background - advocaat law practice
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BACKGROUND
The jurisdiction of a court to entertain a matter is conferred on the court by the Constitution of the Federal Republic of Nigeria 1999 (as amended) or by the statute that created the court. Section 251(1)(g) of the Constitution confers on the Federal High Court the competence to entertain any admiralty matters in Nigeria to the exclusion of all other courts in the country. It is interesting to note that the scope of this admiralty jurisdiction of the Federal High Court has become less clear following a number of recent court decisions. Prior to the promulgation of the 1999 Constitution, there existed a jurisdictional tussle on admiralty matters between the Federal High Court and the State High Courts. The Supreme Court resolved this jurisdictional wrangling in SAVANNAH BANK LIMITED V. PAN ATLANTIC SHIPPING & TRANSPORT AGENCIES1where the Court held that the Federal High Court and the State High Courts had concurrent jurisdiction over admiralty matters. The 1999 Constitution further settled the issue in section 251(1) which provides that the jurisdiction of the State High Courts is subject to the exclusive jurisdictional competence of the Federal High Court on specific subject matters listed in section 251, which includes “any admiralty jurisdiction.”
The application of the concept of simple contracts within the context of the subject matter jurisdiction of the Federal High Court has unsettled and rendered less defined the admiralty jurisdiction of the Federal High Court. The Supreme Court has endorsed the position that the Federal High Court does not possess jurisdiction in respect of simple contracts. Instead, it is the State High Courts that can exercise jurisdiction in respect of simple contractual claims.2 This has created uncertainty regarding the admiralty jurisdiction of the Federal High Court as most admiralty matters are based on simple contracts.
The case under review examines the application of the concept of simple contracts by the Supreme Court in determining the admiralty jurisdiction of the Federal High Court. It also highlights the implication of the decisions for the maritime industry.
BRIEF FACTS
The Respondent commenced this action at the
Rivers State High Court claiming, among other
reliefs, the sum of N14,800,000.00 (Fourteen
Million, Eight Hundred Thousand Naira only), (the
equivalence of 38,845 US Dollars)3 representing
hire rentals of the houseboat Prince III. It was the
Respondent’s case that it delivered the
houseboat to the Appellant for the temporary
use of the Appellant’s staff. After the delivery of
the houseboat to the Appellant, the Appellant
requested that the houseboat be upgraded to
European executive standard. Pursuant to this
1 (1987) 1 NWLR (Pt. 49) 212; (1987) LPELR-SC 139/1985. 2 ONUORAH Vs. KADUNA REFINING & PETROCHEMICAL CO. LTD (2005) LPELR-2707 (SC). 3 At the exchange rate of 381 Naira to 1 US Dollar
request, the Respondent claimed to have carried
out further modification of the houseboat while
the houseboat was in possession of the
Appellant. Upon the completion of the
modification, the Respondent alleged that the
Appellant refused and or neglected to make
payment for the hire of the houseboat. The
Appellant denied the Respondent’s claims and
contended that it did not take delivery of the
houseboat because the Respondent failed to
meet the delivery deadline and also because the
boat did not meet the required standard.
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At the conclusion of the trial, the High Court
found as a fact that there was a contract between
the parties involving the hire of the houseboat.
The Court, among other reliefs, awarded in
favour of the Respondent the sum of
N8,800,000.00 (Eight Million Eight Hundred
Thousand Naira), (the equivalence of 23,097 US
Dollars) being the hire rentals of the houseboat.
On appeal, the Court of Appeal upheld the
decision of the High Court. The Appellant further
appealed to the Supreme Court. One of the issues
submitted for the consideration of the Supreme
Court was whether the Respondent’s claim fell
within the admiralty jurisdiction of the Federal
High Court as to rob the High Court of Rivers State
the jurisdiction to entertain the suit. The
Appellant referred to sections 251 and 272 of the
Constitution and argued that the High Court of
Rivers State did not have the requisite jurisdiction
to entertain the suit. On its part, the Respondent
argued that the High Court of Rivers State had the
jurisdiction to hear and determine the suit as the
suit was based on a simple case of debt owed by
the Appellant to the Respondent which arose
from breach of contract of hire of a houseboat
and that the claim did not arise in the main nor
touch on anything admiralty to oust the
jurisdiction of the High Court of Rivers State. The
Supreme Court held that the Rivers State High
Court had the jurisdiction to hear the case.
BASIS OF THE COURT’S DECISION
In arriving at its decision, the Supreme Court
considered the provisions of section 251(1)(g)
and 272(1) of the Constitution. Section 251(1)(g)
of the Constitution provides as follows:
“Notwithstanding anything to the
contained in this Constitution and in
addition to such other jurisdiction as
may be conferred upon it by an Act of
the National Assembly, the Federal High
Court shall have and exercise
jurisdiction to the exclusion of any other
court in civil causes and matters –
g. any admiralty jurisdiction,
including shipping and
navigation on the River Niger or
River Benue and their affluents
and on such other inland
waterway as may be designated
by any enactment to be an
international waterway, all
Federal ports, (including the
constitution and powers of the
ports authorities for Federal
ports) and carriage by sea.”
