Foreign insolvency – whether termination of contract of affreightment prevented

Article published on July 2014 in Stephenson Harwood Shipping Bulletin and reproduced by courtesy of Stephenson Harwood

F, a party to a contract of affreightment which was expressly subject to English law, had an express right to terminate the contract on the insolvency of the other party, P (a Korean company). P entered into an insolvency process in Korea, and that process was recognised by an order of the English Court as a "foreign main proceeding under the Cross-Border Insolvency Regulations 2006 ("the CBIR").

F terminated the contract of affreightment under its express contractual right. The administrator of P applied to the English Court for an order that F should not exercise its right to terminate.


The application was rejected by Morgan J.

1     The Court's power under CBIR to order a stay of "the commencement or continuation of individual actions or individual proceedings" did not apply. The service of a notice terminating the contract was not the commencement or continuation of an individual action or individual proceeding.


The Court had power under CBIR to grant "any appropriate relief". However:
2.1     that did not give the Court power to order that F should not terminate the contract. The Court's power was limited to relief which would be available to the court when dealing with a domestic insolvency.

2.2     Even if the court had such a power, the judge would not have exercised it. It was appropriate for the Companies Court to apply English law and to give effect to the parties' choice of English law.

(Fibria v Pan Ocean [ 2014 ] EWHC 2124 (Ch))

Authors: Michael Bundock, Senior Associate and professional support lawyer with Stephenson Harwood & Joanne Champkins, Associate specialising in marine insurance with Stephenson Harwood / Publisher: SCMO


Nicolas de Loisy

Advisory specialized in logistics, transportation, and supply chain management.