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[2008] ZAWCHC 3
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MT "Fotiy Krylov" v Owners of the MT "Ruby Deliverer" (181/06) [2008] ZAWCHC 3; 2008 (5) SA 434 (C); (12 February 2008)

Reportable
IN THE
HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
Exercising its
Admiralty Jurisdiction
Case No: 181/06
In the matter between:
THE MT “FOTIY
KRYLOV”
Applicant
and
THE OWNERS OF THE MT
“RUBY DELIVERER”
Respondent
JUDGMENT: 12 February
2008
DAVIS J
The applicant ,the bareboat charterer of the MT “Fotiy Krylov”
had applied for an order setting aside the respondent’s arrest
of
this vessel on 10 November 2006 pursuant to which it commence an
action
in rem
against the vessel under Case No. AC181/06 for
damages allegedly arising out of a collision between the MT “Nikolay
Chiker” and
the MT ”Ruby Deliverer” on the 16 August 2005 .The
applicant asserts that the respondent does not enjoy a
maritime
lien
in respect of its claim and therefore has not made out a
prima facie
case in respect of its claim.
In the alternative, in
the event of the arrest not being set aside, the applicant
prays that the amount
of security furnished to the respondent in order to procure the
release of the MT “Fotiy Krylov” from arrest
be reduced.
Factual Matrix
A number of facts are common cause and can be summarized
accordingly:
On 16 August 2005 the
tug MT “Nikoly Chiker”collided with the MT “Ruby Deliverer”
off Cape Town. At the time of the collision,
the “Ruby Deliverer”
was owned by Bluebottle Navigation Limited (“Bluebottle”).
The “Nikolay Chiker”
was owed by Sovracht Joint Stock Company and bareboat (or demise)
charterered to the applicant, Tsavliris
Russ (World Wide Salvage and
Towing) Limited (“Tsavliris”). On or about 10 November 2006
Bluebottle caused the tug “Fotiy
Krylov “ to be arrested, thereby
instituting an action
in rem
in which Bluebottle claimed
payment of the sum of UU$1 625 716,06 together with interest and
costs
.
In its writ of
Summons, Bluebottle contended as follows:
1. The collision between the “Ruby Deliverer” and the “Nikolay
Chiker” occurred as a result of the negligence of
the
master and crew of the “Nikolay Chiker.”
2. Bluebottle had a
maritime lien enforced against the “Nikolay Chiker “.
3. At the time of its
arrest the Fotiy Krylov was owned by Sovracht Joint
Stock Company and bareboat chartered to Tsavliris
4. Bluebottle therefore was entitled to commence its action against
the “Fotiy Krylov” as an associated ship of the
“Nikolay Chicker”.
On 16 November 2006, security was furnished by United
Kingdom Mutual Team Ship
Insurance
Association, on behalf of Tsavliris, and the “Fotiy Krylov” was
released from its arrest.
The “Fotiy Krylov” was therefore deemed to be under arrest in
terms of section 3(10) of the Admirality Jurisdiction Regulation
Act 105 of 1983 as amended (“Admiralty Act”)
On 4 July 2007 Tsavliris, citing itself as the MT “FOTIY KRYLOV”,
launched an application to set aside the deemed arrest of
the “Fotiy
Krylov”.
The grounds upon which
the application to set aside the arrest were the following:
1 If the collision was caused by the negligence of the master and
/or crew of the “Nikolay Chiker” as alleged in the summons
(which was denied), such negligence constituted a breach of a
contractual duty which gave rise to the maritime lien upon which
Bluebottle’s
action was based. The applicant did not persist with
this argument.
2 In terms of the
contract that governs the right and liabilities of Bluebottle and
Tsavliris in relation to the collision,
the claim was time
–barred and, in any event, subject to the exclusive jurisdiction of
the High Court of Justice in London .
3 In terms of the
contract pursuant to which Bluebottle hired the “Nikolay Chiker”,
Tsavliris was exempt from all liability
for the damage to the “Ruby
Deliverer” of whatsoever nature and howsoever caused.
With regard to
the contract that governed the rights and obligations of Bluebottle
on the one hand and Tsavliris on the other
,it was alleged in the
founding affidavit filed in support of the application to set aside
the arrest as follows : On 15 August Bluebottle
and Tsavliris
concluded an agreement,part oral and part in writing (the TOWHIRE
contract) for the provision of certain supply and
towage service in
respect of the “Ruby Deliverer” and a submersible oil rig known
as either “P-22” or Petrbras 22 (“the
rig”)
In concluding the contract , the Bluebottle was represented by
Mr Phillip Bush of
Bush Shipping who
in turn acted by way of a local salvage and towage brokers, Captain
Needham.
The terms of the standard BIMCO International Towage (Daily Hire)
(“TOWHIRE”)
Agreement were
incorporated into the fixture, save where the TOWHIRE terms were
inconsistent with the
fixture.
