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.

iii. that the Defendants/Respondents have to date not provided any security to meet the Plaintiff’s claim or any award thereon before the Sole Arbitrator.

that the Plaintiffs/Applicants’ claim before the Sole Arbitrator is for US$224,519.79 being demurrage and/or damages for detention arising from the 2nd Defendant’s use or hire of the Plaintiff’s vessel, M. V. CINDYA, pursuant to a Charterparty dated 24th October, 1989 annexed hereto as Exhibit “D”

that the Plaintiffs/Applicants now wish to obtain security from the Defendants/Respondents to ensure payment of any arbitration award in its favour obtained at the end of the said proceedings.

that the 2nd Defendant/Respondent is the beneficial owner of the 1st Defendant vessel M.V. “S. ARAZI” as confirmed by the Lloyd’s Confidential Index now shown to me and marked Exhibit “G” to this Affidavit.

vii. that it will be in the interest of justice to arrest the said vessel to ensure that the Defendants/ Respondents provide adequate security in the form of an acceptable Bank Guarantee to meet any award in favour of the Plaintiffs/Applicants in the arbitration proceedings.

viii. that the Plaintiffs/Applicants are prepared to give an undertaking in damages for this application.”

There was also an affidavit of urgency filed along with the motion papers. The motion was moved by learned counsel for the Plaintiffs on 6th March. 1995 and, in a ruling delivered on 9th March, was granted by the learned trial Judge (Ukeje J.) who concluded and ordered as follows:

“In the circumstance, the Plaintiff has made out a case sufficiently strong to move this Court to grant the reliefs sought.

Consequentially, the Orders sought are granted, in part and the following Orders are made –

(1) The vessel M.V. ‘S.ARAZ’ now lying at Bullnose Berth 19, Apapa Port, Apapa, Lagos, within the jurisdiction of this Court is hereby ordered to be arrested and detained until the determination of the Motion on Notice until this Court otherwise orders. (sic)

(2) The said vessel shall be released from the arrest and detention only upon the Defendants/Respondents furnishing an acceptable Bank Guarantee in the sum of US $300,000 to meet the Plaintiff’s/Applicant’s claim.

(3) The Plaintiffs shall file an undertaking to indemnify the Defendants against any loss, or damage they may incur should it later transpire that this Order is needless.

That is the find finding of this Court in this Ruling.”

On the warrant of arrest as ordered by Ukeje, J. being served on the 1st Defendant, an application was on 3/5/95, filed on its behalf praying for an order:

“Striking out and/or discharging unconditionally the interim Order made on the 9th March, 1995 for the arrest and detention of the 1st Defendant/Applicant, that is, the M.V. “S.ARAZ” berthed at shed number 19 Apapa Port, Apapa, Lagos”

upon the grounds –

(a) The 2nd Defendants are not the beneficial owners of the 1st Defendant/Applicant vessel, Viz: the M.V. “S.ARAZ”.

(b) There is no cause of action against the 1st Defendant/Applicant because the 2nd Defendants are not the beneficial owners of the 1st Defendant/Applicant vessel.

(c) Arbitration is in fact in progress between the parties in England.

(d) The proceedings in this suit are an abuse of the process of this Honourable Court.

(e) The case herein has no connection whatsoever with Nigeria.”

The application was supported by a 13- paragraph affidavit, the penultimate paragraphs of which read:

“3. That I am informed by the Disponent Owners of the 1st Defendant/Applicant vessel and I verily believe them that the owners of the 1st Defendant/Applicant vessel is Turkiye Kalkinma Bankasis A.S. as confirmed by the Lloyds Register of Ships 1994-95. There is now produced and shown to me a copy of the Lloyds Register of Ships 1994-95 marked “A 11”.

That as Disponent Owners of the 1st Defendant/ Applicant, they are the managers and beneficial owners of the 1st Defendant/Applicant currently on Time Charter to Tigris International Corporation. There is now produced and shown to me a copy of the Time Charter Party (Charter Party) between the Disponent Owners, Ege Shipping Trading & Industry Corp and the Time Charterers, Tigris International Corp marked “A 12”.

