Arresting ships – knowing your rightsOct 17, 2006
Author: Anisa Govender
by Anisa Govender of Shepstone & Wylie, Attorneys
Few realize that a bunker supplier would have a maritime claim in respect of "the supply of goods or rendering of services for the employment, maintenance, protection or preservation of a ship", where a fund is created following the arrest of a vessel and sale by judicial auction.
Furthermore, according to South African law, a supply of bunkers will rank in the same position as any other necessaries man, comments Anisa Govender Shepstone & Wylie Attorney’s International Trade Transport & Energy Department.
She adds that in terms of the law, a necessaries man ranks ahead of the mortgagee.
A proviso to this is that the claim must have arisen within one year of commencement of the proceedings to enforce the claim or to submit it to the Referee appointed by the Court when an order is granted for the sale of the vessel.
Govender adds that where the bunker supplier is unable to enforce its claim against the vessel within the one year period, it will be well advised to issue a writ in South Africa against the vessel concerned in order to protect time. A writ is valid for one year and the Court will, on good cause shown, extend that period for a further year.
In the instance where a bunker supplier is faced with a defaulting customer, the bunker supplier has the option of arresting either the guilty vessel or an associated vessel of the guilty vessel. The Admiralty Act provides three methods whereby vessels may be arrested:
1. Arrests in Personam
Any maritime claim may be enforced by an action in personam however, they may only be enforced against a natural or juristic person who falls into one or more of the following categories:
1.1 a person resident or carrying on business at any place in the Republic;
1.2 a person whose property within the court's area of jurisdiction has been attached by the claimant to found or confirm jurisdiction;
1.3 a person who has consented or submitted to the jurisdiction of the court;
1.4 a company, if the company has a registered office in South Africa.
An action in personam may only be instituted in a court of which the area of jurisdiction is adjacent to the territorial waters of South Africa unless one of the exceptions referred to above apply.
If the prospective defendant is resident or carrying on business in South Africa, it is not necessary to attach his property in order to found jurisdiction because the court will have inherent jurisdiction over that person. All that is needed in these circumstances to commence proceedings is to issue and serve a summons.
If the prospective defendant is a foreigner, his property within the area of jurisdiction of the court will have to be attached to found or confirm jurisdiction.
In order to make an attachment to found or confirm jurisdiction, it would be necessary to launch a substantive application before a judge and satisfy the judge on a balance of probabilities that the property to be attached belongs to the prospective defendant.
Once the application for attachment has been granted, the claimant has twelve months within which to effect the attachment or else it will lapse, although the court may, prior to the expiry thereof, on application, and on good cause shown, extend this twelve month period for a further twelve months prior to the expiry thereof. Subsequent to the attachment, a summons may be served on the prospective defendant, although, if he is not in South Africa summons may only be served outside the jurisdiction with the leave of the court.
2. Arrests in Rem
Where it is the guilty vessel that is sought to be arrested, the Act provides for an action in rem which may be instituted by the arrest of the property against which the claim lies.
The action in rem is available in the following circumstances:
2.1 if the claimant has a maritime lien over the property to be arrested. In terms of South African law, the supply of bunkers to a vessel is not a maritime lien and one therefore cannot proceed to arrest a vessel on this basis in South Africa, notwithstanding the fact that the supply might have been in a jurisdiction where such a supply constitutes a maritime lien.
2.2 if the owner of the property to be arrested would be liable to the claimant in an action in personam in respect of the cause of action concerned.
Very briefly, the procedure for instituting an arrest in rem is by way of issue of summons and a warrant of arrest against the guilty or associated vessel and the subsequent arrest of the vessel is effected by service of the summons and warrant on the Port Captain and the Master of the vessel by the Sheriff.
The issue of proceedings in rem is a speedy process which requires allegations to support a prima facie cause of action without any need for substantiation on the papers. An order for an arrest can only be executed when and if the vessel comes into territorial waters of the court where the warrant of arrest has been obtained.
One of the attractions in respect of proceeding in South Africa is the associated ship provisions. In order to arrest an associated ship, the claimant has to satisfy the court on a balance of probabilities that at the time of the arrest, the associated vessel is owned or controlled by the same party or parties or the same company which owned or controlled the ship concerned when maritime claim arose.
3. Security Arrests
Where bunker suppliers have proceedings under way in South Africa or in any other jurisdiction around the world, and where they do not have security for their claim a bunker supplier can proceed in South Africa purely for the purpose of obtaining security for those proceedings whether or not those proceedings are proceeding, pending, or contemplated and whether or not such proceedings are subject to South African Law.
Before a court in South Africa would grant an order for the arrest of a vessel or bunkers for security, the claimant must establish:
3.1 that the claimant has a prima facie claim, which is prima facie enforceable in the jurisdiction where the arbitration or the proceedings are pending, contemplated or proceeding;
3.2 that there is a genuine and reasonable need for security;
3.3 that the claimant has a claim in rem or a claim in personam.
It must be noted that where a claimant proceeds purely for the purpose of obtaining security in South Africa, the claimant does not thereby submit to the South African jurisdiction for the merits of the claim in respect of which security is sought.
4. Wrongful Arrests and Excessive Claims
The Act provides that in circumstances where an arrest is made without reasonable and probable cause or where a person makes an excessive claim or demands excessive security and thereby causes loss or damage to another party, the arresting party may be liable for the damages suffered by the other party.
The phrase "reasonable and probable cause" has been held by the court to mean an honest belief founded on reasonable grounds that the commencement of proceedings was justified.
It should also be noted that the court has the power to order the provision of counter – security for damages which might arise from a wrongful arrest or excessive claim. Before the court will make an order for counter-security, the party concerned will have to satisfy the court that the criteria set out in the above in respect of security arrests have been complied with.
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