THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case no: 972/2015

Name of Ship: MV ‘NYK ISABEL’
In the matter between:

NORTHERN ENDEAVOUR SHIPPING PTE LTD      APPELLANT
and
THE OWNERS OF THE ‘NYK ISABEL’       FIRST RESPONDENT
NIPPON YUSEN KABUSHIKI KAISHA
(‘NYK LINE’)

SECOND RESPONDENT

Neutral citation: Northern Endeavour Shipping Pte Ltd v Owners of
MV NYK Isabel (972/2015) 2016 ZASCA 89 (1 June
2016)
Coram:
LEACH, THERON, SERITI and WALLIS JJA and
KATHREE-SETILOANE AJA.
Heard:
25 May 2016
Delivered: 1 June 2016
Summary: Maritime law – associated ship arrest relying on deeming
provision in s 3(7)(c) of the Admiralty Jurisdiction Regulation Act 105 of
1983 (the Act) – charterer deemed to be owner of ship concerned –
charterer includes a slot charterer – application for security in terms of

s 5(2)(c) of the Act – requirements for – prima facie claim – reasonable
and genuine need for security – factors relevant to exercise of discretion.

ORDER

On appeal from: KwaZulu-Natal Local Division, Durban (Mnguni J,
sitting as court of first instance):
1 The order of the high court is amended in the following respects:
(a)  The deletion of paragraph 1 and the renumbering of the remaining
paragraphs accordingly.
(b)  The deletion in the original paragraph 4.2.3 of the words:
„the Respondent‟s in rem action will be dismissed with costs,
alternatively‟
2  Subject to those amendments the appeal is dismissed with costs,
such costs to include those consequent upon the employment of
two counsel.

JUDGMENT

Wallis JA (Leach, Theron and Seriti JJA and Kathree-Setiloane AJA
concurring)
[1] This appeal involves a claim for security by the second respondent,
Nippon Yusen Kabushiki Kaisha trading as NYK Line (NYK), against
the appellant, Northern Endeavour Shipping Pte Ltd (NES). Mnguni J
sitting in the KwaZulu-Natal Local Division, Durban, exercising its
admiralty jurisdiction, upheld the claim and ordered NES to provide the
security demanded by NYK in an amount of nearly $10 million within ten
days of the court‟s order. The penalty for it failing to do so was that the
deemed arrest of the NYK Isabel, which it had obtained in order to pursue

an action in rem against that vessel in respect of a claim against NYK,
would fall away and become of no force and effect. In addition the order
provided that the action would either lapse automatically, or that NYK
could approach the court for an order dismissing the action. In practical
terms the effect of the order was that NES would be unable to continue
with its action. The high court granted leave to appeal to this court against
that order. The circumstances in which the claim for security was made
were unusual and it is necessary at the outset therefore to set out the
factual background in some detail.

The background facts
[2] By a time charter party dated 2 November 2000, Kien Hung
Shipping Co Ltd (Kien Hung) chartered the Andhika Loreto from its
owners, Lady Loreto Shipping Inc. On 20 November 2001, by way of an
addendum, NES assumed the rights and obligations of the owners under
the charter party. At some stage, although the date is unclear, the vessel
was renamed Northern Enterprise and it is by that name that I will refer
to it.

[3] In the latter stages of 2002 Kien Hung, NYK and another shipping
line, referred to as CSAV, which played no part in these events,
concluded a slot exchange agreement for the operation of a regular
container service from the Far East to the East Coast of South America,
via South Africa. The service was to be known as Supergex and would
operate a weekly round-trip service using vessels provided by each of the
participants. Each line would nominate vessels for the service and would
in respect of those vessels be the ship operator. The lines, other than the
ship operator in relation to each vessel, would charter slots on the vessels
so nominated in agreed proportions. These charters would be governed by

the terms of a standard slot charter agreement. Each line would, however,
issue its own bills of lading in respect of cargo booked on a vessel and
would be the principal carrier in respect of such cargo.

[4] On 22 February 2003 Kien Hung nominated the Northern
Endeavour to undertake this service for a voyage from Pusan, South
Korea to Santos, Brazil via various ports including Singapore and
Durban. At Singapore NYK loaded a number of containers on board the
vessel in bay 22. When the vessel arrived in Durban there was a request,
the nature of which was disputed, that these containers be re-stowed. It is
alleged by NES that NYK refused that request, a dispute we do not have
to address. The vessel then sailed for Brazil.  Off the Cape of Good Hope
it encountered a fierce storm with force 10 or 11 winds, heavy seas and
waves of up to 9 metres in height. In that storm the container stack in bay
22 collapsed. Eleven containers were washed overboard and lost and the
cargo in a number of other containers in that bay was damaged.

[5] Cargo underwriters, acting under rights of subrogation, instituted
action against NYK in Brazil to recover the losses suffered as a result of
these events. They relied upon the fact that NYK had issued the bills of
lading under which the cargo was carried and was the carrier of the cargo
under those bills of lading. NYK joined NES to the proceedings, claiming
an indemnity from it in the event of it being held liable to the cargo
underwriters. The Brazilian court upheld both the cargo underwriters‟
claim and NYK‟s claim against NES for an indemnity in the same
amount as it had been held liable to pay to the underwriters. An appeal
against that judgment failed. There is apparently a further appeal pending
before the highest court in Brazil, but the volume of cases awaiting a

hearing is such that it is improbable that the appeal will be heard in the
near future.

[6] NES was aggrieved by this result as it holds NYK entirely liable
for the losses that were suffered on this voyage. It alleged that the reason
for the collapse of the containers stacked in bay 22 was the improper
manner in which NYK caused them to be stowed. It levelled three
complaints against NYK. The first was that it caused 24 containers to be
stowed on the port side of bay 22 and another 24 on the starboard side
with only a single container in the central portion of the stow, thereby
depriving the outside containers of necessary support and the stow of
stability. Second, it contended that the upper containers in the stow were
loaded with heavier cargo than the lower containers, and this also affected
the stow‟s stability. Third, it claimed that, when the vessel arrived in
Durban, NYK was requested to re-stow these containers in a more
satisfactory manner and that it refused to do so. It alleged that the defects
in the stow were caused by this improper method of stowing the
containers and pointed to the fact that, notwithstanding the magnitude of
the storm that the Northern Endeavour encountered, no other containers
were lost and no other cargo was damaged.

[7] NES contended that any amount that it is obliged in due course to
pay NYK pursuant to the Brazilian judgment will constitute damages
suffered by it in consequence of NYK‟s actions in causing the improper
stowage of containers in bay 22 on the Northern Endeavour. It alleged
that it was entitled to recover these damages from NYK in an action in
tort or delict, based on negligence. To that end it caused the NYK Isabel, a
vessel owned by Mercurius Shipping Pte Ltd (Mercurius), but controlled
by its parent NYK, to be arrested as an associated ship on 23 January

2013, when it called at Durban. Security was furnished on 25 January
2103 to secure the release of the vessel and there is now a deemed arrest
in place in terms of s 3(10) of the Admiralty Jurisdiction Regulation Act
105 of 1983 (the Act).

[8] A writ of summons was served in the action and an appearance to
defend delivered on behalf of both Mercurius and NYK. Particulars of
claim were delivered as was a plea embodying a number of special pleas.
There is a replication in response to the plea. The litigation over the claim
threatens to be protracted unless it is forestalled by the present
application.

