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Impact of Technology on Maritime Activities and its Implications

Impact of Technology on Maritime Activities and its Implications by Esther Samuel Umoekam

INTRODUCTION

With the impact of the Covid-19 Pandemic on major activities around the world, particularly in Trade, there is no doubt that in the 21st century, the advancement of technology has indeed been a major disruptor of activities in most industries of the economy and the Maritime Sector is not excluded. Recently, the Maritime industry has witnessed the deployment of Maritime Autonomous Surface Ships (“MASS”), the exponential growth of the usage of the E-Bill of Lading and the effective use of technology in the advancement of Maritime Security as evidenced by the Deep Blue Project and the likes. With the global trend towards digitization, embracing the technological innovations for the improvement of trade efficiency is a no brainer.

This need to change the old ways of doing things is not one without implications. These recent technological innovations shall be considered in the succeeding paragraphs of this article.

A. AUTONOMOUS SHIPPING

Autonomous Shipping is the use of self-piloting vessels to perform shipping operations. They are in most cases fully operated with the use of technology or unmanned vessels and their usage is largely associated with safety and security challenges; this however, does not eliminate the human element as this is an important factor for consideration. The benefits of Autonomous Shipping include cost savings as there are little or no crew onboard and reduction in loss of lives at sea or harm to humans. These benefits have prompted the governments of some countries to look into the concept of ship automation with nations such as Finland, Japan, USA and Singapore, conducting research and trials. Even in Norway, there is an established body called the Norwegian Forum for Autonomous Ships (NFAs) made up of persons and organizations interested in the subject of Autonomous Ships and one of their many objectives is to contribute to the development of and use of autonomous ships in Europe.

As beneficial as the concept of Autonomous Shipping may be, so many questions arise from this innovation viz: How is liability allocated in a situation where two autonomous ships collide? Where the ship breaks down at sea, what method is deployed to ensure it is fixed? How will Autonomous Shipping affect the future of workforce? These questions are yet to have answers owing to the lack of regulations governing the use of Autonomous Ships.

To ensure that there is a balance of the benefits derived from this new and advancing concept against safety and security concerns, the impact on the environment and on international trade, the potential costs to the maritime/shipping industry, and finally their impact on personnel (both on board and ashore); the International Maritime Organization (“IMO”) has initiated a work plan for the development of instruments for Maritime Autonomous Surface Ships (“MASS”). The IMO envisages/predicts that the MASS Code will come into force on 01 January 2028.
Although it is predicted that autonomous ships will be used for short voyages, as the global maritime industry momentum focuses on digitization and technological innovations, there is a dire need to develop legal frameworks for proper regulation and also to ensure there is adequate training for the maritime workforce, particularly sea farers as there is obviously a need to upskill in order to meet up with the attendant disruptive nature of Autonomous Shipping.

B. E-BILL OF LADING

A Bill of Lading is a document acknowledging the receipt of goods by a carrier or by the shipper’s agent and the contract for the transportation of those goods . It serves as a receipt of shipment, evidence of carriage contract, negotiable instrument and document of title.

Leveraging on technology, there has been a recent evolution and increased usage of Electronic Bills of Lading (“E-Bill of Lading”) and a general digitization of trade documents. Some of the advantages of the E-Bill of Lading over the Traditional Paper Bill of Lading are tabulated below:

A table that compares the E-Bill of Lading with the Paper Bill of Lading.
Esther Samuel Umoekam

It is trite that only parties to a Bill of Lading are bound by the terms of the Bills and ipso facto can sue and be sued in respect of same . This, by parity of reasoning or extension means that for a person to sue in respect of a Bill of Lading, it must be a recognizable Bill of Lading. Owing to the fact that the functionality and legal implications of most trade documents depend on their ability to be possessed for purposes of lien, one question that begs for answer is, can an Electronic Bill of Lading, being an intangible property be capable of possession? Although there are decisions of Superior Court which answer this question in the negative, the Writer aligns with the decision of the District Judge whose decision formed the basis of the Appeal in Your Response Limited v. Datateam Business Media Limited where a very important issue was raised and it was “whether it is possible to exercise a common law possessory lien over an electronic database”. The District Court while acknowledging the need to keep abreast with technological development and advancement, rejected the argument that it is not possible to exercise a lien over intangible property. The Court held thus:

“It seems to me in the present case that a lien can apply to the electronic data which was in the possession of the Claimant. It would not be appropriate for the law to ignore the development in the real world of record keeping moving from hard copy records into electronic media. The decision which I have to reach today is of limited purview and no doubt this topic may arise again in other cases in other contexts. But for the purpose of the particular decision which I have to reach in this case. I do not accept the submissions by Counsel for the Defendant that a lien cannot exist over the electronic data which was in the Claimant’s possession in just the same way as it could exist over the hard copy records in the Claimant’s possession.”
Sadly, the decision of the District Court was not supported by the Court of Appeal but it is the Writer’s firm position that with the innovations in technology, the problem of control and possession has been resolved. The UNCITRAL Model Law on Electronic Transferable Records (“MLETR”) adopted by the General Assembly on 07 December 2017, clearly recognizes the use of electronic trade documents for improved efficiency in commercial activities. As at date, only 7 States have adopted the MLETR as part of their domestic Legislations and these States include; Bahrain, Belize, Kiribati, Papua New Guinea, Paraguay, Singapore and Abu Dhabi Global Market located in the United Arab Emirates .

Based on the UNCITRAL MLETR, in a bid to reform the law in the United Kingdom to allow for trade documents in electronic form, the Law Commission submitted a Report to Parliament on Electronic Trade Documents, and in its Report, it recommended certain criteria which must be met for a document to qualify as an electronic trade document. These criteria are as follows:

• The document must be capable of Possession;
• Fully divestible upon transfer;
• Capable of exclusive control;
• Requirement as to the integrity to establish authenticity;
• The document must contain the same information as would be required to be contained in the paper equivalent;
• The electronic trade document system must be reliable; and
• Identification of persons who exercise control of a document in electronic form.

