Shipping

The regulatory provisions that govern the shipping sector in Nigeria are:

• the Merchant Shipping Act 2007 (MSA);
• the Nigerian Ports Authority Act 1999;
• the Nigerian Maritime Administration and Safety Agency Act 2007;
• the Coastal and Inland Shipping (Cabotage) Act (5/2003);
• the Admiralty Jurisdiction Act 1991;
• the Admiralty Jurisdiction Procedure Rules 2011;
• the Constitution of the Federal Republic of Nigeria 1999 (as amended);
• the Federal High Court Act 1973; and
• the Federal High Court Civil Procedure Rules 2019.

The following bilateral/multilateral instruments on shipping are applicable in Nigeria:

• the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading and Protocol of Signature (Hague Rules) 1924, which was domesticated in Nigeria as the Carriage of Goods by Sea Act 2004;
• the Hamburg Rules United Nations Convention on the Carriage of Goods by Sea, 1978, which Nigeria subsequently ratified and domesticated as the United Nations Convention on the Carriage of Goods by Sea (Ratification and Enforcement) Act 2005;
• the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974 and its Protocol of 1990, which are applicable in Nigeria pursuant to Section 15 of the MSA; and
• the Maritime Labour Convention 2006.

The following bodies are responsible for enforcing the shipping laws and regulations in Nigeria:

• the Nigerian Ports Authority, which governs and regulates all ports in Nigeria;
• the Nigerian Shippers Council, which serves as a forum for the protection of the interests of shippers on matters affecting the shipment of imports and exports to and from Nigeria, including moderating the costs of shipping; and
• the Nigerian Maritime Administration and Safety Agency (NIMASA), which is responsible for ensuring effective:
• • maritime safety administration;
  • maritime labour regulation;
  • marine pollution prevention and control;
  • search and rescue;
  • cabotage enforcement;
  • shipping development and ship registration;
  • training and certification of seafarers; and
  • maritime capacity development.

The regulators supervise the shipping sector with the aim of promoting the participation of indigenous ship-owning companies. They also encourage fair treatment and protection of the national interest when dealing with industry stakeholders.

Vessels that may be registered in Nigeria include:

• fishing vessels;
• floating production storage and offloading and floating storage and offloading units;
• licensed ships weighing under 15 gross tons;
• merchant ships;
• ships licensed to operate in coastal and inland waters of Nigeria;
• ships weighing 15 gross tons or more;
• ships owned by Nigerian citizens or Nigerian registered bodies corporate;
• ships on bareboat charters and other charters exceeding 12 months; and
• ships under construction.

With regard to restrictions, with respect to vessels that can be registered in Nigeria, vessels must be owned by:

• Nigerian citizens;
• corporate bodies and partnerships established under and subject to Nigerian laws, with their principal place of business in Nigeria; or
• such other persons as the minister may prescribe by regulations.

Dual registration of a vessel is not permitted in Nigeria, as Nigeria operates a closed registry.

• Nigerian citizens;
• Nigerian registered corporate bodies; and
• Such other persons as the minister may prescribe by regulation.

The Nigerian Ship Registration Office under the Nigerian Maritime Administration and Safety Agency.

The information contained in the shipping register includes:

• the name of the ship;
• the particulars of the origin of the ship;
• the name of the builders and the date on which the vessel was built;
• the particulars of the ship operator; and
• the particulars of any mortgages or liens regarding the ship.

The register is accessible to the public.

The following documents should be provided:

• the bill of sale or builder’s certificate for a new build;
• the vessel name reservation;
• a copy of the certificate of company registration with the Corporate Affairs Commission;
• a copy of the company’s memorandum and articles of association;
• a copy of the company’s Registration Form CAC 1.1;
• a copy of the company’s registration licence with the Nigerian Maritime Administration and Safety Agency (NIMASA);
• the vessel tonnage certificate;
• the vessel insurance policy;
• a copy of the company’s tax clearance certificate;
• a reference letter from the company’s bank;
• a copy of the certificate of deletion (foreign-flagged vessel);
• a copy of the class certificate (where applicable); and

The process is as follows:

• A formal application must be made to the minister through the director general of NIMASA attaching the documents listed above along with duly completed copies of the following documents:
• • the NIMASA application form;
  • a declaration of ownership form; and
  • evidence of payment of the vessel registration fees.
• The application must then be submitted for a conditional survey and for the issuance of a certificate of tonnage measurement to facilitate a flag survey of the ship.
• Upon receipt of a fully compliant application, the registrar will enter in the register:
• • the name of the ship;
  • the particulars of the origin of the ship;
  • the name of the builders and the date on which the vessel was built;
  • the particulars of the ship operator; and
  • the particulars of any mortgages or liens on the ship.
• NIMASA charges a registration fee for the registration of the ship, which is often subject to review and approval.
• A certificate of registration will be issued by the registrar upon satisfactory completion of the registration process. The certificate must be placed on board the ship and conspicuously displayed on deck.

