ENS
  October 16, 2012 - South Africa

ENS Shipping and Logistics ENSight
  by By Tony Norton, Michael Tucker and Kate Pitman

Newbuilding contracts: When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass? Usually shipbuilding contracts are negotiated on standard forms such as the SAJ form produced by the Shipbuilders’ Association of Japan and the AWES form produced by the Association of European Shipbuilders and Shiprepairers. South African law generally recognises freedom of contract and accordingly parties to a contract are entitled to vary the terms by agreement. However, the Ship Registration Act No. 58 of 1998 provides that a ship is ‘transferred by registration of a bill of sale in the prescribed form’ and, consequently, ownership can only be transferred at that time and in that manner if a vessel is to be registered.


  1. What formalities need to be complied with for the refund guarantee to be valid?
    There are no prescribed formalities for the validity of a refund guarantee. Care, however, should be taken to ensure that it is not structured as a suretyship, in which event the terms thereof must be embodied in a written document signed by or on behalf of the surety for it to be valid.

  2. Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?
    The court has discretion as to whether to grant a mandatory interdict or not. There are three requisities for the grant of a final interdict, all of which must be present: first, a clear right on the part of the applicant; second, an injury actually committed or reasonably apprehended; and third, an absence of any other satisfactory remedy available to the applicant. Being a drastic remedy from the yard’s point of view and in the court’s discretion, the court will not, in general, grant an interdict when the applicant can obtain adequate redress in some other form of ordinary relief. For that reason it is unlikely to order the building of the vessel but would be more likely to order the delivery of an already completed vessel.

  3. Where the vessel is defective and damage results, would a claim lie in product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?

    Section 61 of the Consumer Protection Act, No. 68 of 2008 imposes, subject to certain exceptions, liability for harm caused by or as a result of any defect, failure, hazard or unsafe goods, irrespective of whether the harm resulted from any fault on the part of the producer, importer, distributor or retailer, as the case may be. If, in a particular case, more than one person is liable, their liability is joint and several.

    Product liability is also actionable under the South African equivalent of the tort of negligence (the Lex Aquilia) and is subject to the principles of fault (intentional or negligent action or omission), causation and remoteness. In appropriate circumstances a purchaser from the original shipowner might be able to pursue a claim against a shipbuilder.
ship registration and mortgages
  1. What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?

    The Ship Registration Act, No 58 of 1998 lists the categories of ships that are entitled to be registered on the South African register. These are:

    • South African-owned ships (either wholly owned by a South African national or owned as an undivided whole by three or more joint owners of whom the majority in number are South African nationals, or whose majority of the 64 shares are owned by South African nationals as part or co-owners ‘in common’);
    • small vessels, other than fishing vessels, that are: 

      • wholly owned by South African residents or South African residents and South African nationals; or
      • operated solely by South African residents or South African nationals or both such residents and such nationals; and 

    • ships on a bareboat charter to South African nationals. 

    The Act defines a South African national as:

    • a citizen; 
    • a body corporate established with a place of business in South Africa; or 
    • a trust controlled by a majority of South African nationals as trustees for a majority of South African beneficiaries; or
    • the South African government 

    In terms of the Act, vessels under construction are precluded from being registered on the South African register. However, it is arguable that once the vessel is ‘capable of navigation by water’ it will then meet the definition of a ‘ship’ as provided by the Act and be entitled to be registered.
  2. What are the requirements for company formation?

    The Companies Act No. 71 of 2008 prescribes the formalities for the formation and registration of a company. In order to register a private company a notice of incorporation and memorandum of incorporation (MOI) must be lodged with the Companies and Intellectual Property Commission (CIPC). The board of a private company must comprise of at least one director, or any other minimum number as set out in its MOI. Each incorporator is a first director of the company. The company has the option of deciding whether to appoint an auditor or not.
  3. Is dual registration and flagging out possible and what is the procedure?

    The Ship Registration Act No. 58 of 1998 prohibits dual registration unless the ship is owned by a South African national and it was acquired in terms of a judicially sanctioned sale or is bareboat chartered to a South African national and the written consent of the primary register has been obtained.

    The minister is empowered by the Act to make the necessary regulations regarding flagging out. However, these regulations have not yet been drafted or promulgated. 
  4. Who maintains the register of mortgages and what information does it contain?

