International Arbitration Practice Group
May 20, 2016
New York Enforcement Update
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.1
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
For more information, contact:
James E. Berger
+1 212 556 2202
jberger@kslaw.com
Charlene C. Sun
+1 212 556 2107
csun@kslaw.com
King & Spalding
New York
1185 Avenue of the Americas
New York, New York 10036-4003
Tel: +1 212 556 2100
Fax: +1 212 556 2222
www.kslaw.com
