THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No:  556/2015

In the matter between:

WINDRUSH INTERCONTINENTAL SA

FIRST APPELLANT
MT “ASPHALT VENTURE”

SECOND
APPELLANT

and

UACC BERGSHAV TANKERS AS

RESPONDENT

Neutral citation:   Windrush Intercontinental SA v UACC Bergshav Tankers AS
(556/2015) [2016] ZASCA 199 (6 December 2016)

Coram:

Maya DP, Shongwe, Wallis, Dambuza JJA and Makgoka AJA

Heard:

8 September 2016

Delivered:

6 December 2016

Summary: Admiralty Jurisdiction Regulation Act 105 of 1983  –  action in rem –
maritime lien – application to set aside deemed arrest in rem of vessel in terms of s
3(4)(a) of  the Act to enforce maritime lien for its crew members‟ unpaid wages  –
vessel hijacked by pirates for ransom but pirates releasing vessel and not all crew
members despite payment of ransom – pirates‟ conduct a supervening event rendering
fulfilment of hostage crew members‟ employment contracts impossible – hostage crew
members‟ employment and entitlement to wages ended by supervening impossibility or

frustration of  performance of employment contracts – no claim for unpaid wages
giving rise to a maritime lien enforceable by an action in rem.

________________________________________________________________
ORDER
________________________________________________________________
On appeal from: The KwaZulu-Natal Local Division of the High Court, Durban
(Exercising Admiralty Jurisdiction)(Olsen J sitting as court of first instance): judgment
reported sub nom Windrush Intercontinental SA & another v UACC Bergshav
Tankers as The Asphalt Venture 2015 (4) SA 381 (KZD).

1  The appeal is upheld with costs.
2  The order of the court a quo is set aside and replaced with the following:
„(a) The deemed arrest of the MT “Asphalt Venture” is hereby set aside.
(b) The security furnished on behalf of Windrush Intercontinental SA shall be released
to it forthwith.
(c) UACC Bergshav Tankers AS shall pay the costs of the application, including
(i) the costs attendant upon the further argument as a consequence of the court‟s
request for responses to queries;
(ii) the costs of the application for leave to appeal; and
(iii) the costs of the application to set aside the arrest of the MT “Asphalt Venture”.‟
__________________________________________________________________

JUDGMENT
__________________________________________________________________
MAYA DP (Shongwe, Wallis and Dambuza JJA and Makgoka AJA concurring):

[1] This appeal is against the refusal of the KwaZulu-Natal Local Division of the
High Court, Durban (Exercising Admiralty Jurisdiction)(Olsen J) to set aside the
deemed arrest of the second appellant, the MT Asphalt Venture, owned by Bitumen
Invest AS (Bitumen), leave to appeal having been granted by the high court. The first

appellant, Windrush Intercontinental SA (Windrush), is a company duly registered
and incorporated in accordance with the laws of Panama, carrying on business in
Sharjah in the United Arab Emirates. The respondent is UACC Bergshav Tankers AS
(Bergshav), a company duly incorporated and registered in accordance with the laws
of Norway and carrying on business, inter alia, as the registered owner of the MT
UACC Eagle in Dubai in the United Arab Emirates.

[2] Windrush was the Asphalt Venture‟s bareboat charterer in terms of a bareboat
charterparty it concluded with Bitumen in May 2008 for the period 7 May 2008 to 7
November 2015. The bareboat charterparty was part of an adapted sale and leaseback
arrangement between Concord Worldwide Inc (Concord), Bitumen and Windrush,
under which Concord, which was then the vessel‟s owners, sold the Asphalt Venture
to Bitumen and Windrush bareboat chartered it from Bitumen. The charter was on the
Barecon 2001 form for seven and a half years, at the end of which Windrush was
obliged to purchase the vessel.1 Windrush concluded a sub-bareboat charterparty with
Concord for the same period.2 Between April and August 2010 Concord, through its
technical manager and crewing agent, OMCI Shipmanagement (Pvt) Ltd (OMCI),
entered into employment contracts with 15 crew members, who were citizens of the
Republic of India, in order to crew the Asphalt Venture.

[3] On 23 September 2010, Somali pirates, demanding ransom money, hijacked the
Asphalt Venture about 100 nautical miles east of Mombasa. Concord duly informed

1 The application papers were drafted while the bareboat charter remained extant. We have no information as to what
happened after the bareboat charter expired.
2 In March 2008 Concord had entered into a time charterparty with Colas SA in terms of which the Asphalt Venture was
time chartered to Colas SA for a period of five years, from 19 March 2008 to 19 March 2013. The reason for the sub-
bareboat charter between Windrush and Concord was to enable the latter to fulfil its commitments to Colas SA in terms of
the time charter.

the relevant insurers of the hijacking, engaged solicitors and retained security advisers
to assist in negotiations with the pirates and appointed a negotiator. Seven months
later, on 15 April 2011, a ransom of USD 3.4 million was delivered to the pirates in
exchange for the release of the vessel and her 15 crew members. However, after the
ransom was delivered, the pirates reneged on their agreement and refused to release all
the crew members. Only eight crew members were released with the vessel. Seven (the
hostages) were held captive, apparently to be used in negotiations for the release of
120 Somali pirates arrested by the Indian navy who awaited trial in India.  On 22
December 2011 the Indian government, in line with its policy, formally refused to
negotiate with the pirates for their release. It was only some years later, between
August and December 2014, and after payment of a further ransom, that the pirates
finally released the hostages.

[4] On 17 June 2011, Windrush withdrew the Asphalt Venture from the sub-
bareboat charterparty with Concord, thereby terminating the sub-bareboat charterparty.
This followed Concord‟s failure to honour its obligations in terms of the sub-bareboat
charterparty, due to the vessel being held hostage for about seven months. Concord
nonetheless continued to pay to the hostages‟ families‟ amounts equivalent to the
hostages‟ wages until the end of October 2011, six months after the payment of the
ransom and the release of the eight crew members.

[5] During the period in which all the crew members were held hostage, namely 28
September 2010 to 15 April 2011, Concord had continued to make payment to the
crew in terms of the crew‟s employment contracts as if they had remained in force.
After the eight crew members were released, Concord paid for their repatriation costs

and they were discharged from the vessel. Concord contended that it had paid the
further amounts to the hostages families, although their contracts had terminated, „on a
voluntary, ex gratia basis, in sympathy and on humanitarian grounds and without legal
obligation‟. But it ceased effecting payments to the hostages‟ families when it ran into
financial difficulties and no longer had any substantial assets or income.

