Arrest of Ship in Nigeria: Different Perspectives and the Scope of Maritime Claim By Prince Nwafuru, MCIArb (UK), ACIMC

Abstract

The subject of ship arrest is one that often piques the interests of stakeholders in maritime industry not only because of its peculiar relevance to maritime claimants but more importantly for the reason that when a ship is arrested, a lot of interests are at play. And this can also be understood from the role of shipping industry in international trade and its contribution to revenue pot of the government. Typically, the stakeholders whose interests may be on the line when a ship is arrested range from shipowners, carriers, port operators, cargo-owners, charterers, commercial managers/cargo brokers, crew members, Banks and financial institutions that financed either the cargo or the shipping business amongst other interests. It is therefore expected that the subject of arrest should be viewed more broadly beyond the limited audience of lawyers and their clients. The existing literatures on the subject of arrest and maritime claims suggest an undue emphasis on judicial arrest without the corresponding explanation (even briefly), on the other notion of arrest in maritime lexicon. This op-ed though not attempting to foray deeply into the murky waters of non-judicial arrest, is however, offering different perspectives in ship arrest and the subject matter of in rem action itself which is the ship or other property. It is hoped that subsequent discourse on this subject will offer more detailed exposition on this often-forgotten aspect of maritime experience.

Introduction

It is safe to state that ship is the most important asset in the maritime industry and it comes as no surprise that the subject matter of arrest often revolves around her. Presumptuous as it may sound, the term “arrest of ship” is often taken to mean the judicial arrest. Thus, unless context is offered, the tendency is to presume that all reference to arrest within maritime lexicon is judicial arrest forgetting that the phrase could also lend itself to other meanings not related to admiralty action in rem. Relatedly, the subject matter of admiralty action in rem is not limited to ship as the Admiralty Jurisdiction Act, 1991[1] (“AJA”) talks of “ship” or “other property”. In this essay, the writer seeks to briefly highlight the different perspectives that the phrase “arrest of ship” is often used and also attempt to take the readers through the labyrinth of what constitute maritime claims for the purpose of in rem action.

Perspectival Approach to the concept of Arrest

I have been asked a couple of times, whether a ship can only be arrested with a court order. Definitely, the answer is “No” as the maritime laws confer the power of arrest on regulatory authorities and we shall see anon how such power can be exercised vis-à-vis the judicial arrest. To buttress the point, the tripodal terms “detain”, “forfeit” and “arrest” are often employed interchangeably in the maritime statutes in describing non-judicial arrest, and to mean the seizure of ship. Moreso, there is no definition of “arrest” under the AJA. Semantically, to “detain” and “arrest” are similar in meaning and effect is the confinement or keeping in custody of the subject matter.

The point being made is that the arrest of ship can be viewed from either judicial or administrative-cum-statutory perspectives. The 1952 Arrest Convention[2] defines “arrest” to mean “Any detention or restriction or removal of a ship by order of Court to secure a maritime claim but does not include the seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument.”[3] The Federal Agencies such as NIMASA, Nigerian Port Authority and the Nigerian Navy have statutory powers to arrest and detain ships and the grounds for such arrest may relate to the sea worthiness of the ship or involvement in maritime offences. The Merchant Shipping Act, 2007 and Nigerian Maritime Administration and Safety Agency (NIMASA) Act, 2007 both confer powers on NIMASA to arrest and detain ship in furtherance of its statutory powers.[4]

The exercise of judicial and statutory powers of ship arrest is capable of presenting a conflict situation and section 15 of the AJA in attempt to resolve that possible conflict provides as follows:

Where a law, other than this Act, confers on a person a power to detain a ship:-
If the ship is under arrest under this Act, the power to detain the ship shall not be exercised;
The exercise of the power to detain the ship shall not prevent the arrest of the ship under this Act.
If a ship that has been detained under such a power as is mentioned in subsection (1) of this section, is arrested under this Act, then, by force of this subsection, the detention shall be suspended for so long as the ship is under arrest.
If a ship that has been detained pursuant to a civil claim or would, but for paragraph (a) of subsection (1) of this section, be liable to be detained under such a power, is arrested and sold under this Act, then, the civil claim shall, unless the Court otherwise directs, be payable in priority to any claim against the ship other than the claim of the Admiralty Marshal for expenses.”

