Newbuilding contracts

Transfer of title

When does title in the ship pass from the shipbuilder to the shipowner? Can the parties agree to change when title will pass?

As a shipbuilding contract is basically an agreement to sell future goods, title generally passes from the shipbuilder to the shipowner upon delivery and the vessel’s acceptance by the buyer. This is, however, subject to the express agreement of the parties. The parties can agree to change when title will pass.

Refund guarantee

What formalities need to be complied with for the refund guarantee to be valid?

To be valid:

  • the refund guarantee must be in writing;
  • it should be by deed unless the buyer has furnished consideration for it; and
  • the extent of the refund guarantee should be clearly stated.
Court-ordered delivery

Are there any remedies available in local courts to compel delivery of the vessel when the yard refuses to do so?

Delivery of the vessel is an express duty of the yard under the contract. Failure to perform this duty will amount to a breach of contract for which the buyer can seek redress in court. The buyer can bring an action in court to compel the yard to deliver the ship in specific performance of the contract.

Defects

Where the vessel is defective and damage results, would a claim lie in contract or under product liability against the shipbuilder at the suit of the shipowner; a purchaser from the original shipowner; or a third party that has sustained damage?

Where the vessel is defective and damage results, the shipowner’s claim can lie in breach of contract if the defect is a result of the shipbuilder’s failure to comply strictly with the agreed specifications and general arrangement plan.

The shipowner’s claim may also lie under product liability where the defect is as a result of negligent workmanship by the shipbuilder, notwithstanding full compliance with agreed specifications and gene­ral arrangement plan.

The claim of a purchaser from the original shipowner against the shipbuilder would lie under product liability.

The claim of a third party who has suffered damage as a result of the defective vessel against the shipbuilder would lie in product liability.

Ship registration and mortgages

Eligibility for registration

What vessels are eligible for registration under the flag of your country? Is it possible to register vessels under construction under the flag of your country?

The vessels eligible for registration under the Nigerian flag are as follows:

  • merchant ships;
  • fishing vessels;
  • ships under construction;
  • ships on bareboat charter to Nigerians or to a Nigerian company beneficially owned in all its shares by Nigerians;
  • licensed ships of less than 15 tonnes gross tonnage; and
  • floating production storage and offloading and floating production storage units.

 

Separate registers are maintained for the different categories of vessels listed above.

It is possible to register vessels under construction under the Nigerian flag.

Who may apply to register a ship in your jurisdiction?

The persons who may register a vessel in Nigeria are:

  • Nigerian citizens;
  • corporate bodies and partnerships established under and subject to Nigerian law, with their principal place of business in Nigeria; and
  • such other persons as the Minister of Transport may prescribe.

 

There has been no prescription by the Minister pursuant to this last category and thus only Nigerian citizens and Nigerian corporate bodies or partnerships are entitled to register vessels in Nigeria.

Documentary requirements

What are the documentary requirements for registration?

The Merchant Shipping Act 2007 (MSA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) guidelines provide that the documents required for registration of vessels are as follows:

  • a formal application by owners or their agents with a letter of authority to act on behalf of the owners;
  • certified copies of the company’s incorporation documents;
  • a copy of the company’s current tax clearance certificate;
  • a copy of the company’s bank statement or a bank reference letter;
  • a completed declaration of ownership form, issued by the Nigerian Ship Registration Office (NSRO);
  • tonnage certificate issued by the surveyor commissioned to survey the vessel to ascertain the tonnage before registration;
  • the vessel documents evidencing:
    • the name of the vessel;
    • the time and place of purchase of the vessel;
    • the name of the master of the vessel;
    • the year of build of the vessel;
    • the description of the vessel; and
    • the carving or marking of the vessel;
  • the bill of sale or the builder’s certificate (evidence of title);
  • deletion certificate issued by the original registry (this is required if the vessel is flagging in from a foreign flag registry;
  • evidence of protection and indemnity (P&I) insurance cover of the vessel;
  • certificate of an approved plan for a newly built vessel in Nigeria, issued by NIMASA or approved by a classification society on behalf of NIMASA;
  • copies of the vessel’s certificates;
  • copies of the receipts issued by NIMASA evidencing payment of registration fees;
  • the requisite forms to be obtained from the registry for completion;
  • documents showing the name and address of the ship managers;
  • the ship’s log, to be inspected by the registrar of ships; and
  • evidence of the ability or experience of the owners to operate and maintain the vessel.
Dual registration

Is dual registration and flagging out possible and what is the procedure?

Dual registration is prohibited under Nigerian law.

However, the registration in Nigeria of foreign vessels bareboat chartered-in by Nigerian citizens for cabotage purposes is permitted. Under that arrangement foreign vessels bareboat chartered-in by Nigerian citizens for use within the coastal area are required to be registered with the Registry and to fly the Nigerian flag for the period of the charter. The original registry of the vessel will be suspended for that period except with regard to private law considerations relating to the title, transfer, transmission and mortgage of the vessel.