With modern trends and evolving technology and as can be seen from the increasing number of Countries adopting the use of Electronic Trade Documents, it is safe to argue that the E-Bill of Lading can be treated in the same way as the traditional paper Bill of Lading.

In Nigeria, the closest legislation that recognizes the use of Electronic Documents is the Evidence Act, 2011. By virtue of Section 84(1) of the Evidence Act, electronic documents can be admissible in evidence upon satisfaction of the conditions contained in subsection (2) of the same section. Although it may seem as if the distinction between a mere computer-generated document and a legally binding E-Bill of Lading may be advanced to argue that the Evidence Act is being stretched beyond its limits, one can safely conclude, based on the provisions of the Evidence Act, that an E-Bill of Lading can be admitted in evidence under Nigerian Law.

Technology Platforms for E-Bills of Lading

In recent times, software platforms have been developed to meet the rising demands for electronic bills of lading and one of such platforms is Wave BL. The Wave BL Platform (an E-Bill of Lading and Trade Document Software) which has been used by major shipping companies to create and execute electronic bills of lading, leverages on blockchain technology for its effectiveness. Wave BL has a decentralized solution that makes it possible to verify title and possession, allows for transfer of e-bills of lading from one person to another with zero exposure to third parties. The Wave BL platform also has byelaws which are required to be accepted by users who sign up to use the platform. These byelaws are created to mirror the English Carriage of Goods by Sea Act of 1992 which in effect retains the required terms as stipulated under the relevant law.

The only challenge that may arise from these varying software platforms, is the problem of uniformity.

Finally, when it comes to trade or commercial transactions, particularly shipping, financial institutions play a major role in terms of issuance of letters of credit or using the e-bill of lading as a negotiable instrument. There is therefore a need to onboard the banks and acquaint them with the new development in this regard.

C. MARITIME SECURITY

Maritime Security is concerned with the prevention of intentional damage through sabotage, subversion, or terrorism and prompt mitigation of incidences within the maritime domain . It involves the continuous surveillance and reconnaissance of a nation’s maritime domain with a view to prompt interdictions when infringements occur to the nation’s regulations. For this purpose, surveillance technologies have been deployed to facilitate timely and accurate decisions to neutralize threats. The Deep Blue Project was established by Nigerian Maritime Administration and Safety Agency (NIMASA) inter alia, for the prevention of illegal activities in the Nigerian Exclusive Economic Zone and enhancement of the safety of lives at sea. Also, the NAF ATR 42 Patrol Aircrafts, Falcon Eye Project, Maritime Operational Intelligence System (MOIS) are some of the other technological systems deployed for the purpose of maritime security.

This has helped in promoting and securing the international maritime domain as well as protect maritime resources from all criminal acts.

Conclusion

Safety, ease of doing business, cost savings, speed and support for a greener economy are some of the many benefits that the effectual use of technology in the Maritime industry can promote. It is recommended that countries of the world key into this development and either adopt and domesticate the relevant international laws and or enact legislations to cover any lapse that may arise therefrom so as to enable the smooth running of the Maritime Sector in their jurisdictions.

With the world gravitating towards the use of technology, it is left for individuals and institutions to embrace modern technology and rethink their business processes in a bid to adapt and compete with global the market.

The Maritime Industry is taking laudable steps in ensuring that it has a competitive advantage by embracing the use of technology and it is imperative that the Maritime Workforce upskill to meet up with the challenges that this disruption may pose.

For further information, please contact:

Esther Samuel Umoekam
Energy, Constitutional and Transport Law Section
Paul Usoro & Co.
+234 (0) 8028242292
esther.samuel@paulusoro.com

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PUC Records Another Win at the Federal High Court for Dr. Bartholomew Bassey Ebong (Former Managing Director of Union Bank) after 13 Years of Legal Persecution in Respect of Alleged Criminal Charges.

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PUC’s Victory for Dr. Bartholomew Bassey Ebong at the Federal High Court

Paul Usoro and Co (“PUC”) through its Financial and Corporate Services Team successfully represented Mr. Ebong who was discharged of all the offences relating to Banking and Securities in Charge No. FHC/L/CS/296C/2009: FRN v Dr. Bartholomew Bassey Ebong & 5 Ors, at the Federal High Court (“FHC”), Lagos Judicial Division in a well-considered Ruling delivered on 17 October 2022, on a No Case Submission (“NCS”) filed on his behalf.

The arrest and trial of Dr. Bartholomew Bassey Ebong-the erstwhile Managing Director of Union Bank of Nigeria Plc (“the Bank”) and the 1st Defendant in the above numbered Charge, which enjoyed widest publicity in both print and electronic media, started sometime in 2009. The 1st Defendant at the limelight of his career at the Bank and 5 Ors were, pursuant to a Joint Committee Report involving Central Bank of Nigeria (“CBN”) and the Nigeria Deposit Insurance Corporation (“NDIC”), investigated by the Economic and Financial Crimes Commission (“EFCC”), and arraigned for an alleged offence bordering on grant and approval of credit facilities to the tune of N30,477,210,000.00 (Thirty Billion, Four Hundred and Seventy Seven Million, Two hundred and Ten thousand Naira) to the Bank’s subsidiary -Union Trustee Limited (“UTL”); N3,315,000,000.00 (Three Billion, Three Hundred and Fifteen Million Naira) to Falcon Securities Ltd in excess of the paid-up capital of the Bank; N3,400,000,000.00 (Three Billion, Four Hundred Million Naira) to Union Capital Markets Ltd; N2,600,000,000.00 (Two Billion, Six Hundred Million Naira) to Damnaz Cement Company Ltd through Union Capital Markets inter alia which were  in contraventions of the  regulations, circulars or procedure of the Bank and were deemed to have committed offences contrary to Section 15(1)(c), 19(4) of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, Cap F2 Laws of the Federation of Nigeria 2004 and punishable under Section 16(1)(a) of the same Act, Sections 105(1)(a) , 106(1), 110(b) of the Investment and Securities Act 2007. The 1st Defendant was equally arraigned for having allegedly caused to be created or created a misleading appearance of active trading in the securities of Union Bank, whose shares were traded on the floor of Nigerian Stock Exchange with intent to mislead the public and mop-up the shares of the Bank at the Stock Exchange as well as conspiracy to commit the said offences which were in contraventions to the above referred Laws.

