International Marine Transport SA v MV 'Le Cong'

International Marine Transport SA (the appellant) was the owner of the vessel MV Gaz Progress. It obtained an ex parte order in the Durban High Court on 12 March 2002 for the arrest of the MV Le Cong (owned by Guangzhou Ocean Shipping Company) under section 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983. The arrest was to provide security for a claim against Shantou Sez Chemical Industry and Petroleum Gaz General Company for unpaid charter hire. Shantou Sez was the charterer by demise of the Gaz Progress and was deemed to be its owner for purposes of the associated ship provisions under section 3(7)(c) of the Act. The Le Cong was released after Guangzhou provided a letter of undertaking but remained deemed under arrest. The appellant's basis for arresting the Le Cong was that both Shantou Sez and Guangzhou were 'state-owned enterprises' of the People's Republic of China and therefore the vessels were 'associated ships' within the meaning of section 3(6) of the Act. Guangzhou intervened and applied to set aside the arrest, arguing that the vessels were not associated ships. An arbitration award was made in London in favor of the appellant against Shantou Sez for USD 3,831,233 plus interest and costs.

• Whether the MV Le Cong and MV Gaz Progress were 'associated ships' within the meaning of section 3(6) of the Admiralty Jurisdiction Regulation Act 105 of 1983
• Whether state-owned enterprises established at different levels of government in the People's Republic of China (central government versus municipal government) are controlled by the same person for purposes of section 3(7)(a)(iii) of the Act
• The interpretation and proof of foreign law (Chinese constitutional and administrative law) in South African admiralty proceedings
• The application of the Plascon-Evans rule to facts involving foreign law in motion proceedings
• The onus of proof in proceedings to set aside an arrest of a vessel

The appeal was dismissed with costs. The arrest of the MV Le Cong was set aside.

For purposes of section 3(7)(a)(iii) of the Admiralty Jurisdiction Regulation Act 105 of 1983, ships owned by state-owned enterprises established at different levels of government in the People's Republic of China are not 'associated ships' where the power to control each enterprise vests in different levels of government (central versus municipal). The power to control contemplated in section 3(7) means the power to control the direction and fate of a company, not merely its day-to-day operations. State ownership alone does not establish commonality of control where different governmental organs at different levels exercise independent control over the respective enterprises. The party seeking to arrest a vessel as an associated ship bears the onus of proving association on a balance of probabilities. Where foreign law is in issue in motion proceedings, the Plascon-Evans rule applies to factual disputes about the content and effect of that foreign law, and where the foreign legal system is fundamentally different from South African law, courts will place significant reliance on expert evidence.

The court made observations about the interpretation of foreign law generally, noting that the extent to which a court will depend on expert evidence when interpreting foreign statutory provisions depends on how similar the foreign legal system is to the South African system. The closer the system, the more readily a court will rely on its own judgment. However, where the foreign country has a vastly different legal system, constitutional structure, political philosophy and culture (as with the People's Republic of China), courts must place greater reliance on expert evidence. The court noted concepts in the Chinese Constitution such as 'people's democratic dictatorship', 'ownership by the whole people', and 'collective ownership of the working people' are wholly foreign to South African constitutional and legal concepts. The court also noted that while a court will not simply accept allegations about foreign law without question, especially where there is disagreement, when dealing with foreign statutory law the court will examine the statute itself in light of expert evidence and arrive at its own conclusion as far as possible.

This case is significant in South African admiralty law for clarifying the interpretation of 'associated ships' under section 3(6) of the Admiralty Jurisdiction Regulation Act 105 of 1983, particularly in relation to state-owned enterprises. It establishes that state ownership alone is insufficient to establish association between vessels; there must be a commonality of control in the sense of power to determine the fate and direction of the entities. The case demonstrates how South African courts approach the proof and interpretation of foreign law in admiralty proceedings, particularly where the foreign legal system is fundamentally different from South African law. It confirms the application of the Plascon-Evans rule to factual disputes involving foreign law in motion proceedings and emphasizes that the party seeking to arrest a vessel as an associated ship bears the onus of proving association on a balance of probabilities. The case also illustrates the limits of arresting vessels under the associated ship provisions where ownership structures involve different levels of government in foreign states.