The application
[9] On 26 November 2013 NYK and Mercurius brought an application
against NES claiming the following relief:
„1.
NIPPON YUSEN KABUSHIKI KAISHA (“NYK Line”) is granted leave to
be joined to these proceedings as an intervening applicant; and
2.
In terms of section 5(2)(b) of the Admiralty Jurisdiction Regulation 105 of
1983 (“the Act”) the Respondent is ordered to provide security to the Intervening
Applicant for its claim against the Respondent advanced in proceedings (number
1.242/04) before the Court of Santos, Brazil and which has resulted in a judgment in
favour of NYK Line against the Respondent currently subject to a challenge by
special appeal.
3.
The Respondent is directed to provide said security:
3.1
in the sum of US$11,428,277.00;
3.2
within 10 days of the date of this order;
3.3
in a form to the satisfaction of the Applicants‟ attorneys or, failing that,
to the satisfaction of the Registrar of this Court.
4.
In terms of section 5(2)(c) of the Act, it is ordered that:
4.1
the deemed arrest of MV “NYK Isabel” at the instance of the
Respondent (as Plaintiff) in the action under case number A7/2013 is

made subject to the Respondent providing the security as set forth in
paragraphs 2 and 3 of this Order;
4.2
in the event that the Respondent does not provide the security in
compliance with paragraphs 2 and 3 of this Order:
4.2.1 the aforesaid deemed arrest of the MV “NYK Isabel” will fall away
and be of no force or effect;
4.2.2 the letter of undertaking provided by the First Applicant to the
Respondent to secure the release of the MV “NYK Isabel” from arrest
(and of which a copy is annexure “SMSD1” to the founding affidavit
of Mr Dwyer in this application) shall be null and void and returned for
destruction; and
4.2.3 the Respondent‟s in rem action will be dismissed with costs,
alternatively, the Applicants shall have leave, on the same papers
supplemented in so far as may be necessary, to make application to this
Court for an order that the Respondents claim in the in rem action is
dismissed with costs.
5.
The Respondent is ordered to pay the Applicants‟ costs of the application.‟

[10] The security sought by NYK was not security for a counter-claim
in the existing in rem action. Instead it was security for the indemnity
claim advanced by NYK against NES in Brazil, for which it had already
been granted judgment. The high court held that it was incumbent on it to
order security „in order to render the court‟s judgment effective if it finds
against‟ NES. Other than a reduction in the amount of the security, the
relief that the high court granted was in accordance with the prayer.

[11] In the founding affidavit it was said that „arguably‟ NYK was
already a party to the pending litigation, but to place matters beyond
doubt it sought an order that it be granted leave to „join in the proceedings
as the second intervening applicant in this application‟. There was a
considerable amount of ambiguity in this to which I will need to refer in

due course. Beyond that the deponent, Mr Dwyer, a senior and very
experienced attorney in maritime matters, set out the history of the
voyage giving rise to the dispute and the history of the litigation in Brazil.

[12] In dealing with the claim for security, Mr Dwyer said that,
notwithstanding the further pending appeal, the cargo underwriters were
now in a position to enforce their judgment against NYK, against the
provision of security in the event of the judgment being overturned on
appeal. At the time he deposed to his affidavit the amount of the
judgment, after taking account of the provision in Brazilian law for a
monetary adjustment, presumably related to inflation, and interest, was in
excess of US$ 11 million. NYK had obtained security from NES by way
of a P & I Club letter of undertaking in an amount of US$ 1,8 million. He
accordingly said that his client required security for its claim in an
amount of some US$ 9.6 million.

[13] In support of this claim, Mr Dwyer submitted that his clients had a
prima facie case against NES as evidenced by the judgment it had
obtained against it. As regards the need for security he said that NES had
disposed of the Northern Endeavour and was now a dormant non-trading
shell without assets or income. In view of the fact that, as a result of its
arrest of the NYK Isabel, NES was fully secured for its claim against
NYK he submitted that it would be just and equitable for NYK in its turn
to be fully secured for its claim against NES. Lastly he submitted that in
order to compel NES to comply with an order to provide security the
order should provide that if it failed to do so within a specified time the
deemed arrest would be set aside; the security provided by NYK would
be declared null and void and returned; and either the action against the

NYK Isabel would be dismissed, or NYK should be given leave to apply
for it to be dismissed.

[14] Mr Cunningham who represented NES, also a senior and
experienced maritime attorney, did not seriously challenge the facts
deposed to by Mr Dwyer in the opposing affidavit. He contended that
NYK was not a party to the South African action and that unless it
became a party it could not ask the court to order that NES provide it with
security. In any event he contended that security could not be ordered for
NYK‟s claim against NES under the Brazilian judgment, but only for a
claim pending or contemplated before a South African court. If these
legal arguments were not upheld he contended that no sufficient case had
been made for security to be ordered. If all this failed he contended that
the sanctions proposed by Mr Dwyer were inappropriate.

The arrest of the NYK Isabel
[15]    The NYK Isabel was arrested as an associated ship. The basis for
such an arrest was set out in the Silver Star.1 The first element of such an
arrest is the identification of the owner of the ship in respect of which the
claim arose (the ship concerned) at the time that claim arose. Section
3(7)(c) of the Act provides that the charterer or subcharterer of the ship
concerned is deemed to be the owner of the vessel for the purposes of
effecting an associated ship arrest, where the charterer or subcharterer
and not the owner is liable in respect of the claim. NYK was the slot
charterer of a defined number of slots on board the Northern Endeavour
on this particular voyage. NES accordingly alleged that in terms of

1 MV Silver Star: Owners of the MV Silver Star v Hilane Ltd [2014] ZASCA 195; 2015 (2) SA 331
(SCA) paras 14 and 16. (Silver Star).

s 3(7)(c) of the Act it was deemed to have been the owner of that vessel at
the time that the claims by the cargo underwriters arose, as these were
claims for which it, and not NES, was liable. That satisfied the first
requirement for an associated ship arrest. At the time of the arrest of the
NYK Isabel, it was owned by a company (Mercurius) controlled by NYK.
That satisfied the second requirement. The NYK Isabel was accordingly
an associated ship in relation to the Northern Endeavour, the ship in
respect of which NES‟s claim had arisen.

[16] The premise upon which this rested was that a slot charterer was a
charterer for the purposes of s 3(7)(c) of the Act. If that premise was
incorrect, then the arrest of the NYK Isabel should not have been effected
and could have been set aside on application to the high court exercising
its admiralty jurisdiction. That would have been a simple and direct way
of NYK disposing of NES‟s claim and it would not have been necessary
for it to invoke the complicated process of obtaining and enforcing an
order for security.

[17] Were that the position, it would have affected the question whether
it was appropriate for the high court to order NES to provide security.
NYK would have had a remedy near to hand and, if it eschewed reliance
on it without good reason, that would be a strong factor weighing against
the court coming to its assistance by ordering NES to provide security.
Accordingly, this court called upon the parties to file written argument on
this point and the issues flowing from it. Both sides filed succinct and
helpful supplementary written arguments and we were provided with
copies of the relevant authorities. Counsel were at one in submitting that
a slot charterer fell within the concept of a charterer in terms of s 3(7)(c)
of the Act. For the reasons that follow I think they were correct.

