Spreading the word

LOCATED over 6,500 nautical miles from London, South Africa could be described as something of an outpost. When it comes to maritime law, however, it is firmly on the map as one of the world's best ship arrest jurisdictions. But that's not all it has to offer. It's geographical position means plenty of passing traffic which attracts experts from all areas of the industry. Its hostile coastline results in up to five major casualties each year, not to mention numerous small damage cases, making it a well-developed wet jurisdiction. It also offers 24-hour access to the courts, high-quality legal expertise, and, most importantly, low legal costs. So, why is South Africa still losing so much of its work to other jurisdictions?

"The apparent down-turn in maritime legal work in the UK has meant that solicitors are more hungry and somehow persuade the underwriters and P&I Clubs that it is imperative to send out even wet-behind-the-ears solicitors to investigate casualties on our doorstep. This is despite our wealth of local experienced senior attorneys whose charge out rates are substantially less than even the most junior City solicitor," says Shane Dwyer, partner at Durban-based Shepstone & Wylie.

If South Africa is to be seen as more than simply a good place to arrest, it needs to raise its profile in the international maritime community. One way to do this is to speed up legislation. "The government doesn't appear to regard maritime legislation with the same priority as other legislation so a lot of it gets stuck in the pipeline," explains Graham Charnock, partner at Cape Town-based Findlay & Tait. Among the stuck documents is the new Ship Registration Act. When brought into force this will allow dual flagging attracting more vessels to South Africa and potentially fuelling an upsurge in ship finance work in particular.

Also awaiting entry into force is the Sea Transports Documents Act 2000, which looks set to have a significant impact on litigation relating to cargo carriage. "The problem is that there needs to be a political reason for pushing legislation through parliament. Maritime transport falls under the department of transport which is under huge pressure to improve other areas such as the road system, pushing maritime legislation down the list," says Dwyer.

And it's not only maritime legislation that is causing the headaches. As Mike Posemann, partner at Adams & Adams, points out, "As a developing nation we also need to deal with labour legislation. The labour unions are busy flexing their muscles at the moment which has lead to port strikes."

This is where the Maritime Law Association (MLA) comes in. Made up of representatives from the South African maritime law community, one of the roles of the MLA is to push new or changing legislation through parliament. It is also responsible for keeping all those involved in maritime law fully informed on the latest developments, and that includes judges. "We need to ensure that our judges are kept up-to-date as you can have a judge presiding in a case with no maritime knowledge at all," says Posemann. "Judges should also be encouraged to attend maritime conferences."

Being so far from the main legal centres, the decision to attend the myriad of annual maritime law conferences can be a tricky decision for South African lawyers. But as Posemann says, "You only need one instruction from a person you met at a conference for it to be worthwhile."

Another area to be tackled by the South African MLA is alternative dispute resolution, or ADR. To date, it has made little impression in South Africa as, on the whole, people still prefer to litigate. And who wouldn't given the low legal costs in South Africa compared to other jurisdictions? "Most firms will try and resolve a matter before it goes to court so ADR is already happening informally," says Posemann. But it still has a long way to go.

Firstly, South Africa needs to develop its own arbitration panel. It may not have recognised arbitrators like in London or New York but it does have sufficient competence in the market to develop arbitration as a mechanism should clients want it. The good news is that some local clients are already starting to insert South Africa arbitration clauses into their contracts. This should not only help keep cases in South Africa but encourage new forms of resolution too.

Ironically enough, it's not only work that is going to London, people are too. In the last few years, South African firms have seen an increasing number of people, particularly women, qualify in and wanting to get involved in maritime law. This may have something to do with the growing number of specialised maritime law courses on offer at South Africa's universities. But attracting them is one thing, retaining them is quite another. "Having got a good few years' grounding in South Africa many of them then head off to London or New York for more experience, and more money. This can be frustrating for firms who have invested in training a youngster but it can also help generate work when they move to a new firm abroad," adds Posemann.

This through traffic of new blood may explain why the number of local firms dealing with maritime law has remained pretty constant over the last 20 years. "This is not a Dubai or Singapore and never will be. It would not make financial or practical sense for a foreign firm to set up an office here," says Charnock.

That's not to say the marketplace isn't changing at all. As Gavin Fitzmaurice, partner at Cape Town-based Mallinicks, points out, "Since the introduction of the 1983 Act, it has become apparent to firms that maritime law is a niche worth getting into. Take Mallinicks, for example, where two years there was no organised maritime department. Now we have a team of four."

"The marketplace is hungry for competition. Established shipping clients welcome new faces and competition as the old firms have had it easy for too long. Clients like to instruct new people at times as this helps drive up service and drive down prices."

Competition is never a bad thing and there could soon be plenty more work to go around. The South African government has proposed the privatisation of its ports and related services in a bid to improve efficiency and increase turnaround times. This should ultimately result in more shipping activity and potential claims and disputes, all of which would be good news for maritime lawyers. "In addition, the development of the Coega Harbour and industrial development zone in the Eastern Cape just north of Port Elizabeth will result in a redistribution of shipping activity and cargo traffic. This could well have an effect on the other major ports, particularly Durban which has traditionally been the main port of entry into South Africa," according to Charnock.

It may be a small community and it may be struggling for recognition among the powers that be, but shipping in South Africa remains a key industry. Offering experts in every field and a highly-developed legal system, South Africa is more than capable of handling every kind of maritime dispute whether wet or dry. Getting this message through to other jurisdictions, however, is proving difficult.

Conferences, such as the recent IBA annual meeting, help but only by pushing through new legislation, developing facilities for the use of ADR, and promoting the cost effectiveness of its legal system can South Africa's legal fraternity demonstrate to the rest of the world that it has far more to offer than ship arrest.