Windrush Intercontinental SA and Another v Uacc Bergshav Tankers as the Asphalt Venture

• Jurisdiction: South Africa
• Judge: Olsen J
• Judgment Date: 09 April 2015
• Docket Number: A 111/2012
• Hearing Date: 06 August 2014
• Counsel: DA Gordon SC for the applicants. SR Mullins SC for the respondent.
• Court: KwaZulu-Natal Local Division, Durban

Olsen J:

[1] On 21 September 2012 the vessel Asphalt Venture (now the second applicant) was arrested at the instance of UACC Bergshav Tankers AS F (now the respondent). Security was furnished in order to secure the release of the Asphalt Venture. The first applicant (Windrush Intercontinental SA, the bareboat charterer of the Asphalt Venture) now joins the second applicant in an application to set aside the resultant deemed arrest of the second applicant, and for an order for the return of the security furnished. G

[2] In the action in rem instituted against the second applicant by the respondent it claims to be cessionary of the rights of seven members (or former members) of the crew of the Asphalt Venture. A discussion of the cause of action pleaded, and of the basis upon which it is challenged in the current proceedings, is best preceded by an outline of the facts. H

[3] In May 2008 the first applicant entered into a bareboat charterparty with the registered owner of the Asphalt Venture, Bitumen Invest A/S (Bitumen), in terms of which the first applicant took the vessel on charter from 7 May 2008 to 7 November 2015. The first applicant in turn entered into a sub-bareboat charterparty with Concord Worldwide Inc I (Concord) for the same period.

[4] Concord (represented by its ship managers) entered into contracts of employment with the complement of 15 crew members of the Asphalt Venture. (The contracts relating to the seven crew members who are central to the current dispute were concluded between April and August J

Olsen J

A 2010.) The vessel was at that stage employed under a time charterparty to carry bitumen, apparently principally between Durban and the Indian Ocean islands.

[5] On 28 September 2010 the vessel was hijacked by Somali pirates when it was about 100 nautical miles east of Mombasa. The vessel and B its crew became prisoners of the Somali pirates. Concord then followed what, according to the founding affidavit, has become standard practice in such matters, by engaging with its insurers, instructing solicitors, consulting security advisers and, most importantly, appointing a negotiator to deal with the pirates.

C [6] By these means an agreement was reached which resulted in a ransom of some USD 3,4 million being paid to the pirates on about 15 April 2011 in exchange for the promised release of the vessel and the 15 crew members. The vessel was released with eight of the crew members. The pirates reneged on the negotiated arrangement by retaining seven Indian crew members as hostages. They offered the release of these seven D remaining crew members against the release of some 120 Somali detainees held in India awaiting trial, presumably on charges of or relating to piracy. Unfortunately, from the perspective of the seven Indian hostages, their government does not negotiate with pirates. The seven crewmen remained in captivity.

E [7] Each of the seven crew members had been employed by Concord in terms of a written agreement specifically for service on the Asphalt Venture. The contracts were concluded at different times between April 2010 and August 2010, and the fixed periods of employment varied between four months and nine months. The latest expiry date among the F seven contracts was the end of February 2011. Accordingly the specified period of employment of each of the seven hostages had terminated by the time the vessel was released in mid-April 2011. Notwithstanding this Concord continued to pay the wages of all the crew up to 15 April 2011, when the ship and eight crew members were released. The eight crew G members who were released were discharged from the vessel and Concord paid for their repatriation. Concord then continued to pay amounts equivalent to the wages of the seven detained crew members to their families up to and including October 2011. It is said that this was done on a voluntary basis. But at that stage Concord ran out of money and paid no more to or for the benefit of the seven hostages.

H [8] Concord had run into difficulties before the end of October 2011. It could not meet its obligations in terms of the sub-bareboat charterparty as a result of which the first applicant terminated the sub-bareboat charterparty on or about 17 June 2011. Given what is set out above, the position as at 17 June 2011 was that —

(a)

I none of the original 15 of Concord's crew were in service on or off the vessel;

(b)

upon the assumption that Concord retained an obligation to pay the wages of the seven crew members held hostage, notwithstanding all that had gone before, all such obligations to date had been J discharged.

