CH Offshore Ltd v PDV Marina SA

• Jurisdiction: South Africa
• Judge: Ploos Van Amstel J
• Judgment Date: 05 November 2013
• Docket Number: A113/2013
• Court: KwaZulu-Natal High Court, Durban
• Hearing Date: 18 October 2013
• Citation: 2013 JDR 2513 (KZD)

Ploos van Amstel J:

[1]

This is an application for the reconsideration of an order made in terms of section 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the AJRA) for the arrest of certain rights in a ship. The respondents are in terms of Uniform Rule 6(12)(c) entitled to have the order reconsidered as it was made pursuant to an urgent application and in their absence.

[2]

It is the usual practice for applications for security arrests to be brought ex parte. See Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A) at 833G. In an application for a reconsideration of the order the applicant who obtained the order for the arrest retains the onus of satisfying the court that it was entitled to the order. This is also the case where an application is brought to set the arrest aside. See MV Orient Stride: Asiatic Shipping Services Inc v Elgina Marine Co Ltd 2009 (1) SA 246 (SCA) para 5.

[3]

The order authorised and directed the arrest of the second respondent for the purpose of providing security to the applicant for its claims against the first respondent for payment of hire and other charges arising out of the charter of vessels by the first and fourth respondents, which claims the applicant has advanced or intends to advance in arbitration and High Court proceedings in London.

[4]

The first respondent, PDV Marina SA, is the owner of the property which was arrested, with the exception of the bunkers, which have been released. It is a company based in Venezuela and is a wholly-owned subsidiary and the shipping arm of Petroleos de Venezuela SA, which is Venezuela's state oil company. I shall refer to the first respondent as PDVM.

2013 JDR 2513 p3

Ploos van Amstel J

[5]

The second respondent is described in the founding affidavit as 'the right, title and interest of PDV Marina SA in and to the MT Rio Caroni, including all bunkers, lubricating and other oils, spare parts, provisions and other equipment'.

[6]

The MT Rio Caroni is a crude oil tanker which is lying at anchor outside Durban harbour. The right which the applicant sought to arrest is said in the founding affidavit to arise from a bareboat or demise charter-party over the vessel. The applicant contends that these are real rights which are located wherever the vessel is, and therefore susceptible to arrest by this court when the vessel is here. PDVM's contention is that its rights are contractual and not located within the jurisdiction of this court. I shall return to these submissions in due course.

[7]

The background is briefly as follows. The applicant is CH Offshore Limited, a company in Singapore which provides offshore support services. In January 2008 PDVM chartered two vessels from the applicant. They were both anchor-handling tugs and supply vessels. Both charters were for a period of four years and in each case the daily rate was USD 47 600. In March 2008, with the agreement of the applicant, PDVM assigned the charter-parties to the fourth respondent, a company in Venezuela, on the basis that PDVM would remain liable, with the fourth respondent, for payment of the hire charges.

[8]

Within a few months after delivery of the tugs the fourth respondent started to default with the payment of the hire charges. They were either paid late or not at all. When the tugs were eventually redelivered to the applicant in January 2013 its claim for arrear hire, additional hire and demobilisation charges exceeded USD 50 million.

[9]

The claim was not paid and the applicant instituted proceedings in London against PDVM and the fourth respondent. This is the claim in respect of which it sought security by the arrest of the second respondent.

[10]

Section 5(3)(a) of the AJRA provides as follows:

'A court may in the exercise of its admiralty jurisdiction order the arrest of any property for the purpose of providing security for a claim which is or may be the

2013 JDR 2513 p4

Ploos van Amstel J

subject of an arbitration or any proceedings contemplated, pending or proceeding, either in the Republic or elsewhere, and whether or not it is subject to the law of the Republic, if the person seeking the arrest has a claim enforceable by an action in personam against the owner of the property concerned or an action in rem against such property or which would be so enforceable but for any such arbitration or proceedings.'

