Friday, June 21, 2019 2:40 pm
In a landmark judgment delivered, by Justice Babs Kiewumi, presiding over a Federal High Court, Lagos, south west Nigeria in a case filed before the court by Seadrill Mobile Units Nigeria Limited against The Minister for Transportation and two others has declared that drilling operations fall within the definition of ‘coastal trade’ under the Coastal and Inland Shipping (Cabotage) Act and that Oil rigs fall within the definition of vessels under the Act.
The Plaintiff, Seadrill Mobile Units Nigeria Limited, had initiated the suit in reaction to the detention of its oil rig, The West Capella, by the Nigerian Maritime Administration and Safety Agency (NIMASA), which was detained on the ground that the Plaintiff failed to register it as a vessel at the Ship Registry for cabotage operations. Pursuant to the suit, the Plaintiff in seeking the release of its vessel from detention seeks legal redress.
In challenging the action of the defendants, the Plaintiff urged the court to determine.
1. Whether drilling operations fall within the definition of ‘coastal trade’ and ‘cabotage’ under section 2 of the Coastal and Inland Shipping (Cabotage) Act.,and
2. Whether on a proper interpretation of the Cabotage Act – particularly sections 2, 5 and 22(5) – drilling rigs fall within the definition of vessel under the Coastal and Inland Shipping (Cabotage) Act.
It was the Plaintiff’s argument that drilling operations were simply limited to oil production and this had no relation to the carriage of goods and passengers within Nigerian waters, which had been defined as coastal trade and cabotage under section 2 of the Act. The Plaintiff further argued that section 22 (5) of the Act expressly included certain vessels that were eligible for cabotage registration under the Act. He argued further that it was immaterial that the word ‘include’ was used in section 22 (5) and that the express mention of the specific vessels in the section meant the exclusion of an oil rig, which was not mentioned.
In a counter argument in opposition to the submission of the Plaintiff’s counsel the Defendants’ counsel, Dr. Oluwole Akinyeye of Olisa Agbakoba law firm, contended that the Plaintiff’s drilling operations, which involved oil production encompassed the exploration and exploitation of minerals or non-living natural resources in Nigeria and that the nature and functions of The West Capella compulsorily required it to carry persons and goods in relation to its oil drilling operations, fell within the definition of coastal trade or cabotage under s 2 of the Act.
Dr. Akinyeye further submited that the nature and functions of The West Capella satisfied the three elements required to be fulfilled under section 2 of the Act for the purpose of classifying an oil rig as a vessel. It was also argued that The West Capella was a type of oil rig known as a drill ship and that this fact ought to be taken into joint consideration with the provisions of the Admiralty Jurisdiction Act, NIMASA Act, and Merchant Shipping Act, which all contained provisions defining an oil rig as a ship.
In deciding the first question for determination in the affirmative, Justice Kiewumi found that the Plaintiff’s drilling operations, which were conducted offshore fell within the ambit of the definition of costal trade and cabotage in section 2 of the Cabotage Act. He also found that the pictorial evidence of The West Capella reflected that its drilling operations encompassed the carriage of goods and persons for the purpose of being classified as coastal trade or cabotage under section 2 of the Act. In deciding the second question for determination in the affirmative,
He considered the provisions of the Admiralty Jurisdiction Act and Interpretation Act and found that an oil rig was defined as a ship. The Court was of the position that the word – ‘include’ as utilised in section 22 (5) of the Cabotage Act was to broaden the scope of the Act’s application to encompass vessels not specifically mentioned in the Act. It was the Court’s position that the community reading of the Admiralty Jurisdiction Act, Interpretation Act and Cabotage Act meant that drilling rigs fell under the definition of vessel under the Act.
The judgment has now settled the age-long controversy regarding whether the oil rigs employed by oil and gas companies in the maritime industry can be regarded as vessels for the purpose of the Cabotage Act.
The judgment is also far-reaching as NIMASA can now charge and demand statutory levies on the oil rigs for cabotage activities, which had hitherto been contested by the oil and gas companies. As a corollary, the government stands to derive significant revenue from these levies thereby improving Nigeria’s economic fortune.