Flagging out is not prohibited under Nigerian law as the MSA allows the registration of Nigerian-owned vessels outside Nigeria. To deregister the vessel from the Nigerian Ship Register for the purpose of flagging out, written consent of all registered holders of mortgages on the ship must be obtained.

Mortgage register

Who maintains the register of mortgages and what information does it contain?

Mortgages are registered in the Nigerian Ships Register, which is maintained by the registrar of ships in the Nigerian Ships Registration Office and will contain the particulars of the mortgagee and details of the mortgage debt.

Copies of the following will be placed in the vessel’s file:

  • the mortgage deed;
  • the certificate of mortgage; and
  • the ‘mortgage to secure account current’ form.

 

Where the mortgagor is a corporate body, the mortgage is also registered at the Nigerian companies’ registry known as the Corporate Affairs Commission (CAC). The information contained in the CAC register is as follows:

  • a description and date of creation of the instrument creating the mortgage;
  • the amount secured under the mortgage;
  • particulars of the mortgagee;
  • short particulars of the vessel mortgaged; and
  • the date of acquisition of the vessel mortgaged.

Limitation of liability

Regime

What limitation regime applies? What claims can be limited? Which parties can limit their liability?

The limitation regime that applies is the Convention on Limitation of Liability for Maritime Claims, 1976 and the 1996 Protocol, which was made applicable by the Merchant Shipping Act (MSA).

Claims subject to limitation of liability are:

  1. in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom;
  2. in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage;
  3. in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations;
  4. in respect of the removal, destruction or rendering harmless of the cargo of the ship;
  5. those of a person other than the person liable in respect of measures taken to avert or minimise loss for which the person liable may limit his or her liability in accordance with the MSA, and further loss caused by such measures;
  6. in respect of floating platforms constructed for the purpose of exploring or exploiting the natural resources of the seabed or the subsoil thereof; and
  7. in respect of raising, removal, destruction or rendering harmless of a ship that is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship.

 

Claims falling under (4) to (6) above are not to be subject to limitation to the extent that they relate to remuneration under a contract with the person liable.

The parties who can limit their liability are the shipowner and salvors. ‘Shipowner’ includes the owner, charterer, manager and operator of a ship.

Nigeria is a state party to the Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol. As the Convention and Protocol were made applicable in Nigeria by section 335 of the MSA, the new limits under the 1996 Protocol could have become applicable in Nigeria from 8 June 2015, when they took effect, but because section 356 of the MSA expressly lists the old limits under the 1996 Protocol as the limits applicable in Nigeria, the old limits will remain applicable until that provision of the MSA is amended by the National Assembly.

Procedure

What is the procedure for establishing limitation?

Limitation is established by way of limitation proceedings at the Federal High Court. A party who apprehends that claims under any law, including the MSA that gives effect to a liability convention, are likely to be made against him or her by any party, may apply to the courts for a determination of whether or not its liability can be limited under law.

The proceedings to establish limitation would be commenced by originating summons, which is to be served on persons who have or may have maritime claims against the applicant in respect of matters for which limitation is sought to be established. The originating summons may also be served on one person as the representative of a class. Where the court establishes that the applicant is entitled to limit his or her liability, it may:

  • determine the limit of liability;
  • order the constitution of a limitation fund for the payment of claims in respect of which the applicant is entitled to limit his or her liability; and
  • make such orders as are just for the administration and distribution of the fund.

 

Where all persons identified as having or likely to have maritime claims against the applicant were not served with the summons, the court may order advertisement of the order determining liability and give all such parties a period of at least one month to bring such a claim or apply for the limit of liability to be set aside or varied. Any application to set aside or vary the limit of liability must be served on all other persons named as respondents in the summons commencing the proceedings. Where no such application is made within the stipulated period, the limit as determined shall be binding on all. Where the order determining the limit is not advertised, it shall be binding only on the parties served with the summons.

It is not necessary to provide a cash deposit.

If the court orders the constitution of a limitation fund, such order will specify the method of calculation.

The Admiralty Jurisdiction Act 1991 empowers the Federal High Court to entertain a defence of limitation of liability notwithstanding non-commencement of limitation proceedings from which a fund is set up, so there exists a separate right to plead limitation without setting up a fund.

A shipowner or other entitled person may commence proceedings for limitation of liability and apply to constitute a limitation fund before legal proceedings have been initiated and before they have been required to respond to a claim that has already been commenced.

Break of limitation

In what circumstances can the limit be broken? Has limitation been broken in your jurisdiction?

The limit will be broken where it is proved that the loss or damage was due to the act or omission of the person liable or due to the act or omission of his or her agent or servant while acting within the scope of their employment and with the intent to cause such loss or damage, or recklessly with the knowledge that such damage would result.

