Bulkship Union SA v Qannas Shipping Company Ltd and Another

Bulkship Union SA arrested the MV Cape Courage in Durban as an associated ship under the Admiralty Jurisdiction Regulation Act 105 of 1983 to obtain security for claims it was pursuing in London arbitration against Dry Bulk Maritime Ltd. Those claims arose from alleged breaches of a memorandum of agreement for the sale of another vessel, MV Pearl of Fujairah, and alleged misrepresentations regarding that vessel’s condition. The Pearl of Fujairah had been owned by Dry Bulk Maritime Ltd until delivery to Bulkship Union SA on 20 October 2005, when ownership passed. The Cape Courage was owned by Qannas Shipping Company Ltd, which was controlled by the same person(s) who controlled Dry Bulk Maritime Ltd. The High Court set aside the deemed arrest on the basis that the maritime claims only arose once Bulkship Union SA had suffered damage, which it held occurred after transfer of ownership. Bulkship Union SA appealed.

The appeal was upheld with costs. The High Court order setting aside the deemed arrest was replaced with an order dismissing the application to set aside the arrest, except that the arrest was amended to exclude the claim based on the alleged breach of clause 5(a) of the memorandum of agreement.

The case authoritatively clarifies the meaning of 'when the maritime claim arose' in section 3(7) of the Admiralty Jurisdiction Regulation Act. It confirms that for associated ship arrests, a maritime claim arises when the breach or wrongful act occurs, not only when damage is suffered. This interpretation strengthens the effectiveness of associated ship arrests and provides certainty in South African admiralty practice, aligning domestic law with international maritime principles.