New building contracts
- When does title in the ship pass from the shipbuilder to
the shipowner? Can the parties agree to change when title will
Usually shipbuilding contracts are negotiated on standard
forms such as the SAJ form produced by the Shipbuilders’
Association of Japan and the AWES form produced by the Association
of European Shipbuilders and Shiprepairers. South African law
generally recognises freedom of contract and accordingly parties to
a contract are entitled to vary the terms by agreement. However,
the Ship Registration Act No. 58 of 1998 provides that a ship is
‘transferred by registration of a bill of sale in the
prescribed form’ and, consequently, ownership can only be
transferred at that time and in that manner if a vessel is to be
- What formalities need to be complied with for the refund
guarantee to be valid?
There are no prescribed formalities for the validity of a refund
guarantee. Care, however, should be taken to ensure that it is not
structured as a suretyship, in which event the terms thereof must
be embodied in a written document signed by or on behalf of the
surety for it to be valid.
- Are there any remedies available in local courts to compel
delivery of the vessel when the yard refuses to do so?
The court has discretion as to whether to grant a mandatory
interdict or not. There are three requisites for the grant of a
final interdict, all of which must be present: first, a clear right
on the part of the applicant; second, an injury actually committed
or reasonably apprehended; and third, an absence of any other
satisfactory remedy available to the applicant. Being a drastic
remedy from the yard’s point of view and in the court’s
discretion, the court will not, in general, grant an interdict when
the applicant can obtain adequate redress in some other form of
ordinary relief. For that reason it is unlikely to order the
building of the vessel but would be more likely to order the
delivery of an already completed vessel.
- Where the vessel is defective and damage results, would a
claim lie in contract or under product liability against the
shipbuilder at the suit of the shipowner; a purchaser from the
original shipowner; or a third party that has sustained
Section 61 of the Consumer Protection Act, No. 68 of 2008 imposes,
subject to certain exceptions, liability for harm caused by or as a
result of any defect, failure, hazard or unsafe goods, irrespective
of whether the harm resulted from any fault on the part of the
producer, importer, distributor or retailer, as the case may be.
If, in a particular case, more than one person is liable, their
liability is joint and several.
Product liability is also actionable under the South African
equivalent of the tort of negligence (the lex Aquilia) and is
subject to the principles of fault (intentional or negligent action
or omission), causation and remoteness. In appropriate
circumstances a purchaser from the original shipowner might be able
to pursue a claim against a shipbuilder.
A claim in contract would only be available to the original
shipowner who contracted with the shipbuilder, unless its rights
under the shipbuild contract were validly assigned to a third
Ship registration and mortgages
- What vessels are eligible for registration under the flag
of your country? Is it possible to register vessels under
construction under the flag of your country?
The Ship Registration Act, No. 58 of 1998 provides for the
registration of vessels on the South African Register.
In terms of the Act, vessels under construction are precluded from
being registered on the South African register. However, it is
arguable that once the vessel is ‘capable of navigation by
water’ it will then meet the definition of a
‘ship’ as provided by the Act and be entitled to be
- Who may apply to register a ship in your
The Act lists the categories of ships that are entitled to be
registered on the South African register. These are:
- South African-owned ships (either wholly-owned by a South
African national or owned as an undivided whole by three or more
joint owners of whom the majority in number are South African
nationals, or of which the majority of the 64 shares are owned by
South African nationals as part or co-owners ‘in
- small vessels, other than fishing vessels, that are:
- wholly-owned by South African residents or South African
residents and South African nationals; or
- operated solely by South African residents or South African
nationals or both such residents and such nationals; and
- ships on a bareboat charter to South African nationals.
The Act defines a South African national as:
- a citizen;
- a body corporate established with a place of business in South
- a trust controlled by a majority of South African nationals as
trustees for a majority of South African beneficiaries; or
- the South African government.
- What are the documentary requirements for
In terms of the Ship Registration Regulations of 2002, the
following documents must be provided to the registrar:
- an application for registration of the ship, made in
- a description of the ship in accordance with the
- a description of the ownership of the ship;
- a copy of the charter party where the registration is
necessitated by the bareboat charter to a South African
- a document establishing ownership and nationality;
- a written notice containing the name and address of the
registered agent of the ship. This must be signed by both the agent
and the owner; and
- evidence that the ship has been marked accordingly.
- Is dual registration and flagging out possible and what is
The Ship Registration Act No. 58 of 1998 prohibits dual
registration unless the ship is owned by a South African national
and it was acquired in terms of a judicially sanctioned sale or is
bareboat chartered to a South African national and the written
consent of the primary register has been obtained.
The minister is empowered by the Act to make the necessary
regulations regarding flagging out. However, these regulations have
not yet been drafted or promulgated.
- Who maintains the register of mortgages and what
information does it contain?
The Ship Registration Act No. 58 of 1998 established the South
African Ship Registration Office which is operated and maintained
by the registrar of ships who is responsible for the maintenance of
the Ships Register, subject to the directions of the South African
Maritime Safety Authority (SAMSA).
The registrar is obliged to register all mortgages filed in the
prescribed form and in the order of their lodgement. The details of
the mortgage are entered by the registrar on the Ships Register.
