Can A Drilling Rig Qualify As A Vessel Capable Of Registration Under The Cabotage Act? By John, Ovundah W.

INTRODUCTION:

The Coastal and Inland Shipping (Cabotage) Act No 5 of 2003 Laws of the Federation of Nigeria (Hereinafter referred to as “Cabotage Act”), is a federal Legislation that seeks amongst others to restrict the use of Foreign Vessels in Domestic Coastal Trade to promote the development of Indigenous Tonnage and to establish a Cabotage Vessel Financing Fund and for Related Matters amongst other things.

The Act amongst other Legislations is enforced by the Nigerian Maritime Administration and Safety Agency (Hereafter, “NIMASA” or “The Agency”). Amongst the numerous powers granted via the Cabotage Act is the power register a vessel and detain same where there are reasonable grounds that a vessel has contravened the provisions of the Act— ss.22 and 31 respectively.

In line with the above provisions and powers of the agency, there have been series of Arguments and Counter Argument as to whether a drilling rig is in fact a vessel capable of Registration and by extension detention where such a Drilling may have been said to have contravened the provisions of the law. It is therefore the intention of the writer to analyze the Arguments whilst considering the relevant provisions of our Legislations and relevant case laws on this issue.

ANALYSIS OF RELEVANT AUTHORITIES AND ARGUMENTS.

In accordance with ss.3-6, 21 of the Cabotage Act, there exist a mandate on all proposed foreign vessels or bodies and (drilling) authorities/bodies to comply with the necessary registration and/or grant of license before carrying out any form of Domestic Coastal Trade within the territorial and contiguous boundaries/zones of Nigeria, including our inland waters, Exclusive Economic Zones and Continental shelf. For the sake of clarity, the writer considers it necessary to reproduce the aforementioned provisions of the Cabotage Act;

“…3. A vessel other than a vessel wholly owned and manned by a Nigerian citizens, built and registered in Nigeria shall not engage in the domestic coastal carriage of cargo and passengers within the coastal territorial inland waters, or any point within the waters of the exclusive economic zone of Nigeria.

4. (1) A tug or vessel not wholly owned by a person who is a Nigerian citizen shall not tow any vessel from or to any port or point in Nigeria n waters, or tow any vessel carrying any substance whatsoever whether of value or not or any dredge material whether or not it has commercial value from a point within Nigerian waters.

(2) Nothing in this section shall preclude a foreign vessel from rendering assistance to persons, vessel or aircraft in danger or distress in Nigerian waters.

5. A vessel tug or barge of whatever type other than a vessel, tug and barge whose beneficial ownership resides wholly in a Nigerian citizen shall not engage in the carriage of materials or supply services to and from oil rig, platforms and installationswhether offshore or onshore or within any ports or points in Nigerian waters.
6. A vessel of whatever type or size shall not engage in domestic

Furthermore, section 21 provides that;

21. A foreign owned and foreign crewed vessels shall not participate in the domestic coastal trade without the license and authorization required by the provisions of this Act.”

It follows by implication from the above provisions, that there exist only but two ways by which foreign vessels may be registered in Nigeria;

1) By a grant of license by the (relevant) Minister—ss.15-21 of the Cabotage Act.

2) By the formal Registration of the vessel in accordance with the Act—s.23 of the Cabotage Act.

It’s Noteworthy that further analysis of the Cabotage Act in s.22(5)(a-m) reveals the type of vessel that are capable of being registered.

However, there have been numerous arguments that this provisions or List [s.22(5) of the Cabotage Act] is not in itself exhaustive especially given the use of the phrase that “Vessels eligible for registration under this Act include…”. The Argument spring from the fact that the use of the Word ‘Include’ in that phrase means that the list is and can be expanded. Furthermore, proponents of this argument hold the view that the omnibus provision of para m, of subsection 5, of section 22 of the Cabotage Act should be read using the Ejusdem generis rule of interpretation.

In line with the Arguments above as to the inexhaustive nature of the provisions of s.22(5) of the Cabotage Act, there have been suggestions that a (foreign) drilling rig may infact fall under this section, hence would be required to be registered in line with the Cabotage Act before commencing its activities within Nigeria. It is necessary to state that in the Guidelines for the implementation of the Cabotage Act(The Cabotage Guideline) in Para 9.1.1.(c), the word ‘Drilling Rig’ was included to be a vessel, under the schedule fees for waiver. The Guidelines, first issued in 2003 and subsequently revised in 2007, was issued by the Minister of Transport pursuant to his powers under Section 46 of the Cabotage Act. 