The effects of registration are as follows:

• It gives the vessel the opportunity to trade within Nigeria’s coastal waters;
• The vessel will be given a good rating under the Nigerian Content Development Monitoring Board’s Marine Vessel Categorisation Scheme, which was created to increase the capacity of Nigerian-owned vessels to participate in the oil and gas industry. Under the scheme, vessels with a high ranking can compete for work in the oil and gas industry; and
• It gives the vessel a right to fly the national flag.

In case of deregistration, the vessel must apply to the Ministry of Transport, through the office of the director general of NIMASA, for a licence to participate within Nigeria’s cabotage waters, allowing a foreign-flagged vessel to work and operate within Nigeria’s territorial waters. The vessel will no longer enjoy any of the benefits outlined above.

The formal documentary requirements for registration of a shipping mortgage are as follows:

• Where the mortgagor is a corporate entity, the ship mortgage must first be registered as a charge with the Corporate Affairs Commission (CAC). This process takes between four and eight weeks. Every applicant must submit the following documents to begin the process:
• • a notice of charge (Form CAC 8), to be filed with the CAC (where the mortgagor is a body corporate);
  • an application for registration of charge, to be filed with the ship registry, attaching the following:
  • • the certificate of registration of charge obtained from the CAC;
    • the board resolution approving the mortgage of the vessel, which must be under seal; and
    • receipts for payment of consent to mortgage and payment of the mortgage form;
  • duly stamped mortgage forms (which are issued in two sets: a mortgage to secure account form and a certificate of mortgage);
  • a letter of authorisation where a solicitor is completing the forms on behalf of a client or body corporate;
  • the security deed; and
  • a duly completed and signed mortgage form, together with the following documents;
  • • a photocopy of the consent letter or letters (ie, prior consent to mortgage granted by the director general of NIMASA);
    • a copy of the deed of mortgage or security deed;
    • a copy of the certificate of registration of charge;
    • a copy of the stamp duty receipt for the security deed and mortgage forms; and
    • a receipt for payment of the registration fee per vessel.
• Upon obtaining the CAC certificate of registration of mortgage, the applicant will proceed to register the ship mortgage at the ship registry. The application to the ship registry begins with the submission of a formal letter to the office of the director general of NIMASA and for the attention of the registrar of ships. The application will be submitted to the office of the director general requesting consent to create and register a mortgage on the vessel. Consent is normally granted routinely and upon grant of the same the applicant must submit the following documents to the ship registry:
• • a duly completed form for the certificate of mortgage, stamped by the Federal Inland Revenue Service (FIRS);
  • a duly completed mortgage to secure account form, stamped by the FIRS;
  • a letter of authorisation or power of attorney authorising the solicitor to act on behalf of the mortgagor (where the application is being submitted by the applicant’s solicitor);
  • the mortgage deed;
  • a resolution by the applicant’s board of directors authorising the creation of the mortgage;
  • the CAC certificate of registration of the mortgage;
  • a photocopy of the consent letter or letters (ie, prior consent to the mortgage granted by the director general);
  • a copy of the stamp duty receipt for the security deed and mortgage forms; and
  • a receipt for payment of the statutory registration fee for the mortgage.
• The final due diligence on all documents and vessels will then be conducted before the forms are signed by the registrar of ships.
• One set of mortgage forms will be issued to the mortgagor while the registry will retain the other set.

Upon registration, the mortgage will be deemed to be a legal mortgage and on notice to the public that there is an encumbrance on the vessel. The mortgagee will also be given priority preference over other creditors and will not be affected by any act of bankruptcy committed by the mortgagor after the date of record of the mortgage. This is provided for under Section 57 of the Merchant Shipping Act.

Section 58 of the Merchant Shipping Act also gives the mortgagee the power to absolutely dispose of the ship and to provide receipts for the purchase money.

Deregistration of the mortgage, which is based on the production of a receipt evidencing that the mortgage has been fulfilled, will result in the mortgage being discharged against the mortgagor pursuant to Section 56 of the Merchant Shipping Act. The mortgagee will also no longer have priority over other creditors in case of the sharing of the proceeds of a forced sale of the vessel.

The Nigerian Maritime Administration and Safety Agency (NIMASA) is responsible for port state control by virtue of Section 22(1)(m) of the NIMASA Act 2007. Under this section, NIMASA has the power to perform port and flag state duties.

NIMASA also has the power to implement and enforce safety standards, whether under domestic laws or international conventions ratified by Nigeria by virtue of the provisions of Section 51(3) of the NIMASA Act. NIMASA also has the power to carry out a minimum of 15% inspections on vessels calling in Nigeria’s ports, under the Abuja Memorandum of Understanding.

The penalties that may be imposed against a ship for breach of the applicable laws and conventions include:

• a fine of between NGN 300,000 and NGN 5 million for each day of default;
• withdrawal of maritime services;
• ship seizure and detention; and
• revocation of an international ship security certificate or statement of compliance.

