Under Section 5(3)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983, parties can secure prejudgment relief for claims that may fall outside South African court jurisdiction. This provision enables claimants to seek a High Court order to arrest property as security for their claims. The section specifically addresses claims that could be subject to arbitration or proceedings, whether in South Africa or elsewhere, and applies regardless of the property’s legal jurisdiction or the nature of the action—whether in personam or in rem.
The provision allows for arbitration or any other ongoing legal actions, whether in South Africa or abroad, to be used as the basis for an arrest. Its main goal is to give maritime claimants a procedural tool to secure their claims before enforcement in another forum takes place.
Security Arrests and Local Entities
Uncertainty arises when the respondent is a South African company, as this might conflict with sections 9 and 25(1) of the Constitution. These clauses mandate that everyone is equal before the law and that no one can have their property taken away without a valid reason.
According to D Cooke Hofmeyr’s Admiralty Law, an argument can be made that granting a security arrest where the respondent is local risks infringement of section 9, as any disparity in the application of the Act to different groups of persons must be justified by the discrimination having a rational connection to a legitimate government purpose.
Similarly, creditors who obtain security are treated differently from those who do not. If the respondent is foreign, they lack a physical presence in South Africa and likely possess no assets here, making it harder to enforce a judgment against them.
That legitimate government purpose is absent when the respondent is a domestic entity. Hofmeyr notes that this is particularly true when extra facts weaken the link between the discrimination and the stated purpose or require stronger justification for the property seizure.
Related Post: South Africa eases asylum rules for abuse victims
Case Law and Security Arrests
South African courts have nonetheless granted security arrests despite these constitutional worries, especially when the parties did not raise the issue. In the MSC Gina Mediterranean Shipping Co SA v Cape Town Iron and Steel Works case, an arrest was denied due to lack of evidence of genuine need for security.
The evidence placed before the court included evidence showing that the respondent was on the verge of closing down, the respondent’s failure to respond to the applicant’s enquiries regarding their ability to satisfy judgment, and the low quantum of security when compared with the established nature and size of the respondent’s business. This evidence was found to show that there was a genuine and reasonable need for security.
Although the MSC case did not specifically deal with the location of the respondent in its reasoning, this may become a factor in such an application, for instance, where the foreign respondent resides or is domiciled in a jurisdiction where it is more difficult to execute an award. The residence or domicilium of the respondent in a security arrest application should therefore be considered, along with any additional facts concerning the property to be arrested.
In Afgri Grain Marketing (Pty) Ltd v Trustees for the Time Being of Copenship Bulkers A/S (in liquidation) and Others, the court also adjudicated a security arrest with a local respondent, without considering the constitutional implications. The court’s decision in these cases suggests that the location of the respondent may not be a determining factor in security arrest applications, but rather one of many factors to be considered by the court.
Conclusion of Security Arrest Applications
This article was written by a legal practitioner at Shepstone & Wylie Attorneys in Durban.