As clear as the provisions of sub-sections (1) and (2) of section 15 of AJA may appear, this writer is yet to be see how the practical application will pan out particularly considering the high-handedness of our law enforcement agencies in asserting and guarding their power of arrest and detention generally. Being an uncharted part, it will be interesting to see how it will play out in practical sense. For instance, where the Nigerian Navy arrests and detains a ship for say, on allegation of oil bunkering and a claimant who has a maritime claim against the res subsequently obtains an order of arrest in respect of the same ship. Going by the literal wording of section 15(1)(b) of the AJA, NIMASA or any other Federal Agency’s power to detain such a ship should not prevent the judicial arrest. It is submitted that the legislative intent is to make a court-ordered arrest in maritime claims override the arrest and detention by security or maritime agencies. Any contrary interpretation will produce an absurd result and render toothless the pre-judgment security available to maritime claimants. What is not clear, however, is whether the judicial sale of a ship in satisfaction of maritime claim can be exercised in respect of ship under detention pursuant to the foregoing section. Given the global importance attached to judicial arrest and the pre-judgment security it affords to claimants, it remains to be seen how the Court would approach this issue.

The Subject-Matter of In Rem Action – Ship and Other Property

The AJA used the phrase “ship or other property” in reference to the res that may be the target of arrest in in rem actions.

The AJA defines “ship” to mean “a vessel of any kind used or constructed for use in navigation by water, however it is propelled or moved and includes- (a) a barge, lighter or other floating vessel, including a drilling rig; (b) a hovercraft; (c) an off-shore industry mobile unit; and (d) a vessel that has sunk or is stranded and the remains of such vessel, but does not include a vessel under construction that has not been launched.” Beyond the subject ship which is by far, the commonest res in arrest proceedings, in rem jurisdiction can also be exercised against other maritime property such as cargo, bunkers and freight. For instance, as it relates to freight, an in rem action may be brought against freight that is unpaid (destination freight) and where freight is subject to a maritime lien. A maritime lien attaches to a freight in cases of salvage, damage, bottomry and wages disbursements[5] It has been argued that the maritime lien on freight is parasitic because it is dependent on there also being a maritime lien on a ship that carried the freight.[6] Thus, the fact that “ship” is not the only subject of in rem action is clearly suggested in the phrase “other property” used in the AJA. However, in practice, it appears maritime claimants often prefer to go after ship, as the law and procedure appear much clearer on the subject than it is in respect of other maritime properties.

Scope of Maritime Claims

The admiralty jurisdiction of the Federal High Court as it relates to action in rem, is circumscribed within the maritime claims specified under the AJA[7]. The decision to commence an in rem action should be preceded with a consideration of the scrutiny of the cause of action. The reason is not far-fetched being that it is only the maritime claim that can confer jurisdiction on the Court to make an order for the arrest of ship. Unfortunately, there have been instances where claims have been disguised as maritime claims either deliberately in order to deviously obtain an arrest order or out of ignorance of the practice and laws on the subject. The need for caution cannot be over-emphasied for several reasons. First, a litigant who obtains the arrest of ship wrongly and without the underpinning maritime claim stands the risk of damages for wrongful arrest. Unlike the common law principle established in the Evangelimos case[8] which requires proof of bad faith or mala fide in wrongful arrest claim, the Nigerian law under AJA is a bit more liberal as all the Defendant who seeks damages for wrongful arrest needs to show is that the arrest was unreasonable and without good cause. Second, due to the huge capital-intensive nature and cost associated with ship operations, arrest of ship often exposes maritime stakeholders to unwarranted costs. As noted above, a lot of interests are usually at stake in shipping business – the ship owner, the charterer, the carrier, the crew, the cargo owner, the Bank that financed the importation of the cargo, the mortgagee of the ship in question, etc. These stakeholders stand to lose when a ship is detained for longer than required due to arrest. It is the writer’s suggestion that judges should scrutinize the underlying substantive claim before granting an arrest order. That said, a consideration of the of maritime is important as it will guide the stakeholders in the maritime industry as well as judges, litigants and lawyers involved in admiralty action in rem.

