NIMASA DG, Patrick Akpobolokemi
As a Lagos Federal High Court is set to commence hearing of arguments on the suit filed against NIMASA by NLNG over freight charges, Chika Amanze-Nwachuku takes a look at emerging issues in the long-standing disputes
Barring any unforeseen changes, a Federal High Court in Lagos, will on Thursday, July 4 begin hearing of arguments on a suit filed by the Nigeria Liquefied Natural Gas (NLNG) Limited challenging the continued disruption of its activities by the Nigerian Maritime Administration and Safety Agency (NIMASA) over alleged non-payment of freight fees to the agency.
The defendants in the suit are the Attorney General of the Federation (on behalf of the Federal Government and all its agencies including; NIMASA and the Global West Vessels Specialists Limited (GWVSL), a firm believed to be owned by a former leader of the Movement for the Emancipation of the Niger Delta (MEND), Mr. Government Ekpemupolo.
The long standing dispute between NIMASA and the NLNG stemmed from alleged liability of NLNG and its agents to pay certain levies and charges to NIMASA under the NIMASA Act, Cabotage Act and certain laws and regulations.
The contention of NIMASA was that its Act, (NIMASA Act 2007) empowers it to collect 3 per cent of gross freight on all international inbound and outbound cargo from ships or shipping companies operating in Nigeria to meet its operational costs.
According to the agency, the Cabotage law also stipulates a payment into the Cabotage Vessel Financing Fund, of a surcharge of 2 per cent of the contract sum performed by any vessel engaged in the coastal trade.
According to the agency, the Cabotage law also stipulates a payment into the Cabotage Vessel Financing Fund, of a surcharge of 2 per cent of the contract sum performed by any vessel engaged in the coastal trade.
NIMASA’s acting Director, Shipping Development, Captain Warredi Enisouh, had accused the NLNG of disregard and unwillingness to abide by the Nigeria’s Maritime laws.
He said: “Since its inception, the NLNG has cherry-picked our laws” and that all efforts to get the company to meet its obligations to the country have been treated with impunity.
Initial Suit
NIMASA had in 2010 commenced a suit against the NLNG at the Lagos Federal High Court, seeking among other reliefs, a declaration that the NLNG was liable to the said charges and levies.
Specifically, the agency had prayed the court, for an order mandating the NLNG, its agents, subsidiaries, contractors and sub-contractors, to pay to it (NIMASA), 3 per cent of gross freight on all international inbound and outbound cargoes from any of their ships or shipping companies they are operating in Nigeria from the year 2007 when NIMASA Act, CAP N161, Laws of the Federation of Nigeria, 2007 became effective.
It also sought an order compelling the defendants in the suit to pay to it 2 per cent of the contract sum performed by any of their vessels engaged in coastal trade from the year 2004 when the Coastal and Inland Shipping Act (Cabotage Act), CAP C51.
But after preliminary proceedings had been taken and concluded, and the court was ready to begin hearing on the substantive matter, NIMASA, discontinued the suit before the court made any pronouncement on the matter.
Losses Incurred
After withdrawing the action before the law court, NIMASA resorted to self-help and on May 3, used the facilities of GWVSL to block access to the Bonny Channel, thereby hindering inbound and outbound vessels, owned or chartered by the NLNG from evacuating liquefied natural gas from its facilities on Bonny Island in Rivers State.
The action, which disrupted exports of gas for days, resulted in revenue losses to Nigeria.
NLNG’s General Manager, External Relations, Mr. Kudo Eresia-Eke, had in the wake of the May 3 incident confirmed that three ships- NLNG Lagos, NLNG Adamawa and Stena Clear Sky, were unable to leave the area because of the problem. Also, the product-laden NLNG Lagos, heading to Pacem Brazil, could not depart due to the NIMASA blockade, while the Shines, Portugal-bound NLNG Adamawa and the Montoir, France-bound Stena Clear Sky were prevented entry due to the blockade.
It took the intervention of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, National Security Adviser and other top government officials for NIMASA to lift the blockade.
NLNG’s Position
The NLNG has maintained that it was not liable for the said freight fees as the NLNG Act, which established itexempted it from paying levies and charges as incentive to enable the shareholders recoup their investment. The enabling Act, it further argued, also exempted it from being bound by any new laws, regulations, taxes and charges.
