‘Admiralty Jurisdiction of FHC Is Being Eroded’

Nigeria’s dream of becoming West Africa’s shipping hub got a boost in 2004 with the passage of the Cabotage Act; but, doubts have been expressed as to whether the Nigerian maritime sector has really taken advantage of the Act and maximised its benefits. Mrs Funke Agbor, SAN, a Partner in ACAS-Law which recently went into a combination with global law firm, Dentons, has come into prominence as one of Nigeria’s leading maritime Lawyers and Arbitrators. She recently emerged as the President of the Nigerian Maritime Law Association, and in a chat last week, she gave Onikepo Braithwaite and Jude Igbanoi a brief overview of the maritime sector in Nigeria, and her concerns about the recent decision of the Court of Appeal in the MT Sam Purpose case, which she believes has eroded the admiralty jurisdiction of the Federal High Court. She further expressed her optimism about the establishment of a National Shipping Line, and more female Lawyers taking Silk

In a jurisdiction where partnerships hardly thrive, Adepetun Caxton-Martins Agbor & Segun has continued to weather the storm and forge ahead as one of the leading law partnerships in Nigeria. Kindly, share with us the secret of ACAS-Law’s unity and staying power? Kindly, tell us about your new relationship with foreign law firm, Dentons

The first part of your question is one that I get asked often, and honestly, I believe that if you ask any of my partners this question, including partners you have not mentioned, they will offer a similar answer.

I have been fortunate to have partners who are honest, have strong moral principles, and share the same vision for the kind of law firm I wanted to create. It sounds simplistic, but as a result, we are all pulling in the same direction and enjoying the challenge.

One key issue that was settled from inception and which has paved the way for sustaining our unity, concerns our agreement to build a law firm that would succeed its founders. The process by which this transition is to be achieved, with milestones, is written into our partnership agreement and we consider its enforcement the ultimate test against which we will measure our success. It is not the norm in Nigeria for founder-led law firms, to willingly hand over the proverbial keys to the Mercedes to the next generation. Our shared faith in God, is also a key element of our unity of purpose and goals. While not claiming to be perfect as no one is, it however, keeps us in check and ensures that our moral hazard avoidance quotient is remains high. This has helped us traverse the murky waters sometimes encountered, in the day to day of practice of law.

With respect to Dentons, our combination was launched on 26 April when we re-branded as Dentons ACAS-Law. Dentons is a global law firm, with presence in 204 locations across more than 80 countries. Our shared infrastructure is now integrated, and we deliver a one-firm experience to our clients.

Prior to combining, Dentons and ACAS-Law had for many years enjoyed a very strong correspondent relationship, which was gradually and very deliberately deepened over time. What stood out for us was not just that Dentons is the world’s largest law firm, but of all of the global law firms, it has a unique offering that appealed to us.

Dentons is a polycentric global firm. Polycentric is a term Dentons uses to describe a number of attributes that sets it apart. It has no dominant culture or global headquarters. It emphasises that we are “in and of the community” wherever we are, and has taken a path different than most global firms headquartered in either the UK or US. Dentons does not seek to “colonise” a market with Lawyers sent from a “home office”. It takes pride in diversity that matches its clients diversity, and consciously rejects a “one size fits all culture”. Consequently, with our combination, the focus has been on harmonisation and bringing in complementary strengths rather than imposing one way of doing things.

Permit me to emphasise that as Dentons in Nigeria and in keeping with the Dentons polycentric culture, Dentons ACAS-Law shall remain a fully indigenous Nigerian law firm as required under prevailing regulations governing legal practice in Nigeria, with complete autonomy over our leadership, membership, finances, and administration.

Why is it that to date, we have less than 50 female Senior Advocates? Why is it so difficult for women to attain the rank? Is it that gender discrimination exists in our profession, or many women are not interested into aspiring to the rank?