Maritime claim is broadly classified into a proprietary maritime claim and a general maritime claim^[9]. In comparison, proprietary maritime claims are fewer in number and relate to claims directly affecting the ship or res in question such as claims for (i) possession of a ship; (ii) title or ownership of a ship or of any share therein; (iii) mortgage of a ship or of any share therein; (iv) mortgage of a ship freight (v) relating to operation or earning of a ship; (vi) for interest in respect of the afore-stated claims.

Section 2(2)(c) of AJA extends proprietary maritime claim to a claim for the satisfaction or enforcement of a judgment given by the Court or any court (including a court of a foreign country) against a ship or other property in an admiralty proceeding in rem.

By section 2(3) of the AJA, a reference to a general maritime claim is a reference to

a claim for damage done by a ship, whether by collision or otherwise;
a claim for damage received by a ship;
a claim for loss of life or for personal injury, sustained in consequence of a defect in a ship or in the apparel or equipment of a ship;
subject to subsection (4) of this section, a claim, including a claim for loss of life or personal injury, arising out of an act or omission of- (i) the owner or charterer of a ship; (ii) a person in possession or control of a ship; (iii) a person for whose wrongful act or omission the owner, charterer or person in possession or control of the ship is liable;
a claim for loss of or damage to goods carried by a ship;
a claim out of an agreement relating to the carnage of goods or persons by a ship or to the use or hire of a ship, whether by charter-party or otherwise;
a claim relating to salvage (including life salvage of cargo or wreck found on land);
a claim in respect of general average;
a claim in respect of pilotage of a ship;
a claim in respect of towage of a ship or an aircraft when it is waterborne;
a claim in respect of goods, materials or services (including stevedoring and lighterage service) supplied or to be supplied to a ship for its operation or maintenance;
a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched);
a claim in respect of the alteration, repair or equipping of a ship or dock charges or dues;
a claim in respect of a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of any kind, in relation to a ship;
a claim arising out of bottomry;
a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship;
a claim for an insurance premium, or for a mutual insurance call, in relation to a ship or goods or cargoes carried by a ship;
a claim by a master, or a member of the crew, of a ship for- (i) wages; or (ii) an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of employment or by operation of law, including by operation of the law of a foreign country;
a claim for the forfeiture or condemnation of a ship or of goods which are being or have been carried, or have been attempted to be carried in a ship, or for the restoration of a ship or any such goods after seizure;
a claim for the enforcement of or a claim arising out of an arbitral award (including a foreign award within the meaning of the Arbitration and Conciliation Act made in respect of a proprietary maritime claim or a claim referred to in any of the preceding paragraphs;
a claim for interest in respect of a claim referred to in (a) to (t) above.

As seen above, general maritime claims do not directly affect the ship or subject matter in question. Unlike proprietary maritime claims, general maritime claims arise out of damages done to or caused by the ship, the operation of the ship or any agreement relating to or connected with the ship or use of the ship. The common ground in both categories of maritime claim is the fact that they provide maritime claimants the right to proceed against the arrest the res in action in rem.