Section 272 of the Constitution provides that:
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“Subject to the provisions of section
251 and other provisions of this
Constitution, the High Court of a State
shall have jurisdiction to hear and
determine any civil proceedings in which
the existence or extent of a legal right,
power, duty, liability, privilege, interest,
obligation or claim is in issue.”
The Court also considered 26 of the Admiralty
Jurisdiction Act, 1991 which defines a ship as “a
vessel of any kind used or constructed for use in
navigation by water, however it is propelled or
moved.…”
The Supreme Court affirmed the finding of the
High Court that the transaction between the
parties was a hire of the houseboat. Muhammed
J.S.C who delivered the lead judgment regarded
the transaction as “a simple contract and not an
admiralty or maritime matter. This is
because…the action filed before the trial court is
for the recovery of accrued and unpaid hire
rentals for a houseboat let to the appellant by
the respondent and damages for breach of the
contract.” The Court held further that the fact
that a houseboat comes within the meaning of a
ship under section 26 of the Admiralty
Jurisdiction Act cannot convert an agreement for
hire of houseboat into an admiralty agreement.
The mere fact that a ship is involved in a simple
contract does not automatically make that simple
contract a subject for jurisdiction in admiralty
matters. The Court concluded finally that “This
case of a simple contract of debt recovery is
within the civil jurisdiction of the Rivers State
High Court and it properly assumed jurisdiction
on the matter.”
COMMENTARY
With all due respect to the Supreme Court, the decision under review is contrary to the express
provisions of the Admiralty Jurisdiction Act which defines in detail the admiralty jurisdiction of the
Federal High Court. Section 1(1)(a) of the Admiralty Jurisdiction Act specifies that the admiralty
jurisdiction of the Federal High Court includes the jurisdiction “to hear and determine any question
relating to a proprietary interest in a ship or aircraft or any maritime claim specified in section 2 of
this Act.” Section 2 of the Admiralty Jurisdiction Act enumerates several claims that fall within the
admiralty jurisdiction of the Federal High Court. In particular, section 2(3)(f) of the Act provides for “a
claim arising out of an agreement relating to the carriage of goods and persons by a ship or to the
use or hire of a ship, whether by charter-party or otherwise.”4 These provisions of the Admiralty
Jurisdiction Act are very clear and unambiguous. It is settled law that where the words used in a statute
are plain and unambiguous, the courts are enjoined to give the words their ordinary and natural
meaning without embarking on a voyage of discovery.5
The Respondent’s claim in the decision under review, being a claim relating to the hire of a houseboat,
falls squarely within the purview of section 2(3)(f) of the Admiralty Jurisdiction Act, and as such falls
within the admiralty jurisdiction of the Federal High Court. Surprisingly, the Supreme Court did not
consider the provisions of sections 1(1)(a) and 2(3)(f) of the Admiralty Jurisdiction Act in arriving at its
decision, even though the Appellant relied on these sections in its argument.
The Admiralty Jurisdiction Act which defines the scope of the admiralty jurisdiction of the Federal High
Court provides for different types of agreements and transactions that are within the admiralty
jurisdiction. Some of these agreements and transactions are mortgage of a ship, carriage of goods,
supply of goods or materials to a ship for its use or maintenance, provision of services to a ship,
shipbuilding, repair of ship, and so on.6 All these are based on contracts. The decision that the Federal
4 Underlining for emphasis 5 See Aromolaran v.Agoro (2014) 18 NWLR (pt. 1438) 153
6 See section 2 of the Admiralty Jurisdiction Act
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High Court lacks the jurisdiction to hear and determine any claim based on simple contracts has the
effect of stripping the Federal High Court of its admiralty jurisdiction as most of the items of claims
enumerated in section 2 of the Admiralty Jurisdiction Act can only be actualized by means of contracts.
It is particularly worrisome that in June 2020, the Supreme Court in CRESTAR INTEGRATED NATURAL
RESOURCES LIMITED V. SHELL PETROLEUM DEVELOPMENT COMPANY OF NIGERIA LIMITED7 held
that “There is no aspect of breach of contract, be it a simple or complex contract, that the
Constitution in Section 251(1) thereof, confers jurisdiction on the Federal High Court to adjudicate
on.”
The law is clear that a court is competent to exercise jurisdiction whenever the subject matter of the
claim is within the jurisdiction of the court. It is the subject matter of a contract and not the existence
of the contract that determines the jurisdiction of a court. Using the existence of a contract as a test
for determining jurisdiction, instead of the subject matter of the contract, has the effect of stripping
the Federal High Court of the admiralty jurisdiction duly conferred on it by the Constitution.
The obvious implication of the decision under review is that ship owners, charterers, seafarers and
consignees have lost the opportunity to commence admiralty actions at the Federal High Court where
the action is based on contract.
For further enquiries, please contact:
7 SC/765/2017 delivered by the Supreme Court on 5th day of June 2020
JACOB FAMODIMU [email protected]
LAZARUS KALU [email protected]
GLORY OGUNGBAMIGBE [email protected]