Dues and charges

Ships under arrest in Nigeria are now liable to pay port dues and charges. Yinka Agidee of The Rock and Partners looks at how and why

MOST claimants often use the instrument of arrest as an effective means of securing their claims against shipowners whose vessels are alleged to have damaged their goods and properties. The effect of the arrest is to prevent the vessel from being able to leave the port until the claim is either settled or some sort of security is provided. In the meantime, port dues and charges continue to be levied on the ship by the Nigerian Port Authority (NPA), the body vested with administering ports in Nigeria, during the period of the arrest.

Payment of these dues and charges usually become a source of controversy, as the shipowner does not see the rationale behind being asked to pay port charges during a period over which he had no control over his ship’s movement. The NPA’s stance has always been that the fact of arrest is irrelevant and once a ship is in port, whether voluntarily or otherwise, port charges ought to be paid.

Presently, the relevant legislation which deals with the issue of payment of port charges by arrested vessels is the Nigeria Ports Authority Act (NPAA) 1999. However, before considering the provisions of the NPAA, it is necessary to consider the previous legislations which dealt with the issue in order to understand the rationale behind the existing law.

In the past, there was what appeared to be a hidden power tussle between the courts and the NPA on which body should regulate the issue of payment of port charges by arrested vessels. Based on the Admiralty Jurisdiction Procedure Rules (AJPR), the courts held that vessels under arrest were not liable to pay port charges, while the NPA argued that the Nigerian Ports Decree (NPD) 1993 vested the Authority with wide powers to manage the ports and charge port dues on all ships (whether under arrest or not), entering or leaving Nigerian ports.

Sections 37 and 43 of the NPD contained relevant provisions as follows:

Section 37

“The company {NPA} may charge such harbour dues and rates as it may deem fit on every ship entering or leaving a port or the approach to a port in respect of passengers, animals or cargo carried on the ship”

Section 43

“The company may charge such harbour dues and rates as it may deem fit for pilotage, light, conservancy, buoyage, anchorage, mooring buoy, berthing and other services rendered to a ship”.

On the other hand, Order 8 Rule 2 of the AJPR 1993 provides as follows:

“ whilst a vessel is under arrest pursuant to these Rules, no port or other dues shall be payable by an interested person to any person and no application for the same shall be entertained by the court”

Both the NPD and the AJPR were Federal legislations, but the AJPR came later and dealt specifically with the issue of non- payment of port dues by arrested vessels. However, regrettably, a great majority of cases were not litigated probably because of the notion that existed at the time that even when a vessel is released from arrest by a court, the ship could still be delayed by the NPA for spurious reasons until payment of the port dues are made and some shipowners, in order to avoid unnecessary delays, opted to pay the port charges.

One of the few cases that went to court was Nigeria Ports Plc v S. Araz & anor. The plaintiff claimed the sum of $3,166,690.88 from the defendant as port charges for services rendered to the first defendant’s ship, S. Araz. The S.Araz berthed in Lagos on December 27, 1994, and was arrested by an order of the Federal High Court on January 13, 1995. The defendant disputed the claim and argued that by virtue of Order 8 Rule 2(1) of AJPR the ship was not liable to pay port dues from the date of arrest. The plaintiff relied on Sections 37 and 43 of NPD and contended that Order 8 Rule 2(1) of the AJPR was in conflict with Sections 37 and 43 NPD and was therefore void to the extent of its inconsistency.

The court ruled that there was no inconsistency and that Order 8 Rule 2(1), which specifically deals with non-payment of port dues by ships under arrest, applied and accordingly port dues were not payable by the defendant from the date of the arrest. Ruling in this matter was delivered on December 16, 1998. As can be seen from the facts of the case, the S.Araz had been under arrest for over a year before the NPA instituted its own action and the shipowner really had nothing to lose in terms of time in defending the action.

It is believed in some quarters that this decision of the Federal High Court led to the repeal of the NPD and promulgation of the Nigerian Ports Authority Act on May 10, 1999, which specifically addressed the issue of the liability of arrested ships to port dues. Sections 56(1) and 62 of the NPAA contain relevant provisions as follow:

Section 56(1)
“………., the Authority shall levy such dues and rates on every ship… arrested at any berth or place within the port.

Section 62
“…………., the Authority shall levy on any ship, including a ship under arrest …. such ship dues and rates for lighthouse, conservancy, buoyage, anchorage, mooring buoy, buoys oil pollution control, berthing and other services rendered to a ship; …..”

Although the NPAA did not expressly repeal the AJPR 1993, Nigerian law provides that when a new legislation is enacted to address issues already contained in an existing legislation, the intention of the legislators presumably is to repeal the former legislation. As things stand presently, it would appear that Order 8 Rule 2 of the AJPR, which absolves arrested vessels of the liability to port dues, has been impliedly repealed and ships under arrest are now liable to pay port dues and charges in Nigeria.