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Associated Ship Arrests: Recent Judgement Establishes Important Principles 

by Tony Norton, Kate Pitman, Michael Tucker, Ryan Reddy, Jacqui Kaufmann

Published: March, 2015

Submission: March, 2015


In the recent judgment of “The Owners of the mv “Silver Star” v Hilane Limited”*, several important principles were established, namely: Full effect must be given to the right to proceed against an associated ship of a charterer in respect of a maritime claim that arises in the course of the Charter. A person that has a claim against a charterer is entitled to arrest an associated ship of that charterer by virtue of a deeming provision in section 3(7)(c) of the Admiralty Jurisdiction Regulation Act, No 105 of 1983 (“the Admiralty Act”), which provides -

"If at any time a ship was the subject of a charter-party the charterer or subcharterer, as the case may be, shall for the purposes of subsection (6) and this subsection be deemed to be the owner of the ship concerned in respect of any relevant maritime claim for which the charterer or the subcharterer, and not the owner, is alleged to be liable."

The owners of the “Silver Star” contended that the provision ought to be narrowly construed so as to limit its use to “only those claims against charterers as charterers and which relate to the core of the charterparty” in order not to fall foul of the constitutional guarantee against arbitrary deprivation of property. In that regard, the court held that:

  • as no narrow construction of the section had been proferred, and no challenge had been made to the constitutionality of the section, full effect had to be given to it in deeming the charterer against which a maritime claim arises in the course of a charter to be the owner of the vessel for the purposes of proceeding against an associated ship of a charterer;
  •  the deeming provision places the unpaid creditor in the same situation vis-à-vis a defaulting charterer as it is in respect of a defaulting owner and it, therefore, follows that any constitutional attack must be an attack on the entire institution of the associated ship, which had not been advanced in this matter and, consequently, was not ripe for determination; and
  •  in any event, claims that arose out of letters of indemnity issued by the charterer to owners for the latter issuing a second set of bills of lading and for delivery of cargo without production of bills of lading pursuant to provisions of a charterparty, were claims against the charterer, as charterer and relate to the core of the charterparty.

Arbitration Awards relating to a maritime claim in respect of a Ship give rise to a right to proceed in rem

In respect of a contention that a London arbitration award extinguishes the original in rem nature of a claim against or in respect of a vessel, which thereafter becomes an in personam claim arising out of the arbitration agreement, thereby depriving a claimant in respect of the award from proceeding with an associated ship arrest, the court held that although it is by no means clear that this is the effect of an arbitration award under English law, on a proper interpretation of the relevant provisions of the Admiralty Act, a claim in respect of an arbitration award relating to a maritime claim is a claim in respect of the ship in respect of which the original maritime claim lay (“The Owners of the mv “Silver Star” v Hilane Limited”)

Untruthfulness, evasiveness and economy on detail by an owner of an arrested vessel in relation to an alleged association will be a relevant factor in determining whether an arresting party has proved an association

In an application to set aside an arrest, the onus is on the arrestor and that onus must be discharged on the usual civil standard of proof (balance of probabilities) except for making out a prima facie case in respect of the cause of action concerned. Thus, the arrestor bears the onus of proving on a balance of probabilities that the vessels are associated.

If an application is disposed of on the papers, then the court will make its finding on all matters which are to be dealt with on a balance of probabilities based on the evidence put up by the Respondent owners of the arrested property (“owners”), together with that evidence put up by the Applicant arrestor which is not denied by the owners unless:

  • the denial by the owners is not such as to raise a real, genuine or bona fide dispute of fact and the owners have not availed themselves of their right to apply for the deponents to be called for cross examination and the court is satisfied as to the inherent credibility of the arrestor’s factual averment; or
  •  other exceptional circumstances apply such as, for example, where the allegations or denials of the owners are so far-fetched or clearly untenable that the court is justified in rejecting them merely on the papers, in which event the court may proceed on the basis of the correctness of the disputed allegations of the arrestor (see Plascon-Evans Paints v Van Riebeeck Paints 1984 (3) SA 623 (AD)).

Based on those principles, the court has found that allegations of common ownership or control which are not denied, are sufficient to found an association (see Hasselbacher Papier Import and Export (Body Corporate) & Another v mv "Stavroula" 1987 (1) SA 75 (C)) and that allegations of common ownership or control which are denied, but in respect of which no evidence is led to prove that denial, are sufficient to found an association (see Eridiana SPA v mv "Ya Rab" (unreported judgment, Durban & Coast Local Division, Case No A394/96, 14 April 1997)). In the latter case, common control was denied by Delray, the owner of the "Ya Rab" and the broad structure of the group was put up but the identities of the relevant shareholders and deposition testimony from them was not forthcoming on the basis that they wished to keep that information confidential. The court found, "In my judgment, the absence of direct evidence from Delray of non-association is itself a piece of evidence which is to be taken into account with all the other evidence adduced by the parties." On that basis, the court found that an association existed.

The court in the mv “Silver Star” further recognised the difficulties facing an arrestor in proving an association when it has no direct access to relevant information, and on that basis has found that a response by owners that is untruthful, evasive and economical on detail will be a relevant factor in determining whether the applicant has discharged the onus resting on it. In the context of finding that the owner of the arrested property failed to properly explain how certain factual inaccuracies and inconsistencies in its evidence had occurred, the court further referred with approval to paragraph 21 of the minority judgment of Marais JA in mv "Heavy Metal" : Belfry Marine Ltd v Palm Base Maritime SDN BHD 1999 (3) SA 1083 (SCA)-

“I do not think that a litigant in motion proceedings who resorts to this kind of response in the face of a powerful circumstantial showing that, on the probabilities, whoever ultimately had the power to control the company which owned the guilty ship also has the power to control the company which owns the ship sought to be arrested as an associated ship can shelter behind the principles laid down in the case of Plascon-Evans Paints Ltd. In a few words, such an approach should not be regarded as giving rise to a genuine dispute of fact.”

On that basis it found that an association existed.

*mv “Silver Star” : The Owners of the mv “Silver Star” v Hilane Limited (82/2014)[2014] ZASCA 194 (28 November 2014)


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