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By • Mar 3rd, 2011 • Category: IGPI

Article from Bowman Gilfillan

In a recent decision of the South African High Court, Judge Wallis confirmed certain important aspects of the “security arrest” procedure.

The court application was brought by Mediterranean Shipping Company (MSC) against a local South African defendant, in terms of which MSC sought an order for the arrest of “any property” belonging to the defendant as security for a claim which it had already commenced in the same court.

The security arrest is well-known as an effective procedure to obtain security for a maritime claim contemplated or commenced in a foreign forum, such as London arbitration, and is seldom utilised in circumstances where the main proceedings are before a local court or against a local defendant.

The specific section in the South African Admiralty Act which provides for this type of arrest is cast in wide terms inasmuch as a litigant may arrest any property as security, and is not confined to arresting maritime assets such as ships, cargo or bunkers. The reach of the procedure is constrained by a number of requirements which have been developed by the South African courts over time. It is also constrained by the wording of the provision itself which requires the applicant to prove that it has a claim enforceable by an action in personam against the owner of the property concerned, or an action in rem against such property.

What can appropriately be described as a novel approach in this case, MSC elected not to identify specific property which it sought to arrest, but instead attempted to obtain an order directing the Sheriff of the court to arrest “any property” belonging to the defendant. In argument before the court, MSC took the position that the security arrest procedure is sufficiently wide to permit the Judge to make such an order, and that it is not necessary to prove an ownership link between the property and the defendant.

Finding in favour of the defendant, represented by Bowman Gilfillan, Wallis J cited with approval the Appeal Court case of Bocimar NV v Kotor Overseas Shipping Limited in which it was held that – as in the case of an attachment to found or confirm the jurisdiction of the court – an applicant in a security arrest is required to prove on a balance of probabilities that the property to be arrested belongs to the defendant. This means that if the property to be arrested is not identified in the application and in the order, this requirement cannot be satisfied.

Wallis J went on to find that an order directing the Sheriff to find and arrest whatever property it can that is owned by the defendant, and then hold it as security for the claim, is not an order for the arrest of property, but is a licence to the Sheriff to engage in a fishing expedition.

In most instances, a security arrest will involve the arrest of an identifiable maritime asset, and issues such as those confronted in this case should not arise often in practice. This decision should nevertheless bring a measure of comfort to would-be targets of security arrests from the point of view that an applicant must, at least, identify in its application the property which it seeks to arrest.