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Auctions InformationAnatomy of a Chinese Financial obligation Collection
by:
Zhao Xiomei
Introduction
In late Gregorian calendar month
of 2003, I received an e-mail from Daniel Harris, who introduced himself as maritime attorney from Seattle. He had found me through the computer network and was asking me whether I was interested in portion arrest transshipped cargo in Dalian. I was excited simply about the task and I surfed Dan's website and knowing Dan owns a small international law firm in Seattle, called Harris & Moure (http://www.harrismoure.com). I replied to him instantly and sent him several relevant provisions concerning cargo arrests under China legal system. He was really happy with my prompt and helpful reply and we shortly were working together on the case. He later told me he was so affected
with my responses that he had picked me over many
another lawyers throughout China.
Brief of the case
OOO Bolshoretskoe is a Russian fishing institution that oversubscribed 400 Tons of pollock worth about US$700,000 to Alimex Food
A/S, a Danish company. The pollock was regular
to be transshipped from Dalian to Europe. Alimex had not yet paid Bolshoretskoe for the product. Bolshoretskoe owed Daxin Crude oil Pte, Ltd., a Singapore fuel supply company, about US$400,000 for fuel. M/V IVAN POLZUNOV, the vessel carrying the pollock, was regular
to call on Dalian on 4 July, 2003. Our task was to seize the pollock for Daxin to get Bolshoretskoe to pay its debt.
Bolshoretskoe's financial obligation to Daxin arose in Gregorian calendar month
and December, 2002, once
Daxin supplied bunker products for two Russian fishing vessels, TOSNO and PHOENIX. To secure these fuelings, Bolshoretskoe signed a guarantee letter to Daxin in which "Bolshoretskoe assigns all assets
consequent from production, deliveries and merchandising of Salmon or Pollock on/from board of F/T PHOENIX in favor of Daxin for the figure of the bunker supply. In addition, Bolshoretskoe agrees that property title to salmon or pollock products covering the figure of the bunker shall pass to Daxin instantly upon process
and/or storage of the products on board of PHOENIX.
Daxin was not paid on its two fuel deliveries, and Bolshoretskoe was refusing to pay. It is calculable
the TOSNO and PHOENIX owed a combined total of about $20 million in unpaid financial obligation to various creditors.
Intensive and orderly preparation for cargo arrest
After perusal the relevant documents and analyzing the entire history of the case, we determined that either Bolshoretskoe or Alimex would-be pay Daxin if we in remission the cargo in China. So we set simply about to do simply that.
First, we prepared all necessary legal documents consistent
to Chinese law. Due to the various several legal systems and languages involved (China, Russia, Singapore and the United States), our preparations were extremely time consuming. As we were preparing our documentation and firming up our strategies, Dan was besides preparing to come to Dalian.
However, the day before Dan was to leave the United States, he knowing that the pollock's transport vessel, the IVAN POLZUNOV, had in secret changed its plans in an effort to avoid arrest. It would-be not be career Dalian on Gregorian calendar month
4, 2003; it would-be be career Qingdao on Gregorian calendar month
8, 2003. Because all legal documents had been prepared for the Dalian Maritime Court, Bolshoretskoe's change in plans necessitated we wholly change our plans also. With time so more of the essence, we asked Sunfanlong, who works in Qingdao Wincon law firm, to activity with us and we transferred all legal documents to him.
Successful Arrest of the cargo
On Gregorian calendar month
7, 2003, Dan arrived in Qingdao. The IVAN POLZUNOV arrived in Qingdao the next day and began to discharge 15 containers of pollock for transportation to Europe. Once
the judge, Wincon's attorney and Dan saw that the containers were being offloaded on trailers for transport to the instrumentality terminal, they went straight to the terminal to deliver the arrest papers on all 15 containers. However, after waiting nearly five hours at the terminal and waiting well into the night, only three containers had arrived and been arrested. Cipher seemed to cognize what had happened to the another twelve containers. We were concerned Bolshoretskoe and/or Alimex had knowing of our arrest warrant and had hidden the another twelve containers. Adding to our worries was that we had by now knowing that Alimex was to ship all 15 containers to Europe the really next day. We checked everyplace for the missing twelve containers. We checked with various hauling companies. We checked all about the terminal. Nothing. Eventually, we knowing that the twelve containers had been in the terminal all along, but had been issued separate bills of cargo from the 1st three and placed in a somewhat separate area. We had succeeded in sensational all fifteen containers.
After our having engaged in twelve days of intensive e-mail and telephone communication together, Dan showed up at Dalian's airport. His high praise of our activity sent
his satisfaction of our efficient job. Dalian and Qingdao's picturesque scenery and modern city construction affected
Dan deeply and changed his previous imagination regarding this part of China. He admired the food and our culture and talked simply about returning several day with his family on holiday.
Hard success to acquire guarantee and lift the arrest
Now that we had the pollock under arrest, we would-be need to maintain it in its frozen condition at the terminal. Pollock is a valuable fish and the cost and risks during the arrest period were high. The sooner we could resolve the dispute, the sooner the fish would-be be on its way, and the better it would-be be for all parties.
