creditors can seek the jurisdiction in China, particularly, according to Article 19 of theSpecial Maritime Procedure Law of China, the creditors can get the jurisdiction through the ship arrest and cargo attachment before Chinese maritime court, unless the jurisdiction agreement or arbitration agreement between the parties provides otherwise. Further, Article 8 also says that where all the parties to a maritime dispute are foreign parties, and have agreed in writing to be subject to the jurisdiction of a Chinese maritime court, such maritime court shall have jurisdiction over the dispute notwithstanding that the place that has genuine link with the dispute is not within the territory of China.
Further, except the provisions under Chapter III of the Special Maritime Procedure Law of China, the creditors can apply for a Chinese maritime court to arrest the Hanjin's ship and the container within Chinese territory, Chapter IX of the Civil Procedure Law of China also states that if it becomes impossible or difficult to execute a judgment because of the acts of one of the parties or for other reasons, the court may, at the request of the other party, order that property preservation be adopted. So, the global creditors can seek the ship arrest and/or other property preservation before Chinese court to avoid the disadvantages of the Seoul court's bankruptcy procedures and the U.S. Bankruptcy Court's protection order in United States.
What we concern is that even though the above flexible jurisdiction in Chinese territory, the current situation is that they are numerous creditors, including Chinese domestic creditors are eager to and try their best to findHanjin’sships and assets in China for the ship arrest and/or property preservation, in order to safeguard and realize their creditors after the substantial trial of proceedings. So, it is suggested that the foreign creditors seek professional advice and also make ancomprehensive investigation on Hanjin's assets in China, before initiate the proceedings before Chinese court, but it needs carry out earliest.
Adversely, regarding the Zosco's bankruptcy in Hangzhou Intermediate Court, due to Chinese government is not a signatory of any international bankruptcy convention or mutually agreement with other countries, the foreign creditors can consider to join the Hangzhou Intermediate Court's bankruptcy proceedings, and also choose to find Zosco's assets out of Chinese territory and forum shopping foreign jurisdiction to realize their rights.
Dr. Shouzhi An
Partner
Guantao Law Firm
T: +86 592 520 5899
F: +86 592 520 2133
E: anshouzhi@guantao.com
