The subject of ship arrest is of paramount importance to the international shipping and trading community. It is also an area that traditionally has been subject of divergent approaches by different legal systems. Civil law systems allow arrest for any claim against the owner of the ship even if it was not maritime; while in common law, a ship could only be arrested for a very limited number of maritime claims. Moreover, the interests of the different components of the industry also vary considerably concerning the subject. While the interest of owners of ships and cargo lies in ensuring that international trading is not interrupted by the unjustified arrest of a ship, the claimants are primarily interested in being able to obtain security for the enforcement of their legitimate claim by way of arrest.
Legal framework for the arrest of ships
Nigeria is a state party to the 1952 International Convention for the Unification of Certain Rules Relating to the Arrest of Sea-Going Ships (otherwise known as “the Arrest Convention”). It acceded to the Convention in November 1963, even though the Convention only became effective in Nigeria after the enactment of the Admiralty Jurisdiction Act 1991. However, Nigeria is yet to accede to the 1999 Arrest Convention which is the successor to the 1952 Convention. Ship arrest in Nigeria is currently governed by the Admiralty Jurisdiction Act (AJA) and the Constitution of the Federal Republic of Nigeria 1999 (as amended) (CFRN). By virtue of Section 251 (1) (g)of the CFRN, the Federal High Court has exclusive jurisdiction to entertain maritime claims, and the Admiralty Jurisdiction Procedure Rules (AJPR) as well as the Federal High Court (Civil Procedure) Rule 2019 apply in such matters.
Conditions for filing an application to arrest a ship
For a Plaintiff or Claimant to validly invoke the maritime jurisdiction of the Federal High Court for the arrest of a ship, there must exist a “Maritime Claim” as provided under Section 2 of the Admiralty Jurisdiction Act (AJA). A Maritime Claim must either be a “proprietary maritime claim” or a “general maritime claim.
a. Proprietary maritime claims? A proprietary maritime claim refers to claims that are based on the proprietary interest of the ship. These are claims that relate directly to a ship’s res or subject matter, such as claims regarding ship possession, ownership and operation. It also includes claims related to ship titles, ownership of shares in a ship, mortgages on ships or shares in ships, mortgages on ship freight, and disputes between co-owners regarding ship possession, ownership, operation or earnings. Moreso, claims 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 are under the purview of proprietary maritime claims.
b. General maritime claims? General Maritime Claims as the name suggests are mostly all-encompassing and they involve claims for (a) damage done to or received by the ship; (b) loss of life, personal injury or damage due to a defect in the ship or its equipment, or omission of the owner or charterer; (c) loss of or damage to goods carried by ship; (d) general average, pilotage, or towage of the ship; (e) supply of goods or services for the ship’s operation or maintenance; (f) construction, alteration, repair or equipping of the ship; (g) charges or dues for port, harbour, canal or light tolls; (h) bottomry or disbursements by the master, shipper, charterer or agent; (i) insurance premium or claim for a mutual insurance call; (j) claim for wages or an amount owed to an employee of the ship; (k) forfeiture or condemnation of the ship or its carried goods, or restoration of the ship or such goods after seizure; (n) enforcement of an arbitral award, including a foreign arbitral award.
From the foregoing heads of claims enumerated above, a Plaintiff or Claimant that has a maritime claim or cause of action that is covered by the above-listed heads of claims may commence an action to arrest a ship if she is within the jurisdiction of the adjudicating Federal High Court or expected to arrive within three days at the time of filing of the Application to arrest the ship.
Also, it is noteworthy that an action to arrest a ship (admiralty proceedings) can be commenced either as an action in rem (i.e., against the ship or its cargo) or in personam (i.e., against the named shipowners or charterers). Whereas a proprietary maritime claim relates to claims that border on the possession of a ship; (a) title to or ownership of a ship or of a share in a ship; (b)mortgage of a ship or of a share in a ship; (c)mortgage of a ship’s freight; (d)claims between co-owners of a ship with respect possession; (e)ownership; (d) operation or earning of a ship and claims for interest in respect of any of the subjects listed in paragraphs (a) to (d) above can be commenced either as an in rem or as an in personam action without any conditions.