The limitation was broken in Nigeria in the case of Shipcare Nigeria Ltd v Owners of the MV ‘Fortunato’ and another (2011) 7 NWLR (Pt 1246) 205 where the incident for which the shipowners sought to limit their liability happened while the vessel was in a compulsory pilotage district and there was no evidence that a licensed pilot was on board the vessel at the time, the court held that the shipowners were not entitled to limit their liability. The failure to have a pilot on board in a compulsory pilotage district was viewed as an act or omission of the ship, which was held as making the ship unseaworthy.

The limit was broken in this case notwithstanding that all required conditions for breaking the limit were not present, that is, there was no evidence of intent to cause the loss or damage by the shipowners, their agent or servants. There was also no evidence that the shipowners, their servants or agents acted recklessly with knowledge that such damage would result.

In Nigeria, the fund is usually established after a determination by the court that the shipowner is entitled to limit its liability for an incident. If the decision that shipowners can limit their liability is set aside on appeal, thereby breaking the limitation, any fund established will be disestablished.

Passenger and luggage claims

What limitation regime applies in your jurisdiction in respect of passenger and luggage claims?

The limitation regime that applies is the Athens Convention relating to the Carriage of Passengers and their Luggage by Sea, 1974 and its Protocol of 1990, which is made applicable by virtue of the MSA. The Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol also applies to claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage.

Port state control

Authorities

Which body is the port state control agency? Under what authority does it operate?

The port state control agency is Nigerian Maritime Administration and Safety Agency (NIMASA), which is also the maritime regulatory authority in Nigeria.

It operates on the authority of the NIMASA Act 2007 and the Merchant Shipping Act (MSA).

Sanctions

What sanctions may the port state control inspector impose?

The sanctions are detention of the offending ship, imprisonment upon conviction for a maximum period of six months or a fine to be determined by NIMASA for the owner or the demise charterer or manager who is in operation of the vessel.

Appeal

What is the appeal process against detention orders or fines?

Where a ship is detained as unsafe, the detaining officer is required to immediately report the detention to the Minister of Transportation (the Minister). The master or owner of the ship can appeal to the Minister, who may appoint a surveyor to survey the ship in determination of whether or not it is unsafe. Depending on the result of the survey, the Minister may order the vessel to be released or endorse the detention. The shipowner or master can appeal against the survey report to a board of survey.

Generally, the shipowner or master can commence action at the Federal High Court to contest the detention order or fine if the appeal fails.

Classification societies

Approved classification societies

Which are the approved classification societies?

The classification societies currently approved by the maritime regulatory authority are:

  • American Bureau of Shipping;
  • International Register of Shipping;
  • Lloyd’s Register;
  • Bureau Veritas;
  • Registro Italiano Navale;
  • International Naval Survey Bureau;
  • DNV GL;
  • China Classification Society;
  • Croatian Register of Ships;
  • Indian Register of Ships;
  • Korean Register of Ships;
  • Nippon Kaiji Kyokai;
  • Polish Register of Ships; and
  • Russian Register of Ships.

 

The list is not exhaustive and may change from time to time.

Liability

In what circumstances can a classification society be held liable, if at all?

Though this is not a common occurrence in Nigeria, generally a classification society should be held liable under the rules of contract if it breaches a term of its agreement with the shipowner.

It may also be held liable in tort to a third party who relies on its assertions in a class certificate to act to its detriment.

Collision, salvage, wreck removal and pollution

Wreck removal orders

Can the state or local authority order wreck removal?

Yes, the Nigerian Maritime Administration and Safety Agency (NIMASA) is empowered by the Merhcant Shipping Act (MSA) and NIMASA Act to order wreck removal.

International conventions

Which international conventions or protocols are in force in relation to collision, wreck removal, salvage and pollution?

The International Regulations for Preventing Collisions at Sea 1972 are in force in Nigeria.

There are no international conventions or protocols presently in force in Nigeria in relation to wreck removal.

The pollution conventions in force in Nigeria by virtue of section 335, MSA are:

  • 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 cases 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 Co-operation 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; and
  • the Basel Convention on the Control of Transboundary Movement of Wastes and their Disposal 1989.

 

The Convention for the Unification of Certain Rules of Law with respect to Collisions between Vessels 1910 is not applicable in Nigeria.

The Nairobi International Convention on the Removal of Wrecks 2007 is not in force in Nigeria. The convention has been ratified by Nigeria but as it has not been enacted by the Nigerian National Assembly as required by the Constitution, it is not yet law in Nigeria. Wreck removal on Nigerian territorial waters is governed by the Merchant Shipping Act 2007 and the Merchant Shipping (Wrecks and Salvage) Regulations 2010 made thereunder.

The International Convention on Civil Liability for Oil Pollution Damage (CLC) 1992 is in force by virtue of section 335 of the MSA.

The International Convention on Salvage 1989 is in force in Nigeria by virtue of section 387 of the MSA.

Salvage

Is there a mandatory local form of salvage agreement or is Lloyd’s standard form of salvage agreement acceptable? Who may carry out salvage operations?