The Defendants were initially arraigned by the Prosecution on a 27-Count Charge that was filed on 31 August 2009, but which was amended by way of a 20-Count Amended Charge that was dated and filed on 10 May 2010.  The Amended Charge was further amended by way of a 15-Count Amended Charge dated 07 December 2015 but filed on 08 December 2015 (“Amended Charge”).  The Defendants consistently pleaded “Not Guilty” to all the Counts in the various Charges, including the Amended Charge following which the Prosecution called 3 (three) witnesses in proof of its case – PW1 to PW3 and closed its case on 05 April 2022, with 47 (forty-seven) Exhibits tendered and admitted by the Court.

At the close of the Prosecution’s case (after calling three witnesses, PW1-PW3), and noting, inter alia, that the Prosecution has not established a prima facie case against the 1st Defendant; PUC on behalf of the 1st Defendant filed the NCS praying the Honourable Court to discharge and acquit the 1st Defendant on all the Counts in the Amended Charge hereof pursuant to Sections 302 and 303 of Administration of Criminal Justice Act 2015 (“ACJA”) and hold that the Prosecution has not at all established a prima facie case in any of the Counts sufficient or at all to justify calling the 1st  Defendant to enter his Defence. For completeness, similar NCS were filed by other Defendants.

In its Written Submissions, PUC raised a sole question for the Court’s determination, to wit:

“Upon a reasoned review of the evidence presented by the Prosecution in this Amended Charge, is this a Charge that justifies the invocation of the Court’s powers pursuant to Sections 302 and 303 of the Administration of Criminal Justice Act, 2015 to ‘record a finding of not guilty in respect of the Defendant without calling on him . . . to enter his . . . Defence and . . . accordingly’ discharge the Defendant in consideration of the fact ‘that the evidence against the Defendant . . . is not sufficient to justify the continuation of the Trial’?”

In support of its Written Submissions, PUC relied on statutory and judicial authorities in exposing the principle of NCS vide Sections 302 and 303 of ACJA and the decision of the Supreme Court in Saraki v Federal Republic of Nigeria (2018) 16 NWLR (pt.1646) 405 at 437-438 paragraphs G-E.

The Honourable Court in examining the offences alleged to have been committed by the 1st Defendant, his Written Submissions in support of his NCS, Sections 302 and 303 of AJCA  vis-à-vis the evidence of Prosecution’s Witnesses (PW1-PW3) noted  the meaning and implications of a No Case Submission and further stated that the 1st Defendant in his Written Submissions has argued that; throughout the case of the Prosecution, no legally admissible evidence was tendered before the Court against the 1st Defendant linking the 1st Defendant with the commission of the offence(s) which will indeed compel the 1st Defendant to enter his Defence and, that the evidence adduced by the Prosecution has been so discredited during cross-examination  that no reasonable Court or Tribunal can act on it, or that such evidence is so manifestly unreliable  that no reasonable Tribunal or Court can safely convict on it.

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Have you read our content on:

Nigerian Ships for Nigerian Waters: The Protectionist Policy of the Cabotage Act vis-à-vis the Liberalism of the African Continental Free Trade Agreement (AfCFTA)

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Thereafter, the Court upon wholistic and clinical consideration of the Prosecution’s evidence, the essential elements of the offences as provided under the respective laws – stated that PW1 to PW3  were so discredited during cross-examination that no reasonable Tribunal/Court would convict the 1st Defendant; the Prosecution failed to tender critical documents linking the 1st Defendant to the commission of the offence; PW1 to PW3 could not identify and speak on some of the transactions and during cross-examination they all stated that other Witnesses would come to testify and speak on the transaction.

The said Witnesses were however never called to speak on same. It was also noted by the Court that PW1 to PW3 could not distinguish if the afore-referenced sums were granted as Private Placement or Credit Facilities. Therefore, the Honourable Court finally held that the Prosecution has not proven all the elements of the offences to warrant the 1st Defendant to enter his Defence. Consequently, the Honourable Court upheld the No Case Submissions of the Defendants and accordingly discharged the 1st Defendant, Mr. Ebong and Ors from the Charge, after a very traumatizing criminal trial of over a decade.

The significance of PUC’s victory, apart from the illuminating questions of law and facts that were in issue, is the fact that PUC reaffirmed again, its remarkable ability to competently defend the interests of its Clients in all legal spheres – banking, civil, commercial, transactional, arbitral and as shown in the recent decision – White Collar Crimes as well.

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Nigerian Ships for Nigerian Waters: The Protectionist Policy of the Cabotage Act vis-à-vis the Liberalism of the African Continental Free Trade Agreement (AfCFTA)

NIGERIAN SHIPS FOR NIGERIAN WATERS: THE PROTECTIONIST POLICY OF THE CABOTAGE ACT VIS-A-VIS THE LIBERALISM OF THE AFRICAN CONTINENTAL FREE TRADE AGREEMENT (“AfCFTA”) – Gideon Edem[1]

INTRODUCTION

The potential of our Maritime sector is becoming a recurring revelation and needs no projection into the future but rather an immediate investment for immediate returns. Across the world, crude oil is increasingly being relegated and pressure is increasingly moving to cleaner alternatives, and renewables. The maritime sector offers a wide range of new business opportunities from clean energy to new modes of transportation, logistics and agriculture across almost all other sectors.

However, despite the potentials of this sector for the national economy and sovereignty, our maritime assets were not optimally harnessed as the sector was dominated by foreign companies, with significantly limited participation by domestic companies.

This has been attributed to the lack of financial and technical capacities of domestic companies, inadequate infrastructure, and ineffective implementation of local content policies, among other factors, which perpetuated the state of underdevelopment of local operators.

