South Africa - New Legislation - Title To Sue, Arrest And Mortgages

July 2003

The Sea Transport Documents Act 65 of 2000 and the Ship Registration Act 58 of 1998, both of which have come into effect this year, can be seen as positive developments in South African Maritime legislation. The review of the Maritime Legislation has been identified by the National Department of Transport as one of its key projects for 2003.

Sea Transport Documents Act 65 Of 2000

This act came into effect on 20 June 2003.

Title to Sue

One of the main objects of the Act is to clarify the complicated and confusing situation that existed with regard to title to sue. The Act applies to all "sea transport documents" including bills of lading, through bills of lading, combined transport documents, sea waybills, consignment notes and the like. The Act applies to all such documents issued in South Africa as well as to goods consigned to, or delivered in, the Republic irrespective of whether they were issued before or after the commencement of the Act.

Under the Act a person is the lawful holder of a sea transport document and has title to sue on it if he or his agent is in possession of the original, in addition to any one of the following:

1. the document was issued to him; 

2. he is the named consignee; or 

3. the document was transferred to him in accordance with the Act.

Documents which represent goods shipped, and which are signed by the carrier or the master, are prima facie evidence of shipment when in the hands of the original holder (i.e. shipper), and conclusive evidence in the hands of a subsequent holder (i.e. consignee, endorsee or transferee).

The first person to present the document is entitled to delivery on the applicable terms, although the carrier may require the person presenting the document to establish a right to delivery.

The Act also allows for regulations to be promulgated recognising electronic document exchange systems.

Arrest For Claims Against Charterers

Another development stemming from the Act is that for the purposes of the Admiralty Jurisdiction Regulation Act 105 of 1983, as amended, a demise or bareboat charterer shall be deemed to be the owner of the ship for the period of the charter. It will accordingly be possible to arrest bareboat chartered vessels in order to enforce claims against such charterers. This provision brings South African law on the topic in line with English law.

Ship Registration Act 58 Of 1998

This act and the regulations thereto came into effect on 25 April 2003.

Ship Registration

One of the main objects of the Act is to regulate the registration of ships in the Republic, in addition to various incidental matters, such as the transfer of ownership and the creation and transfer of mortgages. The Act also seeks to facilitate the development of the South African Ship's Register so as to avoid classification as an "open" or "convenience" register. The Act therefore repeals and replaces most of Chapter II of the Merchant Shipping Act 57 of 1951, which governed the recording, registration and licensing of ships in the Republic previously.

Security For Mortgagees

Most notably the Act puts to an end the historical difficulties surrounding the security of the holder of a ship's mortgage. Previously, in the event of the insolvency of the owner of a South African ship a mortgagee ranked merely as a concurrent creditor. In terms of s 31(5) of the new Act a mortgagee will rank as a preferrent creditor in the event of insolvency.

Mortgage Registration For Smaller Vessels

Another notable development is that the Act allows for the registration of small vessels, under 25 tons but over 3 metres in length, and consequently the possibility of registering mortgages over such vessels.

 

With thanks to Bowman Gilfillan Findlay & Tait for supplying this information.