There is no mandatory local form of salvage agreement; Lloyd’s standard form of salvage agreement is acceptable.

Salvage operations may be carried out by any vessel; however, by virtue of the Coastal and Inland Shipping (Cabotage) Act 2003, where the salvage operation is within the coastal and inland waters of Nigeria, only a Nigerian-built vessel, wholly owned and manned by Nigerian citizens, can carry out the salvage operations except in cases of emergency or upon a determination by the Minister of Transportation that the salvage operation is beyond the capacity of Nigerian-owned and operated salvage vessels and companies.

Ship arrest

International conventions

Which international convention regarding the arrest of ships is in force in your jurisdiction?

There is no international convention on the arrest of ships in force in Nigeria.

Claims

In respect of what claims can a vessel be arrested? In what circumstances may associated ships be arrested? Can a bareboat (demise) chartered vessel be arrested for a claim against the bareboat charterer? Can a time-chartered vessel be arrested for a claim against a time-charterer?

A vessel can be arrested in respect of claims classified as maritime claims by the Admiralty Jurisdiction Act 1991, which is the main legislation governing the arrest of ships in Nigeria. Maritime claims include claims arising from title to or ownership of a ship, possession of a ship, ship mortgage, mortgage of ship’s freight, salvage, damage done by or to a ship, wages of the master and crew, master’s disbursements, carriage of goods or passengers by ship, use or hire of a ship, supply of goods or services to a ship, port dues and so on.

The action for the claim would be commenced as an Admiralty action in rem against the vessel sought to be arrested.

Associated ships cannot be arrested in Nigeria.

A sister ship may be arrested where all the following circumstances exist:

  • the claim must have arisen in connection with a ship;
  • the person who would be liable for the claim in an action in personam must have been the owner or charterer or in possession or control of the ship when the cause of action arose; and
  • at the time when the claim is brought the person who would be liable in an action in personam must be the beneficial owner of all the shares in the (sister) ship against which the claim is brought.

 

A bareboat (demise) chartered vessel can be arrested for a maritime claim against the bareboat charterer where all the following circumstances exist:

  • the claim arose in connection with that vessel;
  • the bareboat charterer would be liable for the claim in an action in personam;
  • the vessel was on charter to the bareboat charterer as at the time the cause of action arose; and
  • the bareboat charter is still subsisting as at the date the action is commenced.

 

A time-chartered vessel cannot be arrested for a claim against the time-charterer.

Maritime liens

Does your country recognise the concept of maritime liens and, if so, what claims give rise to maritime liens?

Nigeria recognises the concept of maritime liens. The claims that give rise to maritime liens in Nigeria are as follows:

  • wages and other sums due to the master, officers and other members of the ship’s complement in respect of their employment on the ship;
  • disbursements of the master on account of the ship;
  • claims in respect of loss of life or personal injury occurring, whether on land or on water, in direct connection with the operation of the ship;
  • claims for damage done by a ship;
  • claims for salvage, wreck removal and contribution in general average; and
  • claims for ports, canals and other waterways, dues and pilotage dues.
Wrongful arrest

What is the test for wrongful arrest?

The test for wrongful arrest under the Admiralty Jurisdiction Act is obtaining the arrest of a ship or other property unreasonably and without good cause.

Bunker suppliers

Can a bunker supplier arrest a vessel in connection with a claim for the price of bunkers supplied to that vessel pursuant to a contract with the charterer, rather than with the owner, of that vessel?

If the charter is a demise charter and the charterer was in possession and control of the vessel at the time the cause of action arose and at the time action is brought, then the vessel can be arrested for the claim; otherwise, the vessel cannot be arrested for the claim.

Security

Will the arresting party have to provide security and in what form and amount?

The arresting party generally does not have to provide security before the vessel can be arrested.

In certain circumstances the arresting party may on the application of the defendants be ordered to provide security for costs, failing which the vessel will be released. The circumstances include where the claim is more than 5 million naira, or its equivalent in any currency, or where the court is satisfied that the arresting party has no assets in Nigeria.

The security for costs can be in the form of a deposit of the sum in court or a guarantee to be provided by a bank, insurance company or a protection and indemnity club.

How is the amount of security the court will order the arrested party to provide calculated and can this amount be reviewed subsequently? In what form must the security be provided? Can the amount of security exceed the value of the ship?

The Admiralty Jurisdiction Procedure Rules 2011 (AJPR) provide for security to be supplied by the arrested party in the amount claimed or the value of the ship or property under arrest. In practice the security is, very often, based on the claims of the arresting party and as requested in the application for arrest. There is no provision for revision of the security amount.

The AJPR provides for payment of cash into court or a bail bond in the same value to be filed in court. In practice, the form of security is usually according to the application of the arresting party, which is, most of the time, a bank guarantee from a Nigerian bank.

