SHIP ARREST IN NIGERIA
Essential to the practice of maritime law in any country is the knowledge of the procedure which provides pre-judgment security for claims as well as post-judgment execution where a suit is successful. Pre-judgment security is very key to the maritime creditor who is faced with the threat of being unable to recover his debt from an impecunious or unscrupulous debtor if the debtor’s ship should sail away without the debt (or liability as the case maybe) been paid or settled. Similarly, the possibility of post-judgment execution, by way of judicial sale of the arrested ship remains a key consideration for maritime creditors concerned over the solvency of their debtors and their willingness to settle claims.
In Common law countries like Nigeria whose maritime law is primarily derived from the admiralty laws of England; the action in rem is the basic procedure by which creditors or claimants rely for pre-judgment security and post-judgment enforcement of award or judgment that may be given by the court or an arbitral tribunal where security is obtained pending arbitration. The arrest of a vessel or other res (eg cargo or freight) in an action in rem places the res under judicial detention pending adjudication of the claim. It is also used to secure the appearance of the defendant ship-owner to defend the action and it establishes the jurisdiction of the court. If the court subsequently allows the claim, the judgment is then enforceable against the arrested res by judicial sale or the security or guarantee given in its place.
Creditors and claimants, in seeking redress to maritime claims generally resort to “in rem” action as against action “in personam”. In this regard, arrest and detention of vessels has proved an effective way of securing claims in admiralty actions. Often times, a mere threat of an arrest can provoke the owners into providing voluntary security in the form of cash deposit, a bank or insurance company guarantee/bond, or a P. & I. Club Letter of Undertaking (LOU). Where this is done, the vessel or the “res” when arrested becomes a security in the hands of the courts which can be used to satisfy any judgment that may be awarded by the court.
Over the years, admiralty practice Nigeria has recorded an enormous growth as the country remains a very busy maritime hub in the Sub-Saharan West African region. Accordingly, the knowledge of the laws and rules governing the arrest of vessels as well as other property is of great importance given the crucial nature of in rem proceedings which usually involve transnational trade traversing diverse jurisdictions. The author seeks to provide an analysis of the issues, challenges and prospects of arrest of vessel from a practical perspective in admiralty law and practice in Nigeria.
Background to Admiralty Jurisdiction in Nigeria
Prior to Independence in 1960 and the enactment of the 1962 Admiralty Jurisdiction Act which came into force in September 1963, very few admiralty cases were adjudicated by Nigerian Courts as virtually all contracts relating to carriage of goods by sea to and from Nigeria were clothed with Jurisdiction Clauses granting full and exclusive jurisdiction to the Courts in England. In The Tolten (1946) p. 135, the English Court of Appeal held that a claim arising out of damage to a wharf in Lagos could be litigated in London.
This position persisted even where a matter had originally been commenced in a Nigerian Court and all the facts and circumstances (‘’the connecting factors’’) relevant to the transaction are to be found in Nigeria. This occasioned enormous hardship and dilemma to Nigerian ship interests who often had to abandon their genuine claims owing to their inability to meet the high cost of foreign litigation. As there was no local admiralty jurisdiction, arrest of vessel in Nigeria was difficult, if not impossible to obtain in Nigeria at this point in time.
Earlier in 1952, The International Convention Relating to the Arrest of Sea-Going Ships (now reviewed and modified as the Convention on the Arrest of Ships 1999) otherwise known as the Arrest Convention or the Brussels Convention was promulgated. Nigeria, however, was not a signatory to the Convention as it was made at a time when the country was a British Colony. At this time, there was no Nigerian legislation governing admiralty practice and procedure.
Though the Brussels Convention was not ratified by Nigeria, it indirectly adopted same into its admiralty practice and procedure as demonstrated by the Supreme Court in the case of American International Insurance C. Ltd v. Ceekay Traders Ltd (1981) 2 NSC 65.
By the 1962 Admiralty Jurisdiction Act, regional high courts were given jurisdiction over admiralty matters. The high courts continued to exercise jurisdiction in respect of Admiralty matters until the establishment of the Federal Revenue Court in 1973 by the Federal Revenue Court Act. By Section 7 of the Act, exclusive jurisdiction over admiralty matters was granted to the Federal Revenue Court. However, admiralty jurisdiction was not defined in the Act. The provisions of Section 7 were reproduced in Section 249 of the 1979 Constitution which also failed to define the same.
