Chinese start-up HNA Cruises has had its Henna vessel detained on Jeju Island in South Korea according to reports, due to a legal dispute.
The ex-P&O Australia tonnage was stuck at the pier when a local court ordered that the ship could not leave after a request had been filed by another company, Jiangsu Shagang Shipping International.
Shagang describes itself as a “general import and export trading company engaged in exploration and mining of mineral resources, import and export of metallurgical equipment, spare parts and steel products, ocean shipping of dry bulk cargos and logistics as well as overseas investment.”
HNA responded by offering free food and entertainment, and flying passengers home on Hainan Airlines' planes. Hainan is part of the much bigger HNA Group.
The ship has been operating since January, offering a variety of sailings out of various homeports in China, and was on a six-day itinerary out of Tianjin.
The local South Korean court issued the order after Shagang asked for the vessel to be seized.
HNA has stated it is in the process of working out a solution.
HNA, at press time, was apparently working on a small, seven-figure deposit to the court that would release the vessel.
In a written statement submitted to Cruise Industry News, a spokesman for Shagang Shipping, a Hong Kong company, said that the firm is concerned about the welfare of the 2,300 passengers and crew caused by the “unavoidable but necessary” arrest of the HNA vessel.
He explained that this resulted as a consequence of HNA's failure to comply with their contractual obligations, and to settle the $58 million owed by HNA.
Apparently, the dispute started in 2008 when Shagang chartered a bulk carrier to Grand China Shipping, a subsidiary of HNA Group, for a period of about seven years.
But, according to Shagang, they were only paid for five months of the contract, which called for a charter rate of $52,500 per day, according to the spokesperson.
“Over the course of about two years Shagang Shipping has won five arbitration awards for unpaid hire for more than $18 million but Grand China Shipping has still refused to honor those arbitration awards, until enforcement measures were taken against them.
“As the injured party in this dispute, we were left with no option but to identify and seize an HNA asset, such as the M/V ‘Henna’, which was done extremely efficiently in Jeju last Friday, and we hope this action will bring HNA to their senses so that the parties can finally settle the case,” added the spokesperson.
“In November 2012 Shagang Shipping was awarded damages of about $58 million. Even then however, neither Grand China Shipping nor HNA Group Company Limited paid, but instead sought to appeal to the decision, which was denied by the English High Court.”