One fundamental aspect of the maritime industry is the right given to claimants in maritime disputes, based on certain procedures, to arrest a ship as security for their claims. This principle is one of the hallmarks of the maritime industry in the world - the assurance of claimants of the ability to reap the fruit of their gains in the event of a successful maritime claim in court or arbitration.
In this article, we examine the reasons for the arrest of a ship as security for maritime claims, the categories of claims for which a ship can be arrested as security, the procedure for the arrest of a ship, among others.
The grundnorm concerning admiralty or maritime actions in Nigeria is the Constitution of the Federal Republic of Nigeria, 1999 as amended ("the 1999 Constitution"). Section 251(1)(g) of the Constitution gives the Federal High Court ("FHC") jurisdiction over admiralty actions. Although the scope of the admiralty jurisdiction is not defined in the 1999 Constitution, the Admiralty Jurisdiction Act ("AJA") defines it. Apart from the 1999 Constitution and the AJA, there is also the Admiralty Jurisdiction Procedure Rules of the FHC ("the Rules") made by Honourable Justice Daniel Dantsoho Abutu, the then Chief Judge of the FHC. The Rules provides for the procedure to be followed by a claimant to secure an order for the arrest of a ship or sister ship as security for his claims.
NATURE OF CLAIMS FOR WHICH A SHIP ARREST CAN BE MADE AS SECURITY
A person seeking to arrest a ship as security for his claim must satisfy the court that his claim qualifies as a 'maritime claim' as defined in Section 2 of the AJA. The Section defines a maritime claim as a proprietary maritime claim or a general maritime claim. Proprietary maritime claims are claims which directly affect the 'res'.1 They 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, satisfaction or enforcement of a judgment given by the FHC or any court (including a court of a foreign country) against a ship or other property in an admiralty proceeding in rem. General maritime claims, on the other hand, do not directly affect the res but arise out of the res or any agreement relating to or connected with it. Examples of 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, a claim by a master, or a member of the crew of a ship for wages, or an amount that a person, as an employer, is under an obligation to pay a person as an employee, among others.2
RATIONALE FOR THE PROCEDURE
Generally, claims in maritime disputes are either made in personam action or in rem action. An in personam action is when the claim is made against an individual based on his jurisdiction and his right. On the other hand, an in rem action is when the claim is directed against a specific thing or subject matter 'res' (as a vessel) irrespective of the ownership of it, to enforce a claim or lien upon it, or to obtain, out of the thing or out of the proceeds of its sale, satisfaction for an injury alleged by the claimant. An action in rem is the groundwork for the arrest of a ship in maritime claim.
In many maritime disputes, the 'defendants' or owners of a ship try to escape liability even in the face of an apparent breach of rights (statutory or contractual); they play their game of hide and seek in such a way that the arm of the law is too short to reach them. They normally do so by avoiding the jurisdictions/territories where they can be implicated for the wrongs committed. As a result, the admiralty jurisprudence of action in rem was developed, to cure this mischief, and to target the ship against which the damage or any other claims have been instituted.
In most cases in which a ship in arrested as security for a claim, such action is commenced as an action in rem, where the ship itself is made as the defendant, rather than the owner of the ship, and it can be arrested or sold by the Court to satisfy a claimant's claims as long as judgment is delivered in favour of the claimant.
The Court of Appeal in the case of The Owners of the M Angara v Chrismatel Shipping Co. Ltd3 held that the purpose of obtaining an order for the arrest of a ship or res is to make the defendant put up bail or provide in advance of the judgment, adequate funds to secure compliance with any judgment that may be eventually made against it, or its owners. This is predicated on the fact that an unsatisfied judgment is as good as a pyrrhic victory which effect is as impotent as it is moot. The rationale for arrest and putting up bail or sufficient security stems from the fear that in the interval between judgment and execution, the defendant may have become insolvent, or he may have used the opportunity to remove his assets out of jurisdiction.
Another important feature of the admiralty law is that the owner of the ship or the offensive vessel cannot be implicated except in the jurisdictions of the Court of the country in whose territory was the offensive ship. In most cases, the owner of the ship is outside the jurisdictions, yet the ship can move from the coast of one state to the coast of another state. Therefore, the task of arresting the ship is simpler than the task of arresting the shipowner.
Thus, the ship is arrested mainly for two reasons namely, to provide security to the claimant and to force the defendant to appear in Court and respond to the instituted claims. If the defendant refuses to appear in Court within six months to defend the action in rem and the value of the arrested ship is deteriorating, the court can order a judicial sale of the vessel and compensate the claimant.4
PROCEDURE FOR THE ARREST OF SHIP AS SECURITY FOR MARITIME CLAIMS IN NIGERIA
Section 7 of the AJA provides that a ship or other property may, in any proceeding commenced as an action in rem, be arrested at any place within the limits of the territorial waters of Nigeria. Furthermore, Order 7, Rule 1(1) of the Rules provides as follows:
A party to a proceeding commenced as an action in rem may by a motion ex parte apply for a warrant of arrest in respect of the ship or the property against which the proceeding was commenced, provided that at the time of the application, the ship or other property is within Nigerian territorial waters or is expected to arrive there within three days.