On the heels of the controversy between the Federal and State High Courts on jurisdiction over admiralty matters, the Admiralty Jurisdiction Act (AJA) 1991 was enacted. Section 19 of the AJA vests the jurisdiction in admiralty matters in the Federal High Court. Section 1 of the AJA defines ‘’admiralty jurisdiction’’ to include ‘’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.’’ In the 1999 Constitution, Section 251(g) Constitution equally vests exclusive jurisdiction of admiralty matters on the Federal High Court. The AJA not only incorporated principles of admiralty practice as applicable in the United Kingdom, it also laid to rest the notorious jurisdictional context between the Federal and State High Courts over admiralty jurisdiction.
Arrest is not defined in the AJA. However, ‘’Arrest’’ under the Admiralty Jurisdiction Procedure Rules (AJPR) 2011 ‘’means the detention of ship by judicial process to secure a maritime claim, but does not include the seizure of a ship in execution or satisfaction of a judgment.’’ It is important to state that this is the first time ‘’arrest’’ has been defined as the definition was omitted in the AJA and the AJPR 1993. The definition in AJPR follows closely the definition contained in Article 1 Rule 2 of the International Convention on Arrest of ships 1999 which defines arrest as ‘’any detention or restriction on removal of a ship by order of a court to secure a maritime claim but does not include seizure of a ship in execution or satisfaction of a judgment or other enforceable instrument.’’
The above definition presupposes a pre-judgment arrest and detention of vessel. Thus, it would appear that the arrest contemplated under the AJPR cannot be used to detain a vessel after judgment has been obtained with a view to enforcing that judgment. This presents a contradiction with the provision of Order 7 Rule 4(3) of the AJPR which reads that “A ship or other property may be arrested in a proceeding after judgment has been given in the proceeding.”
In Anna H, a vessel was arrested by the Plaintiff over a maritime claim after a caveat for arrest had been lodged and security provided by the ship-owners. Defendants (ship-owners) contended that the arrest did not fall within the ambit of maritime claim as contemplated by Article 1 rule 2 of the Arrest Convention. The English Court of Appeal held that the definition of arrest in the 1952 Arrest Convention deals more with the nature of legal processes involved in effecting an arrest and not necessarily the motivation of the arresting party and that the essence of the Convention was to harmonize the laws of the contracting states as to the types of claims which could ground an arrest noting that arrest should not be used to secure other claims other than maritime claims.
It is pertinent to note that the use of the term ‘’arrest’’ relates only to an arrest warrant, issued by the court. Whilst powers are granted to government agencies like NIMASA, NPA and the Customs to ‘’detain’’ a ship for unseaworthiness, breach of statutory provisions or for some other reason, such detention should not be mistaken with an arrest as ordered by a court. The power of detention is merely administrative and does not activate the admiralty jurisdiction of the court. 
The Nature and Consequences of Arrest of Ship
The Court of Appeal in the case of The Owners of the M Angara v Chrismatel Shipping Co. Ltd (2001) 8 NWLR pt 716 p. 685 @ p. 693 held that the purpose of obtaining an order for the arrest of a ship or res is to make the defendant put up bail or provide in advance of the judgment, adequate funds to secure compliance with any judgment that may be eventually made against it, or its owners. This is predicated on the fact that an unsatisfied judgment is as good as a pyrrhic victory which effect is as impotent as it is moot. The rationale for arrest and putting up bail or sufficient security stems from the fear that in the interval between judgment and execution, the Defendant may have become insolvent or he may have used the opportunity to remove his assets out of jurisdiction.
