Bocimar NV v Kotor Overseas Shipping Ltd

• Jurisdiction: South Africa
• Judge: Corbett CJ, Joubert JA, Goldstone JA, Nienaber JA and Kriegler AJA
• Judgment Date: 09 March 1994
• Citation: 1994 (2) SA 563 (A)
• Docket Number: 332/93
• Court: Appellate Division

Corbett CJ:

After the hearing of this appeal on 22 and 23 November 1993 this Court made an order in the following terms:

'For reasons to be furnished later the appeal is dismissed with costs, I such costs to include those occasioned by the employment of two counsel.'

Here are the reasons.

The appellant, Bocimar NV ('Bocimar'), a Belgian corporation, carries on business from Antwerp as an operator and charterer of cargo-carrying J vessels. On about 31 July 1992 Bocimar concluded a contract with the

Corbett CJ

A International Colombia Resources Corporation of Colombia ('Intercor'), a seller and shipper of coal, in terms of which it (Bocimar) undertook to carry a cargo of between 60 000 and 64 000 metric tons of coal from Puerto Bolivar, Colombia, to Rotterdam in the Netherlands. To this end Bocimar, having chartered the Crna Gora, nominated it as the vessel to perform this B contract of carriage. Intercor is a subsidiary of the Exxon Coal and Minerals Company of the United States of America.

The Crna Gora had since 7 April 1992 been registered in Valetta, Malta. Prior to that it had had a Yugoslavian registration. It was owned and controlled by Zeta Ocean Shipping Ltd ('Zeta'), a company recently registered in Malta. Of the 500 issued shares in Zeta 499 were owned by C Boka Ocean Shipping Corporation ('Boka'), a company registered in Liberia. At all relevant times the controlling shareholders in Boka were individual persons residing in Montenegro, a constituent republic of Yugoslavia. (Incidentally, 'Crna Gora' is the Serbo-Croat name for Montenegro: see Encyclopaedia Britannica sv 'Montenegro'.)

D The Crna Gora loaded the coal at Puerto Bolivar on about 23 August 1992 and set off for Rotterdam. The vessel arrived off the Hoek van Holland on 7 September 1992, but was refused entry to the port of Rotterdam by reason of certain economic sanctions imposed by the Security Council of the United Nations Organization in respect of the Federal Republic of E Yugoslavia (Serbia and Montenegro) and reinforced by a resolution of the European Community. On the same day application was made on behalf of Bocimar and Enerco BV of Holland ('Enerco'), one of the consignees of the cargo of coal, to the District Court of Rotterdam for an order directing the State of the Netherlands to permit the Crna Gora to enter the port of F Rotterdam and to discharge her cargo. The Court refused to grant the order sought. On 9 September 1992 an application for similar relief was made by Zeta to the President of the District Court, but this was also refused. On 11 September Enerco made application to the relevant government department for exemption from the regulations whereunder entry of the vessel had been refused. This application was also unsuccessful; as was recourse to an appeal tribunal.

G Eventually on 15 and 16 October 1992 for 'humanitarian reasons' the Crna Gora was permitted to enter the port of Rotterdam, but the authorities refused to allow the cargo of coal to be discharged. So matters rested until the Dutch authorities were persuaded that, if the cargo was not discharged, there was a serious danger that the coal would ignite H spontaneously and cause damage to the vessel, ships in the vicinity and harbour installations. The matter was considered by the Security Council sanctions committee which in early December 1992 resolved that, although sanctions prohibited the provision of port services to a vessel such as the Crna Gora, it would authorise the unloading of the ship's cargo on condition that, inter alia, the cargo remained under impoundment by the I Netherlands authorities for the duration of the sanctions. Pursuant to this resolution the cargo was discharged between 15 and 18 December 1992, impounded by the authorities and stored for Intercor's account. Finally, on about 10 February 1993 and on the application of Zeta the President of the District Court in Rotterdam ordered the release of the cargo. He J regarded the cargo, destined for Dutch, Belgian and German consignees,

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A as 'neutral' once it had been discharged from the Crna Gora and held that there was no lawful ground for its detention.

In the meanwhile these events had given rise to legal claims. On the very day that the Crna Gora was denied entry to Rotterdam harbour, Intercor addressed a letter to Bocimar's representatives in Bogota, Colombia, holding Bocimar responsible for all costs and damages arising from this B decision of the Government of the Netherlands; and this has continued to be its attitude. Bocimar, in turn, claimed that it was entitled to recover from Zeta whatever amounts might be payable by it to Intercor by virtue of the vessel's failure to proceed without delay to the port of discharge and there to discharge the cargo as required by the charterparty.

