MV Alam Tenggiri Golden Seabird Maritime Inc and Another v Alam Tenggiri SDN BHD and Another

• Jurisdiction: South Africa
• Judge: Hefer ACJ, Scott JA, Mpati JA, Mthiyane JA and Conradie AJA
• Judgment Date: 25 September 2001
• Citation: 2001 (4) SA 1329 (SCA)
• Docket Number: 159/2000
• Hearing Date: 03 September 2001
• Counsel: M J D Wallis SC (with S R Mullins) for the appellants. D A Gordon SC (with A M Stewart) for the respondents.
• Court: Supreme Court of Appeal

Conradie AJA: A

[1] On 28 August 1997 the first and second appellant each bought from the second respondent a vessel then in the course of construction at the Onomichi dockyard in Japan. The one was hull 425. It later became known as the MT Theano. The other was hull 426. It became the MT Ludovica. B

[2] According to the appellants, the parties intended it to be a term of each agreement that the vessel would be suitable for carrying methyl tert-butyl ether (MTBE) in all their cargo tanks. In the alternative, the appellants alleged that it had been represented by the second respondent that the vessels would be so suitable. MTBE is a C corrosive chemical, which can be transported only in specially coated tanks fitted with specially constructed valves. The second respondent's attitude was that the contract specification provided, and was intended to provide, for MTBE carrying capacity in only approximately 25% of the tanks. It denied the alleged misrepresentation. D

[3] The disputes were to be arbitrated in London. In order to obtain security for their claims in the arbitration the appellants on 3 November 1998 arrested a ship belonging to the first respondent, the MV Alam Tenggiri under s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). Two E letters of undertaking from a P & I Club, the Assuranceforeningen Skuld (the Skuld letters), were tendered in order to secure the release of the ship. No authorised official of the appellants could be reached in time to grant their attorneys authority to accept the Skuld letters. The respondents thereupon applied for and were granted an order by Nicholson J: F

'1.

That the respondents accept the two letters of undertaking issued by Skuld . . . as security for the respondents' claims against the second applicant, which claims are to be enforced by the respondents against the first applicant in London in arbitration proceedings. G

2.

That the aforesaid letters of undertaking are to be substituted with bank guarantees from a first class South African or London Bank in precisely the same format and for the same amounts within a period of 30 days calculated from the date of this order. . . .'

Once the Skuld letters had been accepted the Alam Tenggiri was released from arrest. H

[4] Soon thereafter the respondents sought before Hurt J an order setting aside the arrest of the Alam Tenggiri and directing that the security given to free the vessel from the arrest be set aside. The learned Judge decided that the appellants had failed to I establish that the vessel was an associated vessel, liable to be arrested in the place of the Theano or the Ludovica. He accordingly set aside the arrest and ordered the appellants to pay the costs. He nevertheless declined to order the return of the banker's guarantees which had by this time been furnished by the Bank of Nova Scotia (the Scotia Bank guarantees). The Scotia Bank guarantees J

Conradie AJA

were, despite what Nicholson J had ordered, not in the same terms as the Skuld letters. For one thing, the parties A conferred jurisdiction on the High Court of Justice in London. The Judge a quo accordingly held that he had no jurisdiction to order the return of the Scotia Bank guarantees. This part of the order is not challenged on appeal.

[5] The respondents next sought an order in the High Court of Justice in London, declaring that the setting aside of the arrest B order had resulted in the Scotia Bank guarantees falling away.

[6] The appellants' attempt to secure a reversal of the order setting aside the arrest was aimed at protecting the integrity of the Scotia Bank guarantees. One way of doing this would be to question the C correctness of the decision of Hurt J that the appellants had failed to prove that the Alam Tenggiri was an associated ship of the Theano and the Ludovica. This is indeed one of the appellants' arguments. There is, however, another that requires attention first. D

[7] Mr Wallis, for the appellants, argued that the circumstances in this case are such that the order for the arrest of the Alam Tenggiri under s 5(3)(a) of the Act lapsed when the ship was released from arrest; at the time the respondents brought their application before the Court a quo there was no extant arrest order which could have been set aside; accordingly, the...