South Africa – Entitlement to arrest property to obtain security for foreign proceedings

In recent months, and following the demise of the American Rule B procedure, many claimants have been looking to the favourable South African jurisdiction to obtain security for their claims in arbitration proceedings either contemplated or commenced. Section 5(3) of the South African Admiralty Jurisdiction Regulation Act No. 105 of 1983 as amended provides that:

“A court may in the exercise of its admiralty jurisdiction order the arrest of any property for the purpose of providing security for a claim which is or may be the subject of an arbitration or any proceedings contemplated, pending or proceeding, either in the Republic or elsewhere, and whether or not it is subject to the law of the Republic, if the person seeking the arrest has a claim enforceable by an action in personam against the owner of the property concerned or an action in rem against such property or which would be so enforceable but for any such arbitration or proceedings.”

Subject to satisfying the requirements for a security arrest, a claimant who has submitted (or contemplates submitting) a claim to arbitration or other proceedings (in South Africa or anywhere else) is therefore entitled to arrest property (usually a ship) in South Africa, solely for the purpose of obtaining security for those proceedings.

The South African Admiralty Court does not involve itself with the merits of the claim to any great extent. Once the order has been made, the ship (or other property) has been arrested and security put up to obtain its release, the South African Court drops out of the picture. The security is established for the purposes of paying such amount as might be found to be due in the foreign proceedings.

Tony Edwards
Shepstone & Wylie Attorneys
Durban, South Africa
Email: edwards@wylie.co.za