EXAMINATION_OF_THE_NOVEL_PROVISIONS_OF_ADIRIMALTY_JURISDICTION_PROCEDURE_RULES
INTRODUCTION
The maritime sector is recognized as the lifeblood of global economy, connecting nations and facilitating international trade. It accounts for the transportation of over 90% of the world’s goods, providing employment opportunities and contributing to economic growth. The sector’s efficiency and adaptability are vital for global supply chains and ensuring the smooth flow of goods across continents.
In Nigeria, the government has, presently, realized the potential of the maritime sector to become a significant contributor to the nation’s GDP by creating a Ministry of Marine and Blue Economy for the first time in Nigeria’s history to oversee the government’s vision for the sustainable use of the nation’s ocean and coastal resources for economic growth.
The Nigerian Judiciary has now gone a step further by updating the Admiralty Procedure Rules in the Nigerian maritime industry to enhance efficiency, ensure legal clarity, and foster a conducive business environment for stakeholders in the sector. This came about as a result of the enactment of the AdmiraltyJurisdiction Procedure Rules, 2023 (“the AJPR 2023 or the Rules“), by the Honourable Chief Judge of the Federal High Court, Justice Terhiemba Tsoho, FICMC, OFR, in the exercise of the powers conferred upon him by Section 254 of the Constitution of the Federal Republic of Nigeria (As Amended) and Section 21of the Admiralty Jurisdiction Act 1991 (AJA). The AJPR 2023 has now repealed the Admiralty Jurisdiction Procedure Rules of 2011 (“the AJPR 2011”). It seeks totransform the Admiralty Practice and Procedure at the Federal High Court in line with global best practices, thereby providing the legal regime with the necessary tool to reposition Nigeria as the leading maritime hub in Africa. This article embarks on a comprehensive examination of the novel provisions of the AJPR 2023, delving into the intricacies and implications of the recent amendments, shedding light on how they shape the course of maritime legal proceedings and influence the broader scope of admiralty jurisdiction.
NOVEL PROVISIONS OF THE AJPR 2023.
As noted above, the AJPR 2011 has been repealed and replaced by the AJPR 2023, and the novel provisions of the AJPR 2023 are the following:
1. THE ESTABLISHMENT OF ADMIRALTY DIVISIONS AND THE DESIGNATION OF ADMIRALTY JUDGES: While Order 23 rule 3 of the repealed AJPR 2011 merely provided that the Chief Judgeof the Federal High Court (“the CJ”) should designate the Divisions of the Court where the Admiralty Registry shall be located, under the AJPR 2023, the CJ is now mandated to establish Admiralty Divisions for the Court anddesignate Judges of the Federal High Court as Admiralty Judges. This provision has been celebrated by stakeholders as an innovative and proactive measure to enthrone specialism in the administration of justice for Admiralty cases. This is because Admiralty Practice and Procedureare globally recognized as being sui generis (in a class of its own), and as such, Judges who are assigned to preside over Admiralty cases should rightly be specialists in Admiralty proceedings and be abreast with the nuisances of the Maritime industry in Nigeria.
2. ESTABLISHMENT OF THE ADMIRALTY REGISTRY AND THE HEAD OF THE ADMIRALTY REGISTRY: Order 2B Rule 3 and 4 of the AJPR 2023, has mandated the CJ to issue directions to establish the Admiralty Registry of the Admiralty Division of the Courtand the Admiralty Marshal or his substitute shall be the head of the Admiralty Registry of each Admiralty Division.The Rules also enumerated the duties of the Admiralty Marshal which include: service of initiating processes; execution of arrest warrants; retaining and preservation of ship or property under arrest; removal from the ship, an arrest cargo; removal of cargo from arrested ship; arranging for the release or valuation of a ship upon order of the court; filing a return of sale and account of sale for taxation; payment of proceeds of sale of the ship into the account of the Court.