    The Ship Registration Act No. 58 of 1998 established the South African Ship Registration Office which is operated and maintained by the registrar of ships who is responsible for the maintenance of the Ships Register, subject to the directions of the South African Maritime Safety Authority (SAMSA).

    The registrar is obliged to register all mortgages filed in the prescribed form and in the order of their lodgement. The details of the mortgage are entered by the registrar on the Ships Register. Where there is a prior registered mortgage, the registrar is required to obtain the prior registered mortgagee’s written consent before registering a subsequent mortgage.

limitation of liability
  1.  What limitation regime applies? What claims can be limited? Which parties can limit their liability?

    South Africa is not a party to any of the Limitation Conventions. The South African tonnage limitation regime is embodied in sections 261 to 263 of the Merchant Act No. 57 of 1951. The provisions are modelled loosely on the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 as amended by the Protocol amending that Convention of 1979.

    The persons entitled to limit their liability include the owner of a vessel, any charterer, any person interested in or in possession of such ship, and a manager or operator of such ship. The provisions apply to any kind of vessel used in navigation by water, however propelled or moved.

    In the event that the only damages incurred are for loss of life or personal injury, claims are limited to the rand equivalent of 206.67 special drawing rights (SDR) for each ton of the ship’s tonnage. In the event that the only damages incurred are for loss of or damage to property, claims are limited to the rand equivalent of 66.67 SDR for each ton of the ship’s tonnage. In the event that both types of damages are incurred, claims are limited to the rand equivalent of 206.67 SDR for each ton of the ship’s tonnage with claims in respect of loss of life and personal injury ranking ahead of property claims to the extent of 140 SDR for each ton of the ship’s tonnage and both types of loss of life and personal injury claims ranking equally with claims relating to property in respect of the balance of the fund.

    Limitation probably does not apply to liability for the cost of wreck removal.
  2. What is the procedure for establishing limitation?

    The court has a wide discretion to give such directions as it deems fit with regard to the procedure in any claim for limitation, including the staying of any other proceedings and the conditions for the consideration of any such claim, which may include a condition that such amount as the court may order be paid to abide the result of the consideration of the said claim, or that the claimant be required to admit liability for all or any claims made against him or her, or any other condition that the court deems fit.

    The appropriate method of dealing with limiting as against a number of claims appears to be by way of limitation action. Limitation may also be pleaded as a defence to a claim but this method of raising limitation will only establish the right to limit liability as against the claimant in that claim and not as against any other claimants. There is no need to establish a limitation fund when pleading limitation as a defence.
  3. In what circumstances can the limit be broken? 

    Limitation can be broken in the event that the person seeking to limit is not able to show that the event that occurred was caused without its actual fault and privity. The South African courts have followed the later English decisions in holding that fault and privity on the part of management is sufficient to break limitation. The onus of proving a lack of fault and privity is on the person wishing to rely upon that exception.

port state control
  1. Which body is the port state control agency? Under what authority does it operate? 

    South Africa is a party to the Indian Ocean MOU for Port State Control 1999 and carries out its port state control inspections with a view to advancing the objectives of that MOU which establishes an Indian Ocean Computerised Information System with the express purpose of sharing information derived from port state control inspection with other regional MOUs.

    The SAMSA is the party responsible for exercising South Africa’s port state control obligations. Sections 7, 8 and 9 of the Merchant Shipping Act No. 57 of 1951 give SAMSA proper officers and surveyors various rights of inspection of vessels and interrogation of their crews when, inter alia, within the ports of South Africa.
  2. What sanctions may the port state control inspector impose? 

    Section 243 of the Merchant Shipping Act No. 57 of 1951 provides that if a proper officer has reason to believe that a ship at any port in the Republic is unseaworthy, he shall, whether or not she is registered in the Republic, detain her until he is satisfied that she is in a seaworthy state. 
  3. What is the appeal process against detention orders or fines?

    In terms of section 274 of the Merchant Shipping Act No. 57 of 1951, if a surveyor who has inspected a vessel makes a statement in a report of an inspection with which the owner (or his agent) or the master of the vessel is dissatisfied, they may appeal to a court of survey established in terms of sections 275 to 279 of that Act. In addition, an act of a proper officer or surveyor would constitute an administrative act and be subject to review in terms of the Promotion of Administrative Justice Act No. 3 of 2000.

classification societies 
  1. Which are the approved classification societies? 

