Introduction Background Decisions Comment

Introduction

Liability arising from the carriage of goods by sea was largely regulated in Nigeria by the Carriage of Goods by Sea Act (as amended), a local law which transposed the International Convention for the Unification of Certain Rules relating to Bills of Lading 1924 (the Hague Rules) into national legislation. This was the case until 2005, when legislation formally ratifying and transposing the UN Convention on the Carriage of Goods by Sea 1978 (the Hamburg Rules) into national legislation was enacted by virtue of the UN Convention on the Carriage of Goods by Sea (Ratification and Enforcement) Act 2005 (the Hamburg Rules Act). This act had a significant impact on the interpretation of limits of liability and limitation periods, among other things. Generally, it is believed to treat cargo owners more favourably than the previous legislation, and there is an increased likelihood of success in liability claims.

However, recent Federal High Court judgments have created the uncertainty and caused concern among cargo owners and in government circles.

Background

Article 31 of the Hamburg Rules provides that:

"Upon becoming a Contracting State to this Convention, any state party to the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25 August 1924 (1924 Convention) must notify the Government of Belgium as the depository of the 1924 Convention of its denunciation of the said Convention with a declaration that the denunciation is to take effect as from the date when this Convention enters into force in respect of that State."

On becoming a contracting state to the Hamburg Rules, Nigeria did not denounce the Hague Rules as required. As a result, the invalidity of the Hague Rules in Nigeria has been questioned.

Decisions

Two unreported Federal High Court cases on this matter have recently come to light due to their controversial implications.(1) In both cases, the courts questioned the applicability of the Hamburg Rules in Nigeria and applied the Hague Rules on the basis that they have not been denounced. Specifically, Justice Ibrahim Buba in Megaplastics Industries v MV Kota Halus held that "it is trite law that he who asserts must prove. The burden is the Plaintiff/Respondent's to establish that the Hamburg Rules have repealed the Hague Rules or that the Hague Rules have been repealed and therefore incapable of application to this matter".

Citing Article 31 of the Hamburg Rules, Buba further held that, in the absence of evidence that Nigeria has denounced the Hague Rules, the plaintiff cannot argue that the Hamburg Rules apply.

Comment

In view of these decisions, it could be argued that:

  • the Hamburg Rules Act has no legal effect in Nigeria; and
  • the Hague Rules remain the guide for assessing liability in carriage of goods by sea claims.

This is a strong argument, as both cases directly interpreted the Hamburg Rules Act. However, both decisions were first-instance decisions, which – at best – could have a persuasive effect only on courts of coordinate jurisdiction. This is crucial given the compelling arguments that have been raised against the courts' positions, which could encourage another court to adopt a contrary position.

It could be successfully argued before another court that neither Article 31 of the Hamburg Rules nor any other provision provides consequences for the non-denunciation of the Hague Rules. There is also no indication that denunciation of the Hague Rules is a pre-condition for the valid application of the Hamburg Rules. At best, it may simply imply that the Hague Rules Act has not been formally repealed and may apply in relevant factual circumstances on an equal footing with the Hamburg Rules. In any case, these facts are limited given the difference in the scope of application of both regimes: the Hague Rules should be applicable only to outward carriage from Nigeria, while the Hamburg Rules apply to inward and outward carriage. Most carriage claims relate to inward carriage into Nigeria, for which the Hague Rules will not apply save by virtue of a contractual clause paramount. In that event, it would be wrong to assert that the Hamburg Rules Act, with its statutory compulsion, cannot apply over a contractual clause paramount simply because the Hague Rules have not been denounced.

Despite these decisions, carriers and shipowners may want to hold off celebrating. The Federal Ministry of Transport has indicated that it will take steps to denounce the Hague Rules to the Belgian government in line with the Hamburg Rules. If that happens, any assumed victory by carrier interests will be short lived.

For further information on this topic please contact Emeka Akabogu at Akabogu & Associates by telephone (+234 1460 55550) or email (emeka@akabogulaw.com). The Akabogu & Associates website can be accessed at www.akabogulaw.com.

Endnotes

(1) Megaplastics Industries Limited v MV Kota Halus (Suit FHC/L/CS/1436/12, decision of Justice I N Buba, September 18 2013) and Classic Sparko Investment and Shipping Inc v Pacific Atlantic Line Inc (Suit FHC/L/CS/1151/2011, decision of Justice C J Aneke, May 13 2013).

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