In Tigris Intl. Corp. v Ege Shipping and Trading Ind. Ltd. (1999) 6 NWLR pt 608 p. 701, the Court of Appeal in buttressing the importance and essence of admiralty action in rem adopted and cited with approval the reasoning of Christopher Hill in his book Maritime Law, 3rd Edition @ Pages 93 and 95 as follows:
“The modern writ in rem has become a piece of legal machinery directed against the ship alleged to have been the instrument of wrong doing in case where it is sought to enforce a maritime or statutory action against the ship whose possession is claimed…
This does not mean that the vessel itself is the wrongdoer but that it is the means by which the wrongdoer (its owner) has done the wrong to some party…to issue a writ in rem and to wait ‘and (in your own time) to ‘pounce’ on the res when it comes within the issuing court’s territorial jurisdiction is an excellent method of getting the owner of the res within your grasp…” (emphasis mine)
Buttressing the essence and nature of admiralty action in rem, Sir George Jessel MR, in the case of The City of Mecca (1881) 5 PD at p. 112 stated:
“You may in England and in most countries proceed against the ship. The writ may be issued against the owner of such a ship, and the owner may never appear, and you may get your judgment against the ship without a single being named from beginning to end. That is an action in rem, and it is perfectly well understood that the judgment is against the ship” – (emphasis mine) See generally Carriage of Goods by Sea, John F. Wilson Fourth Edition, p. 317
An arrest constitutes a vessel or other property as security in the hands of the courts for the claim in the action and this security cannot be defeated by subsequent insolvency of the owner of the arrested property. It has been held that where a ship has been arrested in respect of a claim and the ship-owner becomes insolvent or wound up; the liquidator cannot claim the proceeds of the sale of the ship as against the plaintiff, even where the claim does not carry a maritime lien. : See The “Cella” (1888) 13 P.D. 82 (C.A).
To secure the arrest of a vessel, a Plaintiff only need to show an arguable claim or satisfy the court that its ultimate award to the Plaintiff may not be satisfied by the ship-owner or charterer. All that is required is to show a strong prima facie case that falls within section 2 of the AJA as enforceable by an action in rem. The importance of making out a strong prima facie case against a vessel before an arrest is made stressed in The Sea Thand 11. It is also important that the applicant makes full and frank disclosure to the court of all relevant facts. Where an applicant fails on this wise, the arrest may be set aside. A very respected Senior Advocate of Nigeria and foremost maritime practitioner has observed that in many case arrests are sought at very short notice and that counsel may not be in possession of the full documentation and quantification of the claim. He is of the view that counsel should accordingly satisfy himself that the claim is genuine since the court will rely to a large extent on the integrity of counsel.
Under Nigerian maritime and admiralty law, action in rem which gives rise to a right to arrest a vessel can arise under the following two major situations, namely where there is a maritime lien or a statutory right in rem:
A Maritime lien is a right or claim which is intrinsic to the vessel. It inures to the vessel and may be defined as a privileged right or claim upon a vessel or res with which remains attached to it like a leech in respect of services rendered to, or injury caused by that vessel or res . Maritime lien is founded on the general maritime practice which recognizes a vessel as having a personal legal entity distinct from that of its owners and so the res is held accountable for the consequences of “its” acts or omission not withstanding that these may have been done by its “human” owners, operators, managers, agents or servants. As such, the vessel remains the “offender” and not its owner and becomes liable for the act or omission.
In The “Bold Buccleugh”, Sir John Jervis aptly stated as follows:
“… This claim or privilege travels with the thing (res) into whatsoever’s possession it may come. It is inchoate from the moment the claim or privilege attaches and when carried into effect by legal process by a proceeding in rem relates back to the period when it first attached.” (emphasis mine)
Maritime liens have been recognized under Nigerian law by S.5 (3) AJA as follows –
“…and for the purposes of this section, “maritime lien” means a lien for:
(a) Salvage or
(b) damage done by a ship; or
(c) wages of the master or a member of the crew of a ship; or
(d) master’s disbursements (on account of the ship)
Maritime liens are also provided for in S. 2(3) (a) (g) (p) (r) AJA as stated hereunder:-
(a) a claim for damage done by a ship, whether by collision or otherwise
(g) a claim relating to salvage (including life salvage of cargo or wreck found on land)
(p) a claim by a master, shipper, charterer or agent in respect of disbursement on account of 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 obligation to pay to a person as an employee, whether the obligation arose out of a contract of employment or by operation of law, including by operation of the law of a foreign country;
Statutory Rights In Rem
These are admiralty rights which are now sometimes enforceable against the vessel or res, only because they are so provided for by the Statutes. They become enforceable in rem only when the Plaintiff had issued a Writ in rem against the vessel. Statutory rights in rem as provided derive their essence from the need to give local effect to the Arrest Convention in a bid to harmonize the process and procedure for prosecuting maritime claims in Nigeria.