The amount of security cannot exceed the value of the ship. The AJPR provides for payment of cash or a bail bond for the amount claimed or the value of the ship, whichever is less.

Formalities

What formalities are required for the appointment of a lawyer to make the arrest application? Must a power of attorney or other documents be provided to the court? If so, what formalities must be followed with regard to these documents?

There are no special formalities required for the appointment of a lawyer to make an arrest application.

 

Ship maintenance

Who is responsible for the maintenance of the vessel while under arrest?

The Admiralty Marshal, who is the chief registrar of the Federal High Court, is responsible for the maintenance of a vessel under arrest; all expenses of the Admiralty Marshal are required to be paid by the arresting party. The court, upon the grant of an arrest order, would generally order the arresting party to pay an amount not less than 100,000 naira and no more than 500,000 naira towards the Admiralty Marshal’s expenses. The Admiralty Marshal may make further demands fortnightly for payment on account of those expenses while the ship remains under arrest.

Proceedings on the merits

Must the arresting party pursue the claim on its merits in the courts of your country or is it possible to arrest simply to obtain security and then pursue proceedings on the merits elsewhere?

A suit by way of an action in rem must be commenced for the claim in the Nigerian Federal High Court and the vessel will be arrested in the suit. It is not possible to commence a suit simply to obtain security through the arrest of the vessel and then pursue proceedings elsewhere.

In certain circumstances, where there is an arbitration agreement, the court may, on application of an interested party who is party to the arbitration agreement, stay proceedings in the suit in Nigeria and order that the claims be referred to arbitration in accordance with the agreement. In such a situation, the vessel arrested or the bank guarantee furnished as security for release of the same will be retained by the court as security for the arbitration award.

Injunctions and other forms of attachment

Apart from ship arrest, are there other forms of attachment order or injunctions available to obtain security?

A claimant may also apply to the court for an order of interim attachment of property, otherwise known as a Mareva injunction. This is where it is anticipated that the defendant intends to dispose of his or her property or any part thereof or to remove any such property from jurisdiction. The claimant will apply to the court either at the time of the institution of the suit or at any time thereafter for such defendant to furnish sufficient security to fulfil any decree that may be made against him or her in the suit.

Delivery up and preservation orders

Are orders for delivery up or preservation of evidence or property available?

Generally, orders of injunction are available to restrain the performance of an act or to preserve evidence or property that is or is likely to become the subject of a dispute. The rules of court also allow for interim attachment of property.

Bunker arrest and attachment

Is it possible to arrest bunkers in your jurisdiction or to obtain an attachment order or injunction in respect of bunkers?

It is possible to arrest bunkers and to obtain injunctions or attachment orders in respect of bunkers.

Judicial sale of vessels

Eligible applicants

Who can apply for judicial sale of an arrested vessel?

The arrestor or any other party interested in the ship can apply for sale of the vessel where the owners fail to provide bail to secure its release for a period of more than six months from the date of arrest.

The court can also, on its own initiative, but with notice to the parties and subject to valuation, order a sale of the vessel where it is deteriorating in value.

Procedure

What is the procedure for initiating and conducting judicial sale of a vessel? How long on average does it take for the judicial sale to be concluded following an application for sale? What are the court costs associated with the judicial sale? How are these costs calculated?

Judicial sale of vessels is conducted by the Admiralty Marshal and, unless the court otherwise directs, will be by public auction. The Admiralty Marshal, upon receipt of the order to sell the vessel, will advertise the impending sale in two national newspapers for 21 days and at the expiration of that period the vessel will be sold by public auction. The court is not precluded from ordering a sale by private agreement where the parties agree to this.

Section 73 of the Merchant Shipping Act (MSA) requires that written notice of the date, time and venue of the sale be given to:

  • holders of mortgages and other preferential rights that have not been issued to the bearer;
  • holders of mortgages and preferential rights that have been issued to the bearer; and
  • holders of maritime liens specified under section 66 of the MSA whose claims have been notified to the officers and the registrar of ships at least 30 days before the sale.

 

After the sale the Admiralty Marshal shall, as soon as possible, file a return of the sale, pay the proceeds into court and file an account of sale and the vouchers of the account.

On average, it can take about two months to conclude the sale from the date of the order.

The costs associated with judicial sale are mainly the expenses of the Admiralty Marshal.

The Admiralty Jurisdiction Procedure Rules 2011 provide that the Admiralty Marshal’s expenses shall be 2 per cent of the proceeds of sale.

Claim priority

What is the order of priority of claims against the proceeds of sale?

Section 75 of the MSA provides that the costs awarded by the court and costs of the arrest and sale shall first be deducted from the proceeds of sale and thereafter the balance shall be distributed among holders of:

  • maritime liens under section 66 of the MSA; these include the master’s and seamen’s wages, master’s disbursements, claims in respect of loss of life or personal injury, salvage and wreck removal claims, and port and pilotage dues. These maritime liens shall, however, be extinguished after one year from the time the claims secured by such liens arise;
  • preferential rights under section 69 of the MSA, which includes a shipbuilder’s or ship repairer’s lien or right of retention; and
  • mortgages and other preferential rights registered under the MSA.
Legal effects

What are the legal effects or consequences of judicial sale of a vessel?