[6] As a result of Concord discontinuing payment of these amounts, the Indian
government and the Norwegian Maritime Officers‟ Association demanded that
Bitumen, as Asphalt Venture‟s registered owners and, so they claimed, the hostages‟
employer, continue paying the hostages‟ wages. This was based on the demand by the
hostages‟ families to Bitumen for the continued payment of wages beyond October
2011, as the hostages had not yet been repatriated. In response to that demand
Windrush asserted that neither it nor Bitumen were liable for any crew wages or
repatriation costs in respect of the hostages, either before or after October 2011,
because neither party had entered into employment contracts with them. This was so, it
contended, because the crew contracts were concluded with OMCI, which, as
indicated, was contracted to perform this function by Concord.

[7] Thereafter, on 17 January 2012, the UACC Eagle was arrested in Mumbai,
India by the hostages‟ families, representing the hostages, as security for their
cumulative claim of USD 6 787 440. They sought a decree for payment of the daily
wages that the hostages would have earned from November 2011 until they each
reached the age of 70 years. It was alleged in the application papers filed in the High
Court of Judicature, Bombay, (Admiralty and Vice-Admiralty Jurisdiction) (the
Bombay high court), that the UACC Eagle was arrested because it was in the same

beneficial ownership as the Asphalt Venture, that is, a „sister ship‟ as a matter of
Indian law. Bergshav successfully contested this allegation. It nevertheless entered into
a settlement agreement with the hostages‟ families, which was approved by the
Bombay high court on 10 February 2012. It did so for practical reasons, to secure the
expeditious release of the UACC Eagle from arrest and to avoid possible protracted
litigation.

[8] The basis of the settlement agreement was that the hostages had been employed
on the Asphalt Venture over which they claimed a maritime lien for unpaid crew wages
recognised in Indian law.3  To secure the UACC Eagle‟s release Bergshav undertook,
inter alia, to pay to into an escrow account (a) the claims for crew wages for the period
1 November 2011 to 29 February 2012, (b) USD 306 000 (an amount equal to ten
months‟ future crew wages to the end of December 2012), (c) crew wages for the
period 1 January 2013 to 31 December 2013 which would be paid as quarterly
deposits of USD 91 800, subject to its right to call for arbitration on whether the
hostages‟ employment contracts entitled them to crew wages pending repatriation for
this period, and (d) fees and legal costs.  In consideration of this undertaking, the
hostages‟ families unconditionally and irrevocably assigned „any claim and/or maritime
lien they have or may have in the same priority against the Asphalt Venture interests
and any other party whatsoever for the Crew Salary up to the value of the Crew Salary
paid and/or secured by this Agreement, and any security rights they hold or may hold
in respect of such claims for Crew Salary, including but not limited to any maritime
liens against the Asphalt Venture interests‟.

3  The claims were maritime claims in terms of the 1952 International Convention for the Unification of Certain Rules
Relating to the Arrest of Sea-going ships (Brussels, 10 May 1952) and the International Convention on the Arrest of Ships
(Geneva, 12 March 1999).

[9] Relying on this assignment, Bergshav commenced an action in rem against the
Asphalt Venture in the KwaZulu-Natal Local Division of the High Court, Durban. On
21 September 2012, the vessel was arrested in rem in the port of Durban. But it was
subsequently released against the provision of security in the form of a letter of
undertaking furnished by its P & I Club on behalf of Windrush, without admission of
liability and without prejudice to the rights and contentions of the owner or the
bareboat charterers of the vessel; specifically their right to challenge the arrest of the
vessel in respect of the claim or to bring an action for wrongful arrest. Bergshav sued
as cessionary of the hostages‟ claims and maritime lien and demanded payment of the
amounts it had paid to their families. It also sought an order declaring its entitlement
against the Asphalt Venture to recover any amounts it still had to pay in terms of the
settlement agreement.4

[10] The summons and particulars of claim alleged that the hostages were employees
of Bitumen, the Asphalt Venture‟s owners, alternatively employees of Concord as the
Asphalt Venture‟s sub-bareboat charterer, or further alternatively employees of
Windrush, the bareboat charterer. As such, it was alleged, they were and remained
entitled to be paid the wages reflected in their contracts of employment during the
currency thereof and following any valid termination thereof, until such time as each of
them was repatriated. Crucially it was alleged that any of their claims for unpaid wages
were maritime claims as defined in the Admiralty Jurisdiction Regulation Act

4 The claim was itemised as follows:
„(a) payment of the sum of USD  122 400, being accrued crew wages from 1 November 2011 to 29 February 2012;
(b) payment of the sum of USD  214 000, being crew wages for the seven months from March to September 2012;
(c) an order declaring that the Plaintiff is entitled to payment as against the Defendant in respect of the sum of USD 30,600
per month or any part thereof, being crew wages for the months of October 2012 to and including December 2013 as are
paid pursuant to the settlement agreement, subject to a maximum amount of USD 459 000 together with interest from the
date of payment to the date of reimbursement at the prescribed rate of 15,5% per annum, alternatively an indemnity in
respect of such amounts as they fall due and are released for payment to or on behalf of the crew‟ and ancillary relief.‟

105 of 1983 (the Admiralty Act),5 giving rise to a maritime lien enforceable by
proceedings in rem against the Asphalt Venture in terms of s 3(4)(a) of the Admiralty
Act.6 It was alternatively alleged that Bitumen or Concord or Windrush as Asphalt
Venture‟s owner, bareboat charterer and sub-bareboat charterer, respectively, were in
any event liable in personam to the hostages for payment of the wages in terms of s
3(4)(b)7 read with s 1(3) of the Admiralty Act. The latter basis for the alleged claims
has, however, since been abandoned and nothing more need be said about it.

[11] When the UACC Eagle was arrested in Mumbai it was subject to a demise
charter concluded in December 2010 between Bergshav, as owner and United Arab
Chemical Carriers Limited (UACC) as charterer. Bergshav launched arbitration
proceedings in London against UACC to recover the amounts it had paid in terms of
the settlement with the hostages‟ families and obtained an award in its favour.8 At that
stage Bergshav had paid the hostages‟ families USD 743 800. The parties thereafter
entered into  a  settlement  agreement  (the arbitration agreement)  in terms  of which
UACC would pay Bergshav the latter sum and any further sums and payments made in
terms of outstanding undertakings it had made to the hostages‟ families plus interest.
The arbitration agreement obliged Bergshav to continue with the action in rem in

5 A maritime claim is defined for present purposes in s 1(1) as „any claim for, arising out of or relating to–
(y) any maritime lien, whether or not falling under any of the preceding paragraphs.
(z) (ee) any other matter which by virtue of its nature or subject matter is a marine or maritime matter, the meaning of the
expression marine or maritime matter not being limited by reason of the matters set forth in the preceding paragraphs;
…
(ff) any contribution, indemnity or damages with regard to or arising out of any claim in respect of any matter mentioned
above or any matter ancillary thereto, including the attachment of property to found or confirm jurisdiction, the giving or
release of any security, and the payment of interest‟.
6 In terms of this provision „[w]ithout prejudice to any other remedy that may be available to a claimant or to the rules
relating to the joinder of causes of action a maritime claim may be enforced by an action in rem  … if the claimant has a
maritime lien over the property to be arrested‟.
7 This section provides „[w]ithout prejudice to any other remedy that may be available to a claimant or to the rules relating to
the joinder of causes of action a maritime claim may be enforced by an action in rem …if the owner of the property to be
arrested would be liable to the claimant in an action in personam in respect of the cause of action concerned.
8  We were not furnished with a copy of the award and so are unaware of the basis upon which UACC was held liable to
compensate Bergshav for these amounts.