In Nigeria, these statutory rights are enumerated in S.2 of the AJA and include all the other claims in that Section which are not “maritime liens” – whether classified as “proprietary” or “general” maritime claims. The former are claims related to ownership, possession and mortgage of ships, whilst the latter cover other general shipping claims.
Note that an action in rem can only be instituted and a ship arrested in the case of a statutory lien where the conditions listed in Section 5(4) AJA are satisfied, as follows:-
(i) that there is a valid claim in personam against the owner or charterer in possession of the ship when the cause of action arose, and
(ii) the person liable in person is, at the time the action is brought, the beneficial owner of that ship as respects all the shares in it, or the charterer of the ship under a charter by demise or
(iii) against a sister ship which is owned by the person liable in personam as regards all the shares therein.
From the combined effect of the definition in 1 Congresso del Partido and The Andrea Ursula, a beneficial owner in relation to all the shares in a vessel could be either one of the following:-
(a) the legal owner
(b) the equitable owner
(c) the person who has full lawful possession and control of all the benefit and use of the vessel which a legal or equitable owner would normally have.
There are several ways of proving prima facie ownership of vessel in international maritime practice such as entries in the Port of Registry, executed Bills of Sale or Certificate of Registry, but the one commonly known is by the production of extracts from the relevant volume of Lloyd’s Register of Ships.
It is pertinent to distinguish between registered owner(s), beneficial owner and disponent owner of a ship as these terms usually pose some legal problems especially in respect of enforcement of maritime claim. Whilst the registered owner is the person(s) or company in whose name the vessel is registered, the beneficial owner may be another person or company who for various financial considerations is trading with the vessel and deriving profit or benefit from it. On the other hand, the disponent owner or the managing owner is usually the agent engaged to manage the vessel as commercial venture or enterprise for a fee. It should be noted that at various points in time, the beneficial and/or disponent owner(s) may have direct control and management of the vessel whilst is not the registered owner.
It is opined that “beneficial ownership of all shares” in a vessel may remain a wild goose chase or very difficult to establish in these circumstances without going the extra mile of lifting the corporate veil to reveal the truth behind the actual ownership of vessels without necessarily proving fraud as required under company law and practice.
Procedure for Arrest of Ship
Prior to the Judicature Acts 1873 to 1875 proceedings were begun by warrant of arrest, rather than by writ of summons. Today, although the proceedings are commenced by issue of an Admiralty Writ in Rem, the jurisdiction of the court is not invoked until service of that writ. .
The AJPR provides rules of procedure different and distinct from the Federal High Court (Civil Procedure) Rules 2009 for matters within the Admiralty jurisdiction of the Federal High Court. An Admiralty action in rem is commenced by a Writ of Summons or Originating Summons. Where the action is commenced by writ of summons, the writ shall be issued by the Admiralty Registry.
To obtain an order of arrest, a claimant shall file a motion ex parte with an affidavit in support. It is important to note that at the time of the application the ship to be arrested should be within Nigerian territorial waters or is expected to arrive there within three (3) days.
The writ of summons in a proceedings commenced as an action in rem against a ship or other property that is at the time of the service on board a ship shall be served by securely affixing a sealed copy of the process to a mast or other conspicuous part of the ship or delivering the same to the master of the ship. Where access to a ship or property cannot reasonably be obtained, the process may be served on the ship or other property by handing over a sealed copy of the process to or leaving it with a person apparently in charge of the ship or other property or where that person refuses to accept service, by placing a sealed copy of the process down in the person’s presence and telling the person what the document is. The writ of summons in a proceeding commenced as an action in rem against the proceeds of sale of a ship or other property that has been paid into Court shall be served by filling a sealed copy of the process in the Court in which the proceeds are held. In the case of every arrest of a ship or other property, the appropriate officer of the Nigerian Ports Authority shall be served with a copy of the Court order.
In practice, the processes are usually served by the Admiralty Marshal on the master of the ship or in the absence of the master on any other crew member. The processes are also served on the Harbour Master and Port Manager of the Nigerian Ports Authority, the Customs and in special cases on the Nigerian Navy.  In difficult cases where the vessel resists or rejects service, an application may be made to the court directing the Nigerian Police (Marine Division) to intervene to ensure service is carried out on the ship.
