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[2019] ZASCA 77
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Atakas Ticaret VE Nakliyat AS v Glencore International AG (768/2018) [2019] ZASCA 77; 2019 (5) SA 379 (SCA) (30 May 2019)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 768/2018
In
the matter between:
ATAKAS
TICARET VE NAKLIYAT AS
APPELLANT
and
GLENCORE
INTERNATIONAL
AG
RESPONDENT
Neutral
citation:
Atakas Ticaret VE Nakliyat
AS v Glencore International AG
(768/2018)
[2019] ZASCA 77
(30 May 2019)
Coram:
Ponnan, Swain, Zondi and Schippers JJA
and Gorven AJA
Heard:
23 May 2019
Delivered:
30 May 2019
Summary:
Discretion of court to permit or refuse
joinder in terms of s 5(1) of the Admiralty Jurisdiction Regulation
Act 105 of 1983 left
untouched by the International Arbitration Act
15 of 2017.
ORDER
On
appeal from
:
KwaZulu-Natal
Local Division of the High Court, Durban (Lopes J sitting as court of
first instance):
1. The appeal is upheld with costs, including those occasioned by two
counsel.
2. The order of the court below is set aside and in its stead is
substituted the following:
‘
(a)
The respondent, Glencore International AG (Glencore), is joined as
the third defendant in the action in terms of s 5(1) of the
Admiralty
Jurisdiction Regulation Act 105 of 1983.
(b) The applicant, Atakas Ticaret Ve Nakliyat AS, is granted leave to
supplement its particulars of claim in order to plead its
cause of
action against Glencore.
(c)
Glencore is ordered to pay the costs occasioned by the opposition to
this application, such costs to include those consequent
upon the
employment of two counsel.’
JUDGMENT
Ponnan
JA (Swain, Zondi and Schippers JJA and Gorven AJA concurring):
[1]
On 18 December 2012 the appellant, Atakas Ticaret Ve Nakliyat AS
(Atakas), a Turkish company, purchased a consignment of coal
from the
respondent, Glencore International AG (Glencore). Atakas chartered
the MV ‘Cecilia B’ (the vessel) from EFE
Shipping and
Trading Limited of Istanbul to carry the consignment from the port of
Richards Bay in KwaZulu-Natal, South Africa
to Turkey. On 30 October
2013 and shortly after the loading of the consignment had been
completed, an explosion occurred in the
number 6 cargo hold of the
vessel. Subsequent investigations suggested that heated coal had been
loaded, which heated further after
the hold had been closed, and
ignited. As a result of the explosion the voyage had to be abandoned
and the cargo unloaded.
[2] On
26 June 2014 Atakas instituted a delictual action
in personam
against the operator of the coal terminal, the Richards Bay Coal
Terminal (Pty) Ltd (RBCT), out of the High Court of South Africa,
KwaZulu-Natal Division, Durban, in the exercise of its admiralty
jurisdiction in terms of the Admiralty Jurisdiction Regulation
Act
105 of 1983 (the AJRA). The latter denied liability and
inter alia
raised the following special plea:
‘
4.1
The Plaintiff was the purchaser of the coal and its loading on board
the mv “Cecilia B” at the First Defendant’s
terminal occurred:
4.1.1 in terms of the contract
concluded between the Plaintiff and the seller of the coal; and
4.1.2 pursuant to the seller’s
contractual obligation owed to the Plaintiff to deliver the coal on
board the mv “Cecilia
B”.
4.2 The alleged damages suffered
by the Plaintiff are in the nature of consequential loss.
4.3 The Plaintiff was vested
with contractual remedies arising out of the delivery of hot coal as
is alleged, alternatively could
have secured or retained such
remedies pursuant to its contract with the seller of the coal.
4.4 In the circumstances:
4.4.1 there is no justification
for the extension of the Aquilian action so as to afford the
Plaintiff a right to claim in delict
against the First Defendant; and
4.4.2 the Plaintiff is not
vested with any action in delict against the First Defendant for
recovery of its alleged damages.
