The Department of Agriculture, Forestry and Fisheries appears to have adopted a concerning stance on the requirements of the Marine Living Resources Act regarding the licensing of vessels entering South African waters.The policy affects reefer vessels in particular. The penalties for contravention of the act include vessel seizure or the arrest of anyone whom fishery control officers suspect has committed an offence.
A common feature of shipbuilding agreements is the requirement that parties provide guarantees from third-party institutions as security for the performance of their respective obligations. The legal nature and practical effect of this type of security are routinely a source of dispute and litigation internationally, often as a result of the uncertainty introduced by the way in which contracting parties choose to name the instrument.
Given the ease with which ships can be arrested in South Africa as security for legal proceedings, commenced either locally or in foreign forums, the question frequently arises as to whether it is possible to issue arrest proceedings in South Africa as a protective step to guard against a change of ownership or a possible time bar of the claim.
It has long been an open question as to whether a claimant can arrest a bareboat (or demise) charterer's rights in a bareboat charterparty as security for court or arbitration proceedings. There have been arrests in South Africa from time to time of the demise charterer's so-called 'right, title and interest' in and to the ship, but it was not until the recent case of mt Rio Caroni that the point was successfully challenged.
A recent flurry of major international shipping companies initiating proceedings for protection from creditors has highlighted the rights of creditors to arrest maritime property in South Africa as a mechanism to sidestep these proceedings. South Africa is well known for having a liberal arrest regime, and the insolvency provisions are no exception.
In the recent case of Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa an interesting factual scenario gave the Western Cape High Court an opportunity to assess the correct approach to the question of insurable interest under South African law. The case concerned the MFV Buccaneer, a fishing vessel lost at sea in 2008.
South Africa continues to be a popular jurisdiction for maritime creditors to obtain security for claims. While the outstanding feature of the country's admiralty procedure remains the well-known 'associated ship' arrest, a number of other aspects also contribute to its potency. The South African arrest regime has a liberal nature and offers possibilities to creditors in the current distressed market.
The MV Alina II suffered serious hull damage in 2009. The vessel's charterer brought an application to set aside an arrest of bunkers aboard the vessel in South Africa as security for contemplated London arbitration proceedings. This case is noteworthy in that the initial hearing on the papers led to a referral of the matter to oral evidence. Referrals to oral evidence are a rarity in South African arrest applications.