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[2013] ZAKZDHC 26
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Oceantask Corp v mv âVenetiaâ and Others (A45/2013) [2013] ZAKZDHC 26 (27 May 2013)
In the KwaZulu-Natal High
Court, Durban
Republic of South Africa
(Exercising
its Admiralty Jurisdiction)
Case
No : A45/2013
Name
of Ship : mv ‘AS Venetia’ / ‘AS Valentia’
In
the matter between :
Oceantask
Corp
..................................................................................................
Applicant
and
mv ‘Venetia’
.
..........................................................................................
First
Respondent
MS
‘AS Valentia’ GmbH & Co. KG
...................................................
Second
Respondent
MS
‘AS Venetia’ GmbH & Co. KG
........................................................
Third
Respondent
Judgment
___________________________________________________________________
Lopes
J
[1] This is an
application to set aside the arrest of the first respondent pursuant
to an ex parte order granted by this court on
the 30
th
March 2013. The first respondent was arrested as an associated ship
of the mv‘AS Valentia’ which is owned by the second
respondent. The arrest,in terms of s 5(3)(a) of the Admiralty
Jurisdiction Regulation Act, 1983 (‘the Act’) was in
order to obtain security for the applicant’s claims against,
inter alia, the second respondent in the Athens Multi Member
Court of
first instance (‘the Greek court’).
[2] The history of the
matter may be summarised as follows :
on the 7
th
October 2009 in Athens, the applicant (‘Oceantask’), a
company registered in accordance with the laws of Marshall
Islands,
concluded a time charter party on the New York Produce Exchange form
with the second respondent (‘Valentia KG’),
a company
registered in accordance with the laws of Germany and which carries
on business in Hamburg;
the subject matter of
the charter party was the mv‘AS Valentia’ which was
hired by Oceantask for a period of 12 months
on the conditions set
out in the charter party;
the third respondent
(‘Venetia KG’) is similarly a company registered in
Germany and carrying on business at the same
premises as Valentia
KG. Venetia KG is the owner of the associated ship, the first
respondent;
the charter party was
extended by an addendum recap dated the 18
th
October 2010
agreed to at Athens, with minor variations related to the fact that
the mv ‘AS Valentia’ was a newbuilding
at the outset of
the charter party;
on the 3
rd
May 2011 and apparently believing they were entitled to do as a
result of an alleged misrepresentation by the representatives
of
Valentia KG, Oceantask purported to rescind the extension and
terminate the charter party on the basis of a repudiatory breach.
On
the 4
th
May 2011Valentia KG acceptedOceantask’s
conduct as a repudiatory breach of the charter party;
the breach alleged by
Oceantaskrelated to the fact that their representatives claimed to
have been misled into believing that
the mv ‘AS Valentia’
was a Liberian registered vessel, when in fact the ship was on both
the Liberian and German
ships’ registers;
Clause 45 of the charter
party dealt with arbitration and provided :
‘
(b)
LONDON
All disputes arising out
of this contract shall be arbitrated at London and, unless the
parties agree forthwith on a single Arbitrator,
be referred to the
final arbitrament of two Arbitrators carrying on business in London
who shall be members of the Baltic Mercantile&
Shipping Exchange
and
L.M.A.A
. one to be appointed by each of the
parties, with power to such Arbitrators to appoint an Umpire. …
Any dispute arising
hereunder shall be governed by English law.
ArbitrationAct
1996 to apply
.’
the addendum which was
concluded at Athens on the 18
th
October 2010 provided
inter alia, that :
‘
Otherwise
all terms and conditions to remain as per present AS
Valentia/Oceantask Charter Party dated 07th October, 2009, except
In section 4.1 delete
the paragraph reading “since the vessel is a newbuilding …
or closer day to it.”’
The dispute then became
the subject of an arbitration in London before three arbitrators.