An action in rem cannot be maintained against a vessel belonging to an associated company for the acts of another vessel belonging to another “related” company. Ships are said to be associated where there is common shareholding in the owning companies. In other words, vessels owned by such associated companies cannot be arrested in Nigeria. This sharply contrasts with the position of the law in South Africa where a ship belonging to an associated company can be arrested in an admiralty claim for the “wrong” of another vessel belonging to its “associated company.” In that jurisdiction, the courts normally lift the veil of incorporation to uncover the real owners of the associated companies’ vessels. This concept is discussed in detail subsequently in this presentation.
Issues in Arrest of Ships
Sister Ship and Associated Ship Arrest
Section 2 of the AJA provides a list of Maritime Claims, otherwise known as Proprietary or General maritime claim (otherwise known as “Statutory Rights in rem.” Under this form of claim, by virtue of S. 5(4) AJA, it is required that a party who would be personally liable for the claim would be a beneficial owner or demise charterer of the vessel or was in possession or in control of the ship as at the time the cause of action arose in order to be entitled to maintain an action in rem – against the ship.
It is trite that for an arrest to be made, the ship has to be within jurisdiction of the arresting state or plaintiff. However, given that ships are transient object, it is common for a vessel to ‘’commit an offence’’ in a jurisdiction and vanish before an arrest is effected. In this circumstance, it may pose serious challenge to the claimant to effect arrest in another jurisdiction where the vessel has sailed to, not because such ships cannot be legally arrested in another jurisdiction, but because of the huge financial and logistics implication of carrying out such arrest. This entails attorney fees, filing fees and Admiralty Marshal’s expenses in a foreign jurisdiction whose terrain and laws the plaintiff may not be conversant with.
It is on this basis that the sister ship arrest principle comes to play. The principle is to the effect that where a ship which is sought to be arrested has sailed away from jurisdiction of the arrestor, any other ship that belongs to the owner of the offending vessel that is within jurisdiction could be lawfully arrested in lieu of the offending vessel. In other words, sister ship arrest connotes a situation where proceedings are begun against any vessel in a fleet of vessel belonging to the same owner in place of the vessel that actually caused loss, harm or damage. This is provided for in S. 5(4) (b) AJA.
The huge success recorded in the implementation of sister ship arrest necessitated ship-owners to device means of circumventing the long arms of the law. In effect, the owners of ship nowadays register their vessel in the name of different companies or entities and as such make it very difficult for sister ships owned by the same individual or company to be detained, the real ownership having been clothed with corporate veil.
This challenge has been tackled in South Africa and other jurisdictions*(Singapore, Australia, Belgium, Brazil, Spain etc) with the introduction of “associated ship” concept as contained in the South African Admiralty Regulation Act No.105 of 1983 introduced as an extension of the English sister ship provision.
The concept gained prominence on the heels of the judgment of the South African highest commercial Court of Appeal in the case of MV “Heavy Metal”. In this case, following the provision of S. 3(7) (b) (ii) of the Admiralty Jurisdiction Regulation Act which provides that “a person shall be deemed to control a company if he has power, directly or indirectly, to control the company”; the Court held that a vessel owned by a different company from the company which owns the ship sought to be arrested can be arrested simply by virtue of the two owning companies being commonly controlled. It is observed that this provision is more extensive when compared to the AJA in that it permits the piercing or lifting of the corporate veil of incorporation to determining a defendant to an in rem suit.
The practice of nominee shareholding is relatively widespread in shipping circles and has mainly been used to disguise the real shareholding structure in ship owning companies given that the separate corporate personality is an artificial screen designed to evade liability.
In the light of Nigeria’s commitment to repositioning her maritime and shipping industry to conform to international best practices, this proactive and well-thought-out practice is worthy of emulation, hence, it is recommended that similar provision be incorporated into our admiralty and shipping laws.
Security for Costs
The AJPR gives the court the discretion to determine whether security for costs should be ordered and the quantum of security to be furnished. Where the Plaintiff’s claim is in excess of five million naira or its foreign currency equivalent or where the Plaintiff has no assets in Nigeria.  The security is usually in the form of a Bank Guarantee, Insurance Bond or Protection and Indemnity (P&I) Club Letter of Undertaking.