Clause 18(2) (b) of the TOWHIRE clauses exempted Tsavliris from
loss or damage
of whatsoever nature, caused by or to the tow.
Clause 24 of the
TOWHIRE terms provided, inter alia, that any claim arising out of the
towage or service performed thereunder shall
be brought within a
year, failing which the rights of the claimant shall be absolutely
time barred or extinguished. As Bluebottle
commenced its action on 10
November 2006, more than one year after the collision occurred on 16
August 2005, it was contended that
its claim had prescribed.
Clause 25 of the
TOWHIRE term provided that any dispute or difference which may arise
out of or in connection with the agreement should
be referred to the
High Court of Justice in London, and that no suit should be brought
in any state or jurisdiction save for proceedings
in rem
to obtain conservatory seizure or other similar remedy against any
vessel properly owned by the other party in a state of jurisdiction
where such vessel or property may be found. In the circumstances,
Bluebottle was precluded from arresting an associated ship in
proceedings
in rem
in contravention of this clause.
In the alternative ,
and in the event of the Court deciding to set aside Bluebottle’s
arrest the “Fotiy Krylov”, Tsavliris prayed
that the amount of
security furnished in order to procure the release of the “Fotiy
Krylov” from arrest and should be reduced.
In answer to the
allegations made in the founding affidavit, Mr Bush deposed to an
answering affidavit in which he alleged as follows:
The fact that Tsavliris was the bareboat charter and operator of
the” Nikolay
Chiker”, and consequently employed the master and crew, and was
vicariously liable for their negligence, did not alter
the
fact that the underlying claim is a claim
in rem
for
which the owner of the vessel is liable.
Even if there was a contract between Bluebottle and Tsavliris which
incorporated
the TOWHIRE terms, which had been denied, and even if the terms of
that contract prevented Bluebottle from claiming against Tsavliris
for the damages which it suffered, that would not constitute a
defence to claim against the vessel
in rem.
3 The hirer under the TOWHIRE contract was not Bluebottle
but Arusha Shipping Limited (“Arusha”), the owner of
the rig
that was towed. In this regard:
On 15 February 2005 Bluebottle concluded an agreement on the
TOWCON form (“the TOWCON contract”) with Arusha for the towing
of the rig from Brazil to India or Pakistan.
3.2 In terms of clause 3 (b) (iii) of the TOWCON contract Arusha was
liable to pay the cost of the services of assisting tugs ,
when
deemed necessary by the master of the “Ruby Deliverer” or
prescribed by the port authority.
In terms of clause 17 (b) of the TOWCON contract the “Ruby
Deliverer” was at all times at liberty to call at any port or
place for bankers provided that the tug was obliged to leave the
tow in a safe place and during the period the TOWCON contract
would
remain of full force and effect .
As the “RUBY Deliverer” and the rig were nearing Cape Town, Mr
Bush arranged for the supply boat, the “North Star” to
take
bunkers out to the “Ruby Deliverer” and to wait near the rig
while the “Ruby Deliverer” went into Cape Town to
complete
her bunkering and to take on stores.
The South African Maritime Safety Authority (“SAMSA”) became
aware of the arrangements and intervened. SAMSA insisted that
it
would not permit the operation to proceed unless a holding tug was
employed which would hold the rig whilst the “Ruby Deliverer”
entered Cape Town for bunkers.
Mr Bush, acting for and on behalf of Arusha , and using Captain
Needham as a ‘go –between’, concluded the TOWHIRE contract
with Tsavliris .
Certain other grounds of opposition were also advanced, namely
The applicant is cited as “MT “Fotiy Krylov”. Tsavliris is
not the owner of the “Fotiy Krylov” and describes itself
merely
as the operator .Mr Winstain Tsavliris’ attorney, did not
indicate that he had authority from the owner of the “Fotiy
Krylov” to bring the application.
It is not competent for the vessel to be cited as the applicant.
It is only a legal personality that can properly be the applicant.
In his replying affidavit, deposed to on behalf of Tsavliris, Mr
Winstain averred as follows:
1 It is not disputed ,for the purposes of the
applicaton ,that the “Fotiy Krylov” was an associated ship to
the
“Nikolay Chiker” as described in section 3 (6) and (7) of the
Admiralty Act.
With regard to Bluebottle’s assertion that it enjoys a maritime
lien in respect of its claim:
The maritime lien relied upon by Bluebottle is the damage maritime
lien.
2.2 The maritime lien gives rise to a right
of recourse against the defendant ship itself. It does not
result in
personal liability of the owner of the defendant ship.
2.3 In order for the damage maritime lien to exist there must have
been a breach of a duty by those in control of the wrongdoing
ship so
that the ship became an instrument of damage; it is common cause that
Tsavliris was, at the relevant time, the employer of
the master and
crew of the “Nikolay Chiker”.
The breach must, however, be such as to render the owner of the
guilty ship liable, either directly or vicariously.
