Zygos Corporation v Salen Rederierna Ab

• Jurisdiction: South Africa
• Judge: Friedman J
• Judgment Date: 04 July 1984
• Court: Cape Provincial Division

Friedman J:

This is an application for the release of a vessel, D the MV Zygos, from arrest. The MV Zygos was originally arrested at the instance of the present respondent, Salen Rederierna AB ("Salen") pursuant to an order made in this Court on 26 April 1984. Zygos Corporation, which is the applicant in the present application and which has at all relevant times been the owner of the MV Zygos, applied for the release of the E vessel. An order for the release of the MV Zygos was granted on 17 May 1984. However, before that order was granted, Salen launched a fresh application for the arrest of the MV Zygos. That application was granted and on 11 May 1984 the MV Zygos was again arrested. Zygos Corporation now seeks an order setting aside the arrest and authorising the release of the F vessel. In the alternative, Zygos Corporation seeks an order determining the amount of security to be furnished by it to secure the release of the vessel. For convenience the proceedings relating to the first arrest of the vessel will be referred to herein, as they have been in the papers, as "Zygos No 1", and the present proceedings, which relate to the second arrest, as "Zygos No 2".

G In Zygos No 1 Salen sought the arrest of the vessel in an action in rem which Salen intended to bring in this Court for the enforcement of an arbitral award made in London on 14 February 1983, in terms of which Salen was awarded as against Antaios Compania Naviera SA (hereinafter referred to as H "Antaios Compania") an amount of US Dollars 108 327,16, together with interest and costs. The basis on which Salen sought and obtained the arrest of the MV Zygos was that the MV Zygos was an associated ship of the MV Antaios, a vessel owned by Antaios Compania, within the meaning of s 3 (7) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (hereinafter I referred to as "the Act"). The Court held in Zygos No 1 that pursuant to an agreement between the present owners of the MV Antaios and the present owners of the MV Zygos, which was given effect to on 2 March 1981, the MV Zygos ceased, from that date, to be an associated ship of the MV Antaios. As the claim on which Salen had obtained the arrest

Friedman J

A of the MV Zygos in Zygos No 1 had arisen after that date, namely on 14 February 1983, being the date of the arbitration award, the Court set aside the arrest.

In Zygos No 2 the parties accept that the MV Zygos and the MV Antaios were associated ships until 2 March 1981 and that on that date they ceased to be associated ships. Salen contends, B however, that the maritime claim which forms the basis of the current arrest of the MV Zygos arose prior to that date and consequently at a time when the two vessels were associated ships for the purposes of s 3 (7) of the Act. This is disputed by Zygos Corporation.

The relevant paragraphs of the order for the arrest of the C vessel granted in Zygos No 2 on 11 May 1984, read as follows:

"(2)

That the vessel Zygos be arrested in an action in rem to be commenced in this honourable Court, in which action applicant will claim against the vessel as a maritime claim as defined in s 1 (1) (ii) (x) read with ss (i) and (x) thereof and with s 3 (6) and 3 (7) of Act 105 of 1983:

(2) (1)

provision of security in the sum of US Dollars 1 487 203 or the Rand equivalent thereof to the satisfaction of the Registrar D of this honourable Court to secure claims arising between Salen Rederierna AB and Antaios Compania Naviera SA relating to a charterparty entered into between the said parties on or about 3 November 1978 and being:

(2)(1)(1)

hire and loss of profit and indemnity for loss of profit: $1 128 750;

(2)(1)(2)

war risk insurance premium: $400 000;

(2)(1)(3)

indemnity for fuel costs incurred: $80 000;

(2)(1)(4)

indemnity for consequential increase in fuel costs incurred: $161 953,23;

(2)(1)(5)

miscellaneous expenses for which an indemnity is sought against Salen: $16 500;

(2)(1)(6)

interest to date (8 May 1984): $875 000,99 (approximately);

(2)(1)(7)

interest at 14 upon the above amounts (excluding the amount in (2) (1) (6) above) from henceforth to the date of payment.

Less:Security already furnished to Salen Rederierna AB by Antaios Compania Naviera G SA, being the sums of $750 000, drachmas 45 million (the present dollar equivalent of which is $425 000). Being US Dollars 1 487 203 aforesaid.

(2) (2)

Enforcement of any final award arising out of the claims referred to in para (2) (1) hereof and awarded or adjudged in favour of Salen Rederierna AB against Antaios Naviera SA;

(2) (3)

costs of suit;

(2) (4)

alternative relief.

