Security arrest – seminal case on requirements
The Thalassini Avgi loaded general cargo in various ports in the Far East, for carriage to various ports in the Middle East, including Aden, in the People’s Democratic Republic of Yemen.
The owner was Astromando Compania Naviera SA.
Astromando time chartered the vessel to Nippon Yusen Kaisha.
NYK issued bills of lading in respect of the various consignments of goods taken on board the ship including goods destined for consignees in South Yemen.
At Aden, a fire broke out on board the vessel damaging much of the cargo and the vessel.
The Yemeni consignees, being the holders of the bills of lading, arrested the Dimitris in Port Elizabeth as an associated vessel.
It was common cause that the Dimitris was an associated vessel.
The West England Shipowners Mutual Protection and Indemnity Association (Luxembourg) issued a letter of undertaking to obtain the release of the vessel confined to judgments in Japan and South Africa.
The applicants agreed to this without prejudice to their right to have the undertaking extended to a judgment of the South Yemen court.
A second application was launched seeking an order for such extension. The order was refused by the court of first instance.
The SCA (Corbett CJ, Botha, Hefer , Kumleben JJA and Grosskopf AJA, judgment per Botha JA) considered that subparagraphs (i) and (ii) of s 5(3)(a) of the AJRA should be read conjunctively, as if they had been conjoined by the addition of the word ‘and’ between them.
The intention of the Legislature was to make it possible for a claimant to apply to a Court for, inter alia, an order for the arrest of a ship with the object of obtaining security in respect of a claim which was the subject of proceedings contemplated in a foreign court (subparagraph (ii)).
A prerequisite for the grant of such an order was that the claimant had to have a claim enforceable by an action in rem (subparagraph (i)).
In terms of subparagraph (i) the action in rem had to be against the ship which it was sought to arrest, or an associated ship of the ship against which the relevant maritime claim arose, as defined in s 3(7).
Botha JA considered that, as a matter of practice, a Court making an order under s 5(3)(a) should specify and nominate the foreign Court to which the order applied.
A claimant applying for an order in terms of s 5(3)(a) had to show prima facie that this claim is enforceable in that forum. This extended to the merits of the claim and the jurisdiction of the court.
A prima facie case was evidence which, if accepted, would establish a cause of action. This aspect had nothing to do with the probabilities.
Also, an applicant had to satisfy the Court that his need for security was genuine and reasonable
If an applicant satisfied the requirements listed he would be entitled to an order in terms of the section, unless the respondent ship owner placed countervailing material before the Court by which it was proved that there was sound reason for not granting the order. Failing that, the Court did not have the discretion to decline to exercise its power in favour of the applicant.
Countervailing factors included forum non conveniens and the possibility of an unfair hearing.
The ship owner was entitled, in any event, to apply to the Court for an order for the release of the ship against the furnishing of satisfactory security.
Or the owner could apply to the Court for an order setting aside the order of arrest itself in accordance with common law principles relating to the setting aside of orders obtained ex parte.
Applying these principles the SCA found that Cargo had satisfied the requirements of a security arrest which included a prima right to proceed in the courts of South Yemen. By the same token, owners failed to prove that there were countervailing factors, in particular, that they would not receive a fair hearing in South Yemen.
The ship owners tried to exploit some uncertainty in the claims which were said to be based on delict/tort and contract.
That bills were charterers’ bills with an exclusive Japan jurisdiction clause added to the uncertainty.
The SCA showed some robustness in accepting hearsay evidence as the Admiralty Rules empowered them to do. The correct approach was to be receptive to such evidence but then to be careful in attributing the proper weight.
Douglas Shaw QC appeared for Cargo while Douglas Scott SC appeared for the ship owners.
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