2.5 In the case of a bareboat charterer the
lien attaches even though the charterer, not the owner is liable
for
the breach of duty. Accordingly, any maritime lien that Bluebottle
might assert must arise from the breach of duty by Tsavliris
as the
bareboat charterer of the “Nikolay Chiker”.
If, by virtue of a contractual exemption, the owner or bareboat
charterer is exempt from liability then the claimant has no
maritime lien in respect of its claims; or if the claim against the
owner of the bareboat charterer has prescribed the claim
cannot be
prosecuted on the basis of the maritime lien.
Tsavliris contends that it contracted with Bluebottle on the terms
set out in the TOWHIRE contract. However,even if the allegations made
by Mr Bush are accepted, Tsavliris’ liability for the damage
to the
“Ruby Deliverer” is also excluded by virtue of the terms of the
TOWCON agreement.
BURDEN OF PROOF
Although Tsavliris has applied to set aside Bluebottle’s arrest of
the “Fotiy Krylov” ,it remains incumbent upon Bluebottle
to
demonstrate, on a balance of probabilities, that the “Fotiy
Krylov”, at the time of its arrest, was an associate ship to the
“Nikolay Chiker” as described in section 3(6) and (7)of the
Admiralty Act; and it has a
prima facie
case on the
merits of its claim i.e. it had to tender evidence which ,if
accepted, established a cause of action.
Preliminary Objections
Respondent raised two preliminary objections to the application,
being the authority to bring the application and the citation of
the
applicant. I shall deal with these two issues before analyzing the
substance of the dispute.
Mr Stewart, who appeared on behalf of respondent, submitted although
the application to set aside the arrest was said to be the MT
“Fotiy
Krylov,” the applicant both in fact and substance was T
savliris.
He noted that the deponent to the founding affidavit, Mr Winstain,
had received his authority from Tsavliris and had put up a power
of
attorney from the latter. Tsavliris relied on the authority given to
it by
Sovraght.
The question was that,
even if in form the applicant was the “Fotiy Krylov”, in
substance it appeared to be Tsavliris. Mr Wragge,
who appeared on
behalf of the appellant, noted that in terms of clause 15 of the
bareboat charter party, Tsavliris arranged for the
vessel’s
protection and indemnity insurer U K P I Club to put up security in
order to procure the release of the “Fotiy Krylov”
from arrest.
However, as Mr Wragge observed, it is customary that the protection
indemnity insurance provided by the Club covered
only one quarter of
the insured collision liability. The remaining three quarters was
covered by the vessel’s harbor and machinery
insurer .Accordingly,
Tsavliris was obliged to provide counter security to the Club before
it would agree to furnish a letter of
undertaking to procure the
release of the vessel from arrest.
Mr Wragge submitted
that Tsavliris therefore had a real and substantial interest in the
arrest of the “Fotiy Krylov”and in the
security furnished in
order to procure to procure the release of the vessel from arrest.
Bluebottle accepted in
its reply, at the very least that Tsavliris established that it had
locus standi
to bring the application to set aside the arrest,
notwithstanding that it was not the owner of the vessel although
the correctness
or appropriateness of it doing so in the name of
the vessel was not accepted by the respondent.
In its citation of the
applicant, applicant has been cited as the MT “Fotiy Krylov”.
Bluebottle disputed that it was competent
for a vessel to be cited as
an applicant
in rem
.
Refering to the judgment
in
Tao Men
1996 (1) S A 559(C)
at 566, Mr Wragge contended
that , where an application is bought to set aside the arrest in the
name of the ship , an objection
that the ship had no juristic
personality , hence no
locus standi
to bring the application ,
was treated as a technical triviality and accordingly not upheld .
Further, the court held that an
respondent, such as Bluebottle in
this case, chose to bring an action
in rem
citing the
vessel as defendant. In that case, the application to set aside the
arrest was treated as a first hearing of the matter.
If a ship is
cited as a defendant, it must be possible for the person resisting
the arrest to appear either on paper or in person
to challenge this
arrest.
These objectives do not
therefore stand in the way of the application. I now turn to the
substance of the dispute.
The Damage
Maritime Lien
For the purpose of the
institution of an action
in rem,
against the “Fotiy
Krylov”,
Bluebottle has relied upon an assertion that it
enjoys a
maritime lien
in respect of its claim over the
“Nikolay Chiker”.
A maritime lien has
been defined as “a claim of privilege upon a thing carried into
effect by an action
in rem
,
such claim or
privilege traveling with the thing into whosever’s possession it
may come. It is inchoate from the moment the claim
or privilege
attaches and, when carried into effect by legal process by a
proceeding
in rem,
relates back to the period when it
first attached.” The
“Bold Buccleugh
”[1843-60]All ER
Reprint 125 See also G Hofmeyr
Admiralty jurisdiction law and
practice in South Africa
(2006) at148.