In addition, where an owner, agent, master, officer or person in charge of a ship is liable for a penalty under the applicable laws, NIMASA may:

• revoke any licence or certificate issued in respect of the ship;
• suspend a licence issued in respect of the ship for a period considered appropriate;
• deny a licence issued in respect of the ship;
• impose additional conditions and restrictions on any licence issued in respect of the ship; and
• refuse or revoke the clearance issued with respect to entry into a port facility.

Yes, decisions of the port state control authority may be appealed by writing a letter of appeal to the director general of NIMASA, requesting that the decision be revised for valid reasons.

The domestic provisions which apply to marine casualties are as follows:

• Section 266 to 271 of the Merchant Shipping Act 2007, which aim to prevent collisions at sea;
• Section 338 to 350 of the Merchant Shipping Act 2007, which deal with liability in collision cases;
• the Merchant Shipping (Collision) Rules 2010, which enforce the sections of the Merchant Shipping Act that apply to marine casualties;
• Section 2(3)(a) of the Admiralty Jurisdiction Act 1991, which confirms that matters relating to marine casualties are general maritime claims which can be heard and determined exclusively by the Federal High Court of Nigeria; and
• Order 4, Rules (1) and (2) of the Admiralty Jurisdiction Procedure Rules 2011, which govern the institution of proceedings in court to enforce a claim for damages arising from the loss of a ship or damage done to or by a ship.

The applicable international provisions are set out in the 1972 Convention on International Regulations for the Prevention of Collisions at Sea.

The master, the shipowner or any person in charge of the ship may bring a marine casualty claim.

The following persons may also be held liable for a marine casualty:

• the employer of the wrongdoer;
• the salvors, if in breach of the duty of care during a salvage operation;
• the port authority, if it has been careless in providing navigational safety in breach of its statutory duties; and
• ship builders or repairers that build defective ships, fail to carry out proper repair to ships or supply defective equipment, by reason of which collision, death or personal injury occurs, in which case they will be held liable for negligence.

The Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol thereto apply to marine casualty claims by virtue of Section 335 of the Merchant Shipping Act.

Shipowners and salvors may limit their liability according to Section 351 of the Merchant Shipping Act (MSA). ‘Shipowners’ in this context include the owners, charterers, managers and operators of a ships.

Section 352(1) of the MSA provides for certain claims which are subject to limitation of liability. They include:

• claims in respect of loss of life or personal injury, or loss of or damage to personal property, resulting directly;
• claims of a person other than the person liable in respect of measures taken to avert or minimise loss; and
• claims in respect of the raising, removal, destruction or rendering harmless of a ship which has sunk or been wrecked, stranded or abandoned, including anything that is or was on board such ship.

The rules and procedures governing the establishment of limitation funds are set out in Section 357 of the Merchant Shipping Act 2007 and Order 15 of the Admiralty Jurisdiction Procedure Rules 2009.

Upon an application to court for limitation of liability by the defendant, the court will decide on the extent of such liability and determine the appropriateness of limitation in the circumstances. Upon hearing both parties, the court may order the limitation of the shipowner’s liability and the establishment of a limitation fund. The court will further grant an order mandating the shipowner to publish details of the order establishing a limitation fund in a national newspaper, to enable other members of the public who might have an interest in the incident which gave rise to the limitation proceedings to make a claim to the limitation fund, the value of which will be constituted in the form of a bank guarantee.

Section 353 of the Merchant Shipping Act excludes some claims from limitation of liability. These include:

• claims for salvage or contribution in general average;
• claims for oil pollution damage; and
• claims against the shipowner of a nuclear ship for nuclear damage.

Under Section 354 of the Merchant Shipping Act, if it is proved that loss or damage resulted from the personal act or omission of a person or its servants or agents within the scope of their employment, committed with the intent to cause such loss or damage and in the knowledge that such loss would probably result, such persons will not be entitled to limit their liability.

The operator may rely on the perils of the sea defence where:

• the vessel was seaworthy; and
• there was no negligent conduct by the carrier, master or crew in the management of the vessel.

The Nigerian Maritime Administration and Safety Agency (NIMASA) is the main body responsible for investigating and responding to marine casualties in Nigeria. NIMASA is empowered to hold a preliminary inquiry immediately after a shipping casualty has occurred to inquire into the causes and reasons for the occurrence. NIMASA is also empowered to establish a marine board to:

• conduct formal investigations into any casualty in respect of which reports have been submitted to it; or
• inquire into charges of incompetence or misconduct on the part of any officer of a ship.

Section 274 of the Merchant Shipping obliges the master of a Nigerian ship to report dangerous derelicts or any other direct danger to navigation by sending information through such means of communication as are available to ships within the vicinity or to such authorities on shore as may be prescribed.

Section 275 also requires the master of a ship to report any accident that:

• causes material damage to the ship;
• results in loss of life or serious injury to any person; or
• causes a collision.

