Remedies against voyage charterers : The "Arena"

Remedies against voyage charterers
The "Arena"

IN the Snow Delta, the Cape Provincial Division of the High Court of South Africa held that a charterer's rights under a charter party could be attached to establish jurisdiction and secure a claim against the charterer.
(See Maritime Advocate, July 1999).

In an unreported judgment dated May 18, 1999, Justice Combrinck of the Durban and Coast Local Division of the High Court of South Africa considered whether the position in respect of a voyage charterer was the same.

At issue was whether the voyage charterer of the Arena had a right to - or interest in - the use and employment of the vessel.

Justice Combrinck held that, "....it is abundantly clear, in my judgment, that the charterer had no right to or interest in the use and employment of the Arena. What it did have was personal rights flowing from the charter party. These rights were to compel compliance by the owner with its obligations to carry the goods in accordance with the terms of the charter party. These rights do not vest in the vessel but in the charter party..."

Interestingly, the judge commented that he had doubts as to the correctness of the Snow Delta decision insofar as the Cape Provincial Division had concluded that a time charterer "does have an interest in the vessel, albeit not a possessory one, arising out of its time charter party..."

The effect of this decision is twofold, Firstly, it is clear that a voyage charterer's rights under a charter party are not capable of attachment. It does, however, remain possible to attach the voyage charterer's rights to receive freight where the freight is to be paid in South Africa.

Secondly, in light of the obiter remarks of Justice Combrinck, the scope for challenging the decision in the Snow Delta has been widened.

Establishing admiralty jurisdiction
KMP Coastal Oil Pte Ltd v Owners of the "Iran Amanant"

THE high court in Australia recently handed down a unanimous judgment which has dome much to restore certainty in regard to ship arrest in Australia pursuant to the Australian Admiralty Act 1988.

The case of KMP Coastal Oil Pte Ltd v Owners of the "Iran Amanat" involved the supply of bunkers in Singapore, by a Singapore company, to an Iranian owned vessel. After the vessel had been supplied with the bunkers, the shipowners refused to pay for the bunkers. They alleged that the party liable for the bunkers were the time charterers of the vessel. The time charterers had, in the meantime, become insolvent.

The Singapore bunker suppliers eventually arrested the Iran Amanat, a sistership of the bunkered vessel, in Geelong, pursuant to Section 4 (3)(m) of the Australian Admiralty Act, which gives a party the right to arrest a vessel if they have supplied goods and services to that vessel.

The vessel's owners challenged the entitlement of the bunker suppliers to arrest the Iran Amanat. They said the Australian court had no jurisdiction in the matter. There was no dispute that the arrested vessel was owned by the same party who owned the vessel to whom the bunkers had been supplied in Singapore.

The judge, hearing evidence on an urgent basis shortly after the vessel was arrested, found that the party responsible for paying for the bunkers - a receipt for which had been signed by the vessel's chief engineer - were the time charterers, not the owners.

The bunker suppliers had relied on well-established legal authorities in Australia and England, to the effect that the judge did not have to determine the ultimate question as to who was liable, as a matter of law, in order to find if the court had jurisdiction to arrest the vessel. Rather, he simply had to determine whether the owners of the vessel would be liable if, hypothetically, the bunkers had in fact been supplied to them. In other words, according to the bunker suppliers, it was not necessary for the court to determine, at the interlocutory stage of a challenge to jurisdiction, the ultimate substantive issue of who had been the recipient of the bunkers.

The bunker suppliers appealed the decision to the full bench of the federal court, which unanimously overturned the decision of the primary judge, holding that he had applied the wrong test to determine the person liable in personam. The full court was also critical of the judge accepting hearsay evidence on behalf of the owners by their solicitors.

The owners of the Iran Amanant appealed to the high court of Australia, where the appeal was unanimously rejected and the decision of the full court upheld.

Although it does not dispose of the ultimate issue of whether or not it is the owners or the time charterers who are liable in personam to pay for the bunkers, the decision is welcome news for supporters of Australia's admiralty jurisdiction in that it demonstrates that the Australian courts will adopt an expansive view of the jurisdiction given them under the Admiralty Act, and will not adopt an overly legalistic approach on questions of jurisdiction.

Collision liability
The "Trade Expansion"

IN a recent landmark judgment, the Chinese supreme court has overturned two previous court rulings and has cleared the containership Trade Expansion from involvement in a collision which resulted in the loss of a fishing vessel, and six lives. The shipowner maintained throughout that the vessel was not responsible for the tragedy, which occurred on a November night in 1992.

This is the first occasion on which the supreme court's transport division has granted leave for an "adjudication supervision" and conducted its own trial. This intervention blocked enforcement of a court of appeal ruling which required the shipowner to pay $1.2m in compensation.

The exact status of the fishing vessel lost in the collision remains unclear to this day. Certainly, the boat was not engaged in fishing when the collision occurred, as indicated by the presence on board of four border guards. The plaintiff claimed that the fishing vessel was engaged in anti-smuggling duties and had tried to stop the containership. When the containership failed to stop, the fishing vessel manoeuvred alongside and attempted to board. The containership then turned, striking the fishing vessel.

The club was ultimately able to show that the containership was not involved in the collision. VTS data showed that another containership had been in the vicinity and had made a sharp turn at the location of the wreck. Evidence from a Chinese radar station ashore, said to implicate the Trade Expansion, was rejected by a panel of leading authorities on maritime safety and collision from Dalian Maritime University which was established to help the supreme court.

The supreme court saw this case as an opportunity to curb improper practices in the lower courts and, at the same time, assert its independence in high-profile cases. The use of the expert panel provided a shield against pressure.

The Dalian experts concluded that there was insufficient evidence against the Trade Expansion, and that another vessel - the Barzan - may have been involved.

The case has important implications. The containership's P&I insurer, the Swedish Club, says, "Under the Chinese legal system, inadequate evidential and procedural rules can cause problems, with judges having excessive discretion, with witnesses frequently not examined and cross-examined on the documentary evidence submitted to the courts. Perjury is not a crime in civil actions, a fact that can lead to abuse.

"The supreme court's intervention in this case offers real hope for substantial improvements in future. It has signalled to the lower courts that the supreme court is prepared to exercise its powers of intervention when wrongful decisions are made...The Chinese have taken an important step forward in the evolution of a legal system which is fair, open and just."