Messrs. Nv. Scheep & Anor V. The Mv “s.araz” & Anor (2000)

LAWGLOBAL HUB Lead Judgment Report

OGUNDARE, J.S.C.

The main question that calls for determination in this appeal is as to whether the admiralty jurisdiction of the Federal High Court can be invoked 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 the 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 Kindgom 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. Scheep Vaatmij Unidor Wille Mstad, Curacoa – 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 Curacoa Owners of the Vessel 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 M. V. CINDYA, claim against the defendants, jointly and severally, the sum of US $300,000.00 (United States Dollars Three hundred thousand only) as security for 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:

1. 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.
2. 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/applicant’s 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:

3. 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:

i. 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.

ii. that the documents now shown to me and marked Exhibits “A and F” are the claims, submissions and supporting documents submitted to the Sole Arbitrator, one Mr. Mark Hamsher, of 18C Ensign Street, London E1 8JD, by solicitors to the parties.

iii. that the defendants/respondents have till date not provided any security to meet the plaintiff’s claim or any award thereon before the Sole Arbitrator.

iv. that the plaintiffs/applicant’s 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 Charter party dated 24th October, 1989 annexed hereto as Exhibit “D”.

v. 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.

vi. that the 2nd defendant/respondent is the beneficial owner of the 1st defendant vessel M. V. “S.ARAZ” as confirmed by the Llyod’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 in 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 MV ‘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.

(2) The said vessel shall be released from arrest and detention only upon the defendants/respondents furnishing an acceptable Bank Guarantee in the sum of US $300,000.00 to meet the plaintiffs/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 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 Hnourable Court.

(e) The case herein has no contention 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 Llyods Register of Ships 1994-95 marked “A11”.

4. 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 Charters, Tigris International Corp marked “A12”.
5. 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 M. V. “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 Llyods Confidential Index. There is now produced and shown to me, a copy of the Llyods Confidential Index marked “A13”.

b) as nominal owners of the 1st defendant/applicant, Koray Shipping and 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 would be liable in an action inpersonam 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 Industry Inc. were and are the beneficial owners of all the shares in the M. V. “S.ARAZ”, the 1st defendant/applicant.

6. That on the 9th March, 1995, the plaintiffs obtained an Order of interim arrest and detention of the M. V. “S.ARAZ” before this Honourable Court for alleged 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 Charter Party dated 24 October, 1989.
7. That there is no connection whatsoever between the M.V. “S.ARAZ” is not a sister vessel to the M. V. “CINDYA”
8. 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 for 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 suit and the statement of defence of the defendant/respondent in this suit filed before the Sole Arbitrator in London marked “A1.4” and “A1.5” respectively.

c) that the plaintiffs in this action commenced an action in rem for the arrest of the M. V. “S.ARAZ” the 1st defendant/applicant at the 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 “A16” and “A17” respectively.

d) that the plaintiff thereafter commenced another action for the same claim as the one in suit No. FHC/LCS/2 13/95 for the arrest of the M. V. “S.ARAZ”, the 1st defendant/applicant using the name Vaatimij Unidor Willie Mstad, who are the principals to the plaintiffs in suit No. FHC/L/CS/213/95, 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 the suit herein marked “A19”.

e) that if the plaintiffs want 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.

9. That further to paragraphs 8(c) and (d) above, the plaintiffs have not used the machinery of the court bonafide, as they have abused the process of the court by engaging in oppressive and vexatious litigation against the 1st defendant/applicant.
10. That the cause of action in this suit has no connection with Nigeria.
11. 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 plaintiffs responded to this application by filing a counter-affidavit in which one Folashade Giwa, a legal practitioner deposed, inter alia, as follows:

3. 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.
4. 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 A1.3 to this application.
5. That the alleged Disponent Owners are not a party to this action and have taken no steps to become a party thereto.
6. That no particulars or terms of the alleged disponent ownership have been presented to this Honourable court.
7. That Exhibit A1.2, the Time Charter party with a third party, has an addendum which forms part thereof which the deponent failed to disclose. The same is now marked as “Exhibit FG1” hereto and shows that:

(a) the 2nd defendant/respondent is a party to the said charter party;

(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.

