Afgri Grain Marketing (Pty) Ltd v Trustees for the time being of Copenship Bulkers A/S (in liquidation) and Others

Copenship concluded a charter party with Afgri in August 2008 for three voyages to carry bulk maize. An explosion occurred on the vessel MV Fonarun Naree during loading in November 2008, damaging cargo. The cargo consignee (NCPB) rejected the cargo and sued the vessel owner (Precious Trees) in Kenya, which was settled in 2017. Copenship pursued arbitration proceedings in London against both Precious Trees and Afgri. In February 2018, Copenship obtained an ex parte security arrest order under s 5(3)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983, arresting funds in Afgri's Absa bank accounts and future funds to be deposited. The order prohibited Afgri from diverting funds from those accounts. Afgri applied for reconsideration of the arrest order under Uniform Rule 6(12)(c), arguing no genuine and reasonable need for security existed and that certain provisions were beyond the court's powers. The High Court (Weiner J) dismissed the reconsideration application, confirming the arrest order.

• Whether Copenship established a genuine and reasonable need for security under s 5(3)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983
• The proper procedure and evidentiary basis for reconsideration of an ex parte arrest order under Uniform Rule 6(12)(c)
• Whether a security arrest order can extend to property (future funds) not in existence at the time of the arrest order
• Whether the onus was discharged by the applicant to prove a genuine and reasonable apprehension that an award would not be satisfied

The appeal was upheld with costs, including costs of two counsel. The High Court order was set aside and replaced with an order that the reconsideration application succeeded, the arrest order of 21 February 2018 was set aside, and Copenship was ordered to pay all costs of the various applications including costs of two counsel where employed.

A security arrest under s 5(3)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983 may only be granted in respect of property existing at the time the arrest order is made; it cannot extend to future assets not yet in existence. The applicant for a security arrest bears the onus of proving on a balance of probabilities that it has a genuine and reasonable need for security, which requires demonstrating a genuine and reasonable apprehension that the respondent will not satisfy a judgment or award. This apprehension must be based on actual evidence of either: (a) insufficient assets to meet the judgment, or (b) other factors legitimately justifying an inference that the respondent will seek to conceal assets or prevent satisfaction of the award. When an ex parte arrest order is subject to reconsideration under Uniform Rule 6(12)(c) and the party seeking reconsideration delivers an answering affidavit to which a reply is filed, the reconsideration must be conducted on the basis of all the material then before the court, but the onus remains on the applicant to establish entitlement to the relief granted.

The court made several important observations: (1) The refusal to provide voluntary security is neutral and does not, without more, evidence an intention or inability to honour a judgment or award. (2) Centralized group treasury management through sweeping arrangements is a commonplace and legitimate business practice that does not indicate an intention to avoid obligations. (3) Courts must be alert to the possibility that security arrests may be sought for improper purposes, such as to pressure settlement through the significant costs and business disruption they cause, rather than from a genuine apprehension of non-payment. (4) Financial risk statements in audited accounts are standard disclosure requirements and their presence does not indicate financial difficulties or likelihood that risks will materialize. (5) A major company engaged in international trade that resorted to underhand tactics to avoid paying an arbitration award would suffer enormous reputational damage and be shunned by trading partners. (6) Where a party makes vague, general allegations unsupported by specific facts and fails to investigate readily available information about the respondent's financial position, this undermines the genuineness of any alleged apprehension. (7) Material non-disclosure in ex parte applications, such as the failure to disclose a prior settlement demonstrating willingness and ability to pay, is relevant to reconsideration even if not independently determinative.

This judgment clarifies important aspects of South African admiralty law regarding security arrests. It establishes that: (1) Security arrest orders under s 5(3)(a) of the AJRA are limited to property existing at the time of the order and cannot extend to future assets. (2) The applicant bears the onus of proving on a balance of probabilities a genuine and reasonable apprehension that a judgment or award will not be satisfied - this requires actual evidence, not speculation. (3) The court must carefully scrutinize applications for security arrests, particularly where they may be used for strategic purposes to pressure settlement. (4) Centralized treasury management and inter-company sweeping arrangements within corporate groups are ordinary commercial practices and do not, without more, indicate an intention to avoid obligations. (5) On reconsideration of ex parte orders, where affidavits are exchanged, the court considers all material before it but the onus remains on the original applicant. The case provides important guidance on the evidentiary requirements for security arrests in the maritime context and reinforces that such remedies should not be granted lightly.