Claims for unpaid crew wages unenforceable in Federal High Court

Claims for unpaid crew wages unenforceable in Federal High Court
Enare Erim August 01 2018 https://www.internationallawoffice.com/Newsletters/Shipping-Transport/Ni...

Introduction

Maritime claims are generally under the Federal High Court's exclusive jurisdiction and enforceable by an admiralty action in rem or in personam.(1) Admiralty proceedings are sui generis and a unique set of rules and procedures apply.

Section 2 of the Admiralty Jurisdiction Act sets out a list of maritime claims and classifies them into:

proprietary claims – which concern the mortgage, ownership or possession of a vessel; and
general maritime claims – which concern salvage, general average, crew wages and loss or damage to cargo, among other things.

In a recent decision, the Federal High Court held that a claim for crew wages fell outside its jurisdiction.(2)

Facts

Through various employment agreements, the demise charterer of the MT Clover Pride (the defendant vessel) acquired the services of approximately 23 crew. The demise charterer had registered the vessel with the applicant (a protection and indemnity insurance club), but the cover was subsequently terminated due to the demise charterer's failure to pay the fixed premiums. In November 2017 the vessel's crew notified the applicant that the owners had abandoned the vessel and requested:

the applicant's intervention in the repatriation of the abandoned crew from Nigeria; and
payment of their outstanding wages (dating from August 2017 to November 2017).

The applicant undertook to pay the crew's accrued wages and their repatriation costs. In this way, it acquired the crew's rights to the extent of the payments made and expenses incurred in line with Regulation 2.5.2, Standard A2.5.2, Paragraph 12 of the Marine Labour Convention 2006. Having inherited the crew's rights, the applicant instituted an action in the Federal High Court, claiming $293,702.68 from the defendant for losses suffered due to the defendant's breaches of its various employment agreements with the crew. The vessel was subsequently arrested to secure the applicant's claim.

By an ex parte order dated 5 February 2018, Palm Spring Global Limited, the owner of the defendant vessel, was joined as an intervener in the suit. It immediately brought an application seeking, among other things:

the unconditional setting aside or discharge of the order of arrest; and
the striking out of the suit for want of jurisdiction.

Palm Spring Global Limited contended that as the claim concerned the wages of crew members employed on board the defendant vessel, the claim fell within the National Industrial Court's exclusive jurisdiction.

Decision

In arriving at its decision, the court relied on Sections 254C(a) and (k) of the Constitution 1999 (as amended), which provide as follows:

Notwithstanding the provisions of section 251, 257, 272 and anything contained in this constitution and in addition to such other jurisdiction as may be conferred upon it by an act of the National Assembly, the National Industrial Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters:-

a. Relating to or connected with any labour, employment, trade union, industrial relations and matters arising from workplace, the conditions of service, including health, safety, welfare of labour…

k. Relating to or connected with disputes arising from payment of salaries, wages, pensions, gratuities, allowances, benefits and any other entitlement of any employee.

The court held that these provisions gave the National Industrial Court exclusive jurisdiction over employee wages and other labour-related matters. It therefore held that the applicant's action, which was founded on claims for unpaid crew wages, fell outside the Federal High Court's jurisdictional competence.

The court made further reference to Section 2(3)(r) of the Admiralty Jurisdiction Act, which gives the Federal High Court jurisdiction over the following:

A claim by a master, or a member of the crew, of a ship for (i) wages, or (ii) an amount that a person, as employer, is under an obligation to pay to a person as employee, whether the obligation arose out of the contract of employment or by operation of law.

In this regard, the court held that this section – which differed from Section 254C of the Constitution, which conferred the same jurisdiction on the National Industrial Court – was void to the extent of its inconsistency. The court further found that, even though Section 251 of the Constitution provides for the admiralty jurisdiction of the Federal High Court, Section 254C's express use of the word "notwithstanding" clearly made the former section subject to the latter. Ultimately, the court held that it lacked jurisdiction to hear the case and thus transferred it to the National Industrial Court. Pursuant to this, the court made a further order discharging the ex parte order of arrest.

Comment

This decision portends significant implications for Nigeria's maritime jurisprudence. Claims for the wages of crew members and masters are traditional maritime liens which permanently attach to a vessel irrespective of a change in possession or ownership. Under the Federal High Court's admiralty jurisdiction, they are enforceable by an in rem action against the vessel itself, quite apart from its owners. However, on the authority of this recent court ruling, this may no longer be possible. The holder of a claim for crew wages can now enforce its claim only by bringing an action against the employer (who could be the owner or charterer of the vessel), which must now be specifically named in the writ and served accordingly. Having no direct right against the respondent, the claimant may be unable to obtain an ex parte order of arrest against the vessel to secure its claim. Rather, it will face the uphill task of enforcing a favourable judgment against an employer that, in many cases, will be resident in a foreign country with no fixtures or assets within the court's jurisdiction. Thus, the claimant will likely encounter grave procedural difficulties in not only initiating its claim, but also enforcing it in the event of a successful judgment.