That the Disponent Owners of the 1st Defendant/Applicant informed me and I verily believe them that:-

a) Koray shipping and Trading Inc. as an Associated Company of Ege Shipping and Trading Industry Inc. are not the beneficial owners of the MV “ARAZ”, the 1st Defendant/Applicant but are only the nominal owners of the 1st Defendant/Applicant in this suit as confirmed by a copy of the Lloyds Confidential Index. There is now produced and shown to me a copy of the Lloyds Confidential Index marked “A13”

b) as nominal owners of the 1st Defendant/Applicant Koray Shipping & Trading Industry Corp. do not have any actual interest in the 1st Defendant/Applicant, nor can they benefit from its profits.

c) as nominal owners of the 1st Defendant/Applicant, Koray Shipping & Trading Inc. (the 2nd Defendants/ Respondents in this suit) is not the person who would be liable in an action in personam.

d) the person(s) who could be liable in action in personam are the Beneficial or Disponent Owners of the 1st Defendant/Applicant.

e) when the cause of action arose and to date, Ege Shipping and trading Inc. were and the beneficial owners of all the shares in M.V. “S.ARAZ”, the 1st Defendant/ Applicant.

That on the 9th March, 1995 the Plaintiffs obtained an Order of interim arrest and detention of M.V. “S.ARAZ” before this Honourable Court for alleged demurrage and/ or damages for detention arising from the 2nd Defendants use or hire of the Plaintiffs’ vessel, M.V. CINDYA, pursuant to a Charter Party dated 24 October, 1989.

That there is no connection whatsoever between the MV “S.ARAZ” is not a sister vessel to the M.V. “CINDYA” (sic)

That I am informed by Adewale Atake of counsel whom I verily believe as follows:

(a) that the Plaintiffs cannot maintain a cause of action against the 1st Defendant/Applicant of alleged demurrage/damages caused by the 2nd Defendants/ Respondents in this suit because the 2nd Defendants/ Respondents are not the beneficial owners of the 1st Defendant/Applicant.

(b) that this matter is currently before a Sole Arbitrator in London between the parties in this suit for which they have filed statements. There is now produced and shown to me the Statement of Claim of the Plaintiffs in the suit and the Statement of Defence of the Defendant/ Respondent in this suit filed before the Sole Arbitrator in London Marked “A 14″ ” 15″ respectively.

(c) that the Plaintiffs in this action commenced an action in rem for the arrest of M.V. “S.ARAZ” the 1st Defendant Applicant at this suit of Ascona Shipping in Suit No FHC/L/CS/213/95 before the Honourable Justice Ukeje of the Federal High Court, Lagos which application was refused on the ground that the matter was pending before an arbitrator in London for which the parties have already filed statements. There is now produced and shown to me a copy of the Particulars of Claim and the Ruling of the Court in that suit marked “A 16” “A 17” respectively.

(d) that the Plaintiff thereafter commenced another action for the same claim as the one in Suit No: FHC/L/CS/ 213/95 for the arrest of M.V. “S.ARAZ”, the 1st Defendant/Applicant using the name Vatimij Unidor Willie Mstad, who are the principals to the Plaintiffs in suit No. FHC/L/CS/213/95, referred to in paragraph (c) above referred to in paragraph (c) above. There is now produced and shown to me a copy of the Charter Party between the Plaintiff and the 2nd Defendant/Respondent indicating that the Plaintiffs in suit No. FHC/L/CS/213/95 are the agents to the Plaintiffs in the suit herein marked “A18” and the particulars of claim in this suit herein marked “A19”.

e) that if the Plaintiffs was a security in satisfaction of their claim for demurrage and/or damages caused by the 2nd Defendants/Respondents use and/or hire of the M.V. “CINDYA” owned by the Plaintiffs, they should have done so before the Sole Arbitrator, where arbitration proceedings are pending and not before this Honourable Court.

That further to paragraphs 8(c) and (d) above, the Plaintiffs have not used the machinery of the Court bona fide, as they have abused the process of the court by engaging in oppressive and vexatious litigation against the 1st Defendant/Applicant.

That the cause of action in this suit has no connection with Nigeria.

That since the Order of arrest obtained on the M.V, “S. ARAZ”, she has been incurring costs, losses and expenses running into thousands of United States Dollars.”

A number of documents was annexed to this affidavit and an affidavit of urgency was also filed along with the application. The Plaintiff responded to this application by filling a counter-affidavit in which one Folasade Giwa, a legal practitioner deposed, inter alia, as follows:

That the 1st Defendant’s application together with the Affidavit in support and the affidavit of Urgency have been shown to me and this Counter Affidavit is in response thereto.