By virtue of section 74 of the MSA, upon the judicial sale of a vessel all liens and encumbrances on the vessel will cease to exist, except those assumed by the purchaser with the consent of the holders. No charter party or contract for the use of the ship shall be deemed a lien or encumbrance for this purpose.

Foreign sales

Will judicial sale of a vessel in a foreign jurisdiction be recognised?

Yes, judicial sale in a foreign jurisdiction will be recognised.

International conventions

Is your country a signatory to the International Convention on Maritime Liens and Mortgages 1993?

No.

Carriage of goods by sea and bills of lading

International conventions

Are the Hague Rules, Hague-Visby Rules, Hamburg Rules or some variation in force and have they been ratified or implemented without ratification? Has your state ratified, accepted, approved or acceded to the UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea? When does carriage at sea begin and end for the purpose of application of such rules?

International conventions come into force in Nigeria when they have been enacted into law by the National Assembly. The Hague Rules were enacted into law in 1926 without variation by the Carriage of Goods by Sea Act and more recently the Hamburg Rules were also enacted into law without variation by the United Nations Convention on Carriage of Goods by Sea (Ratification and Enforcement) Act 2005.

Nigeria has ratified the Rotterdam Rules, but they do not yet have the force of law.

For the purpose of application of the rules, carriage of goods commences when the carrier receives the goods for carriage and ends when he or she delivers to the receiver in accordance with the contract of carriage or the law of the discharge port.

Multimodal carriage

Are there conventions or domestic laws in force in respect of road, rail or air transport that apply to stages of the transport other than by sea under a combined transport or multimodal bill of lading?

The only other means of carriage under a combined transport or multimodal bill of lading regulated by domestic legislation and international convention is air transport, which is governed by the Civil Aviation Act and the Warsaw Convention.

Title to sue

Who has title to sue on a bill of lading?

The carrier, shipper, consignee and endorsee of the bill of lading.

Charter parties

To what extent can the terms in a charter party be incorporated into the bill of lading? Is a jurisdiction or arbitration clause in a charter party, the terms of which are incorporated in the bill, binding on a third-party holder or endorsee of the bill?

The terms of a charter party can be wholly incorporated into the bill of lading as express terms of the same. All the terms of the incorporated charter party being express terms of the bill of lading shall be binding on a third-party holder or endorsee of the bill. Where, however, the bill of lading is issued pursuant to the charter party without an express incorporation of the terms, the arbitration clause will not be enforceable against a third-party holder who has acquired the bill in good faith, unless an annotation is inserted in the bill of lading to the effect that the arbitration clause is so binding.

Demise and identity of carrier clauses

Is the ‘demise’ clause or identity of carrier clause recognised and binding?

The 'demise' clause or identity of carrier clause is not recognised or binding in view of provisions of the Hamburg Rules​ enacted into law in Nigeria by the United Nations Convention on Carriage of Goods by Sea (Ratification and Enforcement) Act 2005.

Shipowner liability and defences

Are shipowners liable for cargo damage where they are not the contractual carrier and what defences can they raise against such liability? In particular, can they rely on the terms of the bill of lading even though they are not contractual carriers?

Shipowners are not liable for cargo damage where they are not the contractual carriers.

Generally, only parties to a contract can rely on the terms of the contract and thus the shipowner cannot rely on the terms of the bill of lading if he or she is not a contracting party. Where, however, the shipowner acts as an agent of the contractual carrier and acted pursuant to the agency employment, the shipowner could be entitled to rely on the terms of the bill of lading if the bill provides that agents may do so.

Deviation from route

What is the effect of deviation from a vessel’s route on contractual defences?

Where the deviation is not for a justifiable reason such as to save life or property, the carrier shall be liable for losses or damage that result from such deviation. The deviation should, however, not affect defences for loss or damage that occur independently of the deviation.

The carrier may lose its right to limit its liability if it is shown that the deviation was reckless and with knowledge that loss or damage would occur as a result.

Liens

What liens can be exercised?

The liens that can be exercised include a carrier’s possessory lien on cargo for unpaid freight; and statutory liens prescribed in the Admiralty Jurisdiction Act for a maritime claim against the vessel, where the party personally liable on the claim is, both at the time the cause of action arose and at the time action is brought, the owner or demise charterer in possession and control of the vessel. In the absence of the particular vessel, the lien can be exercised on any other vessel beneficially owned by the liable party at the time action is brought.

Delivery without bill of lading

What liability do carriers incur for delivery of cargo without production of the bill of lading and can they limit such liability?

Where the carrier delivers the cargo without production of the bill of lading, he or she will be liable for any loss or damage that results and such liability cannot be limited.

