Euromarine International of Mauren v the Ship Berg and Others

• Jurisdiction: South Africa
• Judge: Milne JP, Leon J and Van Heerden J
• Judgment Date: 31 July 1984
• Citation: 1984 (4) SA 647 (N)
• Hearing Date: 13 June 1984

Milne JP:

This is, on the face of it, rather a remarkable A proceeding. The applicant, which is a foreign company, seeks an order that the Berg, a vessel owned by a local company, be arrested, and that it be held as security for the claim of the applicant against another foreign company in respect of damages allegedly suffered by the applicant, arising out of the alleged breach of a time charterparty of another vessel, which claim is subject to arbitration proceedings in London.

B The application was brought on 8 December 1983, and it appears from the replying affidavit of the applicant that on that date the third respondent furnished security to obtain the release of the vessel Berg in the form of an undertaking by the third respondent. The third respondent nevertheless claims that C the applicant was not entitled to the relief sought, and by reason of the complexity and importance of the issues involved, this matter was referred for decision to the Full Court.

The applicant claims to be entitled to the relief sought by virtue of the provisions of the Admiralty Jurisdiction Regulation Act 105 of 1983, which I shall call the Act. It came into operation on 1 November 1983 and, as FRIEDMAN J said in D the as yet unreported decision of this Division in Katagum Wholesale Commodities Co Ltd v The MV Paz in which judgment was delivered on 23 March 1984, [*] the Act contains a number of sections "with novel, unusual and at times far-reaching provisions...".

The applicant relies upon the provisions of s 5 (3) of the Act. E This section reads as follows:

"(3) (a)

A Court may in the exercise of its admiralty jurisdiction order the arrest of any property if -

(i)

the person seeking the arrest has a claim enforceable by an action in rem against the property concerned or which would be so enforceable but for arbitration or proceedings F contemplated in subpara (ii);

(ii)

the claim is or may be the 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.

(b)

Unless the Court orders otherwise any property so arrested shall be deemed to be property arrested in an action in terms of this Act.

(c)

G A Court may order that any security for or the proceeds of any such property shall be held as security for any such claim or pending the outcome of the arbitration or proceedings."

As pointed out by FRIEDMAN J in The Paz (supra), the section, in effect,

"empowers a Court to arrest at the instance of a foreigner, a H ship owned by a foreigner, as security for a claim pending in some foreign country which is based on a foreign cause of action and is subject to a foreign law".

It was further held, by a majority, that

"... a Court should not be averse to exercising the powers conferred upon it by s 5 (3), but should rather be disposed to exercise them unless it is satisfied upon the facts of a particular case that it ought not to do so".

It was also held that it would not be enough to justify the I grant of an application in terms of s 5 (3) to make sufficient allegations to bring the case within the ambit of that section, and certain requirements were laid down as to matters upon which the applicant would have to

Milne JP

A satisfy the Court, including a prima facie prospect of success in the main proceedings, and averments which explain why the applicant needs the assistance of a South African Court. The third respondent in this application opposes the grant of the order, inter alia upon the grounds that the launching affidavit was defective because it did not deal adequately, if at all, with these matters. The application was B of course launched before judgment was delivered in The Paz, but be that as it may, I think this criticism is well-founded. Mr Gordon, who appeared for the third respondent, however, said that this point was raised purely as a "parasitic" point, in the sense that he preferred the Court not to decide the application upon this point solely, but also in C relation to the two important points involving the interpretation of the Act upon which he submitted that the application should be dismissed. Quite apart from Mr Gordon's wishes in this regard, while, as I have said, it seems to me that the criticism of the baldness of the launching affidavit is well-founded and, ordinarily speaking, an applicant is required to make his case in the launching affidavits, no D application was made to strike out the material in the replying affidavits, which sought to remedy the defect, nor was any application made for leave to file a fourth set of affidavits. Mr Gordon did not seek to argue that the applicant in the replying affidavits had not adequately explained why it needs the assistance of a South African Court, and indeed I am E satisfied that the material in the replying affidavits establishes at least prima facie that the applicant does need such assistance. Provided therefore, that the applicant has brought itself within the ambit of s 5 (3), I am satisfied that the Court should exercise its discretion to grant the relief sought in terms of that section.

The applicant has its head office and carries on business at F Mauren, Liechtenstein. The first respondent is the ship Berg. The second respondent is a Panamanian company and the third respondent is a South African company. The applicant claims that on 16 August 1978, it entered into a time charterparty with the second respondent in respect of the vessel Pericles G which was then and at all relevant times thereafter owned by the second respondent. The applicant alleges that as at 24 December 1978, and during the term of the charterparty, the Pericles was defective and not seaworthy as a result of want of due diligence on the part of second respondent, in consequence of which there was an explosion on board the Pericles in Durban harbour on 24 December 1978, and that the applicant suffered H damages in a substantial sum. On 11 November 1981, the applicant commenced arbitration proceedings against the second respondent in London, claiming the said damages, together with interest and costs. The pleadings have closed in the arbitration proceedings, but the hearing of the arbitration has not yet commenced, and is apparently not due to commence until I February 1985.

The applicant alleges that the Berg is owned by the third respondent, and that at the time its claim arose, the shares in the second respondent were owned or controlled by the third respondent and that the shares in the third respondent are controlled by the same persons who controlled the shares in the second respondent when the said

Milne JP

claim arose. The applicant accordingly alleges that the Berg is A an "associated ship" with regard to the Pericles in terms of s 3 (7) of the Act.

It is admitted in the third respondent's heads of argument that the Berg is, and at all material times was, an associated ship with regard to the Pericles, that the applicant's claim against the Pericles is a maritime claim as defined in s 1 of the Act, and that such claim "may have been enforceable by an action in rem against the Pericles".

B I proceed now to deal with the two main points raised by the third respondent upon which it is submitted that the application must fail. It is clear that for the application to succeed, the applicant must establish that his claim falls within the provisions of s 5 (3) of the Act. For the sake of convenience I set out its terms again:

"(3) (a)

C A Court may in the exercise of its admiralty jurisdiction order the arrest of any property if -

(i)

the person seeking the arrest has a claim enforceable by an action in rem against the property concerned or which would be so enforceable but for an arbitration or proceedings contemplated in subpara (ii);

(ii)

D the claim is or may be the 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.

(b)

Unless the Court orders otherwise any property so arrested shall be deemed to be property arrested in an action in terms of this Act.

(c)

E A Court may order that any security for or the proceeds of any such property shall be held as security for any such claim or pending the outcome of the arbitration or proceedings."

It was common cause in argument that this subsection must be read as if the word "and" appeared between subpara (a) (i) and subpara (a) (ii). It was submitted on behalf of the third F respondent that the applicant does not have "... a claim enforceable by an action in rem..." against the Berg within the meaning of this subsection. The applicant's contention that the applicant has a claim enforceable by an action in rem against the Berg is based on s 3 (6) of the Act. This subsection provides that the action in rem may be brought by G the arrest of an associated ship instead of the ship in respect of which the maritime claim arose. On behalf of the respondents, it is submitted that

"what the Act has achieved is to permit the institution of the action in rem against the Pericles by the arrest of the Berg. The right to bring such proceedings by way of the arrest of the Berg as an associated ship is not in itself an action in rem, it is merely an available alternative to the arrest of the H Pericles in circumstances where arrest is required in terms of the Act in order to enable the Act to be instituted."

The point is summarised as follows:

"In other words, in order to commence proceedings, an applicant may arrest an associated ship, but the maritime claim and the action in rem in terms of which it is sought to be enforced is I still against the ship (and therefore the owners of it) against or in respect of which the maritime claim arose."

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