    The South African government has not approved classification societies. Any of the members of the International Association of Classification Societies Ltd are currently accepted by SAMSA for the purpose of the carrying out of surveys prior to registration.
  2. In what circumstances can a classification society be held liable, if at all? 

    The liability of classifications societies in contract will depend entirely on the terms of the contract between the classification party and the other contracting party.

    Claims against classification societies for negligent conduct (in delict in terms of the Lex Aquilia, the South African equivalent of the tort of negligence) will be determined in terms of the general principles of the Lex Aquilia subject to any agreement between the parties. To found liability conduct must be wrongful and there must be fault (intentional or negligent conduct) causing damages.

    Physical impact to persons or property is considered prima facie wrongful. However, conduct causing pure economic loss is not in itself prima facie wrongful unless other relevant factors favour liability. Similar considerations apply where the conduct concerned is in the nature of a statement or an omission.

    For those reasons the liability of a classification society for negligent action is not capable of a categoric answer, since it depends on all the facts of the case.

    As to whether a classification society would be held liable to third parties in respect of their classification and certification duties, in most cases such duties would give rise to pure economic loss whether by way of a statement or otherwise. There is no authority in South Africa as to whether such duties would give rise to liability and it is unclear whether the factors that persuaded the House of Lords in Marc Rich & Co v Bishop Rock Marine (‘the Nicholas H’), 1995 2 Lloyds Rep 299 will persuade the South African courts or not. 

collision, salvage, wreck removal and pollution
  1. Can the state or local authority order wreck removal?

    Extensive wreck removal powers are conferred on SAMSA by the Wreck and Salvage Act No. 94 of 1996. In circumstances where a ship is ‘wrecked, stranded or in distress’ the Act provides, inter alia, that SAMSA:

    may direct the master or owner of such ship, or both such master and such owner, either orally and in writing to move such ship to a place specified by [SAMSA] or to perform such acts in respect of such ship as may be specified by [SAMSA].
    Wrecks situated within the jurisdiction of any South African port that is owned and operated by the National Ports Authority (NPA), are also governed by the provisions of the National Ports Act No. 12 of 2005. The NPA, ultimately through the harbour master’s office, has the authority to:

    search for, raise, remove or destroy any sunken, stranded or abandoned vessel or wreck within the port limits, and recover the costs incurred in connection with such searching, raising, removal or destruction from the owner of the vessel or any other person who had the beneficial use of the vessel at the time it sank, became stranded or was abandoned
    and to

    search for and remove any wreck or obstruction which may endanger the safety of any vessel entering or leaving the port, and recover the costs of such search and removal from the owner of the wreck or obstruction, or from any person responsible for the presence of such wreck or obstruction.
  2. Which international conventions or protocols are in force in relation to collision, salvage and pollution?

    collision
    South Africa has not ratified the Unification of Certain Rules of Law with respect to Collisions between Vessels, 1910 but has incorporated certain concepts from it into the Merchant Shipping Act No.57 of 1951. The International Regulations for Preventing Collisions at Sea, 1972, as amended, are enacted as an annexure to the Merchant Shipping (Collision and Distress Signals) Regulations, 2005.

    salvage
    The Wreck and Salvage Act No. 94 of 1996 has incorporated the International Convention on Salvage, 1989.

    pollution 
    The International Convention for the Prevention of Pollution from Ships, 1973 (MARPOL), has been incorporated into South African domestic law, as has the Intervention Convention 1969 (including its 1973 protocol), both as South African Acts. 

    South Africa enacted the CLC limits of liability in 1971 into domestic legislation, but only much later acceded to both the Fund Convention and the CLC and their updated limits: however, South Africa has thus far failed to enact the required domestic legislation necessary to make these conventions and their updated limits part of national law.

    Until enabling legislation is passed, South African claimants would, under the present legislative regime, be able to recover no more than 14 million SDR as compensation. Once the enabling legislation is passed, the combined total recoverable under the two conventions would be in excess of 200 million SDR.
  3. Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?