WHEREFORE the
First Defendant prays that the First Defendant’s special plea
is upheld and the Plaintiff’s action is
dismissed with costs,
such costs to include the costs consequent upon the employment of
senior counsel.’
[3]
On 23 February 2016 the vessel’s owners were joined as the
second defendant to the proceedings. Given the nature of RBCT’s
special plea, Atakas applied in terms of s 5(1) of AJRA to join
Glencore as the third defendant in the action. In resisting the
joinder, Glencore raised three defences: first, that clause 17
[1]
of the sale contract (the sale contract) between
Atakas and Glencore provided that disputes should be referred to
arbitration; second,
that the claim had prescribed and third, that
the applicant’s claims were too remote. The second and third
defences were
not persisted in.
[4]
Although not presaged in the papers, the International Arbitration
Act 15 of 2017 (the IAA) became the centrepiece of Glencore’s
first defence when the joinder application was argued before the
court on 9 March 2018. That the IAA had not been mentioned earlier
is
hardly surprising because it only came into operation on 20 December
2017, after both the answering and replying affidavits
had been
filed. As it turned out, it was only when Glencore’s heads of
argument were filed shortly before the matter was
argued, that
reference was made to the IAA for the first time. Glencore contended
that: (i) clause 17 of the sale contract is an
‘arbitration
agreement’ as defined in s 1 of the IAA;
[2]
and (ii) in terms of the IAA, read with article 8
of the Model Law,
[3]
the court was required to stay the proceedings and
refer the matter to arbitration unless it found the sale contract to
be null
and void, inoperative or incapable of being performed.
[4]
Accordingly, so the contention went, if Glencore
was joined as a co-defendant it would deliver a special plea in which
reliance
would be placed on article 8 of the Model Law to seek a stay
of the action against it. The court (per Lopes J) upheld Glencore’s
argument. It referred to various foreign authorities called in aid by
Glencore and concluded that it would be ‘futile to
order the
joinder of Glencore in the action’. The issue of whether
joinder would be ordered on the facts, if a discretion
remained, was
not addressed by the court.
[5]
Section 5(1) of the AJRA provides:
‘
A
court may in the exercise of its admiralty jurisdiction permit the
joinder in proceedings in terms of this Act of any person against
whom any party to those proceedings has a claim, whether jointly
with, or separately from, any party to those proceedings, . .
. or in
respect of whom any question or issue in the action is substantially
the same as a question or issue which has arisen or
will arise
between the party and the person to be joined and which should be
determined in such a manner as to bind that person,
. . . and
notwithstanding the fact that he is not otherwise amenable to the
jurisdiction of the Court . . .’.
The
powers of joinder in terms of the section are far-reaching.
[5]
The extension of the court’s admiralty
jurisdiction in terms of s 5(1) ‘was, from a practical point of
view, clearly
necessary in the interests of convenience and in order
to prevent multiple proceedings’.
[6]
Of s 5(1), Scott JA stated:
‘
. . .
the object of the Legislature was clearly to permit all the parties
to a dispute to be joined in an action. The absence of
such provision
could well result in an undesirable situation of courts in different
countries having to adjudicate on the same
or substantially the same
issues arising out of the same incident or set of facts.’
[7]
[6]
In determining whether to grant a joinder application, the court
exercises a discretion.
[8]
Part of the assessment by a court in the exercise
of its discretion will include a consideration of whether there
exists an alternate
forum that has been agreed as the place for the
resolution of disputes. This is because s 7(1)
[9]
of the AJRA allows a defendant brought before a
South African admiralty court to seek a stay or discharge of the
action by reason
of an arbitration agreement or other relevant factor
suggesting jurisdiction in another forum.
[10]
The AJRA is a special Act which governs all
admiralty matters that come before our courts. It confers
wide-ranging jurisdiction
upon
[11]
and vests South African admiralty courts with the
powers set out therein. Those powers include ordering that any matter
pending
or arising in proceedings before it be referred to
arbitration (s 5(2)
(e)
)
or staying proceedings to enable the matter in dispute to be referred
to arbitration (s 7(1)
(b)
).