South Africa in its own name. But it would have to transfer absolutely and
unconditionally to UACC any proceeds it recovered from the appellants up to the
value of the sums and interest thereon that UACC had paid it, although the arbitration
agreement provided that it was „not intended to cede or assign to UACC, Bergshav‟s
claim or right of action in the South African proceedings‟.

[12] In response to the arrest of the Asphalt Venture and its release against the
provision of security the appellants brought an application to set aside the deemed
arrest of the vessel.9 They also sought an order for the return of the security which had
been furnished to secure its release.  The court a quo (Olsen J) dismissed the
application with costs. It found that Bergshav „ha[d] established a prima facie case for
the proposition that Concord has been liable at all material times since October 2011
to pay wages to the [hostages] … whether by reason of article19.2 of [their] conditions
of employment, or by reason of the provisions of the Merchant Shipping Act 44 of
1958 (India)‟. According to the court a quo, „upon a proper construction of the
settlement agreement … the parties [thereto] must have intended that the monthly
wage claims would pass [to Bergshav] with their associated liens [to Bergshav] as and
when each was paid by [Bergshav]‟.  It held that the maritime lien afforded to the
hostages in respect of their claim for wages, which they prima facie established, was
ceded or assigned to Bergshav with the leave of the Bombay high court.

[13] The court a quo also dismissed the appellants‟ alternative contention that
Bergshav had suffered no loss in light of the arbitration agreement which, in the court‟s

9 In terms of s 3(10)(a)(i) of the Admiralty Act „[p]roperty shall be deemed to have been arrested or attached and to be
under arrest or attachment at the instance of a person if at any time, whether before or after the arrest attachment,
security or an undertaking has been given to him to prevent the arrest or attachment of the property or to obtain the
release thereof from arrest or attachment.‟

view, merely established where the loss would lie if Bergshav‟s action failed and
UACC discharged the obligation under the indemnity it owed Bergshav. The court a
quo held that the agreement did not determine which of them was vested with the
claims for wages, which were never transferred to UACC. The court declined to
decide the issue of future wages ie whether a lien could exist in respect of wages not
yet accrued and whether the tender of security for the full claim amounted to a
compromise as to whether an action in rem could be sustained in respect of such wage
claims.  It held that this had not been canvassed in the papers and would have to be
raised in the impending plea in the action.

[14] It is this judgment that is the subject of this appeal, with the court a quo‟s leave.
The crisp issue before us was whether at the time of the Asphalt Venture‟s arrest at
Bergshav‟s instance, there existed a maritime lien for crew‟s wages entitling Bergshav
to arrest the Asphalt Venture by way of an in rem arrest in terms of s 3(4)(a) of the
Admiralty Act.

[15] It was contended on the appellants‟ behalf that no such maritime lien existed
because the hostages‟ crew contracts terminated by no later than 15 April 2011 as a
matter of Indian law arising from frustration or supervening impossibility of any
remaining performance of the employment contracts. This was so, it was argued,
because neither Windrush nor Concord could procure the hostages‟ release or cause
them to be repatriated under the employment contracts, as the hostages‟ release had
become a political issue beyond their reach. Moreover, the hostages performed no
services to or in respect of the Asphalt Venture after 15 April 2011. There were no
unpaid wages due to them on that date and no maritime lien for crews‟ wages could

arise thereafter.  It was further argued that if any lien did arise, it was extinguished
by Bergshav‟s payment to the hostages‟ families under the settlement agreement and
could not lawfully be assigned to Bergshav. For Bergshav it was argued that a
maritime lien arising from the wages‟ claims, which had been transferred to it as
sanctioned by the Indian Court and permitted by s 11(8) of the Admiralty Act, did
exist. This was so, continued the argument, because the hostages‟ employment did not
terminate after the release of the vessel. And, in any event, their employment contracts
entitled them to repatriation and to payment of their wages until so repatriated.

[16] This court‟s admiralty jurisdiction derives from s 2(1) of the Admiralty Act.10
Section 6 of the Admiralty Act further provides:
„(1) Notwithstanding anything to the contrary in any law or the common law contained, a Court in
the exercise of its admiralty jurisdiction shall–
(a)  with regard to any matter in respect of which a Court of admiralty of the Republic referred to in
the Colonial Courts of Admiralty Act, 1890, of the United Kingdom, had jurisdiction immediately
before the commencement of this Act, apply the law which the High Court of Justice of the United
Kingdom in the exercise of its admiralty jurisdiction would have applied with regard to such a matter
at such commencement, in so far as that law can be applied;
(b) with regard to any other matter, apply the Roman-Dutch law applicable in the Republic.
(2) The provisions of subsection (1) shall not derogate from the provisions of any law of the
Republic applicable to any of the matters contemplated in paragraph (a) or (b) of that subsection.‟

[17] The enquiry into whether there was an enforceable claim based upon a maritime
lien at the time of the Asphalt Venture‟s arrest is two-pronged. First, it must be

10 These provisions read: „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.‟

determined, on a prima facie basis, whether Bergshav has established the existence
and nature of the claims sought to be enforced in rem against the Asphalt Venture.
Secondly, it must be determined whether as a matter of South African law Bergshav
has prima facie established claims which, by reason of their nature and character, are
protected by a maritime lien in South African law.

