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Barrister Osuala: Legal Perspectives of Re-Establishing National Fleet

Barrister Osuala Emmanuel Nwagbara is a legal practitioner, specializing in maritime law and practice in all aspects of maritime arbitration, ship arrest and release, ship registration, and Cabotage Law consultancy. He holds membership of the Institute of Chartered Mediators and Conciliators and the Certified Institute of Shipping and is and holds an IMO certificate in handling of dangerous goods. A managing partner of his Apapa-based law firm, Barrister Osuala has authored many papers on Alternative Dispute Resolution (ADR), maritime, commercial and environmental law in various local and international seminars and training progammes, including Maritime Law Seminar for Nigerian Judges. He also holds a chieftaincy title. In this exclusive interview, he interacted with DDH on the imminent re-floating of the National Fleet and its wider implications for all stakeholders. Excerpts:

DDH: The Federal Government has opted for the policy to re-float the National Shipping Line for Nigeria. In view of the fact that two previous carriers, Nigerian National Shipping Line (NNSL) and Nigeria Unity Line (NUL), had been run by the government unsuccessfully, are there any kinds of legacy issues that might bind the new venture and possibly spur court cases? If yes, how would you advise government to go about them?
Chief Osuala: First and foremost, it is a welcome development that the Federal Government has opted to refloat a national shipping line for Nigeria. We had the Nigerian National Shipping Line which operated for 36 years, 1959 to 1995 when it was liquidated. And we had the National Unity Line which was floated by the then National Maritime Authority (NMA), following the National Shipping Policy Act of 1987. You will recall that the Nigerian National Shipping Line (NNSL) was liquidated in 1995 but its assets and liabilities were acquired by the National Maritime Authority which was formally created in 1987. With that arrangement NMA acquired the only new build which was to be delivered to the NNSL before its demise. So, clearly there was a legal connection between the NNSL which was under-going liquidation at the time and the NMA which had been created to play the role that NNSL was designed to play. Of course it has to be borne in mind that both organizations were institutions of the Federal Government of Nigeria under the supervision of the government ministry in charge of transportation at the time. To make the nexus between NNSL and NUL clearer, NUL was established in 1995 as an enterprise of the NMA, a successor of NNSL and NUL inherited the new ship billed to be delivered to NNSL. NUL as a project failed, just like the NNSL because both enterprises were badly managed. They were seen as nobody’s business, all because the Nigerian Government exerted over-bearing influence in the running of the business outfits. To answer your question therefore I do not see any legal issues from the failed ventures which might bind the new enterprise and possibly spur court cases. In the first place, NNSL was formally liquidated and this was widely publicised for anyone who had a claim of whatever character to come forward and present such a claim. It is too late now for anyone to come forward with any claim. The law would not recognize any such claim. That is as regards NNSL. With regards to NUL, it was clear that creditors to NNSL saw the only asset of NUL, the ship “MV Abuja”, as an asset of the NNSL-in-liquidation. Any claim to the NUL being an independent enterprise was viewed by the NNSL creditors as devious in view of the pedigree of “MV Abuja”, hence they went for it. But suffice to say that they succeeded because their claim apparently was still enforceable at the time. Every country has limitation laws with respect to claims, and especially in respect of shipping matters which are governed by international Conventions, limitation of actions has strong presence in national laws as it is in international conventions, such as the Hague Rules, Hague-Visby Protocols, the Hamburg Rules and the Rotterdam Rules respectively. As we speak today, it is not legally possible to enforce any outstanding shipping-related obligations of NNSL or NUL against any assets of their successor or supervising body or parent such as Nigerian Maritime Administration and Safety Agency (NIMASA), the Federal Ministry of Transportation or the Federal Government of Nigeria. Any such attempt would be caught within the web of limitation of actions. Remember that NIMASA was established pursuant to NIMASA Act of 2007, ten years ago.