The day after we in remission the cargo, we received a letter from Alimex's lawyers in Denmark, claiming Alimex closely-held the in remission cargo, not Bolshoretskoe, and threatening Daxin with criminal action. Alimex's lawyers traced this letter to the court and to Daxin. Although confident that it was in the right, this threat of criminal action did not sit well with Daxin. We replied to Alimex's lawyers by lecture them on Chinese and international law and by declaring that Alimex would-be suffer even as more losses if it insisted on following
judicial proceeding in China instead of cooperation. The reaction from Alimex's lawyers was overwhelming. They wrote me a letter filled with furious and derogative words and declared they would-be ne'er
communicate directly with us again. The case had fallen into deadlock.
Despite the ab initio tough attitude of Alimex's lawyers, we knew we could not abandon our efforts to accomplish a settlement, particularly since we knew settlement ready-made sense for all parties. We projected a three way agreement between Daxin, Alimex and Bolshoretskoe, whereby Alimex would-be support its purchase cost funds and not pay any party for the fish until the dispute between Daxin and Bolshoretskoe had been resolved through arbitration in Canada. Alimex would-be then pay the winner of the arbitration up to the purchase cost of the fish. Alimex would-be besides agree not to pursue any claims against Daxin for wrongful arrest. Upon the sign language of this agreement, Daxin would-be release its arrest of the cargo. Daxin secured oral agreements from several Bolshoretskoe and Alimex to go forward with such an agreement.
For the fish to go out on the next liner to Europe, Dan and I had to activity overtime in drafting the appropriate agreements. This time, the multitude of languages and time zones (China, Russia, Singapore, Seattle, and Denmark) worked to slow us down, and by the time Bolshoretskoe received its Russian language copy of the agreement, only a few hours remained before the pollock needful to be loaded on the liner to Europe. But, at the last minute, Bolshoretskoe changed its mind and distinct it would-be not sign. All our hard activity had been for naught. We were all exhausted.
The next liner to Europe was departure in six days. During the weekend, we stopped-up talking with opposing parties and communicated with only Dan and Daxin. We went back over the case history and analyzed each party's positions and risks. We complete that Bolshoretskoe was Daxin's real adversary. It was Bolshoretskoe that owed the money and it was Bolshoretskoe that had avoided payment for so long. It besides was Bolshoretskoe that had backed out of its oral agreement. There had been no prior conflicts between Daxin and Alimex. Although Alimex was listed as the recipient of the pollock on the Bill of lading, it had yet to really pay for the fish. Above all else, Alimex wanted the pollock sent to Europe so it could fulfill its commitments with its European buyers.
If we could persuade Alimex to provide a deposit or the purchase cost to the Qingdao Maritime Court, we would-be lift our cargo arrest. If, on the another hand, Alimex insisted on paying the purchase cost directly to Bolshoretskoe, the arrest would-be remain in place, and Alimex would-be be unable to fulfill its supply contracts with its European buyers. Daxin would-be be left fighting a two front war against Alimex and Bolshoretskoe in the Chinese courts.
We told Alimex that if it did not instantly settle, we would-be come the court to require Alimex pay the Pollock purchase cost to the court and seeking the immediate sale of the pollock at auction. Inside
hours, we received contact from a Chinese attorney maintained by Alimex, who would, he abreast of us, be going to court to have our "illegal" arrest thrown out. The court neglected him.
The next liner for Europe was coming to Qingdao the next day and it finally began dawn on Alimex that if it wanted to get the pollock to Europe and to its customers, it would-be need to settle with us. Intensive settlement talks began afresh
and another oral agreement was reached. Alimex would-be guarantee to pay up to the figure of the pollock purchase cost to whomever prevailed between Daxin and Bolshoretskoe. Alimex besides in agreement not to pursue any claims against Daxin arising from Daxin's allegedly wrongful arrest of the cargo. A settlement was drafted and signed and the parties worked diligently to get the arrest upraised in time for the product to do it on that day's liner to Europe.
Daxin had a Guarantee Agreement from an established and well funded Danish institution and we had achieved a smashing triumph on this exciting arrest of cross-border transshipping cargo.
Somewhat smooth sailing in convalescent Daxin's award.
We then filed Daxin's case against Bolshoretskoe in the Qingdao Maritime Court. Bolshoretskoe systematically
failing to attend any court hearings and we eventually secured a default judgment against it.
Alimex then paid Daxin all but US$15,000 of the figure it had guaranteed, but claimed title to withhold US$15,000 for itself to help pay for the cost it had incurred in China defensive
against Daxin's arrest. One e-mail from Dan threatening arbitration in London (pursuant to the Guarantee Agreement) for the $15,000, plus all fees and costs, positive Alimex it had no case on this either. Alimex paid the remaining US$15,000 to Daxin and the case was over.
After six months, close cooperation and flexibility by lawyers on several sides of the Pacific had given us full and total victory.
Epilogue
A few months after I closed the case, Dan sent me an e-mail telling me he had detected
from one of his Danish clients that Alimex's Danish lawyers had told them of our great job on this case. Dan and I have since worked on a couple additional cases together, but it wish be this 1st one that I wish always remember. In thinking of this case, I cognize I wish ne'er
forget the sleepless nights I spent communication with lawyers and parties in four times zones. But I besides cognize that the pride I feel from knowing how more we achieved, despite having to activity through the laws of so galore countries under such tight deadlines, is what wish always stand out. Our wisdom, our legal cognition and our strenuous diligence had garnered us high praise not only from our foreign colleague and from our client, but besides admiration from the opposing party.
Just simply about THE AUTHOR
Zhao Xiaomei (Meggie) is a senior partner at the Fada law firm in Dalian, China, wherever
she focuses on international and maritime law. http://www.fada-lawyer.com/introc_e.htm
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