The damage maritime
lien upon which Bluebottle relies for the institution of its action
in rem
against the “Fotiy Krylov ”is a lien for “damage
done by a ship” which is a maritime lien in terms of section 1 (1)
(e) of
the Admiralty Act . Section 6 (1) of the Act provides that the
scope of the lien falls to be determined by reference to the English
admiralty law as it stood on 1 November 1983.
Hofmeyr at 153-154 sets
out the requirements which have to be satisfied before a damage
maritime lien can exist as follows:
(1) The damage must
have been caused by a breach of duty by those in control of the ship
and the breach of duty would only give rise
to the lien if the ship
itself the instrument of damage.
(2) The damage lien does not arise from the mere fact that damage is
done by a ship, or that the wrongdoing ship was the instrument
of
damage. Broadly, it must be shown that the damage complained of a
direct or consequential result of the breach of duty on the
part of
is a person in lawful charge or control of the wrongdoing ship.
3) Subject to an exception, the personal liability of the
res
owner is a condition precedent to the accrual of a damage claim.
Regarding the
exception, Hofmeyr at 154-155 writes as follows: “Under the early
English maritime law inherited in the Republic there
was an exception
to the rule that no
lien
arises unless the owner is liable for
the breach of duty giving rise to the claim, namely, in the case of a
charter by demise .In
a case of a charter by demise the
lien
attached even though the charterer and not the owner was liable for
the breach of duty. The exception has, despite some misgivings,
been
adopted in subsequent English cases. In the absence of judicial
reexamination of the basis for the exception, it must be taken
to be
part of the English law as of 1983 and thus part of the admiralty law
of the Republic”.
Mr Wragge’s submitted
that, if there are provisions in a contract pursuant to which the
bareboat charterer of the chartered ship
is relieved of the
responsibility of the damage, then in such circumstances no damage
lien
accrues. Notwithstanding that Bluebottle’s claim is
asserted by way of an action
in rem
, this does not
render the owner of the “Fotiy Krylov” liable. If , by reason of
a contractual provision in terms of the agreement
entered into
between Bush and
Tsavliris,
the latter is relieved of any
liability to Bluebottle for damage arising from a collision between
the “Ruby Deliverer” and the
“Nikolay Chiker ,”it must follow
that Bluebottle does not enjoy a maritime lien in respect of its
claim. Accordingly, Mr Wragge
submitted, Bluebottle was not
entitled to rely on section 3 (4) (a) of the Admiralty Act to
institute an action
in rem
against the Fotiy Krylov .
In summary, while it
was conceded by applicants that (1) Bluebottle had to do no more than
make out a
prima facie
case ,meaning that it need show no more
than that there is evidence , which if accepted ,will establish a
cause of action, (2) it
had made out such a case that the collision
between the “Fotiy Krylov” and the “Nikolay Chiker” was
caused by the negligence
of the master and crew of the latter ,there
was a provision in the relevant contract that relieved Tsavliris of
any liability to
Bluebottle for damage arising from the collision .
In order to
substantiate the argument of the existence of a provision in the
contract by which
Tsavliris
was relieved of any liability to
Bluebottle for damage arising out of such a collision, Mr Wragge
sought reliance on time bar and
jurisdiction clauses,a so-called
Himalaya clause in the TOWCON contract between
Arusha
and
Bluebottle for the towing of the Peprobras XX11 from Brazil to India
or Pakistan.
The Himalaya Clause
The material terms of
the TOWCON agreement with Arusha as the hirer and Bluebottle as the
tug owner can be summarized thus:
The tug owner would
tow the rig (which was defined as being the tow by the Ruby
Deliverer) from Brazil to India or Pakistan .Save
for obligations
regarding payment, making the tow available for towing accepting
the tow at the destination, the furnishing of
permits and
certification and making the two tow-worthy , the hirer had no
obligation in terms of the contract.
All the obligations
with regard to getting the tow to its destination fell upon the tug
owner.
Clause 19 of that
agreement which included the Himalaya clause reads thus:
“All
exceptions, exemptions, defences, immunities, limitations of
liability , indemnities, privileges and conditions granted
or
provided by this Agreement or by any applicable statute rule or
regulation for the benefit of the Tugowner or Hirer shall also
apply
to and be for the benefit of demise charterers ,sub contractors,
operators ,masters, officers and crew of the Tug or Tow and
to and be
for the benefit of all bodies corporate ,parent of, subsidiary to
,affiliated with or under the same management as either
of them, as
well as all directors, officers ,servants and agents of the same and
to and be for the benefit of all parties performing
services within
the scope of his Agreement for or on behalf of the Tug or Tug owner
of Hirer as servants, agents and sub contractors
of such parties. The
Tugowner or Hirer shall be deemed to be acting as agent or trustee of
and for the benefit of all such persons,
entities and vessels set
forth above but only for the limited purpose of contracting for the
extension of such benefits to such person,
body or vessels”.
In terms of clause 18 of the TOWCON contract, Bluebottle and Arusha
intended by the terms of the contract to protect their sub
contractors
such as Tsavliris .The clause also expressly provided
that Bluebottle contract as agent or trustee of and for the benefit
of sub
contractors such as Tsavliris .
