Katagum Wholesale Commodities Co Ltd v the MV Paz

• Jurisdiction: South Africa
• Judge: Kriek J, Didcott J and Friedman J
• Judgment Date: 23 March 1984
• Citation: 1984 (3) SA 261 (N)
• Hearing Date: 20 February 1984
• Court: Natal Provincial Division

A Friedman J:

This matter concerns the policy which should govern the Court in exercising the powers conferred upon it by s 5 (3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 and the circumstances in which as a general rule such powers should be exercised. The Act, which came into operation on 1 November 1983, contains a number of sections apart from s 5 (3) with novel, unusual and at times far-reaching provisions with which B our Courts will be required, at some time in the future, to deal. Section 5 (3) reads as follows:

"(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 C or proceedings 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)

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

The section, in effect, empowers a Court to arrest, at the instance of a foreigner, a 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 E law. And those are, in short, the facts of the present application.

The applicant is a Nigerian company. The ship it seeks to arrest is registered in Panama and presumably owned by a Panamanian company. The applicant's claim against the ship relates to loss of or damage to cargo conveyed from Antwerp to F Lagos almost five years ago. Litigation over the claim is pending is Hong Kong, where an action in rem has been started in the High Court. Because the ship was due to call at Durban in order to refuel, the applicant applied as a matter of urgency to DIDCOTT J in Chambers for an order for the arrest of the ship so as to provide it with security for the judgment which it hopes it will one day be awarded in Hong Kong. In so G doing, the applicant sought to invoke and relied upon the provisions of s 5 (3). DIDCOTT J considered that the application raised an important question of judicial policy, namely whether or not this Court should, as he put it, allow itself to be "transformed into some sort of judicial Liberia or H Panama", to be "turned into a Court of convenience for the wandering litigants of the world". He therefore referred the application to the Full Bench, for determination by it, and at the same time granted the applicant the relief it sought but only as an interim measure pending the Full Court's decision.

Before us, Mr Shaw, who was to a large extent the author of the Admiralty Jurisdiction Regulation Act, appeared on behalf of I the applicant and we have derived much assistance from his interesting and comprehensive argument, although he, at the end of his address, warned us that he may

"have merely indulged that enthusiastic passion of a parent for his child however malformed it may be".

Friedman J

A Section 5 (3) of the Act clearly gives a Court a discretion whether or not to exercise the powers therein conferred upon it. Equally clearly the discretion is an unfettered judicial discretion which falls to be exercised upon a consideration of all relevant facts and circumstances. To endeavour to categorise or catalogue those facts and circumstances, as has B on occasions been done in the past when questions of discretion were involved, is not only undesirable but is fraught with obvious dangers. That does not mean, however, that general guidelines as to the Court's approach to the powers conferred upon it by s 5 (3) should not, if possible, be sought and stated. And the most helpful starting point, in an effort C to determine what the Court's approach ought to be, seems to me to lie in answering the question whether, where proceedings have no connection with the Republic other than the passing presence of a ship at one of its ports, the Court ought prima facie to exercise the powers conferred upon it by s 5 (3), or whether it ought prima facie to decline to do so; or to put the question a little differently, should the Court agree D to act in terms of s 5 (3) unless the facts and circumstances of a particular case are such as to persuade it not do so, or should the Court decline so to act unless the facts and circumstances of a particular case are such as to persuade it to do so?

Prior to the coming into effect of the Admiralty Jurisdiction E Regulation Act, the jurisdiction of South African Courts in Admiralty cases was governed by the Admiralty jurisdiction of the English High Court as it existed in 1890. In 1890 (and indeed prior to 1982) the English Courts did not have any power similar to that conferred by s 5 (3). In the case of The Cap Bon [1967e 1 Lloyd's Rep 543, and in the case of The Golden F Trader: Danemar Scheepvaart Maatschappij BV v Owners of MV Golden Trader [1974e 2 All ER 686 (QB), BRANDON J that the Court had no jurisdiction to arrest a ship, or keep her under arrest, in order to provide a plaintiff with security for payment of an arbitration award, as distinct from payment of a judgment or settlement of the action in rem. Subsequently, in G the case of The Rena K [1979e 1 All ER 397 (QB), BRANDON J had cause to lament the conclusion to which he had been driven in the earlier two cases. He had this to say at 413:

"The conclusion on the jurisdiction point which I reached in The Cap Bon and followed in The Golden Trader was, from the point of view of what I believe that the law on the matter H ought to be, as distinct from what I felt obliged to hold that it was, an unsatisfactory conclusion.

I say this for two reasons. The first reason is that I think that, quite apart from any international convention relating to the matter to which the United Kingdom is a party, the Court should have power, when it grants a stay, on the ground that the dispute should be decided by another tribunal, of an action in rem in which security has been obtained, to retain such security to satisfy any judgment or award of the other I tribunal. When the grant of a stay is discretionary, as in domestic arbitration cases, foreign jurisdiction clauses cases and vexation cases, the Court can get round the lack of such power, and has in practice got round it, by using the alternative security method. It would, however, be more satisfactory, in my view, even in those cases, to...