    There is no mandatory local form of salvage agreement. Lloyd’s standard form agreement is acceptable. Salvage services may be rendered by any person, although the services must be voluntary. In that respect it has been held that the harbour authority was entitled to a salvage reward in circumstances where harbour tugs were used for the operation, notwithstanding that the salved vessel was in danger and in close proximity to the port.

ship arrest
  1.  Which international convention regarding the arrest of ships is in force in your jurisdiction? 

    South Africa is not a signatory to either the International Convention Relating to the Arrest of Seagoing Ships 1952 or the International Convention on the Arrest of Ships 1999.
  2. In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested?

    A vessel may be arrested in circumstances where the claim is defined in the Admiralty Jurisdiction Regulation Act No. 105 of 1983, as amended (the Admiralty Act), as a maritime claim and the claimant is entitled to proceed in rem.

    Section 1(1) of the Act defines the various maritime claims very widely and generally includes claims in the International Convention on the Arrest of Ships, 1999, as well as claims for, arising out of or relating to:

    • any container and any agreement relating to any container; 
    • the rendering, by means of any aircraft, ship or other means, of services in connection with the carrying of persons or goods to or from a ship, or the provision of medical or other services to or in respect of the persons on being taken to or from a ship; 
    • the forfeiture of any ship or any goods carried therein or the restoration of any ship or any such goods forfeited; 
    • the limitation of liability of the owner of a ship or of any other person entitled to any milar limitation of liability; 
    • the distribution of a fund or any portion of a fund held or to be held by, or in accordance with the directions of, any court in the exercise of its admiralty jurisdiction, or any officer of any court exercising such jurisdiction; 
    • any judgment or arbitration award relating to a maritime claim, whether given or made in the Republic or elsewhere; 
    • wrongful or malicious proceedings; 
    • piracy, sabotage or terrorism relating to property mentioned in section 3 (5), or to persons on any ship; and 
    • any other matter which by virtue of its nature or subject matter is a marine or maritime matter, the meaning of the expression ‘marine or maritime matter’ not being limited by reason of the matters set forth in the preceding paragraphs. 

     A claimant may bring in rem proceedings by arresting the ship, with or without its equipment, furniture, stores or bunkers; the whole or any part of the equipment, furniture, stores or bunkers; the whole or any part of the cargo; the freight; any container (if the claim arises out of or relates to the use of that container in or on a ship or the carriage of goods by sea or by water otherwise in that container) or a fund if that property is property against or in respect of which the claim lies in the following circumstances:

    • where there is a maritime lien over the property to be arrested- section 3(4)(a). These are:

      • seamen’s and master’s wages; 
      • salvage; 
      • damage received by or done by a ship; and 
      • bottomry and respondentia bonds; 
    • where the present owner of the property against or in respect of which the claim lies and which is to be arrested would be liable to the claimant in an action in personam in respect of the cause of action concerned – section 3(4)(b); 
    • where the present bareboat charterer of the property against or in respect of which the claim lies and which is to be arrested would be liable to the claimant in an action in personam in respect of the cause of action concerned – section 3(4)(b) read with section1(3); 
    • by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose (section 3(6) and (7));

    In terms of section 3(6) and (7) of the Admiralty Act associated ships may be arrested that are owned, at the time when the action is commenced:

    • by the person who was the owner or charterer of the ship concerned at the time when the maritime claim arose; 
    • by a person who controlled the company that owned or chartered the ship concerned when the maritime claim arose; 
    • by a company that is controlled by a person who owned or chartered the ship concerned when the maritime claim arose; or 
    • by a company that is controlled by a person who controlled the company that owned or chartered the ship concerned, when the maritime claim arose. 

    In each case the association can only be established in the event of a claim against an owner, by tracing an association from the owner and in the event of a claim against a charterer, by tracing an association from the charterer.  In terms of section 3(7)(b)(ii) a person (natural or artificial) is deemed to control a company if it has the power, directly or indirectly, to control the company. Actual shareholding reflects the direct source of control over a company where voting rights are commensurate with shareholding. Indirect control can be exercised in a number of ways. For example, by a principal over a nominee shareholder or where ‘pyramiding’ takes place.

    The test is factual and involves proof of the ability of the common component to steer the direction of the company. The onus is on the claimant to make proof of that on a balance of probabilities (Bocimar NV v Kotor Overseas Shipping Limited 1994 (2) SA 565 (AD)). Thus, if the evidence before the court is equally consistent with the power over the company/ies being in a source other than that alleged by the claimant and of such sources not being common the arrest will be set aside.