On the other hand, a general maritime claim under Section 2 of the AJA can only be commenced as an in rem action where the person who would be liable for the claim in an action in personam (in the AJA referred to as “the relevant person”) was, when the cause of action arose, the owner or charterer of or in possession or in control of the ship, or if at the time the action is brought, the relevant person is either the beneficial owner of that ship in respect of all the shares in it or the charterer of the ship under a charter by demise. The only other class of action that can be commenced in rem against a ship irrespective of the rule regarding the relevant person and beneficial ownership is an action to enforce a “Maritime Lien.” A “Maritime Lien” is defined under Section 5 (3) AJA to include: a lien for
(a) salvage; or
(b) damage done by a ship; or
(c) wages of the master or of a member of the crew of a ship; or
(d) master’s disbursements.
Section 67 of the Merchant Shipping Act (“MSA”) further extends the above list to include claims for loss of life or personal injury occasioned in connection with the operation of a ship, claims for wreck removal as well as claims for ports, canal and waterways dues and pilotage dues.
In the next part of this article, we will examine the procedure and sale of arrested ships.
PROCEDURE FOR ARREST OF A SHIP
As noted in the initial article, the Admiralty Jurisdiction Procedure Rule 2011 as well as the Federal High Court Civil Procedure Rule 2019 are the primary procedural laws regulating the arrest of a ship in Nigeria. The following procedure is imperative in the arrest of a ship:
1. Invoking the in-rem Jurisdiction of the Court: As observed earlier, a Plaintiff or Claimant must first be satisfied that he has a maritime claim before the admiralty jurisdiction can be invoked.
2. Conducting Search in the Caveat Register: Due diligence in ship arrest proceedings is very important, as such, before the filing of an application for the arrest of a ship or institution of an action in rem, the plaintiff is mandated to search the caveat register and file a consequential affidavit deposing to facts that a search was conducted and attaching the necessary evidence. The plaintiff’s failure to search the caveat register before arresting the ship may result in a claim for unlawful arrest by the relevant person or the defendant due to bad faith or gross negligence. When a plaintiff searches the caveat register and finds a caveat against arrest, they must disclose it in their affidavit and present arguments to convince the court to order an arrest of the ship despite the caveat.
3. Filing the necessary Originating Processes in Court: The Claimant is required to file a motion ex parte for a warrant of arrest in respect of the ship or other property against which the proceeding was commenced, provided that during the time of the application, the ship or other property is within Nigerian territorial waters or is expected to arrive within Nigerian territorial waters within three days from the time of filing the application. The application should be accompanied by a writ of summons as in the prescribed Form 1, a Statement of Claim, and a copy of all documents to be used at the trial, as well as written statements on oath of the witnesses that will be relied upon at trial. The Plaintiff is also required to file an Affidavit of Urgency, an Indemnity in favor of the Admiralty Marshall for expenses incurred in effecting the arrest order, and an undertaking as to damages in favor of the Defendants, in case the arrest warrant turns out to be frivolous and unwarranted.
4. Issuance of Arrest Warrant: The Court upon satisfaction that the claim was properly instituted, and that all requirements of the law were observed, will issue the warrant of arrest as in Form 7. The warrant will be valid for a period of 6 months from the date it was issued and may be renewed for another period of 6 months. It is important to note that a change in ownership may prevent the arrest of a ship, therefore a warrant of arrest of a ship may not be issued where the beneficial ownership of the ship has, since the issuance of the writ of summons, changed as a result of a sale or disposal by any court exercising admiralty jurisdiction. It is, however, the duty of the new owner to inform the Federal High Court of his ownership of the ship to prevent the arrest of his ship.
5. Execution of the Arrest Warrant: The Admiralty Marshall or his substitute is saddled with the responsibility of execution of the arrest warrant. Under custody and sale of the ship, an Admiralty Marshall may accept an amount of money not less than N100,000.00 and not more than N500,000.00 as a deposit towards discharging the liability, and make more demands fortnightly for payment on account of those expenses.