[18] When the Act was first passed s 3(7)(c) read as follows:
„If a charterer or subcharterer by demise, and not the owner thereof, is alleged to be
liable in respect of a maritime claim, the charterer or subcharterer, as the case may be,
shall for the purposes of subsection (6) and this subsection be deemed to be the
owner.‟
This wording was drawn from Article 3.4 of the Arrest Convention,2
providing for sister ship arrests, the relevant portion of which reads:
„When in the case of a charter by demise of a ship the charterer and not the registered
owner is liable in respect of a maritime claim relating to that ship the claimant may
arrest such ship or any other ship in the ownership of the charterer by demise …‟

[19] The underlying purpose of s 3(7)(c) was to enable a claimant
having a claim against a demise charterer to pursue that claim by way of
an action commenced by an associated ship arrest. Absent the deeming
provision, it was debatable whether a debt incurred by a demise charterer
could be pursued in that way.3 The effect of the presumption was to make
it clear that it could, so that where the claim lay against the demise
charterer and not the owner, as would probably be the case in regard to
claims under bills of lading issued by the demise charterer as carrier, or
claims for the price of goods supplied to the vessel at the instance of the
demise charterer,4 the claim could be pursued by way of an action
commenced by an associated ship arrest.

[20]  The existence of the deeming provision reinforced the purpose of
the associated ship arrest provisions, which was to impose liability for

2 International Convention for the Arrest of Sea-Going Ships concluded in Brussels on 10 May 1952.
See D J Shaw Admiralty Jurisdiction and Practice in South Africa at 40.
3 There was some authority in England to the effect that a demise charterer was to be equated with the
owner of the vessel. See Shaw supra at 32-33
4 See for example the facts in Transol Bunker BV v MV Andrico Unity and Others; Grecian-Mar SRL v
MV Andrico Unity and Others [1989] ZASCA 30; 1989 (4) SA 325 (A)

maritime claims where it belonged by virtue of common ownership or
common control of vessels.5 But its reach was restricted to the case of the
demise charterer, which is a less common form of charter party than time
or voyage charter parties. It also meant that, in the case of claims arising
in respect of time or voyage chartered vessels, where the claim arose
against the charterer and not the owner, the associated ship arrest
provisions were not available to assist the claimant. Where a time or
voyage charterer issued its own bills of lading as carrier or was
responsible for the supply of bunkers or provisions to the vessel, creditors
would not be able to arrest an associated ship to pursue their claims. Nor
could the owner of the vessel subject to the charter make use of the
associated ship provisions to enforce a claim against the charterer arising
under the charter party.

[21] These problems were addressed by way of the 1992 amendment to
s 3(7)(c). The reference to demise charterer was deleted and the section
now reads:
„If at any time a ship was the subject of a charter-party the charterer or subcharterer,
as the case may be, shall for the purposes of subsection (6) and this subsection be
deemed to be the owner of the ship concerned in respect of any relevant maritime
claim for which the charterer or subcharterer, and not the owner, is alleged to be
liable.‟
This was a substantial extension of the scope of the associated ship arrest
provisions in the Act. There can be no doubt that it extended to both time
and voyage charters notwithstanding the limited power of a voyage
charterer to give directions to the owner in regard to the operation of the
ship. The question is whether it extended to other forms of charter party.

5 Silver Star para 5.

[22] The origin of slot charter parties lies in the expansion of
containerisation in international shipping. According to a special circular
issued by the Baltic and International Maritime Council (BIMCO):6
„Slot charter parties, or space charter agreements, as they are also called, were first
introduced in the very late 1960‟s by major container operators in consortia on the
basis of exchanging slots on each other‟s vessels. Usually, each operator‟s entitlement
to space on other operators‟ vessels would be in relation to the tonnage entered into
the consortia by that particular vessel operator. Even though financial adjustments
were made to match the number of slots being exchanged, the essence of the
arrangement was exchange rather than sale. Therefore, terms and conditions reflecting
this form of slot chartering were often provided in what could be referred to as a
Cross Charter Party.
…
The main characteristic of a Cross Charter party, in particular, when used in consortia
operation, is that it is rarely used as a free standing document. On the contrary it is
usually attached to an operating agreement which contains the essential details of the
slot charter arrangement, such as number of slots to be exchanged, financial
arrangements, the specified voyages, and other operating details, leaving the Cross
Charter Party primarily as the liability document.‟

[23] A slot charter party has been defined7 as:
„A time or voyage charter under which the slot charterer has the right to use only a
specified amount of the ship‟s container carrying capacity. In container liner trades,
such charters may be reciprocal (“cross slot charters”) between operators/carriers, in
order to share capacity.‟
By contrast with this, the BIMCO circular says that:
„The feature of a slot charter party as a contract of carriage is unique in the sense that,
whereas the slot charter party is not a time charter party nor a voyage charter party, it
bears some similarity to both types of contract. As such, a slot charter party can be

6 Circular No 7, 10 November 1993. The circular explains the thinking underlying BIMCO‟s drafting
of the SLOTHIRE charter party.
7 In Annex 2 (Glossary of Legal Definitions) to the Legal and Economic Analysis of Tramp Maritime
Services February 2007 (EU Report COMP/2006/D2/002).

said to be a „hybrid‟ type of contract. It may be mentioned that, as distinct from a time
charter party when the entire vessel is being chartered, the slot charterers are only
hiring space on a vessel and they are therefore not acting as operators as under a time
charter party and usually have no control over the operation of the vessel.‟
To similar effect, Christopher Hancock QC expresses the view that a slot
charter is a unique form of charter with some elements analogous to a
time charter and some analogous to a voyage charter.8

[24] When courts have considered the status of slot charters they appear
to have concluded that they are a novel form of charter party, that has
evolved in response to changes in the manner in which sea transport
operates and is designed to meet the commercial contingencies of new
and changing circumstances. Thus in The “Tychy”9 the court was
concerned with the question whether a slot charterer was a charterer for
the purposes of s 21(4) of the Supreme Court Act, 1981. After a careful
consideration of the authorities on the question whether this term in the
Act was confined to a demise charterer, Clarke LJ held that it included
both a time and a voyage charterer. He went on to consider the position of
a slot charterer and held that there was in principle no difference between
that and a voyage charter of part of a ship. He said:
They are both in a sense charterers of space in a ship. A slot charter is simply an
example of a voyage charter of part of a ship.‟

[25] Other courts seem to be similarly inclined to accept that a slot
charterer is a charterer, although they have not necessarily endorsed the
idea that a slot charter is a form of voyage charter. When the High Court
of Australia was dealing with the meaning of the word „charterer‟ in

8 Christopher Hancock QC Containerisation, slot charters, and the law. Chapter 14 in D Rhiddian
Thomas (ed) Legal Issues Relating to Time Charters (2008) 247-256.
9 The “Tychy” [1999] 2 Lloyd‟s Rep 11 (CA) at 18-22.

s 19(a) of the Admiralty Act 1988 (Cth), Toohey J expressly included slot
charterers in the category of charterer.10  In the United States the US
District Court for the Southern District of New York said that a slot
charter is a „more specific type of sub-charter‟.11 In Canada a slot charter
has been described as a type of time charter,12 thereby emphasising its
hybrid character.