The master must, where possible:

• transmit a preliminary report by radio communication if in port when the accident or damage occurs; and
• within 24 hours either of reaching the port or of the event occurring, transmit a full signed report on the accident or damage to NIMASA.

Non-compliance/default attracts a fine of not less than NGN 100,000.

The are no specific remedial measures in the event of a marine casualty, save for the aggrieved party instituting a claim in court for compensation. However, if a marine casualty results in a shipwreck, Sections 365 and 366 of the Merchant Shipping Act impose an obligation to remove the wreck upon the shipowner, which may contract with a salvor or other person to remove the wreck on its behalf. This must be done within a specified timeframe.

Any person or vessel can carry out salvage operations in Nigeria. Foreign vessels are not precluded from rendering assistance to persons or vessels in danger or distress within Nigerian waters.

NIMASA is empowered to provide search and rescue services by virtue of Section 22(1)(f) of the NIMASA Act. The Nigerian Ports Authority (NPA) is also empowered to carry out marine salvage operations pursuant to Section 7(g) of the NPA Act. The NPA has the function of facilitating the salvage of life and property on vessels on the high seas.

There are no other requirements and restrictions in this regard, save that tugs are prohibited from receiving reward for salvage activities unless they render exceptional services which cannot be considered as rendered in fulfilment of the contract of towage. This is provided for under Section 388(4) of the Merchant Shipping Act.

The local laws which regulate cargo claims are as follows:

• the Carriage of Goods by Sea (Ratification and Enforcement) Act 2004 (which domesticated the Hague Rules);
• the United Nations Convention on Carriage of Goods by Sea (Ratification & Enforcement) Act 2005 (which domesticated the Hamburg Rules);
• the Merchant Shipping Act 2007; and
• the Admiralty Jurisdiction Act 1991.

The international conventions which relate to cargo claims are:

• the Hague Rules of 1924; and
• the Hamburg Rules of 1978.

The Hague Rules apply to inbound cargo, while the Hamburg Rules apply to inbound and outbound cargo. In Nigeria, both the Hague Rules and the Hamburg Rules are applicable to cargo claims. This is because the United Nations Convention on the Carriage of Goods by Sea (Ratification & Enforcement) Act 2005 (which domesticated the Hamburg Rules) failed to repeal the Hague Rules upon coming into force in 2005. A peculiar situation thus prevails whereby the two contrasting laws apply at the same time.

This notwithstanding, some argue that only the Hamburg Rules apply, as these are the most recent; while some take the view that only the Hague Rules apply because the Nigerian government failed to formally notify the Belgian government of its denunciation of the Hague Rules, as specifically required by Article 31 of the Hamburg Rules. See Megaplastics Industries v Mv Kota Halus, FHC/L/Cs/1436/12, in this regard. Thus, parties ultimately rely on the express statements of the contract of carriage in determining which law is applicable.

The carrier, shipper, consignee and endorsee are entitled to sue for cargo claims in Nigeria.

The limitation of liability regime which applies depends on the cargo claim regime expressly stated as applicable between the parties under the contract of carriage. In Nigeria, the carrier and the shipowner are entitled to limit their liability under both cargo claims regimes.

Section 352 of the Merchant Shipping Act lists the following persons as persons entitled to limit their liability for claims in respect of loss of cargo:

• the shipowner;
• the charterer;
• the manager and operator of the ship; and
• the salvor.

The types of cargo claims that can be limited are set out in Section 353(1) of the Merchant Shipping Act, as follows:

• claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage; and
• claims in respect of the removal, destruction or rendering harmless of the cargo of the ship.

To limit liability in a cargo claim, the party wishing to limit its liability must file an application at the Federal High Court seeking to limit its liability. Upon receiving the application, the court will decide on the extent of such liability and determine the appropriateness of the limitation in the circumstances. Upon hearing both parties, the court may order the limitation of the shipowner’s liability and the establishment of a limitation fund, which will be constituted in the form of a bank guarantee.

Claims in respect of the removal, destruction or rendering harmless of the cargo of the ship cannot be brought where they relate to remuneration under a contract with the person liable. This is pursuant to Section 353(2) of the Merchant Shipping Act.

Furthermore, a carrier is not entitled to the benefit of limitation of liability if it is proved that loss or damage resulted from the personal act or omission of a person or its servants or agents within the scope of their employment, committed with the intent to cause such loss or damage and in the knowledge that such loss would probably result, by virtue of Section 355 of the Merchant Shipping Act.

By virtue of Articles 5(3)(a)(ii), 5(5) and 5(6) of the United Nations Carriage of Goods by Sea (Ratification and Enforcement) Act 2005, in the event of loss resulting from loss of cargo or loss occasioned by delay in the delivery of cargo, carriers and shipowners may rely on the following defences:

• The carrier or its servants took all measures possible to mitigate the loss;
• In respect of live animals, the carrier submits proof of compliance with the special instructions of the shipper for the carriage of animals where loss, damage or delay in delivery could be attributed to special risks inherent in the carriage of such animals;
• The loss, damage or delay in delivery resulted from efforts to save life or property at sea; or
• The shipper failed to properly stow, lash or otherwise pack the cargo securely.