C On 16 October 1992 Bocimar arrested the Crna Gora in Rotterdam in order to secure its claim against Zeta. At the same time arrests of the vessel were also effected by three banks, mortgagees of the vessel, in order to secure their interest in the vessel. At the time of the hearing in the Court a quo the vessel was still in the port of Rotterdam under arrest.

D On 24 December 1992 Bocimar made application ex parte to the Cape of Good Hope Provincial Division, exercising its Admiralty Jurisdiction in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983 ('the Act'), for an order under s 5(3) of the Act for the arrest of the MV Kordun, then at berth in the port of Saldanha Bay, for the purpose of providing security for Bocimar's claim against the Crna Gora and Zeta arising from the events E at the port of Rotterdam. In the founding affidavit these events were recounted and the averments made that Bocimar's claim against Zeta was a maritime one, as defined in s 1(1) of the Act, and that Bocimar would be entitled to enforce such claim by an action in rem against the Crna Gora if such action were to be instituted in South Africa. The founding affidavit also alleged, and explained the grounds for alleging, that the F Kordun was an 'associated ship' as defined in s 3(7) of the Act and, therefore, one against which an action in rem could be brought in order to enforce Bocimar's aforesaid claim. These grounds, which are common cause, are as follows: the Kordun is owned by a company known as Kotor Overseas Shipping Ltd ('Kotor'), registered in Malta and having the same registered G address as Zeta. Of the 500 issued shares in Kotor 499 are owned by Boka, which as I have indicated owns 499 of the 500 issued shares in Zeta. Kotor and Zeta have the same directors. It is accordingly not disputed that the Kordun is an associated ship, as defined in s 3(7)(a)(iii) of the Act.

The founding affidavit also pointed out that the charterparty concerned H made provision for the resolution of all disputes arising out of it by reference to arbitration in London. To enforce its claim against Zeta, Bocimar, therefore, had the alternative of arbitration in London or legal proceedings in Malta, the forum domicilii.

In regard to the claim itself, Bocimar stated that Intercor had not quantified its claim against Bocimar, but at that stage there was the I possibility of the cargo of coal becoming commercially useless, resulting in a claim of US$2,6m, the estimated value of the cargo. Bocimar further alleged that it had been advised that the claims of the mortgagee banks against the Crna Gora amounted to US$6,42m and that these claims would rank ahead of its claim. It thus feared that, despite the arrest of the Crna Gora, this vessel could not provide sufficient security for its J claim. There

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A was, accordingly, a genuine and reasonable need for further security in respect of its claim. This would be afforded, so it was averred, by the arrest of the Kordun in terms of s 5(3) of the Act.

The application was heard by Scott J, who made an order authorising the arrest of the Kordun for the purpose of providing security in respect of, B inter alia, the claim by Bocimar against the Crna Gora and/or Zeta for payment of, or indemnity for, all amounts payable by Bocimar to Intercor for all costs, damages and other consequences arising from the decision of the Government of the Netherlands not to permit the Crna Gora to enter Dutch ports for the purpose of discharging Intercor's cargo, together with interest and costs. It was further ordered that the Kordun be released C from arrest on security being furnished for any amount which the Crna Gora and/or Zeta might be ordered to pay to Bocimar by either a competent court in Malta or by any competent arbitration tribunal in London; and that any security furnished to Bocimar in respect of the latter's claims against D the Crna Gora and/or Zeta should, pending the outcome of proceedings in Malta or London, be held as security for any judgment obtained by Bocimar in such proceedings.

This order was duly served and the Kordun arrested. There has been no security furnished in order to obtain the release of the Kordun from arrest and as at the date of the hearing of the appeal she was still lying E inactive at Saldanha Bay, at very considerable cost to her owners.

On 15 March 1993 Kotor filed an application, citing Bocimar as the respondent, in which it claimed an order setting aside the arrest of the Kordun and releasing the vessel from arrest, together with certain alternative relief which need not be detailed. The application, which prompted the filing of fairly voluminous affidavits, was eventually heard F by Scott J on 19 May 1993 and three subsequent Court days. On 28 May the learned Judge gave judgment and ordered the setting aside of the order of arrest and the release of the vessel, with costs. Bocimar appealed to this Court, with the leave of Scott J.

It is not in dispute that, although Kotor was the applicant in the G ...