8. 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 verily I 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 Kalkinma 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 Kalkinma 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.

9. That the 2nd defendant/respondent chartered the vessel M. V. “CINDYA” from the plaintiff/applicant and breached the terms of the said charter.
10. That the vessel M. V. “S.ARAZ” is not a sister ship to M. V. “CINDYA” but remains beneficially owned by the 2nd defendant/respondent.
11. 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.
12. That the issue before this court is different from that which is before the Sole Arbitrator in London.
13. That the plaintiff/respondent is free and entitled to bring this action in rem before this Honourable court in exercise of its legal right.
14. That the plaintiff/respondent is not obliged to present this claim before the Sole Arbitrator in the pending Arbitration and has not done so.
15. That suit No. FHC/L/CS/213/95 was not commenced by the plaintiff/respondent in this suit.
16. 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.
17. 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.
18. That on the instruction of the plaintiff/applicant in 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.
19. That the plaintiff/respondent has acted in good faith in this matter and has not in any way abused the process of this Honourable Court.
20. That the defendants have not in any way been oppressed by vexatious or several litigation at the instance of the plaintiff/respondent.
21. That the cause of action in this suit is enforceable in Nigeria against a vessel within her jurisdiction.
22. 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.
23. 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.
24. 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.
25. 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 orders.”

(Italics are mine)

The Notice of Discontinuance of suit 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:

3. That on the 15th day of May, 1995, I deposed to a counter-affidavit in this matter.
4. 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.
5. 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”.
6. That in paragraph 1 of Exhibit FG4 deposed to by the Captain of the vessel, the owners of the vessel is stated to be Koray Denizcilik Ve Ticaret A. S. which in English means Koray Shipping & Trading Inc. – the 2nd defendant.
7. 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.
8. 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:

3. 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 M. V. ‘S.ARAZ’, the first defendant/applicant herein.
4. That I have read the counter-affidavit and further counter-affidavit of Folashade Giwa filed on the 15th May, 1995 and 16th May, 1995 respectively.
5. 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 defendant/respondent are not the beneficial owners of the 1st defendant/applicant as confirmed by Exh. G of the said affidavit.
6. That the owners of the 1st defendant/applicant are Turkiye Kalkinma Bankasi A. S. as contained in paragraph 3 of the affidavit in support of this application dated 3rd of May, 1995 and confirmed by Exh. “All” of the said affidavit.
7. That paragraph 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. “A1″ referred to in paragraph 6 above.
8. That paragraph 18 of the counter affidavit of Folasade Giwa dated 16 May, 1995 is not correct, the Notice of Discontinuance was only filed after the plaintiff’s 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 17th, 22nd and 23rd May, 1995. After hearing arguments from learned counsel for the parties, the learned trial Judge, in a ruling delivered on 31st May, 1995, refusing the prayers sought by the 1st defendant, found:

1. “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 Exhs. A, B and D, it is beyond controversy that the 2nd defendants are resident and carry on business in Istanbul, Turkey.

Therefore, the provision 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 it is inapplicable.”

2. “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 the 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.”
3. “Accordingly, whether the 2nd defendants herein is the owner (per Exh. FGI0 or the disponent or nominal owner (per Exh. A1) or the owner as per paras. 1 and 10 of the Exh. FG4), the 2nd defendant is, within the meaning of the cases of Andrea Ursula 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”

4. The 2nd defendant owns the 1st defendant, which thereby becomes liable to arrest on an admiralty claim in rem”.
5. “Without more, by the combined effect of the provisions of section 10(1) 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 Courts sees fit, in exercise of its powers, in particular under section 10(l)(b) and 2(b) 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 MIV Da Qing Shan v. PAC Ltd. (1991) 8 NWLR (Pt.209) 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.”

6. ” this court has jurisdiction to hear and determine the application herein; and therefore, the plaintiffs are properly before this court.”
7. 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 appealed to the Court of Appeal. That 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 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:

1. …”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/L/CS/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 Lylod’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 Kalkinma 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 owner of the ship.”