They published their final award on
the 4
th
October 2012,
finding in favour of Valentia KG against the applicant Oceantask in
the sum of US$2 367 230,34. The arbitrators’
award
was payable forthwith together with interest at the rate of 5% per
annum and costs;
in a very full and
detailed arbitration award they found that Valentia KG’s
representatives did not make anymisrepresentation
toOceantask’s
representatives at the time of negotiation of the terms of the
addendum. They then went on to deal with the
representations alleged
by the applicant on the basis that those representations had been
made at the time the addendum was negotiated.
The charterers found
that even had the correct positionregarding the alleged
misrepresentation been explained to Oceantask’s
representatives at the relevant time, they would nonetheless have
concluded the charter party. They also found that what was
expressly
stated in a questionnaire as having been untrue and part of the
misrepresentation, was in fact true and that no misrepresentation
was made.
[3] Having lost the
arbitration on the 5
th
October 2012, Oceantask did not, as
it was enjoined by the arbitrators to do, forthwith make payment of
the amount of the arbitration
award. Instead Oceantask filed a
criminal complaint in Athens on the 14
th
January 2013
against representatives of Valentia KG and on the 13
th
March 2013 and the 23
rd
March 2013 Oceantask filed two
civil actions againstValentia KG and the representatives of Valentia
KG cited in the criminal complaint.
The cause of complaint in all
three actions was the alleged misrepresentations dealt with by the
arbitrators.
[4] The writ issued on
the 13
th
March 2013 in the Greek court claimed the
annulment of the charter party and the extension in its entirety. In
the second action
instituted on the 23
rd
March 2013
Oceantask sought joint and several liability against Valentia KG and
its representatives in a sum exceeding €7 000 000.It
was to secure those payments in the Greek court that the application
to arrest the first respondent was brought in this court.
[5] In order to arrest a
ship with the object of obtaining security in respect of proceedings
in a foreign forum, an applicant is
required to show :
a claim enforceable by
an action
in rem
against the ship concerned or where the ship
concerned is an associated ship against that ship;
a prima facie case in
respect of the claim which is prima facie enforceable in the
nominated forum of choice; and
a genuine and reasonable
need for the security claimed.
[6] These requirements
were set out in
Cargo Laden and Lately Laden
on Board the mv Thalassini Avgi v mv Dimitris
1989
(3) SA 820
(A). With regard to the establishment of a prima facie
case, Botha JA stated at page 831 H :
‘
In
the analogous case of an attachment of property
adfundandam
jurisdictionem
an
applicant will need show no more than that there is evidence which,
if accepted, will establish a cause of action. … This
approach
is well-established in cases of attachment of property to found
jurisdiction … In our judgment, it is the proper
approach to
be applied to applications for the arrest of a ship in terms ofs
5(3)(a) of the Act, and we hold accordingly.
’
In dealing with the ship
owner’s response to the satisfaction of those requirements,
Botha JA continued at page 833 C :
‘
It
follows, then, that when once the criteria mentioned above are met,
the respondent shipowner who would oppose the granting of
an order
must raise, and discharge the
onus
of
proving,some countervailing factor of sufficient weight to persuade
the court not to grant the order.
The Act was later amended
to include the power to arrest a ship where the applicant has an
action
in personam
against the owner of the property
concerned.
[7] Mr
Gordon
SC
who appeared with Mr
Wallis
for the applicant, contended that
the loss claimed by Oceantask in the Greek court is pursuant to
Valentia KG’s misrepresentation
which results in both the
charter party and the arbitration clause contained therein being
nullified. This dispute, which is referred
to the Greek courts, is
not the same dispute as that before the arbitrators because the
dispute before the arbitrators was a contractual
one, whereas the
actions in the Greek courts are based on tort. Mr
Gordon
submitted that the Greek court will apply the
lex fori
and the
Greek law has to be established as a question of fact. Those facts
are not easily established because various experts have
given
evidence on the Greek law, all relying on their own translations of
the original Greek texts into English. The material disputes
between
the experts cannot be resolved on the papers.
