The arrest follows a court decision that appears to have bypassed the troubled company's bankruptcy protection.
World Fuel Services (WFS) Friday arrested a Hanjin Shipping (Hanjin) vessel in Korea, following a court decision that appears to have bypassed the troubled company's bankruptcy protection, Korea Joongang Daily reports.
The vessel in question is the Hanjin Xiamen, which is currently docked in Changwon, with data from VesselsValue.com indicating the 6,655 teu capacity 2007-built Post Panamax box ship is worth $14.93 million.
The Changwon District Court decision to allow the arrest came after WFS argued that the vessel was not technically "owned" by Hanjin and therefore could not be considered an asset, rather, the vessel was only "beneficially owned" by them and registered to a special purpose entity established in Panama.
Kim In-hyeon, a professor at Korea University Law School
We can't say the court's ruling is wrong, but it seems the court was too considerate of the creditor's position
According to the report, the original court protection did not specify whether both owned and beneficially owned vessels were covered, leaving the district court in Changwon to interpret that the Hanjin Xiamen belonged to the owner on paper - a decision seen as harsh by some observers.
"In the stay order imposed by Singapore, it includes beneficially-owned ships as subject to the order," Kim In-hyeon, a professor at Korea University Law School was quoted as saying.
"We can't say the court's ruling is wrong, but it seems the court was too considerate of the creditor's position."
Hanjin has filed an appeal and a decision on the matter is expected by Thursday, but the worry now is this could lead to many more arrests using the same argument.
For its part, in total World Fuel Services is owed Won 24.5 billion ($21.7 million) by Hanjin, according to records released detailing the claims of around 3,000 of the shipping company's creditors.