A foreign-related shipbuilding dispute that was initially headed for arbitration in Singapore has been resolved by a court in Zhejiang province, highlighting the growing international credibility of China's maritime judiciary.
The case dates back to June 2024, when a ship repair and construction company in Zhoushan, Zhejiang province, received an order from a Singapore-based maritime engineering firm to convert one of its vessels into a wind power construction ship.
After the conversion was completed, however, the Singaporean company failed to pay the remaining $15 million in shipbuilding costs by the end of January this year, as agreed.
As the Zhoushan company prepared to take legal action, the Singaporean firm was facing a financial crisis. It owed not only the outstanding conversion fee but also multiple other debts.
To protect its claim, the Zhoushan company applied to the Ningbo Maritime Court in April to have the vessel, which was berthed in Zhoushan, arrested. A month later, it initiated arbitration with a Singaporean institution in accordance with the agreement between the two parties.
The Zhoushan company soon found that overseas arbitration was time-consuming, unpredictable and costly. The Singaporean firm, meanwhile, was under pressure from the daily costs of keeping the vessel under arrest and from multiple creditors pursuing their claims.
After negotiations, the two sides signed a supplementary agreement in June, agreeing to withdraw from the Singapore arbitration and instead seek judicial relief from the Ningbo Maritime Court under Chinese law, citing the efficiency and lower cost of resolving such disputes.
Two other creditors of the Singaporean company, upon learning of the change, also expressed their willingness to join the effort to resolve the relevant disputes through the Chinese court.
During the proceedings, the Singaporean company, overwhelmed by its massive debts, declared provisional liquidation, further complicating the case.
The court then found that the arrested vessel, which had been converted into a wind power construction ship, had attracted interest from a foreign shipbuilding company because of its promising market prospects. This offered the Singaporean firm a new opportunity to revitalize its assets and repay its debts.
The court quickly contacted the parties involved and convened an online meeting. It explained the rules under China's Maritime Law governing the distribution of proceeds from ship auctions and proposed judicial solutions, which all parties accepted. In September, the case was resolved through a single, comprehensive settlement.
The court described the outcome as a new judicial contribution by China to global maritime affairs. It also said it had worked with mediators familiar with the shipbuilding industry to coordinate efforts and balance the interests of multiple parties, ensuring both the quality and efficiency of the dispute resolution.