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

“I hold that the learned trial Judge was wrong to hold that section 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 is 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. The combined effect of section 1(1)(a), section 5(4) and section 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:

1. Whether the appellant’s action was an abuse of process particularly after the earlier action had been discontinued
2. 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
3. Whether the 2nd defendant/respondent, Koray Shipping & Trading Inc. are the beneficial owners of the Motor Vessel “S Araz” in the circumstances of this case”

The issues as formulated by the defendants in their own brief are not dissimilar though differently worded. I propose to adopt plaintiff’s issues in the determination of this appeal. And because issue(2) relates to the competence of plaintiff’s 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 a charter party they had with the plaintiffs and that that breach gave rise under section 2(3)(f) of the 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 sections 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 1O(2)(a) & (b) of the Act, the plaintiff’s action is sustainable. Counsel relies on M V “Da Qing Shan & Ors v. Pan Asiatic Commodities Limited (1991) 8 NWLR (Pt.209) 354 at 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 thereunder. Counsel submits that in interpreting a statue, every clause must be construed with reference to the con 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 (Pt.94) 323 at 333 and urges this court to hold that the Court of Appeal was in error when it held that the 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) 2 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 court’s 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 charter party 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.”

Dr. Atake, SAN learned leading counsel for the defendants, both in his written brief and in oral submissions, argues that the admiralty jurisdiction of the Federal High Court cannot by the combined effect of section 1(1)(a) of the Admiralty Jurisdiction Act 1991 and section 11 of the Federal High Court Law 1973, be invoked in the circumstances of the case on hand. Learned Senior Advocate examines section 10(1) & (2) of the Act and submits that it applies only in cases where proceedings are stayed or dismissed unlike in the case on hand where proceedings are not stayed or dismissed in the Nigerian court. Learned Senior Advocate points out that the M V “Da Qing Shan” case (supra) relied on by the plaintiffs is not apposite to the case on hand as there was a substantive claim of $300,289.00 for excess freight, etc. in that case and that the issue here did not arise nor was decided in that case. Dr. Atake also draws the court’s attention to another passage in Christopher Hill’s Maritime Law which appears to run counter to plaintiffs’ stand in the case on hand. He submits that The Jalamatsya’s case is inapplicable and immaterial in deciding the case on hand in that section 26 of the U.K. Act is not in pari materia with section 10 of the Nigerian Act. Learned Senior Advocate urges the court to uphold the decision of the Court of Appeal and dismiss this appeal.

I have earlier in this judgment set out the claim of the plaintiffs. No doubt, by the terms of the claim, the sole purpose of the action is to seek in the Federal High Court security for whatever damages, interest or costs that might be awarded in plaintiff’s favour in the arbitration proceedings then pending in London. It is this action that the learned trial Judge held she had jurisdiction to entertain. But the Court of Appeal held differently. The question that arises is: who is right

To answer this question, one must first have a look at the Federal High Court Act Cap. 134 Laws of the Federation of Nigerian 1990. Section 7(1)(d) of the Act confers on the Federal High Court admiralty jurisdiction which jurisdiction is provided in section 1 of the Admiralty Jurisdiction Act, 1991, Section 1 provides:

“1. (1) The admiralty jurisdiction of the Federal High Court (in this decree referred to as “the court”) includes the following, that is –

(a) jurisdiction to hear and determine any question relating to a proprietary interest in a ship or aircraft or any maritime claim specified in section 2 of this Decree;

(b) any other admiralty jurisdiction being exercised by any other court in Nigeria immediately before the commencement of this Decree;

(c) any jurisdiction connected with any ship or aircraft which is vested in any other court in Nigeria immediately before the commencement of this Decree;

(d) any action or application relating to any cause or matter by any ship owner or aircraft operator or any other person under the Merchant Shipping Act or any other enactment relating to a ship or an aircraft for the limitation of the amount of his liability in connection with shipping or operation of aircraft or other property;

(e) any claim for liability incurred for oil pollution damage;

(f) any matter arising from shipping and navigation on any inland waters declared as national waterways;