3. VALIDITY OF WARRANT OF ARREST IRRESPECTIVE OF TRANSFER OF ACTION: The AJPR 2023, retains the position that an admiralty action in rem may be commenced in the Judicial Division of the Court in which the res may be found or is expected to arrive. However, the Rules have introduced two innovative provisions to ease the challenges faced by Plaintiffs by first ensuring the preservation of arrest warrants even when an admiralty action in rem is not commenced in a Judicial Division where the subject of the maritime res is located or expected to arrive. In such a case, the APJR 2023 makes provision for the transfer of the warrant of arrest to the appropriate Judicial Division where the subject of the maritime res is located or expected to arrive, and the warrant of arrest shall remain enforceable against the res in any Judicial Division in which the res may be located.
Secondly, where a suit is commenced in any Judicial Division other than the Judicial Division where it ought to be commenced, the Rules provide that the suit may be heard and determined in that Judicial Division unless the Court directs otherwise. This position lays to rest the controversy under Order 2 Rule 3 of the AJPR 2011, which empowers a Defendant to challenge the Court’s jurisdiction to hear a suit that is commenced in any Judicial Division other than the Judicial Division where it ought to be commenced.
4. DOCUMENTS TO BE FRONTLOADEDALONGSIDE THE WRIT OF SUMMONS IN AN ACTION IN REM: The AJPR 2023 has further noted that alongside the Writ of Summons (Form1), other Originating Processes such as Statement of Claim; List and copies of documents to be relied on at trial; A list of non-documentary exhibits; and List of witnesses to be called at the trial. This introduction was pertinent to streamline the documents to be frontloaded before the Court and to make for an efficient litigation process.
5. INTRODUCTION OF NOTARIZATION OF WITNESS STATEMENT ON OATH FOR WITNESSES NOT WITHIN JURISDICTION AND SUBPOENAED WITNESSES: Under the AJPR 2023, Witness Statement on Oath of witnesses who are not within the jurisdiction of Nigeria, that is who is in a foreign jurisdiction can now be signed and notarized before a Notary Public or any person authorized to administer oaths in such foreign jurisdiction. The Rules also remove the need to file witness statements on oath for witnesses whoare subpoenaed at the commencement of the action for an action in rem or in personam which is commenced by a Writ of Summons. Moreover, a party who intends to subpoena a witness shall now serves such witness with a Form 3 (Summons to Witness Requiring Subpoena) filing the statements of such witness.
6. ORGINATING PROCESS FOR AN APPLICATION FOR THE RECOGNITION OR ENFORCEMENT OF AN ARBITRATION AGREEMENT OR AWARD: The AJPR 2023, has provided that where a party intends to file an application for the recognition or enforcement of an arbitration agreement or arbitral award made in relation to any maritime claim in any domestic or foreign arbitration proceeding, such party shall make such application by way of an Originating Motion.
7. IDENTIFICATION OF PARTIES IN ACTION IN REM: The AJPR 2023 has abolished the previous requirement of specifying the relevant person as a defendant, on the Plaintiff in an action in rem in relation to a proprietary maritime claim. The only parties to be specified as the Defendant by the Plaintiff in the Writ of Summons are the Ship or Other property. However, this abolishment does not apply to an action in rem in relation to a general maritime claim, as in addition to specifying the ship or other property, a relevant person must be specified as a Defendant by the Plaintiff vide the Writ of Summons.
8. SERVICE OF COURT PROCESSES ON OWNERS OF SHIP AND PROPERTY: The AJPR 2023 further restatesthe medium of Service of Writ of Summons in proceedingscommenced as an action in rem against a ship or other property that is at the time of service on board a ship. TheRules provide that such service shall be by securely affixing a sealed copy of the process to a mast or some other conspicuous part of the ship, or delivering the same to the master of the ship. An interesting and novel introduction to the rules is that the medium of service of the Writ as described above shall act as sufficient service on the owners of the ship or other property.
In the same vein, the Rules state that the medium of service of a Writ of Summons in a proceeding commenced as an action in rem against any property that is not at the time of service, on board a ship shall be served by securely affixing the sealed copy of the Writ to the property or a package or container or on the storage facility containing the property.
The Rules further provide that the medium of service as noted above will constitute sufficient service on the owners of the property.
