Proper Basis For The Arrest Of Ships – Marine/ Shipping

The Admiralty Jurisdiction Act widens the scope of the Federal
High Court in relation to the arrest of ships.

This widened scope affects the ship arrest provisions. Under the
Act, liabilities binding on a demise charterer are also enforceable
by an arrest order. Where a claim is not founded upon a proprietary
or possessory interest in the ship, an applicant must ascertain the
relevant person at the outset. “If I wish to proceed against a
specific person whether for breach of a contractual, tortious or
statutory duty, who will I sue?” That individual or corporate
body, when identified, is the relevant person.

Therefore, for the purpose of arresting the carrying ship, it
must be shown that the relevant person is the beneficial owner of
all the shares in the ship or its demise charterer at the time the
suit is commenced: M.V. Araz vs LPG Shipping S. 4. (1996) 6
NWLR (PI.457) 720 (CA). Alternatively, a sister ship may
be arrested. In this case, the relevant person must be the
beneficial owner of all the shares in the sister ship at the time
the suit is commenced: M. V. Araz vs N. V. Scheep (1996) 5
NWLR (P. 447) 204 (C.A). The position of a sister ship
merits further comment. The expression itself is a misnomer because
it is not a statutory requirement under the Act that the sister
ship and the carrying ship must be in the same beneficial ownership
at the time the suit is brought. A more accurate expression is
“surrogate ship” which has been adopted in similar
legislation elsewhere.

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A further point relates to claims by holders of bills of lading
in respect of cargo carried in non-demise chartered ships either on
a time or voyage basis. It was not covered in the M.V Araz case,
which were involved with charter party claims simpliciter. However,
there is copious authority to the effect that bills of lading
issued under non-demise charters and which has been signed by the
master (or charterer as agent of the master) contractually bind the
ship owner and not the charterer.

Contractual privity is usually founded on the holder’s
position as a consignee or endorsee within the terms of the
Merchant Shipping Act, S. 375(1). In such a case, the relevant
person for the purposes of a ship arrest is patently the ship
owner.

It is submitted that in order to contractually bind the
non-demise charterer so as to confer personal status, the bills of
lading must have been signed with the authority of, and on behalf
of the non-demise charterer. To determine otherwise will not accord
with binding precedents. Moreover, it will create an obvious
circularity with respect to the arrest of the carrying ship. This
will be impossible because the non-demise charterer can manifestly
neither be its beneficial owner nor demise charterer.

It is hoped that the appellate Courts will be presented with an
early opportunity to pronounce on this point so that aggrieved
cargo interests are not wrongly deprived of the pre-judgment
security afforded by a ship arrest.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.