Sections 215, 340 and 341 of the Merchant Shipping Act apply to passenger claims in Nigeria.

The Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974 and its Protocol of 1990 also applies.

Section 352(1) of the Merchant Shipping Act and the Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol thereto apply to passenger claims in Nigeria.

Under the applicable provisions, shipowners, managers, charterers and operators of a ship, and salvors, can limit their liability in passenger claims.

Claims in respect of loss of life or personal injury and claims in respect of loss resulting from delay in the carriage by sea of passengers or their luggage are subject to limitation of liability by virtue of Section 353(1) of the Merchant Shipping Act.

To limit liability in a passenger claim, the party wishing to limit its liability must file an application at the Federal High Court seeking to limit its liability. Upon receiving the application, the court will decide on the extent of such liability and further determine the appropriateness of limitation in the circumstance. Upon hearing both parties, the court may order the limitation of the shipowner’s liability and the setting up of the limitation fund, which will be constituted in the form of a bank guarantee. This is provided for under Order 15 of the Admiralty Jurisdiction Procedure Rules 2011.

A person liable will not be entitled to limit its liability if it is proved that the loss or damage resulted from its personal act or omission or the act or omission of its servants or agents acting within the scope of their employment, committed with the intent to cause such loss or damage or recklessly and in the knowledge that such loss would probably result, by virtue of Section 354 of the Merchant Shipping Act.

Sections 5 to 15 of the Admiralty Jurisdiction Act 1991 and Orders 7 to 13 of the Admiralty Jurisdiction and Procedural Rules 2011.

There are no international provisions regulating the arrest of ships in Nigeria.

Nigeria has acceded to the International Convention for the Unification of Certain Rulеѕ Relating to the Arrest of Ocean-Going Vessels, 1952, but this has not yet been domesticated.

Under Section 2(2)(a) of the Admiralty Jurisdiction Act (AJA), ships can be arrested for the following claims:

• claims relating to:
• • the possession of a ship;
  • a title to or ownership of a ship or a share in a ship;
  • a mortgage of a ship or of a share in a ship; or
  • a mortgage of a ship’s freight;
• claims between co-owners of a ship relating to the possession, ownership, operation or earnings of the ship;
• claims for interest in respect of a general maritime claim as defined under Section 2(2)(3) of the AJA;
• claims in respect of a maritime lien or other charge on any ship or other property; and
• any other claims listed under Section 2 of the AJA which arise in connection with a ship, where the ‘relevant person’ (ie, the person who would be liable on the claim in an action in personam) at the time the cause of action arose was:
• • the beneficial owner or charterer of the ship under a demise charter; or
  • in possession or in control of the ship in respect of all shares in the ship.

The party instituting an arrest must provide evidence in its statement of claim that there is a maritime claim against the ship. The applicant must also ensure that a caveat against arrest has not been filed. Where such a caveat exists, the party is precluded from filing an application for arrest under Order 7, Rule 1(2) of the Admiralty Jurisdiction Procedure Rules (AJPR) and Order 8, Rule 1 of the AJPR.

Maritime liens are recognised in Nigeria by virtue of Section 5(3) of the AJA. These are claims relating to:

• salvage;
• damage done by a ship;
• wages of the master or a member of the crew of a ship; or
• master’s disbursements (on account of the ship).

The difference between a ship arrest for a maritime line and a ship arrest for a maritime claim is that where the basis of the arrest is the existence of a maritime lien, the liability attaches to the vessel and thus remains valid despite any change in ownership of the vessel. However, where the arrest is based on a maritime claim, it is valid only if the relevant person is the beneficial owner of the ship at the time of the arrest. If the relevant person is no longer the beneficial owner of the ship at the time of the arrest, the arrest will not be valid.

The principle of arresting a sister ship or associated ship belonging to the same shipowner is recognised in Nigeria and provided for under Section 5(4)(b) of the AJA. Under this section, the arrest of a sister ship is possible where, at the time the action is brought, the relevant person (ie, the person who would be liable in an action in personam) is the beneficial owner or charterer of the sister ship in respect of all shares in the ship. If this the case and the offending vessel is outside the jurisdiction of the court, the sister ship can be arrested in lieu of the offending vessel.

There are certain restrictions in an application for arrest of a sister ship:

• It would amount to an abuse of process and wrongful arrest for a claimant to arrest more than one vessel for one and the same claim; and
• A person that is not the consignee, the consignor or the endorsee on a bill of lading is restricted from applying for arrest (Section 5(9) of the AJA).

This principle also will not apply if the relevant person is only a time charterer of the ship and not the demise charterer of the ship.

A bareboat-chartered vessel can be arrested only if the arresting party can prove that:

• there is a maritime claim against the ship; and
• at the time the action is brought, the relevant person was the beneficial owner or charterer by demise of the ship in respect of all the shares in the ship.