    Allegations of common ownership or control that are not denied are sufficient to found an association as envisaged by the Act. Allegations of common ownership or control that are denied, but in respect of which no evidence is led to prove that denial, are sufficient to found an association as envisaged by the Act.

    If it is not possible to obtain direct evidence of an association a claimant would then have to rely on circumstantial evidence to persuade a court that an association exists.

    Circumstantial evidence that would generally assist in attempting to persuade a court that an association exists includes common directors and office bearers, published statements or financial results, shared addresses, financing documents, cross-mortgages, common signatories to important documents, fleet entries with P&I clubs, common managers or operators, and common ‘branding’.

  3. What is the test for wrongful arrest?

    Arresting ‘without reasonable and probable cause’ renders one liable in damages. The arrest will be wrongful if the arresting party did not have such information as would lead a reasonable person in its position to conclude that it was entitled to arrest or if the arresting party did not in fact believe that it was entitled to arrest.

  4. Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel? 

    As no maritime lien is recognised for the supply of bunkers if there is no contract with the owners or demise charterer of the vessel, a supplier cannot proceed against a vessel in those circumstances.

  5. Will the arresting party have to provide security and in what form and amount? 

    The court has discretion as to whether to order that an arresting party provide security, but generally does not do so of its own accord. The owner of the arrested property may apply for security. Such application would have to establish prima facie proof of a claim and show a genuine and reasonable need for such security. Even then the court will weigh the strength of the claim against other relevant factors before ordering counter security. The amount ordered will generally be that proved by the owner of the arrested property in respect of its claim and first-class South African bank guarantees and International Group P&I Club undertakings are acceptable security. Any other form of security will have to be negotiated between the parties or sanctioned by the court on application.

  6. Who is responsible for the maintenance of the vessel while under arrest? 

    The sheriff of the High Court, who is entitled to recover the costs of maintenance from arresting parties.

  7. Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

    An arresting party may arrest for security for local or foreign proceedings in circumstances where it is able to satisfy the court on application:

    • that it has a maritime claim enforceable by an action in rem against the property in question or against a ship of which the ship in question is an associated ship or that it has an action in personam against the owner of the property concerned;
    • that it has a prima facie case in respect of such claim, which is prima facie enforceable in the nominated forum or forums of his choice and that the forum/s will exercise jurisdiction in the matter. In this regard it is incumbent upon the claimant to deal in the application for the arrest with the question of the court or courts in which it has brought or contemplates bringing proceedings and to nominate the forum or forums in respect of which it seeks the security; and
    • that it has a genuine and reasonable need for security in respect of the claim. It will at least be expected of the claimant to allege and explain a need for security and to further allege that it has not already obtained security and that it cannot obtain such security in the other contemplated or pending arbitration or other proceedings.

 judicial sale of vessels
  1. Who can apply for judicial sale of an arrested vessel? 

    Any person with an interest may apply for the sale of a vessel that has been arrested or attached.

  2. What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated? 

    An application for the sale of a vessel is made to the High Court (exercising its admiralty jurisdiction) on notice to all interested parties. The initial order is invariably to call all interested parties to show cause on a specified date in the future (the return day) why the vessel should not be sold and to suitably advertise that order. In the event that the court is satisfied that the sale should proceed, it will confirm the sale order on the return day. The sale usually takes place within a month to a month and a half of the first application.

    The sale can be by means of auction, private tender or treaty. The sale order ordinarily makes provision for: 

    • the conditions of sale;
    • the proceeds of the sale to constitute a fund; 
    • the registrar of the High Court to invest the fund in an interest-bearing account pending the distribution thereof; 
    • the appointment of a referee, usually an advocate (equivalent of a barrister) specialising in maritime law to receive and assess claims; 
    • the time periods within which claims are to be filed, objections raised and replies to objections lodged with the referee; and 
    • the referee to have the power to call for further documents and information relevant to the claims against the fund. 

    The sale costs vary depending on the value of the particular vessel concerned. However, the commission will vary around the following sliding scale:

    • 3  per cent on the first US$500,000;
    • 2.5 per cent on the second US$500,000;
    • 2 per cent on the third US$500,000;
    • 1.5 per cent on the fourth US$500,000;
    • 1 per cent on the firth US$500,000; and
    • 0.5 per cent thereafter.