Gender discrimination even though a fact, is a strong expression in the Nigerian legal context. It has happened by way of default given our culture where men hold sway in the society, and this is not peculiar to Nigeria. However, I have no doubt that because of the extra-ordinary contributions generations of women have made and continue to make to their societies, it is only a question of time before the current imbalance will become less acute.

But, to your point, the route to becoming a Senior Advocate in Nigeria is a very rough terrain, even for men. But, men are better able to navigate the terrain, as society regards them as achievers with no discouraging voices hindering them, while women who go that route can often be labelled as abandoning their domestic duties as a wife and mother, or even as daughters to elderly parents. So, first of all, if you are married you must have 100% support of your husband and family members, or you could be swimming against the tide. Imagine how super exhausting that could be, if you are married to the wrong person!

Women are very interested, but our nurturing instincts sometimes override ambition, so after getting past the nurturing phase ambition kicks in later than it would in men, which is why women arrive at the same destination …not late, but later!

So, we need to be intentional about giving our daughters advice early, about career progression in the same way that young men are guided by their fathers and other male mentors. Girls should not be left out, and women should make the extra effort at building up younger women as well as young men. It is our God given duty, as is exhorted in Titus 2 in the Bible.

I really do not have an absolute answer as to how to ensure gender equity in attaining the rank of Silk, but I know that the more women there are in the decision making process, the more likely we will begin to see fundamental changes. Our men know the benefits of women in the profession, and are becoming our partners in progress. This resonates in more with men, when they see their daughters unfairly disadvantaged in the work place. We are making progress. The glass ceiling has never been easy to break, anywhere, but we will get, there, as has been said before, one crack at a time.

You are listed as one of Nigeria’s leading Maritime practitioners. How would you assess Nigeria’s Cabotage regime since the passage of the Act almost 20 years ago? Do you agree that the Court of Appeal decision in the MT Sam Purpose has whittled down the jurisdiction of the Admiralty jurisdiction of the Federal High Court? If so, explain briefly why, whether the decision has caused any setbacks and if so, what can be done to correct it.

Nigeria’s cabotage regime has substantially impacted the Nigerian maritime industry, since the passage of the Act. The Act was passed with the lofty objectives of increasing Nigerian interests in the Nigerian maritime offshore industry, and this has to a large extent, been achieved. You will hardly find an operator in that industry, without some sort of Nigerian interest. Since the inception of the Cabotage regime in 2004, there has been significant growth in domestic tonnage, and the number of Nigerian vessels engaged in Cabotage trade. The Nigerian Maritime Administration and Safety Agency (NIMASA) recently reported that about 68% of vessels engaged in Cabotage trade in Nigeria, are Nigerian-flagged vessels. Some of the Nigerian flagged vessels are owned by Nigerians, while others are bareboat chartered-in.

The ability of Nigerians to take advantage of the regime has however, been impacted by economic factors, such as the amount of capital required for acquisition of assets in the industry. Many Nigerians are unable to afford some of the very large and sophisticated vessels required in the industry, consequently, the cabotage waiver regime is still with us. NIMASA recently announced a five-year strategic plan beginning from 2021, through which it intends to end the grant of cabotage waivers in stages. I hope that the plan would include helping eligible Nigerians with financing for acquisition of the large vessels in the industry, and also support for local shipyards. I also hope that a national shipping line will eventually be established, which will make the absolutely necessary sea time training of eligible Nigerian seafarers, possible.

Over the years, we have witnessed a series of rather disturbing judgements that have eroded the admiralty jurisdiction of the Federal High Court. The decision of the Court of Appeal in the MT Sam Purpose, is just one of such decisions. I will avoid delving into an analysis of the judgement, as I do not think it is necessary to do so here. Crew wages is of paramount importance, such that a claim for crew wages is one of the few claims that create a maritime lien which attaches to and travels with the vessel in respect of which the claim arose. The most concerning aspect of the judgement, is that it has removed the very potent remedy of arresting a vessel to enforce this maritime lien, because the National Industrial Court of Nigeria (NICN) does not possess the jurisdiction and capacity to effect the arrest of a vessel to secure a maritime claim.