A claimant who seeks to enforce any of these claims should note the time-limit provided for the enjoyment of the right. The Supreme Court in the case of EGWORABOR & ANOR V. OSANEBI & ORS[10], did state that the law on limitation of action is simply a rule of law, which prohibits the commencement of stale claims. In its operation it extinguishes the right to action but not the cause of action itself, which is rendered bare and unenforceable in a Court of law. The rationale for limitation of time for the commencement of action would seem to be that due to the length of time that must have elapsed, a Defendant, on being confronted with a stale claim, may have lost or due to unavailability of materials evidence or death or unavailability of vital key witnesses, due to no fault of his, necessary for his defense which would have otherwise been available if the claims were commenced timely within the period as allowed under the relevant applicable limitation law.[11]

As noted by a commentator with specialist skills in shipping and maritime law, admiralty actions do not last forever; rather, they have prescribed limitation periods, which often vary depending on the type of claim. A limitation bar, which arises on the expiration of a limitation period, effectively negates the enforcement of a claim, no matter how meritorious. In other words, if a claim is not brought within the time prescribed by the relevant law or contract, a party with an otherwise valid claim will generally lose its right of action on that claim. In order to avoid such a scenario, claimants must take active steps to enforce their maritime claim in court once it arises (or soon afterwards).[12]

Section 18 of the AJA imposes a general limitation of 3 years from the period the cause of action arose for maritime claim and maritime lien or other charge subject however to limitation period specifically fixed by any other enactment. Thus, in determining the limitation period for each head of claim, recourse should also be made to the Merchant Shipping Act, which has some specific provisions for certain claims such as salvage (two years), maritime lien (one year), collisions (two years) and cargo claims (one year). Unlike limitation period in general civil matters which are cast in iron, the Court can exercise discretion to extend the limitation period if sufficient reason is provided[13].

Maritime Lien

This specie of maritime claim deserves further comment due to its peculiarity in admiralty practice. Its uniqueness may be appreciated from the stand point that it hovers over, attaches to and remains with the vessel irrespective of who is in actual possession thereof at any given time.[14] It has also been described as a claim or privilege on a maritime res in respect of service done to it or damage caused by it[15]. Such a lien does not import or require possession of the res, for it is a claim or privilege on the res to be carried into effect by legal process. A maritime lien travels with the res into whosoever possession it may come, even though the res may have been purchased without notice of the lien, or may have been seized by the sheriff under a writ of fieri facias issued at the instance of execution creditors. A maritime lien is inchoate from the moment the claim or privilege attaches, and when called into effect by the legal process of a proceeding in rem, relates back to the period when it first attached. There can be no maritime lien on a res which is not a ship or her apparel or cargo, and if a lien has attached to a maritime res which is sold by the owner, there is no lien against the proceeds of sale since the lien travels with the res. A maritime lien only attaches to the particular res in respect of which the claim arises and not to any other property of the owner.[16] Section 5(4) of the AJA limits maritime lien to only four claims, viz: (1) salvage; (2) damage done by a ship; (3) wages of the master or of a member of the crew of a ship; (4) master disbursements.

With the amendment of the Constitution of the Federal Republic of Nigeria, 1999 to vest employment related matters to the National Industrial Court (NIC), there is been a debate as to which Court now has jurisdiction over claim for wages of the master and crew members. Is it the Federal High Court or the NIC? Even the Courts have not resolved this debate as there appear to be conflicting decisions on the proper interpretation of section 254C (k) of the Constitution vis-à-vis section 5(4) of the AJA. The first decision on the point is the case of Moe oo v. The MV Phuc Hai Sun[17] where the Federal High Court (coram: Tsoho J. (now CJ) was invited to pronounce on its jurisdiction over a matter involving the payment of wages to seamen. After reviewing the relevant provisions, the court held that the fact that the claim relates to foreigners, it does not fall within the ambit of the Section 254C (k) of the 1999 Constitution and such the matter was a maritime claim. Contrast this with the decision in Assuranceforenigen Skuld (Gjensidig) v. MT “Clover Pride” & ors [18] where the same Federal High Court (coram Idris J (now JCA) faced with similar situation held that it lacked jurisdiction over a claim for wages of master or crew members and ordered that the matter should be transferred to the NIC. It is hoped that the Court of Appeal and/or the Supreme Court will have the opportunity to pronounce on the subject as the law is not yet settled on the point. Given the importance of maritime lien to maritime workers whose employers most times are ship owners without any fixed assets or presence within Nigeria, it will be precarious to expect such claimants to approach the NIC to seek remedy which even when gotten may end up being an empty shell as there won’t be any asset to attach within jurisdiction. It is suggested that the Court should adopt a purposive approach to the issue of maritime lien relating to the claims of ship masters and crew members. The alternative would be the amendment of the Constitution to return this aspect of maritime lien within the jurisdiction of the Federal High Court.