    After the sale claims, objections thereto and replies thereto, if any, are lodged with the referee, the Referee assesses claims and furnishes a report to the court regarding his recommendations for ranking of claims and distribution of the fund. An interested creditor then applies for payment out in terms of that report as furnished or varied, in the event of disagreement with the report. Payment out of the fund is then effected in terms of the order made by the court.

    It usually takes approximately six months to finalise the distribution of the fund from the date of the initial application for sale. 
  3. What is the order of priority of claims against the proceeds of sale? 

    Section 11 of the Act determines the ranking of claims against a fund arising from the sale of maritime property. The court has no discretion to depart from this ranking. There are three queues. One for direct claims against the vessel sold, the second for sister-ship claims (that is, claims against a vessel owned by the same party against whom the claim lies) and the third is associated-ship claims. Within each queue the order is as follows:

    • preservations charges and costs associated with the sale of the vessel and the distribution of the proceeds thereof; 
    • claims for salvage and wreck removal; 
    • claims to a preference based on possession of the property by way of right of retention or otherwise that accrues before any of the following claims; 
    • claims that arose not earlier than one year before the commencement of proceedings to enforce the same, or before submission of proof thereof, and which are: 

      • claims in respect of the employment of the master or crew; 
      • claims in respect of port and harbour dues or any charge or levy imposed by SAMSA; 
      • claims in respect of loss of life or personal injury, whether occurring on land or on water, directly resulting from employment on a ship; 
      • claims in respect of loss of or damage to property; 
      • claims in respect of repairs, supply of goods or rendering of services to the ship; 
      • claims in respect of premiums owing under any policy of marine insurance; or 
      • claims in respect of P&I contributions; 

    • claims for mortgage, hypothecation or right of retention; 
    • claims in respect of a maritime lien; and 
    • any other maritime claim. 
  4. What are the legal effects or consequences of judicial sale of a vessel? 

    A judicial sale results in the purchaser obtaining clean title to the ship sold. Accordingly the judicial sale extinguishes all encumbrances, such as mortgages, maritime and possessory liens and all other maritime and other claims. 
  5. Will judicial sale of a vessel in a foreign jurisdiction be recognised? 

    A judicial sale of a vessel in a foreign jurisdiction will be recognised on the basis of comity. Furthermore, the Ship Registration Act No. 58 of 1998 makes provision for the registration in South Africa of a ship sold in execution by a competent court, without a certificate of deletion from her previous register, where ‘all reasonable steps to secure termination of the ship’s registration in terms of the law of that other state have been unsuccessful’.
  6. Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?

    South Africa is not a signatory to this Convention.

carriage of goods by sea and bills of lading 
  1. Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

    The International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 1924, the Protocol of 1968 and the SDR Protocol, 1979 have not been ratified by South Africa. However, they have been incorporated into domestic legislation as a schedule to the Carriage of Goods by Sea Act No. 1 of 1986 (COGSA) and accordingly have force of law in South Africa in relation to and in connection with:

    • the carriage of goods by sea in ships where the port of shipment is a port in the Republic; 
    • any bill of lading if the contract contained in or evidenced by it expressly provides that the Rules shall govern the contract; 
    • any receipt which is a non-negotiable document marked as such if the contract contained in it or evidenced by it or pursuant to which it is issued is a contract for the carriage of goods by sea which expressly provides that the Rules are to govern the contract as if the receipt were a bill of lading; 
    • deck cargo or live animals; and 
    • arguably, in the circumstances set out in Article X of the Rules. 

    South Africa has ratified neither the Hamburg Rules nor the Rotterdam Rules.

  2. Are there conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

    South African is neither a signatory to the International Carriage of Goods by Rail Convention, 1970 nor the Convention on the Contract for the International Carriage of Goods by Road, 1956.

    UNCTAD/ICC Rules for Multimodal Transport Documents, 1992, can be incorporated into a contract of carriage by agreement between the parties.

    Regarding the carriage of goods by air, South Africa has enacted the Carriage by Air Act No. 17 of 1946 which gives effect to the Warsaw Convention (Convention for the Unification of Certain Rules relating to International Carriage by Air, 1929, as amended by the Hague Protocol, 1955).

