South Africa has the busiest ports in Africa but the ships that call here are not registered in South Africa, nor are the owners of the ships South African companies. There are no South African ships to carry South African cargoes, and only very rarely are South African registered companies the contractual carriers of cargo. So what remedies are available to South African maritime interests when claims arise in respect of damaged cargo or when shipowners fail to pay for services rendered to their ships?
Outside of admiralty practice, the pursuit of a claim against a shipowner or carrier would be extremely difficult because these parties usually have no assets or presence in South Africa beyond a ship which may call here for only a few hours to load cargo or take on fuel. This would mean that the local cargo owner or bunker supplier would be forced to institute proceedings in a foreign court that exercises jurisdiction over the defendant. Even if the claimant is successful in those foreign proceedings, it may not be able to enforce its judgment because the defendant either has no or limited assets and cannot satisfy the judgment debt, or it simply ignores any judgment obtained against it. After all, many shipowning companies are no more than brass plates in countries that host flags of convenience.
The Admiralty Jurisdiction Regulation Act 105 of 1983 responds to these problems and provides local (and foreign) maritime interests with some powerful and unique enforcement mechanisms to protect their interests in the event of a dispute that may lead to litigation, either in South Africa or elsewhere.
The key to any admiralty action is the “maritime claim” - without a maritime claim, a claimant cannot proceed with an admiralty action.
There are no less than 31 broadly worded claims set out in Section 1(1)(aa) – (ff) of the Act. These include claims relating to cargo lost or damaged, contracts for the carriage of goods by sea or the employment of a ship, goods supplied to ships, repairs to ships, issues of marine insurance, claims against shipping lines and freight forwarders and a catchall definition to include claims for any other matter which can be categorised as a marine or maritime matter.
The advantage of this widely defined approach to maritime claims is that it allows parties such as importers, exporters, bunker suppliers, vessel’s agents, stevedores, financial institutions, insureds and insurers to make use of the bespoke admiralty procedures for enforcing their claims. In addition, these claimants can make use of the various admiralty mechanisms to obtain pre-judgment security , to require the early production of information and documents and to preserve evidence for trial.
Once a claimant is satisfied that it has a maritime claim, it must then establish whether its claim can be heard and decided by a South African court. This will require the South African court to exercise jurisdiction over both the merits of the claim and over the defendant or its property.
The Act gives a South African court a very wide jurisdiction to hear any maritime claim irrespective of where the claim arose, where the ship is registered or where the owner of the ship is domiciled. However, the court has the discretion to decline to exercise jurisdiction if it is of the view that any other court, arbitrator, tribunal or body elsewhere will exercise jurisdiction and it is more appropriate for that court, arbitrator, tribunal or body to hear and decide the action.4
Whilst many contracts of carriage contain an exclusive jurisdiction clause, of importance to local importers is Section 3 of the Carriage of Goods by Sea Act5. This provides that any person carrying on business in South Africa who is the consignee under a bill of lading or similar document issued in respect of goods discharged at a South African port can pursue its claim in a South African court regardless of any agreement to litigate elsewhere that may be contained in that bill of lading. If the cargo was exported from South Africa, and the bill of lading contains a jurisdiction clause requiring any dispute to be heard by another court or forum, then the claimant may need to pursue its claim in that foreign jurisdiction. However, as will be discussed below, the claimant may still be able to obtain pre-judgment security for its claim in South Africa for those foreign proceedings. This can provide comfort for a claimant and ensure that, in the event that the claimant obtains an award or judgment in the foreign jurisdiction, the claimant will be able to enforce that award or judgment by drawing down on whatever security6 the defendant has put up to secure the release of its property.
The Act allows any maritime claim to be enforced by way of an action against the wrongdoing person (an action in personam). However, a claim in personam can only be instituted against a person who is resident or carrying on business in South Africa; whose property within the court’s area of jurisdiction has been attached to found and confirm jurisdiction; who has consented or submitted to the jurisdiction of the court; or, in the case of a company, if the company has a registered office in South Africa. An in personam action is instituted by way of service by the sheriff of a summons issued out of the court in whose jurisdiction the defendant is registered or the property that has been attached is situated.7
A remedy particular to admiralty proceedings is the action brought directly against a ship or other qualifying maritime property (an action in rem). An action in rem can be instituted where the claimant has an action in personam against the registered owner of the property (or a maritime lien over the property) and the property to be arrested is the property against or in respect of which the claim arose.8 In the case of a ship, the Act allows for the unique remedy of an associated ship arrest which is discussed below.
An in rem arrest is instituted by way of the issuing of a summons and warrant by the registrar of the High Court in whose jurisdiction the property is situated and service of the summons and warrant on the property by the sheriff. The claimant or its attorney must sign a certificate stating that the property to be arrested is the property in respect of which the claim arose, or an associated ship to that property. Once the property has been arrested, the defendant must put up security for the claim up to the value of the property that has been arrested before the property will be released.
If a South African court has jurisdiction to hear the claim, then a claimant can attach property which belongs to the defendant and which is within the jurisdiction of the court in order to found and confirm the jurisdiction of that particular court.9 A common target of attachment proceedings are the bunkers on board a vessel where the claimant’s claim lies against the charterer of that vessel. The attachment is done by way of an application to court. Where property has been attached, the owner of that property is obliged to provide security to the full value of the claim – even if this exceeds the value of the property arrested – before the property will be released from attachment.
Where a South African court will not exercise jurisdiction over a claim (for example, where the cargo was exported under a bill of lading containing a foreign court or arbitration jurisdiction clause) or where proceedings have been instituted, or are contemplated, in a foreign jurisdiction, then it is possible for a claimant to obtain pre-judgment security for those proceedings by way of a security arrest.10 This is done by way of an application to court for an order for the arrest of the defendant’s property. The claimant must show that it has a maritime claim which is prima facie enforceable in the foreign jurisdiction, that the property to be arrested is owned by the defendant (or, in the case of a ship arrest, that the ship is an associated ship) and that the claimant has a genuine and reasonable need for security. The sheriff will effect the arrest by serving the arrest order on the property to be arrested.
The Act specifies the type of property that can be arrested or attached. Most usually this is a ship or her bunkers but the Act also allows for the arrest or attachment of a vessel’s equipment, stores, furniture, cargo, freight or any container if the cargo was carried in that container.
The associated ship provisions have been called the “nuclear weapon” of South African shipping law.11 The Act allows a claimant to arrest or attach a ship (but not other maritime property) within the same shipowning group as the ship against or in respect of which the claim arose.12 While most foreign jurisdictions allow for the arrest of a sistership (ie the arrest of another vessel owned by the owner of the ship in respect of which the claim arose), the Act goes significantly beyond this. The Act allows a claimant to pierce the corporate veil and look at the person who ultimately owns or controls the owner of the guilty ship (ie the ship in respect of which the claim arose) and the owner of the target or associated ship which the claimant is seeking to arrest.13
It follows that local maritime litigants are well-served by the Admiralty Jurisdiction Regulation Act which allows local importers, exporters and vessel suppliers to protect themselves by making use of the admiralty actions and other useful admiralty mechanisms set out in the Act. It is important for local parties to bear these in mind if they have a dispute which falls within the definition of a maritime claim.
Footnotes
- S 5(3) of the Act
- S 5(5) of the Act
- S 2(1) of the Act
- S 7(1) of the Act
- Act 1 of 1986
- Security can be put up to secure the release of the property arrested or attached. Security is usually put up in the form of a suitable bank guarantee or a letter of undertaking put up by the ship’s protection and indemnity insurers.
- S 3(2) read with s 4(4) of the Act.
- S 3(4) of the Act
- S 4(4) of the Act
- S 5(3) of the Act
- J Roux Section 5(3) of the Admiralty Jurisdiction Regulation Act: “A nuclear weapon” of South African Shipping Law unpublished LLM dissertation, UCT Faculty of Law 1996.
- S 3(6) and (7) of the Act
- S 5(3) of the Act
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