[26] In the field of limitation the right to limit under the Limitation
Convention 197613 is given to a charterer of the vessel. In the MSC
Napoli14 the court had to consider whether that right extended to slot
charterers. The court concluded that it did. In para 17 of the judgment
Teare J said:
„Indeed the ordinary meaning of the word charterer is apt to include any type of
charterer, whether demise, time or voyage charterer. There is no reason why it should
not also include a slot charterer. Standard textbooks refer to slot charters when
discussing types of charters … There is a good reason for a slot charterer to be within
the definition. Were slot charterers not within the definition, slot chartering, which is
an established and, to judge by its growth, an efficient way of organising the carriage
of goods would or might fall into disuse. A slot charterer‟s inability to limit liability
would not encourage international trade by way of sea carriage, which was the object
and purpose of the convention.‟

10 Laemthong International Lines Co Ltd v BPS Shipping [1997] HCA 55; (1997) 190 CLR 181; 149
ALR 675 at 681.
11 International Marine Underwriters v M V Patricia S 06 Civ 6273 (19 January 2007); (2007) 713
LMLN 1.
12 Canada Moon Shipping Co Ltd and Another v Companhia Siderurgica Paulista-Cosipa and Another
2012 FCA 284 para 53.
13 Convention on Limitation of Liability for Maritime Claims 1976. See also s 263(2) of the Merchant
Shipping Act 57 of 1951.
14 Metvale Ltd and Others v Monsanto International SARL and Others (the “MSC Napoli”) [2009] 1
Lloyds‟ Rep 246 [QBD (Admlty Ct)].

This conclusion has been accepted in textbooks on the subject of
limitation.15

[27] I do not think it desirable to approach a statute such as the Act,
which is concerned with events in the dynamic field of international trade
and shipping, on the basis that the meaning of expressions used in the
statute are fixed in stone at a point in time, and are incapable of being
adapted to accommodate new developments.16 When the Act speaks of
charter parties it is concerned to refer to contracts of a type developed by
and familiar to those engaged in maritime trade. It is not concerned to
restrict the category of such contracts. In other words it requires a court to
give a construction to the expression that is, so far as possible, consistent
with the commercial understanding of its meaning.

[28] Slot charters have evolved as the container revolution in maritime
transport has evolved. They meet a perceived commercial need and their
terms are largely adapted from the established time and voyage charters
that are in daily use in maritime trade. The objection to treating them as
charters appears to be based principally on the fact that the slot charterer
does not charter the entire vessel, but only a part thereof. But I can
perceive nothing in that fact that should operate to preclude slot
charterers from being characterised as charterers.

[29]  A final point that seems to me relevant is the purpose of s 3(7)(c).
It is to enable claims to be pursued by way of proceedings against an

15 Griggs, Williams and Farr Limitation of Liability for Maritime Claims (4 ed) at 11; Norman A
Martínez Gutiérrez Limitation of Liability in International Maritime Conventions (IMLI Studies in
International Maritime Law, 2011) at 25-27.
16 Malcolm v Premier, Western Cape Government [2014] ZASCA 9; 2014 (3) SA 177 (SCA) paras 10
and 11.

associated ship in circumstances where no claim lies against the ship
concerned and its owner. The deeming provision simply enables the first
requirement for an associated ship arrest to be satisfied without affecting
the commercial relationships underpinning the slot charter. If the owner
of the ship concerned is liable on the claim the deeming provision cannot
be invoked. A construction of the word „charterer‟ that includes a slot
charterer will serve the purpose of promoting the ability of creditors to
recover maritime claims. That is the underlying purpose of permitting
proceedings to be instituted by the arrest of an associated ship. So that
construction is consistent with the statutory purpose.

[30] For all these reasons I am satisfied that NYK was a charterer of the
Northern Endeavour for the purposes of the deeming provision in
s 3(7)(c) of the Act. It follows that it was not open to NYK on this ground
to set aside the arrest of the NYK Isabel as defective. I turn then to deal
with the other issues raised by the application for security.
Was NYK a party to the action?
[31]    The primary issue argued on behalf of NES was that NYK was
not a party to the action instituted by NES against the NYK Isabel. The
mere fact that it had entered an appearance to defend that action did not,
so it was submitted, make it a party as such. It was submitted that in order
for it to become a party it had to take a further procedural step and seek
its joinder.

[32] The crisp answer to this argument is that it is contrary to the
provisions of rule 8(2) of the Admiralty Court Rules, which provides that:
„Where summons has been issued in an action in rem, any person having an interest in
the property concerned may, at any time before the expiry of 10 days from the service

of the summons, give notice of intention to defend and may defend the action as a
party.‟ (Emphasis added.)
The rule states expressly that the person giving notice of intention to
defend thereafter defends the proceedings as a party. It imposes no further
obligation that must be discharged in order to become a party. And if
confirmation is needed that they are a party, one need only look at rules 9
and 10. In terms of rule 9(2)(c) a party is entitled to deliver pleadings.
There is no suggestion that NYK would have had to do any more from a
procedural perspective to invoke this rule. In fact an examination of the
plea delivered in the case shows that it was pleading specifically in
relation to the claim against it. For example, it raised a defence of res
judicata. But that defence is ordinarily only available to a party that was a
party to the judgment relied on as constituting res judicata.17

[33] The provisions of rule 10 dispose of any residual doubt. That reads:
„A defendant and any person giving notice of intention to defend in an action in rem
may claim in reconvention against the plaintiff, either alone or with any other person.‟
Acceptance of the proposition that a person does not become a party to an
action in rem merely as a result of giving a notice of intention to defend
the action, would have the remarkable result that, albeit that they were not
a party, they would be entitled to bring a claim in reconvention. Counsel
sought to escape this absurdity by contending that the effect of bringing a
claim in reconvention would necessarily be that the person bringing that
claim would have to make themselves a party to the action. But there is
nothing in the rules to suggest that any additional procedural step needs to
be taken before delivering the claim in reconvention. The only sensible

17 Caesarstone Sdot-Yam Ltd v World of Marble and Granite CC & others [2013] ZASCA 129; 2013
(6) SA 499 (SCA); [2013] 4 All SA 509 (SCA) paras 3 and 4.

construction of rule 8(2) is that such a person is already a party to the
action.

[34] Mr Mullins SC, for NYK, drew our attention to the background to
rules 8(2) and 10. When they were originally promulgated these two rules
were rules 6(2) and 8 respectively. There were, however, two significant
differences. In rule 6(2) (now rule 8(2)) the words „as a party‟ did not
appear. In rule 8 (now rule 10) the words „and any person giving notice of
intention to defend in an action in rem’ were not included.