Traditionally, the expression ‘’Security for Costs’’ applies to costs recoverable by the defendant from an unsuccessful plaintiff on the orders of the court at the conclusion of a trial. Nigerian courts usually award nominal costs as the security granted by the court was usually for a fairly nominal sum. However, in admiralty proceedings, different considerations apply. The potential costs of a defendant whose ship has been wrongfully arrested could be enormous and the effect of the rule on security for costs recognizes that the arresting plaintiff has an obligation to give security not just for legal costs, but also for other costs that may relate to damages which may be incurred by the ship owner. In The Antzy the court ordered the release of an arrested ship when plaintiff failed to provide the security ordered by the court. In Dangote Nigeria Ltd & Anor v. Owners of M/V Rea the court observed that failure of the plaintiff to obey an order of court to provide security may amount to contempt of court.
Damages/Reparation for Wrongful Arrest
The decision in The Evangelismos established the principle that for there to be a valid claim for a wrongful arrest, the Claimant must show that the arrest was obtained either mala fides (bad faith) or through crassa neglentia (crass negligence). This archaic principle (still applicable in England) makes it a herculean task to establish a claim for wrongful arrest. Great difficulty has been encountered by ship-owners in proving mala fides fides and crassa negligentia.
It would appear that in the process of arrest of vessel, the arrestor occupies a rather privileged position. First, in most cases of arrest, the plaintiff does not have any link with the jurisdiction save that the vessel which is sought to be arrested is within the jurisdiction.
Little wonder Colman J in The Kommunar (No 3)  2 Lloyd’s Report 22 observed:
“The in rem jurisdiction of the Admiralty Court requires no undertaking from a Plaintiff who obtains the benefit of security for his claim by arresting a vessel. Even if the plaintiff’s claim fails or he is found to have wrongly invoked the jurisdiction he will not have to compensate the shipowner for the expenses and losses arising out of the arrest unless mala fides or crassa negligentia [in Nigeria ‘unreasonably and without good cause’] is proved. This is a rule of English law which can bear very harshly on shipowners who for some special reason may be unable to obtain release of their vessel by putting up security…” (emphasis mine)
Fortunately, S.13 of the AJA and Order 11 of the AJPR has brought relief to the rather insurmountable hurdle hitherto faced by ship-owners in establishing a claim for wrongful arrest. The Section has abandoned the rather outdated requirement of mala fides and crassa negligentia, replacing it with the more practical and proactive expression of conduct that is “unreasonably” and “without good cause.” What is more, the Section extends liability for wrongful arrest to parties who demand or try to exact outrageous and disproportionate security or withholds consent for the release of the vessel.
The above provision is by and large beneficial to ship-owners so as to curtail the incidence of unwarranted arrest and detention of vessel bearing in mind the capital intensive nature of shipping enterprise. The provision gives the Court the jurisdiction to determine the question of wrongful arrest and to award damages summarily to deserving parties.
Compared to Mareva injunction, the in rem procedure seems harsh to the defendant shipowner in that in Mareva proceedings – widely used for obtaining security for a claim in personam in English law, an undertaking in damages is required and the liability in respect of that undertaking stems from the basis that if the underlying claim fails, the plaintiff becomes liable for all losses caused by the injunction. It is observed that the absence of similar provision in Admiralty proceedings in rem leaves the innocent defendant ship-owner without remedy for wrongful arrest where he is unable to jump the hurdle of proving that the arrest was obtained ‘unreasonably and without good cause.’
It is observed that the right to arrest is not essentially limited to the amount of the claim. Thus, a Plaintiff with a claim of $200,000 may arrest a ship worth $20,000,000 thereby resulting in astronomical economic loss to the ship owner as the ship is immobilized under arrest instead of plying the oceans and earning freight/hire. What is more, the plaintiff’s right to arrest does not depend upon the “character” of the defendant. He is not required to persuade the court that the defendant is “debt dodger” or impecunious – otherwise unlikely to meet the plaintiff’s claim. This contrasts with the criteria for applying for a Mareva injunction where the Plaintiff is required to establish the character of the defendant – that he may likely remove the res from jurisdiction or that he may not be able to satisfy the plaintiff’s claim.