[8] Mr
Fitzgerald
SC,
who appears for the respondents together with Ms
Mills,
submitted that the Greek court would uphold a defence of
res
judicata
in that the actions in Greece are between the same
parties, and based on the same facts as existed in the English
arbitration proceedings.
[9] Mr Fitzgerald
submitted that in order to determine the approach of the Greek courts
towards the defence of
resjudicata
, one must first look at the
Private International Law rules of Greece in order to understand
which system of law would be applied.
A Greek court considering the
second writ (i.e. the claim for restitution) would use English law
and not the Greek civil code.
[10] Mr
Fitzgerald
submitted further that :
on the basis of the
aforegoing, Oceantask had not established a prima facie case in
respect of its claims in the Greek court,
which areprima facie
enforceable in that court;
the arrest of the first
respondent ship provides no security for the applicant’s
claims; and
even if the Greek court
were to entertain Oceantask’s claims it would have to apply
English law in adjudicating those claims
because of the choice of
law clause in the charter party. In terms of the Greek conflict of
law rules, in cases such as duress,
fraud, etc in contracts, such
claims are adjudicated in accordance of the
lex causa
(the
law governing the contract). As Oceantask’s claims in the
Greek court are based on the Greek Civil Code they cannot
succeed.
This is because, according to English law as was agreed to in the
arbitration clause, Oceantask’s claim was dismissed.
[11] In order for me to
consider whether the applicant has established a prima facie case
which is prima facie enforceable in the
Greek court, it is necessary
to examine :
the law to be applied;
possible defences
in
limine
, for example
res judicata
; and
the facts as they will
affect the Greek proceedings.
[12] With regard to the
law to be applied, a number of Greek legal experts have put up
affidavits in support of the contentions
as to the Greek law. Those
experts are :
Dr George Constantine
Panagopoulos – who is a solicitor and partner with the Piraeus
firm of attorneys representing the
respondents. He is admitted as an
attorney in Greece and admitted to the Supreme Court of Greece. He
is also admitted as a solicitor
of England and Wales and as a
barrister and solicitor of the Supreme Courts of Victoria,
Australia. He holds a doctorate in law;
George Theocharidis –
who holds a doctorate in law from Aristotle University of
Thessaloniki in Greece and an LL.M degree
from the University of
Cambridge. He teaches maritime law as a Fellow in the Economic
University of Athens. He is also a member
of the London Maritime
Arbitrators Association and the Greek Maritime Law Association;
Dr Gregory J Timagenis –
who is a Greek lawyer who was admitted to the Piraeus bar in 1971
and has practiced law in Greece
since 1972. He has practiced before
the Supreme Court since 1981,having a Degree in Law from the
University of Athens, a Degree
in Economics and Political Sciences
from the University of Athens, a Master of Laws degree (LL.M) in
maritime law and Law of
the Sea from the University of London and a
Doctor of Philosophy (Ph.D) in the Law of the Sea from the
University of London.
They all claim extensive
knowledge of, and experience in, admiralty matters.
[13] Mr
Gordon
submits that because of the differences in translation between the
various experts, none of their views could be relied upon. Mr
Fitzgerald
on the other hand, submits that the evidence of Dr
Timagenis has not in any way been contradicted by the applicant
despite having
had the opportunity to do so in further supplementary
affidavits.
[14] In examining the
different views of the legal experts, I do not intend to rely upon
the submissions of Dr Panagopoulous. This
is because he is a
solicitor and partner of the attorneys representing the applicant in
Greece. In my view it would be safer to
rely upon the independent
evidence of the other experts. In saying this I cast no aspersion
upon the independence of Dr Panagopoulous,
but objectively it would
be fairer if I were to rely on the other experts where possible. In
this regard I refer to the dicta of
Wallis JA in
Imperial
Marine Co v Deiulemar Compagnia Di Navigazione SPA
2012
(1) SA 58
(SCA) at paragraph 27 where, in dealing with the acceptance
of English law by our courts,he stated:
‘…
it
should generally speaking be unnecessary for it to be presented
through affidavits from practitioners, who all too frequently
…
are representatives of the parties. The undesirability of expert
evidence from such a source has been the subject of previous
comment
from our courts.’
