MV Gladiator Samsun Corporation t/a Samsun Line Corporation v Silver Cape Shipping Ltd, Malta

• Jurisdiction: South Africa
• Judge: M D Southwood AJ
• Judgment Date: 14 September 2004
• Citation: 2007 (2) SA 401 (D)
• Docket Number: A234/2003
• Hearing Date: 20 May 2004
• Counsel: G Lopes SC for the applicant. D J Shaw QC for the respondent.
• Court: Durban and Coast Local Division

Southwood AJ:

Applicant is a Korean company. Respondent is a Maltese company. Neither is an incola of South Africa, and neither claims that the other owns property in South Africa.

By a time charter dated 22 January 2002 'to commence before 1 February 2002', applicant time chartered respondent's vessel, the Gladiator. C

It is common cause that on 12 December 2002, during the time charter, the Gladiator berthed in the port of El Dekheila, Egypt. In bad weather the stern of the vessel ranged against the quay wall and knocked fenders off the quay wall onto the sea bed. The vessel was also damaged. On 23 December 2002 she sailed for Piraeus for D repairs. After she had been repaired she returned at a later date to the same position or to a point equivalent thereto.

There is an arbitration clause in the time charter. In April 2003 respondent instituted arbitration proceedings against applicant in London under the arbitration clause. It claimed relief arising out of E the consequences of the incident at El Dekheila. Applicant has defended respondent's claim and made a counterclaim based on the consequences of this incident and another incident at Port Cartier, Canada.

On 21 December 2003 applicant applied to this Court urgently. Broadly stated, it averred that respondent is a one ship company and that its ship, the Gladiator, would arrive at Richards F Bay at 10:00 on Sunday 21 December 2003. It referred to the arbitration and said it had counterclaimed for two amounts.

The first amount is a refund of US$152 462,48 for hire charges paid and bunkers consumed while the Gladiator was off hire.

The second amount is US$223 685 for damages arising from a refused request to respondent to approve the breaking of the Institute G Warranty Limits under clause 36 of the time charter for the vessel to load a cargo of iron ore at Port Cartier, Canada, on 5 March 2003. It stated that respondent unreasonably refused that request, giving the reason that 'due to weather cond (ice situation)' it was unable to firm fix the vessel for her intended employment, but instead entered H into an alternative charterparty reasonably and in mitigation of its losses; that respondent has no other assets against which execution can be levied if applicant is successful with its counterclaim in the arbitration; and that its requests in London for security have been ignored.

On these averments applicant applied ex parte for an order authorising the attachment of the Gladiator for the purposes I of providing security for its counterclaim and costs, and ancillary relief. This order (omitting para 5, which regulated service) was granted on 21 December 2003 in the following form:

'It is ordered: J

Southwood AJ

1.

That the Sheriff for the District of Richards Bay be and is hereby authorised and directed to arrest the MV Gladiator, A the said arrest being for the purposes of providing security to the applicant in respect of counterclaims made by the applicant in arbitration proceedings in London in the sums of US$376 147,48 in respect of capital, US$42 134,12 in respect of interest, £50 000 in respect of costs of the counterclaims in the London arbitration proceedings already instituted by the respondent and an amount to B be fixed by the Registrar in respect of costs in these proceedings, which claims arise out of a charterparty dated 22 January 2002 in respect of the MV Gladiator.

2.

That in terms of s 5(2)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983, this order and any arrest effected in terms hereof be subject to the condition that the vessel be released from the said arrest either with the consent of the applicant C or on respondent depositing security with the Registrar for the applicant's claim.

3.

That the respondent be and is hereby granted leave to apply for this order and any arrest effected in terms hereof to be set aside.

4.

That any such application brought after security has been furnished to the applicant for the release of the vessel from arrest shall, together with the affidavit founding such application, be filed D at Court and served on the applicant's attorneys within 20 days of the provision to applicant of the said security or within such extended period as this Court may on good cause shown allow.

5.

. . .

6.