Shipper responsibilities and liabilities

What are the responsibilities and liabilities of the shipper?

The shipper is liable for loss suffered by the carrier, the actual carrier or damage sustained by the ship if the loss or damage was caused by the fault or neglect of the shipper or his or her servants or agents.

The shipper has the responsibility to suitably label dangerous goods as such and to inform the carrier of the dangerous nature of the goods and the precautions it may be necessary to take.

If the shipper fails to properly label dangerous goods or to inform the carrier about them, the shipper shall be liable to the carrier and any actual carrier for loss resulting from the shipment of such goods.

Shipping emissions

Emission control areas

Is there an emission control area (ECA) in force in your domestic territorial waters?

The International Convention for the Prevention of Pollution from Ships 1973 has been domesticated and thus has the force of law in Nigeria. However, regulations designating ECAs are yet to be issued.

Sulphur cap

What is the cap on the sulphur content of fuel oil used in your domestic territorial waters? How do the authorities enforce the regulatory requirements relating to low-sulphur fuel? What sanctions are available for non-compliance?

The maximum level of sulphur content in fuel used in Nigerian domestic waters is 0.5 per cent m/m. The Department of Petroleum Resources (DPR) is the regulator of petroleum products in Nigeria and they inspect all cargoes that enter or leave the shores of Nigeria. Where fuel does not conform with the above standard, the DPR will not grant entry or permit discharge of that cargo in Nigeria.

Ship recycling

Regulation and facilities

What domestic or international ship recycling regulations apply in your jurisdiction? Are there any ship recycling facilities in your jurisdiction?

Ship recycling in Nigeria is presently regulated by the Nigerian Merchant Shipping Act (MSA) with guidelines drawn up by the Nigerian Maritime Administration and Safety Agency.

There are ship recycling facilities in Nigeria.

Jurisdiction and dispute resolution

Competent courts

Which courts exercise jurisdiction over maritime disputes?

The Federal High Court is the Admiralty court in Nigeria.

Service of proceedings

In brief, what rules govern service of court proceedings on a defendant located out of the jurisdiction?

The rules governing service of court proceedings on a defendant outside the jurisdiction are the Federal High Court (Civil Procedure) Rules 2009, the Admiralty Jurisdiction Procedure Rules 2011 and the Sheriffs and Civil Process Act.

Arbitration

Is there a domestic arbitral institution with a panel of maritime arbitrators specialising in maritime arbitration?

Yes, the Maritime Arbitrators Association of Nigeria is mainly made up of arbitrators and lawyers specialising in maritime arbitration. The Chartered Institute of Arbitrators, Nigeria branch, can also constitute a panel of specialist maritime arbitrators. The Maritime Arbitrators Association of Nigeria is very active.

Foreign judgments and arbitral awards

What rules govern recognition and enforcement of foreign judgments and arbitral awards?

Recognition and enforcement of foreign judgments and awards are governed by the Foreign Judgments (Reciprocal Enforcement) Act and the Reciprocal Enforcement of Judgments Act.

Asymmetric agreements

Are asymmetric jurisdiction and arbitration agreements valid and enforceable in your jurisdiction?

Generally, parties are bound by their contracts in the absence of vitiating factors such as coercion or duress, mistake, misrepresentation, undue influence, fraud and illegality. Thus, unless any of the vitiating elements exist in a particular circumstance, asymmetric arbitration agreements are likely to be held valid and enforceable.

With respect to asymmetric jurisdiction agreements, section 20 of the Admiralty Jurisdiction Act makes any agreement that seeks to oust the jurisdiction of the Nigerian Federal High Court in an Admiralty matter null and void in any of the following circumstances:

  • the place of performance, execution, delivery, act or default is or takes place in Nigeria; 
  • any of the parties resides or has resided in Nigeria; 
  • the payment under the agreement (implied or express) is made or is to be made in Nigeria; 
  • in any Admiralty action or in the case of a maritime lien, the plaintiff submits to the jurisdiction of the court and makes a declaration to that effect or the rem is within Nigerian jurisdiction; 
  • it is a case in which the federal government or the government of a state of the federation is involved and the federal government or government of the state submits to the jurisdiction of the court; 
  • there is a financial consideration accruing in, derived from, brought into or received in Nigeria in respect of any matter under the Admiralty jurisdiction of the court; 
  • under any convention, for the time being in force to which Nigeria is a party, the national court of a contracting state is either mandated or has a discretion to assume jurisdiction; or
  • in the opinion of the court, the cause, matter or action should be adjudicated upon in Nigeria.

 

Thus, where the asymmetric jurisdiction agreement has the effect of depriving the Nigerian Federal High Court of jurisdiction under any of the above circumstances, the agreement will not be valid or enforceable in Nigeria.

Breach of jurisdiction clause

What remedies are available if the claimants, in breach of a jurisdiction clause, issue proceedings elsewhere?