[35] Those words were inserted in consequence of the judgment of
Scott J in The Lady Rose.18 In that case, after delivering a notice of
intention to defend an action in rem, the owner of the boat filed a plea and
a claim in reconvention. An exception was taken to the claim in
reconvention on the grounds that such a procedure was impermissible.
The exception was dismissed and Scott J said:19
„For the present purpose, however, it is unnecessary to have to decide upon the true
nature of the action in rem. Whatever that may be, it is at least clear that the action
cannot be regarded as simply an action against a res without reference to the owner or
person having an interest therein. This is particularly so where, as in the present case,
the action is dependent upon the existence of a claim in personam against the owner
(s 3(4)(b) of the Act). Even where the claim is founded upon a maritime lien, the
owner, of course, remains involved to the extent that he is compelled, in the absence
of payment, to defend the action or lose his ship or other maritime res. In these
circumstances, to regard him, for the purpose of Admiralty Rule 8, as being someone
entirely different from the defendant, viz the maritime res, and therefore unable to
counterclaim, would be to adopt an approach which, in my view, is unnecessarily
technical and could not have been what was intended. Indeed, to require the owner to

18 SA Boatyards CC (t/a Hout Bay Boatyard) v The Lady Rose (formerly known as the Shiza) 1991 (3)
SA 711 (C).
19 At 716B-E.

formally apply to be joined as a co-defendant with the res before being able to
counterclaim, or to bring a separate action, it seems to me, would serve no purpose
other than to increase the costs of litigation. In my judgment, therefore, the word
“defendant” in Admiralty Rule 8 is to be construed as including the owner of a
maritime res who appears to defend an action in rem against the res.‟

[36] There can be no doubt that the amendments effected to rules 8(2)
and 10 in 1997, were directed at incorporating the conclusion by Scott J
in The Lady Rose. They involved an express acceptance that the effect of
entering an appearance to defend an action in rem is to make the person
so doing a party to that action.

[37] Counsel for NES sought to call in aid a passage from my judgment
in the Alina II,20 where I dealt with the fact that in English admiralty
proceedings the mode of citation is such that, if the person entering
appearance to defend is personally liable under the claim, that person has
been properly cited and any judgment thereafter will be enforceable as a
judgment in personam against them. I went on to say:
„Under the present admiralty rules in South Africa the second of these consequences
would not flow from the entry of appearance to defend and the defence of the in rem
action. The reason is that in terms of admiralty rule 2(4), read with form 1 to the
admiralty rules, the summons in rem is not addressed to and does not cite the owner
or other persons having an interest in the vessel or other res arrested in order to
commence the action. In this our rules have departed from the forms that applied in
England, as referred to by Lord Wright in The Cristina supra, and the forms
previously applicable in South Africa, both when our courts sat as Colonial Courts of
Admiralty and in the first three years of operation of the Act.  One may therefore have
a submission to the court's jurisdiction by a person not cited as a party. However, the
problem, if it be one, is readily overcome by amending the summons to join that

20 MV Alina II (No 2): Transnet Ltd v Owner of MV Alina II [2011] ZASCA 129; 2011 (6) SA 206
(SCA) para 30.

person and to reflect, as rule 22(5) contemplates, that the action will proceed as an
action both in rem against the vessel and in personam against that person, with such
consequential amendments as the circumstances may require. Alternatively a separate
action in personam can be commenced on the basis of the submission to the court's
jurisdiction. Some such procedural step seems to be necessary in this country in order
that the action (and ultimately any judgment) reflects the party entering appearance as
a party to the judgment.‟

[38] It was not my intention in that passage to suggest that a person
entering an appearance to defend an action in rem did not thereby become
a party to the action. I was concerned to deal with a different proposition.
It was that, until such person was expressly cited, a judgment in rem
against the vessel would not be executable against them in personam
without some procedural step being taken to make it clear that the
judgment lay against them personally. I postulated that the procedural
step might be to cite them as a defendant by way of amendment as
contemplated by rule 22(5).  Alternatively a separate action in personam
could be instituted and the proceedings consolidated. The sole purpose of
these suggestions was to indicate how a judgment granted in rem could be
pursued and executed upon in personam. These procedural mechanisms
may not be exclusive. In the case of a judgment against a partnership it
has been held that it is permissible, after judgment, to approach the court
for an order naming the individual partners so that the judgment may be
enforced against them.21 Perhaps it would be permissible for the claimant
to seek an order declaring that the in rem judgment should also operate in
personam. That process would bear some similarity to the procedure
adopted in England in The Dictator.22 Be that as it may, that procedural
problem is not germane to the present issue, which is simply whether

21 M Rauff (Pty) Ltd v Petersburg Cole Agency 1974 (1) SA 811 (T) at 812E.
22 The Dictator [1892] P 304; [1891-4] All ER Rep 360.

NYK became a party to the action in rem against the NYK Isabel when it
entered an appearance to defend that action. The answer to that question
must be in the affirmative.

[39] It follows from that conclusion that paragraph 1 of the order
granted by the high court was unnecessary. It should be set aside. The
next issue is whether NYK was entitled to invoke the provisions of
ss 5(2)(b) and (c) of the Act in order to obtain the security it sought.

Applications for security in terms of s 5(2)(b)
[40] The application for security was brought in terms of ss 5(2)(b) and
(c) of the Act. Those sections provide that:
„A court may in the exercise of its admiralty jurisdiction –
(a) …
(b) order any person to give security for costs or any claim;
(c) order that any arrest or attachment made or to be made or that anything done
or to be done in terms of the Act or any order of the court be subject to such
conditions as to the court appears just, whether as to the furnishing of security
or the liability for costs, expenses, loss or damage caused or likely to be
caused, or otherwise.‟

[41] It is not easy to comprehend precisely what is meant by the words
„in the exercise of its admiralty jurisdiction‟ in the preamble to this
section. The admiralty jurisdiction of the high court is defined in s 2 of
the Act as being a jurisdiction to hear and determine any maritime claim
and s 1(1) of the Act contains a list of maritime claims, which includes in
para (ff) „the giving or release of any security‟. But the mere fact that a
claim is made for the provision of security against „any person‟ in terms
of s 5(2)(b) cannot on its own vest the court with jurisdiction to deal with
that claim. If the demand for security is unrelated to any maritime claim

and unrelated to any matter having a connection to proceedings before the
court, s 5(2)(b) could surely not be construed as empowering the court to
make such an order.23

[42] Section 5 of the Act deals generally with the powers of the court in
admiralty matters. It is true that some of these are powers that may be
exercised without any pre-existing need for the court to be seised with a
matter falling within its admiralty jurisdiction. In those instances, it is the
application for the exercise of the power that gives rise to the court‟s
jurisdiction. The powers in ss 5(3)(a) and, in some instances s 5(5)(a)(i),
read with s 5(5)(a)(iv), fall in that category. This is not, however, the case
with the powers in s 5(2), save for sub-section (dA), which was inserted
in 1992 and does not fit comfortably with the remaining matters dealt
with in the sub-section. Leaving aside the special instances mentioned
above, it seems to me in general that s 5 is directed at conferring on
courts powers to be exercised in matters where their admiralty
jurisdiction has already been established by arrest, attachment,
submission or otherwise. That is undoubtedly so in regard to the powers
in sub-sections (a), (c), (d), (e), (f) and (g) of s 5(2). In my view the
sensible construction of the words „in the exercise of its admiralty
jurisdiction‟ in the context of an application under s 5(2)(b) is that they
limit the application of the sub-section to circumstances in which the
court is already vested with admiralty jurisdiction in relation to the person
against whom such an order is sought.24 This should not hamper a litigant

23 MV Zlatni Piasatzi: Frozen Foods International Ltd v Kudu Holdings (Pty) Ltd and Others 1997 (2)
SA 569 (C) at 574A-B, although the problem does not so much lie with the wide wording of the sub-
section, but with the interpretation of the preamble to it.
24 In view of the point discussed earlier in this judgment that a person that has entered an appearance to
defend in an action in rem thereby becomes a party to the action, the conclusion in MV Rizcun Trader
(3): Manley Appledore Shipping Ltd v MV Rizcun Trader 1999 (3) SA 966 (C) at 973 B-C that an order

wishing to obtain an order that security be provided in the light of the
extensive powers of the court to order joinder in terms of s 5(1).

