What constitutes a “maritime claim” for purposes of admiralty jurisdiction? The most recent decision on the interpretation of the phrase “relating to” by the High Court of South Africa
A maritime claim is defined in the Admiralty Jurisdiction Regulation Act 105 of 1983 (hereafter “the Act”) as “any claim for, arising out of or relating to” (emphasis added) those grounds of jurisdiction listed in section 1(1) of the Act. The characterisation of a claim as a “maritime claim” is crucial to the determination of whether a South African court of law has admiralty jurisdiction or not: only a court exercising its admiralty jurisdiction will have the competency to determine a maritime claim. With this in mind, and therefore also unsurprisingly, the phrase “relating to” (as it appears in the definition of “maritime claim”) has been the subject of a number of South African court cases, the most recent being Kuehne & Nagel (Pty) Ltd v Moncada Energy Group SRL (GSJ) unreported case no 40214/2014 of 19 February 2016.
In 1990 Page J was confronted with this issue in the matter of Peros v Rose 1990 (1) SA 420 N. Peros had entered into a contract with Rosa Marine CC (hereafter "Rosa Marine") for the construction of a yacht. The parties agreed to a series of payments on agreed dates with no particular milestones in the construction of the yacht. Rose, the sole member of Rosa Marine, provided a personal written guarantee to Peros that "in the event of the BUILDER not completing the construction of the yacht up to stage…'installation of engine, completion of plating' within a period of six months from 'laying of the keel' I shall….repay to the OWNER and amount equal to the aggregate of such sums as shall have been paid by the Owner" as at defined dates. Rose filed a special plea in defence of the claim against him under the guarantee that the claim is a "maritime claim" as defined in section 1(1)(ii)(m) of the Act, which provides that a "maritime claim" means inter alia "any claim in respect of the design, construction, repair or equipment of any ship…" (see the current section 1(1)(q) of the Act). The Plaintiff replicated to the effect that he was seeking to enforce a contractual guarantee, that is a contractual obligation to pay a sum of money and therefore not a claim in respect of the design, construction, repair or equipment of any ship. The court concluded that, with regard to matters arising out of English Admiralty claims as recognised under English Admiralty law as at 1983 (this idiosyncrasy in the Act is a debate for another day), the intention of the legislature in using expressions such as "relating to", "in respect of", "for", "arising out of", "in the nature of" and "with regard to" in the definitions of maritime claims "was to convey a relationship between the claim and the maritime topic to which it is related, sufficiently intimate to impart to the claim a maritime character which would render it appropriate for the claim to be adjudicated in accordance with maritime law". The court went on to conclude that whilst there was a connection between the construction contract and the contractual guarantee, the connection was not sufficient to render a claim for specific performance of the guarantee, a claim for the construction of the yacht. The special plea therefore failed. Page J declined also to view the claim as being ancillary to a maritime claim (see the current section 1(1)(ee) of the Act), partly because the claim was not so framed, but also on his own accord. It has since been remarked by Hare (Shipping Law & Admiralty Jurisdiction in South Africa at page 53), quite correctly, that the decision by Page J in Peros results in an unnecessary narrow view of the extent to which the Act extended South African admiralty jurisdiction and sought to draw an unnecessary distinction between old and new jurisdiction, interpreting the former more restrictively than the latter.
Until recently, however, Peros was the accepted position in Admiralty law in South Africa.
Kuehne & Nagel concerned an application for edictal citation and substituted service. Both parties appeared before the court in the exercise of its ordinary common law (i.e. non-admiralty) jurisdiction. The respondent challenged the court’s jurisdiction, contending that the claim brought by the applicant was a “maritime claim” and that, as a result, the matter fell within the exclusive jurisdiction of the High Court in Admiralty.