Given that the vast majority of admiralty disputes are subject to
agreements that can be classified as international arbitration
agreements (almost every charterparty, contract of carriage,
construction and repair contract and provision of supplies contract
includes such a provision) the effect of an implied repeal or
restriction on the scope of the discretion conferred on a court by
ss
5(1) and 7(1) of the AJRA would be extraordinarily far reaching.
[7] If
accepted, the effect of the judgment of the court a quo is to put a
red line through those provisions of the AJRA. However,
as explained
in
Minister of Justice and Constitutional Development and others v
Southern African Litigation Centre and others
[2016] ZASCA 17
;
2016 (3) SA 317
(SCA) para 118:
‘
. . .
repeal by implication is not favoured. An interpretation of
apparently conflicting statutory provisions which involve the
implied
repeal of the earlier by the later ought not to be adopted unless it
is inevitable. . . . Any reasonable construction which
offers an
escape from that is more likely to be in consonance with the real
intention of the Legislature. . . . As it was put in
Wendywood
Development (Pty) Ltd v Rieger & another
1971
(3) SA 28
(A) at 38:
“
It
is necessary to bear in mind a well-known principle of statutory
construction, namely, that statutes must be read together and
the
later one must not be so construed as to repeal the provisions of the
earlier one, unless the later statute expressly alters
the provisions
of the earlier one or such alteration is a necessary inference from
the terms of the later statute.”’
Here,
there is an interpretation that offers an ‘escape’ from
an implied repeal of the earlier by the latter. It is
article 1(5) of
the Model Law, which provides:
‘
This
Law shall not affect any other law of the Republic by virtue of which
certain disputes may not be submitted to arbitration
or may be
submitted to arbitration only according to provisions other than
those of this Law.’
The
phrase ‘any other law’ in article 1(5) plainly
encompasses the AJRA. Thus, what the court a quo conceived as an
insurmountable obstacle (namely, the IAA) to the exercise of its
discretion under ss 5(1) and 7(1) of the AJRA was more illusory
than
real.
[8]
In my view, the IAA accordingly left untouched the discretion to
permit or refuse the joinder of Glencore. The court a quo did
not
exercise that discretion and this court is now free to do so.
[12]
In heads of argument filed with this court on
behalf of Glencore the following appears:
‘
14.
Glencore agrees the existence of a prima facie case is a prerequisite
for the excise by a court of its discretion to order the
joinder of a
party to an action in terms of section 5(1) and that convenience is a
relevant factor. Glencore also agrees that the
object of section 5(1)
is to avoid multiple proceedings.
15. Glencore also does not
dispute that Atakas demonstrated that it has a prima facie case for
its contention that the coal loaded
on board the vessel heated and
that the explosion on board the vessel on 30 October 2016 was caused
by its heating. Glencore, however,
does not accept that it breached
the sale agreement or that the heating of the cargo was the cause of
the explosion.’
In
the light of those concessions, it seems to me appropriate to permit
the joinder of Glencore as the third defendant in the proceedings.
[9] In
the result:
1. The appeal is upheld with costs, including those occasioned by two
counsel.
2. The order of the court below is set aside and in its stead is
substituted the following:
‘
(a)
The respondent, Glencore International AG (Glencore), is joined as
the third defendant in the action in terms of s 5(1) of the
Admiralty
Jurisdiction Regulation Act 105 of 1983.
(b) The applicant, Atakas Ticaret Ve Nakliyat AS, is granted leave to
supplement its particulars of claim in order to plead its
cause of
action against Glencore.
(c)
Glencore is ordered to pay the costs occasioned by the opposition to
this application, such costs to include those consequent
upon the
employment of two counsel.’