Limitation of Liability
A ship owner is entitled to limit his liability in respect of certain maritime claims arising out of an occurrence to a particular amount, irrespective of the total amount of such claims.
Historically, the right to limit liability was developed to encourage ship-owners to carry on the expensive business of maritime adventure so as to promote international trade and increase the wealth and influence of maritime nations. It was conceived to meet the needs of commerce and has been justified as a commercially practicable device by means of which the effects of a maritime disaster are reasonably apportioned.
On the other hand it is also contended that the concept of limitation of liability contradicts the basic legal concept of restitutio in intergrum. This flows from the fact that more often than not, settlement of damages, where limitation of liability applies, is hardly commensurate and full in contradistinction with the assessed level of damage. The application of limitation of liability is more or less an abrogation of natural right of justice for selfish political reasons.
By virtue of S. 9 AJA and part XXV of the Merchant Shipping Act (MSA) 2007, a ship owner or other person is entitled to limit his liability and establish a fund (the Limitation Fund) in Court for the payment of claims against him in respect of which he is entitled to limit his liability. Where the court is satisfied that a right to limit exists, the court would order the defendant ship owner to pay the ascertained sum (the limitation fund) into court. Thereafter, the defendant ship owner is discharged from liability under the main claim. The distribution of the limitation fund amongst claimants is left to the court to decide after the claimants have established their respective claims.
Arbitration Clause and Retention of Security
Where a vessel has been arrested and the ship-owner raises an objection that the matter ought to be referred to arbitration pursuant to an arbitration clause in the contract underlying the transaction, it is usually desirable to give effect to the arbitration clause. S.10 of the AJA allows retention of security given where proceedings are stayed and a suit is referred to arbitration.
It is important to note that by the provision of S.10 AJA, retention of security for foreign arbitration is only applicable where arbitration proceedings have not begun in Nigeria or elsewhere. What is more, it is only permissible if the action falls within the admiralty jurisdiction of the Federal High Court.  In addition to the provisions of Section 20 AJA which suggests that the jurisdiction of the court in admiralty matters cannot be ousted. Section 10(1)(b) AJA provides that the court retains its traditional powers to stay proceedings where a defendant successfully pleads a foreign jurisdiction or arbitration clause. Section 8 of Arbitration and Conciliation Act 1988 also provides that the court is bound to stay proceedings in favour of an arbitration clause. The approach of the court on this issue has been anything but definite
It is strongly advocated that where Arbitration (is commenced) in respect of maritime claims enforceable in rem, the Claimant should be able to secure arrest of the vessel to obtain security for the arbitration award. This practice is obtainable in England pursuant to the Civil Jurisdiction and Judgments Acts 1982 as illustrated by the case of The Jalamatsya. In any event, its is clear that the court retains its overall discretion whether or not to stay proceedings and in so doing, should apply the tests laid down by the Supreme Court in the Nordwind following the Brandon Tests as laid down in the Eleftheria.
Caveat Against Arrest
The arrest of a ship usually involves great inconvenience and embarrassment to a ship owner. The essence of caveats is that a party can give notice by making entry in a register kept at the court’s Registry stating that he is prepared to provide security in respect of any claim against his vessel. Thus a person who wishes to prevent the arrest of a vessel may have a caveat entered against arrest. The caveat shall not be filed unless the person or his solicitor gives an undertaking to acknowledge the service of the writ in any action in rem that that may be begun against the vessel and to appear in the suit and provide bail or make payment into the court, within 3 days of being served with such processes. The rationale for caveats against arrest has been explained thus –
‘’It may be sufficient here to state that the caveat book is always consulted before a warrant for arrest of a vessel issues in the principal or district registry; the existence of a caveat is not legally a bar to arrest, but unless the arresting party shows good and sufficient reason for arresting in the face of a caveat, he shall be liable to have the warrant discharged and to be condemned in costs and damages. Caveats are entered on behalf ofsome owners and kept in force by regular renewals in order to provide against any possible danger of a vessel suffering future delay by arrest.’’
The arrest of ships is a recognized and veritable feature of international maritime and admiralty jurisprudence. Its importance to Nigeria is underscored by the thriving nature of shipping business in the country. Legitimate claims will go unsatisfied unless there is recourse to an effective and efficient system of arrest. Shipping interests therefore must endeavour to understand the practice, challenges and legal complexities of arrest that usually arise in the course of shipping trade. Nevertheless, the party that avails itself of the special right of arrest must be ready to justify its conduct and to prove that it was entitled to take advantage of this all important but critical legal remedy.