Under section 20 of the Admiralty Jurisdiction Act 1991, a foreign jurisdiction clause is null and void in Nigeria. A Nigerian claimant can litigate his or her claims in Nigeria even where the agreement provides that only a foreign court can exercise jurisdiction; this provision is particularly applicable in the case of the bill of lading, which is usually a standard form contract, the terms of which the Nigerian consignee is generally obliged to accept. The claimant will have to show among other things that the claim is more closely connected to Nigeria than elsewhere.

A foreign arbitration clause is enforceable in Nigeria.

What remedies are there for the defendant to stop domestic proceedings that breach a clause providing for a foreign court or arbitral tribunal to have jurisdiction?

Where there is a foreign arbitration clause, the defendant upon entering appearance and before filing a statement of defence can apply to the court for a stay of the Nigerian proceedings pending reference to arbitration in accordance with the agreement. The court may stay proceedings after considering certain factors, including the justice of referring the matter to arbitration, particularly with reference to the effect on the claimant and the readiness and willingness of the defendant or applicant to do everything necessary for the proper conduct of the arbitration.

A foreign court jurisdiction clause will be considered null and void if any of the circumstances listed in section 20 of the Admiralty Jurisdiction Act exist.

Limitation periods for liability

Time limits

What time limits apply to claims? Is it possible to extend the time limit by agreement?

The time limit for maritime claims brought under the Admiralty Jurisdiction Act is three years except where a different time limit has been stipulated under other laws. For instance, the Nigerian enactment of the Hamburg Rules stipulates a two-year time limit for claims under a bill of lading. Parties are at liberty to extend the time limit by agreement, but it is not usual and the court is not bound to uphold such agreement.

Court-ordered extension

May courts or arbitral tribunals extend the time limits?

An arbitral tribunal is likely to extend time limits if the parties so agree. The courts may not extend the time limit.

Miscellaneous

Maritime Labour Convention

How does the Maritime Labour Convention apply in your jurisdiction and to vessels flying the flag of your jurisdiction?

Nigeria has ratified the Maritime Labour Convention (MLC) but the Convention has not been incorporated into Nigerian municipal laws and is, therefore, not yet in force in Nigeria.

Nigerian Maritime Administration and Safety Agency (NIMASA) currently implements some provisions of the MLC in Nigeria through existing provisions of the Merchant Shipping Act (MSA), which are similar in effect to the MLC.

Based on regulatory powers conferred on it by the MSA and NIMASA  Act, NIMASA issues maritime labour certificates to all vessels flying the Nigerian flag, which the vessels are required to carry at all times along with a declaration of maritime labour compliance (DMLC) countersigned and stamped by Director Maritime Labour Department NIMASA. NIMASA would in signing and stamping the DMLC state any equivalencies or exemptions granted or both.

Relief from contractual obligations

Is it possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where economic conditions have made contractual obligations more onerous to perform?

Ordinarily, the court will always give effect to the intentions of the parties to a contract. It is possible to seek relief from the strict enforcement of the legal rights and liabilities of the parties to a shipping contract where it can be established or proven that the contract has become impossible to perform by reason of forces beyond the control of the parties thereto (force majeure) or in view of any other vitiating elements of the contract. Unfavourable economic conditions are, however, not a factor for which relief from strict enforcement of the rights and liabilities of the parties in a shipping contract can be granted. The position of the law is that the courts do not rewrite contracts for parties where the terms are clear. In the absence of, inter alia, fraud, duress, undue influence and misrepresentation the parties are bound by their contract.

Other noteworthy points

Are there any other noteworthy points relating to shipping in your jurisdiction not covered by any of the above?

A noteworthy point relating to shipping in Nigeria is the cabotage regime introduced by the Coastal and Inland Shipping (Cabotage) Act 2003. Under this Act, only Nigerian-built vessels wholly owned and manned by Nigerian citizens are allowed to operate within Nigerian waters. The Cabotage Act, however, acknowledges that there may be a dearth of vessels to provide the required capacity for domestic trade and so provides for a system of waivers from the three requirements (ownership, manning and building). These waivers are granted by the Minister for Transportation through NIMASA upon an application where he or she is satisfied that there is no Nigerian-built vessel wholly owned and manned by Nigerians available to perform the particular service described in the application.

The Cabotage Act also provides for the establishment of the Cabotage Vessel Financing Fund. Any vessel in Nigeria that is engaged in the coastal trade is mandated to pay a surcharge of 2 per cent of the contract sum performed into the Fund. Also of note is the recent introduction of 12 new regulations mainly introducing levies relating to the management of the marine environment, intended to ensure the safety, cleanliness and general protection from pollution of the Nigerian territorial waters. The regulations were made pursuant to powers conferred on the Minister by the Merchant Shipping Act 2007.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics that may affect shipping law and regulation in your jurisdiction in the foreseeable future?

No updates at this time.

Law stated date

Correct on

Give the date on which the information above is accurate.

4 May 2020.