Where there is a prior registered mortgage, the registrar is
required to obtain the prior registered mortgagee’s written
consent before registering a subsequent mortgage.
Limitation of liability
- What limitation regime applies? What claims can be limited?
Which parties can limit their liability?
South Africa is not a party to any of the Limitation
Conventions. The South African tonnage limitation regime is
embodied in sections 261 to 263 of the Merchant Act No. 57 of 1951.
The provisions are modelled loosely on the International Convention
Relating to the Limitation of the Liability of Owners of Seagoing
Ships 1957 as amended by the protocol amending that Convention of
The persons entitled to limit their liability include the owner of
a vessel, any charterer, any person interested in or in possession
of such ship, and a manager or operator of such ship. The
provisions apply to any kind of vessel used in navigation by water,
however propelled or moved.
In the event that the only damages incurred are for loss of life
or personal injury, claims are limited to the rand equivalent of
206.67 special drawing rights (SDR) for each ton of the
ship’s tonnage. In the event that the only damages incurred
are for loss of or damage to property, claims are limited to the
rand equivalent of 66.67 SDR for each ton of the ship’s
tonnage. In the event that both types of damages are incurred,
claims are limited to the rand equivalent of 206.67 SDR for each
ton of the ship’s tonnage with claims in respect of loss of
life and personal injury ranking ahead of property claims to the
extent of 140 SDR for each ton of the ship’s tonnage and both
types of loss of life and personal injury claims ranking equally
with claims relating to property in respect of the balance of the
Limitation probably does not apply to liability for the cost of
- What is the procedure for establishing
The court has a wide discretion to give such directions as it
deems fit with regard to the procedure in any claim for limitation,
including the staying of any other proceedings and the conditions
for the consideration of any such claim, which may include a
condition that such amount as the court may order be paid to abide
the result of the consideration of the said claim, or that the
claimant be required to admit liability for all or any claims made
against him or her, or any other condition that the court deems
The appropriate method of dealing with limiting as against a
number of claims appears to be by way of limitation action.
Limitation may also be pleaded as a defence to a claim but this
method of raising limitation will only establish the right to limit
liability as against the claimant in that claim and not as against
any other claimants. There is no need to establish a limitation
fund when pleading limitation as a defence.
- In what circumstances can the limit be broken?
Limitation can be broken in the event that the person seeking to
limit is not able to show that the event that occurred was caused
without its actual fault and privity. The South African courts have
followed the later English decisions in holding that fault and
privity on the part of management is sufficient to break
limitation. The onus of proving a lack of fault and privity is on
the person wishing to rely upon that exception.
Port state control
- Which body is the port state control agency? Under what
authority does it operate?
South Africa is a party to the Indian Ocean Memorandum of
Understanding (MoU) for Port State Control 1999 and carries out its
port state control inspections with a view to advancing the
objectives of that MoU which establishes an Indian Ocean
Computerised Information System with the express purpose of sharing
information derived from port state control inspection with other
The SAMSA is the party responsible for exercising South
Africa’s port state control obligations. Sections 7, 8 and 9
of the Merchant Shipping Act No. 57 of 1951 give the SAMSA’s
proper officers and surveyors various rights of inspection of
vessels and interrogation of their crews when, inter alia, within
the ports of South Africa.
- What sanctions may the port state control inspector
Section 243 of the Merchant Shipping Act No. 57 of 1951 provides
that if a proper officer has reason to believe that a ship at any
port in the Republic is unseaworthy, he or she shall, whether or
not the ship is registered in the Republic, detain her until he or
she is satisfied that the ship is in a seaworthy state.
- What is the appeal process against detention orders or
In terms of section 274 of the Merchant Shipping Act No. 57 of
1951, if a surveyor who has inspected a vessel makes a statement in
a report of an inspection with which the owner (or his agent) or
the master of the vessel is dissatisfied, they may appeal to a
court of survey established in terms of sections 275 to 279 of that
Act. In addition, an act of a proper officer or surveyor would
constitute an administrative act and be subject to review in terms
of the Promotion of Administrative Justice Act No. 3 of 2000.
- Which are the approved classification societies?
The South African government has not approved any classification
societies. Any of the members of the International Association of
Classification Societies Ltd are currently accepted by SAMSA for
the purpose of the carrying out of surveys prior to
- In what circumstances can a classification society be held
liable, if at all?
The liability of classification societies in contract will depend
entirely on the terms of the contract between the classification
party and the other contracting party.
Claims against classification societies for negligent conduct (in
delict in terms of the lex Aquilia, the South African equivalent of
the tort of negligence) will be determined in terms of the general
principles of the lex Aquilia subject to any agreement between the
parties. To be liable, conduct must be wrongful and there must be
fault (intentional or negligent conduct) causing damages.
Physical impact to persons or property is considered prima facie
wrongful. However, conduct causing pure economic loss is not in
itself, prima facie, wrongful unless other relevant factors favour
liability. Similar considerations apply where the conduct concerned
is in the nature of a statement or an omission.
For those reasons a categorical answer cannot be given concerning
the liability of a classification society for negligent action,
since it depends on all the facts of the case.
As to whether a classification society would be held liable to
third parties in respect of their classification and certification
duties, in most cases such duties would give rise to pure economic
loss whether by way of a statement or otherwise. There is no
authority in South Africa as to whether such duties would give rise
to liability and it is unclear whether the factors that persuaded
the House of Lords in Marc Rich & Co v Bishop Rock Marine
(‘The Nicholas H’), 1995 2 Lloyds Rep 299 will persuade
the South African courts or not.
Collision, salvage, wreck removal and pollution
- Can the state or local authority order wreck
Extensive wreck removal powers are conferred on SAMSA by the Wreck
and Salvage Act No. 94 of 1996. In circumstances where a ship is
‘wrecked, stranded or in distress’ the Act provides,
inter alia, that SAMSA:
may direct the master or owner of such ship, or both such
master and such owner, either orally and in writing to move such
ship to a place specified by [SAMSA] or to perform such acts in
respect of such ship as may be specified by [SAMSA].
Wrecks situated within the jurisdiction of any South African port
that is owned and operated by the National Ports Authority (NPA),
are also governed by the provisions of the National Ports Act No.
12 of 2005. The NPA, ultimately through the harbour master’s
office, has the authority to:
search for, raise, remove or
destroy any sunken, stranded or abandoned vessel or wreck within
the port limits, and recover the costs incurred in connection with
such searching, raising, removal or destruction from the owner of
the vessel or any other person who had the beneficial use of the
vessel at the time it sank, became stranded or was
search for and remove any wreck
or obstruction which may endanger the safety of any vessel entering
or leaving the port, and recover the costs of such search and
removal from the owner of the wreck or obstruction, or from any
person responsible for the presence of such wreck or
- Which international conventions or protocols are in force
in relation to collision, salvage and pollution?
South Africa has not ratified the Unification of Certain
Rules of Law with respect to Collisions between Vessels, 1910 but
has incorporated certain concepts from it into the Merchant
Shipping Act No. 57 of 1951. The International Regulations for
Preventing Collisions at Sea, 1972, as amended, are enacted as an
annex to the Merchant Shipping (Collision and Distress Signals)
The Wreck and Salvage Act No. 94 of 1996 has incorporated
the International Convention on Salvage, 1989.
The International Convention for the Prevention of Pollution from
Ships, 1973 (MARPOL), has been incorporated into South African
domestic law, as has the Intervention Convention 1969 (including
its 1973 protocol), both as South African Acts.
South Africa enacted the CLC limits of liability in 1971 into
domestic legislation, but only much later acceded to both the Fund
Convention and the CLC and their updated limits; however, South
Africa has thus far failed to enact the required domestic
legislation necessary to make these conventions and their updated
limits part of national law.
Until enabling legislation is passed, South African claimants
would, under the present legislative regime, be able to recover no
more than 14 million SDR as compensation. Once the enabling
legislation is passed, the combined total recoverable under the two
conventions would be in excess of 200 million SDR.
- Is there a mandatory local form of salvage agreement or is
Lloyd’s standard form of salvage agreement acceptable? Who
may carry out salvage operations?
There is no mandatory local form of salvage agreement.
Lloyd’s standard form is acceptable. Salvage services may be
rendered by any person, although the services must be voluntary. In
that respect it has been held that the harbour authority was
entitled to a salvage reward in circumstances where harbour tugs
were used for the operation, notwithstanding that the salved vessel
was in danger and in close proximity to the port.
- Which international convention regarding the arrest of
ships is in force in your jurisdiction?
South Africa is not a signatory to either the International
Convention Relating to the Arrest of Seagoing Ships 1952 or the
International Convention on the Arrest of Ships 1999.
- In respect of what claims can a vessel be arrested? In what
circumstances may associated ships be arrested?
A vessel may be arrested in circumstances where the claim is
defined in the Admiralty Jurisdiction Regulation Act No. 105 of
1983, as amended (the Admiralty Act), as a maritime claim and the
claimant is entitled to proceed in rem.
Section 1(1) of the Act defines the various maritime claims very
widely and generally includes claims in the International
Convention on the Arrest of Ships, 1999, as well as claims for,
arising out of or relating to:
- any container and any agreement relating to any container;
- the rendering, by means of any aircraft, ship or other means,
of services in connection with the carrying of persons or goods to
or from a ship, or the provision of medical or other services to or
in respect of the persons on being taken to or from a ship;
- the forfeiture of any ship or any goods carried therein or the
restoration of any ship or any such goods forfeited;
- the limitation of liability of the owner of a ship or of any
other person entitled to any similar limitation of liability;
- the distribution of a fund or any portion of a fund held or to
be held by, or in accordance with the directions of, any court in
the lixercise of its admiralty jurisdiction, or any officer of any
court exercising such jurisdiction;
- any judgment or arbitration award relating to a maritime claim,
whether given or made in the Republic or elsewhere;
- wrongful or malicious proceedings;
- piracy, sabotage or terrorism relating to property mentioned in
section 3(5), or to persons on any ship; and
- any other matter which by virtue of its nature or subject
matter is a marine or maritime matter, the meaning of the
expression ‘marine or maritime matter’ not being
limited by reason of the matters set forth in the preceding
A claimant may bring in rem proceedings by arresting the ship,
with or without its equipment, furniture, stores or bunkers; the
whole or any part of the equipment, furniture, stores or bunkers;
the whole or any part of the cargo; the freight; any container (if
the claim arises out of or relates to the use of that container in
or on a ship or the carriage of goods by sea or by water otherwise
in that container) or a fund if that property is property against
or in respect of which the claim lies in the following
- where there is a maritime lien over the property to be
arrested- section 3(4)(a). These are:
- seamen’s and the master’s wages;
- damage received by or done by a ship; and
- bottomry and respondentia bonds;
- where the present owner of the property against or in respect
of which the claim lies and which is to be arrested would be liable
to the claimant in an action in personam in respect of the cause of
action concerned – section 3(4)(b);
- where the present bareboat charterer of the property against or
in respect of which the claim lies and which is to be arrested
would be liable to the claimant in an action in personam in respect
of the cause of action concerned – section 3(4)(b) read with
- by the arrest of an associated ship instead of the ship in
respect of which the maritime claim arose (section 3(6) and
In terms of section 3(6) and (7) of the Admiralty Act associated
ships may be arrested that are owned, at the time when the action
- by the person who was the owner or charterer of the ship
concerned at the time when the maritime claim arose;
- by a person who controlled the company that owned or chartered
the ship concerned when the maritime claim arose;
- by a company that is controlled by a person who owned or
chartered the ship concerned when the maritime claim arose; or
- by a company that is controlled by a person who controlled the
company that owned or chartered the ship concerned, when the
maritime claim arose.
In each case the association can only be established in the
event of a claim against an owner, by tracing an association from
the owner and in the event of a claim against a charterer, by
tracing an association from the charterer.
In terms of section 3(7)(b)(ii) a person (natural or artificial)
is deemed to control a company if it has the power, directly or
indirectly, to control the company. Actual shareholding reflects
the direct source of control over a company where voting rights are
commensurate with shareholding. Indirect control can be exercised
in a number of ways. For example, by a principal over a nominee
shareholder or where ‘pyramiding’ takes place.
The test is factual and involves proof of the ability of the
common component to steer the direction of the company. The onus is
on the claimant to prove that on the balance of probabilities that
is the case (Bocimar NV v Kotor Overseas Shipping Limited
1994 (2) SA 565 (AD)). Thus, if the evidence before the court is
equally consistent with the power over the company or companies
being in a source other than that alleged by the claimant and of
such sources not being common the arrest will be set aside.
Allegations of common ownership or control that are not denied are
sufficient to found an association as envisaged by the Act.
Allegations of common ownership or control that are denied, but in
respect of which no evidence is led to prove that denial, are
sufficient to found an association as envisaged by the Act.
If it is not possible to obtain direct evidence of an association
a claimant would then have to rely on circumstantial evidence to
persuade a court that an association exists.
Circumstantial evidence that would generally assist in attempting
to persuade a court that an association exists includes common
directors and office bearers, published statements or financial
results, shared addresses, financing documents, cross-mortgages,
common signatories to important documents, fleet entries with
P&I clubs, common managers or operators, and common
- What is the test for wrongful arrest?
Arresting ‘without reasonable and probable cause’
renders one liable in damages. The arrest will be wrongful if the
arresting party did not have such information as would lead a
reasonable person in its position to conclude that it was entitled
to arrest or if the arresting party did not in fact believe that it
was entitled to arrest.
- Can a bunker supplier arrest a vessel in connection with a
claim for the price of bunkers supplied to that vessel pursuant to
a contract with the charterer, rather than with the owner, of that
As no maritime lien is recognised for the supply of bunkers if
there is no contract with the owners or demise charterer of the
vessel, a supplier cannot proceed against a vessel in those
- Will the arresting party have to provide security and in
what form and amount?
The court has discretion as to whether to order that an arresting
party provide security, but generally does not do so of its own
accord. The owner of the arrested property may apply for security.
Such application would have to establish prima facie proof of a
claim and show a genuine and reasonable need for such security.
Even then the court will weigh the strength of the claim against
other relevant factors before ordering counter security. The amount
ordered will generally be that proved by the owner of the arrested
property in respect of its claim and first-class South African bank
guarantees and International Group of P&I Clubs undertakings
are acceptable security. Any other form of security will have to be
negotiated between the parties or sanctioned by the court on
- How is the amount of security the court will order the
arrested party to provide calculated and can this amount be
reviewed subsequently? In what form must the security be
Subject to what follows, the clamant is entitled to security
in an amount determined on the basis of its reasonably arguable
best case. The upper limit of security that can be ordered in an
action for the arrest of maritime property is the value of the
property arrested, while in an application for attachment, the
security that can be claimed is the value of the claim. The court
can, in terms of section 5(2)(d) of the Act, make an order for
further property to be arrested or attached in order to provide
additional security, and can, in appropriate circumstances,
increase, reduce or discharge the security that is already in
place. First-class South African bank guarantees and International
Group of P&I Clubs undertakings constitute acceptable
- Who is responsible for the maintenance of the vessel while
The sheriff of the High Court, who is entitled to recover the
costs of maintenance from arresting parties.
- Must the arresting party pursue the claim on its merits in
the courts of your country or is it possible to arrest simply to
obtain security and then pursue proceedings on the merits
An arresting party may arrest for security for local or
foreign proceedings in circumstances where it is able to satisfy
the court on application:
- that it has a maritime claim enforceable by an action in rem
against the property in question or against a ship of which the
ship in question is an associated ship or that it has an action in
personam against the owner of the property concerned;
- that it has a prima facie case in respect of such claim, which
is prima facie enforceable in the nominated forum or forums of his
choice and that the forum will exercise jurisdiction in the matter.
In this regard it is incumbent upon the claimant to deal in the
application for the arrest with the question of the court or courts
in which it has brought or contemplates bringing proceedings and to
nominate the forum or forums in respect of which it seeks the
- that it has a genuine and reasonable need for security in
respect of the claim. It will at least be expected of the claimant
to allege and explain a need for security and to further allege
that it has not already obtained security and that it cannot obtain
such security in the other contemplated or pending arbitration or
- Apart from ship arrest, are there other forms of attachment
order or injunctions available to obtain security?
Apart from the arrest for security for local or foreign
proceedings a claimant is also entitled to commence local
proceedings against a foreigner by way of an attachment of property
owned by the alleged debtor to found or confirm jurisdiction
against it. Property properly attached can only be released from
attachment by the establishment of security to the value of the
- Are orders for delivery up or preservation of evidence or
Section 5(5) of the Admiralty Jurisdiction Regulation Act,
No. 105 of 1983 provides that:
- A court may in the exercise of its admiralty jurisdiction
at any time on the application of any interested person or of its
- if it appears to the court to be necessary or desirable for
the purpose of determining any maritime claim, or any defence to
any such claim, which has been or may be brought before a court,
arbitrator or referee in the Republic, make an order for the
examination, testing or inspection by any person of any ship,
cargo, documents or any other thing and for the taking of the
evidence of any person;
- in making an order in terms of subparagraph (i), make an
order that any person who applied for such first-mentioned order
shall be liable and give security for any costs or expenses,
including those arising from any delay, occasioned by the
application and the carrying into effect of any such
- grant leave to any such person to apply for an order that
any such costs or expenses be considered as part of the costs of
- in exceptional circumstances, make such an order as is
contemplated in subparagraph (i) with regard to a maritime claim
which has been or may be brought before any court, arbitrator,
referee or tribunal elsewhere than in the Republic, in which case
subparagraphs (ii) and (iii) shall mutatis mutandis
- The provisions of this Act shall not affect any privilege
relating to any document in the possession of, or any communication
to or the giving of any evidence by, any person.
Rule 14 of the Admiralty Rules details procedures in respect of
In the matter of Bouygues Offshore v M/T
‘Tigr’, her owners, master, crew and any party
interested in her (unreported judgment, CPD, Case No. AC96/94, 5
July 1994) it was held that an applicant for relief under section
5(5) should satisfy the court that:
- it has a prima facie prospect of success in the main case;
- the evidence of which the gathering and preservation is sought
might be of assistance to the court at the trial;
- the evidence is not reasonably available to the applicant from
any other source; and
- there is a real apprehension that if the order is not granted
the specific evidence sought may be lost, secreted or destroyed
(see the Owner of the Cargo Lately Laden on Board the MV
‘Ioannis NK’ v the Master and Crew of the MV
‘Ioannis NK’ and others (unreported judgment,
Western Cape High Court, Cape Town, Case No. AC66/2009, 26 August
In the absence of special circumstances justifying a departure,
the applicant may be required to provide security in an amount
fixed by the registrar for the costs and expenses occasioned by the
application and carrying into effect of the court’s
The court also held that applications for relief under section
5(5) should be approached by it with the same caution and restraint
as it does with an application for analogous relief under its
Furthermore, if the proceedings for which the evidence is required
are not proceedings to be heard in the Republic it will be
necessary to demonstrate ‘exceptional circumstances’
before the order sought will be granted.
- Is it possible to arrest bunkers in your jurisdiction or to
obtain an attachment order or injunction in respect of
A claimant is entitled to attach bunkers to commence local
proceedings against a foreign owner of those bunkers, or arrest
such bunkers for security for local or foreign proceedings in the
event that all the requirements for such arrest are able to be met
(for which see 27).
Judicial sale of vessels
- Who can apply for judicial sale of an arrested
Any person with an interest may apply for the sale of a
vessel that has been arrested or attached.
- What is the procedure for initiating and conducting
judicial sale of a vessel? How long on average does it take for the
judicial sale to be concluded following an application for sale?
What are the court costs associated with the judicial sale? How are
these costs calculated?
An application for the sale of a vessel is made to the High
Court (exercising its admiralty jurisdiction) on notice to all
interested parties. The initial order is invariably to call all
interested parties to show cause on a specified date in the future
(the return day) why the vessel should not be sold and to suitably
advertise that order. In the event that the court is satisfied that
the sale should proceed, it will confirm the sale order on the
return day. The sale usually takes place within a month to a
month-and-a-half of the first application.
