The collapse of Hanjin, the world's seventh largest shipping container carrier, and its immediate impact in South Africa and its shipping industry, remains to be seen. As far as we can ascertain, there has been no attempt to date to apply to a South African Court for the recognition of the Korean rehabilitation proceedings.

No Hanjin vessels have called, or are showing as calling, in South African territorial waters for the time being. The South African maritime jurisdiction is notably an "arrest friendly" jurisdiction. Certainly, the South African Admiralty Act is aimed at meeting the needs of creditors and the shipping industry in enforcing maritime claims, providing wide-ranging powers of arrest – either by way of an associated ship arrest, or through arrest for the purpose of obtaining security for proceedings elsewhere (Security arrest).

For these reasons, there is scope for creditors seeking to enforce their claims in South Africa. It remains to be seen whether the Korean rehabilitation proceedings will be recognised in South Africa, or whether there are apparent grounds to resist a potential recognition order and the arrest of Hanjin vessels. There are currently no immediate obstacles in the way of creditors seeking to arrest or attach Hanjin vessels or maritime property. Certainly, South African Courts are granted extensive powers to join a person or entity as a party to any local proceedings "notwithstanding the fact that he [it] is not otherwise amenable to the jurisdiction of the court". South African Courts may also decide any matter arising in connection with a maritime claim "notwithstanding that any such matter may not be one which would give rise to a maritime claim."

On the topic of judicial sales – that is, the sale of maritime property arrested or attached in admiralty, a court exercising admiralty jurisdiction may, at any time, order that any property that has been arrested in accordance with the Admiralty Act, be sold. The reference to "at any time" is apposite because a section of the Admiralty Act (section 9) also contemplates pre-judgment sales (i.e. the sale of the property during the litigation proceedings - pendente lite). In other words, a South African Court's powers under this section are not limited to ordering the sale of maritime property to only after the judgment has been handed down.

As regards the exercise of any mortgage, charge, lien or other security over Hanjin's vessels or property, any sale under the terms of a South African Court order, whether pendente lite or after judgment in execution, is not subject to any mortgage, lien, hypothecation, or any other charge of any nature whatsoever. The proceeds arising from the sale of "maritime" property under the Admiralty Act, will then constitute a "fund" to be held in Court, or to be otherwise dealt with, as may be provided by the rules or by any order of the Court i.e. a separate concursus (competing claim) to the company's Korean held assets, in respect of that fund.

Creditors with claims against any "maritime" property arrested or attached belonging to Hanjin, or deemed to be under arrest or attachment, will then be entitled to prove their claims against such fund. To this end, there is a statutory ranking of claims, dealt with in section 11 of the Admiralty Act. If the fund, either constituted by the proceeds of the sale of "maritime" property or as contemplated in section 3(11) of the Admiralty Act, is insufficient to settle all claims proved against it in full, the fund will be distributed among the proved claims in accordance with this statutory scheme of ranking or preference under section 11.

In summary, it still remains to be seen where and when a Hanjin owned and/or controlled vessel will enter into South African territorial waters, but – while no steps have yet been taken to recognise the Korean rehabilitation proceedings in South Africa, or, unless the recognition of such order is successfully opposed – an in rem arrest of such vessel remains available to Hanjin's creditors.

Hanjin Shipping - Current Jurisdictional Status And Options - South Africa

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