HONG KONG SAR, CHINA Law and Practice Contributed by: Christopher Andrew Potts, Crump & Co
It does not automatically impose a stay on proceed - ings, meaning a dissenting creditor can still pursue winding-up action unless all major creditors agree to an informal standstill. Provisional liquidation is primar - ily a protective mechanism and, although sometimes used to facilitate restructuring discussions, does not amount to a debtor-in-possession rescue regime. The Hong Kong maritime court may order the arrest and judicial sale of a vessel owned by owners that are under Chapter 11 proceedings in the USA. Admiralty proceedings are brought in rem against the vessel itself, and a foreign insolvency stay does not auto - matically bind Hong Kong courts. While Hong Kong courts may recognise and assist foreign insolvency proceedings at common law, such recognition is dis - cretionary and does not necessarily preclude vessel arrest or sale unless a specific stay is granted by the Hong Kong court. 5.12 Damages in the Event of Wrongful Arrest of a Vessel Damages for wrongful arrest are awarded only if the arresting party acted maliciously, in bad faith or with gross negligence, or shows a deliberate abuse of pro - cess. 6. Passenger Claims 6.1 Laws and Conventions Applicable to the Resolution of Passenger Claims The 1974 Athens Convention governs carrier liabil - ity for passenger injury, death and luggage, and the LLMC 1976/1996, which provides a mechanism for ship-owners to limit their overall liability based on a ship’s tonnage, is incorporated into Hong Kong law through the Merchant Shipping (Limitation of Ship - owners Liability) Ordinance (Chapter 434). Other relevant domestic laws include the Control of Exemption Clauses Ordinance (Chapter 71), which prohibits carriers from excluding liability for death or injury due to negligence, and the Fatal Accidents Ordi - nance (Chapter 22) for the death of a passenger.
An action for damages related to a passenger’s death or injury, or loss or damage to luggage, must be filed
within a two-year time limit. Limitations on Liabilities
Under Chapter 434, liability for death or personal injury is limited to 175,000 SDRs per passenger, mul - tiplied by the ship’s authorised passenger capacity. Separate limits apply to different types of luggage. A ship-owner or any person liable for maritime claims may limit liability by reference to the vessel’s tonnage unless the loss was a result of the owners’ intentional or reckless actions with knowledge of the probable outcome. Chapter 434 also allows the constitution of a limita - tion fund under the admiralty jurisdiction of the Hong Kong Court of First Instance. Claims for indemnities for passenger personal injury are generally considered maritime claims instead of maritime liens. 7. Enforcement of Law and Jurisdiction and Arbitration Clauses 7.1 Enforcement of Law and Jurisdiction Clauses Stated in Bills of Lading Hong Kong courts recognise law and jurisdiction clauses in bills of lading. A properly incorporated jurisdiction or arbitration clause in a bill of lading will almost always be upheld, unless the resisting party shows strong cause such as unreasonable enforce - ment or serious injustice. Properly incorporated claus - es bind third-party bill holders. Arbitration clauses are also routinely enforced under the Arbitration Ordi - nance (Chapter 609). 7.2 Enforcement of Law and Arbitration Clauses Incorporated Into a Bill of Lading Hong Kong courts recognise and enforce law and arbitration clauses in a charterparty when they are properly and effectively incorporated into a bill of lad - ing. Incorporation requires clear, specific and express wording demonstrating an intention to include the dispute resolution clause (eg, “all terms, conditions and arbitration clause of the charterparty are incor - porated”). Once validly incorporated, the clause binds
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