A time-chartered vessel cannot be arrested where the relevant person was not the beneficial owner or the charterer by demise of the ship in respect of all the shares in the ship at the time the action is brought.

This is provided for under Section 5(4)(a) of the AJA.

According to the AJPR and the AJA, a person seeking to arrest a vessel must first provide prima facie evidence that there is a maritime claim against the ship. This is done by commencing an action in rem, by way of writ of summons, at the Federal High Court against the ship that is the target for the loss, damage or harm suffered. The writ of summons must be accompanied by:

• a statement of claim;
• a witness statement on oath;
• a list of witnesses and a list of documents to be relied on in court;
• an ex parte application seeking an order of arrest;
• a verifying affidavit; and
• an affidavit of urgency.

Order 2, Rule 1 of the AJPR provides that an action in rem may be commenced in the Judicial Division of the court in which the ship may be found or is expected to arrive. An application for a warrant of arrest can be made only where:

• the ship is within Nigerian territorial waters; or
• it is expected that the ship will arrive in Nigerian territorial waters within three days.

The ex parte application will be heard by a judge who has the discretion to decide whether the application has merit. Where there is a prima facie maritime claim against the ship, a warrant of arrest will be issued against the ship. The warrant of arrest is to be executed by the admiralty marshal and the warrant of arrest may be executed on any day pursuant to Order 7, Rule 7 of the AJPR.

A sealed copy of the process should be served on the ship by affixing a copy to a mast or some other conspicuous part of the ship, or by to the master of the ship by virtue of Order 5, Rule 1 of the AJPR. The execution of a warrant of arrest will be verified by affidavit.

The process takes between two and five working days.

Countersecurity need not be provided, except where an interested party files an application for security for costs by virtue of Order 13(1)(a) of the AJPR. The application will be granted where:

• the claim is more than NGN 5 million or its foreign currency equivalent; or
• the arrestor has no assets in Nigeria.

An arresting party must also generally pay an initial upfront deposit for the admiralty marshal’s cost and expenses. According to Order 9, Rule 2(2)(a)(b) of the AJPR, this may be between NGN 100,000 and NGN 500,000 as a deposit towards discharge of the liability; further demands can be made fortnightly for payment account on those expenses.

Once a ship arrest has been effected on a ship, the ship will remain in the custody of the admiralty marshal until the action has been determined or the ship has been fully released.

The procedure for release of a ship from arrest is set out in Order 10, Rule of the AJPR, as follows:

• upon filing of an application for the release of the ship;
• upon filing of a ‘consent to release’ and an oral application by the arresting party consenting to the release of the ship to a judge in chambers (Order 10, Rule 2 of the AJPR);
• upon the filing of an application by an interested party for the release of the vessel (Order 10, Rule 4 of the AJPR); or
• upon the filing of an application for the ship’s release in exchange for:
• • security equal to the amount of the claim or the value of the ship, whichever is less; or
  • a bail bond equal to the amount of the claim.
• Security can be in the form of a bank guarantee in the amount equal to the value of the claim or the value of the ship, whichever is less.

The admiralty marshal may, on written application by the relevant person, obtain the authorisation of a judge to release the ship from arrest (Order 10, Rule 5(1)(a-b) of the AJPR).

No answer submitted for this question.

Although most actions in rem (ship arrest) are directed at the vessel, in appropriate circumstances, an application for arrest can equally and effectively be commenced against other maritime property, such as cargo, bunkers and freight, as well as aircraft.

Where the ship has already been sold, an action in rem can be commenced against the proceeds of the sale which have been paid into court by virtue of Section 8 of the AJA.

The key domestic provisions on judicial sale of vessel are:

• the Admiralty Jurisdiction Act 1991 (AJA); and
• Order 16 of the Admiralty Jurisdiction Procedural Rules 2011 (AJPR).

Judicial sale of an arrested vessel can be initiated by an application by a party either before or after final judgment in a proceeding for an order that the ship be valued or valued and sold (Order 16, Rule 1(1) of the AJPR). If the ship is deteriorating in value, the court may also, at any stage of the proceeding, on notice to the parties, order that it be sold subject to valuation (Order 16, Rule 1(3) of the AJPR).

The procedure is as follows:

• An application is filed in court seeking an order for the valuation and sale of the ship.
• Upon grant of the application, the sale is conducted by the admiralty marshal.
• An ad is placed in two national daily newspapers.
• The sale then takes place 21 days after publication of the ad. The judicial sale of an arrested vessel is by auction, unless the court orders a different method (Order 16, Rule 2 (1-2) of the AJPR).
• After the sale of the vessel, the admiralty marshal will, within 21 days:
• • file a return of sale;
  • pay into court the proceeds of sale; and
  • file an account of sale and the vouchers of the account.

A judicial sale takes between four and eight weeks, on average, to conclude from the date of the court order granting the valuation and sale.