The sale can be by means of auction, private tender or treaty. The
sale order ordinarily makes provision for:
- the conditions of sale;
- the proceeds of the sale to constitute a fund;
- the registrar of the High Court to invest the fund in an
interest-bearing account pending the distribution thereof;
- the appointment of a referee, usually an advocate (equivalent
of a barrister) specialising in maritime law to receive and assess
- the time periods within which claims are to be filed,
objections raised and replies to objections lodged with the
- the referee to have the power to call for further documents and
information relevant to the claims against the fund.
The sale costs vary depending on the value of the particular
vessel concerned. However, the commission will vary around the
following sliding scale:
- 3 per cent on the first US$500,000;
- 2.5 per cent on the second US$500,000;
- 2 per cent on the third US$500,000;
- 1.5 per cent on the fourth US$500,000;
- 1 per cent on the firth US$500,000; and
- 0.5 per cent thereafter.
After the sale claims, objections thereto and replies thereto,
if any, are lodged with the referee, the referee assesses claims
and furnishes a report to the court regarding his recommendations
for ranking of claims and distribution of the fund. An interested
creditor then applies for payment out in terms of that report as
furnished or varied, in the event of disagreement with the report.
Payment out of the fund is then effected in terms of the order made
by the court.
It usually takes approximately six months to finalise the
distribution of the fund from the date of the initial application
- What is the order of priority of claims against the
proceeds of sale?
Section 11 of the Act determines the ranking of claims
against a fund arising from the sale of maritime property. The
court has no discretion to depart from this ranking. There are
three queues. One for direct claims against the vessel sold, the
second for sister-ship claims (that is, claims against a vessel
owned by the same party against whom the claim lies) and the third
is associated-ship claims. Within each queue the order is as
- charges and costs associated with the sale of the vessel and
the distribution of the proceeds thereof;
- claims for salvage and wreck removal;
- claims to a preference based on possession of the property by
way of right of retention or otherwise that accrues before any of
the following claims;
- claims that arose not earlier than one year before the
commencement of proceedings to enforce the same, or before
submission of proof thereof, and which are:
- claims in respect of the employment of the master or crew;
- claims in respect of port and harbour dues or any charge or
levy imposed by SAMSA;
- claims in respect of loss of life or personal injury, whether
occurring on land or on water, directly resulting from employment
on a ship;
- claims in respect of loss of or damage to property;
- claims in respect of repairs, supply of goods or rendering of
services to the ship;
- claims in respect of premiums owing under any policy of marine
- claims in respect of P&I contributions;
- claims for mortgage, hypothecation or right of retention;
- claims in respect of a maritime lien; and
- any other maritime claim.
- What are the legal effects or consequences of judicial sale
of a vessel?
A judicial sale results in the purchaser obtaining clean
title to the ship sold. Accordingly the judicial sale extinguishes
all encumbrances, such as mortgages, maritime and possessory liens
and all other maritime and other claims.
- Will judicial sale of a vessel in a foreign jurisdiction be
A judicial sale of a vessel in a foreign jurisdiction will be
recognised on the basis of comity. Furthermore, the Ship
Registration Act No. 58 of 1998 makes provision for the
registration in South Africa of a ship sold in execution by a
competent court, without a certificate of deletion from her
previous register, where ‘all reasonable steps to secure
termination of the ship’s registration in terms of the law of
that other state have been unsuccessful’.
- Is your country a signatory to the International Convention
on Maritime Liens and Mortgages 1993?
South Africa is not a signatory to this Convention.
Carriage of goods by sea and bills of lading
- Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or
some variation in force and have they been ratified or implemented
without ratification? Has your state ratified, accepted, approved
or acceded to the UN Convention on Contracts for the International
Carriage of Goods Wholly or Partly by Sea? When does carriage at
sea begin and end for the purpose of application of such
The International Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading, 1924, the Protocol of
1968 and the SDR Protocol, 1979 have not been ratified by South
Africa. However, they have been incorporated into domestic
legislation as a schedule to the Carriage of Goods by Sea Act No. 1
of 1986 (COGSA) and accordingly have force of law in South Africa
in relation to and in connection with:
- the carriage of goods by sea in ships where the port of
shipment is a port in the Republic;
- any bill of lading if the contract contained in or evidenced by
it expressly provides that the Rules shall govern the
- any receipt which is a non-negotiable document marked as such
if the contract contained in it or evidenced by it or pursuant to
which it is issued is a contract for the carriage of goods by sea
which expressly provides that the Rules are to govern the contract
as if the receipt were a bill of lading;
- deck cargo or live animals; and
- arguably, in the circumstances set out in article X of the
South Africa has ratified neither the Hamburg Rules nor the
- Are there conventions or domestic laws in force in respect
of road, rail or air transport that apply to stages of the
transport other than by sea under a combined transport or
multimodal bill of lading?
South Africa is neither a signatory of the International
Carriage of Goods by Rail Convention, 1970 nor the Convention on
the Contract for the International Carriage of Goods by Road,
UNCTAD/ICC Rules for Multimodal Transport Documents, 1992, can be
incorporated into a contract of carriage by agreement between the
Regarding the carriage of goods by air, South Africa has enacted
the Carriage by Air Act No. 17 of 1946 which gives effect to the
Warsaw Convention (Convention for the Unification of Certain Rules
relating to International Carriage by Air, 1929, as amended by the
Hague Protocol, 1955).