(g) any matter arising within a Federal port or national airport and its precincts, including claims for loss of or damage to goods occurring between the off-loading of goods across space from a ship or an aircraft and their delivery at the consignee’s premises, or during storage or transportation before delivery to the consignee;

(h) any banking or letter of credit transaction involving the importation or exportation of goods to and from Nigeria in a ship or an aircraft, whether the importation is carried out or not and notwithstanding that the transaction in between a bank and its customer;

(i) any cause or matter arising from the constitution and powers of all ports authorities, Airport Authority and the National Maritime Authority;

(j) any criminal cause and matters arising out of or concerned with any of the matters in respect of which jurisdiction is conferred by paragraphs (a) to (i) of this subsection

(2) The admiralty jurisdiction of the court in respect of carriage and delivery of goods extends from the time the goods are placed on board a ship for the purpose of shipping to the time the goods are delivered to the consignee or whoever is to receive them whether the goods were transported on land during the process or not.

(3) Any agreement or purported agreement, monetary or otherwise, connected with or relating to carriage of goods by sea whether the contract of carriage is executed or not shall be within the admiralty jurisdiction of the court”

What is a proprietary interest in a ship or aircraft or what is a maritime claim is to be found in section 2 of the Act which reads:

“2.-(1) A reference in this Decree to a maritime claim is a reference to a proprietary maritime claim or a general maritime claim refence in this Decree to a proprietary maritime claim is a reference to –

(a) a claim relating to –

(i) the possession of a ship, or

(ii) a title to or ownership of a ship or of a share in a ship, or

(iii) a mortgage of a ship or of a share in a ship, or

(iv) a mortgage of a ship’s freight;

(b) a claim between co-owners of a ship relating to the possession, ownership, operation or earning of a ship;

(c) a claim for the satisfaction or enforcement of a judgment given by the court or any court (including a court of a foreign country) against a ship or other property in an admiralty proceeding in rem;

(d) a claim for interest in respect of a claim referred to in paragraph (a), (b) or (c) of this subsection.

(3) A reference in this Decree to a general maritime claim is a reference to –

(a) a claim for damage done by a ship whether by collision or otherwise;

(b) a claim for damage received by a ship;

(c) a claim for loss of life or for personal injury, sustained in consequence of a defect in a ship or in the apparel;

(d) or equipment of a ship;

including a claim for loss of life or personal injury, arising out of an act or omission of – subject to subsection (4) of this section, a claim –

(i) the owner or charterer of a ship,

(ii) person in possession or control of a ship,

(iii) a person for whose wrongful act or omission the owner, charterer or person in possession or control of the ship is liable;

(e) for loss of damage to goods carried by ship;

(f) a claim out of an agreement relating to the carriage of goods or persons by a ship or to the use or hire of a ship whether by charter party otherwise:

(g) a claim relating to salvage (including life salvage of cargo or found on land);

(h) a claim in respect of general average;

(i) a claim in respect of pilotage of a ship;

(j) a claim in respect of towage of a ship or an aircraft when it is waterborne;

(k) a claim in respect of goods, materials or service (including stevedoring and lighter age service) supplied or to be supplied to a ship for its operation or maintenance;

(l) a claim in respect of the construction of a ship (including such a claim relating to a vessel before it was launched);

(m) a claim in respect of the alteration, repair or equipping dock charges or dues;

(n) a claim in respect of a liability for port, harbour, canal or light tolls, charges or dues, or tolls, charges or dues of any kind, in relation to a ship;

(o) a claim arising out of bottomry;

(p) a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship;

(q) a claim for an insurance premium, or for a mutual insurance call, in relation to a ship, or goods or cargoes carried by a ship;

(r) a claim by a master, or a member of the crew, of a ship for

(i) wages, or

(ii) an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of operation of the law of a foreign country;

(s) a claim for the forfeiture or condemnation of a ship or goods which are being or have been carried, or have been attempted to be carried in a ship, or for the restoration of a ship or any such goods after seizure;

(t) a claim for the enforcement of or claim arising out of an arbitral award including a foreign award within the meaning of the Arbitration and Conciliation Act made in respect of a proprietary maritime claim or a claim referred to in any of the preceding paragraphs;

(u) a claim for interest in respect of a claim referred to in any of the paragraphs (a) to (t) of this subsection.