That any costs be paid by the respondent.' E

The Gladiator was attached. On behalf of respondent, the North of England Protecting and Indemnity Association Ltd provided, through its agent Shepstone & Wylie in Durban, a guarantee to the applicant, and the vessel was released. The guarantee is in the following terms:

'Re: Security for counterclaims by Samsun Corp trading as Samsun Line Corporation (the claimant) in arbitration proceedings in London F against Silvercape Shipping (the owners) - said to be for US$376 147,48 plus interest and costs.

Whereas you have caused the MV Gladiator (the vessel) to be arrested in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 by order of the High Court of South Africa, Durban and Coast Local Division (in the exercise of its admiralty G jurisdiction) under case No A234/2003 for security for the claimants counterclaims in the abovementioned arbitration proceedings.

Now therefore in consideration of you releasing the vessel from arrest, and refraining hereafter from rearresting the said vessel or any other vessel or asset in the same or associated ownership, management or control in respect of the abovementioned counterclaims H otherwise than for the purpose of execution after an award or judgment has been obtained, we being duly instructed and authorised by The North of England Protecting & Indemnity Association Ltd (the club) and acting on its behalf and as agents only, undertake that on your first written demand the club will make payment to you of any sum or sums:

1.

Which may be agreed in terms of a written deed of settlement between you on the one hand and the owners and the club on the other, I to be due to you in respect of the counterclaims; or

2.

for which the owners are found to be liable in terms of a final award made in the said arbitration proceedings or any final appeal therefrom.

Provided always that the total liability of the club in terms of this letter of undertaking shall, at no time exceed the sum of US$376 147,48 in respect of J

Southwood AJ

the capital claim; security for interest in the sum of US$42 134,12 and costs in the sum of £50 000 as taxed A or agreed.

Payment of any amount due in terms of this letter of undertaking shall be effected by the club within 14 days of receipt by us at the abovementioned address of a written demand, addressed to us and enclosing this undertaking together with a copy of the written deed of settlement or final unappealable arbitration award or judgment, as the case may be. B

The club does hereby submit to the jurisdiction of the High Court of South Africa, Durban and Coast Local Division (in the exercise of its admiralty jurisdiction) for any claim on this letter of undertaking and chooses as an address for service of any process for that purpose, the offices of Shepstone & Wylie, 35 Aliwal Street, Scotswood, Durban 4001.

This letter of undertaking is furnished without admission of liability and without prejudice to the rights and contentions of the C owners of the vessel. We confirm that nothing contained in this letter of undertaking shall derogate from the rights of either party to seek such relief as may be available to them in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983 as amended.

In the event of the counterclaims being withdrawn, or of the arbitration proceedings being decided in favour of the owners of the vessel after all appeal procedures, if any, have been finalised, this D undertaking shall be null and void ab initio and of no force and effect and shall be returned to us. This letter of undertaking shall be governed by South African law.'

Applicant applied for and was granted the order for the arrest of the Gladiator under s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) to provide security E for applicant's counterclaim which was then subject to arbitration in London.

This Court exercising its admiralty jurisdiction has other powers to make orders for security, and to impose conditions on and order variations of a security arrest. These are found in paras (b), (c) and (d) of s 5(2) of the Act. Shorn of irrelevant words, these read: F

'A Court may in the exercise of its admiralty jurisdiction -

. . .

(b)

order any person to give security for costs or for any claim;

(c)

order that any arrest or attachment made . . . or that anything done or to be done in terms of this Act or any order of the court be subject to such conditions as to the court appears just, G whether as to the furnishing of security or the liability for costs, expenses, loss or damage caused or likely to be caused, or otherwise;

(d)

notwithstanding the provisions of s 3(8), order that, in addition to property already arrested or attached, further property be arrested or attached in order to provide additional security for any claim, and order that any security given be increased, H reduced or discharged, subject to such conditions as to the court appears just; . . .'

The Supreme Court of Appeal has decided that an application for a security arrest under s 5(3) of the Act renders an applicant amenable to the Court's powers under s 5(2)(b) of the Act to require it to lodge counter security; under s 5(2)(c) to I impose appropriate conditions for the enforcement of that order; and under s 5(2)(d) to increase, reduce or discharge security. (See The Merak S: Sea Melody Enterprises SA v Bulktrans (Europe) Corporation 2002 (4) SA 273 (SCA) at 280E - G (which I shall...