As previously reported, Tebtale Marine Inc – owner of the former Hanjin Cape Lambert – recently filed an application to set aside a protective writ issued by a creditor of Hanjin at the time of the company's collapse (for further details please see "Hanjin fallout: end of protective writs in South Africa?").
The court found that where a writ of summons has been issued against a vessel – which, before its arrest, is sold at arm's length pursuant to a legitimate transaction – that vessel can no longer be arrested and must be removed from the writ. The court's decision has been appealed before the Supreme Court of Appeal.
This update examines further developments in South Africa following an application brought by Hanjin creditors for a time extension to serve the writs of arrest (which were the subject of the Tebtale dispute) pending the outcome of the appeal. In the absence of an extension, the writs will have no further force or effect.
Under the Admiralty Jurisdiction Regulation Act, no summons or warrant may be served if more than one year has passed since it was issued. This is subject to the proviso that the courts may, before the one-year period ends, grant leave for the summons or warrant to be served within a further period which the court deems fit.
Faced with the prospect that their various writs of arrest issued on September 2 2016 were about to expire, the applicants in this case sought urgent relief from the court for a time extension. In doing so, they argued that:
- they would suffer prejudice if the extension was not granted;
- a reasonable prospect remained that one or more of the defendant vessels would call at a South African port – if not to work cargo, then at least to bunker, change crew, procure parts or undertake repairs;
- the court's decision in the Tebtale dispute had been suspended pending the determination of the appeal; and
- if the writs of arrest were not extended, it would cause irreparable prejudice, as any appeal that the court may be permitted to prosecute would in all probability be moot.
The respondents in the application (being a group of the new owners of 14 former Hanjin ships) opposed the application for an extension on the following grounds:
- Tebtale should be regarded as a binding decision;
- the fact that the applicants had obtained the necessary leave to appeal the judgment did not suspend its operation;
- the respondents' vessels were precluded from undertaking any business or visiting South Africa for operational purposes – as long as the threat by the creditors to arrest the defendants remained – and, in the existing economically depressed shipping market, this was an unreasonable barrier to trade and would result in serious financial impendent and loss, particularly to South Africa.
In considering the matter, the court held that the decision of whether to extend the writs was a discretionary power which must be exercised on consideration of all relevant circumstances in each case. As a point of departure, the court was satisfied that there was no good reason in law for it to differ from the judgment in the Tebtal dispute or depart from the reasoning and finding of the judge in that case.
Although the operation and execution of a decision is suspended pending an appeal under common law and Section 18(1) of the Superior Courts Act, the court approved the finding in the case of the Snow Delta, in which it had been held that the dismissal of a claim or application is not suspended pending an appeal because there is nothing that can operate or on which execution can be levied.
Although the Snow Delta case concerned an interim order for attachment, the court in the present case applied the same principles to an arrest in rem on the basis that it is implicit that a court registrar's order for arrest is provisional in the sense that it is intended to operate only unless and until challenged. If a challenge succeeds, the case for arrest is effectively dismissed and there is no order that an operation can be ordered to be suspended.
Taking into account the prejudice that the applicants could suffer and the fact that they had had approximately one year to seek the arrest of the defendant vessels, the court held that justice and equity in those circumstances dictate that it would not be commercially sound or in the interests of justice to extend the writ of summons for the arrest of the defendant vessels. For these reasons, the court dismissed the application for the extension of the writ of summons in rem and the warrants of arrest in respect of the respondents' vessels.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.