[15] Mr Theocharidis, who
gave his views on Greek law in support of the applicant, dealt with
the following matters:
the requirement of
service of the Greek writs : I do not understand this to be a
contentious issue in this application save for
the suggestion by Dr
Panagopoulous that the action has not yet been instituted in Greece
because of the lack of service of the
writs on the respondents. In
my view non-service is of no moment because the provisions of s
5(3)(a) of the Act provide that
a security arrest may be effected
for a claim which is the subject of contemplated proceedings;
that the Greek court has
international jurisdiction in respect of matters of the type
instituted by Oceantask in the two cases
before the Greek court : I
do not understand this to be disputed to the extent that the
respondents contend that the Greek court
would have no jurisdiction
whatsoever. As pointed out by Mr Theocharidis, an objection to
jurisdiction on the basis of
res judicata
would have to be
raised as a point
in limine
. In this regard Mr Theocharidis
holds the view that Oceantask’s claim in tort does not fall
within the ambit of the arbitration
clause in the charter party;
the defence of
res
judicata
: Reference is made to various articles in the Greek
code of civil procedure and Mr Theocharidis opines that
res
judicata
is linked to the substantive issue determined by the
previous proceedings. His view is that
res judicata
would not
be applicable because the object of the litigation in the
arbitration, and in the proceedings before the Greek courts,
are not
the same. The arbitration award was determined by the application of
English law to a contractual liability, as opposed
to a
consideration of Greek law in respect of a tort, and that the claim
of Oceantask is founded in the Greek Civil Code and
falls to be
determined in accordance with Greek law.
[16] Mr Theocharidis
concluded that the Greek courts have jurisdiction to consider claims
which are not precluded by the arbitration
clause and that the
defence of
res judicata
is unlikely to be upheld. In addition
he opined that an unjust enrichment claim by Valentia KG would be
unsustainable.
[17] Mr Timagenis on the
other hand, maintains that the question to be answered is whether the
arbitration clause covers claims
in both contract and tort between
the parties, arising in the context of, or relating to the charter
party. The Greek rules of
Private International Law and the Greek
case law provide that the scope of an arbitration clause is governed
by the national law
governing that clause. In the instant case the
parties agreed in the charter party that any dispute would be
governed by English
law. Accordingly the arbitration clause is also
governed by English law which the Greek court will use in
interpreting it.
[18] Mr Timagenis then
deals with the position in the event that the arbitration clause is
to be governed by the
lex fori
– Greek law. In this
regard the Greek Civil Code provides at Article 173 that the true
intention of the parties should be
sought, and in Article 200 that
agreements are interpreted as required by good faith taking into
account business practice. According
to the Greek authorities quoted
by Mr Timagenis, where an arbitration clause provides for the
submission to arbitration of ‘all
disputes arising out of a
contract’, that clause would cover claims in tort arising
between the parties in connection with
the contract. Mr Timagenis
opines that the arbitration clause may be determined separately from
the charter party in Greek law.
The submissions of Oceantask in the
first Greek writ that the existence or otherwise of the alleged
fraudulent misrepresentation
should be adjudicated on the basis of
Greek law is wrong. The law which will be applied according to the
laws of Greek Private
International Law is the law of the contract –
English law.
[19] Mr Timagenis states
that Greek law recognises the defence of
res judicata
. He sets
out the provisions of Article 903 of the Greek Civil Procedure Code
which covers res judicata. His view is that as the
requirements in
Article 903 are satisfied in the present case, the validity of the
arbitration clause could not be challenged in
the first Greek writ.
