Euromarine International of Mauren v the Ship Berg and Others

• Jurisdiction: South Africa
• Judge: Corbett JA, Miller JA, Hoexter JA, Grosskopf JA and Galgut AJA
• Judgment Date: 27 February 1986
• Citation: 1986 (2) SA 700 (A)
• Hearing Date: 11 November 1985
• Court: Appellate Division

Miller, JA.:

What is at issue in this appeal is whether certain provisions of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) operate with retrospective effect in the sense J of being applicable in respect of maritime claims which came into being prior to the commencement

Miller JA

of the Act. The question arose for decision when the A appellant, a foreign company carrying on business and having its head office in Lichtenstein, moved the Durban and Coast Local Division of the Supreme Court of South Africa, in the exercise of its admiralty jurisdiction, for an order that a vessel called the Berg (the first respondent), owned by a B Durban company (the third respondent), be arrested and thereafter be held as securityfor a claim by the appellant against the second respondent, a Panamanian company.

The appellant had on 16 August 1978 entered into a time charter party with the second respondent in respect of a ship named Pericles, owned by the second respondent. It was alleged that C as a result of the negligence of the second respondent the ship, the Pericles, became unseaworthy and by reason thereof came to grief in the Durban harbour when it suffered an explosion on 24 December 1978, during the subsistence of the charter party. As a consequence of this disaster the appellant suffered considerable damage and loss in respect of which it D commenced arbitration proceedings in London, which were still pending at the time of the launching of the application for the arrest of the Berg. The damages suffered by the appellant as a result of the explosion on board the Pericles represented the claim for the security of which the appellant sought to have the Berg arrested.

Neither the third respondent nor its vessel, the Berg, was in E any way responsible for or the cause of the explosion which damaged the Pericles, or the loss sustained by the appellant. It appeared, however, that at the time the claim arose, which was 24 December 1978, the shares in the second respondent were owned or controlled by the third respondent and that the shares F in the third respondent are controlled by the persons who controlled the shares in the second respondent at the time of the comming into existence of the claim which was by definition in s 1 of the Act a "maritime claim", in that it related to a "charter party" such as is referred to in s 1 (1) (ii) (i). In these circumstances it was alleged by the appellant that the Berg was an "associated ship" with regard to the Pericles in G terms of s 3 (7) of the Act, which defines an associated ship against which, in terms of s 3 (6), an action in rem may be brought by the arrest of such associated ship instead of the ship in respect of which the maritime claim arose. I reproduce the terms of s 3 (6) and (7):

"3 (6)

Subject to the provisions of ss (9) an action in rem, other than such an action in respect of a maritime H claim contemplated in para (a), (b) or (c) of the definition of 'maritime claim', may be brought by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose.

(7) (a)

For the purposes of ss (6) an associated ship means a ship, other than the ship in respect of which the maritime claim arose -

(i)

owned by the person who was the I owner of the ship concerned at the time when the maritime claim arose; or

(ii)

owned by a company in which the shares, when the maritime claim arose, were controlled or owned by a person who then controlled or owned the shares in the company which owned the ship concerned.

(b)

for the purposes (a) -

(i)

ships shall be deemed to be owned by the same persons if all the shares in the ships are owned by J the same persons;

Miller JA

(ii)

A a person shall be deemed to control a company if he has power, directly or indirectly, to control the company.

(c)

If a charterer or subcharterer of a ship by demise, and not the owner thereof, is alleged to be liable in respect of a maritime claim, the charterer or subcharterer, as the case may be, shall for the purposes of ss (6) and this subsection be deemed to be the owner."

B Section 5 (3) of the Act contains the provision by which, so the appellant alleged, the Court was empowered to order the arrest of the Berg at the instance of the appellant because it had a maritime claim enforceable by an action in rem, or which would be so enforceable, but for a pending arbitration, against the associated ship (the Berg) instead of the "guilty" ship (the Pericles).

C Section 5 (3) (a) and (b) are in these terms:

"5 (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 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."

E According to the judgment a quo 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)".

The appellant's application for an order arresting the Berg was referred for decision to the Full Court of the Natal Provincial F Division. Before that Court (MILNE JP, LEON and VAN HEERDEN JJ) the third respondent raised two main defences to the appellant's claims. (Other possible defences of a technical nature were not relied on by the respondent in the Court below nor in this Court and they may be ignored.)

The first of the two defences was unanimously rejected by the G Full Court; the second was upheld by the majority of the Court (MILNE JP, with whom VAN HEERDEN J concurred). LEON J dissented. In the result the application was refused. The case is reported under the name Euromarine International of Mauren v The Ship Berg and Others at 1984 (4) SA 647 (N). Leave to appeal was granted by the Court a quo.

H The respondent's summary of the first of the defences is quoted by MILNE JP at 651G - I. That passage in the...