The Chairman, Lagos Deep Offshore Logistic (LADOL), Mr Ladi Jadesimi, at the 2019 Nigerian Shippers’ Council (NSC) Annual Stakeholders Appreciation Night, had noted that “The maritime industry holds the key to the sustainable economic development of Nigeria and whatever we do must be underpinned with strong local content – in today’s world that starts with Nigerians owning, engineering and building the ships we use.”[2]

It must have been for this reason that the Coastal and Inland Shipping (Cabotage) Act, 2003 was enacted to address the limited participation of domestic companies and enhance their participation in the maritime sector. The main objective of the Act is to give first priority to Nigerian shipping companies in domestic coastal trade and develop indigenous tonnage.

The Cabotage Act clearly gave priority to indigenous ships and strictly reserves the Nigerian waters for Nigerian ships.

While protectionism has been the Nigerian maritime dream, concerns broke out across Africa on the Pan African liberalism drive and this led to the ambitious trade pact to form the world’s largest free trade area by creating a single market for goods and services of almost 1.3bn people across Africa in order to deepen the economic integration of Africa; The African Continental Free Trade Area (AfCFTA) Agreement. This agreement and the impact therefrom could have a combined gross domestic product of around $3.4 trillion, but achieving its full potential depends on significant policy reforms and trade facilitation measures across African signatory nations.[3]

On the basis of Nigeria being a signatory to this trade pact, this article attempts to highlight the startling divergence (if any) between the Cabotage Act and the African Continental Free Trade Agreement with respect to the Nigerian waters and maritime assets.

TRADE PROTECTIONISM OF THE CABOTAGE ACT

It is no gainsaying that the Cabotage Act was enacted for trade protectionism. Trade protectionism is a policy that protects domestic industries from unfair foreign competition using tools such as tariffs, subsidies, quotas, and currency manipulation.

According to Mrs. Mfon Usoro in a paper presented at the International Maritime seminar for Judges in 2018,[4] the Cabotage Act was enacted in 2003 to inter alia promote the development of indigenous tonnage, and restrict the use of foreign vessels in cabotage. It defines cabotage to include the carriage of goods by vessel or any other mode of transport from one place in Nigeria or above Nigerian waters to any other place in Nigeria or above Nigerian waters.

Indeed, for a vessel to engage in cabotage on the inland waterways, it must be wholly owned and manned by Nigerian citizens; and must be built and registered in Nigeria.[5] To further maintain its strict protectionist disposition and to aid enforcement, the Act criminalises non-compliance with its provisions.

The only exceptions for participation of foreign vessel in the act[6] are instances where the vessel is engaged in a salvage operation,[7] engaged with the approval of the minister or any related government agency in activities of marine pollution emergency or any threatened risk,[8] engaged in any ocean research activity commissioned by the department of fisheries,[9] and operated or sponsored by a foreign government that has sought and received the consent of the Minister of Foreign affairs to conduct Marine Scientific Research[10]. A salvage operation in this section must be determined by the minister to be beyond the capacity of Nigerian owned and operated salvage vessels and companies.

While the Cabotage Act leaves some allowances for waivers[11] and licenses to foreign vessel,[12] the circumstances of these allowances are only activated if there are no domestic options.

The foundational issue of ship registration is also protected as a vessel shall not be registered or used in the domestic trade unless the minister is satisfied that[13]–

(a) the vessel is wholly and beneficially owned by Nigerian citizens or by a company wholly and beneficially owned by Nigerian citizens and a vessel or company is wholly and beneficially owned by Nigerian citizens where all the shares in the vessel and the company are held by Nigerian citizens free from any trust or obligation in favour of any person not a citizen of Nigeria;

(b) the vessel is on bareboat charter to Nigerian citizens and is under the full control and management of Nigerian citizens or a company wholly and beneficially owned by Nigerians;

(c) the vessel is owned by a company registered in Nigeria and the percentage of shares in the company owned by Nigerian citizens is not less than 60 per centum;

(d) any foreign vessel is licensed in compliance the Cabotage Act;

(e) the vessel is exclusively manned by officers and crew of Nigerian citizenship except with the minister’s waiver and

(f) the vessel possesses all certificates and documents in compliance with international and regional maritime conventions to which Nigeria is a party including all safety and pollution requirements imposed by a Nigerian law and any international convention in force.

From the foregoing, it is a requirement for registration for a vessel intending to participate in the domestic trade to be built by a company owned by Nigerian citizens or with the controlling interest vested in Nigerian citizens.[14]

The law determines instances where the controlling interest shall not be deemed to be vested in Nigerian Citizens, thus-

(i) if the title to a majority of the shares thereof or 60 per centum are not held by such citizens free from any trust or fiduciary obligation in favour of any person not a citizen of Nigeria; or Coastal and Inland Shipping

(ii) if the majority of the voting power in such company is not held by citizens of Nigeria; or

(iii) if through any contract or understanding it is so arranged that more than 40 per centum of the voting power may be exercised, directly or indirectly on behalf of any person who is not a citizen of Nigeria; or

(iv) if by any other means whatsoever control of any interest in the company in excess of 40 per centum is conferred upon or permitted to be exercised by any person who is not a citizen of Nigeria.

While Protectionism has its merits particularly with shielding a country’s new industries from foreign competition and temporarily creating jobs, it might also have a converse impact as companies have the tendency of decline without competition.  The potential to outsource jobs and negatively impact economic growth are other demerits of protectionism.

A peek into other jurisdictions particularly, the Merchant Marine Act of 1920 otherwise called the “Jones Act” was signed into law on June 5, 1920, following a bill by Senator Jones, serving then as the chairman of the Senate Commerce Committee, to encourage greater commercial use of U.S. ships. Among the provisions in Jones’s legislation were requirements that ships eligible to transport goods from one U.S. port to another must be U.S.-flagged, U.S.-built, U.S.- owned, and crewed by U.S. citizens. Today, those provisions require that such ships be at least 75 percent U.S.-owned, at least 75 percent U.S.- crewed, and assembled entirely in the United States with all “major components of the hull and superstructure” fabricated domestically.[15] Many critics of the Jones Act describe it as a burden and a foe to America’s economy as “Higher shipping rates are the most obvious cost of the Jones Act, but they are merely the first in a cascade of adverse consequences unleashed by the law’s restrictions.”[16]

The discontent with America’s Jones Act begs the question if our Cabotage Act is a friend or foe and this should set the tone for the invitation of liberalism to our maritime trade.