(4) A claim shall not be made under subsection (3)(d) of this section unless the act or omission is an act or omission relating to the management of the ship, including an act or omission in connection with –

(a) the loading of goods on to or the unloading of goods from a ship;

(b) the embarkation of persons on to or the disembarkation of persons from a ship; and

(c) the carriage of goods or persons on a ship.

(5) A claim under paragraphs (a) to (c) of this subsection may be made against the owner, agent or charterer of a ship.

What then is a claim The word is defined in Black’s Law Dictionary as meaning:

“demand as one’s own or as one’s right. .. A cause of action …”

And the expression “cause of action” is defined in the said Dictionary as meaning

“The fact or facts which give a person a right to judicial redress or relief against another. The legal effect of an occurrence in terms of redress to a party to the occurrence. A situation or state of facts which would entitle party to sustain action and give him right to seek judicial remedy in his behalf.”

See also Bello & Ors v. Attorney-General Oyo State(1986) 5 NWLR (Pt.45) 828. From the above, it can be seen that a claim presupposes a cause of action.

What is plaintiff’s cause of action in the present proceedings Is security for damages, interest and/or costs that may be awarded in a proceeding a cause of action Certainly not. Security for damages, etc, belongs to the realm of adjectival law, that which prescribes method of enforcing rights or obtaining redress for their invasion. It is essentially rules of court, whether civil, criminal or appellate. Laws which fix duties, establish rights and responsibilities among and for persons – be they natural or corporate – are known as substantive laws. But those which merely prescribe the manner in which such rights and responsibilities may be exercised and enforced in a court are adjectival or procedural laws.

Security for damages, etc, belongs to the latter group. It is usually required of a debtor or defendant to assure the payment or performance of his debt by furnishing the creditor or plaintiff with a resource to be used in case of failure in the principal obligation. It is not a cause of action that can ground a claim, unless otherwise specifically provided by statute. One of such statute is the U.K. Civil Jurisdiction and Judgments Act, 1982 section 26 of which provides:

“Where in England and Wales, or Northern Ireland, a court stays or dismisses Admiralty proceedings on the ground that the dispute in question should be submitted to arbitration or to the determination of the courts of another part of the United Kingdom, or of an overseas country the court may, if in those proceedings property has been arrested, or bailor other security has been given to prevent or obtain release from arrest – (a) order that the property arrested be retained as security for the satisfaction of any award of judgment which (i) is given in respect of the dispute in the arbitration or legal proceedings in favour of which those proceedings are stayed or dismissed and (ii) is enforceable in England and Wales, or as the case may be, in Northern Ireland, or (b) order that the stay or dismissal of those proceedings be conditional on the provision of equivalent security for the satisfaction of any such award or judgment.”

It was on the basis of the above provisions that Sheen .J in the “Jalamatsya” (supra) held at page 165:

“That section (that is section 26) was enacted to enable claimants (I use a neutral expression) to obtain security if they proceeded by way of arbitration rather than by action. In my judgment S.26 applied whether or not an arbitration has already been commenced. It follows that if an arbitration has been commenced, and if the claimants in the arbitration have not obtained security for any possible award, they can quite properly issue a writ in rem if they know that a ship belonging to the respondents in the arbitration is coming within the jurisdiction, and they may arrest that ship in order to obtain security.”

(Words in earlier brackets are mine)

In an earlier case, The “Vasso” (1984) 1Lloyd’s Report 235; (1984) QB 477, which arose before the enactment of the 1982 Act the Court of Appeal (England), per Goff L.J, at affirming Sheen J, declared:

“However, on the law as it stands at present, the court’s jurisdiction to arrest a ship in an action in rem should not be exercised for the purpose of providing security for an award which may be made in arbitration proceedings. That is simply because the purpose of the exercise of the jurisdiction is to provide security in respect of the action in rem, and not to provide security in some other proceedings, for example, arbitration proceedings. The time may well come when the law on this point may be changed: See S.26 of the Civil Jurisdiction Act, 1982, which has however not yet been brought into force. But that is not yet the law. It follows that if a plaintiff invokes the jurisdiction of the court to obtain the arrest of a ship as security for an award in arbitration proceedings, the court should not issue a warrant of arrest.”