[18] The term „maritime lien‟ is not defined in the Admiralty Act but is mentioned, in
addition to s 3(4)(a), in subsecs 1(1) and 11 thereof.11 In s 1(1), under the definition of
„maritime claim‟, is included any claim for, arising out of or relating to „any maritime
lien, whether or not falling under any of the preceding paragraphs‟. And s 1112 lists in
subsection (4)(e), „a claim in respect of any maritime lien on the ship not mentioned in
any of the preceding paragraphs‟.  Therefore, a maritime lien is by definition a type of
a „maritime claim‟ and its importance lies in the facts that (a) it constitutes one of the
bases upon which a claimant may found an action in rem (s 3(4)(a)); and (b) it confers
a certain preference in the ranking of claims in terms of s 11.13 The lex fori decides the
question as to whether the claim gives rise to a maritime lien and is therefore
enforceable on that basis.14

11 According to The Father Thames [1979] 2 Lloyd‟s Rep 364 at 368, the maritime lien is more easily recognised than
defined, and most jurisdictions have avoided defining it. In Oriental Commercial and Shipping Co Ltd v MV Fidias 1986
(1) SA 714 (D), at 717I-J, the court mentioned that „[t]he Legislature, for some reason or another, deliberately chose not to
define the term "maritime lien". That can only mean that the Legislature was content to leave it to the English law to fix the
limits and the contents of this legal phenomenon‟. It is suggested that it is perhaps fortunate that the Legislature has
refrained from attempting to deal with the onerous subject of defining the maritime lien. See in this regard D J Shaw
Admiralty Jurisdiction and Practice in South Africa (1987) at 86.
12 This section deals with the ranking of claims in regard to a „fund in a Court‟ resulting from the sale of arrested property in
terms of s 9 or in regard to the proceeds of property sold pursuant to an order or in the execution of a judgment of a Court in
terms of the Act.
13 Transol Bunker BV v MV Andrico Unity & others; Grecian-Mar SRL v MV Andrico Unity & others 1989 (4) SA 325
(A) at 331D.
14 See s 6 of the Admiralty Act. See also Transol Bunker BV v MV Andrico Unity ibid at 338A.

[19] The source of the obligation to pay the crews‟ wages may be gleaned from
their employment contracts, which were annexed to Bergshav‟s particulars of claim.
Each of these documents comprised a terse, single page document signed by the
relevant crew member and on behalf of Concord. They reflected the crew member‟s
personal details, rank, period of employment for the duration of nine months and the
details of his salary. Each commenced on a different date, depending on the crew
member that was employed, and recorded that the relevant crew member was
employed under „the attached terms and conditions‟, in reference to a collective
bargaining agreement for Indian officers of the International Bargaining Forum entered
into between OMCI and Maritime Union of India.15 In terms of the latter agreement the
employment contracts were governed by Indian law.16 The employment contracts also
contained two simple terms to the effect that in the event of the seafarer being stranded
or his death, Concord undertook to repatriate him or his mortal remains, respectively,
to his port of engagement.

[20] It was common cause that the relevant provisions of the collective bargaining
agreement for the crews‟ wages claims are in articles 5, 18 and 19 thereof. Article 5
reads in relevant part:
„Duration of Employment
5.1 An officer shall be engaged for the period specified in Appendix – 1 to this Agreement and such
period may be extended or reduced by the amount shown in Appendix – 1 for operational
convenience. The employment shall be automatically terminated upon the terms of this Agreement at
the first arrival of the ship in port after expiration of that period, unless the Company operates a
permanent employment system.‟

15 Clause 1.2 of the collective agreement deems the agreement as „incorporated into and contain[ing] the terms and
conditions of employment‟ of the crew members‟.
16 Article 34 thereof.

In terms of article 18.1(a) an officer‟s employment „shall be terminated upon the
expiry of the agreed period of service identified in APPENDIX – 1‟. Appendix – 1
inter alia deals with the „duration of employment‟ and provides that „[t]he maximum
period of engagement referred to in article 5 shall be nine months, which may be
extended to ten months or reduced to eight months for operational convenience [after
which] the Officer‟s engagement shall be automatically terminated in accordance with
Article 18 of this Agreement.‟

[21] It was not alleged in the papers that Concord operated a permanent employment
system as envisaged in article 5. Neither was it disputed that the „period specified in
Appendix – 1‟, contemplated in that article, in respect of each crew member, expired
before the Asphalt Venture‟s release by the pirates on 15 April 2011. And as already
stated, when the vessel arrived at the port in Mombasa on 28 April 2011, it was
without the hostages as the pirates had removed them from board. On a plain reading
of the above provisions in the ordinary course the hostages‟ employment would have
terminated upon the Asphalt Venture‟s arrival at the Mombasa port on 28 April 2011.17
The parties agreed that this was so, because in the founding affidavit it was alleged
that the employment contracts of the hostages came to an end by effluxion of time
when the time periods in the contracts of employment expired. In reply it was said that
quite clearly the fixed term contracts of employment of the hostages had expired. The
court a quo accepted this, but nonetheless concluded that if the employment contract
provided for a continued obligation to pay wages until repatriation was effected, it was
ultimately not relevant whether the employment continued. The central issue was

.17 In other words, the contracts mean what they say. See Phillips v SA Reserve Band & others [2012] ZASCA 38; 2013 (6)
SA 450 (SCA) para 64. See also Van der Merwe v Road Accident Fund & another (Women’s Legal Centre Trust as
Amicus Curiae) 2006 (4) SA 230 (CC) para 43.

therefore whether Bergshav established a prima facie case that this was indeed the
position notwithstanding the fact that the contracts of employment had expired.

[22] Bergshav‟s contention that the hostages were entitled to payment of their wages
until they were repatriated rested mainly on article 19 of the collective bargaining
agreement which governed the repatriation process of ships‟ officers. The article
provided:
„19.1 Repatriation shall take place in such a manner that it takes into account the needs and
reasonable requirements for comfort of the Officer.
19.2 During repatriation for normal reasons, the Company shall be liable for the following costs:
a.  payment of basic wages between the time of discharge and the arrival of the officer at their place
of original engagement or home;
b.  the cost of maintaining the Officer ashore until repatriation takes place;
c.  reasonable personal travel and subsistence costs during the travel period;
d.  transport of the Officer‟s personal effects up to the amount allowed free of charge by the relevant
carrier.
19.3 An Officer shall be entitled to repatriation at the Company‟s expense on termination of
employment as per Article 18 except where such termination arises under Clause 18.2(b) and
18.3(a).‟

[23] Bergshav further relied on the expert opinions of advocates practising in
Mumbai, Mr S Venkiteswaran and, following his untimely death, Mr SK Mukherji.
Neither was very satisfactory in explaining their view. Mr Venkiteswaran initially said,
without reference to either, that „in accordance with Indian law and the contracts of
employment‟ the hostages would be deemed to continue in employment until their
employment was terminated. In a second affidavit he referred to two provisions of the
Indian Merchant Shipping Act, 1958. It perhaps suffices to say that neither was relied

upon in argument before us. Both expressed the view that under Indian law and the
employment contracts the hostages remained in employment and were therefore
entitled to receive their wages until their repatriation. They placed reliance on a
decision of the Indian Supreme Court, O Konavalov v Commander, Coast Guard
Region,18 and s 141(1) of the Indian Merchant Shipping Act 44 of 1958 (the Merchant
Shipping Act).