The costs incurred in a judicial sale of an arrested vessel are mainly the admiralty marshal’s expenses. These expenses are computed and filed by the marshal, who then deducts 2% from the proceed of sale to cover his expenses, including bank charges (Order 16, Rule 4 (1-2) of the AJPR).

The proceeds of sale are distributed in the order of priority of claims set out in Order 17 of the AJPR. Under this provision, anyone who already has an enforceable judgment against a vessel may apply to the court to determine the order of priority of the claims against the vessel. The order of priority is as follows:

• statutory, court and other charges and costs – the admiralty marshal has a first charge on the vessel for all his expenses in connection with the vessel throughout the course of the proceeding as well as the costs of the sale pursuant to Order 17(2) of the AJPR;
• maritime liens – which rank inter se from salvage to collisions, damage, seafarers’ wages, disbursement of master, repairers, calins for ports and pilotage dues – in accordance with Section 68 of the Merchant Shipping Act;
• registered mortgages, and preferential rights, hypotenuse and charges;
• statutory rights in rem, which include cargo and charterparty claimants, repairers, towage, pilotage (where applicable); and
• claims of other trade creditors.

Where a court orders the sale of a ship, any bona fide purchaser will get a good title to the ship and can transfer the ship as if it were the registered owner. The ship will thus be free from all claims, encumbrances and liens, these being transferred to the proceeds of sale.

The sale of a vessel by the admiralty marshal pursuant to court order extinguishes all liens that are not satisfied from the sale proceeds.

Section 336 of the Merchant Shipping Act, Part XXIII, provides for the application of the provisions of the following conventions for the regulation of pollution of ships in Nigeria:

• the International Convention for the Prevention of Pollution from Ships 1973/1978, and the Annexes thereto;
• the Convention relating to Intervention on the High Seas in Case of Threatened Oil Pollution Casualties 1969;
• the International Convention on Prevention of Marine Pollution by Dumping of Wastes and Other Matters 1972;
• the International Convention on Oil Pollution Preparedness, Response and Cooperation 1990;
• the International Convention on Civil Liability for Oil Pollution Damage 1992;
• the Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol thereto;
• the Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage 1971 and its Protocol of 1992;
• the Basel Convention on the Control of Transboundary Movements of Wastes and their Disposal 1989;
• any other international agreement or convention which relates to the prevention, reduction or control of pollution of the sea or other waters by matters from ships, and civil liability and compensation for pollution damage from ships to which Nigeria is a party, such as the International Maritime Organization (IMO) Sulphur Regulations 2020; and
• the Marine Environment (Sea Protection Levy) Regulations, 2012.

The IMO Sulphur Regulations 2020 are applicable on Nigerian waterways and regulate the sulphur content in fuel oil used by ships.

There are no domestic or international provisions on ship recycling in Nigeria.

Environmental issues include the following:

• Disposal of garbage and solid waste: Non-oil pollutants such as garbage and other solid waste from ships are normally dumped into the sea or rivers. Solid waste generated on a ship includes glass, paper, cardboard, aluminium and steel cans, and plastics. Waste can be either non-hazardous or hazardous in nature.
• Tanker accidents: Oil spills are commonly associated with ship pollution. Oil tankers, chemical and gas carriers are prone to normal sea risks such as collision, grounding, explosion and fires. The exploration, exploitation and transportation of oil, gas and their derivatives have resulted in several catastrophic accidents. While less frequent than the pollution that occurs from daily operations, oil spills have devastating effects.

Shipowners must implement control and preventive measures against marine pollution on board.

Sections 176 to 193 of the Merchant Shipping Act provide for the welfare of maritime workers. Certain sections deal specifically with the health and safety of seafarers onboard vessels in Nigeria.

The Maritime Labour Convention 2006, which was ratified by the Nigerian government on 18 June 2013, is the primary international legislation on the health and safety of maritime workers in Nigeria. The rights of maritime workers protected by the convention include:

• the right to a safe and secure workplace;
• the right to decent living and working conditions; and
• the right to health protection, medical care, welfare measures and other forms of social protection.

Nigeria practises a cabotage regime, whereby only vessels manned by Nigerian citizens can engage in domestic coastal trade by virtue of Section 3 of the Coastal and Inland Shipping (Cabotage) Act 2003. The vessels operating within Nigeria’s territorial waters must engage Nigerian citizens exclusively to work on board their vessels. This notwithstanding, the act provides for a system of waivers, whereby an application maybe submitted to the minister of transport though the office of the director general of the Nigerian Maritime Administration and Safety Agency (NIMASA) for a waiver from the manning requirements of the Cabotage Act pursuant to Section 10 of the Cabotage Act. Waivers are very difficult to obtain and will only be granted where the applicant can show that there are no qualified Nigerian officers or crew available for the position specified in the application.

Several rights of maritime workers with respect to wages are contained in Sections 150 to 160 of the Merchant Shipping Act 2007. Maritime workers or seafarers have:

• the right to earn wages;
• the right to recover their wages; and
• the right to be appropriately compensated in the event of improper discharge.

