The general Nigerian economic landscape could be seen as challenging, but its robustness and potential make it worthwhile for parties that do their research. As the Nigerian ship charter market is estimated to be worth at least $10 billion, there is a lot of potential for interested parties to benefit.
In late 2018 the president declined to assent to the National Transport Commission Bill (which the Senate had passed in March 2018). The president cited the need to review certain fiscal provisions set out in the bill, as well as concerns over the duplication of functions which already fell within the statutory mandates of existing agencies. The Senate recently formally reapproved the bill after examining it in view of the president's observations.
Voyaging in West African waters, particularly the Gulf of Guinea, is considered dangerous and raises the question of whether shipowners are entitled to put armed guards on board their vessels to protect them from attacks by arms-bearing third parties. Considering reported attacks of armed robbers at sea, kidnappings for ransom and other criminal occurrences in Nigerian waters, shipowners and operators have explored how to optimise the protection of both ships and cargo.
Shipowners whose ships have caused damage will not want their ship to be arrested, but also will not want to pay damages to the extent of the actual claim. Luckily, shipowners can ensure that their ships are not arrested and at the same time significantly limit the total amount payable. To cap it all off, shipowners do not have to accept liability. If this is not having your cake and eating it, then nothing is.
The chief of naval staff has claimed that the recently promulgated Harmonised Standard Operating Procedures on Arrest, Detention and Prosecution of Vessels and Persons in Nigeria's Maritime Environment 2016 (HSOPs) will provide consolidated guidance for the harmonious management of the arrest, detention and prosecution of vessels and suspects, as well as seizure and forfeiture. However, despite the fanfare that accompanied their launch, the HSOPs have no legal potency or operational clarity.
The Ports and Harbours Authority Bill recently passed its third and final reading in the Senate. The bill's objectives will resonate with followers of Nigeria's port reform efforts, as they clearly demonstrate an intention to give legal status to the landlord port management and administration model adopted by the government in 2006. The bill thus addresses some of the legal issues that have resulted from the inadequate statutory provisions that support Nigeria's so-called 'port concessions era'.
When shipwrecks occur, they often pose navigational and environmental hazards and thus their urgent removal is necessary. Nigeria has had its fair share of wrecks, and in response the Nigerian Maritime Safety and Administration Agency recently directed that all abandoned ships should be removed from Nigerian territorial waters.
On becoming a contracting state to the Hamburg Rules, any state party to the Hague Rules must notify the Belgian government of its denunciation of the latter. Nigeria failed to fulfil this requirement and, as a result, the invalidity of the Hague Rules in Nigeria has been questioned. Two unreported Federal High Court cases on this matter have recently come to light due to their controversial implications.
In a recent ruling, a Federal High Court judge held that there is no limitation period for claims brought within the admiralty jurisdiction that are enforceable in rem. Taken literally, this decision could have significant practical consequences, as proceedings could effectively be brought at any time. In the case at hand, the proceedings stemmed from events that had occurred 10 years earlier.
Following an executive order confirming it as the economic regulator of Nigeria's ports, the Nigerian Shippers' Council recently issued standard operating procedures (SOPs) that apply to various port users and operators. The SOPs are expected to streamline port activities significantly and ensure improved efficiency and greater value for money. They may also reduce the number of disputes and litigation brought by port users that are unhappy with the services provided by operators.
The draft International Convention on Foreign Judicial Sales of Ships and their Recognition is being developed and Comite Maritime International intends to submit it for consideration as an international maritime convention. While the Nigerian Admiralty Jurisdiction Procedure Rules have laid the groundwork for the convention to some extent, it should solve a number of problems faced by purchasers following a foreign judicial sale.
The Department of Petroleum Resources' bunkering guidelines apply to all vessels engaged in bunker fuel business or trade within any part of Nigeria's territorial or internal waters. They regulate all matters pertaining to bunkering, including the issuance of licences. Any party intending to participate in bunkering operations must obtain a bunkering licence. Failure to do so can incur a penalty of $1 million and criminal prosecution.
Due to their relatively conflicting provisions, the continued co-existence of the Hague Rules and the Hamburg Rules has generated confusion among ship and cargo owners. Although the Hamburg Rules adequately and equitably regulate carriage of goods by sea transactions in Nigeria, steps should be taken to formally denounce the Hague Rules to clarify the subject for those who may still be confused.
The Federal High Court recently convicted a vessel and its crew of charges that included conspiracy to deal, dealing with, attempting to export and storing crude oil without lawful authority or a licence. In convicting the vessel and crew, the court relied on the fact that the defence's ship-to-ship transfer claim was neither proven nor supported by International Maritime Organisation or Lloyds List data.
A ship intended for use in the Nigerian cabotage trade must be registered as a bareboat vessel. The Coastal and Inland Shipping Cabotage (Bareboat Registration) Regulations set out guidelines and criteria for the registration of bareboat vessels, including the eligibility requirements, the obligations of a registered vessel, the application of private law provisions and the grounds for refusal or termination.
The Federal High Court recently held that while the Nigerian Navy can arrest vessels suspected of involvement in oil theft or illegal bunkering, it does not have unfettered power to detain vessels beyond the period prescribed by law. The judgment sets a precedent for shipowners and practitioners in similar situations where the navy has acted arbitrarily when detaining ships.
The recent banning of certain oil tankers from trading in Nigeria was a shock for the industry. The vessels have since been re-admitted under the condition that they comply with the law. In the interests of due diligence and risk management, vessel owners and parties with interests in ships operating in Nigeria should be properly acquainted with the relevant rules.
The Nigerian Maritime Administration and Safety Agency recently revised the schedule for the phase-out of single-hull tankers operating in Nigeria. From a risk assessment viewpoint, operators of single-hull tankers that wish to take advantage of the extension should ensure that such tankers are limited at all times within Nigerian territory.
The Nigerian Maritime Administration and Safety Agency recently introduced a raft of regulations to police the marine environment. The regulations are drawn from provisions in various international conventions to which Nigeria is a party, but which had not previously been put into effect. They established a robust regulatory regime for the marine environment, with strong compliance responsibilities for shipowners.
In a landmark judgment the Federal High Court has affirmed the role of the Nigerian Shippers' Council as the economic regulator of ports in Nigeria, dismissing claims filed by shipping companies and terminal operators. It also held the shipping line agency charge, often levied by shipping companies against importers, to be illegal.
The Federal High Court recently ordered the sale of a vessel under arrest for the purpose of preserving pre-judgment security. The court held that the application of the Admiralty Jurisdiction Procedure Rules does not depend on the filing of a statement of defence, but is rather to preserve the vessel from destruction. The court ordered that the vessel be sold and the proceeds kept in a profit-yielding account pending the case outcome.