The Asphalt Venture Windrush Intercontinental SA and Another v Uacc Bergshav Tankers As

• Jurisdiction: South Africa
• Judge: Maya DP, Shongwe JA, Wallis JA, Dambuza JA and Makgoka AJA
• Judgment Date: 06 December 2016
• Citation: 2017 (3) SA 1 (SCA)
• Docket Number: 556/2015 [2016] ZASCA 199
• Hearing Date: 08 September 2016
• Counsel: MJ Fitzgerald SC for the appellants (heads of argument prepared by DA Gordon SC) SR Mullins SC for the respondent.
• Court: Supreme Court of Appeal

Maya DP (Shongwe JA, Wallis JA, Dambuza JA and Makgoka AJA concurring):

[1] This appeal is against the refusal of the KwaZulu-Natal Local Division of the High Court, Durban (Exercising Admiralty Jurisdiction) (Olsen J), to set aside the deemed arrest of the second appellant, the MT Asphalt Venture, owned by Bitumen Invest AS (Bitumen), leave to appeal E having been granted by the High Court. The first appellant, Windrush Intercontinental SA (Windrush), is a company duly registered and incorporated in accordance with the laws of Panama, carrying on business in Sharjah in the United Arab Emirates. The respondent is UACC Bergshav Tankers AS (Bergshav), a company duly incorporated F and registered in accordance with the laws of Norway and carrying on business, inter alia, as the registered owner of the MT UACC Eagle in Dubai in the United Arab Emirates.

[2] Windrush was the Asphalt Venture's bareboat charterer in terms of a bareboat charterparty it concluded with Bitumen in May 2008 for the G period 7 May 2008 to 7 November 2015. The bareboat charterparty was part of an adapted sale-and-leaseback arrangement between Concord Worldwide Inc (Concord), Bitumen and Windrush, under which Concord, which was then the vessel's owners, sold the Asphalt Venture to Bitumen and Windrush bareboat chartered it from Bitumen. The charter H was on the Barecon 2001 form for seven and a half years, at the end of which Windrush was obliged to purchase the vessel. [1] Windrush concluded a sub-bareboat charterparty with Concord for the same period. [2]

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Between April and August 2010 Concord, through its technical manager A and crewing agent, OMCI Shipmanagement (Pvt) Ltd (OMCI), entered into employment contracts with 15 crew members, who were citizens of the Republic of India, in order to crew the Asphalt Venture.

[3] On 28 September 2010 Somali pirates, demanding ransom money, hijacked the Asphalt Venture about 100 nautical miles east of Mombasa. B Concord duly informed the relevant insurers of the hijacking, engaged solicitors and retained security advisers to assist in negotiations with the pirates and appointed a negotiator. Seven months later, on 15 April 2011, a ransom of USD 3,4 million was delivered to the pirates in exchange for the release of the vessel and her 15 crew members. C However, after the ransom was delivered, the pirates reneged on their agreement and refused to release all the crew members. Only eight crew members were released with the vessel. Seven (the hostages) were held captive, apparently to be used in negotiations for the release of 120 Somali pirates arrested by the Indian navy who awaited trial in India. On 22 December 2011 the Indian government, in line with its D policy, formally refused to negotiate with the pirates for their release. It was only some years later, between August and December 2014, and after payment of a further ransom, that the pirates finally released the hostages.

[4] On 17 June 2011 Windrush withdrew the Asphalt Venture from the E sub-bareboat charterparty with Concord, thereby terminating the sub-bareboat charterparty. This followed Concord's failure to honour its obligations in terms of the sub-bareboat charterparty, due to the vessel being held hostage for about seven months. Concord nonetheless continued to pay to the hostages' families' amounts equivalent to the F hostages' wages until the end of October 2011, six months after the payment of the ransom and the release of the eight crew members.

[5] During the period in which all the crew members were held hostage, namely 28 September 2010 to 15 April 2011, Concord had continued to make payment to the crew in terms of the crew's employment contracts G as if they had remained in force. After the eight crew members were released, Concord paid for their repatriation costs and they were discharged from the vessel. Concord contended that it had paid the further amounts to the hostages' families, although their contracts had terminated, 'on a voluntary, ex gratia basis, in sympathy and on humanitarian grounds and without legal obligation'. But it ceased H effecting payments to the hostages' families when it ran into financial difficulties and no longer had any substantial assets or income.

