Op-Ed: Faulty Ruling in Western Sahara Bulker Arrest

[Editorial]

In April 2017, a cargo of phosphates was loaded on the bulker Cherry Blossom at El Aaiun, Western Sahara. The cargo was part of a regular series of phosphate shipments sold freight-on-board by Moroccan firm OCP SA to New Zealand-based Ballance Agri-Nutrients Ltd.

On May 1, 2017, the vessel was arrested in Port Elizabeth, South Africa, where she had called for bunkers, at the request of The Polisario Front, a national liberation movement in Western Sahara. The Polisario Front claimed ownership of the phosphates on board on the grounds that this cargo was a part of the national resources of Western Sahara and belongs to its people.

On June 15, a court in Port Elizabeth decided to detain the vessel and send the case to the High Court. On February 23, 2018, the High Court made a surprising decision to order the sale of the cargo.

By this judgment, the ownership of the cargo was vested in The Polisario Front. However, no purchaser came forward. In order to gain the release of the vessel, the shipowner decided to lodge an application seeking the judicial sale of the cargo. The shipowner acquired it and returned it to OCP SA for one dollar.

This court procedure was an intrusion in a political process being carried out under the auspices of the United Nations Security Council on the question of the sovereignty of Western Sahara. The political points invoked by the decision cannot be legally defensible, as the case involves only commercial transactions between parties in contracts.

Unsubstantiated claim of The Polisario Front

The claim in question constitutes a 'maritime claim' as defined in Section 1(1) of the South African Admiralty Jurisdiction Regulation Act of 1983. The Polisario Front’s claim over the cargo is among the list of ‘maritime claims’.

The claim of The Polisario Front supposes that it has a claim against the owner of the cargo. The owner was not OCP SA, but the New Zealand freight-on-board buyer to whose ownership the cargo was transferred upon the completion of loading.

The action of The Polisario Front was considered admissible by the South African Court. However, the Court should have investigated the conditions of the sale of the cargo that followed the International Commercial Terms (Incoterms).

In addition, the cargo was seized on board the ship and remained on board. According to the usual maritime procedure, the cargo should have been unloaded from the ship to shore or to a bonded warehouse to allow the ship to be released. The court decided not to offload the cargo and used the ship as a floating warehouse against the shipowner’s interest.

Through the court's decision, The Polisario Front did not effectively seize the cargo, but rather the ship. This seizure was not justified because the ship had committed no offense.

Issues with the court's decision

The law applicable to the present case is the Sea Transport Document Act, 2000 of the Republic of South Africa. According to Section 2 of this Act, it is applied “to any proceedings instituted in the Republic in any court or before any arbitration tribunal after the commencement of this Act in respect of any sea transport document [a bill of lading]."

The bill of lading establishes the existence of the contract of carriage by sea and its conditions. It represents the goods, and the detention of the bill of lading is equivalent to the possession of the cargo. The beneficiary of the bill of lading is, according the Section 3 (2) of the Act, the person who is “in possession of the original sea transport document, or possession of that document is held on that person’s behalf, and that person is a) the person to whom the document was issued; b) the consignee named in the document; or c) a person to whom the document has been transferred.”

It should be noted that this title is not a title of property. Indeed, it transfers only the rights of claim. But the bill of lading is endorsed with great security, which gives it an evidential value. According Section 5 of the Sea Transport Documents Act of 2000, “any right or obligation under the bill of lading has full force and effect." Thus The Polisario Front was never the seller, the buyer or a holder in due course of the cargo. The High Court's ruling was neither correct nor in accordance with international standards for maritime claims.