[24] Section 141(1) of the Merchant Shipping Act in relevant part reads:
„Where the service of any seaman engaged under this Act terminates before the date contemplated in
the agreement by reason of the wreck, loss or abandonment of the ship or by reason of his being left
on shore at any place outside India under certificate granted under this Act of his unfitness or
inability to proceed on the voyage, the seaman shall be entitled to receive –
(a)  In the case of wreck, loss or abandonment of the ship –
(i)  Wages at the rate to which he was entitled at the date of termination of his service for the period
from the date his service is so terminated until he is returned to and arrives at a proper return port‟.

[25] These provisions found application in O Konavalov which concerned a vessel
that had apparently been abandoned by its owners with crew and cargo on board. The
Indian custom officials found contraband on board the vessel off the Indian coast. They
brought the vessel to land with its crew where it was subsequently arrested by the
Madras High Court at the instance of the owners of its cargo. The master of the vessel
committed suicide on that day and the owners could not be traced. The crew lodged a
wages‟ claim out of the anticipated proceeds of the sale of the vessel. Thereafter the
customs officials seized the vessel and its cargo. The crew launched further litigation

18 O Konavalov v Commander, Coast Guard Region (2006) 4 SCC 620.

for payment of their wages from the proceeds of the cargo, or an order for the sale of
the vessel, so that their claim could be paid out of those proceeds.

[26] The court found in the crew‟s favour and ordered the coastguard authorities and
the custom officials to pay their wages and attend to their repatriation from the
proceeds of the sale of the vessel‟s cargo. The customs authority successfully appealed
against this order in the high court. It also obtained final orders confiscating the vessel
whilst the appeal was still pending so that the consulate of the crew, which had
remained on the vessel throughout the period of almost two years for which they
claimed wages, had to repatriate them. The high court held that the vessel‟s
confiscation vested its ownership in the state thus divesting the crew of its rights
against the vessel.

[27] The Supreme Court of India reversed this decision on further appeal to it. It
referred to s 141(1) of the Merchant Shipping Act, which it held enables a seaman
whose service is terminated by reason of wreck, loss or abandonment of ship, among
other reasons, before the termination of employment date envisaged in his employment
contract, to payment of „certain wages and compensation‟ until his repatriation.19  The
court gave examples of cases which it considered constituted loss of a vessel, in which
the crew‟s right to wages did not cease with such loss, such as the destruction of a
neutral ship by a belligerent State or where, unknown to the crew, the vessel was
carrying contraband of war. On that basis it held that the crew were lawfully in the
employment of the vessel against which they had a maritime lien for service (and not
against the cargo) until their deportation. The court further highlighted the special

19 Para 29.

sanctity attaching to wages in Admiralty and under the Indian Constitution and the
State‟s duty to act fairly and reasonably in settling the lawful wage claims of seamen
who are at the lowest strata in society and thus suffer greatly without their wages.20

[28] Based on this reasoning, Messrs Venkiteswaran and Mukherji opined that
Indian law would regard the Asphalt Venture as having been „lost‟ in the manner
contemplated in s 141(1) thus entitling its crew to their wages until repatriated. To
counter this view, the appellants tendered an opinion of their own expert, former Chief
Justice of India, Justice VN Khare. The nub of his opinion was that although in the
ordinary course clauses 5 and 19 of the collective bargaining agreement entitled
seamen to payment of their wages until their repatriation, the hostages had no viable
claim to wages in this case. As he saw it, even if the hostages‟ contracts of
employment remained in force until the return of the vessel and the remaining
hostages, when the vessel sailed without them on 15 April 2011, any further obligation
by Concord to repatriate them was rendered impossible by a supervening event that, to
a reasonable person, was not foreseeable. In his view, it could not have been
contemplated that even after full ransom was paid the hostages would continue to be
held captive.

[29] Justice Khare based his view on the decision of the House of Lords in Horlock v
Beal.21 There, a British ship, during a voyage for which a British seaman had signed
articles, was detained at a German port on 4 August 1914 after the declaration of war.
On 2 November 1914 the crew, including the seaman, was removed from the vessel
and imprisoned. The seaman‟s wife launched an action for the allotment of his wages.

20 Para 45.
21 Horlock v Beal [1916] 1 AC 486.

The House of Lords held that his contract of employment had come to an end and
that he ceased to be entitled as soon as the further performance of his contract became
impossible. The court took the view that if the crew had been released on 2 November
1914, the common law would not have treated the employment contract as terminated.
But because they were imprisoned from that date neither party was any longer bound
by the contract from that date; otherwise if they were bound it would mean that wages
were to be paid, without any service in return, for the duration of the war.22

[30] The court a quo recognised the conflict between the experts but held that the
opinion expressed by Bergshav‟s experts was tenable, „even though Justice Khare may
well be right‟. In the court‟s view it was „arguable that the vessel was lost to pirates,
albeit temporarily‟. The court assumed that the hostages had been kept on board until
shortly before the vessel sailed without them after the ransom was paid. It
consequently held that their service terminated upon their removal from the vessel in
advance of the date of termination of their employment in their contracts upon the first
docking of the vessel in Mombasa on 28 April 2011. The court considered itself
constrained to „confine [itself], at least more or less to what has been stated by
[Bergshav]‟ as it had not been „established with certainty that Indian law would
recognise impossibility of performance or frustration as having released Concord from
its obligation to pay wages pending repatriation‟. The court reasoned that foreign law
is a question of fact. It accordingly held that, in the context of establishing a prima
facie case, the respondent need not show that the court hearing the trial would
necessarily come to the conclusion that the opinion of the respondent‟s witnesses
should be accepted.