6. Vacation of Arrest Warrant: An order of arrest of a ship or other property is not a final decision of the Court in the in-rem action and as such, when either of the prescribed conditions through a written application by the defendant is met, the arrest will be vacated, provided that:
a. an amount equal to (i) the amount claimed; or the value of the ship or property, whichever is the less (ii), has been paid into court; or
b. a bail bond for an amount equal to (i) the amount claimed; or the value of the ship or property, whichever is the less (ii), has been filed in the proceedings.
SISTER SHIPS AND ARREST OF SISTER SHIPS
A sister ship is simply a ship owned by the same owner or the same set of owners against whom the maritime claim exists. The doctrine of the arrest of the sister ship requires that in circumstances where the offending ship does not lie within the Court’s jurisdiction, any other ship belonging to the offending ship owner that may appear within the jurisdiction of the Court can be legally arrested as the offending ship, provided that the other ship is in the same beneficial ownership as the offending ship. This implies that the sister ship must be owned by the same relevant person or defendant who owns the offending ship for the arrest of the sister ship to be effective.
SALE OF SHIP BY JUDICIAL ORDER
The Judicial Sale of a ship is another important provision in the AJPR. The AJPR empowers the Court, upon the application of the arrestor or other interested party to order the Sale of a ship if bail or sufficient security has not been provided 6 months after the date of arrest. The ship is to be sold by the Admiralty Marshal and the proceeds of Sale paid into an interest-yielding fixed deposit account in the name of the Admiralty Marshal, pending further orders of the Court. a
SHIPS EXEMPTED FROM ARREST AND DAMAGES FOR WRONGFUL ARREST
Certain ships, such as those used by the Nigerian Navy or belonging to the state or Federal Government, cannot be subject to maritime proceedings or arrested under relevant Maritime Laws. If they commit any wrong, they are exempt from detention, arrest, and judicial sale. Therefore, an action in rem cannot be proceeded against such ships.
The law also recognizes situations where a Plaintiff may make a frivolous and baseless maritime claim for the arrest of a ship. In such cases, the law provides remedies to the aggrieved defendant for wrongful arrest. Accordingly, where an arrest order has been made, the Court may award compensation to the defendant and damages against the Plaintiff if it later appears that the arrest was applied for on insufficient grounds or if the suit is dismissed and there was no probable cause for instituting it. The compensation is intended to cover any loss or injury suffered by the defendant as a result of the arrest, attachment, order of sale, or injunction and is awarded at the Court’s discretion upon application by the defendant within 3 months of the termination of the suit. However, it is crucial to note that only a demise charterer or the owner of an arrested vessel possesses the requisite legal capacity to maintain an action for wrongful arrest. Moreover, for an action for wrongful arrest to succeed, the alleged damage suffered as a result of the wrongful arrest must be proved by credible evidence.
CONCLUSION AND RECOMMENDATION.
The admiralty industry and jurisprudence have experienced significant growth over the years, thanks to new rules and the proactive attitude of courts towards maritime claims, particularly on the practice of ship arrest. Over time and even currently, courts have expounded on the law and practice of arresting ships, however, there is a need for a more efficient and seamless system for the institution of maritime claims. It is imperative to provide continuous legal education and training to all personnel and stakeholders involved in admiralty proceedings to ensure efficient practice in Nigeria. This could be achieved by the joint effort of the relevant bodies such as the Judiciary, the Nigerian Maritime Administration and Safety Agency (NIMASA), the Nigerian Shippers Council (NSC) and the Nigeria Bar Association (NBA). Furthermore, establishing a separate Admiralty Registry in Nigeria, which is accessible to all the Federal High Court divisions situated near seaports, is an urgent necessity. This will guarantee the smooth discharge of duties by the Admiralty Marshall, who bears immense responsibilities of enforcing judgments and orders of the Court in maritime and admiralty cases.
Joseph Siyaidon is the Team Lead of the Arbitration, Maritime Construction and Energy Disputes Practice Group at Stren & Blan Partners while Stanley Umezuruike is an Associate in the firm’s Arbitration, Maritime Construction and Energy Disputes Practice Group.
Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners dedicated to providing thought leadership insight on business and legal matters.
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