KARACHI: The Pakistan National Shipping Corporation (PNSC)’s vessel MV Hyderabad was arrested at Port Elizabeth on Friday on the orders of the South African high court, according to official sources.

The vessel was on its way to the West African port of Pedro but had to report at the South African port for refuelling where it was arrested on a court decree issued in a freight default case against the Pakistan Steel Mills (PSM), they said.

Under South African law, a vessel can be arrested once a court decree is issued. The order was issued in a case filed by a Singaporean shipping company against the PSM over its failure to pay freight against the haulage of iron and ore in 2008.

According to the sources privy to the development, the PSM engaged the company in 2008 for the haulage of one million tonnes of iron/ore from South Africa.

But the PSM could not make freight payments of $7.5 million to the company and it, after carrying 0.8 million tonnes in four trips out of total six trips, stopped the haulage of iron/ore.

The arrest is result of a court order in freight default case against PSM

Besides ordering payment of $7.5m freight, the court also ordered the PSM to pay $6.5m interest to the company, the sources said.

Due to the arrest of MV Hyderabad belonging to the PNSC, a government-owned entity like the PSM, the corporation had to face the consquences for no fault on its, they said, adding that the court order was a sort of attachment of state asset.

After the PSM failed to make payment of freight charges and the shipping company stopped the haulage of iron and ore, the two sides evoked arbitration clause of the contract.

A two-member arbitration tribunal with Capt Anwar Shah representing the PSM and Capt Sulat Majeed representing the company gave a split decision.

Upon this the Sindh High Court in 2010 appointed a neutral empire (a retired judge) to sort out the issue but again the PSM made a default as it did not pay the agreed fee to the judge.

Since the case could not make progress and after about six years, the South African high court issued a decree for confiscation of state (Pakistan) asset, official sources said.

PNSC sources said that the corporation had several options to get the vessel released by getting international surety and guarantee at an amount of $5m. The corporation has approached Finance Minister Ishaq Dar and the Pakistan high commissioner in South Africa in this regard.

Answering a question, a PNSC official told Dawn that MV Hyderabad was on a chartering with a foreign company and was loaded with clinker. This means there is no fear of goods getting perished or damaged.

Published in Dawn, August 23rd, 2016