That the Company, Turkiye Kalkinma Bankasi A.S. named in Exhibit “A1.1 is owned by Koray Shipping and Trading Inc., the 2nd Defendant/Respondent as shown by Exhibit A 1.3 to this application.

That the alleged Despondent Owners are not a party to this action and have taken no steps to become a party thereto.

That no particulars or terms of the alleged disponent ownership have been presented to this Honourable Court.

That Exhibit A1.2, the Time Charterparty with a third party, has an Addendum which forms part thereof which the deponent failed to disclose. The same is now marked as “Exhibit FG ” hereto and shows that:

(a) the 2nd Defendant/Respondent is a party to the said charterparty: (b) that 2nd Defendant/Respondent is not merely the nominal owner of the 1st Defendant/Applicant but remains the beneficial owner thereof in all respects as to its shares and profits therefrom.

That with regard to paragraph 5 of the affidavit in support, I am informed by Steven Fox Esq., solicitor of Inc. & Co., London, instructing solicitors in this matter and I verily believe him as follows:

(a) that the 1st Defendant/Applicant, M.V. “S.ARAZ” is a Turkish vessel registered in the Registry of Istanbul where the “proprietor” is mentioned as Turkiye Kalkinmo Bankasi A.S. and the “owner” as KORAY SHIPPING & TRADING INC. the 2nd Defendant/Respondent herein.

(b) That under Turkish Law. the 2nd Defendant/Respondent remains the beneficial owner as respects all the shares in the 1st Defendant/Applicant vessel.

(c) That Turkiye Kalkinimo Bankasi A.S. and the said Ege Shipping Trading & Industry Corporation are companies owned by the 2nd Defendant/Respondent, Koray Shipping & Trading Inc.

(d) That the 2nd Defendant/Respondent is the person who would be liable in an action in personam in the matter giving rise to this claim.

(e) That the alleged disponent owners are merely managers of 1st Defendant/Applicant on behalf of the 2nd Defendant/Respondent, having only use and control of the vessel and not beneficial ownership or interest in its shares.

(f) That Ege Shipping & Trading Industry Corporation were never the beneficial owners of all the shares in the 1st Defendant/Applicant either at the time the cause of action arose or presently.

That the 2nd Defendant/Respondent chartered the vessel M.V.”CINDYA” from the Plaintiff/Applicant and breached the terms of the said charter.

That the vessel M.V. “S.ARAZ” is not a sister ship to M.V. “CINDYA” but remains beneficially owned by 2nd Defendant/Respondent.

That the matter before this Honourable Court in this suit remains a claim for security for damages and not a claim for demurrage or damages for detention which is before the Arbitrator.

That the issue before this Court is different from that which is before the Sole Arbitrator in London.

That the Plaintiff/Respondent is free and entitled to bring this action in rem before this Honourable Court in exercise of its legal right.

That the Plaintiff/Respondent is not obliged to present this claim before the Sole Arbitrator in the pending Arbitration and has not done so.

That Suit No. FHC/L/CS/213/95 was not commenced by the Plaintiff/Respondent in this suit.

That the Plaintiff/Respondent in this suit is different from the Plaintiff/Applicant in Suit No. FHC/L/CS/213/95 and the Particulars of claim and facts relied upon herein are different.

That the Plaintiff/Respondent in this suit is entitled to the order granted by this Honourable Court on the facts disclosed notwithstanding that Arbitration is pending in London.

That on the instruction of the Plaintiff/Applicant suit No. FHC/L/CS/213/95 the Court processes therein were never served on the Defendant/Respondent and the action has been discontinued and is no longer pending. The document now shown to me as Exhibit “FG2” herein is the Notice of Discontinuance.

That the Plaintiff/Respondent has acted in good faith in his matter and has not in any way abused the process of this Honourable Court.

That the Defendants have not in any way been oppressed by vexatious or several litigations at the instance of the Plaintiff/Respondent.

That the cause of action in this suit is enforceable in Nigeria against a vessel within her jurisdiction.

That the said vessel M.V. “S.ARAZ” is presently under two earlier arrest in Suit Nos.FHC/L/CS/40/95 and FHC/L/CS/226/95 which were commenced prior to this suit.

The document now shown to me and marked Exhibit “FG3” is the particulars of claim in suit no. FHC/L/CS/ 226/95 commenced against, inter alia, the 2nd Defendant/ Respondent in this Suit.