Mr Wragge submitted
with regard to authority, that the ratification by Tsavliris of the
agreement was sufficient. This ratification
occurred when the
“Nikolay Chiker” was made available to render the services in
terms of the TOWHIRE contract, alternatively
at a later stage.
Mr Wragge submitted
that, by virtue of the Himalaya clause, Tsavliris was entitled to the
benefit of ‘all exceptions, exemptions,
defenses, immunities,
limitations, of liability, indemnities, privileges and conditions
granted or provided by the TOWCON. Clause
24 of the contract,
entitled “Time for Suit” clause provides that if a suit is not
brought within one year of the time when
the cause of action first
arose , “all rights whatsoever and howsoever shall be absolutely
barred and extinguished”.
Clause 25 of the
contract provided for the law and jurisdiction in relation to the
agreement.
Inter alia
it reads:
“This agreement
shall be construed in accordance with and governed by English law.
Any dispute or difference which may arise out
of or in connection
with this Agreement or the services to be performed hereunder shall
be referred to the High Court of Justice
in London.
No suit shall be
brought in any other state of jurisdiction except that either party
shall have the option to bring proceeding
in rem
to
obtain conservative seizure or any similar remedy against any vessel
or property owned by the other party in any state or jurisdiction
where such vessel or property may be found.”
Mr Wragge accepted that
the action commenced by Bluebottle in the present dispute could be
regarded as a “proceeding
in rem
to obtain
conservative seizure”. However it was not brought against property
owned by Tsavliris .Accordingly,
Tsavliri
s was entitled to
rely upon the second part of the exclusive jurisdiction clause. This
constituted a defence or privilege and therefore
Tsavliris was
entitled to rely upon the provision of the exclusive jurisdiction
clause for its benefit.
On this basis, Mr
Wragge contended that, on Mr Bush’s version as set out in the
answering affidavit, Bluebottle had not made out
a
prima facie
case in respect of its claim against
Tsavliris.
The latter was
entitled to rely upon the provisions of the TOWCON agreement
stipulated for the benefit of both Arusha and Bluebottle,
and
further, any action which Bluebottle might have had against either
Tsavliris
was prescribed by virtue of the provisions of clause
24 or was prohibited by the provisions of clause 25 of the agreement
as set
out.
RESPONDENT’S
CONTENTIONS
Mr Stewart submitted
that there were a number of reasons why the Himalaya clause could not
be employed by T
savlaris
in seeking the release to the Fotiy
Krylov from arrest, any of which, if upheld , would defeat the
application to set the arrest aside.
On this basis, he
submitted that the action was not against
Tsavliris
. The
action was an action
in rem
against the “Fotiy
Krylov” based on the damage
maritime lien
that Bluebottle
enjoyed against the “Nikolay Chiker” Even though the appearance
to defend was entered by
Tsavliris
on behalf of the vessel, Mr
Stewart contended that the action
in rem
was not
transformed into an action
personam
against
Tsavliris,
with the result that, even if there was an applicable time-bar
clause preventing Bluebottle from bringing any proceedings against
Tsavliris,
this time bar clause could not operate to protect
the vessel in an action
in rem
.
In this connection Mr
Stewart relied upon the case of
The Ripon City
8 Asp. Mar. Law Cas
304(1897)
where at 310 Gorell Barnes J in the Admiralty Court
held that parties who receive damage from a ship had “by the
maritime law of
nations a remedy against the ship itself” and that
the right to enforce a maritime lien “is different from the right
of arrest
to compel appearance and security in this, that it is
confined to the property by means of which the damage is caused, and
may be
enforced against the hands of an innocent purchaser”.
Further he said at 311:
“It is the right
acquired by one over a thing belonging to another - a
jus in re
aliena.
It is, so to speak, a subtraction from the absolute
property of the owner in the thing .This right must therefore in some
way have
been derived from the owner either directly or through the
acts of persons deriving their authority from the owner. The person
who
acquired the right cannot be deprived of it by alienation of the
thing by the owner. It does not follow that a right to a personal
claim against the owner of the
res
always coexists with a
right against the
res.
The right against the
res
may be
conferred on such terms or under such circumstances that a person
acquiring that right obtains the security of the
res
alone
,and no right against the owner thereof personally. …Some of the
cases I have examined above show that where the owners of
a ship
have vested the control of a vessel in the charterers the latter are
deemed to have derived their authority from the owners
so as to make
the ship liable for the negligence of the charterers. (
The
Ticonderoga
[Swab.215
] and The Lemington
[2 Asp. Mar. Law
Cas .475]).”
On this basis Mr
Stewart submitted that, even if the charterers were themselves not
liable, because they had the authority of the
owners in being in
control and possession of the ship, the
res
itself will
be susceptible to the damage maritime lien. See also
The
Father Thames
[1979] 2 Lloyd’s Rep 364 (QB).