Furthermore, unlike the provisions of Order 6 Rule 4 of the AJPR 2011, which requires every Court order for arrest of a ship or other property to be served on the appropriate officer of the Nigerian Ports Authority without providing a clear definition of who that officer should be, the Rules has clarified the position by expressly stipulating that the Harbour Master of the Nigerian Ports Authority is the appropriate person to be served with a copy of the Court order for arrest in every arrest of a ship or other property.
9. RECOGNITION OF PHYSICAL SERVICE AND SERVICE OF COURT PROCESSES BY EMAIL OR ON COUNSEL: The AJPR 2023, mandates that a Writ of Summons, a Court order of arrest, and a warrant of arrest in an action in rem, be served through physical service. It is noteworthy that the Rules embraced a digital approach allowing for other Court Processes in an action in rem to be served on the Defendant through the Defendant’s email address. Also, the Rules recognize the role of the Legal Practitioner in representing the Defendant, thus the Rulesallow such other Court Processes to be served on and received by the Defendant’s Lawyer.
10. MEDIUM OF SERVICE IN CERTAIN CIRCUMSTANCES: The AJPR 2023, notes that where an action in rem is commenced against the ship or other property which has been abandoned in Nigeria or in personam is filed against the Defendant who does not reside in or carry on business in Nigeria through an agent, the Court may order service on such Defendant or owner of ship or other property and such service shall be done at the last known address of the Defendants business and which shall be delivered by Courier between Nigeria and in the Country of business. Alternatively, the service shall be by any mode as accepted by the Court.
11. ARRESTING A SHIP AND OTHER PROPERTY: The AJPR 2023 has taken a clue from the recent introduction of electronic filing (“e-filing) in the judicial division of major commercial hubs of the Country, by making provisions for the physical (to be done at the Admiralty Registry) or e-filing (to be done at the Admiralty E-filing Unit) of ex parte applications for a warrant arrest of a ship or other property. Such e-filed ex-parte application must be in PDF(Portable Document Format) and shall be sent to the email address as shall be provided by the Admiralty Registry. Also, as is the practice with e-filing, fees payable for the Court Processes shall be assessed and paid online.The Rules have mandated that where it is practicable, such application shall be heard and determined within twenty-four (24) hours timeline from the date of filing, and such proceedings may be conducted physically or virtually on any day, including Sundays and public holidays
Furthermore, to maintain the standard of due diligence in applications for the arrest of a ship or other property, the Rules mandates that before a warrant of arrest is issued, the applicant must apply for a search to be made in the caveat book to determine whether or not there is a caveat against the arrest of such ship or other property. Upon such application for search, the Admiralty Registry is to issue a report of the search and such report shall be in Form 8A(Report of Search of Caveat Against Arrest Register).This is an improvement from the controversial position under the AJPR 2011, where it is the Plaintiff that is required to file an affidavit stating whether or not there is a caveat against the arrest of such ship or other property. This position was susceptible to manipulation as in many cases, the Court may not be provided with the correct information.
Notably, it is not in every circumstance that a warrant of arrest may be issued by the Court exercising the admiralty jurisdiction. The Rules make an exception that where an action is not an action in rem based on a maritime lien commenced in relation to a general maritime claim, a warrant of arrest shall not be issued where the beneficial owner of the ship or other property has changed since the issuance of the writ of summons as a result of sale or disposal. This provision has been retained in the Rules to protect the interests of vessel purchasers (and their financiers).
12. WARRANT OF ARREST FOR CROSS BORDER COURT PROCEEDINGS AND NIGERIAN OR INTERNATIONAL SEATED ARBITRATIONS: The AJPR 2023 has enthroned a streamlined process of obtaining a warrant of arrest for ships or property related to Court Proceedings outside Nigeria or Arbitration proceedings within or outside Nigeria. The provision ensures efficiency by allowing the Applicant to file such an application without commencing a separate action. The Rules mandate that such an application will be accompanied by the certified true copy (CTC) of the Court or Arbitration Processes, and a duly notarized undertaking as to indemnity if later found that the order for arrest should not have been made.