- Who has title to sue on a bill of lading?
The Sea Transport Documents Act No. 65 of 2000 provides that
a holder of a sea transport document (as defined and including a
bill of lading) has title to sue on a bill of lading. The Act
defines a holder of an original sea transport document as being a
person in possession thereof or the person to whom the document was
issued, the named consignee or a transferee.
- To what extent can the terms in a charter party be
incorporated into the bill of lading? Is a jurisdiction or
arbitration clause in a charter party, the terms of which are
incorporated in the bill, binding on a third-party holder or
endorsee of the bill?
As a matter of South African law, the terms of a charter
party can validly be incorporated into a bill of lading by
reference, provided that there is a clear indication of such
incorporation that appears legibly on the bill of lading.
Ultimately, it is a question of contractual construction.
A South African court will usually apply English law to
bill-of-lading disputes, either because of South Africa’s
conflict-of-law provisions or because of the existence of a
choice-of-law clause contained in the bill of lading. Accordingly,
a South African court, in determining whether a jurisdiction or
arbitration clause in a charter party whose provisions are
incorporated in a bill of lading is binding on a third-party holder
or endorsee of the bill, will enquire whether English law
requirements are met, namely the existence of effective words of
incorporation, and a description apt to describe the charter party
clause sought to be incorporated that, if incorporated, is
consistent with the remaining terms of the bill of lading.
- Is the ‘demise’ clause or identity of carrier
clause recognised and binding?
The effectiveness of a demise clause will be determined by a
consideration of the bill of lading as a whole, particularly any
indications relating to the identity of the carrier and by whom the
bill of lading has been signed and the mandate of that party. The
House of Lords decision in the The Starsin will be
- Are shipowners liable for cargo damage where they are not
the contractual carrier and what defences can they raise against
such liability? In particular, can they rely on the terms of the
bill of lading even though they are not contractual carriers?
A South African court will recognise a contractual claim
against the shipowner in circumstances where the bill of lading
clearly provides that the owner is a co-carrier or the carrier is
liable in tort or bailment.
The shipowner may be able to rely on the terms of the bill of
lading notwithstanding that it is not the contractual carrier in
circumstances where it is able to rely on the Himalaya clause in
the bill of lading, circular indemnities in the bill of lading or
bailment on terms arguments. As to whether any one or more of those
will be effective will depend on the facts of the particular case.
However, Himalaya clauses have been recognised and enforced in
South Africa on a number of occasions.
- What is the effect of deviation from a vessel’s route
on contractual defences?
South African law does not recognise a contractual deviation
as voiding contractual rights. However, by the South African
conflict-of-law rules, the rules that a court of England and Wales,
including its private international law rules, would have applied
as at 1 November 1983, apply to cargo claims in respect of goods
carried into South Africa. As such, those rules may well apply in a
particular case and serve to void contractual defences.
- What liens can be exercised?
In terms of South African common law, a carrier, irrespective
of the contractual terms, has a possessory lien over cargo, which
is exercisable against all parties to the extent that the owner of
the cargo has been enriched by the carriage (improvement) and
exercisable against the contracting party for the full freight in
respect of that cargo. Such liens are also available to a shipyard
in respect of a vessel under build or repair.
Possessory liens can also be conferred by contractual agreement
and the common law liens are usually extended by this device to
cover not just freight in respect of the cargo concerned but other
amounts due in respect of that and other cargoes. Such liens only
operate between the contracting parties.
The lien on freight is not a possessory lien at all but a cession
of freight or sub-freights due to the debtor by another to the
creditor. Such a right is recognised in South African law if it has
been contractually agreed.
- What liability do carriers incur for delivery of cargo
without production of the bill of lading and can they limit such
A carrier is obliged to deliver cargo to the person entitled
to it under the relevant bill of lading who presents an original
version of the bill of lading. In circumstances where the cargo is
delivered without production of a bill of lading, the carrier would
be liable in damages for the value of the cargo. In the event that
the bill of lading is not able to be presented it is usual for the
carrier to take an indemnity from the party seeking delivery of the
- What are the responsibilities and liabilities of the
In respect of shipments to which the Hague-Visby Rules are
applicable the shipper is obliged to furnish accurate details of
the cargo, specifying the ‘marks, number, quantity and
weight’ of the cargo. By virtue of article III, rule 5, the
shipper ‘shall indemnify the carrier against all loss,
damages and expenses arising or resulting from inaccuracies in such
The shipper would also be subject to the primary obligation in
terms of article IV, rule 6 to disclose the nature of inflammable,
explosive or dangerous goods.
The absolute undertaking under South African common law not to
ship dangerous goods (interpreted broadly to include goods not
necessarily inherently dangerous but also those posing a danger to
the ship, crew or other cargoes) may have been displaced by article
IV, rule 3, but the shipper is always bound by the provisions of
article IV, rule 6.
- Is there an emission control area (ECA) in force in your
domestic territorial waters?
