28 Mar 2017

The "Guilty Ship": The Implications for an Associated Ship Arrest based on an Arbitration Award

Practice Area(s): Shipping & Logistics |

In order to invoke the associated ship provisions of the South African Admiralty Jurisdiction Regulation Act ("the Act"), there must be a ship in respect of which a maritime claim has arisen (the "ship concerned" or often referred to as the "guilty ship").  There must also be another ship (the "associated ship") in respect of which the arrest is sought instead of the ship concerned and against which an action in rem is pursued in the stead of the ship concerned.

Whilst this might seem obvious, it can often be a complicated exercise determining if the cause of action upon which a claimant relies for an arrest can rightly be considered to be a "maritime claim" as defined in the Act and whether such maritime claim can be said to arise in respect of the ship concerned.

If a maritime claim does not give rise to a maritime lien against a particular ship and an in personam claim does not arise "in respect of" a particular ship then neither of the two requirements for an action in rem in terms of section 3(4) of the Act are satisfied and there cannot be said to be a ship concerned, and an arrest of an associated ship would be impermissible.

This was one of the issues in dispute in the case of the MV "Silver Star", where the applicant arrested the MV "Silver Star" as an associated ship of the MV "Sheng Mu" based on an arbitration award obtained in London concerning a dispute arising out of the charter of the MV "Sheng Mu".

The owners of the MV "Silver Star" ("the Owners") applied for the arrest to be set aside on several grounds, one of which was that the arbitration award effectively novated the original cause of action, in essence removing the link to the MV "Sheng Mu" as the ship concerned as required for an associated ship arrest in South Africa.

The court a quo held that an arbitration award in South African law does not extinguish the underlying cause of action and the Court was thus satisfied that the arbitration award does arise "in respect of" the MV "Sheng Mu" as envisaged in the provisions of the Act pertaining to the arrest of a vessel as an associated ship.  The application to set aside the arrest was dismissed with costs.

The Owners' application for leave to appeal before the Judge a quo was dismissed, but the Owners then petitioned the Supreme Court of Appeal ("the SCA") which granted them leave to appeal. The appeal was, however, dismissed with costs, the SCA holding that where an arbitration award is made in terms of an arbitration clause in a charter party relating to a particular ship, the award cannot be severed from its source and it remains one in respect of that particular ship.