The Third Alteration to the Constitution inadvertently transferred the jurisdiction over claim for crew wages to the NICN, thereby depriving seamen of the veritable weapon of a maritime lien on the vessel on which they served, as security for their wages. It is arguable that the legislature could not have intended this to be the consequence of the third amendment to the Constitution. To correct this anomaly, I hope that there will be a further constitutional amendment sooner rather than later to address the issue.

Furthermore, I would like that, in the event of a further appeal to the Supreme Court, the Apex Court would give the Constitution a more purposeful and liberal interpretation in accordance with the intention of the legislature. A distinction should be made between claims for crew wages, and general labour related claims in the industry. The jurisdiction of the Federal High Court over claims for crew wages and masters’ disbursement, should be restored in accordance with the provisions of Section 251(1)(g) of the Constitution and international maritime law practices. Other maritime industry labour claims such as the claims of other employees of a shipping company or a stevedoring company, which do not fall within the admiralty jurisdiction, and of course, do not give rise to a maritime lien on a vessel as security, remain within the jurisdiction of the NICN.

It is on record that Nigerian banks are not shipping friendly, as they are said to rarely grant loans for vessel acquisition to Nigerian potential ship-owners. This perhaps, explains why most shippers lease vessels instead outright acquisition. How do we change this narrative?

The Nigerian banking system, seems not to be quite compatible with ship finance. The interest rates, the loan tenure etc. all make it impractical for a ship owner to finance a vessel through a Nigerian bank. The narrative can be changed, through educating the Nigerian banking sector on the special nature of the ship finance business. The banks should be educated to view ship financing, as going into long term business with the ship owner. It goes without saying that the education needs to start with the regulator, CBN, so that banking regulations will take into consideration the special nature of ship finance. The criteria for eligibility for the financing facility, should not include a requirement for the prospective ship owner to already have a contract for the ship before acquisition. The tenure of the loan should be reasonable, depending on the nature of the vessel; for instance, a minimum of 20 years would be reasonable for a new build. The rate of interest on the facility, should not be more than one digit.

The bank is always typically protected with a mortgage on the ship, until the facility is paid off.

In other countries where shipping is a substantive industry, there are specialist shipping banks, and they are, in effect, business partners with the shipowner or operator. We are not there yet.

Is it true that Nigerian Insurance companies are also reluctant to offer coverage to vessel owners?

Insurance companies are willing to do more, but are constrained by a sluggish economy and successive governments who do not have the political will or sufficient interest to grow the insurance sector. It could certainly be more vibrant. Insurance is a feature of every type of business, including shipping. But, shipping covers a diverse range of businesses within it. In Nigeria, insurance on goods imported by sea is compulsory, and the insurance market covers that particular risk quite adequately. However when it comes to specialised high value equipment/goods, perhaps, not so well, but the law allows an element of collaboration with foreign insurers with the consent of the insurance regulator, to insure risks which are beyond the capacity of the Nigerian insurance market.

Amidst the nation’s serious security challenges, piracy and kidnapping of crew members is said to be on the increase in the Nigerian coastal waters. What is the implication of this for the maritime sector which depends almost wholly on foreign owned and foreign-crewed vessels?

The increase in piracy attacks in Nigerian waters and in the Gulf of Guinea, is no doubt, of great concern. It is a serious setback to the development of our maritime sector. The International Maritime Bureau (IMB) Piracy Reporting Centre, is replete with reports and warnings of pirates’ attacks and risks in Nigerian waters and the Gulf of Guinea.

