/ 30 April 2015

Hijack leaves maritime law at sea

The cargo ship MV Asphalt Venture arrives in Mombasa in 2011. After the vehicle was 'arrested' in Richard's Bay the legal dispute landed up in a South African high court.
The cargo ship MV Asphalt Venture arrives in Mombasa in 2011. After the vehicle was 'arrested' in Richard's Bay the legal dispute landed up in a South African high court.

When Somali pirates captured the vessel MV Asphalt Venture off the coast of Mombasa in September 2010, no one could have foreseen the far-reaching human and legal dramas that would result. 

These have spanned the globe and, with further legal action scheduled for later this year, have culminated in a precedent-setting international dispute heard in the high court in Durban.

Complicating the story is the problem of who is really responsible for the crew and the vessel. For ordinary readers unfamiliar with shipping law terms and practices, it’s a maze — multilayered agreements obscuring the question of who owns a vessel, who leases it, who hired the crew and who is responsible for paying them. 

Sometimes there are several answers to the questions, and so the story that follows has been simplified in some ways.

When the vessel was hijacked, it was carrying bitumen to several international ports. The company bearing immediate responsibility for the ship and crew was Concord Worldwide, which had employment contracts with all 15 crew members.

The chief, perhaps only, concern of most people when hearing about the hijacking would have been about the immediate safety of the crew and whether they would escape alive. 

But the capture of ships has become so common that a protocol has evolved to deal with a variety of issues resulting from hijacking, issues that you might never consider when you read the news about pirate action such as this.

Advised of the vessel’s fate, Concord followed what the high court in Durban has since heard is standard practice in such cases — “engaging with its insurers, instructing solicitors, consulting security advisers and, most importantly, appointing a negotiator to deal with the pirates”.

The upshot of all this feverish activity was that a deal was made with the pirates and, in mid-April 2011, they were paid a ransom of $3.4-million. In exchange, the pirates were to release the vessel and all 15 crew.

But, pirates being what they are, only half the crew members were freed. The remaining seven Indian crew members were kept on as hostages. The pirates said they would only be freed if 120 Somali detainees, held in India pending trial, presumably on piracy charges, were freed.

But India has a strict policy not to negotiate with pirates and so it seemed likely that the seven crew members would remain captives of the hijackers indefinitely.

Concord’s contract with the crew varied between four and nine months of fixed service, and its last contract with the seven who remained in captivity was due to expire at the end of February 2011, meaning that by the time the vessel was released, the contracts had expired.

But Concord continued to pay their salaries, even after the rest of the crew had returned home, until the end of October 2011, when the company ran out of money.

Early the following year, relatives of the seven captive sailors had the UACC Eagle arrested. The vessel was moored in Mumbai. They said they had done so because under Indian law, the Eagle was a sister ship of the Asphalt Venture — although this was later shown not to be correct.

The families hoped that by holding the Eagle, they could induce the owners of the Asphalt Venture to agree to their claim of almost $7-million on the basis that the families of each hostage should be paid a daily wage until the age of 70.

The company owning the Eagle had little choice but to comply and settle with the relatives, partly because of how long it takes to resolve litigation in the Indian courts. 

This is apparently not an unusual response: what normally happens, as in this case, is that the “owners” of the Eagle will bring an action against the “owners” of the Asphalt Venture for compensation.

Part of the settlement between the Eagle and the families was that wages would be paid for the seven crew members until the end of 2013. The families then ceded their claims under this settlement to the Eagle, whose owners could then act against the Asphalt Venture and try to recoup what had been guaranteed to the families. 

With the settlement concluded between the relatives and the Eagle, the Mumbai courts then allowed the vessel to sail.

When the Asphalt Venture docked in Richard’s Bay some time later, representatives of the Eagle had the vessel arrested so that the question of the crew payments could be resolved.

The resulting litigation has raised many questions of huge interest to shipping experts. Most novel — it has not been dealt with in South African cases before — is the question of what the crew members are entitled to. Must they be paid only for the term of their contract and subsequent repatriation, or is there a case to be made for a continued payment?

It’s a question made more important and complex because if crew members are entitled to further payment, under a maritime lien — a right to keep possession of property belonging to another person until a debt owed by that person is discharged — that entitlement is linked to the vessel.

As an experienced shipping lawyer explained, a lien fixes itself like a mollusc to a ship, moving with it until it is paid, regardless of who currently owns or runs the vessel.

That South African Judge Peter Olsen, who heard the matter, had to consider relevant Indian jurisprudence — because the contracts had been concluded under that country’s law — added to the complexities surrounding the lien. He was given expert written opinion on the issue by three senior Indian lawyers, including a former chief justice.

In the end, Olsen concluded that, in theory at least, even after the crew’s contracts expired, some benefits remained as a maritime lien. 

With this principle established, the case now moves on to its next phase in which, later this year, legal representatives of the two vessels will argue whether the principle now established applies to the facts of this case.  

Meanwhile, at least the human drama has reached some conclusion: Olsen was told that the last seven Indian crew members have now been released.