Shipping finance transactions are characterised by peculiar risk factors principally on account of shipping assets' transient operations. The applicable rules and mercantile uses – reflective of this reality themselves – must therefore be adequately factored into financiers' lending procedures and loan recovery strategies, whether they be banks or private investors. This article offers helpful guidance to such lenders.
In a recent ruling concerning a claim for crew wages, the National Industrial Court held that Section 254C(1)(a) of the Constitution clearly vests the court with the exclusive jurisdiction to hear and determine civil causes and matters relating to or connected with labour, employment, trade unions or industrial relations and matters arising from the workplace. The claim in question was for N500 million in compensation for the defendant's failure to observe safety standards and procedures during a fumigation exercise.
The president recently announced that only cargo vessels which have been at sea for more than 14 days can dock in Nigerian ports. The 14 days referred to by the president will start from the last port of call, which means that vessels trans-shipping in Tema or Cotonou before arriving in Nigeria will be subject to delays of at least 12 days before berthing. However, most shipowners have drafted clauses to excuse themselves and their ship from any liability arising from delays caused by COVID-19.
Persons claiming against ships should be careful to comply with the detailed procedural requirements, otherwise valid claims may be compromised by the additional possibility of liability in damages. Ship interests equally need not go into panic mode on the arrest of the ship. A detailed review of the processes filed for compliance or non-compliance with arrest procedures should be the first step, possibly coupled with other extenuating measures.
A caveat registered in the courts serves to prevent a ship's arrest by committing to pay a bond for any sum claimed against the ship which is equal to or less than the amount stated in the caveat. Entering a caveat against release does not automatically entitle the caveator to the security flowing from a ship in respect of which a caveat has been entered. A request for security can be made only when there is a subsisting claim against the ship in respect of which the caveat is entered.
The general Nigerian economic landscape could be seen as challenging, but its robustness and potential make it worthwhile for parties that do their research. As the Nigerian ship charter market is estimated to be worth at least $10 billion, there is a lot of potential for interested parties to benefit.
The president recently assented to the Suppression of Piracy and Other Maritime Offences Bill, successfully concluding almost a decade of advocacy to implement such a law in order to curb and deter sea piracy, armed robbery and other unlawful acts at sea. The new law has ended the controversy around whether the crime of sea piracy is defined in any local legislation and bestowed on the Federal High Court exclusive jurisdiction to determine matters of armed robbery and other unlawful acts at sea.
Wrecks pose a real danger to navigational safety and the marine environment and their expeditious removal, control and management is therefore a key concern. The issue of wreck control in Nigeria has been the subject of an increasingly fierce conflict between the Nigerian Inland Waterways Authority, the Nigerian Maritime Administration and Safety Agency and the Nigerian Ports Authority.
A tripartite arrangement between the Federal Ministry of Finance, the Customs Service and the Nigerian Maritime Administration and Safety Agency (NIMASA) seeks to encourage the expansion of Nigeria's indigenous fleet by creating a special tariff regime for vessel acquisition in the country. According to NIMASA Director General Dakuku Peterside, the high cost of vessel acquisition is gradually driving away many indigenous players in the maritime sector.
The Nigerian Maritime Administration and Safety Agency has announced a five-year strategic plan to stop the issuance of cabotage waivers. This plan appears to be a tacit admission that the waiver regime – which was intended to be a stop-gap measure pending the development of indigenous capacity – is derailing the country's lofty cabotage goals. Nonetheless, the cessation of the issuance of cabotage waivers represents a significant shift in policy.
The Nigerian Maritime Administration and Safety Agency (NIMASA) recently issued a marine notice to further the Cabotage Act's objectives and to ensure strict compliance. It is expected that this notice would, among other things, ensure greater compliance with the cabotage regime and drive wider indigenous participation in offshore marine operations. However, as the NIMASA has not introduced a fine or other punishment for non-compliance, full compliance with the notice cannot be guaranteed.
It is not uncommon for shipowners to incur liability for acts or omissions for which neither they nor their employees are directly responsible. This is particularly common in the compulsory pilotage field. However, even in cases where liability cannot be disputed, shipowners may be entitled to limit their liability or, in some cases, escape it entirely.
In late 2018 the president declined to assent to the National Transport Commission Bill (which the Senate had passed in March 2018). The president cited the need to review certain fiscal provisions set out in the bill, as well as concerns over the duplication of functions which already fell within the statutory mandates of existing agencies. The Senate recently formally reapproved the bill after examining it in view of the president's observations.
Voyaging in West African waters, particularly the Gulf of Guinea, is considered dangerous and raises the question of whether shipowners are entitled to put armed guards on board their vessels to protect them from attacks by arms-bearing third parties. Considering reported attacks of armed robbers at sea, kidnappings for ransom and other criminal occurrences in Nigerian waters, shipowners and operators have explored how to optimise the protection of both ships and cargo.
Shipowners whose ships have caused damage will not want their ship to be arrested, but also will not want to pay damages to the extent of the actual claim. Luckily, shipowners can ensure that their ships are not arrested and at the same time significantly limit the total amount payable. To cap it all off, shipowners do not have to accept liability. If this is not having your cake and eating it, then nothing is.
In a watershed decision, the Supreme Court appears to have overruled itself on the question of what constitutes 'outside jurisdiction' in relation to the Admiralty Court (Federal High Court) for the purpose of determining whether leave of court is required to effect service of an originating process. The decision puts to bed the decade-long unease surrounding the territorial jurisdiction of the Admiralty Court in the wake of MV Arabella.
Following the Federal High Court's recent ruling that claims for crew wages fall outside its jurisdiction, practitioners and other observers are understandably eager for judicial elaboration on the fate of such claims. Although initial reactions appear to be that crew wage claims may no longer be enforceable through the adoption of the in rem procedure, some have argued that the ruling, being merely persuasive, can and should be sidestepped by other Federal High Court judges.
Maritime claims are generally under the Federal High Court's exclusive jurisdiction and enforceable by an admiralty action in rem or in personam. However, in a decision which portends significant implications for Nigeria's maritime jurisprudence, the court recently held that a claim for crew wages fell outside its jurisdiction.
The chief of naval staff has claimed that the recently promulgated Harmonised Standard Operating Procedures on Arrest, Detention and Prosecution of Vessels and Persons in Nigeria's Maritime Environment 2016 (HSOPs) will provide consolidated guidance for the harmonious management of the arrest, detention and prosecution of vessels and suspects, as well as seizure and forfeiture. However, despite the fanfare that accompanied their launch, the HSOPs have no legal potency or operational clarity.
Various questions can arise regarding the service of processes in admiralty proceedings. For example, what happens if a ship (X) is named as the first defendant in a writ of summons, along with a second defendant which is merely referred to as the "owner of X"? Does the action cease to be one in rem? Further, where X is a foreign ship, is leave of court required to effect service on the second defendant? Although a recent Court of Appeal decision is instructive in this regard, it was arguably reached per incuriam.