[31] I have difficulty with the court a quo‟s reasoning and findings. It seems to me
that its first misstep was in its evaluation of the expert evidence and in accepting the
plausibility of the opinion of Bergshav‟s experts, without analysing that evidence.
Where a court is dealing with the evidence of experts on foreign law it is entitled to
consider it in the same way in which it considers the evidence of any other expert. As
this court has consistently said, foreign law is a question of fact and must be proved.23
This is achieved by reference to the evidence of experts ie lawyers practising in the
courts of the country whose law our courts want to ascertain. But the court is not
bound to accept the view of the experts and it may, for cogent reasons, accept the
testimony of one as against that of another where they are at odds. And, if in their
evidence the experts have referred to passages in the Code of the country whose law is
sought to be ascertained, the court is at liberty to look at those passages and consider
their proper meaning.24

[32] This court has recently re-articulated these views, in MV Pasquale Della Gatta
MV Fillipo Lembo Imperial Marine Co v Deiulemar Compagnia Di Navigazione,25 as
follows:
„Lastly on the aspect of proof of a prima facie case, the parties relied on expert evidence in regard to
… the legal position in terms of English law, which governs the charterparty. In a trial action it is
fundamental that the opinion of an expert must be based on facts that are established by the evidence
and the court assesses the opinions of experts on the basis of „whether and to what extent their
opinions advanced are founded on logical reasoning”. It is for the court and not the witness to
determine whether the judicial standard of proof has been met. How, if at all, are these principles to

22 Ibid, at 494.
23 Schlesinger v Commissioner for Inland Revenue 1964 (3) SA 389 (A) at 396G.
24 See Atlantic Harvesters of Namibia (Pty) Ltd v Unterweser Reederei GMBH of Bremen 1986 (4) SA 865 (C) at 874E-
G.
25 MV Pasquale Della Gatta MV Filippo Lembo Imperial Marine Co v Deiulemar Compagnia Di Navigazione SPA
[2011] ZASCA 131; 2012 (1) SA 58 (SCA) paras 25-27.

be applied in the context of an application where the applicant is required to show only that it has a
prima facie case? There does not appear to be any authority dealing with this problem. In my view
the court must first consider whether the underlying facts relied on by the witness have been
established on a prima facie basis. If not then the expert‟s opinion is worthless because it is purely
hypothetical, based on facts that cannot be demonstrated even on a prima facie basis. It can be
disregarded. If the relevant facts are established on a prima facie basis then the court must consider
whether the expert‟s view is one that can reasonably be held on the basis of those facts. In other
words, it examines the reasoning of the expert and determines whether it is logical in the light of
those facts and any others that are undisputed or cannot be disputed. If it concludes that the opinion
is one that can reasonably be held on the basis of the facts and the chain of reasoning of the expert
the threshold will be satisfied. This is so even though that is not the only opinion that can reasonably
be expressed on the basis of those facts. However, if the opinion is far-fetched and based on
unproven hypotheses then the onus is not discharged. Foreign law is treated as a fact requiring to be
proved by tendering the evidence of a witness who can speak to the contents of that law. However,
such evidence is unnecessary where the law in question can be ascertained readily and with sufficient
certainty without recourse to the evidence of an expert, because the court is then entitled to take
judicial notice of such law. In many maritime cases our courts deal with English admiralty or
maritime law. They are accustomed to considering questions arising out of bills of lading and
charterparties and the operation of vessels. Since at least 1797 in the case of the Cape Colony and
1856 in the case of the Colony of Natal our courts have in relation to a wide variety of maritime
matters been required in admiralty cases to apply English admiralty and maritime law. That law is
readily accessible in law reports and textbooks that are part of the standard libraries of the courts and
practitioners in this field. In those circumstances it should generally speaking be unnecessary for it to
be presented through affidavits from practitioners, who all too frequently (as in this case with
Deiulemar's expert) are representatives of the parties. The undesirability of expert evidence from
such a source has been the subject of previous comment from our courts.‟
(Footnotes omitted.)

[33] It is hard to discern why the court a quo rejected Justice Khare‟s opinion. The
doctrine of impossibility or frustration is applicable to contracts of employment where

supervening events rendered the performance of the contract impossible26 or
radically different from what had been undertaken when the contract was entered
into.27 And whether a contract is frustrated in the particular circumstances of the case
will be a matter of fact and degree.28  In English law a contract may be frustrated if
supervening events prevent its further performance.29 The principle forms part of the
law of contract in India too in terms of s 56 of The Indian Contract Act 9 of 1872,
which provides that „a contract to do an act, which after the contract is made, becomes
impossible or, by reason of some event which the promisor could not prevent,
unlawful, becomes void when the act becomes impossible or unlawful‟.

[34] There is nothing special about the contract of employment that precludes such a
contract from being subject to the ordinary principles of frustration of contracts. In
Prest v Petrodel Resources [2013] 2 AC 415 the Supreme Court in the United
Kingdom had to deal with the relationship between the law on the division of assets on
divorce and the principle of company law that the company and its assets are distinct
from the person and assets of the shareholders.  It held that the latter principle did not
cease to apply in proceedings in the Family Court and Lord Sumption said:30

26 Horlock v Beal, at 492.
27 In Karelrybflot  v Udovenko [2000] 2 NZLR 24 (CA) paras 36- 37 the New Zealand Court of Appeal accepted that
contracts of employment could be frustrated and mentioned without confining itself to those instances the imprisonment or
internment of the seaman. What happened here seems very close to those examples.
28 Ibid.
29  The classic statement is that of Lord Radcliffe in Davis Contractors Ltd v Fareham UDC [1956) AC 696 where he said:
„Frustration occurs whenever the law recognises that without default of either party a contractual obligation has become
incapable of being performed because the circumstances in which performance is called for would render it a thing radically
different from that which was undertaken by the contract.’
Chitty on Contracts (29 ed) para 23-001 expresses it thus:
„a contract may be discharged on the ground of frustration when something occurs after the formation of the contract which
renders it physically or commercially impossible to fulfil the contract or transforms the obligation to perform into a radically
different obligation from that undertaken at the moment of the entry into the contract.’
30 At para 37.

„Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts
are suspended or mean something different.‟
No more are courts dealing with contracts of employment entitled to disregard the
basic principles of contract and treat employment law as excluding basic legal
principles. Neither expert on behalf of Bergshav sought to suggest that the doctrine of
frustration of contracts did not apply to employment contracts or was inapplicable in
India.

[35] Bergshav‟s counsel sought to distinguish Horlock v Beal from the present case
with a contention that „there is a world of difference between a world war and pirates
making unrealistic demands‟ and that that a lot has changed in relation to the
protection of seafarers and their entitlement to wages since the war era. Whilst that
may factually be the case, I do not agree that it alters the legal principle. To my mind it
is the underlying principle that matters and not the facts of the case. That principle is
the same in both cases – the performance of the employment contract was rendered
impossible by a supervening event. To continue to pay and support a crew not on
board the vessel and not rendering service to the vessel, whose contracts of
employment had terminated and who were held in captivity by intransigent pirates,
who  had  been paid  a  ransom  but  demanded  an  exchange  that  was  not  within
Concord‟s power, could hardly have been contemplated by the employment contracts.

[36] O Konavalov clearly does not support Bergshav‟s case as was claimed. It is
patently distinguished by the fact that there the crew was in the employment of the
vessel and remained on board for the entire duration in respect of which wages were
claimed. As mentioned above, the hostages claim wages purportedly accrued after

their employment contracts ended but before their repatriation, for a period which
started seven months after they were last on board the vessel during which they were
not on board the vessel (for an unforeseen reason beyond the employer‟s control).