[43] Differing views have been expressed in regard to the scope of the
power given to the court in terms of s 5(2)(b).25 In the context of
applications for security for counterclaims brought by the owners of
vessels arrested in actions in rem in South Africa or arrested under
s 5(3)(a), there are judgments that suggest that it should be sparingly
exercised.26 These cases have also tended to view the proper approach to
its exercise through the prism of the common law in regard to compelling
peregrini to provide security. Others have disagreed.27 In my view the
language of the section does not restrict the manner in which the power to
order security is to be exercised. It is undesirable in that situation for the
discretion to be unduly circumscribed.28 A better approach is that adopted
by Friedman J in The Paz.29 In dealing with the similarly unqualified
discretion in s 5(3) of the Act, he said:
„(T)he discretion is an unfettered judicial discretion which falls to be exercised upon a
consideration of all relevant facts and circumstances. To endeavour to categorise or
catalogue those facts or circumstances, as has on occasions been done in the past
when questions of discretion were involved, is not only undesirable but is fraught with

for security could not be made against such a person because the only party to the proceedings was the
ship was incorrect.
25 Gys Hofmeyr Admiralty Jurisdiction Law and Practice in South Africa (2 ed, 2012) para IV.8, p 225.
26 Sunnyface Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another Intervening); Sunnyface
Marine Ltd v Great River Shipping Inc 1992 (2) SA 653 (C) at 657; The Catamaran TNT: Deans
Catamarans CC v Slupinski (No 1) 1997 (2) SA 383 (C) and The MV Leresti: Afris Shipping
International Corporation v MV Leresti (DMD Maritime Intervening) 1997 (2) SA 681 (D) at 689E-H.
27 The Yu Long Shan: Guangzhou Maritime Group v Dry Bulk SA 1997 (2) SA 454 (D); MV Heavy
Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 2000 (1) SA 286 (C) (Heavy Metal) at
298 D-H; MV Akkerman: Fullwood Shipping SA and Another v Magna Hella Shipping SA 2000 (4) SA
584 (C) at 592B-F; The Millenium Amanda SCOSA B141 at B151G-H and MV Gladiator: Samsun
Corp t/a Samsun Line Corp v Silver Cape Shipping Ltd Malta 2007 (2) SA 401 (D) at 411 I-J and
413D-E.
28 Heavy Metal at 298 F-H; MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v
Deiulemar Compagnia Di Navigazione Spa [2011] ZASCA 131; 2012 (1) SA 58 (SCA) (Pasquale
Della Gatta) para 57.
29 Katagum Wholesale Commodities Co Ltd v The MV Paz 1984 (3) SA 261 (N) at 264 A-C.

obvious dangers. This does not mean, however, that general guidelines as to the
Court's approach to the powers conferred upon it by s 5(3) should not, if possible, be
sought and stated.‟

[44]  It is unhelpful to have regard to common law rules on the
furnishing of security for costs in determining the scope of the power to
order security under this section. These are not only restrictive, but are
directed at different situations to those that arise under the Act.30 The Act
is a special statute dealing with maritime matters and it is directed at
meeting the needs of the shipping industry in enforcing maritime claims.
It provides the court with very extensive powers to deal with maritime
cases. In regard to the breadth of these powers I draw attention to s 5(1),
which empowers the court, to join a person as a party „notwithstanding
the fact that he is not otherwise amenable to the jurisdiction of the court‟,
and to s 5(2)(a), which provides that a court may decide any matter
arising in connection with a maritime claim „notwithstanding that any
such matter may not be one which would give rise to a maritime claim‟.
These powers take account of the reality that maritime defendants are
mobile and transitory in their presence in any particular jurisdiction.
Perforce they compel maritime claimants to become „wandering litigants
of the world‟, in the colourful expression of Didcott J recorded in The
Paz,31 but without the pejorative overtones with which he used it. In order
to address this problem the Act provides wide-ranging powers of arrest,
both for the purpose of instituting actions in South Africa32 and to enable
claimants to obtain security for proceedings in other jurisdictions.33

30 Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd intervening) 1994 (2) SA 363 (C) at 371
E-F. Hofmeyr, supra para IV.14, p 227.
31 At 263G-H.
32 These are commonly and compendiously referred to as associated ship arrests in terms of s 3(7) of
the Act.
33 Commonly referred to as security arrests in terms of s 5(3) of the Act.

[45] It follows in my view that the provisions of the Act should be given
a generous interpretation consistent with its manifest purpose of assisting
maritime claimants to enforce maritime claims. That construction is also
consistent with the right of access to courts afforded to everyone in terms
of s 34 of the Constitution. There is, however, a need for balance when
the courts exercise the expansive powers of arrest and attachment of
vessels embodied in the Act. Sections 5(2)(b) and (c) give courts the
means to balance the interests of claimant and defendant by ordering
counter-security in appropriate cases and attaching conditions to orders of
arrest or attachment. Thus it is commonplace for an arrest to be subject to
the provision of security for the costs of an application to set the arrest
aside, or for any loss suffered in consequence of that arrest if it is
subsequently set aside.34

[46] Turning then to general matters applicable to the exercise of a
court‟s discretion under s 5(2)(b) two requirements are well established.
The first flows from the language of the section, namely that security is to
be given for costs or a claim. An applicant for security under this section
must establish that they may be entitled in due course to an order for
costs, or that they have a claim against the party from whom security is
sought. The existence of a claim need only be established prima facie,
that is by producing evidence that, if accepted, shows the existence of a
cause of action.35 As the claim must be one that is enforceable it is for the
applicant also to show on a prima facie basis that it will be enforceable in
the forum in respect of which security is sought. The second is that the

34 Yu Long Shan at 462I-J.
35 Pasquale Della Gatta paras 19 and 20.

applicant must show a genuine and reasonable need for security. After
some debate at the level of the high court, this court held that to be a
requirement in the Wisdom C.36

[47] NES contended that the security sought by NYK was unrelated to
the subject matter of the litigation in South Africa. It is not clear to me
whether it was intended by this submission to contend that it was
impermissible for the court to grant the application for security.37 To the
extent that this was its purpose, I disagree. The section refers to „any
claim‟ and NYK has a claim for an indemnity against NES that is
reinforced by the judgment in its favour granted by the Brazilian court. It
would be entitled to pursue a counterclaim in the present action based on
that judgment. Such a claim is a maritime claim in terms of paragraph
(aa) of the definition of maritime claim. I understood counsel to accept
that, if NYK had brought a counterclaim on that basis, NES could not
have objected to the application for security on this ground. That
concession was in my view destructive of the argument. There can be no
practical difference between security for a counterclaim in South Africa
based on the Brazilian judgment and security for payment of that
judgment in its country of origin, if it is not set aside on appeal.

[48] An alternative submission was that while NES had submitted to the
jurisdiction of the South African court for the purposes of its action and
matters relating thereto or arising therefrom, it had not submitted to the
jurisdiction in relation to a claim for security to be provided in Brazil.

36 MV Wisdom C: United Enterprises Corp v STX Pan Ocean Co Ltd [2008] ZASCA 21; 2008 (3) SA
585 (SCA) para 26.
37 If it was, it was inconsistent with judgments such as MV Leresti: Afris Shipping International
Corporation v MV Leresti (DMD Maritime intervening) 1997 (2) SA 681 (D) at 686B-H and the
Pasquale Della Gatta supra.