That the 1st Defendant/Applicant is seeking to hide or disguise its true beneficial ownership in order to defeat the course of justice in this matter.

That the order of arrest in this suit has not in any way imposed any cost on the Defendant/Applicant in view of the earlier and subsisting arrest order” (Italics supplied).

The Notice of Discontinuance of Suit No. FHC/L/CS/213/95 dated 5th day of May 1995 is one of the documents annexed to the counter affidavit. A further counter-affidavit was also filed in which Folashade Giwa deposed:

That on the 15th day of May, 1995, I deposed to a counter affidavit in this matter.

That I had in paragraph 22 of the said Counter Affidavit deposed to the fact that the vessel M.V. S”.ARAZ”, is under arrest in Suit No. FHC/L/CS/40/95.

That the owners of the vessel M.V. “S.ARAZ” had filed an application in the said suit No. FHC/L/CS/40/95 for the order of arrest to be discharged. A certified true copy of the Affidavit in support of the motion is attached as Exhibit “FG4”.

That in paragraph I of the Exhibit FG4 deposed to by the Captain of the vessel, the owner of the vessel is stated to be KORAY DENIZCILIK VE TICARET A.S. which in English means KORAY SHIPPING & TRADING INC. the 2nd Defendant.

That in paragraph 10 of the said Exhibit FG4, it is deposed that “according to Turkish Laws, the owner of the vessel, “S. ARAZ”, was always and still is KORAY DENIZCILIK VE TICAREY A.S.

That the introduction of EGE SHIPPING TRADING & INDUSTRY CORP. as Disponent Owners is merely designed to mislead the Honourable Court”, and had annexed to it a number of documents.

The counter-affidavits provoked a further affidavit being filed on behalf of the 1st Defendant in which Adewale Atake deposed, inter alia:

That I have seen and read the affidavit dated 3 May, 1995 of Chief Aloysius Idam a Senior Manager, Marine Division, S.G.S. Inspection Services Nigeria Limited representative of the owners of the MV. “S. ARAZ” the first Defendant/Applicant herein.

That I have read the Counter Affidavit and Further Counter Affidavit of Folashade Giwa filed on the 15th May 1995 and 16 May 1995 respectively

That I discovered after perusing the Affidavit in Support of the application for the arrest and detention of the 1st Defendant/Applicant that paragraph 3(iv) of the said Affidavit is not correct because the 2nd Defendants/ Respondents are not the beneficial owners of the 1st Defendant/Applicant as confirmed by Exh. G of the said Affidavit

That the owners of the 1st Defendant/Applicant are Turkiye Kalkinma Bankasis A. S. as contained in paragraph 3 of the Affidavit in support of this application dated 3rd May, 1995 and confirmed by Exh.”A1.1′ of the said Affidavit.

That paragraphs 6 and 8 of the Further Counter Affidavit is not correct as the ownership of a vessel can only be established based on the entry in the Lloyds Register of Ships, i.e. Exh. “A 1” referred to in paragraph 6 above.

That paragraph 18 of the Counter Affidavit of Folashade Giwa dated 16 May, 1995 is not correct, the Notice of Discontinuance was only filed after the Plaintiffs” application in Suit No. FHC/L/CS/213/95 to arrest and detain the 1st Defendant/Applicant herein was dismissed and also after the 1st Defendant/Applicant in this suit had filed their application to strike and/or release unconditionally the 1st Defendant/Applicant in the suit herein.”

1st Defendant’s motion came before Ukeje J. for hearing on l7th 22nd and 23rd May 1995. After hearing arguments from learned counsel for the parties, the learned trial Judge, in a ruling delivered on 3 1st May 1995, refusing the prayers sought by the 1st Defendant, found:

“It is therefore my considered view that by virtue of section 5(7), the provisions of ‘Beneficial owner’ under Section 5(4) relate only to a Nigerian Shipper. There is no doubt that the 2nd Defendant is neither resident in Nigeria nor does it have its place of business in Nigeria.

By virtue of Exh. A, B and D, it is beyond controversy that the 2nd Defendants are resident and carry on business in Instanbul, Turkey. Therefore, the provisions of Section 5(4)(b) of the Decree do not apply to the 2nd Defendant. Accordingly, whether or not the 2nd Defendant is the beneficial owner of all, the shares in the 1st Defendant vessel, within the meaning of Section 5(4)(b) does not arise and is inapplicable.”