This is because the arbitration award made the validity of the
arbitration clause
res judicata
.
[20] Mr Timagenis also
deals with the defence of
res judicata
with regard to the
merits of the arbitration. He has also dealt in detail with the
question of the ability of Oceantask to recover
on the basis of
unjust enrichment.
[21] Mr Timagenis is
accordingly of the view that the Greek courts will not accept
jurisdiction because of the arbitration agreement
(presumably taken
as a point
in limine
), and will accept the defence of
res
judicata
with regard to the validity of the arbitration clause in
the charter party, and the validity of the charter party and the
addendum.
Such a finding would be fatal to both of Oceantask’s
claims in the Greek court.
[22] In applying the
foreign law in this matter I am mindful of the dicta of van Heerden J
in
Atlantic Harvesters of Namibia v Unterweser Reederei
1986
(4) SA 865
(C) at 874 E :
‘
In our Courts, foreign law is a matter of
fact to be decided on evidence and the proper evidence is that of
experts, that is to
say, of lawyers practising in the courts of the
country whose law our Courts want to ascertain. The Court is not
bound to accept
the view of either of them. On the other hand, the
Court may for cogent reasons accept the testimony of one as against
that of
the other where they are at issue. Furthermore, if in their
evidence the experts have referred to passages in the Code of the
country
whose law we are endeavouring to ascertain, it would
certainly be most unreasonable to hold that this Court is not at
liberty to
look at those passages and consider what is their proper
meaning.’
[23] In assessing the
role of the Greek law experts, I accept that they are all suitably
qualified to express opinions on maritime
law and the Greek law. I
find, however, that the views of Mr Timagenis are preferable to those
of Mr Theocharidis because the latter
did not deal with the important
aspect of the law to be applied by the Greek courts. I accept the
evidence of Dr Timagenis that
a Greek court will apply English law in
determining a proper interpretation of the arbitration clause and
would uphold a defence
of
res judicata
to the claims.
[24] There is no doubt
that the claims raised in the Greek courts with regard to the
misrepresentations allegedly made by the second
respondent’s
representatives are identical to those which were dealt with by the
arbitrators. The arbitrators fully considered
the alleged
misrepresentations and found not only that they do not exist, but had
they existed, they would not have been material
misrepresentations.
[25] With regard to the
interpretation of the arbitration clause in English law, I refer to
the matter of
Fiona Trust & Holding Corporation and Others v
Privalov and Others
[2007] UKHL 40.
In
Fiona Trust
it was
alleged bythe owners that charter parties were procured by the
bribery of senior officers of the owners. What the court
had to
consider was whether, as a matter of construction, the arbitration
clause covered the question of whether the contract was
procured by
bribery and whether it is possible for a party to be bound by
submission to arbitration when he alleges that, but for
the bribery,
he would never have concluded the contract containing the arbitration
clause. At paragraph 13 of the speech of Lord
Hoffman, he stated the
following :
‘
13.
In my opinion the construction of an arbitration clause should start
from the assumption that the parties, as rational businessmen,
are
likely to have intended any dispute arising out of the relationship
into which they have entered or purported to enter to be
decided by
the same tribunal. The clause should be construed in accordance with
this presumption unless the language makes it clear
that certain
questions were intended to be excluded from the arbitrators’
jurisdiction. As Longmore LJ remarked, at para
17 :“If any
businessman did want to exclude disputes about the validity of a
contract, it would be comparatively easy to
say so.”’
[26] Mr
Gordon
pointed to the fact that it was emphasised in
Fiona
Trust
that reliance was placed on the
separability of the arbitration clause from the main agreement. This
was pursuant to s 7 of the
Arbitration Act, 1996 – the
arbitration clause being treated as a distinct agreement. Mr
Fitzgerald
pointed out
in reply that the arbitration clause with which we are concerned
specifically provides for the applicability of the
Arbitration Act,
1996.