In Mr Stewart’s view,
Tsavliris’ approach to the problem was to engage from the wrong end
by asserting that, because the liability
of the ship stems from the
negligence of the Master and /or crew employed by it, a contractual
defence that it may have to the claim
will be a defence available to
the ship itself and possibly the owners of the ship
qua
owners
.In his view, the cases cited by him established that the ship may be
liable even if the ownership has since changed. Thus,
it could not
be that the
in personam
liability of the charterers of the
ship on demise charter is a prerequisite to establish the liability
of the ship .The negligence
of the Master and /or crew of the ship,
who had possession and control of the ship with the consent or
authority of the owners, regardless
of who employed them, established
the liability of the ship.
Mr Stewart further
submitted that the Himalaya clause in question did not meet one of
the requirements for the applicability of the
Himalaya clause ,
namely that it was clear by its terms that it was not intended to
apply to a party in the position of
Tsavliris
.The reason for
this is simply that
Tsavliris
was not a party “performing
services within the scope of the TOWCON agreement”, other than to
pay Bluebottle for any additional
expenses incurred by the latter for
the services of any assisting tugs,
Arush
a had no obligation
of performance under the TOWCON that related in any way to what
Tsavliris
undertook to do and to what he did so do .In other
words, in performing under the TOWHIRE agreement ,
Tsavliris
was not performing an obligation of
Arusha
‘s to Bluebottle
under the TOWCON agreements and was therefore not a servant ,agent
or sub-contractor of Arusha performing services
under TOWCON .
In Mr Stewart’s view,
what occurred was that Arusha contracted with Tsavliris for the
services of the “Nikolay Chiker”, but
Arusha did not do so in
order to perform some obligation that it had to Bluebottle.
Tsavliris
was accordingly not a sub- contractor of Arusha’s
at all , and certainly not within the meaning of clause 19 of the
TOWCON.
Mr Stewart also
contended that, since both the TOWCON and the TOWHIRE agreements were
governed by English law, the requirements for
the applicability of
the Himalaya clause under the English law had to be established .One
of those requirements was that the party
seeking to rely on the
clause in question must be given “consideration” therefore. See
Scruttons Ltd v Midland Silicones Ltd
[1962]
1 ALL ER 1(HL)
at 10.
There has been no
allegation by Tsavliris that any consideration had been given, let
alone proved, from which the giving of consideration
could be
inferred. In these circumstances, it could not be said that there was
a contract between Bluebottle and Tsavliris. In
this case the
contract was between Arusha and Tsavliris.
Finally, Mr Stewart
submitted that the exclusive jurisdiction clause 25 of the TOWCON
agreement, was not amongst the “exceptions,
exemptions, defences,
immunities, limitations of liability indemnities, privileges and
conditions granted or provided” by a TOWCON
because it did not
benefit only one party but embodied a neutral agreement under which
both parties agreed with each other as to
the relevant jurisdiction
for the resolution of disputes. It was therefore a clause that
created mutual rights and obligations.
He contended that
proceedings
in rem
are expressly excluded from the
ambit of an exclusive jurisdiction clause with the result that
Bluebottle was not prevented by that
clause from bringing the current
proceedings. Therefore, there was no contractual bar to Bluebottles’
action
in rem
against the MT”Fotiy Krylov”.
Accordingly the application that the arrest be set aside should be
dismissed.
EVALUATION
A key case cited by Mr Wragge in support of the proposition that, if
there is a provision in the contract pursuant to which the bareboat
charterer of the chartered ship is relieved of responsibility for
damage, no damage lien then accrues was that of the
Tasmania
(1888) 6 Asp LR 305.
This was case cited in
the
Ripon City
which in turn was much emphasized by Mr
Stewart.
In the former case the
tug,
Tasmania
, was demise chartered .It caused damage to a
fishing smack belonging to plaintiff. The charter contained the
following provisions:
“They will tow
vessels, boats or other crafts by the above-named steamtugs on the
following conditions only: That they are not to
be answerable or
accountable for any loss or damage whatever which may happen to or be
occasioned by any vessel, boat, or craft,
or any of the cargoes on
board the same, while such vessel, boat, or craft is in tow of either
of the steamtugs whether arising from
the of occasioned by any
supposed negligence or default of them or their servants, or defects
or imperfections in the said steamtugs
or either of them, or the
machinery or any other part of the same, or any delay, stoppage, or
slackness of the speed of the same,
however occasioned, or for what
purpose wheresoever taking place; and that the owner or persons
interested in the vesels, boats,
or crafts, or of the cargoes on
board the same so towing, undertake, bear, satisfy and indemnify the
said tug-owners against the
same.”