“From the totality of the foregoing, particularly, from the admission of the Captain of the vessel himself; and the exposition of Turkish Law, it becomes abundantly clear that Koray A S. the 2nd Defendant herein is the Owner of the 1st Defendant vessel.

In this regard, I should refer to Section 151 of the Evidence Act which makes admissible any averment against one’s own pecuniary or other interest”

“Accordingly, whether the 2nd Defendant herein is the owner (per Exh. FG 10 or the Disponent or nominal owner (per Exh. Al) or the owner as paras. I and 10 of Exh.FG4), the 2nd Defendant is, within the meaning of the cases of Andrea Urula and Congresso del Partido the owner for the purposes of this suit.

For all those, I find that the 2nd Defendant beneficially owns the 1st Defendant vessel.”

The 2nd Defendant owns the 1st Defendant, which thereby becomes liable to arrest on an admiralty claim in rem.

“Without more, by the combined effect of the provisions of Section 10(l) and (2) of the Decree, into which the facts of this case squarely fit, I find that notwithstanding the pendency of the Arbitration in London, this court can, if the Court sees fit in exercise of its powers, in particular under Section 10(1) (b) and 2 (6) of the Decree, order the arrest of the vessel and impose as a condition for its release, the sum claimed by the Plaintiff herein as security for payment of the award of the Arbitration.

See Also M/V Da Quing Shan v. PAC (1991)8 NWLR (Pt.209) at p.354 where the Court of Appeal upheld an arrest to secure the award of an arbitration. Therefore, I resolve this issue in favour of the plaintiff.”

“…… this Court has jurisdiction to hear and determine the application herein; and therefore, the Plaintiffs are properly before this Court”

That suit FHC/L/CS/213/95 having been discontinued with, “there are not two actions now pending” and therefore there was no abuse of process of court.”

The Defendants were displeased with the decision of the trial High Court and appeal to the Court of Appeal. The Court, after considering the submissions in the written briefs, of the parties and the oral arguments of their respective learned counsel, allowed the appeal, struck out Plaintiff’s suit and ordered the immediate release of the 1st Defendant. The Court, as per the lead judgment of R. D. Muhammad JCA with which the other Justices expressed consent, found, inter alia, as follows:

…..… “I consider the conduct of the respondent as an abuse of the judicial process of the court in that the respondent having failed to secure the arrest of the ship in Suit No. FHC/L/CS/213/95 proceeded to obtain the arrest of the ship by filing suit No. FHC/UCS/236/95 against the appellants while the earlier suit was still pending.”

“Suit No. FHC/L/CS/213/95 has been discontinued and struck out. There was only one case before the court below, when it heard the motion. Even though I have held that filing the second suit while the first one was pending before the court was an abuse due to the peculiar circumstances of this case, i.e. the first case has been discontinued, I don’t think the appeal should be allowed on this alone.”

“A nominal owner cannot be said to be the beneficial owner with respect to all the shares in a ship he nominally owns. I, therefore, hold that the Lloyd’s confidential index is not a confirmation that Koray Shipping is the beneficial owner of the M.V. “S.ARAZ”.

“I therefore, believe that M.V. “S.ARAZ” is owned by Turkiye Kalkinmma Bankasi A.S. and not Koray Shipping and I so hold. For the above reason I hold that the trial judge was wrong to hold Koray was the beneficial of the ship.” (sic)

That “since Koray Shipping are not the beneficial owners as respects the shares in M.V. “S.ARAZ”, the action cannot be maintained under S.5(4) (b).”

“I hold that the learned trial judge was wrong to hold that S.10 of the Admiralty Jurisdiction Act, 1991 applied to this case.”

Muhammad JCA concluded:

“As I have stated the only purpose of bringing, this action to obtain security from the appellants to ensure payment of any arbitration award that may be made in favour of the respondents in an arbitration which has commenced in London since 1992 (sic). The combined effect of Sections 1 (1)(a), S.5(4) and S 10 of the Admiralty Jurisdiction Act, 1991 is that the admiralty jurisdiction of the Federal High Court cannot be invoked in such a situation.”

Being dissatisfied with the judgment of the Court of Appeal, the Plaintiffs have now appealed to this Court upon two original and one additional grounds of appeal and in their amended brief of argument filed pursuant to the rules of this Court, have set down three issues as calling for determination in this appeal, to wit:

Whether the Appellants’ action was an abuse of process particularly after the earlier action had been discontinued?

