MV IRAN DASTGHAYB: Islamic Republic of Iran Shipping Lines v Terra-Marine SA

Eco Shipping Company PJS (ESC), an Iranian company, bareboat chartered two vessels (Eco Elham and Eco Ekram) from the Islamic Republic of Iran Shipping Lines (IRISL). Terra-Marine SA, a Swiss company, managed the vessels under a Ship Management Agreement containing a London arbitration clause governed by English law. Disputes arose and Terra-Marine commenced arbitration in London against ESC. While arbitration was pending, Terra-Marine instituted an in rem admiralty action in South Africa against multiple vessels, including MV Iran Dastghayb, alleging it was an associated ship under the Admiralty Jurisdiction Regulation Act 105 of 1983. The vessel was arrested and released against security. IRISL applied to stay the in rem proceedings under s 7(1)(b) pending the outcome of the London arbitration, offering substitute security. The High Court refused the stay, holding IRISL could not rely on the arbitration clause as it was not a party to it.

The appeal was upheld with costs. The High Court order was set aside and replaced with an order staying the in rem action against MV Iran Dastghayb pending final determination of the London arbitration, subject to IRISL providing limited substitute security for specified claims, interest, and costs, and the cancellation of the earlier security.

The case clarifies the scope of s 7(1)(b) of the Admiralty Jurisdiction Regulation Act, confirming that South African courts have a broad discretion to stay admiralty proceedings for 'any other sufficient reason', even where the applicant is not a party to the arbitration agreement. It is an important authority on the interaction between associated-ship arrests and foreign arbitration, promoting comity and procedural fairness in maritime disputes.