Sheen .J had at the trial in the Admiralty Court held that:

“The appellant’s only purpose in arresting Vasso was to obtain security for the satisfaction of whatever award might ultimately be made by the arbitrators; the appellants did not purport to invoke the jurisdiction of the court for the purpose of hearing and determining any claim; accordingly the court had no jurisdiction to arrest the vessel and the club’s undertaking would be discharged.”

The plaintiffs in the appeal on hand have urged this court to follow The Jalamatsya arguing that section 26 of the U.K. Act of 1982 is in the pari material with section 10(2)(a) & (b) of our Admiralty Jurisdiction Act, 1991. Now subsections (1) and (2) of section 10 provide-

“10(1) Without prejudice to any other power of the court –

(a) where it appears to the court in which a proceeding commenced under this Decree is pending that the proceeding should be stayed or dismissed on the ground that the claim concerned should be determined by arbitration (whether in Nigeria or elsewhere) or by a court of a foreign country; and

(b) where a ship or other property is under arrest in the proceeding, the court may order that the proceeding be stayed on condition that the arrest and detention of the ship or property shall stay or satisfactory security for their release be given as security for the satisfaction of any award or judgment that may be made in the arbitration or in a proceeding in the court of the foreign country.

(2) The power of the court to stay or dismiss a proceeding commenced under this Decree includes power to impose any conditions as is just and reasonable in the circumstances, including a condition.

(a) with respect to the institution or prosecution of the arbitration or proceeding in the court of a foreign country; and,

(b) that equivalent security be provided for the satisfaction of any award or judgment that may be made in the arbitration or in the proceeding in the court of a foreign country.”

With profound respect to learned counsel for the plaintiffs, I do not share the view that section 26 of the U.K. Act is in pari materia with section 10(2) (a) & (b) of our own Act. Section 10 of our act presupposes the existence of a pending action that is ordered to be stayed or dismissed. Section 26 of the U.K. Act goes further than this. Although the facts in The Jalamatsya (supra) are almost on all fours with the facts of the case on hand, but because there is no equivalent of section 26 of the U.K. Act in our Admiralty Jurisdiction Act, 1991, that case is not relevant to the case on hand. There is nothing in sections 1,2,5 and 10 of the act or any other section, that empowers the plaintiffs to invoke the admiralty jurisdiction of the Federal High Court in the circumstances of this case. Plaintiff’s claim is not for the enforcement of, or a claim arising out of an arbitral award, it is for the sole purpose of obtaining security for the satisfaction of whatever award that might ultimately be made in their favour in the U.K. arbitration proceedings. They cannot invoke the admiralty jurisdiction of the Federal High Court by an action in rem for that purpose. Our law as it stands does not clothe the Federal High Court with such admiralty jurisdiction.

The case of M. V. “Da Qing Shan” (supra) relied on by the plaintiffs, is of no assistance to them for in that case, there was a substantive claim of U.S. $300,289 and an unspecified claim for damages. The trial court stayed proceedings and ordered the parties to submit to arbitration in London. The ship that had previously been arrested was ordered to be released. There was an appeal to the Court of Appeal and an application for stay of execution of the order of release. The facts clearly are different here. And the question is not whether this is a proper case for the making by the court of an order for security but whether it is a matter that can be made the subject of a claim simpliciter in a writ of summons rather than by way of an application in a pending proceeding.

I have read Christopher Hill’s Maritime Law (3rd Edition). I find nothing in it that is of assistance to the plaintiffs having regard to our law.

The conclusion I finally reach is that the Federal High Court, has no jurisdiction to entertain plaintiff’s action and the Court of Appeal was right in so holding. I therefore, answer Question 2 in the negative. And in view of this conclusion, the other two questions raised in this appeal for determination have become academic.

No useful purpose will be served in dealing with them in this appeal.

This appeal fails and it is dismissed by me with N10,000.00 costs to the respondents.

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SC.167/1996