In brief, the applicant sought payment under two demand guarantees (or “Parent Company Guarantees”) that were issued by the respondent, a peregrinus of the court and of the country. It appears from the judgment that on 13 November 2012 and 13 November 2013 respectively the respondent’s subsidiary, a local company trading under the name and style of Construczioni Moncada South Africa (Pty) Ltd (hereafter “the subsidiary”), concluded two Forwarding Services Agreements (being the underlying contracts) with the applicant. Pursuant to the foregoing, on 13 November 2012 and 27 February 2013 respectively the respondent issued two demand guarantees in favour of the applicant, in each instance expressly guaranteeing as principle obligator “the due and the correct and punctual performance by [the subsidiary] of all its payment obligations to [the applicant]” under the Forwarding Services Agreements. The demand guarantees further provided that should the subsidiary fail to make payment under the Forwarding Services Agreements, the respondent undertakes and will become obliged to make payment in terms thereof within seven days of receipt of a written demand from the applicant and will not contend the validity of the demand or the correctness of the amount demanded or become party to any claim or dispute of any nature which any party may allege. The demand guarantees contained both choice of law and jurisdiction clauses: the law and jurisdiction being that of South Africa. The subsidiary defaulted on its payment obligations to the applicant, thus prompting the applicant to seek payment under the demand guarantees from the respondent.
The applicant argued that (i) in line with established legal principles, the demand guarantees were wholly independent and autonomous of the underlying contracts, meaning that the respondent was not entitled to raise the subsidiary’s possible defences to the underlying claim in terms of the Forwarding Services Agreements as defences against the applicant’s claim against the respondent under the demand guarantees; and (ii) as a result of the independent and autonomous nature of the underlying contracts, the applicant’s claim under the demand guarantees could not be characterised as a maritime claim. The respondent took the opposite view: it argued that the applicant’s claim is a "maritime claim” for purposes of the Act. Therefore the court had no jurisdiction to hear the matter to begin with.
The court, by way of Van der Linde J, held that the claim based on the demand guarantees constitutes a maritime claim as it relates to the remuneration of a forwarding agent, as envisaged in the Act. In doing so, the court appears to have watered down the interpretation applied in Peros in determining whether or not the relevant claim is covered under section 1(1) of the Act. Van der Linde J first determined the precise ambit and nature of the claim. This was done by having regard to not only the ordinary grammatical meaning of the phrase “relating to” but also the relevant context (or “milieu”), which may include the historical background of the claim in question. The court also confirmed that there must be a relationship between the claim and the maritime topic to which it relates, which is sufficiently intimate to impart to the claim a maritime character which would render it appropriate for the claim to be adjudicated in accordance with maritime law. However, the court here came to a very different conclusion. The conclusion may, with respect be justified on the basis that the claim for freight forwarding obligations did not constitute a claim under English Admiralty law in our law prior to 1983, interpreting the obligation as a contractual obligation under Roman Dutch law, and thereby determining the intimacy of the relationship between the maritime contract and the alleged maritime claim.
The court distinguished the present matter from the decision by Lopes J in MFV El Shaddai, Oxacelay and Another v MFV El Shaddai and Others 2015(3) SA 55 (KZD), a case wherein it was held that the underlying contract did not give rise to a maritime claim. The purpose of the underlying loan agreement in the El Shaddai case was to finance a company, a transaction far removed from any of the grounds of jurisdiction listed in the definition of “maritime claim” in the Act. Despite arguments to the contrary, Lopes J held that the nature and purpose of the underlying loan agreement cannot be altered by the fact that the recipient of the loan was to repay the loan out of the proceeds of its continued fishing operations. As the underlying loan would not constitute a “maritime claim” in terms of the Act, because there was no legally relevant connection between the claim (being the repayment of the loan) and the fishing venture, it thus followed that the applicants in El Shaddai could not rely on a previous foreign judgment to establish a claim in terms of section 1(1)(aa) or section 1(1)(ee) of the Act.
The difficulty for any court tasked with deciding whether or not a claim relates to one of the grounds of jurisdiction listed in section 1(1) of the Act is that the phrase “relating to” (as used in the Act) is not capable of precise definition. As noted by Van der Linde J in Kuehne & Nagel, despite the wide meaning attributable to the phrase “relating to”, there should at least be a legally relevant connection between the claim being made and the object to which the claim is required to relate for purposes of the definition of “maritime claim”. Failing such a connection, the claim should not be classified as constituting a “maritime claim" for purposes of the Act, as was the case in El Shaddai. In making such a determination, our courts may have regard to the context which may include the historical background of the claim under consideration. For the moment there appears to be a divergence between the bench in KwaZulu-Natal and Gauteng on this issue.