It was argued for the
plaintiff in the
Tasmania
that the clause did not apply to the
negligence of the company servants in the navigation of the
Tasmania
as distinguished from the tugs belonging to the company. Further, as
this was an action
in rem
, plaintiff was entitled to
recover against the ship and through the ship against the owner of
the tug, notwithstanding the chartering
of the tug to the tug company
and the plaintiff’s dealings with that company. Dealing with these
arguments Sir James Hannen said,
at 309:
“ The result of the
authorities cited appears to me to be this, that the maritime lien
resulting from collision is not absolute.
It is a
prima facie
liability of the ship which may be rebutted by showing that the
injury was done by the act of someone navigating
the ship not
deriving his authority from owners, and that by maritime law
charterers in whom the owners are deemed to have derived
their
authority from the owners so as to make the ship liable for the
negligence of the charterers, who are
pro hac vice
owners.
These propositions do not lead to the conclusion that where, as
between the charterers and the persons injured, the charterers
are
not liable, the ship remains liable nevertheless. On the contrary, I
draw from these premises that whatever is a good defence
of the
charterers against the claim of injured person is a good defences for
the ship, as it would have been if the same defence
had arisen
between the owners and the injured person.”
This key finding in
the Tasmania appears to support the contentions of Mr Wragge. By
contrast, Mr Stewart cited
The Longford 6 Asp. Ma. r Law. Cas 371
(1889)
and the later case of The
Burns 10 Asp. Mar. Law.Cas.
424 (1907)
to the effect that the lien remains available because
the ship is liable, irrespective of whether the bareboat charter can
not be
held to be liable .As Moulton LJ said in
The Burns at 428
“ I am of the opinion that …the action
in rem
under the
circumstances is an action against the ship itself. It is an action
in which the owners may take part, if they think proper,
in defense
of their property, but it is a matter for them to decide upon and if
they do not decide to make themselves parties to
the suit in order to
defend their property there is no personal liability against them
that can be established in that action. It
is perfectly true that the
action indirectly affects them. So it would if it was an action
against a person whom they had identified”.
Mr. Stewart’s
contention can be summarized thus: the basis of the lien flowed from
the running of the ship by those with the authority
to run the ship;
that is with authority granted by the owner. It was the very running
of the ship that gave rise to the liability.
The decision in the
Tasmania
appears to be good law for the purpose of the
applicable law to determine the present dispute in that both
The
Longford
and
The Burns
do not appear to deal with the
direct issue of a clause which covers an action
in rem
.
Both
The Longford
and
The Burns
dealt with a
time bar clause contained in legislation. In both cases, the courts
read the legislation to cover only an action
in personam
.
In the present case, the dispute turns on a contractual
provision (hence the importance of the
Tasmania
) and
the wording thereof does not appear to sustain the distinction drawn
in
The Longford
and
The Burns
, a distinction which
trumped the applicable legislation.
The question still
arises as to whether Mr. Stewart’s objection that
Tsavliris
was
not a party performing a service with in the scope of the TOWCON
means that the Himalaya clause cannot be rendered applicable
to the
present dispute.
It would appear that
agents and sub-contractors and parties to such a contract are given
protection if (1) the contract makes clear
that the contracting party
intended , by its terms, to protect the defendant, (2) the
contracting party contracted for the defendant’s
protection as well
as for his own (3) the authority of the carrier to act for the
defendant either anti sedently or by ratification
is made out .See
Santam Insurance Company Ltd
v S A Stevedores Ltd
1989
(1) SA182(D) at 189-190.
A commercial orientated
approach to these clauses which supports this interpretation is
evident in the judgment of Lord Steyn in
Starsin
[2003] 1
Lloyd’s Rep 571 (HL) at 585.
“ When in ITO
Ltd.
v. Mida Electronics Inc
., 28 D.L. R. (4
th
) 641 the
Supreme Court of Canada followed
The Eurymedon
, McIntyre, J.
commented (at p. 667):
Himalaya clauses have become accepted as a part of the commercial law
of
many of the leading trading nations, including Great Brattain, the
United States, Australia, New Zealand, and now in Canada. It is
thus
desirable that the courts avoid construction of contractual documents
which would tend to defeat them. I would therefore accept
the
approach taken by Lord Wilberforce and, in doing so; I observe that
the court is simply giving effect to that which the parties
themselves clearly agreed to in writing.
This is the approach which should be adopted in the case before the
House.
In my view the
arguments of the cargo-owners are of the very type which Lord
Wilberforce warned against. I would respectfully also
echo an
extra-judicial statement by Lord Goff of Chiveley in Commercial
Contracts and the Commercial Court
(1984) LMCLQ 382
, 391:
We are there to help
businessmen, not to hinder them; we are there to give
effect to their
transactions, not to frustrate them; we are there to oil the wheels
of commerce, not to
put a spanner in the works, or even grit in the oil.
This is a particularly
apposite observation in regard to the ground-breaking development in
The Eurymedon
[1974] 1 Lloyds Report 354 (PC)]
.
