Windrush Intercontinental SA and MT "Asphalt Venture" v UACC Bergshav Tankers AS

The MT Asphalt Venture was a vessel bareboat chartered by Windrush Intercontinental SA from Bitumen Invest AS, then sub-bareboat chartered to Concord Worldwide Inc. Between April and August 2010, Concord employed 15 crew members who were Indian citizens through employment contracts. On 23 September 2010, Somali pirates hijacked the vessel and demanded ransom. On 15 April 2011, after payment of USD 3.4 million ransom, the vessel was released with only 8 crew members; 7 crew members were held hostage by pirates demanding an exchange for 120 Somali pirates arrested in India. The Indian government refused to negotiate. The hostages were eventually released between August and December 2014 after further ransom payment. Concord terminated the sub-bareboat charter on 17 June 2011 due to Concord's failure to honour obligations. Concord paid wages to hostages' families until October 2011 on an ex gratia basis. The hostages' families arrested the UACC Eagle in Mumbai in January 2012 claiming unpaid wages. Bergshav settled that claim and sought to arrest the Asphalt Venture in Durban in September 2012 in rem to enforce a maritime lien for crew wages as cessionary of the hostages' claims.

• Whether a maritime lien existed for unpaid crew wages after the hostages' employment contracts terminated
• Whether the employment contracts were frustrated or terminated by supervening impossibility when the pirates retained the hostages after releasing the vessel
• Whether crew members held hostage off the vessel and unable to perform services were entitled to wages that would attract a maritime lien
• Whether an action in rem could be sustained under section 3(4)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983 on the basis of an assigned maritime lien for crew wages

1. The appeal is upheld with costs. 2. The order of the court a quo is set aside and replaced with: (a) The deemed arrest of the MT "Asphalt Venture" is hereby set aside. (b) The security furnished on behalf of Windrush Intercontinental SA shall be released to it forthwith. (c) UACC Bergshav Tankers AS shall pay the costs of the application, including (i) the costs attendant upon the further argument as a consequence of the court's request for responses to queries; (ii) the costs of the application for leave to appeal; and (iii) the costs of the application to set aside the arrest of the MT "Asphalt Venture".

A maritime lien for crew wages arises only when a crew member renders service to the ship. The hallmark of such a lien is the benefit to the vessel of the service of the crew, without which no maritime lien can arise. When employment contracts are frustrated by supervening impossibility - such as when pirates retain crew members hostage after releasing a vessel and paying ransom - the employment relationship and entitlement to wages terminates. The doctrine of frustration applies to employment contracts when supervening events render performance impossible or radically different from what was undertaken. Crew members who are physically prevented from serving on a vessel and performing their duties cannot acquire a maritime lien for wages for periods when no service is rendered, regardless of whether some other legal obligation to pay them might exist. An action in rem under section 3(4)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983 can only be sustained where a valid maritime lien exists at the time of arrest.

The Court noted it was unnecessary to decide whether the termination of the sub-bareboat charterparty with Concord on 17 June 2011 also constituted a supervening event rendering performance of the employment contract impossible, as Concord no longer had any interest in the vessel. The Court also found it unnecessary to address whether the maritime lien (if one had existed) could have been effectively assigned to Bergshav. The Court observed that courts exercising family jurisdiction or employment jurisdiction do not occupy a 'desert island' where general legal concepts are suspended or mean something different - basic principles of contract law apply across different areas of law. The Court commented on the undesirability of expert evidence from representatives of parties rather than independent experts. The Court also noted that in maritime cases dealing with English admiralty law, which has been applied in South African courts since 1797 (Cape Colony) and 1856 (Natal), it should generally be unnecessary for such law to be presented through expert affidavits as it is readily accessible in standard legal resources.

This case clarifies important principles of South African admiralty law regarding maritime liens for crew wages. It establishes that: (1) the doctrine of frustration or supervening impossibility applies to seamen's employment contracts under both English and Indian law; (2) a maritime lien for wages requires that the crew member be rendering service to the vessel - without such service, no lien arises even if wages might be owed on some other basis; (3) employment contracts must be interpreted according to their terms and extraordinary circumstances like piracy can frustrate performance; (4) foreign law (in this case Indian law) is a question of fact to be proved by expert evidence, which courts must evaluate critically and logically; (5) courts exercising admiralty jurisdiction must apply general legal principles of contract law and cannot treat employment law as a special regime that suspends basic contractual doctrines. The case provides guidance on when an action in rem under section 3(4)(a) of the Admiralty Jurisdiction Regulation Act can be sustained and the essential requirements for a maritime lien to exist and be enforceable.