“It is instructive to note that Nigeria LNG Limited and its shareholders still firmly believe in the rectitude of their earlier position that NLNG is duly protected by the provisions of the NLNG Act against the payment to NIMASA of the Sea Protection Levy, the 3per cent freight levies on cargo exports shipped by NLNG, and that the 2per cent Cabotage Levy on LNG carriers is inapplicable because NLNG’s LNG vessels are not involved in coastal trade or cabotage,” the NLNG said in a statement.
However, after series of meetings with the feuding parties, the NLNG was directed by the National Security Adviser to pay the disputed levies. In compliance with the directive, the NLNG last month made a payment of $20 million, an equivalent of N3.2 billion to NIMASA and thereafter approached a Lagos Federal High Court for a judicial clarity and interpretation on the legality or otherwise of the said levies.
Also, to forestall further blockade, the NLNG on June 18 sought and obtained an order of interim injunction from the same court, restraining the defendants from further preventing entry and or exit of NLNG vessels through Bonny channel or elsewhere in Nigeria.
In fact, the court, presided over by Justice M.B. Idris, after hearing NLNG’s lawyers, Messrs O. Akani (SAN) and K. Daodu, restrained the defendants (AGF and GWVSNL), NIMASA, all government agencies and organisations from further detaining or preventing NLNG’s owned or chartered vessels from carrying out import and export of gas through the Bonny channel or elsewhere in Nigeria pending the hearing and determination of a motion on notice for interlocutory injunction filed by the NLNG.
The judge also restrained the defendants from charging, imposing, demanding or collecting the 3 per cent of the gross freight earnings, tax, charges or dues on any international inbound and outbound cargo abroad ships, owned or contracted by the NLNG, its agents, contractors or subsidiaries, pending the hearing of the suit.
The agency, NIMASA and other agencies of government were also restrained from charging, imposing or demanding the 2 per cent surcharge from the NLNG and its subsidiaries, based on the Cabotage Act or further demanding of the sea protection levy, tax or charge, based on the Marine Environment (Sea Protection Levy) Regulations 2012 and the Merchant Shipping Regulation.
Contemptuous Actions
Despite the subsisting order of the court and after the NLNG had complied with the payment directives, the NIMASA again on June 21, sealed off the operation of the NLNG, detaining three vessels and preventing the vessels from accessing or leaving the company’s loading bay.
Two NIMASA boats with 15 naval officers on board had ordered that the vessels- one NLNG vessel - LNG Imo, and one chartered vessel, Torm Thames, should remain at NLNG’s loading bay, while another NLNG Vessel- LNG Oyo, should remain outside the Bonny Channel until further notice.
Eresia-Eke said in statement that NIMASA, after detaining the vessels, on June 22, issued Ship Detention Orders, specifically detaining three NLNG ships - LNG Enugu, LNG Oyo, and LNG Imo.
He observed that the agency’s latest action was “in flagrant disregard of the court injunction issued by the Federal High Court in Lagos in Suit No FHC/L/CS/847/2013 by Honorable Justice M.B. Idris, presiding, on Tuesday 18th June 2013, against the Attorney General of the Federation, Global West, and any other parties including Nigerian Maritime and Safety Agency, NIMASA, from imposing any charges or taking any steps to block, detain or prevent access by the company’s owned or chartered vessels, whether inbound or outbound from Bonny channel or elsewhere in Nigeria”. The order of the court and hearing notice on the substantive action were said to have been promptly served on the defendants through bailiffs of the court.
NIMASA’s Denial
Surprisingly, the NIMASA had claimed that it was aware of any action in court or any subsisting order.
Deputy Director in charge of Public Affairs at NIMASA, Isichei Osamgbi, was quoted to have said in a statement that, “the maritime regulator was not aware of any court order against it or any suit brought by NLNG against NIMASA”.
Osamgbi had however admitted that NIMASA received the $20million part-payment before serving the detention notices/orders on vessels belonging to/chartered by the NLNG.
“This course of action was forced on NIMASA by the NLNG's subsequent refusal or/and failure to abide by the outcome of the negotiated settlement arrived at through the mediation process it willingly instigated and subscribed to, after reaching agreement with NIMASA on its outstanding debt and paying $20m out of it and its continued flagrant disregard for Nigerian laws,” he added.
