The Ghost in the Hull: Maritime Liens in Nigeria

Good day everyone. This is Arugo speaks on Arugo Insights. Today we talk about the ghost in the hall. We will talk about the 20 year history of Nigerian maritime len. And um I welcome everyone legal scholars and maritime practitioners, students of law and maritime enthusiast. >> I welcome you all to today's lecture in the Nigerian hinterlands. We have a saying that the debt of the head is not paid by the cap. If you sell the head, the debt follows you to the new owner's house. In admirality law, this is not just false claw. It is a $50 million reality. $50 million reality. Imagine you've just got a state-of-the-art vessel. The papers are clean and the registry is clear. But two weeks later in Lagos, the Federal High Court arrest the vessel for a collision that happened 3 years ago in English Channel. How? Because you didn't just buy a ship, you bought its goat. Today on Arugu in sight, we are discing the invisible building and exploring how Nigeria's merchant shipping act 2007 created a dual track system that can sink an innocent investor's dream. >> Let us start from the origin where it all start where it all began. The Roman hypotaker, the clinging her. To understand our law, we must go back 200 years to Rome. The Romans knew a ship had to sail to earn money to pay its debts. They created the hypota. Unlike a pawn shop where you leave your watch behind, the hypothetical allow the dead to cling to the hall while the sheep remain in the owner's possession. This clinging debt is the very soul of the Nigerian maritime l. Let us talk about personification of the vessel and in doing that in Nigeria we will consider the MV gongola hope case >> under the common law legacy we inherited. >> A sheep is a juridical person. It is the instrument of me chief. If he causes damage, we don't need to sue the owner. We can sue the vessel itself. In Nigeria, this is not just theory. In the landmark case of MV Gongula and SCIT Limited, our courts particularly the court of appeal confirm that the ship is the defendant. This is the action in RIM. When you sue the ship, you are seizing the defendant itself independent of the owner's identity. Let us go back to where it all started. The big bang. The bold Bley. The year 1851 gave us the big bang of maritime history. The bold Bley. Sir John Javvis established the three indelible pillars and in that case he stated that the land attaches the second the impact happened. Two that it travels with the ship no matter who owns it. Three it is secret. No registration is what required. This created a legal ghost that waits in the shadow of the registry. >> Let us relate it to Nigeria. Let us talk about the Nigerian evolution. Nigeria didn't just copy the British. We evolved. We move from the English clothes list to our own localized system. >> By 2007, the MSA gave the English model in Nigerian twist. We expanded the list to include port and pilotage dues. Today our system is a hybrid, a Roman heart, an English body, and a Nigerian face. >> Ladies and gentlemen, so don't just see still cargo, see a history of death spanning two millennia. As we move on in this lecture, we're going to dive into the introductory part of the lecture. We talk about the statutary dualism where we will see why you must balance the procedural key of the AJ and the substantive anchor of the MSA. Stick around ladies and gentlemen and let's navigate the law the statutory dualism. We will look at the procedural gatekeeper and the substantive heart. If you are a student of Nigerian law, you probably started with admirality jurisdiction act. That's something you must know. We will refer to the admirality jurisdiction act here in this lecture as AJ as your procedural gatekeeper. The AJ provides the key the action in REM. Under section five sub three of the AJ it tells the federal high court yes you have the power to arrest the ship. It's about the how and beware. But hold on. >> Just because you can arrest a sheep >> doesn't mean you your claim stays alive after the ship is sold. That is where the merchant shipping act 2007 MSA enters as the substantive heart. While the AJ focuses on the process of the arrest, the MSC specifically through section 66 to 71 defines the property rights. In Nigeria, you cannot practice admirality law with one eye closed. You must balance the procedural key of the AJ with the substantive anchor of the MSE. If you don't, you might arrest a ship only to find your claim was legally extinguished the moment the owner signed a bill of sale. Let us look at the jeridical defender and in that we will consider the principle in the gongola. Now you might ask does the Nigerian court truly accept this 19th century idea of a ship being a person? The answer is a resounding yes. Look at the landmark case of the MV Gongola Hope and SCIT Limited 2007 decision. There are the court. This is a Nigerian definitive authority on the personification theory. The