The writer contends that by implication, this insertion has amended the provisions of s.22(5) of the Cabotage Act. The writer further contends that the use of Ejudem Generis rule of interpretation isn’t the best rule of interpretation to adopt, as it allows for a wide vacuum of elements, including those not intended by the Law makers.

It is the opinion of the writer that the Expresio Unius Est Exclusio Alterius rule of interpretation, which holds that the Express mention of a thing is the very Exclusion of every other thing; is the best rule of interpretation. This rule of interpretation would help checkmate any form of unreasonable amendment and by Extension, addition of other elements or items as a vessel so as to bring it under the Act.

Furthermore,”Vessel” according to the interpretation section of the Cabotage Act—s.2; includes any description of vessel, ship, boat, hovercraft or craft, including air cushion vehicles and dynamically supported craft, designed, used or capable of being used solely or partly for marine navigation and used for the carriage on through or under water of persons or property without regard to method or lack of propulsion;

It follows from the above that a drilling rig may not qualify In line with the above in the interpretation section of the Cabotage Act, this view was what gave rise to the decision in the unreported case of Noble Drilling (Nig) Ltd v NIMASA & Minister of Transport unreported—FHC/L/CS/78/2008; wherein the learned Judge found for the Plaintiff in that suit that a Drilling rig does not come with the interpretation of a vessel and as such cannot be capable of Registration or detention. It was further held that the drilling rig was incapable of marine navigation as required in the definition of a vessel under the Cabotage Act. However, this ruling was upturned on appeal basically on technicalities with regards to Jurisdiction. The substantive matter was not pronounced upon by the Appeal court.

Similar issues in the Noble Drilling Case were considered in Seadrill Mobile Units Nigeria Limited v The Honourable Minister for Transportation & 2 Others Suit No. FHC/L/CS/607/2016. (Judgment in this matter was delivered on June 14, 2019.) where the learned Judge essentially determined the following issues:

• Whether drilling operations fall within the definition of ‘coastal trade’ and ‘cabotage’ under Section 2 of the Cabotage Act; and
• Whether on a proper interpretation of the Cabotage Act, particularly Sections 2, 5, 22(5), drilling rigs fall within the definition of ‘vessel’ under the Cabotage Act.

On the first issue, the Court held that where drilling operations are carried out offshore, such activities will fall within the definition of ‘coastal trade’ and ‘cabotage’ under paragraph (d) of section 2 of the Cabotage Act.

Regarding whether Drilling Rigs fall within the definition of a Vessel under the Cabotage Act, the Court held that the use of the word ‘include’ in the list of vessels eligible for cabotage registration, as contained in Section 22(5) of the Cabotage Act, implies that “similar crafts within the category listed can be allowed in” and therefore Rigs can be included in the list of Vessels under the Cabotage Act. The Court was particularly swayed by the fact that one of the vessels of the Plaintiff is a drill ship which it regarded as “a vessel with a drilling rig” and which is “capable of navigating in and within the waters of Nigeria carrying out drilling operations”. The implication of this latest judgment seems that oil rigs operating on Nigerian waters will now be subject to the provisions of the Cabotage Act.

It’s important to reconsider these two issues again(without prejudice to the fact that the court has decided), on the first; regard is made to the definition of “Coastal Trade” or/and “Cabotage” as seen in s.2(a) of the Cabotage Act; it states;

“Coastal Trade” or “Cabotage” means-

(a) The carriage of goods by vessel, or any other mode of transport, from one place in Nigeria or above Nigeria waters to any other place in Nigeria or above Nigeria waters, either directly or via a place outside Nigeria and includes the carriage of goods in relation to the exploration, exploitation or transportation of the mineral or non-living natural resources of Nigeria whether in or under Nigerian waters;

The reasoning of the learned Judge here was that where drilling rigs are involved in exploration and exploitation of minerals and nonliving natural resources in the coastal area of Nigeria, then such a drilling rig is equal to a vessel and ought to be registered. The writer does not share this reasoning and view. The writer considers that a contextual understanding of the provision would lead to a better and more logical conclusion unlike a word by word interpretation of the provision. The contextual revelation is to the end that Cabotage or coastal trade must at all time involve a locomotive process and not be static.