[37] In that regard, Bergshav‟s counsel urged us to give „wages‟ and, necessarily, the
corresponding lien,31 an expanded meaning to include the wages for which he
contended. It is so that the concept of wages enjoys an extensive and broad
construction so as to include claims incidental to the seaman‟s employment that would
not be comprehended under the narrow meaning of the word.32 This is evident from the
very wide wording of s 1(1)(s) of the Admiralty Act which inter alia defines „maritime
claim‟ to mean „any claim for, arising out of or relating to ... the employment of any
master, officer or seaman of a ship in connection with or in relation to a ship, including
the remuneration of any such person, and contributions in respect of any such person
to any pension fund, provident fund, medical aid fund, benefit fund, similar fund,
association or institution in relation to or for the benefit of any master, officer or
seaman.‟

[38] But the hallmark of a maritime lien in respect of wages is the benefit to the
vessel of the service of the crew without which no maritime lien can arise. As Clarke J
observed in The Ever Success:33

31 In line with The Tacoma City  [1991] 1 Lloyd‟s Rep 330 CA,  which said „[a]s with the case arising from the statutory
expansion of the court‟s jurisdiction so also the judicial expansion of a substantive concept of a wage has been accompanied
by corresponding expansion in the maritime lien. To the extent that a claim is in the nature of a “wage” it is accompanied by
a maritime lien.‟ See also The Halcyon Skies [1976] 1 Lloyd‟s Rep 461 (QB); D R Thomas British Shipping Laws
Maritime Liens (1980) vol 14 para 313.
32 See, for example, Continental Illinois National and Trust Co of Chicago Bank v Greek Seamen’s Pension Fund 1989
(2) SA 515 (D) at 530I-533E; The Tacoma City fn 31 above; The Arosa Star [1959] 2 Lloyd‟s Rep 396 at 402; The
Westport (No 4) [1968]  2 Lloyd‟s Rep 559; The Halcyon Skies fn 30 above.
33 The Ever Success [1999] 1 Lloyd‟s Rep 824 at 831; The Halcyon Skies above. This approach can be traced to Lord
Watson‟s statement in The Castlegate [1893] AC 38 at 52 that the sole condition for the existence of the lien is that such

„The maritime lien is in respect of service to the ship. In the absence of some very unusual
contractual provision, that service will ordinarily be measured by reference to the seaman‟s contract
of service ... under which he was hired, whether by the shipowner, or (as in this case) the putative
shipowner, provided of course that there is a sufficient connection between the service and the ship
in the sense discussed below. It follows that I accept [the] submission that it is never appropriate for
the court to evaluate the services of each seaman on a quantum meruit basis. The proper approach is

wages have been earned on board the ship.

to ask whether in the relevant period the claimant was rendering a service to the ship as a member
of the crew. If he was, he was entitled to a maritime lien in respect of his wages in respect of that
period assessed in accordance with his contract.‟
Thus, even if on some indeterminate basis the hostages were entitled to recover wages
from one of Concord, Bitument or Windrush, the entitlement to those amounts would
not have arisen from service on or to the Asphalt Venture and would not have attracted
a maritime lien. And the absence of a maritime lien was fatal to the entitlement of
Bergshav to arrest the Asphalt Venture.

[39] The court a quo‟s finding that, if the hostages „were engaged in terms of a
contract governed by and subject to Indian law, which promised them wages from the
date of termination of their employment to date of repatriation without regard to the
duration  of  the  delay  and  without  regard  to  the  fact  that the employer giving the
undertaking might not be at fault with regard to any delay in repatriation‟, this passes
the traditional test of recompense for execution of duty, with the result that „the claim
is supported by a maritime lien‟, is in my view wrong.  It, as did Bergshav‟s experts,
overlooked the provisions of the collective bargaining agreement, which underpinned
the employment contracts, especially Appendix – 1 of article 5, which made clear that
the hostages‟ contracts of employment had terminated by 15 April 2011 when the
vessel was released.  In any event, the wages contemplated in these provisions were
paid. The judgment attached no weight to the fact that the reason for the hostages not
being repatriated was the conduct of the pirates, which was beyond Concorde‟s
control. It also ignored the fact that the hostages did not perform any service on or to
the vessel and were unable to do so because of their detention by the pirates.

[40] The mainstay of Bergshav‟s case, article 19.2, expressly envisages repatriation
for „normal reasons‟, which could not be further from the unusual situation in which
the hostages found themselves. These provisions cannot by any stretch of the
imagination bear relevance here. The employment contracts simply make no provision
for the type of wages claimed. And, in my view, neither does the Indian law to which
we were referred. I respectfully disagree with the court a quo‟s interpretation of s
141(1) of the Merchant Shipping Act that the Asphalt Venture was „lost‟ to the pirates,
for which no substantiation was given. This construction goes against the plain
wording of the provisions and common sense. We are after all concerned with the
situation after the Asphalt Venture had been restored to its owners and had resumed
trading. It cannot then have been „lost‟ to the pirates.

[41] There was an attempt on Bergshav‟s part to place reliance on ss 141(1)(b) and
142 of the Indian Act. Section 141(1)(b) entitles a seaman „to receive … in the case of
… inability to proceed on the voyage, wages for the period from the date his service is
terminated until he is returned to and arrives at a proper return port‟. Section 142
decrees that wages shall not accrue to a seaman during absence without leave, refusal
to work or imprisonment. The problem with this late tack raised for the first time
before us, however, without even engaging the contentions made by counsel in respect
of these provisions, is that none of the experts dealt with them at all. The pre-requisite
to the invocation of this provision was a certificate granted under the Indian Act of the
seaman‟s unfitness or inability to continue with the voyage. There was no such
certificate, which puts an end to this contention. In the end Bergshav‟s counsel was
unable to identify the source of the alleged continued obligation to pay the contested
wages.

[42] There was therefore no obligation on Concord to pay crew‟s wages or
repatriation costs in respect of the hostages beyond 15 April 2011, despite the fact that
it continued making payments until October 2011. These payments were respectively
made ex gratia and in terms of an agreement concluded for expedience as mentioned.
Thus, no maritime lien could have arisen and existed on 2 September 2012 when
Asphalt Venture was arrested. For that reason, Bergshav could not invoke the action in
rem and execute the arrest in terms of the Admiralty Act. It is unnecessary, on these
findings, to decide whether the termination of the sub-bareboat charterparty with
Concord on 17 June 2011, some five months before the wages clamed allegedly started
accruing, also constituted a supervening event rendering the performance of the
employment contract impossible as it no longer had any interest in the vessel. It is also
unnecessary to deal with the question whether the lien could be assigned effectively to
Bergshav.