Conclusion

The subject matter of ship arrest is as interesting as it is crucial to every stakeholder in the maritime industry. The ratification of the Treaty establishing the African Continental Free Trade Area (“AfCFTA”)[19] by Nigeria is expected to attract further opportunities in the Nigeria maritime sector. When the AfFCTA Treaty[20] is domesticated in Nigeria and becomes fully operational, it is expected that there would be a surge in maritime activities and maritime dispute, which is inevitable. It is therefore important that lawyers who play within this space appreciate the different perspectives to ship arrest and the scope of maritime claims as the consequence of wrongful arrest occasioned by the misapplication of the maritime laws particularly in admiralty action in rem, cannot be over-emphasized. A case has also been made for the Court of Appeal and the Supreme Court to resolve the unsettled controversy surrounding the aspect of maritime lien relating to the claims by ship masters and crew members. Thus, rather than further shrink the scope of maritime lien to only three items under the AJA, this writer suggests for further expansion of same to reflect the developments in other maritime nations particularly the principles enshrined under the 1999 Arrest Convention.

About the Author

Prince is a Partner at The Law Suite (“TLS”) where he has represented and advised local and international clients on a wide range of practice areas such as commercial & investment disputes, maritime & transport, cross-border trades, financial services, capital market, startups, real estate, taxation, data & privacy disputes amongst others. Prince has also advised and represented local and foreign clients on maritime litigation and arbitration as well as claims concerning vessel arrest, ship mortgage, ship sale and purchase, ship building, charterparty and shipping contracts.

[1] Cap A5 LFN 2004

[2] Nigerian is a party to this Convention and the AJA is mirrored after it. Nigeria is not yet a party to the 1999 Arrest Convention which is an updated version of the 1952 Arrest Convention. The fact that Admiralty Jurisdiction Rules, 2011 appears to have proactively adopted some of the principles in the 1999 Arrest Convention

[3] Article

[4] See for instance, section 23(5)(b)&(j) of NIMASA Act which gives the Agency the power, inter alia, to enter, examine, search, seize and detain any vessel within the Nigerian maritime zone. Subsection (5)(e) of the same section also gives NIMASA the right of hot pursuit which under United Nations Convention on Law of the Sea (UNCLOS) and International customary law is the right to pursue and arrest an offending ships escaping to international waters as long as there is inter alia a reasonable ground to believe that the pursued ship has violated the State’s laws. See also the provisions of Cabotage Act and Regulations as well as the Merchant Shipping Act which contain power of arrest, detention and forfeiture of ships by Maritime security agencies.

[5] See The ‘Orpheus” (1871) LR 3 A&E 308 cited in C.O. Ukattah (PhD) “ACTION IN REM UNDER THE NIGERIAN ADMIRALTY JURISDICTION ACT 1991 – SERVICE OF WRIT OF SUMMONS AND STATEMENT OF CLAIM IN AN ADMIRALTY ACTION IN REM: M/T “Ane (Ex M/TLeste & Anor v M/V/ “Dalmar Majuro” & The Owners of the M/V Dalmar Majuro, Unreported, Suit No FHC/L/CS/994/07” – NIALS Maritime Law Journal (NMLJ, Vol 2) (2014) p.116

[6] Ibid – Also see The “Castlegate” (1893) AC 38 (HL)