Protest Letter
The NLNG has vide a letter dated June 24 and copied the presidency, the National Assembly, Minister of Defence, the National Assembly, the National Security Adviser, among others, condemned the act as “illegal and criminal”, pointing out that NIMASA carried out the June 21 action, in spite of the subsisting order of a court of competent jurisdiction.
In the letter written through the law firm of Babalakin and Co, the NLNG noted that the order of the court had already been brought to the attention of the AGF, NIMASA and GWVSL, defendants in the suit, through the bailiffs of the court.
The NLNG said the “illegal and criminal action” has seriously disrupted its operations, activities and business as well those of shipping companies under charter whose vessels are currently being detained by NIMASA.
Furthermore, the company noted that aside the massive disruption of its operations and businesses at a time when other gas exporting projects in the country are in the processes of taking a Final Investment Decision (FID), the action also affects Nigeria’s international image and reputation as an investment destination, apart from the substantial damages that the country risks in awards from international tribunals under bilateral investment treaties that Nigeria has entered into.
“Regardless of the views of NIMASA or the federal government on NLNG’s position, it is only the courts that can determine the rights of the parties. As you are aware, no one is permitted to take the law into his hands once a matter has been submitted to the court for adjudication” the letter partly read.
“By this protest, we hereby demand, purely in the interest of everything in the oath of office that you took to uphold the rule of law in Nigeria, and your very recent public pronouncements to ensure that the integrity of our country’s judiciary is fully protected and not undermined by anyone, especially the executive, that the full effect is given to the subsisting order of the Federal High Court by ensuring that NIMASA, its agents, as well as the officers and men of the Nigerian Navy that are all under your authority as the Chief Legal Officer of the country, cease and desist from their illegal actions and criminal contempt of the orders of the Federal High Court” the letter added.
As a step in a right direction, the gas company last week filed a contempt suit against NIMASA for disobeying the order of the court. Specifically, the plaintiff (NLNG) wants the court to commit the NIMASA and other defendants to prison for “having disobeyed or neglected to obey the order of the court made on the 18th day of June 2013,” which amounted to contempt of court.
The NLNG noted in the suit that since the court made the order on June 18, 2013, the defendants have caused their agents, privies and other third parties, particularly NIMASA to brazenly disregard and flout the extant interim orders of the court.
Lawyers React
The action of NIMASA has continued to generate criticisms, from Nigerians, particularly, legal practitioners who viewed it as an affront to the judiciary.
A private legal practitioner, who spoke on condition of anonymity, said NIMASA ought to have allowed the court to adjudicate on the issue, rather than resort to self-help.
“By withdrawing a matter that had already been slated for hearing and resorting to self-help, NIMASA has showed that it has no confidence in our courts. This also informed why the agency flouted the order of the court. The NLNG as a law-abiding entity has taken the right step, which is taking the matter to the temple of justice. I also read in the newspapers that the company (NLNG) has commenced contempt proceedings against the respondents. This is also a right decision and I am sure that the court will resolve the matter accordingly”.
Another lawyer posited: “The expression, no one is above the law simply means that everyone is restricted by law. Whatever is NIMASA’s case against the NLNG, the right thing would have been to go before the court to resolve it. So what NIMASA has done amounts to total disregard to the order of the court and the contempt proceeding is the best way to go”.
Speaking in the same vein, a property lawyer, Soroumuna Nwokolo, said: “The right thing is for an aggrieve party to go to court to seek redress. But a situation where one decides to take the law into his hand, for whatever reason or intention, is illegal and an affront to the judiciary”.
Contempt of court is a court order, which in the context of a court trial or hearing, declares a person or organisation to have disobeyed or been disrespectful of the court's authority.
A finding of contempt of court may result from a failure to obey a lawful order of a court, showing disrespect for the judge, disruption of the proceedings through poor behaviour, or publication of material deemed likely to jeopardise a fair trial. A judge may impose sanctions such as a fine for someone found guilty of contempt of court.
To prove contempt, the prosecutor or complainant must prove the four elements of contempt: Existence of a lawful order; the potential contemnor's knowledge of the order; the potential contemnor's ability to comply, and the potential contemnor's failure to comply.
source: thisdaylive
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