 Partner at AZIH & AZIH (Legal Practitioners) www.azihandazih.com
 Arrest, Attachment and Related Maritime Law Procedures, William Tetley, Q.C
 This procedure is discussed in subsequent part of this presentation.
 Renamed the Federal High Court by 1979 Constitution – see section 228
 See Nigerian Shipping Practice and Procedure by L.N Mbanefo
 Jammal Steel Structures Ltd v. African Continental Bank Ltd (1973) 1 ALL NLR part 11 page 208 and Bronik Motors Ltd & Anor v. Wema Bank Ltd (1983) NSCC 226, the Supreme Court held that the Federal High Court possessed a concurrent jurisdiction with the State High Courts.
 (1995) 1 Lloyd’s Report 11
 Nigerian General Superintendence Co Ltd v. Nigerian Ports Authority (1989) 3 NSC 519; Section 15 AJA
 (1976) 1 NSC 295
 See Chief Victor Odili v. M/V Hemlock (1991) 4 NSC 63; see also The Vasso (1984) 1 Lloyds Law Report 235 (per Robert Geoff LJ) at page 243.
 L.N Mbanefo – Nigerian Shipping Practice and Procedure at page 126
 (1851) 7 M00 P.C 267
The “Monica S” (1967) 2 Lloy’d’s Report P. 113.
 (1971) 1 Lloyd’s Law Report
 (1971) 1 All E.R 821
 C.M.I Trading Services Ltd v. Owners of MV “Chaika” & Anor (The Chaika) Nigerian Shipping Cases (NSC) Vol 6 P. 367.
 See generally Essays on Maritime Law and Practice by L. Chidi Ilogu pp 55-58; MV “S. Araz” & Anor v. N.V Scheep (The Araz No. 1) NSC Vol. 6, p.116, Owners of MV “S. Araz” v. LPG Shipping (The Araz No.2) NSC Vol. 6 p.149.
 The “Freccia del Nord”  1 Lloyd’s Rep. 388
 Order 3(1) &(2) AJPR
 The territorial waters of Nigeria extend to twelve nautical miles – S. 7(1) and (2) AJA and S.1 Territorial Waters Act; Benzenne Nigeria Ltd v Nigerbras Shipping Line Ltd – The Gongola Hope (19992) 4 NSC 247.
 See Order 7 AJPR
 Order 6 Rule 1 AJPR
 Ibid, Order 6 Rule 3
 Ibid, Order 6 Rule 5
 Ibid, Order 6 Rule 4
 See Universal Shipping Co. Ltd v. The Owners Polar M.C (1978) 1 NSC 363.
 Belfry Marine Ltd v Palm Base Maritime, SDN BHD 1999)
 See generally Order 13 AJPR
 (1981) 2 NSC 62
 (1991) 4 NSC 130
 See generally L.N Mbanefo op cit page 147
  Vol. 4 ER
 See Maritime Law by Christopher Hill 4th Edition p. 381; Liability for Oil Pollution and Collissions, Ozcayir, 1998, 229-380 at 299.
 See Admiralty Law Institute: Symposium on Limitation of Liability – The Origins and Development of Limitation of Shipowners’ Liability Tulane Law Review 1979 Vol 53, 999-1045 at 999.
 See generally Limitation of Liability – A Nigerian Perspective – John Hare, University of Cape Town p. 2.
 For a detailed discussion see Essays on Nigerian Shipping Laws by L.N Mbanefo
 See Scheep v The MV “S. Araz” and Owners of the MV “S. Araz” (2000) 15 NWLR (Pt. 691) p. 622.
 Cap A18 LFN 2004
 See Owners of M/V Lupex v. Nigerian Overseas Chartering and Shipping Ltd (1994) 5 NSC 182; Scheep v. MV “S Araz’’ (supra)
 (1987) 2 Lloyd’s Rep. 164.
 (1987) 3 NSC 1
 (1969) 1 Lloyds Law Report 237
 Marsden, British Shipping Laws: Collisions at Sea Vol. 4 Para. 344.