It is therefore important for shipowners and operators to carefully follow the terms of the contract of employment/engagement of maritime workers in Nigeria to avoid needless disputes.

Shipping disputes are typically heard in the Federal High Court, by virtue of Section 251(1)(g) of the Constitution of Nigeria 1999 (as amended) and Section 1(1)(g) of the Admiralty Jurisdiction Act 1991. The Federal High Court is vested with the exclusive jurisdiction to hear and determine maritime disputes.

Shipping disputes may also be resolved through arbitration or other alternative dispute resolution (ADR) mechanisms. Essentially, the ADR mechanism must be included in the contract or agreement between the disputing parties. The rules that govern the ADR mechanism, the venue, the mode of appointment of the arbitrator or other adjudicator and other details should also be agreed by the parties to the contract or the parties involved in the shipping dispute.

The issues involved in shipping disputes range from proprietary maritime claims to general maritime claims. Section 2 of the Admiralty Jurisdiction Act details the maritime claims that are proprietary in nature and those that are general maritime claims.

Proprietary maritime claims include those relating to:

• the possession of a ship;
• a title to or ownership of a ship or of a share in a ship;
• a mortgage of a ship or of a share in a ship;
• a mortgage of a ship’s freight;
• disputes between co-owners of a ship relating to possession, ownership or operations; and
• the satisfaction of a judgment given by the court against a ship.

Claims relating to general maritime claims include those relating to:

• damage done by a ship;
• damage suffered by a ship;
• loss of life or personal injury due to a defect in a ship;
• damage to goods carried by a ship;
• agreements relating to the carriage of goods or persons by a ship;
• salvage; and
• general average.

These disputes are typically resolved by filing an action at the Federal High Court. However, if the parties have agreed on an ADR mechanism, the dispute must be resolved in accordance with the selected ADR mechanism.

One recent case that is worth noting is MT Sam Purpose (Ex MT Tapti) v Amarjeet Singh Bains, which concerned the court’s jurisdiction to hear and determine matters relating to crew wages. In March 2021, the Court of Appeal of Nigeria delivered its judgment in the appeal of a Federal High Court, Lagos Division ruling of 22 May 2020. In resolving the primary issue before the Court of Appeal – that is, whether the Federal High Court or the National Industrial Court has exclusive jurisdiction over maritime labour claims – the Court of Appeal relied on the Constitution of the Federal Republic of Nigeria 1999 (as amended), the Admiralty Jurisdiction Act, the Merchant Shipping Act, the Labour Act and judicial precedence to hold that the National Industrial Court is vested with exclusive jurisdiction to entertain maritime labour claims involving the wages of crew members. However, this decision has raised serious questions among maritime law experts in relation to the practicality of crew members exercising a lien over the vessel, given that it is only the Federal High Court that can affect the arrest of a vessel. This decision unfortunately and regrettably remains the position of the law unless it is overturned by the Supreme Court of Nigeria.

The shipping sector in Nigeria has continued to operate smoothly after a period of setbacks and challenges caused by the COVID-19 pandemic. Several technology tools – such as container scanners and e-call up systems – have been deployed. Many of these technologies are still undergoing upgrades and finetuning, but should facilitate smooth operations in the sector.

Some proposed legislative reforms are also being considered by the National Assembly, incuding revisions to:

• the Merchant Shipping Act Amendment Bill;
• the Coastal and Inland Shipping (Cabotage) Amendment Bill;
• the Nigerian Maritime Zones Act (Repeal & Re-enactment) Bill 2019;
• the Ports and Harbour Bill;
• the National Shipping Policy Act Amendment Bill;
• the Nigerian Ports Authority Act Amendment Bill; and
• the National Inland Waterways Authority Amendment Bill.

The recent decision of the Court of Appeal of Nigeria in MT Sam Purpose (Ex MT Tapti) v Amarjeet Singh Bains (see question 11.3) will significantly impact on maritime disputes relating to the wages of crew members. According to the Court of Appeal, such matters are now to be commenced before the National Industrial Court of Nigeria rather than the Federal High Court. This position presents challenges with regard to the arrest of a vessel in exercise of a crew member’s right of lien for unpaid wages, which cannot be executed by the National Industrial Court. The position will remain the law unless the Supreme Court of Nigeria decides otherwise.

Shipowners and operators are expected to comply with the relevant laws, regulations and guidelines applicable to the sector, including:

• the Merchant Shipping Act;
• the Coastal and Inland Shipping (Cabotage) Act;
• Nigerian Maritime Administration and Safety Agency (NIMASA) regulations; and
• regulations issued by the Nigerian Shippers’ Council.

Compliance with these will ensure that shipowners and operators carry out their operations smoothly.

Shipowners and operators should also comply with the provisions of other relevant laws – such as the Companies and Allied Matters Act, the Companies Income Tax Act and the Personal Income Tax Act – to ensure smooth operations in Nigeria.