That appeared to be based upon a passage in the judgment in the Rizcun
Trader (4),38 where it was said that while jurisdiction to make such an
order was inevitably present when the claim was to be pursued in
reconvention in the South African proceedings, that was not necessarily
so in relation to a claim to be pursued in a foreign tribunal. In that case
the initial arrest of the vessel as an associated ship by an entity referred to
as MAS, had been for the purpose of obtaining security for arbitration
proceedings in London. The owner of the arrested vessel brought an
application against MAS for security for a claim for damages for
wrongful arrest that it wished to pursue in South Africa. Van Reenen J
dismissed the application inter alia on the footing that in bringing the
initial application MAS had only submitted to the jurisdiction of the
South African court in respect of matters relevant to its original claim for
security and not in respect of the proposed claim for damages.

[49] That conclusion was incorrect. In Mediterranean Shipping Co v
Speedwell Shipping Co Ltd39 Van Heerden J said:
„It was the defendants who had initially sought the assistance of this Court against the
plaintiff for relief under the Act. The present claim is for loss flowing from that relief.
… The plaintiff's present cause of action arose under and by virtue of the Act and
within the jurisdiction of this Court. Anyone who invokes the jurisdiction of this
Court for relief under the Act must be taken - and can hardly be heard to contend
otherwise - to have submitted to that jurisdiction for the recovery, in terms of a
remedy under the Act, of any loss or damage flowing from his very action in coming
to this Court.‟

38 MV Rizcun Trader (4): MV Rizcun Trader v Manley Appledore Shipping Ltd 2000 (3) SA 776 (C) at
803G-804E.
39 Mediterranean Shipping Co v Speedwell Shipping Co Ltd 1986 (4) SA 329 (D) at 333J-334B.

[50] In this case NES has invoked the jurisdiction of the South African
court with a view to nullifying the effect of the judgment granted against
it and in favour of NYK in Brazil. NYK, for its part, is defending that
action and, by inference, defending the Brazilian judgment insofar as it
holds NES liable to indemnify it for any amount it may have to pay to
underwriters under the same judgment. In invoking the jurisdiction of the
South African court NES subjected itself to the exercise of the powers of
that court to grant relief under the provisions of the Act. Those powers
include those set out in ss 5(2)(b) and (c) of the Act. I can see no basis for
the view that the scope of those powers is in some way circumscribed by
the nature of the claim brought by NES. It makes no sense to say that
NYK could ask for security for its claim, provided it brought a
counterclaim in South Africa based on the Brazilian judgment, but not if
it wanted that security for payment of the judgment in Brazil.

[51] Beyond the two requirements referred to above, I do not find it
helpful to try and establish further guidelines for the exercise of the
court‟s discretion under ss 5(2)(b) and (c). Each situation will be
different. The court should not be constrained by a formulaic approach to
the exercise of its discretion.40  All relevant factors must be weighed and
a conclusion reached that is in accordance with the interests of justice.
How should that exercise be undertaken in this case?

The exercise of the court’s discretion.
[52] It is unclear on what grounds the high court exercised its discretion
in favour of NYK. Having set out the facts it summarised the issues and
concluded that there were five questions that needed to be addressed. The

40 Pasquale Della Gatta para 57.

third of these was whether the court had jurisdiction in respect of NES to
order it to furnish security for a claim advanced in Brazil and the fourth
was whether the court should exercise its discretion to make such an
order. It then said that the fifth issue was whether NYK had established a
genuine and reasonable need for such security. That inverted the enquiry
because proof of a genuine and reasonable need for security is a
prerequisite for the exercise of the discretion. Proof of that need is
essential.41

[53] This may explain why in the latter part of the judgment the fourth
and fifth issues were dealt with together. But having set out the
arguments by NYK in favour of security being ordered, the judgment
digressed to deal with the quantum of security. It concluded simply:
„I agree with counsel for applicants that fairness would, in the circumstances, dictate
that the respondent actually pay (and secure) its liability to the intervening applicant
and in that way, if the respondent is correct, it will have met its obligation in terms of
the binding judgment and will have recovered that which it claims to be entitled to
recover in the South African action in rem. Conversely, if the intervening applicant is
correct, and the respondent‟s claim in rem is bad, the respondent will have met its
obligations. Obviously in those circumstances the South African court will ultimately
decide where the losses will lie.‟
The following paragraph added the conclusion that the application for
„additional‟ security was genuine and reasonable.

[54] It seems to me that this approach conflated the question whether
NYK‟s need for security was reasonable and genuine with the exercise of
the court‟s discretion and led in the end result to the court not dealing
with the latter question. It falls to be emphasised that these are separate

41 Ibid.

issues. Whether there is a reasonable and genuine need for security is a
prior question concerned with the likelihood that the applicant for
security will be paid if it is successful in obtaining an order for costs or in
pursuing its claim.42 In The Paz43it was said that an applicant for a
security arrest should say why it needed security; that it had not already
obtained security; and that it could not obtain security in the other actual
or contemplated proceedings. I would add the following glosses. If some
security has been obtained there should be an explanation of the need for
further security, for example, by explaining that it is insufficient or of no
real value. If it would be feasible to obtain security elsewhere, or in the
other or contemplated proceedings, there needs to be an explanation for
invoking the jurisdiction of a South African court for that purpose. In
other words, as Didcott J said in The Paz44 the applicant must explain:
„no alternative and less disruptive opportunity for obtaining such has been or is likely
to become available to him and, if one has already been lost, that this was not his fault
or, I should rather say, not his fault to such a degree as to be fairly held against him.‟
Whether security should be ordered when a reasonable and genuine need
therefor has been established will depend upon the circumstances of the
particular case.

[55] It will usually be convenient in considering an application for
security to address these questions sequentially. Starting then with the
question whether NYK demonstrated that it had a claim against NES, it is
clear that it did. The claim arose under the slot exchange agreement, read
with the particular slot charterparty applicable to the voyage. A court of
competent jurisdiction in Brazil adjudicated upon it and it is in that court

42 MV Orient Stride: Asiatic Shipping Services Inc v Elgina Marine Co Ltd [2008] ZASCA 111; 2009
(1) SA 246 (SCA) para 7.
43 At 268B-C.
44 At 270A-B.

that NYK seeks to enforce it. It was therefore prima facie established and
the first requirement was satisfied.

[56] Some argument was addressed to us on the basis that if NYK
sought to enforce the judgment in South Africa it would need to make
further allegations and establish them on a prima facie basis.45 Stress was
laid on the need for a South African court to be satisfied that the foreign
court had international jurisdiction or competence. The short answer to
this is that NYK was not seeking to enforce its Brazilian judgment in
South Africa, but in Brazil. It would only be if it were contrary to South
African public policy for our court to lend its aid to the enforcement of
that judgment by compelling NES to provide security, that the issue of
the Brazilian court‟s exercise of its jurisdiction might arise. In this case
there is no suggestion that it exercised jurisdiction on an exorbitant basis.
Given the breadth of the admiralty jurisdiction vested in our courts under
the Act, it would only be in extreme circumstances that our courts would
refuse to recognise the admiralty jurisdiction of a foreign court on public
policy grounds.

[57] On the question of NYK‟s genuine and reasonable need for
security its case was simple. NES has disposed of the Northern
Endeavour and the company is dormant, with neither assets nor income.
In the absence of security there seems little prospect of NYK obtaining
payment of its claim if the judgment it has is not disturbed on appeal. It
has obtained some security in Brazil in the form of a P & I Club letter of
undertaking, in an amount equivalent to the package limitation applicable
to the lost and damaged cargo, and it reduced its claim for security by the

45 Jones v Krok [1994] ZASCA 177; 1995 (1) SA 677 (A) at 685A-C.

amount of that guarantee. It also caused a claim made by NES against
ships‟ agents in South Africa to be arrested. But, if NYK succeeds in its
claim against NES, it is difficult to see that any value can attach to that
claim. Accordingly in my view NYK clearly established a genuine and
reasonable need for security for its claim against NES.

[58] The final issue is the exercise of the discretion vested in the court
under s 5(2)(b). There was very little argument directed at suggesting that
this should not be exercised in favour of NYK. It seems to have been
accepted that once the pre-requisites for the exercise of the discretion had
been established an order for security should follow. Accordingly I
confine myself to the following observations that point in favour of an
order for security. First, in doing so we are assisting a court in one of our
close trading partners and a fellow member of the BRICS group of
trading nations to enforce its judgment. So we are dealing with the
judgment of a court in a friendly nation. Judicial comity points in favour
of assisting in its enforcement. Second, NES invoked the jurisdiction of
the South African court in order to obtain security for its claim against
NYK and it cannot complain if NYK makes use of the same jurisdiction
for the same purpose. Third, where the merits of a claim and counterclaim
are on the face of it reasonably balanced, considerations of fairness
suggest that either both parties should have security or neither. Fourth,
NES did not point to any policy or equity reasons to suggest that it would
be unjust for it to be required to provide such security. The present
litigation is being supported by its P & I Club. Its decision to provide or
withhold security will be a business decision in the light of its
underwriting experience and its assessment of the value of pursuing the
claim.

[59] While a court will ordinarily not explore the merits of the claim for
which security is sought, it would in my view be a relevant consideration
in the exercise of the discretion if it appeared that it was largely
speculative or had limited prospects of success. In this case the position
appears to be that NYK has a strong claim and conversely NES a weak
claim. I have read both the first instance and the appellate judgments of
the Brazilian courts. Contrary to the allegation in papers in this court that
its finding that NES should indemnify NYK flowed from a special
provision of the Brazilian Commercial Code that imposed strict liability
on NES, there is no mention in either judgment of reliance on such a
provision. Instead it appears that NES largely ran the same defences
against NYK as NYK ran against the underwriters, namely, defences of
heavy weather and Act of God, as well as package limitation. In the
appellate judgment it is recorded that NES argued that NYK was
exclusively liable „due to the improper cargo stowage‟, but this defence
was rejected.

[60] The provisions of the slot exchange agreement and the slot charter
party also favour NYK‟s case. Clause 5.5(a) of the former provides that:
„The Ship Operator [NES] takes responsibility of the container from the time the
spreader is disconnected at the port of loading until the spreader is reconnected at the
port of discharge‟.
While clause 8.1 makes each line responsible for the proper and careful
stowing of containers, that is in turn subject to the provisions of clause
8.2 of the slot charter, which provides that:
„The Charterer shall comply with the directions of the Master or other persons
responsible for the stowage on behalf of the owners as to when and where containers
are to be stowed.‟
It is no doubt in the light of that provision that the ship operator – in this
case NES – undertook in clause 10.2 of the slot charter to be:

„responsible for the proper and careful carriage, custody and care of the containers
and goods whilst on board the Vessel …‟
In clause 10.4 the possibility of the slot charterer pursuing a claim for an
indemnity against the owner (NES) arising out of claims made against it
by cargo interests, was expressly recognised.

[61] I do not say that these provisions were necessarily decisive of
NES‟s liability to NYK. They do, however, furnish powerful support for
the proposition that the Brazilian court‟s decision was supported by the
terms of the relevant contracts. Furthermore NES does not seek in the
South African proceedings to rely upon the contracts for its claim against
NYK. Instead it pursues the claim in delict or tort, always a problematic
course of action when the parties‟ relationship is governed by detailed
contracts.46

[62] Weighing all these factors it seems to me that this is a clear case in
which the overall interests of justice pointed in favour of the grant of an
order that NES provide security to NYK for its claim in Brazil. It was but
faintly argued that if security was not provided the penalty should be that
the amount of security NES held should be reduced to correspond with
the security NYK holds in Brazil under the P & I Club letter of
undertaking. I can see no justification for that. Subject only to two minor
amendments to the order of the high court the appeal must be dismissed
with costs. The first of these is the deletion of the unnecessary order for
NYK‟s admission as an applicant. The second is the inadvertent grant of

46 Trustees, Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd [2005] ZASCA 109; 2006 (3)
SA 138 (SCA); [2007] 1 All SA 240 para 25; Country Cloud Trading CC v MEC, Department of
Infrastructure Development [2014] ZACC 28; 2015 (1) SA 1 (CC) para 64.

relief in para 4.2.3 of the court‟s order of relief in the alternative. The
parties were at one that the costs of two counsel were warranted.

[63] I make the following order:
1 The order of the high court is amended in the following respects:
(a) The deletion of paragraph 1 and the renumbering of the remaining
paragraphs.
(b) The deletion in the original paragraph 4.2.3 of the words:
„the Respondent‟s in rem action will be dismissed with costs,
alternatively‟
2 Subject to those amendments the appeal is dismissed with costs,
such costs to include those consequent upon the employment of two
counsel.

M J D Wallis
JUDGE OF APPEAL

Appearances

For appellant:
M Wragge SC (with him J D McKenzie)
Instructed by:
Bowman Gilfillan, Cape Town,

Matsepes Inc, Bloemfontein.
For respondent:
S R Mullins SC (with him Ms S Linscott)

Instructed by:
Shepstone & Wylie, Durban,
McIntyre & Van der Post, Bloemfontein.

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
1 June 2016
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Northern Endeavour Shipping Pte Ltd v The Owners of the MV NYK
Isabel

The SCA today dismissed an appeal from the Durban and Coast
Local Division, Durban sitting as a court of admiralty. The NYK Isabel
had been arrested by Northern Endeavour Shipping (NES) in an action in
rem. It claimed that cargo lost overboard and damaged on a voyage by
the Northern Endeavour between Durban and Santos, Brazil, had been
lost and damaged as a result of negligence on the part of NYK Lines. The
action was defended and NYK Lines sought and obtained an order that
NES provide it with security for its claim against NES in proceedings in
Brazil in which NES had been ordered to indemnify NYK Lines in
respect of the self-same loss and damage.

The court upheld the arrest of the NYK Isabel as an associated ship
in relation to the Northern Endeavour. It said that a slot charterer is a
charterer of the ship in relation to which the claim arises for the purpose
of the deeming provision in section 3(7)(c) of the Admiralty Jurisdiction
Regulation Act. When NYK Lines entered appearance to defend the
action it became a party to the proceedings and accordingly entitled to
invoke the power of the court to order the provision of security. The SCA

was satisfied that the requirements for an order to provide security had
been satisfied and accordingly dismissed the appeal.