Does it mean that a drilling rig which isn’t capable of marine navigation would fall under the definition as given by my Lord in the Seadrill case? I wit not. The mere fact that drilling operation are carried out offshore, may not necessarily equate that it comes under the coastal trade, especially when considered with the fact that not all drilling rigs are locomotive in nature. The provisions and interpretation of coastal trade is quite clear that at every point it must involve the carriage of goods, without this  germane condition, it goes without saying that a drilling rig with is not locomotive or capable of any marine navigation cannot infact come under Cabotage or coastal trade.

On the second issue, the writer believes this has earlier been addressed in this work hence, not needful to repeat same, however, the writer considers the fact that the circumstances of each case differs, in this SeaDrill case, the writer isn’t oblivious that a major reason for the Court’s holding was due to the fact that one of the vessels of the Plaintiff is a drill ship which it regarded as “a vessel with a drilling rig” and which is “capable of navigating in and within the waters of Nigeria carrying out drilling operations”. The fact when considered properly is sufficient to sway anyone including the writer to posit that the drilling rig was in that case a vessel and capable of Registration under the Cabotage Act. The mere fact that the rig is capable of marine navigation solely brings the drilling rig within the interpretation of a vessel as can be seen from s.2 of the Cabotage Act.

The court of Appeal has however had the opportunity to pronounce on this issue, in the unreported appeal of Transoceanic Support Service Limited v NIMASA & Minister of Transport unreported CA/L/503/2016, the court inter Alia gave two conditions as to when a drilling rig would be a vessel; The first condition is that in order for a drilling rig to be deemed as a vessel eligible for registration under the Cabotage Act, it was crucial to show that the rig was designed, used or capable of being used solely or partly for marine navigation and used for the carriage on, through or underwater of persons or property without regard to method or lack of propulsion.

The second condition is that a drilling rig could be classified as a vessel under the Cabotage Act, if it is shown that the rig was listed among the machinery expressly identified as vessels in the Act. According to the three wise men at the appeal court, either both or one of these two conditions are necessary to make a drilling rig a vessel under the Cabotage Act.

The respondent in the Transoceanic case failed to show how the drilling rig satisfied any of the above conditions, the court further had very strong words about that the subtle amendment of the Cabotage Act by the Ministry of transportation via the inclusion and listing of drilling rig under the Guideline for the implementation of the Coastal and inland shipping(Cabotage) Act 2003 and revised in 2007. The Court held that the minister acted ultra vires and that subsidiary Legislation cannot be used to amend a principal Legislation.

The writer aligns with the reasoning and decisions of the law Lords in this appeal and believe same to be correct. The other Argument of whether the decision of My Lord in the SeaDrill case is in conflict with that of their Lordships in the Transoceanic case can be settled via two means;

1) The writer believes that both decisions are not totally in conflict as have been argued in sundry occasions. A cursory look at the decision in SeaDrill, especially on issue two, shows that one of the conditions as opined by the Court of Appeal was infact followed in reaching its decision. In seadrill, it was held that the drilling rig in contention was a vessel under the Cabotage Act because it satisfied one of the conditions identified by the Court of Appeal in Transoceanic case, which is that the rig must be capable of being used for marine navigation and for the carriage of property and persons. This clearly shows that the both cases are distinguishable. Whilst in Transoceanic, the Respondents failed to establish that a drilling rig satisfied any of the two conditions laid down by the Court of Appeal for the purpose of classifying the rig as a vessel under the Cabotage Act.  In SeaDrill the defendants’ were able to do so.

2) The doctrine of Stare Decisis holds that decisions of higher courts binds all other courts below them. Assuming but not conceding that the both Decisions are somewhat in conflict, recourse ought reasonably to be made to the doctrine of Stare Decisis to settle the said conflict. This recourse will automatically show that the present law as at today is in fact the decision of the Court of Appeal as given in Transoceanic Support Service Limited v NIMASA & Minister of Transport (Supra). 

Conclusively, Save where the two or either one of the conditions is met, a drilling rig cannot be termed a vessel for the purpose of Registration and liability of 2% surcharge as stipulated in the Cabotage Act. Furthermore, the essence of subsidiary Legislations is so as to give a better and Pragmatic approach to the principal statute, those entitled and given such power must never seek to use it to undermine, amend, or expand the principal Legislations as this would be Ultra vires and would go to a nullity.

JOHN, Ovundah W.; is a 300 level law student, of the faculty of Law, University of Nigeria, Nsukka. He writes from Enugu State, Nigeria.