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This paper considers the recent developments in Nigerian Ship Arrest Law.  The Admiralty Jurisdiction Procedure Rules (AJPR) 2011 for the Federal High Court of Nigeria (FHC), and its effect on ship arrest practice. The new AJPR 2011 (the New Rules) was made by the Chief Judge of the FHC(CJF) ¹ on 1^st March 2011 and came into force on 14^th March 2011.   This is pursuant to section254 of the Constitution of the Federal Republic of Nigeria 1999² andsection 21 of the Admiralty Jurisdiction Act (AJA) 1991³which empower the CJF to make rules of practice and procedure for the FHC and to carry into effect the objects of the AJA. Together, the AJA and the AJPR govern admiralty
matters in Nigeria, with the FHC as the court of first instance. The admiralty jurisdiction of the
FHC is well stated in the AJA⁴, whilst the AJPR provides the procedure for the exercise of its jurisdiction. Appeals from the FHC lie to the Court of Appeal and the Supreme Court.

The New Rules are the result of the review of AJPR 1993 (Old Rules),
which became necessary to keep up with the demands in shipping practice; noting
the dynamic nature of the shipping industry. Various issues have been addressed
in the AJPR 2011, with new rules added to bring the AJPR in line with modern shipping
practices. There is in total, 23 Orders in the New Rules, amounting to an
increase from the 17 Orders in the Old Rules.

I shall briefly highlight the criteria for arresting a ship in Nigeria before
discussing the provisions of the New Rules as it affects ship arrest. 

CRITERIA FOR
ARRESTING A SHIP IN NIGERIA

The process of
applying for the arrest of a ship requires that the claimant possesses a ‘Maritime
Claim’ as defined in Section 2 AJA and reproduced in Appendix 1 to this paper.
This generally means that the claim must be a ‘proprietary maritime claim’ or a ‘general maritime claim’ as follows:

<!--[if !supportLists]-->ù        
<!--[endif]-->Proprietary
maritime claims include claims relating to the possession of a ship, title to
or ownership of a ship or a share in a ship, mortgage of a ship or of a share
in a ship, mortgage of a ship’s freight or claims between co-owners of a ship
relating to the possession, ownership, operation or earning of a ship. Also
claims for the satisfaction or enforcement of a judgment given by the Court or
a court (including a court of a foreign country) against a ship or other
property in an admiralty proceeding in rem. 

<!--[if !supportLists]-->ù        
<!--[endif]-->General
maritime claims include claims for damage done or received by a ship (whether
by collision or otherwise), claims 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 as well as arising out of an act or omission of the owners or
characters of a ship.

Once the claimant
has ascertained that his claim falls within the meaning of a Maritime Claim as
listed above, he may shall commence proceedings against the ship at the FHC (in
the judicial division covering the port or area where the ship is located). The
procedure for applying for the arrest for a ship shall be discussed later under
the New Rules.

SHIP ARREST DEVELOPMENTS IN NIGERIA

The New Rules in
its bid to update the AJPR has provided new provisions, thus changing the face
of ship arrest in Nigeria.
Some of the important provisions are discussed below:

1. Application
   for the Arrest of a Ship

The new procedure
for applying for the arrest for a ship is set out in Order 7, Rule 1 (1) AJPR
2011 and reproduced in Appendix 2 to this paper. With this, a claimant with a
Maritime Claim may now commence in rem
proceedings against the ship once the ship is within jurisdiction or expected to arrive jurisdiction
within three days (Emphasis mine), at the time of filing the
application.

This amounts to a
major improvement as the Old Rules (Order VII) failed to state whether a ship
must be within the jurisdiction of the court or not, before an application for
the arrest of the ship can be made to the FHC. The practice therefore was for a
ship to be within the jurisdiction of the court (and no more) before an
application for the arrest of the ship can be brought made. This was premised
on the fact that the FHC cannot arrest a ship⁵ not within its
jurisdiction (.i.e. every open sea within twelve (12) nautical miles of the
coast of Nigeria
(measured from the low water mark) or of the seaward limits of inland waters⁶);
and that the grant of an order otherwise, would amount to an order in futility.

The documents
required to be filed for the warrant of arrest of a ship remains the same as
under the Old Rules: Writ of summons; statement of claim; motion exparte
disclosing a strong prima facie case for the arrest of the ship; supporting
affidavit stating the nature of the claim, that the ship is within the
jurisdiction of the court or is expected to arrive jurisdiction within three
days, and that the ship may leave the jurisdiction of the court at anytime. The
claimant is also required to provide an Affidavit of Urgency; Indemnity in
favour of the Admiralty Marshall for his expenses in effecting the arrest
order; and an undertaking as to damages in favour of the Defendants.

The new procedure
for applying for a warrant of arrest of a ship deals with the lacuna in the Old
Rules which allowed claimants to lose their window of opportunity to arrest a
ship for a claim, simply because they have to wait for the ship to be within
jurisdiction before applying a warrant of arrest.

2. Caveats

As part of the
new procedure for obtaining a warrant of arrest for a ship, the New Rules
clearly state that the Claimant shall be responsible for conducting a search of
the caveat book for the purpose of ascertaining whether there is a caveat
against arrest in force with respect to that ship.⁷ This puts an end
to a lacunae in the Old Rules that allowed a claimant obtain an arrest order
for a ship, knowing fully well that a caveat against arrest exists. This was
the practice simply because the Old Rules did not require the Claimant to
search the caveat register before applying for a warrant of arrest of a ship
and where such a caveat exists, inform the court accordingly.