(3)

That the said vessel be released from arrest on security being furnished to the applicant to the satisfaction of the Registrar for any judgment, including interest and costs, which may be given in the said action in rem and on respondent selecting a domicilium citandi et executandi within the area of jurisdiction of this honourable Court."

It is necessary at this stage to refer to the background to the I dispute between Salen and Antaios Compania. By a charterparty dated 3 November 1978, the owners of the MV Antaios time-chartered the vessel MV Antaios to the charterer (Salen) for a minimum period of 30 months and a maximum period of 36 months from the date of delivery. Salen as disponent owner subchartered the MV Antaios to Salen Dry Cargo AB ("Salen DC") which in turn subchartered the

Friedman J

vessel to Unitramp, which in turn subchartered the vessel to A Maritime Transport Overseas GmbH ("MTO"). As Salen and Salen DC are companies within the same group, for purposes of the disputes to which reference will be made below, Salen and Salen DC were treated as a single entity. The charterparty between Antaios Compania and Salen is referred to as the head charter. The charter between Salen DC and Unitramp is referred to as the B subcharter and the charter between Unitramp and MTO is referred to as the sub-subcharter. Both the head charter and the various subcharters provided for disputes to be referred to arbitration in London.

At about the time of the commencement of the sub-subcharter (ie the charter party between Unitramp and MTO) a dispute arose C between Antaios Compania and Salen. Antaios Compania maintained that MTO or its agents had issued a number of bills of lading in respect of cargo to be loaded on the vessel which were not in conformity with the mate's or the tally clerk's receipts as required by the relevant charterparties. When it came to light on 7 May 1980, during the course of a voyage to D the Middle East, that such non-conforming bills of lading had indeed been issued, Antaios Compania ordered the vessel to suspend the voyage and eventually, on 20 May 1980, purported to withdraw the MV Antaios from Salen's service under the head charter party. Salen applied to the Commercial Court in London for an injunction restraining Antaios Compania from withdrawing E the MV Antaios. The injunction was granted and the vessel remained in service. However, it was not until 7 September 1980, some 110 days after the purported withdrawal, that Antaios Compania was prepared to continue the voyage and proceed into the port of Jeddah. Shortly after this hostilities broke out between Iraq and Iran and the Persian Gulf, to which the vessel was ultimately bound, was declared a war zone, which F resulted in additional war risk insurance premium having to be paid.

The dispute arising from the withdrawal of the MV Antaios from service was referred to arbitration in London pursuant to the head charter. Antaios Compania sought a declaration that the vessel had been validly withdrawn on 20 May 1980. Salen G disputed this and counterclaimed, alleging various periods of off-hire, including the 122 days from 8 May to 7 September 1980. In addition Salen claimed that the vessel had slow steamed at certain stages of the charter and claimed indemnities in respect of loss of profits. Salen also made claims against Antaios Compania in respect of claims which had been made against it by the subcharterers of the vessel. Salen H further claimed the return of additional war risk premiums in an amount of approximately US Dollars 400 000 which had been incurred because of the outbreak of war. Salen alleged that, had the owners not been in breach of suspending the voyage in May 1980, the vessel would have been able to complete the I voyage within time and the additional premium would not have been incurred.

The liability of the charterers for additional war risk insurance premiums was decided by the arbitrator as a preliminary issue and was the subject of an award dated 19 December 1980. This award is referred to as "interim award No 1".

Friedman J

A The main arbitration hearing took place in London between 15 and 26 February 1982. At that hearing all the disputes, ie those arising under the head charter as well as those arising under the subcharter and the sub-subcharter, were dealt with at one and the same time. On 9 July 1982 the arbitrators issued interim award No 2, in which they held that Salen had committed B a breach of the head charter in respect of a number of bills of lading which were not in conformity with the mate's or the tally clerk's receipts as required by the charterparty. The arbitrators declared, however, that Antaios Compania was not entitled, on that account, to withdraw the vessel MV Antaios from the service of Salen on 20 May 1980. It had been agreed C between the parties that the award to be issued would relate to issues of liability only. Thus, in terms of interim award No 2, the arbitrators awarded and declared that Salen was entitled to recover from Antaios Compania

"any loss which they may have suffered... by reason of the claimant's (Antaios Compania's) failure to prosecute the voyage with the utmost dispatch"

during...