13. CAVEATS CANCELLATION AND RELEASE OF ARRESTED SHIP OR OTHER PROPERTY: The AJPR 2023 provides for a clear consequence of a caveator’s failure to adhere to the obligation to provide the security in its filed caveat against arrest within the timeframe provided. Such failure will necessitate the cancellation of the caveat, and the non-compliance shall be equated to the failure of the caveator to appear in the proceedings within the stipulated timeframe and the caveat shall be deemed canceled.
In the same vein, the Rules provide that in case where a ship or property is under arrest, a person can file a caveat against the release from arrest. Pursuant to the Rules, a person having a claim against a ship or other property that is under arrest may, on providing an undertaking in damages, file in court a caveat against the release of the ship or other property in lieu of a further arrest of that ship or other property, provided that: (a) the caveator has not commenced an admiralty action in rem before filing the caveat against the release from the arrest of the ship or other property; or (b) where security is furnished in relation to a caveat against release from arrest; the caveator shall file an action in rem in respect of the claim for which the caveat against release was filed within fourteen (14) days of the issuance of the security, otherwise the security shall forthwith be canceled and released by the Admiralty Marshal to the party that furnished it.
14. MANDATORY FILING OF REPORT BY ADMIRALTY MARSHAL ON ARRESTED SHIP OR OTHER PROPERTY TO THE COURT: The AJPR 2023 mandates the Admiralty Marshal to prepare and file monthly reports detailing the location, security status, and conditions of the arrested ship or other property to the Court/Judge who issued the arrest warrant and forthwithdeliver the report to the parties to the suit or as the Court may order. This is innovative as it ensures transparency and accountability within the system.
15. PRESERVATION, MANAGEMENT, AND SALE OF ARRESTED SHIP OR OTHER PROPERTY: Under the new AJPR 2023, the Court is at any stage of proceedingsempowered to issue orders concerning the preservation, management, or control of an arrested ship or other property. This includes instances where the party responsible for the arrest fails to cover the Admiralty Marshal’s ongoing expenses, thus in such instances, the Admiralty Marshal is allowed to seek the Court’s directives. Notably, if a ship or other property remains under arrest for over 60 (Sixty) days without the owners providing security for its release, the Court may on the application of the arrestor or other interested partyauthorize its sale by the Admiralty Marshal. The proceeds are then deposited into an interest-yielding fixed account under the Admiralty Marshal’s name until furtherinstructions from the Court. This provision ensureseffective control and management of arrested assets, offering a balanced approach to the complexities of maritime proceedings.
16. DAMAGES FOR NEEDLESS ARREST: Notably, as has been the tradition, the AJPR 2023 frowns against arrest, attachment, order of sale, or injunction obtained negligently, unlawfully, or in bad faith by an Applicant. The Rules further permit the Defendant to institute an action against an Applicant for wrongful arrest and for reasonable damages and compensation to be awarded in favour of the Defendant by the Court for any loss, injury, or expenses sustained as a result of the negligent and unlawful Application.
However, the Rules has now departed from the former test of determining a wrongful and unlawful arrest, which was “unreasonably and without good cause” to “bad faith or in gross negligence, or unlawfully”. Some stakeholders have raised concerns about the departure from the ‘unreasonably and without good cause’ test to the “bad faith or gross negligence test because, in their view, the unreasonably and without good cause’ test was better because it was less cumbersome to establish. Moreover, it appears that the “bad faith or gross negligence test introduced by Order 11Rule 2(a) of the AJPR 2023, conflicts with the provision of Section 13 of the Admiralty Jurisdiction Act 1991 (AJA),which still has the ‘unreasonably and without good cause’ test as the fundamental basis for determining wrongful arrest. Thus, while this conflict may result in some confusion, it will be left for the Federal High Court and the appellate Courts to determine whether to follow the ‘unreasonably and without good cause’ test stipulated underSection 13 of AJA or to follow the “bad faith or gross negligence test introduced by Order 11 Rule 2(a) of theAJPR 2023. What every ship owner or charterer needs to know for now is that sufficient evidence will always be required to show that an arrest was indeed wrongful, and in other to be entitled to damages for wrongful arrest, theymust also provide sufficient evidence to show that theyhave either incurred expenses or lost business as a result of the wrongful arrest. Indeed, the Supreme Court held in the case of O.A.N. Overseas Agency (Nig) Limited v. Bronwen Energy Trading Limited & Ors, that any alleged damagessuffered as a result of wrongful arrest must be proved by credible evidence.