From the above provision, one clear thing is that the FHC will only entertain an application for an arrest of a ship only when the ship has entered its jurisdiction; that is the ship is within Nigerian territorial waters or is expected to arrive there within three days. So, where a prospective applicant is aware that a ship sought to be arrested is bound for a Nigeria port, it is advisable for him to instruct his counsel in Nigeria as soon as possible so that the requisite processes can be prepared and filed immediately the ship is within three days of entering Nigerian territorial waters.
The motion ex parte seeking an order to arrest a ship is expected to be accompanied by an affidavit sworn to by the applicant or his agent containing the following particulars:5
- The nature of the claim or counter-claim and that it has not been satisfied and, if it arises in connection with a ship, the name of that ship;
- The name of the person who would be liable on the claim in an action in personam (the relevant person);
- That the relevant person was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship in connection with which the claim arose;
- That at the time of the issuance of the writ, the relevant person was either the beneficial owner of all the shares in the ship in respect of which the warrant is required or (where appropriate), the charterer of it under a charter by demise;
- That the ship is within the jurisdiction of the court or is expected to arrive within the jurisdiction within three days; and
- That the ship may leave the jurisdiction of the court at any time thereby depriving the applicant of his pre-judgment security.
The applicant is also required to provide, alongside the application (a) statement of claim; (b) exhibits supporting the claim; (c) an undertaking to indemnify the ship against wrongful arrest; (d) an undertaking to indemnify the Admiralty Marshal in respect of any expenses incurred in affecting the arrest; and (e) the fact that the matter is very urgent and must be heard expeditiously. At this stage of the proceedings, the court may admit photocopies of exhibits and undertakings. However, the applicant would subsequently be required to provide the originals or certified true copies.
Prior to applying to the Court for an order to arrest a ship, the applicant must conduct a search in the caveat book to ascertain whether there is a caveat against arrest in force with respect to that ship or other property. Where such a caveat exists, the applicant must inform the Court of the same.6
An arrest order is usually served alongside an arrest warrant, the writ of summons and statement of claim by affixing sealed copies of the processes to a mast or some other conspicuous part of the ship.7 If access to the ship or property cannot reasonably be obtained, the process may be served on the ship or other property by handing a sealed copy of the process to or leaving it with a person apparently in charge of the ship or other property; or if that person refuses to accept service, by placing a sealed copy of the process down in the person's presence and telling the person what the document is.8 Copies of the said processes must also be delivered to the appropriate officers of the Nigerian Port Plc, for example the Chief Harbour Master, Traffic Manager and Port Manager.9
When granted, the warrant of ship arrest is valid for six months and can be renewed for another period of six months.10 The arrest of the ship can only be implemented by the admiralty marshal or his delegated substitute,11 not by the applicant himself.
ARREST OF SISTER VESSEL
Where a ship, which is sought to be arrested has sailed away from the jurisdiction where the arrest is to be carried out, any other ship that belongs to the owner of the offending vessel (sister ship) that is within the jurisdiction could be lawfully arrested in lieu of the offending vessel. In other words, sister ship arrest connotes a situation where proceedings are begun against any vessel in a fleet of vessels belonging to the same owner in place of the vessel that actually caused loss, harm or damage.12 This provision seeks to help claimants who are unable to effect an arrest of a ship that has caused them damage or injury because the ship has sailed away into another jurisdiction, to arrest another vessel of the defendant.
EXEMPTION FROM ARREST AND WRONGFUL ARREST OF THE SHIP
Some categories of vessels are exempted from being arrested under the Admiralty Laws. These include ships being used by the Nigerian Navy or in connection with Navy and ships that belong to state or federal government or being demised to the Nigerian Government. In case they commit any wrong, they are exempted from detention, arrest and judicial sale. Therefore, an action in rem cannot be preceded against such ships.13
As regards wrongful arrest of a ship, Section 13(1) AJA provides that in circumstances where a party without reasonable cause demands excessive security in action in rem proceedings or obtains the warrant for the arrest of the ship, that party will be held responsible for the damages to the proceeding who has suffered damage or loss. Particularly, under the Rules, a defendant who was a victim of a wrongful arrest has three options as follows:
- He may apply to the court within three months from the termination of the suit for general damages of such amount as the court may deem a reasonable compensation; or
- He may bring an action for wrongful arrest against the plaintiff claiming all the damages arising from the arrest, which he can establish; or
- He may make an oral application for damages immediately after judgement. The court in this instance, is entitled to summarily assess the damages due to the ship owner.14
The arrest of ship is fundamental to most maritime claims. The claimant seeks his or her claims on the ship to force the shipowner to enter appearance or provide security for the claimant's claim. This procedure is very delicate, and is thus essential that maritime claimants are aware of the issues as well as the requirements.
1 This means the subject matter of the suit, that is the ship itself.
2 Section 2(3) AJA.
3 (2001) 8 NWLR pt 716 p. 685 @ p. 693.
4 Order 9 (6) (b) of the Rules.
5 Order 7, Rule 1(3) of the Rules.
6 Order 7 Rule 2 of the Rules.
7 Order 6 Rule 1 of the Rules.
8 Order 6 Rule 3 of the Rules.
9 Order 6 Rule 4 of the Rules.
10 Order 7 Rule 3 of the Rules.
11 Order 7 Rule 4 of the Rules.
12 Section 5(4)(b) AJA.
13 Section 24 AJA.
14 Order 11 (2)(3) of the Rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.