THE LIBERALISM OF THE AFRICAN CONTINENTAL FREE TRADE AGREEMENT (“AFCFTA”)

In January 2012, fifty-four African countries agreed to establish the African Continental Free Trade Area (AfCFTA) during the 18th  Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU) in Addis Ababa, Ethiopia. The aim of this agreement was to create a single market for goods and services with ambitious long-term goals of deepening integration among AU member States, promoting the African Economic Community as envisaged in the 1991 Abuja Treaty of the Organisation of African Unity, and realising Africa’s Agenda 2063 to build a prosperous and united Africa.[17]

The AfCFTA envisages a borderless African Continental market as a step forward in reducing the cost of shipping in Africa in order to expand the intra-African trade from the traditional regional economic communities – where trade between African countries is currently domiciled – to the continental level to help diversify African economies and promote continental trade integration.[18] As a natural impact to this liberalisation, there could be an increase in containerised trade and port traffic volume as well as the need for cross-border maritime transportation between Nigeria and other African countries. One wonders what this will mean for Nigeria’s closed up maritime sector as the agreement and cabotage act seems at face value to be very distinct in objectives and totally opposed to each other.

THE MEETING POINT

While the AfCFTA might seek to liberalise trade among state parties, there have been an increasing conversation to support the position that any vessel that expects free and unlimited passage to trade in the African Continental Free Trade area needs to be flagged in an African State that is a party to the Agreement and in addition, hold 50 percent of its crew from a state party, or hold its equity shareholding in respect of the vessel in 50/50% equity from/with nationals of a state party

When placed side by side with the provisions of the Cabotage Act, it cannot be said that there is a contradiction as the requirements appear quite similar to those of the Cabotage Act in Nigeria which beyond protecting coastal shipping for indigenous operators has by way of waivers still left Cabotage trade open to foreign participation.

It is also suggested that the AfCFTA permits flagging, and foreign vessels take advantage to participate in Nigeria’s maritime trade using the mechanism of flags of convenience in a bid to attract the incentives bestowed on vessels plying the African waters by AfCFTA’s protocol on trade on goods.

CONCLUSION:

It is the opinion of the author that the protectionist policy of the Cabotage Act and the Liberalisation thrust of the African Continental Free Trade Area Agreement might seem divergent in principle but do not confront each other when tested in the practice of Nigeria’s maritime sector.  While there may also be discontentment with the Jones Act of America, the author of this piece opines that Nigeria’s cabotage Act is more of a friend than a foe to Nigeria’s economy as it will prevent capital flight in the booming maritime sector.

As a recommendation, it is imperative for the Cabotage Vessel Financing Fund (CVFF) as created by section 44 of the Cabotage Act to be implemented religiously as that would increase the capacity of indigenous shipping companies and merchants to stay in the game to ensure that Nigerian waters are for Nigerian ships, and with the heightened capacity from this funding and the complementary support of ACFTA, Nigeria’s ships may lead in Africa’s waterways.

[1]Associate, Paul Usoro & Co., LL. B (University of Uyo) B.L(Bagauda, Kano)

[2] Sulaimon Salau, “Nigeria’s Huge Maritime Potential Remain Untapped” available at Nigeria’s huge maritime potential remain untapped | The Guardian Nigeria News – Nigeria and World News — Business — The Guardian Nigeria News – Nigeria and World News – accessed on 25 December 2019.

[3] David Thomas, “What you need to know about the African Continental Free Trade Area” available atWhat you need to know about the African Continental Free Trade Area – African Business accessed in February 2022

[4] Mfon Usoro “Liability Regime for Inland Carriage of Goods (Road, Rail and Inland Waterways)” paper presentation at Sheraton Hotel Abuja, July 2018

[5] Section 3-6 of the Cabotage Act

[6] Section 8 of the Cabotage Act

[7] Section 8(a) of the Cabotage Act

[8] Section 8(b) of the Cabotage Act

[9] Section 8(c) of the Cabotage Act

[11] Section 9-11 of the Cabotage Act

[12] Section 15-21 of the Cabotage Act

[13] Section 23(1) of the Cabotage Act

[14] Section 23(2) of the Cabotage Act

[15] C. Grabow, I. Manak & D. Ikenson, “The Jones Act – A Burden America Can No Longer Bear” available at The Jones Act: A Burden America Can No Longer Bear (cato.org) accessed on 16 August 2022

[16] ibid

[17] UNCTAD Research Paper No. 15, “African Continental Free Trade Area: Challenges and Opportunities of Tariff Reductions” available at African Continental Free Trade Area: Challenges and Opportunities of Tariff Reductions | UNCTAD accessed on 16 August 2022.

[18] The Maritime Executive, “What Will the African Continental Free Trade Area Mean for Shipping?” available on What Will the African Continental Free Trade Area Mean for Shipping? (maritime-executive.com) accessed on 16 August 2022.

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The Petroleum Industry Act, 2021 and the unveiling of the Nigerian National Petroleum Company Limited

  1. INTRODUCTION

The Petroleum Industry Act 2021 (“PIA”) was signed into law by the President of the Federal Republic of Nigeria, His Excellency, Muhammadu Buhari, GCFR on 16 August 2021. The Act is to provide legal governance, regulatory and fiscal framework for the Nigerian petroleum industry and the development of host communities. Prominent amongst the many innovations of the PIA is the creation of the Nigeria National Petroleum Company Limited (“NNPCL”) which was officially unveiled on Tuesday, 19 July 2022.