The
difficulties created in international trade by the doctrines of
privity of contract and consideration had to be overcome. Those
doctrines obstructed the process of giving effect to the reasonable
expectations of parties. Fortunately, as was pointed out in
ITO
,
at p. 667, by McIntyre, J., “one of the virtues of law is that it
has never let pure logic get in the way of common sense and
practical
necessity when a desirable result is sought to be achieved.” The
desired result was to give businessmen the freedom
to make
arrangements for the allocations of risks as they thought right. The
decisions in
The Eurymedon
and
The New York Star
were
taken in the context of classical English contract law. It is true
that this result can now be achieved more simply and directly
by a
combination of the Carriage of Goods by Sea Act, 1992 and the
Contracts (Rights of Third Parties) Act, 1999. Nevertheless, the
plain objectives of the decisions in
The Eurymedon
and
The
New York Star
was to enable businessmen to make sensible and just
commercial arrangements, and thereby further international trade.
Legal policy
favours the furtherance of international trade.
Commercial men must be given the utmost liberty of contracting. They
must be left
free to decide on the allocate commercial risks. In my
view there can be no good reason to set at naught on an
interpretative basis
the allocation of risk in the Himalaya clause.
The factual background,
relevant to this issue, is set out in the answering affidavit of Mr
Phillip Bush ,a director of Bluebottle
.He states that on 15 February
2005 he concluded a TOWCON contract on behalf of Bluebottle with
Arusha for the towing of the Petrobras
XXII by the vessel the “Ruby
Deliverer” from Brazil to India or Pakistan .In terms of clause 3
(b)(iii) of the TOWCON, the hirer
shall pay ,as and when they fall
due, the cost of the services of any assisting tugs when deemed
necessary by the Tug Master as prescribed
by Port or other
Authorities. Mr Bush states that, “where during the course of the
tow the tug requires to enter a port for bunkers
all costs associated
therewith will be for the hirer’s account and the tug will still
earn its hire... If it was necessary to
employ another tug to keep
the rig safe whilst the original tug is bunkered, that cost too will
be for the hirer and it would make
perfect sense for the hirer to
contract for the holding tugs services. “
Mr Bush states further
as the Petrobras XXII was approaching Cape Town under tow by the
“Ruby Deliverer” he made arrangements
on behalf of Arusha with
the owner of a supply boat the “North Star” to take bunkers out
to the “Ruby Deliverer” and to wait
near the “Petrobras”
while the “Ruby Deliverer” went to Cape Town to complete her
bunkering and to take on stores.
At this point the South
African Maritime Safety Authority (SAMSA) intervened and “insisted
that it would not permit the operation
to proceed unless the holding
tug was employed which would hold the rig while the “Ruby
Deliverer” entered Cape Town for bunkers…
I spoke to him
(Needham) about finding a suitable tug to hold the rig to enable the
“Ruby Deliverer” to enter Cape Town. Needham
came back to me and
suggested that the “Nikolay Chiker” operated by Tsavliris would
be available for the purpose. Needham was
accordingly used as a go
between to myself on behalf of Arusha on one hand and Tsavliris on
the other for the purpose of agreeing
terms to fix the “Nikolay
Chiker”. He did not act as a broker on behalf of the hirer and
received no remuneration from me or
those I represented for his
services. I assume he was remunerated by Tsavliris. “
Mr Wragge submitted
that the agreement between Arusha and Bluebottle for services to be
rendered by Tsavliris in respect of the tug
fell within the scope of
the very same agreement. While it might not be clear as to why Arusha
contracted the agreement rather than
Bluebottle, this is not relevant
to the dispute. What is relevant is that a contract was concluded and
that it was so contracted
and further that it took place within the
context of the broader TOWCON agreement, that is to fulfill any
obligation to provide assisting
tug services.
CONCLUSION
On the version of Mr Bush ,as I have set out, Bluebottle has not made
out a
prima facie
case in respect of its claim against
Tsavliri
s which is necessary to establish that there is
evidence which if accepted will establish a course of action; a
prima
facie
case on the merits of its claim. To summarize: the
reason for my conclusion is
that Tsavliris
is entitled, in my
view, to rely upon the provision of the TOWCON agreement stipulated
for the benefit of both Arusha and Bluebottle
and any action that
Bluebottle may have against T
savliris
is either prescribed by
virtue of the provisions of clause 24 or is prohibited by the
provisions of clause 25 of the agreement as
analyzed above.
ORDER
For the reasons set out, the following order is made:
The deemed arrest of the MT “Fotiy Krylov” in Case No. AC
181/2006 is set aside
Respondent is directed to return the undertaking issued by the
United Kingdom Steamship Assurance Association (Burma) Limited dated
16 November 2006 forthwith.
The action
in rem
commenced by the respondent against the
application under Case No. AC 181/2006 is dismissed.
The respondent is directed to pay costs of this application as well
as the costs of the application in which an order was issued
by this
Honourable Court on 16 February 2007 directing that the respondent
furnish security for the applicant’s costs of defending
the
action.
____________________________
DAVIS J