The wide-ranging remedies available to maritime creditors regarding the arrest of ships and other maritime property in South Africa for the enforcement of maritime claims are well known.

Apart from the ability to arrest so-called 'associated' ships by means of a statutory piercing of the veil of shipping corporate structures, the law also allows for property to be arrested in South Africa as security for court and arbitration proceedings commenced or contemplated anywhere in the world.

While the scope of security arrests is wide, there are still several requirements which the arresting party must meet in order to sustain an arrest – for example, the arresting party must show:

  • a prima facie claim on the merits;
  • that the claim is enforceable in the nominated forum;
  • that the underlying claim lies against the owner of the property to be arrested; and
  • that it has a 'genuine and reasonable' need for security.

Following the Supreme Court of Appeal's decision in MV Orient Stride in 2009, it is now settled that the arresting party must demonstrate a 'genuine and reasonable' apprehension that the party whose property will be arrested will not satisfy a judgment or award made in favour of the arresting party. That apprehension may arise from actual knowledge of the respondent's assets or other factors that legitimately justify an inference that the respondent will seek to conceal assets or otherwise prevent the award from being satisfied. However, the arresting party need not show that the respondent has insufficient assets to meet a judgment granted against it, although this may justify an order for a security arrest in certain circumstances. In all cases, the enquiry is a factual one and the onus of proof on the balance of probabilities rests on the arresting party.


It is against this background that the Supreme Court of Appeal revisited the application of the test, as formulated above, in Afgri Grain Marketing (Pty) Ltd v Trustees for the Time Being of Copenship Bulkers A/S (in liquidation), which was handed down on 29 May 2019.

The case in support of a genuine reasonable need for security rested on four points, which the court summarised as follows:

  • Copenship's English solicitors had requested Afgri to provide security and this had been refused.
  • The refusal to provide security left Copenship financially exposed in the sense that it had no certainty that any award would be satisfied.
  • The shipping industry as a whole was under financial strain because the market was unpredictable, particularly freight and hire rates. Further, several charterers recently experienced financial difficulties or had been placed in liquidation.
  • Finally, regarding Afgri's assets, a search had been done approximately two and a half years previously and revealed no moveable physical assets that could be attached or arrested in South Africa.


After analysing the points outlined above, the court came to the following findings.

Point one: failure to give security when demanded

The court found that the rejection of a demand for security is not, on its own, evidence of an intention not to honour a judgment or award; nor is it evidence of an inability to do so once an award is made. An obvious reason for such a refusal could simply be that the party demanding security is not entitled to it.

Therefore, unless the refusal to furnish security can be plausibly linked to an unwillingness or inability to satisfy the award or judgment, it does not support a claim for security. In the present case, no plausible link to such an inability or unwillingness had been suggested by the arresting party.

Point two: refusal to provide security left Copenship financially exposed

The finding in respect of point one disposed of the second point that Copenship had been exposed to a risk of non-payment as a result of not having security. It would have been exposed to risk only if there had been plausible evidence of an inability or unwillingness to pay an award. Given the circumstances, the complaint that a demand for security had been rejected was, in the words of the court, "akin to attempting to lift oneself by one's own bootlaces".

Point three: precarious state of international shipping market

The court held that this point did not support Copenship's case for the primary and obvious reason that Afgri was not a participant in the shipping industry, as its financial well-being was not subject to the vagaries of the industry. Afgri was a commodity trader operating primarily in the grain market. It was not a shipowner and its involvement in the chartering market arises, as it did in this case, because it sometimes sold commodities on cost insurance and freight terms that required it to conclude contracts of carriage for those goods.

Further, the general allegation of strain in the shipping industry was not supported by any facts. In the replying affidavit, two chartering businesses – Hanjin Shipping (a Korean company and one of the largest charterers in the world) and Copenship itself – were identified as having gone into liquidation. Apart from this, the statement in the affidavit was entirely general and no endeavour had been made to link it in any way to Afgri's business.

On balance, the arguments in this regard amounted to vague generalities that had little or no application to the issue of whether there were grounds to found an apprehension that Afgri would be unable or unwilling to satisfy an award.

The court stressed that the apprehension must be both 'genuine' (ie, actually entertained by the party claiming security) and 'reasonable' (ie, one that can be reasonably entertained based on the facts).

Point four: no moveable physical assets to attach or arrest in South Africa

The court found that, on the facts, this point had little, if any, weight. As a commodity trader, Afgri's primary assets were claims against the parties with which it traded and various financial instruments, as opposed to physical property (eg, vehicles). Its largest current asset for the financial year ended 31 March 2017 was trade and other receivables of some R533 million – an amount far in excess of Copenship's claim.

Genuine and reasonable apprehension

In its judgment, the court also expressed a view on three other factors which were relevant in assessing whether Copenship entertained a genuine and reasonable apprehension that any award would not be satisfied.

The first was that there had been a substantial delay in bringing proceedings to obtain security without explanation.

Second, the furnishing of security is always a costly business. Therefore, when the court is asked to order a security arrest it must be alert to the possibility that it is being sought for purposes other than the applicant's genuine and reasonable apprehension that a future award may not be satisfied.

Finally, no evidence was placed before the court dealing with the nature and extent of Afgri's business. Had Copenship wished to make a proper case of Afgri's potential inability to pay the award, or to lay some foundation for the proposition that it was a business of such a character that it would take measures to avoid paying the award (eg, liquidating the company and transferring its activities elsewhere in the group), it needed to produce evidence pointing in that direction.

For the reasons set out above, the court was not satisfied that the arresting party had made out a genuine and reasonable need for security and, on a reconsideration of the original arrest order, set it aside.


There can be little doubt that the Supreme Court of Appeal took a hard line regarding the arresting party and delivered a salutary message to pay close attention to establishing a plausible link between the factors justifying a genuine and reasonable need for security and the particular facts and circumstances of the party against which the arrest order is sought. The judgment is a cautionary tale for arresting parties that seek to rely on generalised allegations, many of which appear frequently in arrest papers as a matter of standard practice.

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.