Prior to now, the Nigerian petroleum industry had become so synonymous with the Nigerian National Petroleum Corporation (“NNPC”). The NNPC has been the government’s main entity primarily vested with the responsibility of managing the joint venture relationships between the Nigerian Government and multinational companies licensed to carry out exploration, exploitation, production and distribution of petroleum in Nigeria. It was by its creation and structure, a state-owned entity/corporation devoid of any ownership of shares.

However, the NNPCL based on the provisions of the PIA was designed to be a limited liability company and to succeed the NNPC with its specific objectives enumerated in Section 64(a)-(m) of the PIA. The NNPCL was to be incorporated within 6 (six) months from the commencement of the PIA and was eventually incorporated on 21 September 2021 in accordance with the Companies and Allied Matters Act 2020.

  1. HIGHLIGHTS OF THE PIA AS IT RELATES TO THE NNPCL

The PIA makes extensive provisions for the formation, structure, objectives and governance of the new entity “NNPCL” in Sections 53 to 65 of the Act. The referenced sections are contained in Part V, Chapter One of the PIA. The major highlights of the provisions are:

  • Ownership and Non-Transferability of Shares
    • Ownership of shares of the NNPCL is to be vested in the Government at incorporation and held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated in equal portions on behalf of the Federation. One peculiar point to note as regards the shares of the NNPCL is that the shares are not transferable except with the approval of the Government and endorsement of the National Economic Council on behalf of the Federation.
    • In the event that the said shares are transferred, it shall be on equal proportion basis of the shares held by the Ministry of Finance Incorporated and the Ministry of Petroleum Incorporated.
  • Funding
    • The NNPCL is set up to operate as a commercial entity without reliance on government funding and it is mandated to expressly state the restrictions in its Memorandum and Articles of Association. It is also required to pay its share of all fees and taxes or other form of payments to the Government under any lease or license.
  • Limitation of Action upon Transfer of Assets, Interests and Liabilities of NNPC
    • Upon the conclusion of the transfer of the assets, interests and liabilities of NNPC to the NNPCL or to the Government or extinguishing of same within the stipulated period of 18 months from the commencement of the PIA, the NNPC shall cease to exist and all pending actions commenced by or against NNPC with regards to the assets, interests and liabilities of NNPC before the transfer shall be enforced or continued by NNPCL. However, the PIA places a limitation on the commencement of any action against the NNPCL with regard to the transferred assets, interest and liabilities where the time for instituting such proceedings would have expired had such transfer to NNPCL not occurred.
    • The transfer is not in any way deemed to have created a new cause of action for the Creditors of NNPC or any party to a contract with NNPC which was entered into before the date of Transfer.
  • Appointment of NNPCL to Act as Agent of NNPC
    • The Minister of Petroleum upon due consultation with the Minister of Finance shall appoint the NNPCL as an agent of NNPC for the sole purpose of managing the process of winding down the assets, interests and liabilities of NNPC and the cost is to be borne by the Government.
  • Automatic Transfer of Employees
    • The provision of the PIA mandates that all employees of the NNPC are deemed to be employees of NNPCL and the said employees are to enjoy any related entitlements as specified under any applicable law and to also take benefit of terms and conditions not less favourable than what they enjoyed prior to the transfer. The NNPCL is required as a matter of law to fulfil all statutory obligations in terms of Pension owed to the employees by NNPC. This in effect means that the employees do not lose their jobs merely by reason of the transition. 
  • Governance
    • The PIA provides for the composition of the Board of the NNPCL whose members shall be appointed or removed by the President of the Federal Republic of Nigeria. The Board is required to carry out its responsibilities as enumerated under Section 63 (1) of the PIA in line with applicable principles of corporate governance and best practices.
  • Establishment of Incorporated Joint Venture Companies
    • The PIA makes provision for the restructuring of any Joint Operating Agreement (“JOA”) as an Incorporated Joint Venture Company. This option is solely on a voluntary basis as may be agreed by parties to the JOA in respect of any upstream petroleum operation.
  1. CONCLUSION

It is clear from the highlights in the foregoing paragraphs that the NNPCL is structured to run as an independent company based on commercial objectives in line with best practices and standard principles of corporate governance. These are indicators that the NNPCL is primed to compete at the world international level with other major operators in the Oil and Gas sector.

It is the hope of Nigerians that with the unveiling of the new NNPCL, Nigeria will be able to attain global relevance in the Petroleum Industry.

Energy, Constitutional Law & Electoral Matters and Transport (ECT) Section

  • Chinedu Anyaso – chinedu.anyaso@paulusoro.com
  • Esther Samuel – esther.samuel@paulusoro.com
  • Chijioke Obute – chijioke.obute@paulusoro.com
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Mrs. Mfon Ekong Usoro Served as a Consultant of the IMO at the Regional Workshop for the Heads of Maritime Administrations

 

L-R: Capt Sunday Umoren – SG, Abuja MoU; Capt Dallas Laryea – IMO Regional Rep; Mfon Ekong Usoro-IMO Consultant; Capt Babacar Diop – IMO Consultants; William Azuh – Head Africa Section, IMO Integrated Technical Cooperation Programme.

Our Managing Partner, Mrs Mfon Ekong Usoro served as a consultant of the International Maritime Organisation at the Regional workshop for the heads of Maritime Administrations(MARADs) organised by the Memorandum of Understanding on Port State Control for West and Central African Region(Abuja MoU) in collaboration with the International Maritime Organisation (IMO) held on 9-11 May, 2022 at Eko Hotel, Lagos.

The Abuja MoU is one of the Nine(9) Regional MoUs established pursuant to the IMO Resolution A.682(17) of 1991 and implemented on the 22nd October, 1999 in Abuja covering 22 Countries with 18 of these countries having full member Status.

The workshop was established to reiterate and amplify the core objectives which informed the founding and establishment of the Abuja MoU which includes the elimination of substandard shipping, prevention of marine pollution and improvement of the living and working conditions of seafarers aboard ships.