DDH: What businesses did Nigerians lose when our national shipping lines closed shop and which would bounce back again if a new carrier is successfully birthed?
Chief Osuala: At the present there is clamour for the lifting of Nigerian crude. The argument has been that foreign vessels lift Nigeria’s crude to the detriment of Nigerian ship-owners and the Nigerian economy. Indeed, it is estimated that the Nigerian economy loses over N2 trillion annually due to the lifting of Nigeria’s crude by foreign vessels. This is known as capital flight. In the heyday of NNSL, Nigerian ships exported mainly agricultural produce and carried home Nigerian imports. At the time NNSL closed shop, not much emphasis was placed on exports due to the petro-dollar fortune or “misfortune” that made Nigeria almost wholly import dependent. Today the hue and cry centre around the lifting of Nigeria’s crude. If Nigeria re-floats its national shipping line with the right ships, in terms of types, age, specification, and technology, Nigeria would gain much from lifting its crude. The freight lost to foreign ship-owners for carriage of dry and wet cargo would be our gain. Our cadets would gain sea-time experience on board Nigerian vessels and be ready to be exported to work overseas and repatriate their earnings to Nigeria just like the Filipinos and the Chinese are doing right now. More employment opportunities in the maritime industry would open up. Shipping industry related businesses would be established, ship repair yards, ship building yards, iron and steel industries, original equipment manufacturing industries would spring up, to mention a few. The insurance industry would reposition itself to be able to insure the fleet of the proposed shipping line, their hulls and machinery, as well as cargo transported. The economy would look up. Nigeria would have no business with in-country economic recession.

DDH: How would legal practitioners benefit from a resuscitated national carrier; what kind of briefs could come their way?
Chief Osuala: When ships do not call at the ports, maritime lawyers become idle because there are no maritime briefs. With the re-floating of a national shipping line certainly the briefs available to maritime lawyers and legal practitioners generally will increase. When goods are short-landed or not delivered, there is a brief. When goods are discharged in damaged condition there is a brief. Legal practitioners that specialise in maritime and shipping matters would have the opportunity to be engaged to offer legal opinion on maritime issues that would arise in the course of business of the shipping line. Shipping Contracts documents would be drawn up and vetted by legal practitioners. Legal practitioners generally would have more briefs on their table and that will mean more money to spend and made available to the economy.

DDH: Did you have the experience of interacting with the NNSL or NUL when they were still active? If yes, what observations did you have which you would caution the committee working on the re-floating of a new national carrier to be mindful of in order to learn from the mistakes of the past?
Chief Osuala: I was about six years into practice at the time NNSL was liquidated, I had only a few cargo claims that were settled in-house at the NNSL office at Wharf Road, Apapa. I would not speak in terms of observations from interactions at the time. But what led to the collapse and eventual liquidation of NNSL and the failure of NUL are in the public space. Already, luckily there is a clear break between the proposed shipping line and its two predecessors. And again thanks to limitation of action laws. There is the need to have a special purpose vehicle (SPV) to drive the national shipping line project. It should be structured on a Private-Public Partnership, with Nigerian government holding a minority interest. As much as possible, government should distance itself from the management of the proposed shipping line. The best hands should be employed to run the organization. It is common knowledge that in spite of the stupendous wealth at the command of Nigeria in 1977, Nigeria could not procure the state of the art ships, due largely perhaps to bureaucracy associated with government business and corruption. In fact it is said that by the time the ships contracted to be built for NNSL were delivered in 1977, they were already rendered obsolete due to advancement in technology and containerisation concept. While the developed shipping economies were taking advantage of technology to procure high speed and modern container ships, Nigeria ordered monotype combo vessels of two different tonnages. This is a clear case of lack of dynamism in management. This time around, going forward, we need tested technocrats who would read and predict the shipping market five to ten years ahead.

DDH: Generally speaking, what is your assessment of any nation which has the maritime endowments of Nigeria but does not feature vigorously in inland, coastal and ocean shipping? In other words, what problems are militating against Nigeria becoming a strong maritime nation?
Chief Osuala: Sea power is as relevant today as it was in the past in terms of international diplomacy, influence, relevance and respect. Nigeria is placed by nature in a position to exert influence among the comity of Littoral States. Sea power promotes national pride and during hostilities, vessels are requisitioned for use in the national interest. The Cabotage law is one of the best things that happened to the Nigerian maritime industry. However, Cabotage regime remains what it is, an enabling environment for private indigenous shipping enterprises to flourish. It is for the private sector to take advantage of the law and grow the economy through coastal and inland shipping. I do not expect that our proposed national shipping line should focus on inland and coastal shipping. I look to see our proposed national shipping line do more of international shipping business while our indigenous shipping companies dominate the coastal and inland shipping space. Realising the enormous endowments that accrue from being a Littoral State and making the rights decisions in investment in the maritime sector at the right time is critical to becoming a strong maritime nation. Nigeria is yet to come to terms with this un-shrouded reality.