AJOT Insights

The law or politics?

May 18, 2018

The strange case of the NM Cherry Blossom

By Prof. H. Cherkaoui, Hassan II University of Casablanca

In April 2017, a cargo phosphates was loaded on the bulk carrier NM CHERRY BLOSSOM at El Aaiun, Western Sahara. This was one of a regular shipment of phosphates sold fob by the Moroccan company, OCP SA, to the New Zealand Company Ballance Agri-Nutrients Ltd.

On 1 May 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, claiming the ownership of the phosphates loaded on board on the grounds that this cargo is part of the national resources of Western Sahara and belongs to its people.

On 15 June, the 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 but no purchaser came forward because the cargo actually belonged to the OCP SA who, after the seizure of the vessel, had sent Ballance Agri-Nutrients a replacement cargo. In order to gain the release of his vessel the shipowner decided to lodge an application seeking the judicial sale of the cargo and by acquiring it returned it to its rightful owner, OCP SA, for one symbolic dollar.

This highly political procedure was an intrusion in the process being carried out under the auspices of the United Nations Security Council on the question of the sovereignty of Western Sahara. Obviously, the political points invoked by the decisions cannot be legally defensible because the case involves only the commercial transactions between parties in the contracts according to international maritime law.

Thus, we are faced with a legally inadmissible claim that has given rise to an absurd result and an illegitimate decision.

l – 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’s claim over the cargo is indeed among the list of ‘maritime claims’.

The claim of The Polisario supposes that it has a claim against the owner of the cargo. The owner was not OCP SA but the New Zealand fob buyer to whose ownership the cargo was transferred upon completed of loading.

The action of The Polisario was nevertheless considered admissible by the South African Court whereas it was legally baseless. The Court should have investigated the conditions of the sale of the cargo that followed the International Commercial Terms (Incoterms).

Besides, in this case, the cargo was seized on board the ship and remained on board. In the traditional maritime procedure, as far as the cargo goes, the cargo should have been unloaded from the ship to the land or in a bounded warehouse to allow the ship to be released. The court decided not to offload the cargo and has used the ship as a floating warehouse against the shipowner’s interest.

So, the Polisario Front did not seize the cargo but the ship. This seizure is not justified because the ship has committed no offense.

Thus, the claim of The Polisario Front is abusive and has given rise to an illegitimate decision contrary to the law and international conventions.

II – Illegitimate Decision of the South African Court

The maritime industry is organized internationally in accordance with precise and protective standards of international trade which are accepted and respected worldwide. It is unacceptable that the Court of South Africa could arrogate the right to flout these standards by making a legal fabrication in order to give legitimacy to the request of the Polisario Front.

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…”. Sea transport document means, according to Section 1 of this Act, “a bill of lading”.

Functions of the bill of lading. The bill of lading establishes the existence of the contract of carriage by sea and its conditions. It represents also the goods, so that the detention of the bill of lading is equivalent to the possession of the cargo. When the bill of lading is issued pursuant to a charter contract, it does not evidence the terms of the contract since this role is assigned to the charter-party.

The beneficiary of the bill of lading. The beneficiary of the bill of lading is, according to the Section 3 (2) of the Act, “a person is the holder of a sea transport document if that person 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
the person to whom the document was issued;
the consignee named in the document; or
a person to whom the document has been transferred in accordance with subsection (1)”

Rights attached to the bill of lading. 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 to 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.

By not respecting the applicable law, the South African court has opened the way for the abuse of respected and accepted international laws.

Prof. H. Cherkaoui, Hassan II University of Casablanca
Prof. H. Cherkaoui, Hassan II University of Casablanca

The opinions expressed in the article are those of Prof. H. Cherkaoui.