[6] As a result of Concord discontinuing payment of these amounts, the Indian government and the Norwegian Maritime Officers' Association I demanded that Bitumen, as the Asphalt Venture's registered owners and, so they claimed, the hostages' employer, continue paying the hostages' wages. This was based on the demand by the hostages' families to Bitumen for the continued payment of wages beyond October 2011, as the hostages had not yet been repatriated. In response to that demand Windrush asserted that neither it nor Bitumen was liable for any crew J

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A wages or repatriation costs in respect of the hostages, either before or after October 2011, because neither party had entered into employment contracts with them. This was so, it contended, because the crew contracts were concluded with OMCI, which, as indicated, was contracted to perform this function by Concord.

B [7] Thereafter, on 17 January 2012, the UACC Eagle was arrested in Mumbai, India, by the hostages' families, representing the hostages, as security for their cumulative claim of USD 6 787 440. They sought a decree for payment of the daily wages that the hostages would have earned from November 2011 until they each reached the age of 70 years. C It was alleged in the application papers filed in the High Court of Judicature, Bombay (Admiralty and Vice-Admiralty Jurisdiction) (the Bombay High Court), that the UACC Eagle was arrested because it was in the same beneficial ownership as the Asphalt Venture, that is, a 'sister ship' as a matter of Indian law. Bergshav successfully contested this allegation. It nevertheless entered into a settlement agreement with the D hostages' families, which was approved by the Bombay High Court on 10 February 2012. It did so for practical reasons, to secure the expeditious release of the UACC Eagle from arrest and to avoid possible protracted litigation.

E [8] The basis of the settlement agreement was that the hostages had been employed on the Asphalt Venture over which they claimed a maritime lien for unpaid crew wages recognised in Indian law. [3] To secure the UACC Eagle's release Bergshav undertook, inter alia, to pay into an escrow account (a) the claims for crew wages for the period 1 November 2011 to 29 February 2012; (b) USD 306 000 (an amount equal to ten F months' future crew wages to the end of December 2012); (c) crew wages for the period 1 January 2013 to 31 December 2013, which would be paid as quarterly deposits of USD 91 800 subject to its right to call for arbitration on whether the hostages' employment contracts entitled them to crew wages pending repatriation for this period; and (d) fees and legal costs. In consideration of this undertaking, the hostages' families unconditionally G and irrevocably assigned —

'any claim and/or maritime lien they have or may have in the same priority against the Asphalt Venture interests and any other party whatsoever for the Crew Salary up to the value of the Crew Salary paid and/or secured by this Agreement, and any security rights they hold or H may hold in respect of such claims for Crew Salary, including but not limited to any maritime liens against the Asphalt Venture interests'.

[9] Relying on this assignment, Bergshav commenced an action in rem against the Asphalt Venture in the KwaZulu-Natal Local Division of the High Court, Durban. On 21 September 2012 the vessel was arrested in rem I in the port of Durban. But it was subsequently released against the

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provision of security in the form of a letter of undertaking furnished by A its P & I Club on behalf of Windrush, without admission of liability and without prejudice to the rights and contentions of the owner or the bareboat charterers of the vessel, specifically their right to challenge the arrest of the vessel in respect of the claim or to bring an action for wrongful arrest. Bergshav sued as cessionary of the hostages' claims and B maritime lien and demanded payment of the amounts it had paid to their families. It also sought an order declaring its entitlement against the Asphalt Venture to recover any amounts it still had to pay in terms of the settlement agreement. [4]

[10] The summons and particulars of claim alleged that the hostages C were employees of Bitumen, the Asphalt Venture's owners, alternatively employees of Concord as the Asphalt Venture's sub-bareboat charterer, or further alternatively employees of Windrush, the bareboat charterer. As such, it was alleged, they were and remained entitled to be paid the wages reflected in their contracts of employment during the currency D thereof and following any valid termination thereof, until such time as each of them was repatriated. Crucially it was alleged that any of their claims for unpaid wages were maritime claims as defined in the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Admiralty Act), [5] giving rise to a maritime lien enforceable by proceedings in rem against E

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A the Asphalt Venture in terms of s 3(4)(a) of the Admiralty Act. [6] It was alternatively alleged that Bitumen or Concord or Windrush as the Asphalt Venture's owner, bareboat charterer and sub-bareboat charterer, respectively, were in any event liable in personam to the hostages for payment of the wages in terms of s 3(4)(b) [7] read with s 1(3) of the Admiralty Act. The latter basis for the alleged claims has, however, since B been abandoned and nothing more need be said about it.

[11] When the UACC Eagle was arrested in Mumbai it was subject to a demise charter concluded in December 2010 between Bergshav, as C owner, and United...