The implication of the rising incidents of piracy attacks and kidnapping of crew members on the maritime sector, are many and dire. Piracy attacks increase the risks faced by seafarers and vessels, the attacks adversely affect maritime trade and activities. Shipowners are conscious of security challenges, and heed warnings regarding the vulnerability of vessels to piracy attacks in certain locations. This could result in their complete avoidance of routes considered too dangerous, or the provision of extra security on vessels to deal with any potential attacks. Insurers are equally nervous about the security situation, and tend to demand higher premiums to provide cover for vessels which ply routes considered as high risk. The higher premium and extra security all lead to increase in the costs of shipowners, which increased costs would undoubtedly result in higher freight or hire, as the case may be for the Nigerian maritime sector. Also, where the vessels decide to avoid the routes completely, or insurers refuse cover and vessels avoid the routes as a result, the maritime industry will be impacted by the resulting difficulty in movement of goods and services.

The Federal High Court exercises exclusive jurisdiction on admiralty matters, and it is a well known fact that the number of Judges that sit there are not enough to handle these admiralty cases. What is your suggested panacea to this worrisome issue?

The problem is not just with the number of Judges of the Federal High Court; it is also about the number of cases the few Judges have to deal with. The issue of congestion in our courts is obviously a general problem that cuts across all courts and matters, not just the Federal High Court and admiralty matters. It is imperative, that we begin to limit the number of cases that end up in court. There are too many cases filed in court, which ordinarily could and should have been settled without litigation. Even when a case is filed in court, parties should continue to be open to out of court settlement in appropriate circumstances; it is said that the aim of a civil suit is to force the Defendant to settle on the best possible terms. If litigants adopt this approach towards litigation, the number of cases being adjudicated by the Judges will be reduced drastically. Arbitration or alternative dispute resolution should be actively explored, as a route to decongest the courts. The knowledge, ability, capacity, experience and the supporting institutions, exist in abundance in Nigeria for this to work.

At the risk of pointing out the obvious, I would say that appointing more Judges who are experienced in admiralty to the Federal High Court, will be helpful in solving the problem. Maritime law is a specialised system of international laws, and requires particular specialised knowledge and experience. Shipping practice is global, and multi-jurisdictional. It is therefore, important that Judges of the Federal High Court undergo continuous training in admiralty/maritime law, for proper understanding and adjudication of admiralty cases. It is always helpful to appoint admiralty Judges from the rank of Lawyers who are experienced admiralty law practitioners.

You would be aware that I was recently, just last month, elected the President of the Nigerian Maritime Law Association, the main objects of which are to promote the practice study and advancement of Maritime law and its administration. We have done a lot of work in this regard over the years, led by previous Presidents who have only been four in number since inception in 1977, so I can name them: Chief C. O. Ogunbanjo, Hon Justice Babatunde Belgore (of blessed memory), Mr L. N. Mbanefo, SAN and Mr Chidi Ilogu, SAN. I am the 5th President with big shoes to fill, but I am undeterred as I have a very strong executive committee and other able hands across the sector, who continue to support the Association! We will continue in the same vein particularly as under our last President, Mr Chidi Ilogu, SAN, an Admiralty Law Reform Committee was constituted, chaired by Mrs Jean Chiazor Anishere, SAN and Sir Osuala Nwagbara, and with the support of very senior maritime Lawyers prepared a report on proposed reforms to the Admiralty Jurisdiction Procedure Rules 2011 and the Admiralty Jurisdiction Act 1991. We have submitted our report to the Rules Committee of the Federal High Court. We have also participated in the development of the national maritime transport policy, and key in our contribution, was to entrench the training of Lawyers and Judges into the policy, in order that funds can be allocated specifically for that purpose, with the expectation that this important element is not just assumed or taken for granted.

Some have observed that in Nigeria, it is very easy to arrest a ship and keep that vessel for many months, with the attendant economic losses. What is it about our laws and legal system, which gives a leeway to this ugly practice? How can it be tackled, to at least ensure the confidence of foreign ship owners and operators?