  3. Who has title to sue on a bill of lading? 

    The Sea Transport Documents Act No. 65 of 2000 provides that a holder of a sea transport document (as defined and including a bill of lading) has title to sue on a bill of lading. The Act defines a holder of an original sea transport document as being a person in possession thereof or the person to whom the document was issued, the named consignee or a transferee. 

  4. To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

    As a matter of South African law, the terms of a charter party can validly be incorporated into a bill of lading by reference, provided that there is a clear indication of such incorporation that appears legibly on the bill of lading. Ultimately, it is a question of contractual construction.

    A South African court will usually apply English law to bill-of-lading disputes, either because of South Africa’s conflict of law provisions or because of the existence of a choice-of-law clause contained in the bill of lading. Accordingly, a South African court, in determining whether a jurisdiction or arbitration clause in a charter party whose provisions are incorporated in a bill of lading is binding on a third-party holder or endorsee of the bill, will enquire whether English law requirements are met, namely the existence of effective words of incorporation, and a description apt to describe the charter party clause sought to be incorporated that, if incorporated, is consistent with the remaining terms of the bill of lading, have been met.

  5. Is the ‘demise’ clause or identity of carrier clause recognised and binding?

    The effectiveness of a demise clause will be determined by a consideration of the bill of lading as a whole, particularly any indications relating to the identity of the carrier and by whom the bill of lading has been signed and the mandate of that party. The House of Lords decision in the The Starsin will be persuasive.
  6. Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers? 

    A South African court will recognise a contractual claim against the shipowner in circumstances where the bill of lading clearly provides that the owner is a co-carrier or the carrier is liable in tort or bailment.

    The shipowner may be able to rely on the terms of the bill of lading notwithstanding that it is not the contractual carrier in circumstances where it is able to rely on the Himalaya clause in the bill of lading, circular indemnities in the bill of lading or bailment on terms arguments. As to whether any one or more of those will be effective will depend on the facts of the particular case. However, Himalaya clauses have been recognised and enforced in South Africa on a number of occasions.

  7. What is the effect of deviation from a vessel’s route on contractual defences?

    South African law does not recognise a contractual deviation as voiding contractual rights. However, by South African conflict of law rules, the rules that a court of England and Wales, including its private international law rules, would have applied as at 1 November 1983, apply to cargo claims in respect of goods carried into South Africa. As such, those rules may well apply in a particular case and serve to void contractual defences.

  8. What liens can be exercised?

    In terms of South African common law, a carrier, irrespective of the contractual terms, has a possessory lien over cargo, which is exercisable against all parties to the extent that the owner of the cargo has been enriched by the carriage (improvement) and exercisable against the contracting party for the full freight in respect of that cargo. Such liens are also available to a shipyard in respect of a vessel under build or repair.

    Possessory liens can also be conferred by contractual agreement and the common law liens are usually extended by this device to cover not just freight in respect of the cargo concerned but other amounts due in respect of that and other cargoes. Such liens only operate between the contracting parties.

    The lien on freight is not a possessory lien at all but a cession of freight or sub-freights due to the debtor by another to the creditor. Such a right is recognised in South African law if contractually agreed.

  9. What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

    A carrier is obliged to deliver cargo to the person entitled to it under the relevant bill of lading who presents an original for accomplishment. In circumstances where the cargo is delivered without production of a bill of lading, the carrier would be liable in damages for the value of the cargo. In the event that the bill of lading is not able to be presented it is usual for the carrier to take an indemnity from the party seeking delivery of the cargo.

  10. What are the responsibilities and liabilities of the shipper? 

    In respect of shipments to which the Hague-Visby Rules are applicable the shipper is obliged to furnish accurate details of the cargo, specifying the ‘marks, number, quantity and weight’ of the cargo. By virtue of article III Rule 5, the shipper ‘shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars’.

    The shipper would also be subject to the primary obligation in terms of article IV Rule 6 to disclose the nature of inflammable, explosive or dangerous goods.

    The absolute undertaking under South African common law not to ship dangerous goods (interpreted broadly to include goods not necessarily inherently dangerous but also those posing a danger to the ship, crew or other cargoes) may have been displaced by article IV Rule 3, but the shipper is always bound by the provisions of article IV Rule 6. 

jurisdiction and dispute resolution
  1. Which courts exercise jurisdiction over maritime disputes? 

