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Oil rig is vessel under Cabotage Act 2003, Court rules

A Federal High Court sitting in Lagos has ruled that oil
rigs  be
classified as vessels, under the Cabotage Act 2003, supporting the position
of the Nigerian Maritime Administration and Safety Agency
(NIMASA).

Honourable Justice Babs Keuwumi of
the Federal High Court, Lagos, in a landmark judgment delivered Friday, June
14, 2019 in a matter instituted by Seadrill Mobile Units Nigeria Limited
against the Honourable Minister for Transportation and two others with suit No:
FHC/L/CS/607/2016, initiated through an Originating Summons, held 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 had been detained upon the Plaintiff’s failure 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 had raised two questions for determination as to whether
drilling operations fall within the definition of ‘coastal trade’ and
‘Cabotage’ under section two  of the Coastal and Inland Shipping Cabotage
Act 2003.
 It also sought to know whether on a proper interpretation of
the Cabotage Act; particularly sections two, five and 22(5); drilling rigs fall
within the definition of vessel under the Coastal and Inland Shipping Cabotage
Act.
 Plaintiff’s counsel had argued 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 s two 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. It was argued 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 opposition, the first and third defendants’ counsel, Dr. Oluwole
Akinyeye of Olisa Agbakoba Legal, argued 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, which fell within
the definition of coastal trade or cabotage under section two of the acts.
Dr. Akinyeye further argued that the nature and functions of The
West Capella satisfied the three elements required to be fulfilled under
section two 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
drillship 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, the Honourable Court found that the plaintiff’s drilling
operations, which were conducted offshore; fell within the ambit of the
definition of coastal trade and Cabotage in section two of the Cabotage Act.
The court further 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 two of the Act.
In deciding the second question for determination also in
the affirmative, the court considered the provisions of the Admiralty
Jurisdiction Act and Interpretation Act and found that an oil rig was defined
as a ship. 

The court also held 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 held  as well 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. 
Industry watchers believe that the judgment is groundbreaking as it 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.
They also said that 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 the economic fortunes
of Nigeria.

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