On Day 1, our Managing Partner who has extensive National, regional, continental and international experience in the sector led conversations on the Responsibilities of MARADs as flag state to include implementation of the IMO and domestication of relevant international instruments, establishment of institutions for Enforcement as well as Evaluation and regular assessment of recognized organizations. She also discussed the responsibilities of Coastal States to include the need to guarantee right if Safe passage of ship, the obligation to prevent pollution and the provision for reception activities. Mrs Usoro further trained participants on Regional Port State Control (PSC) regimes highlighting the Status, need for harmonization and Co-operation with other PSC regimes.

On day 2, Mrs Usoro led the breakout sessions with Heads of MARADs to understand the challenges they face, their Expectations from Abuja MoU and the Expectation of Abuja MoU from MARADs.

On the third and final day, Mrs Usoro led the analysis of the annual report and presented the draft record of Action Plans for adoption by all participants.

As a remark, she reiterated the need for gender balance in the Maritime sector, applauded the countries with female representatives and encouraged others to open up the spaces for women to take advantage.

The workshop had in attendance 19 African Countries and also had in attendance Mr William Azuh, head of African Section, Technical Cooperation Division of the International Maritime Organisation, Dr. Magdalene Ajani, the Permanent Secretary of the Federal Ministry of Transportation as representative of the Honourable Minister for Transportation, the representative of the Director General of Nigerian Maritime Administration and Safety Agency(NIMASA),  the Secretary General of the Abuja MoU, Captain Sunday Umoren and Captain Babacar Diop as the lead consultant of the IMO.

The frontline role of Mrs Usoro in the Maritime sector remains a great encouragement for women to take advantage in the space and would serve as an inspiration to others as the International Day for Women in Maritime is celebrated on 18th May, 2022.

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Our Principal Partner, Paul Usoro, SAN Inaugurated as Chairman of the Board of Dakkada Luxury Estate, Akwa Ibom State

We are pleased to announce that our Principal Partner, Paul Usoro, SAN was inaugurated as the Chairman of the Board of Dakkada Luxury Estate by the Governor of Akwa Ibom State, Mr. Udom Emmanuel on Tuesday, 05 April 2022.

The 5-man board which is led by our Principal Partner is tasked with the responsibility of managing the luxury estate which will operate as a limited liability company without government’s expense. The need for the luxury estate is to expand the housing and educational facilities in order to accommodate the influx of people into the state.

The expertise of our Principal Partner in delivering this task is without a doubt and we are confident that the vision behind the establishment of the luxury estate would be achieved. 

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PUC Congratulates Our Partner, Mrs. Adetola Bucknor-Taiwo on the Success of the NBAWF International Women’s Day Conference

Paul Usoro & Co (“PUC”) was well represented at the 2022 edition of the Annual Conference of the Nigerian Bar Association Women Forum (NBAWF) held in commemoration of the International Women’s Day 2022.

PUC played a frontline role in the actualisation of the success of this year’s conference which was themed “The Invisible Hand of Gender Bias: Championing Collective Change” as we were privileged to have our partner, Mrs. Adetola Bucknor-Taiwo serve as the Chairperson of the Conference Planning Committee, assisted by our Associate Trainee, Unwanaobong Ekanem who also served as a member of the Logistics and Technical Sub-Committee. The Conference featured a total of six plenary sessions on topics ranging from the “Hidden Biases in Courtroom Dynamics: Gender and the Judiciary” to “Shattering Stereotypes: Heels in the Boardroom – A Case for Navigating or Negotiating the Corporate Ladder”.

It is worthy to note that the NBAWF was inaugurated in September 2019 by our Principal Partner, Paul Usoro, SAN during his tenure as the President of the Nigerian Bar Association.

PUC is dedicated to creating a culture where everyone regardless of gender, is given equal opportunity to thrive and we will do our part in support of the fight against stereotypes and biases especially in the workplace.

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PUC Facilitates Training on the Legal Framework for Combating Piracy and Other Maritime Crimes in Nigeria

Paul Usoro & Co. (“PUC”) was engaged by the Federal Ministry of Transport (“FMOT”), Nigeria to facilitate a 2-day training on the legal framework for combating piracy and other maritime crimes in Nigeria.

The training came up on the 26 – 27th of January 2022 in Abuja and covered the historical perspective to piracy, the substantive law on piracy in Nigeria (Suppression of Piracy and Other Maritime Offences Act 2019) and the practice and procedure of prosecuting maritime offences in Nigeria.

The PUC team at the training was led by our Managing Partner, Mrs. Mfon Usoro and the presentations were delivered by our Partner, Mrs. Adetola Bucknor-Taiwo, Senior Associate, Mr. Ime Edem Nse and Navy Captain Warradi Enisuoh as a guest speaker.

The event was insightful and well received by the participants.

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After a 25 Year Legal Tussle PUC Makes Another Bold Statement at the Federal High Court for the Nigerian National Petroleum Corporation (NNPC)

Paul Usoro and Co (“PUC”) successfully represented and secured a remarkable victory for the Nigerian National Petroleum Corporation (“NNPC”) at the Federal High Court (“FHC”), Lagos Judicial Division in a Judgment delivered on 18 January 2022, after twenty-five (25) years of turbulent legal battles in SUIT NO. FHC/L/CS/1186/96: ROBINSON EDOBOR & ORS v. NNPC.

The legal tussle started sometime in 1996 when the Plaintiffs vide a Writ of Summons, Statement of Claim and other accompanying processes (“Originating Processes”) commenced a Suit against NNPC seeking inter alia declaratory reliefs, perpetual injunction, refund of excess monies paid as housing allowances, as well as damages and an Order compelling NNPC to transfer the Certificate of Occupancy in respect of the houses occupied by the Plaintiffs to them. The Plaintiffs’ claims were predicated on the fact that on or about 16 March 1977 in the Daily Times Newspaper Publication, the then Federal Military Government under the Leadership of General Olusegun Obasanjo introduced a Housing Policy Scheme to facilitate home ownership for Nigerian workers. The said Housing scheme which was open to all participating organization had three (3) categories of houses, to wit: Two (2) Bedroom at the rate of N12, 000.00, three (3) Bedroom at the rate of N16,500.00 and four (4) Bedroom at the rate of N21,000.00 respectively and the said amounts were paid by the Plaintiffs.