court of appeal made it clear that in an actioning rim the ship is not just a piece of property it is the jurical defendant it is the rest the court taught us that if you don't sell the ship correctly literally pinning the wreath to the mast or to a conspicuous part of the hall you have not properly arrested the court's jurisdiction. >> The case of Gongola reinforces that under the AJ 2004, the ship is the instrument of mischief. When you sue the MV Gongola Hope, you are not just knocking on the owner's door. You are seizing the defendant itself. Let us look at the overriding five and then the hierarchy of power. Now let us talk about the hierarchy of power. In the federal high court, some claims are more equal than others. If you look at section 66 and 67 of the MSA, >> we find what I call you riding five. These are not just death. They are super claims that leap frog every other claim even the claim that is coming from the banks. Let us break down the leap frog list. I am going to look at this from a humanitarian and the savior >> first the crew wages. If you look at section 66A the law protect those who man the walls. This covers not just pay but repatriation and social insurance. Why? Because a stranded crew is a humanitarian crisis. The ship pays the human before he pays the bank. The second one is loss of life and personal injury. >> Section 66B, whether on water, on land. If the ship cause the injury, the land clings to the hole. The third one is salvage reward section 66 sub. This is the savior's land under section 68. A letter salvage claim actually at ranks an earlier one. What is the Jewish prudence behind it? Why? Because without the salvo, the ship would be at the bottom of the ocean and the other creditors would have nothing to fight over. >> So when it is time to share whatever they get from the vessel, you must first of all settle the salvo. >> Let us look at the sovereign and the third fo. >> The fourth item and this is a Nigerian twist ports and pilotage dues 66 subda unlike English law. Nigerian law makes state dues an overriding lean. If a vessel skips out on its dues in worry The NFA NPA, the Nigerian Port Authority, carries a master key to the ship that survives any sale. And then >> the fifth out of the five of the claims is the one that is related to third to third claims 66 sub. This covers physical damage and crucially environmental pollution. In the era of blue economy, this is the primary tool for holding rogue ships accountable for spills in the Niger Delta. If your claim is in this overriding five we just listed, >> you possess a legal checkmate, you can wait for a bank to finance a ship for 10 years and then in one afternoon at the federal high court, your claim can jump to the front of the line and take the lion share of the money. It is the ultimate power move in maritime law. >> Let us look at the mutation and the shadow. >> Now before we move on, we have to address the heavy lifting of the low. To truly understand the invisible burden we have talked about, you must master the distinction between a maritime lean and a statutory right in REM. >> Think of a maritime lean >> as a DNA mutation in the ship's title as established In the 1981 case of the bold voc, >> it attaches the very second the damage is done. It is proprietary. It is permanent. It survives a sale. It is a ride in the ship. However, >> a statutory right in Rome >> like a bill for ship repairs or supply of necessaries just a procedural shadow. If the owner sells the ship before you file your RE in the Federal High Court, that shadow vanishes. You can't chase the new owner because that right wasn't encrusted in the hole. It was merely right to sue the current owner using the ship as security. And here is the kicker for our international viewers. The rule from the bankers trust international limited and third shipyards group popularly referred to as the highle 1981 decision says it all. When multiple creditors show up at the federal high court in Lagos, the court doesn't care about foreign priority rules. He uses the lex for that's the law of the Nigerian core. This is why understanding the MSA 2007 is your only shield in the priority battle. If the Nigerian statute says that you're second in line, it doesn't matter if the law in New York says you're first. It is the law in Nigeria that what will prevail. >> Let us now consider the inelibility mark. >> In landlord we have a saying caveat mtor meaning buyer beware. You check the registry you see a clean title and you are safe. But in Nigerian maritime law under section 71 of the MSA the rules of the land don't apply. Think of a maritime lean as a legal virus. Once a ship holds, hits a jetty or fails to pay its crew, the virus attaches to the hall. Under section 71 MSA, this lean follows the vessel not withstanding any change of ownership of registration of flag. It doesn't matter if the new owner is a bonafide purchaser for value without notice of the impending