No. South Africa has not yet ratified annex VI of MARPOL and
there is consequently no restriction on sulphur oxide and nitrogen
- What is the cap on the sulphur content of fuel oil used in
your domestic territorial waters? How do the authorities enforce
the regulatory requirements relating to low-sulphur fuel? What
sanctions are available for non-compliance?
South Africa has not yet ratified annex VI of MARPOL, nor has
it introduced any sulphur restrictions for the fuel that may be
used in domestic territorial waters.
While South Africa complies with the international requirements
for the manufacturing and production of fuel, there are no
regulatory and enforcement mechanisms to ensure that ships
operating in South African waters use only low-sulphur fuel.
Jurisdiction and dispute resolution
- Which courts exercise jurisdiction over maritime
The High Court of South Africa in the exercise of its
- In brief, what rules govern service of court proceedings on
a defendant located out of the jurisdiction?
Service in arrest proceedings in rem is on the asset
arrested, requiring no further service.
Service on a foreigner in proceedings in personam can only be made
with the leave of the court on application. The court will detail
the manner in which service is to occur and this varies depending
on the circumstances.
- Is there a domestic arbitral institution with a panel of
maritime arbitrators specialising in maritime
The Arbitration Foundation of South Africa retains a maritime
panel of arbitrators.
- What rules govern recognition and enforcement of foreign
judgments and awards?
Legislation exists that governs the recognition and enforcement of
foreign awards and judgments. However, this legislation is
recognised as being deficient for various reasons. In practice,
therefore, the common law rules in this respect are generally
The requirements for a foreign judgment or award to be recognised
and enforced at common law are that the foreign court or tribunal
have international jurisdiction (only residence and submission to
the jurisdiction of the court or agreement to the tribunal
concerned will afford international competence); the judgment or
award is final and conclusive and has not become superannuated; its
recognition and enforcement is not against public policy; and the
judgment or award does not fall foul of the Protection of
Businesses Act No. 99 of 1978.
- What remedies are available if the claimants, in breach of
a jurisdiction clause, issue proceedings elsewhere?
Depending on the circumstances of the particular matter it may be
possible to interdict the claimant from doing so.
- What remedies are there for the defendant to stop domestic
proceedings that breach a clause providing for a foreign court or
arbitral tribunal to have jurisdiction?
In the event of a claimant commencing admiralty proceedings
in South Africa in breach of a jurisdiction clause it is open to
the defendant to apply for a stay of those proceedings in favour of
the agreed court or tribunal. The principles in The Eleftheria
(1969) 2 All ER 641 (PDA) have been approved by the courts in that
Limitation periods for liability
- What time limits apply to claims? Is it possible to extend
the time limit by agreement?
Under the Prescription Act No. 68 of 1969 the prescriptive period
in South Africa in respect of breach of contract and delictual
(tort) claims is three years from the time the debt is due.
However, prescription does not run when the debtor is outside the
Specific prescription or time-bar periods are provided for
particular types of claims. Of relevance are the one-year
prescriptive period for cargo claims under the South African
Carriage of Goods by Sea Act No. 1 of 1986, the two-year period of
prescription for collision claims under section 344 of the Merchant
Shipping Act No. 57 of 1951 and the two-year period in respect of
claims for salvage in terms of the Wreck and Salvage Act No. 94 of
Time limits can be extended by agreement.
- May courts or arbitral tribunals extend the time
There is no provision for the court to extend the time limit under
the Prescription Act No. 68 of 1969 and it generally may not do so
under other provisions unless specifically permitted to do so. On
that basis the court may in certain circumstances extend
prescription for collision claims.
An arbitral tribunal may extend time limits in terms in an
arbitration agreement, whether already lapsed or not, in terms of
section 8 of the Arbitration Act No. 42 of 1965.
- How does the Maritime Labour Convention apply in your
jurisdiction and to vessels flying the flag of your
South Africa ratified the Maritime Labour Convention on 20
June 2013. However, it will only come into force on 20 June 2014.
As such, it is not yet applicable in South Africa or to vessels
flying the South African flag.
The Merchant Shipping (Consolidated Maritime Labour Convention)
Regulations were published in 2007 for comment but have yet to come
into force. An inter-disciplinary team has recently been tasked by
the Department of Transport and the Department of Labour with
making recommendations as to the implementation of the
- Is it possible to seek relief from the strict enforcement
of the legal rights and liabilities of the parties to a shipping
contract where economic conditions have made contractual
obligations more onerous to perform?
Generally, no. However, financially distressed South African
companies may apply to be placed under business rescue, or seek a
compromise with creditors. In the former, a general moratorium
prevents claimants from instituting any potential action against
The business rescue practitioner can, in certain circumstances,
suspend or cancel the contract, either partially, conditionally, or
in its entirety. In this instance, the only remedy available to the
wronged party would be a damages claim. However, this would only
occur if the business rescue fails, and the aggrieved party would
then be ranked as an unsecured creditor on insolvency.
- Are there any other noteworthy points relating to shipping
in your jurisdiction not covered by any of the above?
* The authors wish to thank Jacqui Kaufmann, Cheri Young
and Lisa Clarke of the ENS shipping department for their assistance
with this chapter.