Is this the end of the road for protective writs in South Africa?

By Pauline Kumlehn, Senior Associate in the International Transport, Trade & Energy department

The common practice in South Africa of issuing so-called ‘protective writs’ has recently been called into question in the Western Cape Division of the High Court of South Africa.

The respondents in this matter sought to secure their claims against beleaguered Hanjin Shipping Co Ltd (“Hanjin”) for payments due arising out of the charter of its vessels by Hanjin.  On 2 September 2016, and following Hanjin having entered rehabilitation proceedings in South Korea, the respondents caused to be issued a series of protective writs citing seventy two of Hanjin’s vessels as defendants.

The applicant, with full knowledge of the existence of the writs, subsequently acquired the thirty first defendant, the MV “Hanjin Cape Lambert”, which it renamed the MV “Mount Meru”.  The applicant then sought an order, seeking, inter alia, the setting aside of the protective writs in respect of the MV “Mount Meru”.

At the core of the decision was the question whether the issue of such a protective writ would entitle a claimant to arrest an associated vessel notwithstanding a change in ownership. Support for such a contention is a legacy from the English law and the position as postulated by Brandon J (as he then was) in The Monica S [1967] Lloyd’s Rep. 113 (QB Adm). Succinctly stated, The Monica S was authority for the argument that if a res was sold after the accrual of a charge, the security obtained would attach irrevocably to the res despite any subsequent change(s) of ownership.  The respondents in relying on The Monica S to maintain their writs, pointed out that the position in English law remained unchallenged and was indeed followed and applied by the courts in other jurisdictions, including Australia, Singapore and Hong Kong.

The court, constituted before a single judge, in considering this “difficult question” reframed the issue in light of the relevant provisions of the Admiralty Jurisdiction and Regulation Act, No 105 of 1983 (“the Admiralty Act”) as follows:  whether, in respect of the statutory lien contained in the provisions of the Admiralty Act, the person who would be liable in personam must be the owner of the property to be arrested at the time of the issue of the process (the respondents’ contention) or at the time of arrest (the applicant’s position), where the vessel to be arrested is an associated ship as provided for in the relevant associated ship provisions.

The court “with some hesitation” found in the applicant’s favour, holding that the relevant time of ownership is the time of the arrest.  In reaching this decision, the court noted that it was “brought to this view principally by the wording of the [Admiralty] Act”.  The court further noted that it was not persuaded by The Monica S as it was a decision which was primarily based on the interpretation of a particular English statute.

Whilst there are other elements of the judgment which require food for thought, of particular interest is the manner in which the court appears to have referred to the importance of preferring an interpretation which better supports and favours the values contained in the Constitution of the Republic of South Africa, 1996.  The court’s recognition of the objective normative value system embodied in our Constitution and its relevance in statutory interpretation is to be welcomed.  That said, the judgment is not entirely clear on how its balancing or weighing up of the various arguments led it to prefer one interpretation over another.  It is also regrettable that the statutory provisions concerned have not of itself led to a more ready interpretation.
In circumstances where the decision is left unchallenged, it may indeed prove fatal to the role of the protective writ in South African admiralty practice in so far as a change of ownership is concerned.  It does not in our view, however, affect the issue of a protective writ to interrupt prescription or other time limits.  The judgment did not address the situation where there is no change of ownership, and so, in our view, the judgment does not affect the issue of a protective writ in such circumstances.

For more information on the above contact Pauline Kumlehn

kumlehn@wylie.co.za

+27  79 525 6988