Nigeria Maritime Administration & Safety Agency & Anor V. Noble Drilling Nigeria Limited (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment)

By an Originating Summons issued on the 24th day of January 2008, the Respondent commenced suit no. FHC/L/CS/78/2008 at the Federal High Court Lagos seeking the determination of the following questions namely:-

1. Whether drilling operations fall within the definition of ‘coastal trade’ or ‘cabotage’ under Section 2 of the Coastal and Inland Shipping (Cabotage) Act 2003 (Cabotage Act).
2. Whether, upon a proper interpretation of the Cabotage Act particularly the provisions of Sections 2, 5 and 22(5) thereof, drilling rigs fall within the definition of ‘vessel’ under the said Cabotage Act.
3. Whether the Minister of Transportation acted ultra vires his powers under the Cabotage Act to make regulations when in Clauses 9.1.1. of the Guidelines on the implementation of the Coastal and Inland Shipping (Cabotage) Act issued in April 2007 (the Guidelines) he included ‘Rigs’ under the classification of vessels to be subject to waiver fees under the cabotage Act.

The Respondent prayed for the following reliefs:-

1. A DECLARATION that drilling operations do not fall within the definition of ‘coastal trade’ or cabotage, under Section 2 of the Coastal and Inland Shipping (Cabotage) Act 2003.
2. A DECLARATION that drilling rigs are not within the purview of the definition of vessels under the Coastal and Inland Shipping (Cabotage) Act 2003 and therefore are not subject to the said Act.

A DECLARATION that the Minister of Transportation acted ultra vires his powers under the Cabotage Act to make guidelines or regulations when in Clause 9.1.1 of the Guidelines he included ‘Rigs’ under the classification of vessels to be subject to waiver fees under the Cabotage Act which act is therefore null and void.

4. AN ORDER of perpetual injunction restraining the Defendants, whether by themselves, their assigns, servants, agents, privies or representatives from disturbing, obstructing, hampering or in any other manner whatsoever interfering with the Plaintiff’s drilling operations or drilling rigs operated by the plaintiffs on grounds of non-compliance with the Coastal and Inland Shipping (Cabotage) Act 2003.”

The Respondent’s reasons for filing the originating summons were that contrary to the letters written by the 1st Appellant demanding 2% surcharge of contract sum performed by all vessels (chartered and company-owned) engaged by the Respondent in offshore and midstream activities, the rigs operated by it were engaged solely in drilling operations which were not marine operations. It also claimed that since the rigs operated by it were not vessels under the Cabotage Act, the Respondent was not liable to pay the 2% surcharge on contract sum relating to its rigs under the Cabotage Act.

After entering a conditional appearance, the Appellant filed a notice of preliminary objection to the suit being brought by originating summons. They also filed counter-affidavit and a counter-claim. With the leave of court they filed a further and better counter-affidavit with several exhibits. The gist of the Appellants’ defence is that the Respondent’s listed drilling rigs were vessels under the Cabotage Act; that they were involved in activities that were cabotage under the Cabotage Act; that the Respondent was one of the major debtors of the 1st Appellant under the 2% cabotage surcharge amounting to US$15,150,000.00 which they counter claimed for.

In their notice of preliminary objection that the action was wrongly commenced by originating summons, they prayed that the originating summons be struck out or converted to a Writ of Summons for the parties to file pleadings. The written address of the parties were duly adopted. The lower Court delivered its Ruling on 21/10/08 dismissing the preliminary objection and holding that the action as constituted had been properly commenced by originating summons and that the appropriate step for the Appellants it they wanted to pursue their counter claim was to institute an action. The learned trial judge directed parties to file written arguments on the Originating Summons.

The parties thereupon filed and adopted their written addresses on the originating summons and the lower court delivered its judgment granting all the reliefs sought by the Respondent.

Being dissatisfied with the Judgment, the Appellants filed a notice of appeal. With the leave of the court pursuant to a Motion they filed to amend their notice and grounds of appeal and for leave to raise and argue fresh points, the Appellants filed an amended notice of appeal with seven grounds of appeal.

The parties exchanged briefs of argument and at the hearing of the appeal on the 6th day of November, 2013 they adopted their respective briefs. The Appellants formulated the following issues from their grounds of appeal:

1. Should the learned trial Judge have declined jurisdiction to hear and entertain this suit when the conditions precedents to the exercise of that jurisdiction were not met by the Respondent? (Ground 1)

In the alternative to issue 1 above:-

2. Whether the Appellants’ right to fair hearing was not infringed when their counter-claim was not heard and determine along with the claims filed by the Respondent and not considered in arriving at his Lordship’s judgment? (Ground 2).
3. Whether the Respondents’ drilling rigs operating within the Nigeria cabotage zone are ‘vessels’ and their drilling operations are ‘cabotage’ or coastal trade’ within the meanings of the words ‘vessel’ and ‘cabotage’ or ‘coastal trade’ under the Cabotage Act so as to bind the Respondent to pay the 2% surcharge on such operations to the Appellant and the learned trial Judge was not wrong in holding that they were not? (Grounds 3 and 4).
4. Whether the Court below should have read the Cabotage Act and Guidelines as a whole and applied the ‘mischief rule’ of interpretation of statutes in discovering the intention of the legislature in the Cabotage Act and its Guidelines with respect to the interpretative matters submitted to it for adjudication which would have led to a dismissal in this case? (Ground 5).
5. Whether the listing of rigs by the 2nd Appellant under clause 9.1.1. of the Guidelines under the caption ‘Foreign Vessel’ to be subject to waiver fees under the Cabotage Act, is wrong? (Ground 6).
6. Whether the learned trial Judge was right in granting injunction restraining the Appellants’ from performing their statutory duties? (Ground 7).

From the seven grounds of appeal filed by the Appellants in their amended notice of appeal, the Respondent distilled the following issues for determination:

1. Whether service of the originating summons in suit number FHC/L/CS/78/08 on the 2nd Appellant was improper and affected the jurisdiction of the learned trial Judge to hear and determine the suit? (Ground 1)
2. Whether the Appellants’ constitutional right to fair hearing was infringed when the learned trial judge refused to allow them to bring a counter-claim in suit number FHC/L/CS/78/2008 and which intended counter claim was not considered in his final judgment (Ground 2).
3. Whether the learned trial judge was right in holding that drilling rigs and drilling operations are not subject to the Coastal and Inland Shipping (Cabotage) Act 2003? (Grounds 3, 4, 5)
4. Whether the learned trial judge was right in holding that the listing of rigs by the 2nd Appellant under Clause 9.1.1 of the Guidelines for Implementation of the Coastal and Inland shipping (Cabotage) Act 2003 was ultra vires the powers of the 2nd Appellant? (Ground 6)
5. Whether the learned trial judge was right in granting Respondent’s injunctive reliefs? (Ground 7)

The Appellants’ issues are basically the same as those of the Respondent. I shall adopt the Appellant’s issues in the determination of this appeal.

ISSUE ONE: