MESSRS. N. V. SCHEEP AND ANOTHER (PLAINTIFFS/APPELLANTS)
v.
THE M. V. "S. ARAZ" AND ANOTHER (DEFENDANTS/RESPONDENTS)
(2000) ALL N.L.R. 643
Division: Supreme Court of Nigeria
Date of Judgment: 8 December 2000
Case Number: SC 167/1996
Before: Adolphus Godwin Karibi-Whyte; Michael Ekundayo Ogundare; Sylvester Umaru Onu; Okechukwu Godfrey Achike; Umaru Atu Kalgo, JJSC
ISSUES
Whether the appellants' claim for security for damages arising from an arbitration in the United Kingdom could form a cause of action in the Federal High Court of Nigeria?
Whether admiralty jurisdiction of the Federal High Court could be invoked against the defendants/respondents solely for the provision of security for damages, interest and costs that may be awarded in an arbitration proceeding in a foreign jurisdiction?
Whether the second respondent, Koray Shipping Trading Inc was the beneficial owner of the first respondent, Motor Vessel "S. Araz"?
FACTS
The plaintiffs (appellants) were owners of the vessel M.V. "Cindya". By a charterparty dated 17 October 1989 the second defendants (respondents) hired the said vessel from the appellants. A dispute arose between the parties resulting in a claim by the appellants against the respondents for demurrage and or damages. The claim was referred to arbitration in London, United Kingdom, and was still pending when the proceedings leading to this appeal commenced in the Federal High Court, Lagos.
On 22 February 1995, Ascona Shipping Ltd, agents for appellants filed an action in rem against the respondents claiming US$250,000 as security for damages, interest and costs in respect of the claim for demurrage and/or damages relating to the hire of the said M.V. "Cindya". Then an application was made ex parte, to secure the arrest of the first respondent (M.V. "S. Araz"), and was refused on 27 February 1995.
On 28 February 1995, the appellants brought yet another action in rem against the first and second respondents, claiming US$300,000 as security for damages, interest and cost relating to a claim for demurrage and/or damages for detention for the second defendant's use or hire of the said M.V. "Cindya".
Simultaneously with the filing of that action, the appellants filed another motion ex parte seeking an order for arrest and detention of the vessel, M.V. "Araz (first respondent) in Apapa Port, Lagos, on the basis that the second respondent was the beneficial owner of the ship.
On 9 March the trial Judge (Ukeje J) ordered the arrest of M.V. "S. Araz".
The first respondent applied unsuccessfully to have the order set aside, the court finding in favour of the appellant that the second respondent beneficially owned the first respondent vessel, and that the Admiralty Jurisdiction Act 1991 empowered the Federal High Court, notwithstanding the pending arbitration, to order the arrest of the vessel.
The respondents appealed to the Court of Appeal, which allowed the appeal, struck out appellant's suit and ordered the immediate release of the first respondent, finding that:-
. The only purpose of the action was to obtain security from the respondents to ensure payment of (any) London arbitration award. This was an abuse of the judicial process in that the respondent, having failed to secure the arrest of the ship, proceeded to obtain the arrest of the ship while the earlier suit was still pending.
. That the second respondent (Koray Shipping) was not the beneficial owner of the ship, (the first respondent) and so the action could not be maintained.
Being dissatisfied with the judgment of the Court of Appeal, the plaintiffs appealed to the Supreme Court.
Appeal dismissed.
HELD
1. Security for damages not a cause of action
"Security for damages belongs to the realm of adjectival law, that which prescribes method of enforcing rights or obtaining redress for their invasion. Laws which fix duties, establish rights and responsibilities are substantive laws. But those which merely prescribe the manner in which such rights and responsibilities may be exercised and enforced in a court are adjectival or procedural laws. Security for damages belongs to the latter group. It is not a cause of action that can ground a claim, unless otherwise specifically provided by statute." Per Ogundare JSC at page 649.
2. English law not in pari materia
"Section 26 of the English Civil Jurisdictions and Judgments Act is not in pari materia with Sections 10(1)(b), 10(2)(a) & (b) of Admiralty Jurisdiction Act 1991 and Section 11 of the Federal High Court Act 1973. Such a finding would entail introducing extraneous matters into the lucid provisions of the Nigerian Admiralty
Jurisdiction." Per Achike JSC at page 694.
