The claims of the respondents arose in relation to cargo which was laden on board the MV Hymetus at Bourgas, Bulgaria, and carried under bills of lading issued by Palmyra Tsiris Lines SA of Piraeus, Greece. The bills of lading contained Greek choice of law and exclusive jurisdiction clauses. The cargo was destined for various ports in the Far East but was lost when the Hymetus sank on 17 November 1986 in the South China Sea about 180 miles from Hong Kong. In November 1987 the respondents sought to enforce their claims in the Court below by instituting actions in rem against the appellant, the MV Achilleus, which was an associated ship as defined in s 3(7)(a)(ii) of the Admiralty Jurisdiction Regulation Act of 1983 (the Act). The appellant applied for a stay of the actions in terms of s 7(1)(b) of the Act, which provides that: 'A Court may stay any proceedings in terms of this Act if it is agreed by the parties concerned that the matter in dispute be referred to arbitration in the Republic or elsewhere, or if for any other sufficient reason the Court is of the opinion that the proceedings should be stayed.'

The application was dismissed by the first instance Judge on the ground that although the foreign jurisdiction clauses were applicable, in the sense that they operated as a submission of the matters in dispute to the courts of Greece, they did not constitute sufficient cause for a stay of the proceedings. The appellant appealed.

Held: The appeal is upheld. Subject to the appellant providing substitute security within 14 days for the respondents' claims before the Greek courts, it is ordered that the actions brought by the respondents are stayed pending their determination by courts of competent jurisdiction in Greece. As against the provision of security, the security provided by the appellant in the South African actions will be released.

The respondents contended that the foreign jurisdiction clauses, by referring to disputes 'relative to the execution of this contract' and 'arising under this bill of lading', are limited in their operation to claims based on breach of contract and do not cover delictual claims based on allegations of ownership and negligence. It is common cause that the allegations in the particulars of claim in each case encompass delictual as well as contractual causes of action, but the delictual claims clearly arise out of the negligent performance of obligations under the contract of carriage. Moreover, the bills of lading incorporate the Hague Rules, and the defences and limits of liability provided for in the Rules are applicable to any action for loss of goods carried under the contract, whether the action be founded in contract or delict [ie tort].

As to the grounds upon which the first instance Judge refused to stay the proceedings, his conclusion that the loss of the ship and the cause of the loss have no connection with Greece is clearly wrong. In terms of art 3.1 of the Hague Rules the carrier is bound before and at the beginning of the voyage to exercise due diligence to: (a) make the ship seaworthy; and (b) properly man, equip and supply the ship; and the carrier has to prove due compliance with these obligations as a prerequisite to reliance upon an exception such as 'perils of the sea' under art 4.2. The witnesses in regard to these issues are all based in Greece. None of the parties is connected in any way with South Africa, and apart from the fact that the Hymetus underwent repairs in Durban in June 1986, some five months before it sank, the case has nothing whatsoever to do with South Africa.

The Judge's finding that the claims based on the shipowner's negligence arise from a delict committed in Durban, and are accordingly governed by South African law, is incorrect. To the extent that they are founded on the shipowner's negligence, the claims relate to disputes arising under the bills of lading and the applicable law is that which the parties chose in cl 3 of the bills: the law of Greece.

To the extent that the claims are based on a breach of the contract of carriage, Greek law undoubtedly applies and the defence to the claim must be determined according to the principles of that law. It follows that if the actions were to proceed in South Africa the relevant principles would have to be established by the expert evidence of one or more Greek lawyers, and that would be more expensive and less satisfactory than leaving the matter to be decided by a Greek court as the parties agreed to do. The mere fact that the defence invokes an exception under the Hague Rules does not justify the Judge's conclusion that it would be determined by the application of the same principles under South African law. There is no evidence of the relevant provisions of Greek law and no indication of the manner in which Greek courts interpret and deal with the Hague Rule exception of perils of the sea. The Court is not aware of any South African case dealing with this defence.