In comparison with some other jurisdictions, it can be said that it is quite easy to arrest and detain a ship in Nigeria. Yet, it must be borne in mind that, the procedure of arrest of a ship to secure a claim is a very useful and potent tool in the hands of a claimant under the right circumstances. I agree that this useful and potent tool, may be misused or abused by litigants. In as much as the law is never perfect and there is always room for improvement, I do not think that our maritime jurisprudence as it is today, permits arbitrary arrest and detention of vessels for a lengthy period without consequences. The Admiralty Jurisdiction Act and the Admiralty jurisdiction Procedure Rules, have made detailed provisions on what an applicant must establish before the Court may order the arrest of a vessel. So, an order of arrest should not be something you just stroll to the court to obtain, as a matter of course. It is now up to litigants to avoid bringing needless applications for arrest. It is equally up to the Judges before whom applications for arrest are brought, to critically evaluate the merits of the applications and grant them only in deserving cases. That said, it is important to point out that Shipowners can always file a Caveat against Arrest at the Admiralty Registry of the Federal High Court, where they foresee a potential claim that could lead to the arrest of their vessels that sail into Nigerian waters. A potential arrestor is obliged to search the Caveat Book, before bringing an application for arrest. It is, however, unfortunate that potential arrestors have, to circumvent a Caveat, developed a habit of inflating their claim above the amount stated in a Caveat.

Ideally, the essence of arresting a ship is to compel the Owner to appear in the suit, and post an acceptable security in lieu of the arrested vessel. The alternate security can be a guarantee from a Bank, Insurance Company or Protection and Indemnity Club. Because a guarantee from a Bank or Insurance Company is quite expensive to maintain, Shipowners will always prefer to furnish a guarantee from their P&I Club. Unfortunately, Claimants are often reluctant to accept a P&I Club guarantee as alternative security, but insist on a Bank Guarantee. I will advice that Judges be bold enough to release vessels from arrest upon the Owners furnishing a guarantee from a reputable P&I Club, even where the arrestor insists on a Bank Guarantee.

Finally, I must point out that there is always room for reparation for needless arrest. Damages can be awarded in favour of the Shipowner against the arrestor, where an arrest turns out to be needless.

The Covid-19 pandemic has dealt a very heavy blow on the legal profession for the past one year. Now the JUSUN strike has compounded the situation, and Lawyers and law firms are hard-hit. Many law firms are downsizing. What is your suggested way out of this quagmire?

The reason for the JUSUN strike, is a real issue that continues to bedevil the administration of justice in this country. It is really sad and unfortunate that the basic and fundamental principle of constitutional law and democracy, the Doctrine of Separation of Powers, has never been adhered to in its entirety with respect to the Judiciary. It is an open secret that all is not as it should be, and this strike is also to tell the powers that be that we know all is not as it should be. It is inimical to the effective and transparent administration of justice. While the Nigerian Bar Association supports the strike for this reason, it is also true that the criminal justice and civil justice administration is suffering, in that our citizens in jail or in Police custody for whatever reason, are deprived from having their constitutional right to their day in court. I attended the last meeting of the Lagos Branch of the NBA and this was an issue of great concern, but one key to resolving the strike apparently lies in the interpretation of some provisions of the Constitution as to what, if any, is the extent of the responsibility the Federal Government and the State Government, respectively. There are clearly divergent views. A balance of those views is needed for the courts to go back to work, and for the full implementation of the constitutional provisions giving independence to the judiciary.

Are you in support of jettisoning the 1999 Constitution for a new and improved one? Kindly, give reasons for your answer

I am not a constitutional Lawyer, who may be better placed to answer this question from that standpoint. However, as a citizen of this country, the discordant and angry voices across our land is concerning. Any arrangement or rearrangement must ensure that our humanity, of both our leaders and our people is not lost to us forever, regardless of the differences in our tribe, tongue and faith. The power of humanity has been said to be “the strength of our individual and commitment and the force of collective action. Both must be mobilised to relieve suffering, ensure respect for human dignity, and ultimately create a more humane society” (ICRC 1999 Declaration). I think this means we should be our brothers’ keeper. Treat each other with respect.

Our motto which is on our Coat of Arms is Unity and Faith Peace and Progress. How can we truly get there? Without humanity it is not possible, but with humanity we have a chance.

Thank you Learned Silk.