3. Jurisdiction of Nigerian courts wrongly invoked
"Plaintiffs' claim is not for the enforcement of, or a claim arising out of, an arbitral award; it is for the sole purpose of obtaining security for the satisfaction of whatever award that might ultimately be made in their favour in the UK arbitration proceedings. They cannot invoke the admiralty jurisdiction of the Federal High Court by an action in rem for that purpose. Nigerian law does not clothe the Federal High Court with such admiralty jurisdiction." Per Ogundare JSC at page 649.
4. Beneficial ownership
The issue of beneficial ownership raised in the appeal for defamation was found to be an academic exercise as it will serve no useful purpose in the instant case.
LC Ilogu, (with him, UA Ogakwu) for the appellant.
Dr E Atake, SAN (with him, O Onigbogi) for the respondent.
The following cases were referred to in this judgment:
Nigeria
Adebayo v Babalola (1999) 5 NWLR (Part 408) 383
Adeyemi v Opeyori (1976) 9-10 SC 31
Agbizounon v The Northern Assurance Co Ltd (1934) 11 NLR 177
Aghadiuno v Onubogu (1998) 5 NWLR 16
Agu v Ikewibe (1991) 3 NWLR 385
Ando v Aiyekru (1997) 3 NWLR 126
Arcon v Fassassi (No 4) (1987) 3 NWLR (Part 59) 42
Bello & others v A-G Oyo State (1986) 5 NWLR 828
Eshughayi Eleko v Baddley & another (1925) 6 NLR 65
Fadare v A-G of Oyo State (1982) 4 SC 1
FRN v Abiola (1997) 2 NWLR 444
General Oil Ltd v Chief Ogunyade (1997) 4 NWLR 613
Idika & others v Erisi & others (1988) 2 NWLR 563
Izieme v Ndokwu (1976) NMLR 280
John Mills v Franklin Beatrice Aweonor Renner (1940) 6 WACA 144
Kingsley Maude v Victoria Inning & another (1986) 3 NWLR 23
Kotoye v Saraki (1992) 9 NWLR 156
Labiyi v Anretiola (1992) 8 NWLR 157
M.V. "Da Quing Shan" & others v Pan Asiatic Commodities Pte Limited (1991) 8 NWLR 354
Morgan & others v W.A.A. and Eng Co Ltd (1971) 1 NMLR 219
Obienu v Orizu (1972) 2 ECSLR 606
Okafor v Attorney-General, Anambra State (1991) 6 NWLR 659
Okorodudu & another v Okoromadu & another (1977) NSCC Vol.11; (1977) 3 SC 21
Orubu v NEC (1988) 5 NWLR 323
Overseas Construction Ltd v Creek Enterprises Ltd (1985) 3 NWLR (Part 13) 407
Owonikoko v Arowosaiye (1997) 10 NWLR 61
Shitta-Bey v A-G Federation (1998) 10 NWLR 392
Vessel "Saint Roland" v Osinloye (1997) 4 NWLR (Part 500) 387
Foreign
Addis v Crocker (1961) 1 QB 11
Castanho v Brown & Root (UK) Ltd & others (1981) Reports 133
Everrett v Ribbands (1952) 2 QB 198
The "Vasso" (1984) 1 Lloyd's Report 235; (1984) QB 477
The Jalamatsya 1987 2 Lloyds Report 164
The following statutes were referred to in this judgment:
Nigeria
Admiralty Jurisdiction Act 1991: Ss 1(1)(a); 2(3)(f ); 5(4)(b); 10(2)(a)
Evidence Act: S 151
Federal High Court Act 1973: Ss 7(1)(a); 11
Federal High Court Act: Order XL111 rule 1(L)
Foreign
Civil Jurisdiction and Judgments Act 1982: Ss 1; 2; 5; 26
The following rules were referred to in this judgment:
Admiralty Jurisdiction Procedure Rules: Order 2 rule 2(1)
The following books were referred to in this judgment:
Black's Law Dictionary
Maritime Law (3ed) Christopher Hill at 99; at 95
Ogundare, JSC (Delivered the Leading Judgment):- The main question that calls for determination in this appeal is as to whether the admiralty jurisdiction of the Federal High Court can be invoked solely for the purpose of obtaining security for damages, interest and costs that may be awarded in arbitration proceedings being conducted in a foreign country. There are two other minor questions raised in the appeal, the necessity for which resolution depends on the answer to the main question.