17. EXPLAINER AS TO WHOM AN INTERVENER:The AJPR 2023 has cleared the ambiguity as to the sort of persons referred to in Order 18 of AJPR 2011 and Order 18 of the Rules as an intervener. The Rules, in the interpretation part, defined an Intervener as follows:
“Intervener” in relation to a proceeding or a ship or other property under arrest means any person not named in the writ of summons in an admiralty action in rem who is interested in the res under arrest or in the fund at the Admiralty Registry and includes mortgagees, trustees in bankruptcy, underwriters who have accepted abandonment, charterers, persons who have possessory liens or competing maritime liens, and generally persons who are plaintiffs in other actions in rem against the same property”.
18. ORDER OF PRIORITY OF CLAIMS AGAINST A SHIP OR OTHER PROPERTY: An arrested vessel may have various competing interests, thus the AJPR 2023 has now empowered a person who has obtained an enforceable judgment in any court, including a foreign court against the vessel to apply to the Court for the determination of the order of priority of claims against the arrested vessel. The Rules note that the order of priority of claims against such arrested ship or other property includes:
a) Statutory/court charges and expenses like the Admiralty Marshall’s expenses in connection with the ship or property;
b) salvage, wreck removal, and contribution in general average;
c) wages and other sums due to the master, officers, and other members of the ship’s complement in respect of their employment on the ship;
d) disbursements of the master on account of the ship;
e) loss of life or personal injury occurring whether on land or water in direct connection with the operation of the ship;
f) ports, canal, and other waterways, dues, and pilotage dues;
g) possessory liens (repairer’s lien – where the ship is still in possession);
h) mortgages – priority of mortgages is determined by the date on which each mortgage is recorded in the register and registered mortgages have priority over unregistered mortgages;
i) in rem action for possession or ownership of a ship;
j) in rem action in relation to a dispute between co-owners, possession or use of a ship;
k) in rem action in relation to loss or damage to cargo carried on a ship;
l) lien in rem action in relation to damage received by a ship;
m) in rem action in relation to a dispute arising out of contracts for carriage of goods or use of a ship; and
n) in personam action.
The above priority of claim is important as it will guide the Court and parties with interest in the ship or other property on the priority of claim and is also in line with international best maritime practices.
19. INCREASED CLAIM THRESHOLD FOR SECURITY FOR COST: Formerly under the AJPR 2011,the Rules set the threshold of the claim of the Plaintiff to above N5,000,000, to necessitate the payment of security for cost in action in rem, However, this threshold has been increased in the AJPR 2023, as the Rules now require the plaintiff’s claim to exceed 10 million naira or its foreign currency equivalent, for the court to order the payment of security for cost. This provision is a welcome development, especially due to the seeming fluctuation and inconsistency of the naira currency against other popular international trading currencies. Interestingly, the Rules have also recognized that interest rates are not stable, especially with the economic realities, there it has provided that in determining the quantum of security to be provided, the Court shall have regard to all the circumstances of the case, including the interest rate, if any, payable by the defendant to a bank or other financial institutions.
CONCLUSION
The AJPR 2023 has established a new and progressive legal regime for Admiralty Proceedings in Nigeria. With visionary amendments and innovation, the Honourable Chief Judge of the Federal High Court, has steered our legal framework into alignment with contemporary maritime realities. From the establishment of Admiralty Divisions to the innovative approach in service of court processes, the Rules demonstrate a proactive commitment to efficiency and transparency. As the maritime industry evolves, these novel provisions offer a robust foundation for effective dispute resolution, ensuring Nigeria’s continued prominence in the global maritime landscape.Therefore, it is advised that all stakeholders in the maritime sector, including legal practitioners, shipping companies, and other relevant parties, familiarize themselves with the Rules to effectively navigate the intricacies of maritime legal proceedings.