Although the
Praecipe for Caveat against Arrest – Form C in the Schedule to the Old Rules
provides that the Caveator undertakes to appear with 14 days of service of a
writ commencing action against a ship, the Caveat against Arrest issued in
practice and accepted by the Registrar/Admiralty Marshal provides that the
caveator shall in a suit involving the ship within 3 days of been served. The
New Rules have amended (Form 8 in the Schedule to the AJPR 2011) and brought
the rules in line with practice.

Finally, a
Praecipe for Caveat against Release of a Ship is provided for the first time in
Form 10 to the Schedule to the New Rules.

3. Change
   in Beneficial Ownership

The provisions of
the New Rules provide that 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 jurisdiction8. It is however the duty of the new owner to inform the
FHC of his ownership of the ship to prevent the arrest of his ship.

4. Custody
   and Sale
   of Ship Under Arrest

As you would
recall, the application for a warrant of arrest constitutes an undertaking from
the Claimant to the Court to pay the Admiralty Marshal, on demand, an amount
equal to the expenses of the Admiralty Marshal in relation to the arrest. As
such the Admiralty Marshal was allowed under the Old Rules to accept from the
Claimant, an amount not exceeding ₦5,000.00 (Approx. USD$32.30) as deposit
towards discharging its liability and the Admiralty Marshall may make more
demands for interim payments on account of those fees and expense. This amount
is clearly not commensurate to the demands of the time.

Whilst advising claimant’s
on the ship arrest practice in Nigeria,
we estimate the Admiralty Marshal‟s weekly cost as ₦100,000.00 (Approx.
USD$645.15). Taking note of the current realities, the New Rules now provided
that the “Admiralty Marshall may accept
an amount of money not less than N100,000.00 and not more than ₦500,000.00 as
deposit towards discharging the liability; and make more demands fortnightly
for payment on account of those expenses.”⁹

The Admiralty
Marshall is also required to file a return or receipts and expenditures to the
Court within 7 working days of the release of the ship¹⁰

5. Judicial
   Sale of a
   Ship

In light of the
various ships that litter the waterways of Nigeria as a result of ship owners
failing to provide bail for the release of vessels under arrest or entering
appearance in a suit, Order 9, Rule 6(2) of the New Rules now empowers the
court on the application of the arrestor or other interested party order the
sale of the ship where the 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.

6. Reparation
   For Needless Arrest

One of the most
notable changes to ship arrest practice under the New Rules is the issue of
reasonable compensation for needless arrest. This is addressed under Order 11,
Rule 2 AJPR and reproduced in Appendix 3 to this paper the New Rules.

Under the Old
Rules, if it appears to the Court that the arrest of any defendant, or any
order of attachment, sale, or injunction, or any warrant to stop clearance of,
or to arrest any ship was applied for on insufficient grounds; or if the suit
in which any such application was made is dismissed, or judgement is given
against the plaintiff by default or otherwise, and it appears to the Court that
there was no probable ground for instituting such suit, the court may (on the application of the defendant
made at any time before the expiration of 3 months from the termination of the
suit) award against the plaintiff such amount, not exceeding the sum of ₦20,000.00
(Approx. USD$129.00) (Emphasis
mine), as it may deem a reasonable compensation to the defendant for any
loss, injury, or expenses which he may have sustained as a result of such
arrest, attachment, order of sale or injunction , as aforesaid.

The maximum sum
of ₦20,000.00 for compensation for needless arrest of a ship has been highly criticized
over few years. The frivolous and/or vindictive arrest orders obtained over the
years by various claimants has been blamed on this provision as it does not
serve as a deterrent. The New Rules, understanding the economic importance of a
ship arrest to a ship owner has provided the Court with the power to “award
against the plaintiff such amount as
it may deem reasonable compensation (Emphasis
mine) to the defendant for any loss, injury, or expenses which he may have
sustained as a result of such arrest, attachment, order of sale or injunction.”

Order 11, Rule 2
AJPR would definitely serve as a deterrent to false applications for arrest
orders and prevent an abuse of the court process.

CONCLUSION

It is believed
that the AJPR 2011 would improve maritime practice in the Nigeria as well
as help in mitigating cost of doing business in the country. The above rules
mirror current realities in the industry and closely modeled in line with
notable Maritime Jurisdictions of the world like, England
& Wales.

Although the
implementation of some the provisions of the New Rules might not be clear, I
believe this would be “ironed out” with practice as Nigeria remains a
significant shipping nation and the largest in cargo volume in the West African
sub-region. Nigeria
therefore remains a favorable jurisdiction for ship arrests and an enviable
investment destination.

Authored by:

Adedoyin Afun¹¹

[email protected]

 

¹ Justice
Daniel Dantsoho Abutu, FCI Arb. (as he then was)

² Cap.
C23, Laws of the Federation of Nigeria
(LFN) 2004

³ Cap. A5,
Laws of the Federation of Nigeria
(LFN) 2004

⁴ Sections
1, 3 and 5 AJA

⁵ Section
7, AJA provides that the service and arrest of a ship shall take place within
the limits of the territorial waters of Nigeria.

⁶ Section
1(1) Territorial Waters Act, Cap. T5, Laws of the Federation of Nigeria
(LFN) 2004

⁷ Order 7
Rule 1(2) AJPR 2011

⁸ Order 7
Rule 1(4) AJPR 2011

⁹ Order 9,
Rule 2 (2(a and b) AJPR 2011

¹⁰ Order
9, Rule 2 (2d) AJPR 2011

^{11 Mr. Afun is an Associate in the Transportation Practice Group
at ÆLEX, one of the largest law firms in West Africa with offices in Lagos, Port Harcourt and Abuja in Nigeria
and Accra, Ghana.}