The facts briefly are as follows:-
The plaintiffs (who are appellants in this appeal) are owners of the vessel M.V. "Cindya". By a charterparty dated 17 October 1989 the second defendants/respondents herein hired the said vessel from the plaintiffs. A dispute arose between the parties resulting in a claim made by the plaintiffs on the second defendants/respondents for demurrage and or damages for detention of the vessel M.V. "Cindya". The claim was referred to arbitration in London, United Kingdom and was still pending when the proceedings leading to this appeal commenced in the Federal High Court, Lagos.
On 22 February 1995, Ascona Shipping Ltd, agents for Messrs N.V. Scheep Vaatmij Unidov Willel Matad, Curacos -the plaintiffs in the present suit filed an action in rem (Suit No FHC/L/CS/213/95, against the present two defendants claiming:-
"The plaintiffs, as agents to Messrs N.V. Sheep Vaatmij Unidor Wille Mstad of Curacoa, owners of the Vessel M.V. "Cindya", claim against the defendants, jointly and severally, the sum of US$250,000 (United States Dollars Two hundred and fifty thousand only) as security for damages, interest and cost in respect of the claim for demurrage and/or damages for detention relating to the second defendant's use or hire of the said M.V. "Cindya" pursuant to a charterparty dated 17 October 1989 presently under arbitration in London, United Kingdom."
An application by them, brought ex parte, to secure the arrest of the first defendant was on 27 February 1995 refused by the learned trial Judge, Ukeje J.
On 28 February 1995, the plaintiffs brought yet another action in rem against the two defendants herein claiming:-
"The plaintiffs, as owners of the vessel M.V. "Cindya", claim against the defendants, jointly and severally, the sum of US$300,000 (United States dollars three hundred thousand only) as security for damages, interest and cost relating to a claim for demurrage and/or damages for detention for the second defendant's use or hire of the said M.V. "Cindya" pursuant to a charterparty dated 17 October 1989, which claim is presently under arbitration in London, United Kingdom."
Simultaneously with the filing of the action, they also filed another motion ex-parte praying for the following two main reliefs:-
"1. An order for arrest and detention of the vessel, M.V. Araz present at Bullnose Berth 19, Apapa Port, Apapa, Lagos, within the jurisdiction of this Honourable Court.
2. That the said vessel be released from arrest only upon the defendants/respondents furnishing an acceptable bank guarantee in the sum of US$300,000 to meet the plaintiffs/applicants' claim."
The motion was supported by a 9 paragraph affidavit to which were annexed a number of documents. Paragraph 3 of the said affidavit reads:-
3. That I am reliably informed by Steven Fox, of Counsel in the firm of Inc & Co, plaintiff's solicitors in London, and I verily believe as follows:-
i. that arbitration proceedings were commenced in July 1992 and are presently pending in London, United Kingdom, between the plaintiffs/applicants and the second defendants/respondents in terms of a claim which the second defendants/respondents have failed and/or neglected to settle.
ii. That the documents now shown to me and marked Exhibits 'A', 'F' are the claims submissions and supporting documents submitted to the sole arbitrator, one Mr Mark Hamsher, of 18C Ensign Street, London E1 8JD, by solicitors to the parties.
iii. that the defendants/respondents have to date not provided any security to meet the plaintiff's claim or any award thereon before the sole arbitrator.
iv. that the plaintiffs/applicants' claim before the sole arbitrator is for US$224,519.79 being demurrage and/ or damages for detention arising from the second defendant's use or hire of the plaintiff's vessel, M.V. "Cindya", pursuant to a Charterparty dated 24 October 1989 annexed hereto as Exhibit 'D'.
v. that the plaintiffs/applicants now wish to obtain security from the defendants/respondents to ensure payment of any arbitration award in its favour obtained at the end of the said proceedings.
vi. that the second defendant/respondent is the beneficial owner of the first defendant vessel M.V. "S. Araz" as confirmed by the Lloyd's Confidential Index now shown to me and marked Exhibit 'G' to this affidavit.
vii. that it will be in the interest of justice to arrest the said vessel to ensure that the defendants/respondents provide adequate security in the form of an acceptable bank guarantee to meet any award in favour of the plaintiffs/applicants in the arbitration proceedings.
viii. that the plaintiffs/applicants are prepared to give an undertaking in damages for this application."
There was also an affidavit of urgency filed along with the motion papers, the motion was moved by learned Counsel for the plaintiffs on 6 March 1995 and, in a ruling delivered on 9 March, was granted by the learned trial Judge (Ukeje J) who concluded and ordered as follows:-
"In the circumstance, the plaintiff has made out a case sufficiently strong to move this Court to grant the reliefs so