'Substantial security' releases
perishable-laden ships, writes Ray Smuts\
A HIGHLY unusual and controversial legal principle - allowing the arrest of an 'intangible asset' - was recently effected with the detention of three fruit-laden reefer vessels in Cape Town, Port Elizabeth and Durban.
At issue over the arrest of the Snow Delta (Cape Town), Snow Flower (Port Elizabeth) and Snow Cape (Durban) was the right of charterer Universal Reefers to operate the vessels.
The action was brought by two Liberian-registered companies, Castle Navigation Corporation and Metrostar Marine Co, who own the vessels Virginia Universal and Vermont Universal.
The plaintiffs claimed that Universal Reefers of Douglas, Isle of Man, charterer of both these vessels, was in breach of charter party agreements by not fulfilling them. For this reason they were seeking a total of $3 050 000 (Three million and fifty thousand US Dollars) as security for their claims at arbitration proceedings in London.
Arresting a charterer's intangible right to operate a vessel is extremely rare in maritime law, a most unusual remedy, which, to the best of my knowledge is not available in other maritime legal jurisdictions, Cape Town maritime attorney Gavin Fitzmaurice of the firm Findlay and Tait told FTW this week.
Referring to the Snow Delta in particular, he said it was ironic that her arrest had taken place in terms of a precedent set in September 1996 when she was detained over a R1,1 million wrangle between local fruit interests and the then charterers Serna Ship Ltd.
The legal authority which endorsed that arrest relating to the charterer's interest in the use of the vessel, was a full Cape High Court bench decision in March 1998.
Instructed to act in the matter against Universal Reefers were Findlay and Tait, its associates in Durban, Garlic and Bousefield, and Pagdens in Port Elizabeth.
After a Durban High Court order had granted an urgent application by Universal Reefers, setting aside the arrest of the Delta Cape, lawyers for all the parties held urgent discussions, given that the vessels were laden with perishables, predominantly Capespan cargoes, bound for Europe.
The upshot was that the plaintiffs accepted what Fitzmaurice terms a substantial amount as security before agreeing to the release of the vessels.
The question of spoilage did not arise because of on-board cooling facilities but being export product it was imperative that the vessels sail as soon as possible, says Fitzmaurice.
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