Messrs. Nv Scheep Vs M.V. S. Araz

LAWGLOBAL HUB Lead Judgment Report

M.E. OGUNDARE, JSC.

The main question that calls for determination in this appeal is as to whether the admiralty jurisdiction of the Federal High Court can be invoke solely for the purpose of obtaining security for damages, interest and costs that may be awarded in arbitration proceedings being conducted in a foreign country. There are two other minor questions raised in the appeal, the necessity, for which resolution depends on the answer to the main question.

The facts briefly are as follows:

The Plaintiffs (who are appellants in this appeal) are owners of their vessel M. V. CINDYA. By a charter party dated 17th October, 1989 the 2nd Defendants/Respondents herein hired the said vessel from the Plaintiffs. A dispute arose between the parties resulting in a claim made by the Plaintiffs on the 2nd Defendants/Respondents for demurrage and or damages for detention of the vessel M. V. CINDYA. The claim was referred to arbitration in London, United Kingdom and was still pending when the proceedings, leading to this appeal commenced in the Federal High Court, Lagos.

On 22nd February 1995, ASCONA Shipping Ltd, Agents for Messrs N. V Sheep Vaatmij Unidov Willel Matad, Curacos – the Plaintiffs in the present suit filed an action in rem (Suit No. FHC/L/CS/213/95, against the present 2 Defendants claiming –

“The Plaintiffs as Agents to Messrs N.V. Sheep Vaatmij Unidor Wille Mstad of Curacao, Owners of the Vessels M.V CINDYA, claim against the Defendants, jointly and severally, the sum of US$250,000.00 (United States Dollars Two Hundred and Fifty Thousand only) as security for damages, interest and cost in respect of the claim for demurrage and/or damages for detention relating to the 2nd Defendant’s use or hire of the said M.V CINDYA pursuant to a charter party dated 17th October, 1989 presently under arbitration in London, United Kingdom.”

An application by them, brought ex-parte, to secure the arrest of the 1st Defendant was on 27/2/95 refused by the learned trial Judge, Ukeje, J. On 28th February, 1995, the Plaintiffs brought yet another action in rem against the two Defendants herein, claiming

“The Plaintiffs, as Owners of the Vessel MV. CINDYA, claim against the Defendants, jointly and severally, the sum of $300,000.00 (United States Dollars Three Hundred Thousand only) as security of damages, interest and cost relating to a claim for demurrage and/or damages for detention for the 2nd Defendant’s use or hire of the said M.V. CINDYA pursuant to a charter party dated 17th October, 1989, which claim is presently under arbitration in London, United Kingdom.” Simultaneously with the filing of the action, they also filed another motion ex-parte praying for the following two main reliefs:

An Order for arrest and detention of the vessel, M.V. “ARAZ present at BULLNOSE Berth 19, Apapa Port, Apapa, Lagos, within the jurisdiction of this Honourable Court.

That the said vessel be released from arrest only upon the Defendants/Respondents furnishing an acceptable bank Guarantee in the sum of US $300,000.00 to meet the Plaintiffs/Applicants’ claim”

The motion was supported by a 9 – paragraph affidavit to which were annexed a number of documents. Paragraph 3 of the said affidavit reads:

That I am reliably informed by Steven Fox, of counsel in the firm of Inc. & Co., Plaintiff’s Solicitors in London, and I verily believe as follows:

that Arbitration proceedings were commenced in July 1992 and are presently pending in London. United Kingdom, between the Plaintiffs/Applicants and the 2nd Defendants/Respondents in terms of a claim which the 2nd Defendants/Respondents have failed and/or neglected to settle.

that the documents now shown to me and marked Exhibit “AF” are the claims Submissions and supporting documents submitted to the Sole Arbitrator, one Mr. Mark Hamsher, of 18C Ensign Street, London E I 8JD, by Solicitors to the parties.