[27] In the founding
affidavit to lead the arrest of the first respondent Oceantask’s
attorney stated that :
‘…
there
has already been an arbitration in London dealing
inter
alia
with
these issues of fact, albeit that the issues of law relative thereto
were considered in the context of a contractual dispute
and applied
in accordance with English law, …’
He also concedes that
notwithstanding Oceantask’s contentions that the findings in
the London arbitration were wrong, there
is no reasonable prospect of
success on appeal. He records at the same time that the arbitration
regime in London does not allow
for an appeal on findings of fact.
That being so, my view is that there would therefore appear to be
very little, if any,
prospect that a Greek court
would not uphold the defence of
res judicata
on the merits of the charter party dispute.
[28] In my view the
applicant has not established a prima facie right to arrest the first
respondent (even accepting the fact of
association), which is prima
facie enforceable in the Greek court. It is accordingly unnecessary
for me to deal with the interesting
point raised by Mr
Fitzgerald
regarding Oceantask’s failure to establish a need
for security, because the first respondent ship is mortgaged far in
excess
of its value.
[29] In my view the
conclusion I have arrived at accords with the justice of the case.
Oceantask repudiated the charter party by
relying on an alleged
misrepresentation by Valentia KG. Those claims were fully dealt with
by three London arbitrators who unanimously
ruled against Oceantask.
They ordered Oceantask to pay an amount of US$2 367 230,34.
The award was handed down on the
4
th
October 2012. Having undertaken in the arbitration
agreement,
and by its participation in the
arbitration,
that it would honour the award made
by the arbitrators, Oceantask then declined to do so. In the founding
affidavit to lead the
arrest of the first respondent, it is stated :
‘
That
amount has yet to be paid by the Applicant by reason of the pending
litigation in Greece. Payment cannot now be made because
there is
almost no prospect of recovery by the Applicant in the event of the
Greek court upholding the applicant’s claim.
That is because as
set out below there is the real risk that the second respondent will
be liquidated.’
[30] That statement by
the applicant’s attorney rings somewhat hollow when one
considers that civil proceedings in the Greek
courts were instituted
in March of 2013. No reason is advanced why Oceantask did not pay the
amount of the award promptly upon
the handing down of the
arbitrators’ decision. The reason now seems clear. It did not
wish to do so because it did not accept
the final decision of the
arbitrators. Having no other recourse in English law other than to
attack the conduct of the arbitrators
(which they could not do)
Oceantask then sought to institute proceedings in the Greek courts to
claim a right not to pay the arbitration
agreement pending the
outcome of the decision by the Greek court. In my view,Valentia KG
having honoured its undertaking by participating
in the London
arbitration with the parties agreeing to be bound by the result,
Oceantask should be compelled to do so and not to
seek refuge in
litigation which has no prospect of success.
[31] I am also mindful of
the caution of Wallis J in
Imperial Marine
at page 68, paragraph 13 in relation to ship arrests :
‘
Nonetheless,
the remedy is of an exceptional nature and may have far-reaching
consequences for the owner of the property attached.
It has
accordingly been stressed that the remedy is one that should be
applied with care and caution …’
[32] In the premises I
make the following order :
The arrest of the mv
‘Venetia’ is set aside.
The Registrar of this
court is authorised and directed immediately to issue a release
warrant and to provide it to the respondent’s
attorneys.
The Sheriff of this
court is authorised and directed to serve the release warrant on the
Port Captain, Durban, by telefax.
Service of the release
warrant on each of the respondents need not be effected.
The applicant is to pay
the respondents’ costs, such costs to include those consequent
upon the employment of two counsel.
Date of hearing : 20
th
May 2013
Date of judgment : 27
th
May 2013
Counsel for the Applicant
: D A Gordon SC with PJ Wallis (instructed by Shepstone & Wylie)
Counsel for the
Respondents : M J Fitzgerald SC with L M Mills (instructed by van
Velden Pike Inc)