equity who paid the full price and was never and has never heard of the debt. It doesn't matter if the ship is renamed. It moved from something else to another name and flies a Liberian flag. No, instead of a Nigerian flag, it doesn't matter. The virus stays in the steel. In the eyes of the federal high court, you haven't just bought a ship, you have also bought it since the priority paradox, the reverse time race. Now >> let's talk about the priority paradrop. >> In standard banking law, the first person to register their interest wins. But maritime law flips the script. Under section 68 of the MSA, we have a hierarchy that keeps bankers awake at night. Number one, we talk of the varieting five. We've discussed this earlier on. Wages of crew and the master, injury, salvage, pu, and to. The second order priority leaves after the overriding five are registered mortgages. Even those registered years ago, they will come second. And then the third one in the list is statutory rights in REM. That's borders on repairs, bunkers, and supply of necessaries. But here is the twist. The last shall be the first in maritime law. A lot of savage claim our rights an earlier one. outranks an earlier one. >> Why? Because >> the most recent Salvoore is the one who save the asset for everyone else. If you didn't pull the ship off the rocks last week, the bank wouldn't have a ship to foreclose on today in this race. The finish line moves backwards. Let us look at the 2-year clock. The statute of extinguishment. >> So, is there ever an end to the invisible body? Yes. But is a tight window. Look at section 72 of the MSA. A maritime lean is extinguished after 2 years. However, there's a major catch for the buyer. That's the tolling exception. If the clament was legally prevented from arresting the ship, for instance, if the ship stayed out of Nigerian territorial waters, the clock stops. The dead doesn't die, it just goes into hibernation. The moment that head enters a Nigerian port, the invisible body wakes up and the federal high court mashal is waiting with an arrest warrant. In Nigeria, the sea remembers what the registry forgets. Let us look at a seminar case. The escape pilotage deals. Let us supply this. >> A vessel owes NPA 50 million naira in pilotage dues. It sold to a conglomerate, renamed and refl. The new owner's lawyer say we have a clean title. What is the verdict >> under section 66D and section 67 of the MSA? Those dues are varieting maritime lean. Under section 71, they survive the sale. The MPA wins. The ship is arrested. The debt of the head must be paid. This is the reality of the Nigerian blue economy. You don't just navigate the waves. You navigate the statutes in form of a summary. Let us look at the doctrinal trinity. If you look at the origin of maritime lean, you know that maritime leans arises automatic automatically by the operation of law for statutory right in REM. They arises only upon the issuance of a read. What is the character? Maritime leans are proprietary in nature. It is a right of the sheep in the ship for statutory rights in RAM. The right is procedural. It is a right against the ship. In maritime lean, it is a right in the ship. Let's talk about survivability. A maritime lean survives a bonafide sale to a third party for a statutory right in RAM. It is extinguished if the ship is sold before you file your suit. What is the authority for this for this um summary? You look at the case of the bold buckley 1851. And then for statutory rights in RAM, you look at section two and section five sub three of the AJ. By way of closing, as we wrap up this session of arugsite, let us synthesize the law. The invisible body is not just a poetic phrase. It is the proprietary ghost of the bold buckle. When you advising a client on the ship purchase or an arrest, you must distinguish between the mutation and the shadow. A maritime lean is a mutation in the title. It attaches at the moment of impact, the moment of salvage or the moment the seaman's wages go unpaid. It is indelible. It is what we call a privilege claim. However, the statutory right in REM for your bunkers, your repairs or your necessaries is merely a procedural shadow. If the sheep is sold before you move the court, that shadow vanishes. And finally, remember the hard lesson of the highleon aisle. When the sheep is arrested in Nigeria, the lex for the law of accords reigns supreme. The MSA 2007 is the final abita of who gets paid and who goes home empty-handed. In the Nigerian blue economy, ignorance of the invisible body isn't just a mistake, it is a total loss. This concludes a deep dive into the invisible body. If you found this useful, hit the subscribe button for more insights into the federal high court admirality practice. In our next session, we look at ship arrest procedure from the rate of summons to the marshall's warrant. I am Ari speaks your anchor and this is shipping low. Thank you for your time. I appreciate sides.