[43] For all these reasons, I am not satisfied that Bergshav established a prima facie
case for the existence of the wages claim it pursues against Asphalt Venture. Its case
does not pass the first leg of the enquiry described above.

[44] In the result the following order is made:
1  The appeal is upheld with costs.
2  The order of the court a quo is set aside and replaced with the following:
„(a) The deemed arrest of MT “Asphalt Venture” is hereby set aside.
(b) The security furnished on behalf of Windrush Intercontinental SA shall be released
to it forthwith.
(c) UACC Bergshav Tankers AS shall pay the costs of the application, including

(i) the costs attendant upon the further argument as a consequence of the court‟s
request for responses to queries;
(ii) the costs of the application for leave to appeal; and
(iii) the costs of the application to set aside the arrest of MT “Asphalt Venture”.‟

__________________________

MML MAYA

Deputy President of the Supreme
Court of Appeal

APPEARANCES

For the Appellant:
M J Fitzgerald SC (Heads of Argument prepared by DA

Gordon SC)

Instructed by:

Cox Yeats Attorneys, Durban

McIntyre & Van Der Post, Bloemfontein

For the Respondent:
S R Mullins SC

Instructed by:

Shepstone & Wylie Attorneys, Durban

Matsepes Inc., Bloemfontein
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

6 December 2016

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Windrush Intercontinental SA v UACC Bergshav Tankers AS (556/2015) [2016] ZASCA
199 (6 December 2016)

MEDIA STATEMENT

The Supreme Court of Appeal today upheld an appeal against a judgment of the KwaZulu-Natal Local
Division of the High Court, Durban (Exercising Admiralty Jurisdiction) which refused to set aside the
deemed arrest of the vessel, the MT Asphalt Venture, and order the return of the security paid on
behalf of its owner, Windrush Intercontinental SA, for its release.

The issue was whether at the time of the arrest of the second appellant, Asphalt Venture, at the
Durban port, there existed a maritime lien for unpaid crew’s wages entitling its arrest by way of an in
rem arrest in terms of s 3(4)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983.

The unpaid wages relate to crew members of Indian nationality, who were employed on board the
Asphalt Venture, a vessel owned by Bitumen Invest AS. Windrush is Asphalt Venture’s bareboat
charterer in terms of a bareboat charterparty it concluded with Bitumen. Windrush also concluded a
sub-bareboat charterparty with Concord Worldwide Inc (Concord), which through its technical
manager and crewing agent, OMCI Shipmanagement (Pvt) Ltd, concluded employment contracts with
the crew between April and August 2010, for a duration of nine months.

The Asphalt Venture and her crew were hijacked by Somali pirates on 23 September 2010 about 100
nautical miles east of Mombasa. On 15 April 2011, a ransom of USD 3.4 million was delivered to the
pirates in exchange for the release of the vessel and her crew but the pirates nonetheless refused to
release some the crew. The remaining hostages were held captive, apparently to be used in
negotiations for the release of 120 Somali pirates arrested by the Indian navy who awaited trial in
India.  On 22 December 2011 the Indian government, in line with its policy, formally refused to

negotiate with the pirates for their release. It was only some years later, between August and
December 2014, and after payment of a further ransom, that the pirates finally released the hostages.

Subsequently, Windrush withdrew Asphalt Venture from the sub-bareboat charterparty with Concord,
thereby terminating the sub-bareboat charterparty. Concord nevertheless continued to pay to the
hostages’ families amounts equivalent to the hostages’ wages until the end of October 2011. It also
paid for the repatriation costs of the released crew members, and continued to pay their wages even
after they were discharged from the vessel. But it ceased to make payments when it ran into financial
difficulties. On 17 January 2012, the MT “UACC Eagle” owned by the respondent, UACC Bergshav
Tankers AS, a Norwegian company, was arrested in Mumbai by the hostages’ families, representing
the hostages, as security for their cumulative claim of USD 6 787 440 on the erroneous belief that the
UACC Eagle was Asphalt Venture’s sister ship.

This incident culminated in the conclusion of a settlement agreement the basis of which was that the
hostages were employed on Asphalt Venture over which there was a maritime lien for unpaid crew
wages recognised in Indian law. The Eagle was released on conditions and with the respondent
making several undertakings, and the families renouncing any claim and/or maritime lien they have or
may have. Resulting from this assignment, Bergshav commenced an action in rem action against
Asphalt Venture in the KwaZulu-Natal Local Division of the High Court, Durban. It sued as cessionary
of the hostages’ claims based on an alleged maritime lien and demanded payment of the amounts it
had paid to their families. It also sought an order declaring its entitlement against Asphalt Venture for
the amounts it still had to pay in terms of the settlement agreement.

The summons and particulars of claim alleged that the hostages were employees of Bitumen, Asphalt
Venture’s owners, alternatively employees of Concord as Asphalt Venture’s sub-bareboat charterer or
further alternatively employees of Windrush, the bareboat charterer. Thus, it was alleged that they
were and remained entitled to be paid the wages reflected in their contracts of employment during the
currency thereof and following any valid termination thereof, until such time as each of them was
repatriated. It was further alleged that their claims for unpaid wages were maritime claims as defined
in the Admiralty Act and gave rise to a maritime lien which was enforceable in rem against Asphalt
Venture in terms of s 3(4)(a) of the Admiralty Act.

The high court dismissed the appellants’ application to set aside Asphalt Venture’s deemed arrest
and an order for the return of the security which had been furnished to secure its release. It found that
Bergshav had established a prima facie case for the proposition that Concord was liable at all
material times since October 2011 to pay wages to the hostages and that this maritime lien afforded
to the hostages in respect of their claim for wages, was ceded or assigned to Bergshav.

The SCA stated that the question whether there was an enforceable claim based upon a maritime lien
at the time of Asphalt Venture’s arrest was two-pronged. First, it had to determine, on a prima facie
basis, whether Bergshav has established the existence and nature of the claims sought to be
enforced in rem against Asphalt Venture. Secondly, it had to determine whether as a matter of South
African law Bergshav has prima facie established claims which, by reason of their nature and
character, are protected by maritime lien in South African law.

The SCA held that the Somali pirates’ conduct of reneging on their agreement to release all the crew
upon payment of the ransom and the negotiations to release the hostages in exchange for the pirates
incarcerated by the Republic of India, which were beyond the appellants’ control, constituted a
supervening event rendering the fulfilment of the hostages’ employment contracts impossible. The
hostages’ employment and entitlement to wages were accordingly terminated by supervening
impossibility or frustration of the performance of their employment contracts which made clear that
their employment had terminated by 15 April 2011 when the vessel was released. Accordingly, there
was no claim for unpaid wages giving rise to a maritime lien enforceable by an action in rem.

--- ends ---