Release of A Ship from Arrest

 

The Nigeria Ship Arrest Series is published by Akabogu & Associates, a Nigerian law firm. It will run weekly through the first quarter of 2021 to provide ship and cargo interests related to Nigeria with information to make quick decisions when faced with ship arrest situations.

 

 

 PART 7 – Release of a Ship from Arrest

 

Introduction

Ship arrest is only a means to an end – a form of pre-judgment security available to a claimant which on its own does not with finality imply the liability of the defendant.  Its potency however must not be ignored since transitioning from arrest to judicial sale of the ship asset is a well-situated legal possibility.1

The successful execution of a warrant of arrest therefore additionally places the claimant on a strong bargaining footing as, the cost of the arrest notwithstanding, the ship’s potential losses from forgone freight, crew expenses and wages, general asset underutilization as well as liabilities from unmet carriage obligations are far more significant.

These factors and others account for the usually frenzied push by shipping interests to have their arrested ships quickly released from arrest. How this is done under Nigerian law is highlighted hereunder.

Application for Release from Arrest

The Admiralty Jurisdiction Procedure Rules (AJPR) 2011 provides that an application for release of a ship from judicial arrest may be made to the court that ordered the arrest. A party to the proceedings2 or an interested person3 may apply for the release of the arrested ship or other property and within 3 days of the filing and service of the application for release, and the court shall entertain it. The judge that ordered the

1 See Order 8 Rule 5 and Order 9 Rule 6(1-2) AJPR 2011

2 Order 10 Rule 1 AJPR 2011

3 Order 10 Rule 4(1) AJPR 2011

arrest or, where he is unavailable, another judge shall hear the application. Upon hearing the application for release, the court may make an order for the release from arrest upon such terms as it deems just.

Typically, the court will order a release from arrest if the claimant consents in writing or upon the defendant providing sufficient security to cover the claimant’s claim or the value of the ship whichever is less.

Fixing Security for Release of an Arrested Ship

 In considering the security to be fixed for the release of an arrested vessel, the Court will have regard to the entitlement of the claimant to sufficient security to cover the amount of his claim with interest and costs on the basis of its reasonably arguable best case. In other words, in the absence of strong contrary evidence, the amount of bail or guarantee should be sufficient to cover the claimant’s claim together with interest thereon and the costs of the action4. 

The burden is on the Defendant, to convince the Court upon substantiated facts that a lower amount of bail would be adequate. The reason is that the Plaintiff is deemed to have made a prima facie case of liability in the quantum claimed when it convinced the Court initially to issue the order of arrest and detention of the vessel.

Three forms of security generally accepted by the Court: (i) Provision of letter of undertaking from a protection and indemnity club (P & I Club). However, it is important to note that this is not popular in Nigeria. (ii) Bank guarantee from a reputable bank. (iii) Insurance bond from a reputable insurance company.

Conclusion

 Ship interests need not go into panic mode on the arrest of their ship. While a detailed review of the processes filed for compliance with arrest procedures should be the first step taken, the process of obtaining a release of the ship from arrest is equally a straight forward matter which can be initiated and seen through within a short time with competent counsel and compliance with requisite protocols.

For more information contact info@akabogulaw.com, 2347043293271.

Next – Part Eight: Challenging a Ship arrest Order 4 Da Quin Sham vs. Pan Asiatic Commodities Plc. Ltd. (1991) 8 NWLR Pt. 209 page 354