Olsen J

[9] If after 31 October 2011 Concord had continued on its earlier A course, the next income the families of the seven hostages would have received would have been paid to them at the end of November 2011. The fact that this was not done obviously caused them considerable hardship.

[10] On 17 January 2012 a vessel belonging to the respondent, the UACC Eagle, B was arrested in Mumbai, India, by the dependent relatives of the seven crew members still in captivity, stating that they represented the crew members in that litigation. The arrest was sought to be justified upon the basis that under Indian law the UACC Eagle was a sister ship of the Asphalt Venture. It is common cause between the applicants and the respondent that in fact there is and was no such relationship between the C two vessels.

[11] Be that as it may, the sum of the claims made by the families was USD 6,787 million, and the quantum was premised upon the proposition that the plaintiffs were entitled to seek in respect of each of the D hostages a 'decree for daily wages' which each hostage would be entitled to be paid from November 2011 until each reached the age of 70 years. As the deponent to the respondent's answering affidavit put it, at a practical level, given the size of the claims that had been made against the respondent's vessel, and given (the deponent says) the time-consuming nature of litigation in the Indian courts, the respondent had little E alternative but to reach a settlement with the dependent relatives of the seven crewmen. This was done in February 2012. The respondent undertook to pay the claims for crew wages for the period 1 November 2011 to 29 February 2012, to pay USD 306 000 into an escrow account to cover future wages to the end of December 2012, and to undertake to F pay and guarantee the payment of crew wages for the period 1 January 2013 to 31 December 2013. (This latter obligation to cover the wage claim during 2013 was subject to a right on the part of the respondent to call for arbitration on the issue as to whether in terms of their service contracts the seven crew members were entitled to wages pending repatriation for the period covered by the agreement, ie until 31 December 2013.) G Against that the crew members who were held hostage, represented by their families, ceded their claims paid or guaranteed under the settlement agreement to the respondent, together with what they contended to be their associated maritime liens. Following the settlement agreement the respondent's vessel was released by order of the court in Mumbai. H

[12] As cessionary of the claims acquired in the manner set out above, the respondent in September 2012 issued a summons in rem out of this court against the second applicant. The respondent sought payment of what it had already paid to the families of the seven hostages, and an I order declaring the respondent's entitlement as against the second applicant to payment of the amounts still to be paid in terms of the settlement agreement. (By the time that this application was first argued in August 2014 the due date of the final payment under the settlement agreement had of course passed.) The summons and the particulars of claim which followed asserted that the seven hostages were and remained J

Olsen J

A entitled to be paid the wages reflected in their employment contracts during the currency of those contracts and, following any valid determination thereof, until such time as each of them might be repatriated. It was alleged that the crew had been employed by Bitumen as owner; alternatively by Concord as sub-bareboat charterer; or further alternatively B by the first applicant as bareboat charterer. It was alleged in the main that the claim by the seven hostages was for unpaid wages, which gives rise to a maritime lien against the second applicant; and in the alternative that the action in rem could be maintained because one of Bitumen, Concord or the first applicant was both the owner of the second applicant and liable in personam to the crew (and consequently C to the respondent as cessionary) for payment of the wages. In this latter regard the respondent pleaded its reliance on s 3(4)(b) of the Admiralty Jurisdiction Regulation Act 105 of 1983, read with s 1(3).

[13] I should deal first with the alternative basis for the claim, to get it out of the way. The first applicant has stated in its founding affidavit D that —

(a)

at the time of the arrest it was the deemed owner of the vessel as contemplated by s 1(3) of the Act; but that

(b)

it had never concluded any employment contract with any of the hostages, that having been done by Concord.

E Mr Mullins SC, who appeared for the respondent, has fairly conceded that a case has not been made out for the alternative claim on the papers before me, as a result of which the respondent must establish the existence of the maritime lien upon which it relies.

[14] The seven crewmen remained in captivity when this case was first F argued in August 2014. Further written argument was delivered thereafter, the last instalment of which arrived in December 2014. Fortunately by then the parties were able to inform the court that the crewmen had...