[11]

It was not contended before me that the arrest of the movables on board the vessel was not in order, save for the bunkers, which are owned by the current time-charterer of the vessel and which have been released by agreement. The application for a reconsideration of the arrest relates only to PDVM's interest in the vessel and I will make no further reference to the movables.

[12]

Although it is customary to refer to a party's 'right, title and interest' in something, we are really concerned with rights. Harms JA said in MV Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd 2000 (4) SA 746 (SCA) at 753B, that the phrase 'right, title and interest' can only refer to rights because the law does not protect titles and interests that do not translate into 'legal' rights.

[13]

PDVM does not own the vessel. It is the charterer of the vessel in terms of a bareboat charter-party which incorporates a contract of purchase and sale on a hire-purchase basis. What needs to be considered is the nature of its rights in and to the vessel, where these rights are situated and whether they are susceptible to arrest for the purposes of providing security. I should mention that although the second respondent is described in the founding affidavit as 'the right, title and interest of PDVM in and to the MT Rio Caroni' it is said elsewhere in the affidavit that the application for the arrest relates to PDVM's right, title and interest 'in the bareboat charter of the vessel and in and to the vessel itself by virtue of its physical and legal possession thereof…'. It was not contended by counsel for the applicant that the application for the arrest related to the contractual rights of PDVM in the charter-party. The matter was argued on the basis that those contractual rights are not located here and that what was arrested were PDVM's rights in and to the vessel, which counsel referred to as possessory rights.

2013 JDR 2513 p5

Ploos van Amstel J

[14]

Both counsel referred in argument to The MV Snow Delta. In that case an order was obtained, on an ex parte basis, for the attachment of the respondent's possessory right, title and interest in the vessel, including any possessory right which may arise from its possession and control of the vessel in terms of a demise charter-party. It later appeared that the respondent had chartered the vessel in terms of a time charter-party and not a demise charter-party, with the result that on the return day the rule nisi was discharged. On appeal the Full Court overturned the judgment and confirmed the rule nisi in other terms. What was then attached was 'all of [SSL's] right to and interest in the use and employment of the MV Snow Delta… which [SSL] might have by virtue of a time charter-party concluded between [SSL] and the said vessel's owner…'

[15]

On appeal to the Supreme Court of Appeal the order of the Full Court was set aside and the order which discharged the rule was reinstated. The basis for the decision was that the Full Court had failed to distinguish between the personal right against the debtor and the vessel which was the subject-matter of the agreement. Harms JA said the charterer's rights in terms of the time charter-party were personal rights and their situs was where the debtor (the disponent owner) resided. They were therefore not within the jurisdiction of the South African courts and could not be attached here.

[16]

I have to determine whether the position is different in the case of a demise charter-party, where the charterer has control and possession of the vessel. Some of the remarks in the MV Snow Delta suggest that the position may be different. Harms JA said the following at page 750E-F:

'This appeal is concerned essentially with the question whether the rights of a charterer (the hirer) of a ship in terms of a time charter-party can be said to be "property" which is located wherever the ship may be from time to time. A time charter-party does not entitle the charterer to the possession and control of the ship; in other words, the charterer has no real rights in relation to the ship but only contractual rights against the owner.'

2013 JDR 2513 p6

Ploos van Amstel J

What was attached at the ex parte hearing was 'all of [SSL's] possessory right, title and interest in the MV Snow Delta (the vessel) currently lying alongside at the port of Cape Town, including any possessory right which may arise from [SSL's] possession and control of the vessel in terms of a demise charter-party concluded between [SSL] and the vessel's owners'.

At 750 I-J Harms JA said:

'It will be immediately apparent to the reader that the order related to the attachment of real rights flowing from a demise charter-party (the charterer under a demise charter-party being regarded as the owner of the ship during the term of the charter) and not from contractual rights flowing from a time charter-party. The reason for this was that at the time of the launch of the application DTL believed that SSL had possession of the vessel in terms of a demise charter-party'.

[17]

The nature of the demise charterer's rights and...