Effect of a winding-up petition

The Singapore Court, in Pacific King Shipping Pte Ltd v Glory Wealth Shipping Pte Ltd [2010] SGHC 173, addressed an important issue relating to the enforcement of arbitration awards. The key issue for Philip Pillai J was whether an award creditor was entitled to seek a winding-up order against the award debtor without being faced with defences to the enforcement of the award available under the New York Convention in ordinary enforcement proceedings. The court’s view was that a winding-up petition is not an enforcement measure for the purposes of the Convention.

Pacific King: the facts

In October 2007 PK chartered a vessel from GW under a contract which contained an arbitration clause for arbitration in London. PK’s obligations to GW were guaranteed by T. A dispute arose between the parties, which led to arbitration and an award in favour of GW. This led to a demand by GW for the sum of US$3,986,157.16, of which US$1,326,625.04 represented the amount awarded by the arbitrators. PK paid US$350,000 of the award, leaving US$976,625.04 due and outstanding. After three weeks, GW filed a statutory demand seeking payment and then a winding-up petition. PK contested the petition on the ground that the award was not one which should be recognised or enforced under the New York Convention because it was obtained in a manner which prevented PK from presenting its case and because the arbitrators had exceeded their jurisdiction. PK also asserted that it had a cross-claim which exceeded the debt allegedly due under the award. T as guarantor argued that it was not bound by the award. As will be seen from the following paragraphs, Philip Pillai J rejected each of these possible defences.