According to the Plaintiffs, the Federal Government sequel to the housing policy, vide a Letter of Allocation, allotted parcels of land at Satellite Town in Lagos to NNPC to develop, build houses, and deduct on monthly basis certain sums from their gross housing allowances with the sole aim of transferring ownership of the said houses to the Plaintiffs. Rather than comply with the government directives, NNPC issued a vacation Notice to the Plaintiffs and equally coerced them to sign an undertaking to vacate the house before they could be paid their entitlements.

PUC on behalf of NNPC mounted a very robust defence against the Plaintiffs and also Counterclaimed against them, seeking inter alia declaratory and injunctive reliefs. It was PUC’s arguments that NNPC was not bound by the then policy of the FGN, the Letter of Allocation did not provide that the developed staff quarters would have to be on owner/occupier basis. In point of fact, the quarters were governed by NNPC’s housing policy, which empowered NNPC to generally deduct 81/3% (eight and one-third percent) as cost of rent, from the annual income of its employees resident in the NNPC Staff quarters. The rent deduction is discontinued upon the vacation of the houses by any of the allottees’ or any other condition(s) provided by NNPC. However, the policy was discontinued several years before the determination of the Plaintiffs’ employment.

In support of the immutable principle that policy of the Federal Government was not a law binding on NNPC, PUC relied on the Court of Appeal decision in Wilkie v. FGN & ORS (2017) LPELR-42137, whereat, the Court upheld the afore-referenced principle. In addition, PUC established before the FHC that the Plaintiffs were not privy and/or party to the contract of allocation between NNPC and the then Federal Government as such, the Plaintiffs’ lacks the competence to have instituted the Suit. Moreover, the Plaintiffs did not establish that by the Letter of Allocation, the developed quarters were to be built on owner/occupier basis. What is more? The Plaintiffs did not even produce the Letter of Allocation before the Court, the plank upon which their case rested on.

The Court after the examination of the issues in contention agreed with PUC’s submissions and granted all the reliefs sought in the Counterclaim. In its Judgment, the Court raised two issues for determination to wit:

  1. Whether the Plaintiffs have placed sufficient materials and evidence before the Court to be entitled to reliefs sought?
  2. Whether the Defendant/Counterclaimant is entitled to the reliefs claimed in the Counterclaim against the Plaintiffs?

The Court held that the Plaintiffs failed to discharge the burden of proof on them to be entitled to the properties in issue. The Court went further to hold that the Counterclaimant’s claim succeeds having been able to prove its claims before the Court. The Court in its analysis held that the Letter of Allocation being the contract between the FGN and NNPC which contained the disputed conditions of allocation was capable of settling the Suit one way or the other. However, failure on the part of the Plaintiffs to produce same in proof of their case notwithstanding the issuance of a notice to produce on NNPC was tantamount to not discharging the burden of proof based on preponderance of evidence. Also, the Court held that the Letter of Allocation being a contract document between the FG and NNPC, the Plaintiffs were not privy to same and so could not sue for its enforcement.

As it relates to the Federal Government’s directives and policy in respect of the Housing Scheme, the Court held that Government policies cannot create contract and have no force of Law. In the final analysis, the Court agreed with the entirety of PUC’s submissions and held that the Plaintiffs’ Suit was frivolous and lacking in merit and dismissed same. On the other hand, the Court upheld NNPC’s Counterclaim in its entirety.

What is significant about this PUC victory, apart from the illuminating questions of law and facts that were in issue, is the fact that PUC reaffirmed again, its remarkable ability to competently defend the interest of its Clients.

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Trailblazing PUC: The Case of Mobil Producing Nigeria Unlimited & Exxon Mobil Corporation v. Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State & Anor.

Click here to read the CTC of the judgement.

Just within days of preventing a calamitous upset in the Nigerian Mining sector by securing a court victory in what is arguably Nigeria’s biggest mining legal tussle, Paul Usoro & Co (“PUC”) made another profound statement on Friday 14 January 2022 by recording a second tumultuous courtroom win, the echoes of which this time around, reverberated well beyond the shores of Nigeria right up to the offices of international oil giant, Exxon Mobil Corporation, in the United States of America.

In a Suit commenced by a Writ of Summons, Statement of Claim and other accompanying Processes dated 12 May 2017 (“Originating Processes”) and based on a  fiat issued to them by the Attorney General of Akwa Ibom State, the Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State and one other instituted Suit No: FHC/UY/CS/67/2017; Registered Trustees Of Mineral Resources Awareness Initiative Of Akwa Ibom State & Anor V. Mobil Producing Nigeria Unlimited & Anor at the Federal High Court, Uyo Judicial Division against Mobil Producing Nigeria Unlimited (the 1st Defendant or MPNU) and Exxon Mobil Corporation, a foreign corporation resident in the United States of America (the 2nd Defendant or EMC). The 1st Plaintiff, a non-governmental organization claiming to act for the people of Akwa Ibom State was seeking an assortment of declaratory, executory and monetary reliefs, principal amongst which was for an order of Court compelling MPNU to relocate its head office from Lagos State to Akwa Ibom State. The Plaintiffs anchored this interesting relief on a document called the Standard of Business Conduct document published on EMC’s website which the Plaintiffs claim constitutes a contract between them on the one hand and MPNU and EMC on the other. The Plaintiffs assert that by the said standard of Business Conduct issued by the parent company EMC and binding on the subsidiary, MPNU, the said MPNU was obligated to locate its headquarters in Akwa Ibom State as against Lagos State because MPNU’s operations are in Akwa Ibom State.

The Plaintiffs also made a claim for the payment/remittance of accrued tax from 1987 till the date of Judgment for sums running into billions of dollars.

Continue reading “Trailblazing PUC: The Case of Mobil Producing Nigeria Unlimited & Exxon Mobil Corporation v. Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State & Anor.”

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