Caveat Does not Create Jurisdiction

1.      MT “DELMAR”

2.     OWNER OF THE MV “MT DELMAR MAJURO”

                                     V

1.      MT “ANE” (EX MT LESTE)

2.     TRILIUM NAVUGATION S.A. PANAMA

 (OWNER OF THE MT “ANE (EX MT LESTE)”

3.     ZENON PETROLEUM & GAS LTD

(Caveator/Interested Person)

The 3rd respondent instituted an action against the 1st and 2nd respondents at the Federal High Court, Lagos in suit No. FHC/L/CS/245/2006: Zenon Petroleum and Gas Limited v M/T Leste and Owner of M/T Leste.

Pending the determination of the action, the 3rd respondent secured the arrest of the 1st respondent pursuant to the order of court dated 22nd November 2006, As a result of that order, the 1st respondent came under the custody of the Admiralty Marshal of the Federal High Court. The Court ordered the 1st and 2nd respondents to provide a bank guarantee for the release of the 1st respondent but they were unable to provide the bank guarantee.

While the 1st respondent was still under arrest at the behest of the 3rd respondent, the 1st Appellant’s vessel collided with the 1st Respondent’s vessel and allegedly caused her extensive damage during maneuvering operation at the Commodore Pool, Lagos on 25th October 2007.

As a result, the 1st and 2nd Respondent commenced an admiralty action “in rem” at the Federal High Court, Lagos in Suit: No: FHC/L/CS/994/2007 against the appellant. In the action, they claimed the sum of US$7,500,000 (Seven Million Five Hundred Thousand United States Dollars) being damages for alleged collision damage done by the 1st Respondent’s vessel.

The 1st and 2nd Respondent also obtained an ex-parte order arresting and detaining the 1st Appellant’s vessel to secure their claim.  

The 3rd Respondent then filed a caveat before the Admiralty Marshal of the Court who had the custody of the 1st appellant against its release. But the caveat was not served on the Appellants and the 1st and 2nd Respondents. Being unaware of the caveat, the appellant filed an application at the trial court for the release of the 1st Appellant from arrest without notifying the 3rd Respondent and the 1st Appellant was duly released on provision of a bank guarantee by the appellants

When the 3rd Respondent became aware of the release, it filed a motion on notice in suit No: FHC/L/994/2007 for an order directing the 1st and 2nd Appellant to provide security for its claim in suit No: FHC/L/CS/245/2006Zenon Petroleum and Gas Limited v M/T Leste and Owner of M/T Leste. Or in the alternative, an order setting aside or varying the order of the release of the 1st Appellant from arrest be also applied in securing the 3rd Respondent’s claims against the 1st and 2nd respondents in suit No: FHC/L/CS/245/ 2006.

In a considered ruling delivered on 2nd February 2009, the trial court granted the 3rd Respondent’s application and varied the order of release of the 1st Appellant from judicial arrest. It held that the security provided by the appellant be also applied in and towards securing the claims of the 3rd Respondent against the 1st and 2nd Respondents in Suit No: FHC/L/CS/245/ 2006. Zenon Petroleum and Gas Limited v M/T Leste and Owner of M/T Leste

JUDGMENT

The Court of Appeal in deciding the case of the parties considered whether it is possible to grant a relief in favor of a person who is not a party to a suit and stated “ the res in any suit is limited to the parties in the suit and cannot apply to a non party” the court further stated that the actual purpose of a caveat is to enable the caveator be put on notice before the arrest or release of the vessel, and in the event of the need for a follow-up action in the matter of the caveat requiring the court to grant a relief or make an order in favour of the caveator, the caveator must take steps to make himself a party in suit and also claim against the adverse party.

By the provision of Order VII rule 1(1) of the Admiralty Jurisdiction procedure Rules, 1993, a party to a proceeding commenced as an action in rem may by motion ex parte apply for an arrest warrant in respect of the ship or other property against which the proceeding was commenced. In effect, the institution of an action in rem precedes an application for arrest of a ship, and a caveat against the release of a ship.

Conclusion: In the instant case, the 3rd respondent ought to have brought an application to be joined in suit No: FHC/L/CS/994/2007 as an interested party because the outcome of the suit will directly affect them rather than only filing a caveat. Mere filing of a caveat, even if it is registered and served on all the parties does not automatically create such a special circumstances as to confer jurisdiction on the court to grant relief to the caveator without the caveator filing a claim before the court.

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