An extraordinary legal battle between two Chinese companies has just been decided in London’s high court. We first reported on the messy spat between HNA Group and Shagang Shipping back in 2013 (see WiC210). The dispute centred on the non-payment by an HNA subsidiary of charter fees to Shagang, based on a contract signed in 2008 – at the height of the shipping boom.
This top-of-the-market charter rate became a source of consternation for HNA’s Grand China Shipping, pushing it into loss. When it stopped receiving payment, Shagang Shipping – an offshoot of the privately-owned steel firm – chased HNA, which had guaranteed the agreement.
A British judge finally gave his verdict last week, ordering HNA to pay Shagang $68.6 million to settle the dispute over the capesize vessel’s charter. HNA’s lawyers told the shipping industry publication TradeWinds that it would appeal against the decision.
HNA – a company that has been making a host of high-profile international acquisitions this year (see WiC321) – argued that the charter was unenforceable because a Chinese court had convicted a top Grand China Shipping executive of taking a bribe at the time he signed the lucrative deal. TradeWinds reports that Shagang countered that this conviction was invalid because the bribery confession was obtained after the executive was “tortured” in the basement of a Hainan police station. The British judge wrote in his High Court opinion “I find that torture cannot be ruled out as a reason for the confessions” and added that it only added to his doubts about Hainan-based HNA’s case, stating “I already have insufficient confidence in the confessions to allow a finding of bribery”.
Who knew the business of chartering ships could get so grisly…
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