    The High Court of South Africa in the exercise of its admiralty jurisdiction.

  2. In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?

    Service in arrest proceedings in rem is on the asset arrested, requiring no further service.

    Service on a foreigner in proceedings in personam can only be made with the leave of the court on application. The court will detail the manner in which service is to occur and this varies depending on the circumstances.

  3. Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?

    The Arbitration Foundation of South Africa retains a maritime panel of arbitrators.

  4. What rules govern recognition and enforcement of foreign judgments and awards?

    Legislation exists that governs the recognition and enforcement of foreign awards and judgments. However, such is recognised as being deficient for various reasons. Consequently, the common law rules in this respect are generally utilised in practice.

    The requirements for a foreign judgment or award to be recognised and enforced at common law are that the foreign court or tribunal have international jurisdiction (only residence and submission to the jurisdiction of the court or agreement to the tribunal concerned will afford international competence); the judgment or award is final and conclusive and has not become superannuated; its recognition and enforcement is not against public policy; and the judgment or award does not fall foul of the Protection of Businesses Act No. 99 of 1978.

  5. What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?

    Depending on the circumstances of the particular matter it may be possible to interdict the claimant from doing so.

  6. What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?

    In the event of a claimant commencing admiralty proceedings in South Africa in breach of a jurisdiction clause it is open to the defendant to apply for a stay of those proceedings in favour of the agreed court or tribunal. The principles in the Eleftheria (1969) 2 All ER 641 (PDA) have been approved by the courts in that regard. 

limitation periods for liability
  1. What time limits apply to claims? Is it possible to extend the time limit by agreement?

    Under the Prescription Act No. 68 of 1969 the prescriptive period in South Africa in respect of breach of contract and delictual (tort) claims is three years from the time the debt is due. However, prescription does not run when the debtor is outside the country. 

    Specific prescription or time-bar periods are legislated for particular types of claims. Of relevance is the one-year prescriptive period for cargo claims under the South African Carriage of Goods by Sea Act No. 1 of 1986, the two-year period of prescription for collision claims under section 344 of the Merchant Shipping Act No. 57 of 1951 and two years in respect of claims for salvage in terms of the Wreck and Salvage Act No. 94 of 1996.

    Time limits can be extended by agreement.

  2. May courts or arbitral tribunals extend the time limits? 

    There is no provision for the court to extend the time limit under the Prescription Act No. 68 of 1969 and it generally may not do so under other provisions unless specifically permitted to do so. On that basis the court may in certain circumstances extend prescription for collision claims.

    An arbitral tribunal may extend time limits in terms in an arbitration agreement, whether already lapsed or not, in terms of section 8 of the Arbitration Act No. 42 of 1965.

miscellaneous
  1. Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

    A claimant can only arrest bunkers if the claim is a maritime claim and the claimant is entitled to proceed in rem. As in rem proceedings require that the claim be against or in respect of the bunkers it is unusual for bunkers to be the subject of an arrest.

    However, an action in personam in respect of a maritime claim may, inter alia, be instituted against a person whose property within the jurisdiction of the court concerned has been attached to found or confirm jurisdiction. In order to obtain an order for attachment the following need to be proven on affidavit: a prima facie case; that the claim is a maritime claim; and that the property sought to be arrested or attached is owned by the defendant.
  2. Can external factors, such as the recent global restriction on the availability of credit, affect the legal rights and liabilities of the parties to a shipping contract?

    One of the recognised circumstances in which parties to a contract may avoid their contractual obligations is where the contract is or becomes objectively impossible to perform. However, the ability of a party to obtain credit will be considered a subjective consideration and will not permit that party to avoid its contractual obligations.
  3. Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?

    No.
update and trends
 
The South African government is intent upon building a strong maritime sector that is able to boost employment in the country. As a part of this policy it is investigating putting competitive fiscal provisions in place to attract vessels to the South African register and introducing cabotage legislation.
 
The authors wish to thank Jacqui Kaufmann, Crispen Camp and Lisa Clarke of the ENS shipping department for their assistance in putting this chapter together.

Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through – Shipping 2013, (published in September 2012). For further information please visit www.GettingTheDealThrough.com



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