[7] Note that by virtue of section 1 of the AJA the admiralty jurisdiction of the Federal High Court is wider than the maritime claims under section 2. The admiralty jurisdiction also extends to application by ship owner or aircraft operator for limitation of amount of his liability under the Merchant Shipping Act, any claim for liability incurred for oil pollution, matters arising from shipping and navigation on inland waters under Cabotage Act, any banking or letter of credit transaction involving importation or exportation of goods in ship or aircraft, any action involving NPA, NIMASA and other maritime authorities, any criminal cause or matter arising from the afore-stated admiralty matters. By section 1 (2) of AJA the admiralty jurisdiction of the Court in respect of carriage and delivery of goods extends from the time the goods are placed on board a ship for the purpose of shipping to the time the goods are delivered to the consignee or whoever is to receive them, whether the goods were transported on land during the process or not.

[8] 12 Moo PC 352

[9] MESSRS. NV. SCHEEP 2. VAATMIJ UNIDOR WILIE MSTAD v. THE MV “S.ARAZ” & Anor (2000) LPELR-1866(SC)

[10] (2019) LPELR-48802(CA)

[11] See also ATTIOGBEY V. UBA PLC & ORS (2013) LPELR-20326(CA) where it was held that a statute of limitation is designed to stop or avoid situations where a plaintiff can commence an action anytime, he feels like doing so, even when human memory would have normally faded and therefore failed. Putting it in another language, by the statute of limitation, a plaintiff has not the freedom of the air to sleep or slumber and wake up at his own time to commence an action against a defendant. The different statutes of limitation which are essentially founded on the principles of equity and fair play will not avail such a sleeping or slumbering plaintiff.

[12] Emeka Akabogu “Don’t let your maritime claim expire” https://www.internationallawoffice.com/Newsletters/Shipping-Transport/Nigeria/Akabogu-Associates/Dont-let-your-maritime-claim-expire Accessed 11 March 2020

[13] Op cit Emeka Akabogu

[14] L. Chidi Ilogu SAN “Maritime Liens and Mortgages: The International Perspective” being a paper presented at the 1997 Maritime Seminar for Judges held at Sheraton Hotel Abuja, on 28^th February 1997.

[15] Harmer v Bell, The Bold Buccleugh (1852) 7 Moo PCC 267 at 284

[16] Halsbury’s Laws of England (Butterworths, London) 1997 (Vol. 43(1) page 1273 para1901

[17] Unreported. Suit No: FHC/L/CS/592/11

[18] Unreported. Suit No: FHC/L/CS/1807/17

[19] The initial signing of the Agreement establishing AfCFTA by the 44 member States should not be confused with the subsequent ratification that gave legal teeth to the Treaty. The understanding was that the proposal would come into force 30 days after ratification by 22 of the signatory States. Article 12 (2) (b) of Vienna Convention on the Law of Treaties, 1969 (also known as Treaty of Treaties), is to the effect that where the signature is subject to ratification, acceptance or approval, the signature does not establish the consent to be bound. However, it is a means of authentication and expresses the willingness of the signatory state to continue the treaty-making process. The signature qualifies the signatory state to proceed to ratification, acceptance or approval. It also creates an obligation to refrain, in good faith, from acts that would defeat the object and the purpose of the treaty.

[20] The Treaty came into effect on 30 May 2019 after Gambia^[20] became 22^nd State to ratify it. Gambia ratified the Treaty on 02 April 2019 becomes fully operational, it is expected that there would be a surge in maritime activities and maritime dispute, which is inevitable. It is therefore important that lawyers who play within this space appreciate the different perspectives to ship arrest and the scope of maritime claims as the consequence of wrongful arrest occasioned by the misapplication of the maritime laws particularly in admiralty action in rem, cannot be over-emphasized. A case has also been made for the Court of Appeal and the Supreme Court to resolve the unsettled controversy surrounding the aspect of maritime lien relating to the claims by ship masters and crew members. Thus, rather than further shrink the scope of maritime lien to only three items under the AJA, this writer suggests for further expansion of same to reflect the developments in other maritime nations particularly the principles enshrined under the 1999 Arrest Convention.

About the Author