Whether the Admiralty Jurisdiction of the Federal High Court can be invoked against the Defendants/Respondents solely for the provision of Security for an Arbitration proceeding in a foreign jurisdiction?

Whether the 2nd Defendant/Respondent, KORAY SHIPPING & TRADING INC. are the Beneficial Owners of the Motor Vessel “S.ARAZ” in the circumstance of this case?’

The issues as formulated by the Defendants in their own brief are not dissimilar though differently worded. I propose to adopt Plaintiffs’ issues in the determination of this appeal. And because issue (2) relates to the competence of Plaintiffs’ action, and therefore, the jurisdiction of the trial Court, it shall be the one to be considered first.

ISSUE (2)

Both in his written brief of argument and oral submissions, Mr. Ologu, learned counsel for the Plaintiffs submits that the admiralty jurisdiction of the Federal High Court can be invoked against the Defendants in an action for the provision of security for an arbitration proceeding as in the case on hand for the reason that the 2nd Defendants breached the terms of charterpaty they had with the Plaintiffs and that that breach gave rise under section 2(3) (f) of Admiralty Jurisdiction Act, 1991 to a maritime claim and that in addressing such a claim it is the usual practice to require a defendant to give security for the satisfaction of any award which a Court or an arbitrator may eventually make. It is argued further that as the maritime claim in this case was pending before an arbitrator and 2nd defendant had not given security, it was proper for the Plaintiffs to claim for such security as they have done and that the Federal High Court would have jurisdiction to entertain such claim pursuant to section 2(3) (f) of the Act. It is argued that the provision of security is not limited to actions commenced in a court of law alone but extends to arbitration proceedings as well.

A passage at page 99 of Christopher Hill’s Maritime Law (3rd edition) is cited as authority for this submission. It is learned counsel’s submission that by the combined effect of section 1 (1)(a) and 2(3)(f) of the Act “a claim for the provision of security for the satisfaction of an award by an arbitrator is a matter which the Federal High Court can hear and determine conclusively on the merits without more being required of the Plaintiffs as such a claim or matter arises out of an agreement for the use or hire of a ship.” Learned counsel further submits that pursuant to section 10(2)(a) &(b) of the Act, the Plaintiffs’ action is, sustainable. Counsel relies on M.V. “Da Quing Shan & Ors. v. Pan Asiatic Commodities Plc Limited (1991) 8 NWLR 354 at p. 364 F-G in support of his submission. Learned counsel argues that if the Federal High Court can invoke the admiralty jurisdiction to order the arrest of a vessel where it stays proceedings in an action commenced before it for the purpose of having the dispute resolved by arbitration the mere fact that a party opts to go to arbitration in the first instance rather than go to court (which proceedings are liable to be stayed) does not derogate from the powers of the Court to order provision of security pursuant to an action in rem and an arrest made there under.

Counsel submit that in interpreting a statute, every clause must be construed with reference to the context and other clauses of the Act as far as possible to make a consistent understanding of the whole statute and achieve its intendment. He relies on Orubu v. NEC (1988) 5 NWLR 323 at p. 333 and urges this Court to hold that the Court of Appeal was in error when it held that admiralty jurisdiction of the Federal High Court did not extend to a claim solely for the provision of security to satisfy an arbitration award. Relying on The Jalamatsya (1987) f2 Lloyd’s Report 164 learned counsel observes that in England, whether a plaintiff proceeded by way of arbitration rather than by court action would not matter as by virtue of S. 26 of the Civil Jurisdiction and Judgments Act 1982, such plaintiff could obtain security by way of in rem procedure without being accused of abusing the courts process. He urges this Court to follow the practice in England more so that section 26 of the U.K Act applied in The Jalamatsya case is in pari materia with section 10 of the Nigerian Act under consideration. After citing a passage on page 95 on Hill’s Maritime Law, learned counsel concludes his submissions thus:

“The nature of the action filed in this suit as borne out by the Particulars of Claim (set out in page 2 of the Record of Appeal) does not derogate from the powers of the Federal High Court under S.11 of the Federal High Court Act to determine the matter of security completely and finally as distinct from the issue of the charterparty breach being contested before the arbitrator in London.

To this end, the Court is entitled and free to call for oral and documentary evidence from the parties before making any order as may be deemed appropriate in the interest of justice.”

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SC.167/1996