Palm Base Maritime Sdn Bhd (Palm Base - respondent) arrested the Heavy Metal, an alleged associated ship of the Sea Sonnet (later renamed the Seri Ibonda), pursuant to s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (AJRA) for security to a future claim in London arbitration against Dahlia Maritime Ltd (Dahlia). Dahlia and Belfry Marine Ltd (Belfry - appellant) were both Cyprus companies with the same registered address. The respondent purchased Sea Sonnet from Dahlia.

The claim, based on an supposed breach of the memorandum of agreement, was alleged to be a maritime claim in terms of s 1(1)(c) of the AJRA. This concerned a failure to notify the classification society of relevant information.

The Sea Sonnet and the Heavy Metal were alleged to be associated ships. A Cypriot advocate served as ‘postbox and registered office’, and was the majority shareholder and sole director of both Dahlia and the appellant. Another person exercised ultimate control over a group of vessel owning companies and over a company which managed and operated a fleet of ships, including the Sea Sonnet (when it was still owned by Dahlia) and the Heavy Metal.

The appellant applied for the release from arrest of the Heavy Metal, arguing that it and the Sea Sonnet were not associated ships. Since it was the respondent, and not Dahlia, who owned the Sea Sonnet, it had not cancelled the sale of Sea Sonnet. When the Heavy Metal was arrested as an associated ship of the Sea Sonnet, no action in rem could, for this reason, have been brought against the Sea Sonnet by the respondent pursuant to s 3(4)(b) of the AJRA.

The application was dismissed, leading to the present appeal. There were four issues. First, whether a claim had to be currently enforceable by an action in rem in terms of s 3(4) of the AJRA before the associated ship provisions (ss 3(6) and 3(7) of the AJRA) could come into play. Second, whether the respondent’s cause of action had arisen at the time when the guilty ship ie the Sea Sonnet had still been owned by Dahlia. Third, whether it had been proved that the relevant person had the ‘power, directly or indirectly, to control’ Dahlia and the appellant so that the deeming provisions of s 3(7)(b)(ii) of the AJRA came into operation. Fourth, whether, even if the deeming provision came into operation, it gave rise to an irrebuttable presumption incapable of being refuted.

Held: Appeal dismissed.

The first issue considered the Arrest Convention 1952. Section 3(6) of the AJRA is modelled on art 3.1 of the Arrest Convention 1952. There were great developments in maritime law, including the Arrest Convention 1952, which endeavoured to produce a unification of rules relating to the arrest of sea­going ships in the period after 1890, when the British Parliament enacted the Colonial Courts of Admiralty Act 1890. Since most of these developments had not been incorporated in South African legislation, South African maritime law had become out of date and filled with anachronisms. The Colonial Courts of Admiralty Act 1890 formed the basis of admiralty practice in South Africa until the coming into operation of the AJRA.

A great degree of consistency among maritime nations was reported as desirable and hence it was appropriate for the South African courts to have regard to the Arrest Convention 1952 and the case law of those countries which have adopted and clearly modelled the articles in the Arrest Convention 1952. However, the case law of other maritime nations, which did not go as far as the AJRA, could not provide guidance to interpretation.

The Arrest Convention 1952 served as the basis for a number of provisions in the AJRA, in particular the definition of maritime claims in s 1 (see art 1, Arrest Convention 1952). Additionally, the provisions in the Arrest Convention 1952 for the arrest of sister ships (ships in the same ownership) as the guilty ship were not only taken over, but extended to cover associated ships to address the practice of registering one-ship companies to evade sister ship provisions of the Arrest Convention 1952.

The purpose of the Arrest Convention 1952 was to provide uniform rules regarding the right to arrest seagoing ships by judicial process to secure a maritime claim against the owner of the ship. (Owners of the Motor Vessel Erkowit v Owners of the Ship Jade; Owners of the Cargo lately Laden on Board the Motor Vessel Erkowit v Owners of the Ship Eschersheim [1976] 1 All ER 920 (Lord Diplock)).

The effect of the Arrest Convention 1952 was to allow the arrest, not only of the offending ship, but also of any other ship belonging to the same owner, but only one ship (The Banco: Owners of the Motor Vessel Monte Ulia v Owners of the Ships Banco and Others [1971] 1 All ER 524 (Denning LJ and Cairns LJ)). Denning LJ was right to say that art 3.1 of the Arrest Convention 1952 authorised the arrest of a sister ship even when the ‘guilty ship’ was not available to be arrested because it had sunk. This seemed to follow from the nature of the compromise arrived at Brussels between the English ‘guilty ship’ approach and the Continental approach (which was also the approach in South Africa for non­-admiralty matters where property was arrested to found or confirm jurisdiction).

Article 3 of the Arrest Convention 1952 represented a compromise between the wide powers of arrest available in some of the Civil Law countries, including Scotland, in which jurisdiction to entertain claims against a defendant could be based on the presence within the territorial jurisdiction of any property belonging to it, and the limited powers of arrest available in England and other Common Law jurisdictions, where the power to arrest was exercisable only in respect of claims falling within the admiralty jurisdiction of the Court and based on a supposed maritime lien over the particular ship in respect of which the claim arose; this referred not only to maritime liens properly so called, but also to statutory rights of action in rem (sometimes called ‘statutory liens’ (The Zafiro: John Carlbom & Co Ltd v Owners of SS Zafiro [1959] 2 All ER 537 (Hewson J)).