_________________
V M Ponnan
Judge of Appeal
APPEARANCES:
For
Appellant: R W F MacWilliam SC (with him PJ Wallis)
Instructed
by:
Webber
Wentzel, Cape Town
McIntyre
van der Post, Bloemfontein
For
Respondent: M Wragge SC
Instructed
by:
Clyde
& Co., Cape Town
Lovius
Block, Bloemfontein
[1]
Clauses 17 and 18 of the sale contract provide:
‘
17. Any dispute arising out of in
connection with this contract, including any question regarding its
existence, validity
or termination, shall be referred to and finally
resolved by arbitration under the Rules of the London Court of
International
Arbitration (LCIA), which Rules are deemed to be
incorporated by reference into this clause. The seat, or legal
place, of arbitration
shall be London. The language to be used in
the arbitration shall be English.’
18. This contract, including the arbitration clause, shall be
governed by, interpreted and construed in accordance with
the
substantive laws of England and Wales excluding the United Nations
Convention on Contracts for the International Sale of
Goods of April
11, 1980 (CISG).’
[2]
It was accepted that the arbitration
clause in the sale contract is an ‘arbitration agreement’
as defined in s 1 of
the International Arbitration Act.
[3]
UNCITRAL Model Law on International Commercial
Arbitration adopted by the United Nations Commission on
International Trade Law
on 21 June 1985, as amended by the said
Commission on 7 July 2006 ‘UNCITRAL Model Law on International
Commercial Arbitration
GN 1454, GG 41347, 20 December 2017’.
The Model Law is incorporated as Schedule 1 to the International
Arbitration Act.
[4]
Article 8 of the Model Law provides:
‘
(1) A court before which an action
is brought in a matter which is the subject of an arbitration
agreement shall, if a party
so requests not later than when
submitting his or her first statement on the substance of the
dispute, stay those proceedings
and refer the parties to arbitration
unless it finds that agreement is null and void, inoperative or
incapable of being performed.
(2) Where an action referred to in
paragraph (1) of this article has been brought, arbitral proceedings
may nevertheless
be commenced or continued and an award may be made,
whilst the issue is pending before the court’.
[5]
MY ‘Summit One’: Farocean Marine
(Pty) Ltd v Malacca Holdings Ltd
2005
(1) SA 428
(SCA);
[2004] 3 All SA 279
(SCA) (
MY
‘Summit One’)
para 17.
[6]
G Hofmeyr
Admiralty
Jurisdiction: Law and Practice in South Africa
2
ed
(2012) at 212.
[7]
MY ‘Summit One’
fn 5 para 18.
[8]
Ibid.
[9]
Section 7(1) provides:
‘
(a)
A
court may decline to exercise its admiralty jurisdiction in any
proceedings instituted or to be instituted, if it is of the
opinion
that any other court in the Republic or any other court or any
arbitrator, tribunal or body elsewhere will exercise jurisdiction
in
respect of the said proceedings and that it is more appropriate that
the proceedings be adjudicated upon by any such other
court or by
such arbitrator, tribunal or body.
(b)
A court may
stay any proceedings in terms of this Act if it is agreed by the
parties concerned that the matter in dispute be referred
to
arbitration in the Republic or elsewhere, or if for any other
sufficient reason the court is of the opinion that the proceedings
should be stayed.’
[10]
See
MV Iran
Dastghayb Islamic Republic of Iran Shipping Lines v Terra-Marine SA
[2010] ZASCA 118; 2010 (6) SA 493
(SCA).
[11]
Section 2(1) provides:
‘
Subject to the provisions of this Act each
provincial and local division, including a circuit local division,
of the Supreme Court
of South Africa shall have jurisdiction
(hereinafter referred to as admiralty jurisdiction) to hear and
determine any maritime
claim (including, in the case of salvage,
claims in respect of ships, cargo or goods found on land),
irrespective of the place
where it arose, of the place of
registration of the ship concerned or of the residence, domicile or
nationality of its owner.’
[12]
MY ‘Summit One’
fn 5 para 18.