*Says “A Government Security Check Places In Abeyance The Time Of Counting Overstay Of Cargo”
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The Federal High Court sitting in Lagos has ordered the Nigeria Customs Service to pay 150,000 dollars in special damages to MV Agro Engineers Nigeria Limited and its Indian sister company, MV Agro Engineers Pvt Limited, after finding that the service unlawfully auctioned part of their imported agricultural equipment.
Honourable Justice Daniel Osiagor also awarded the companies 500,000 naira in general damages, with 10 per cent post-judgment interest until the judgment sum is fully liquidated.
The court declared that the auction of one of the companies’ containers violated their constitutional right to own property, holding that cargo subjected to a government security investigation cannot lawfully be treated as overtime or abandoned cargo while that investigation remains unresolved.
“A Government Security check places abeyance time of counting overstay of cargo,” the judge held.
The judgment arose from suit No. FHC/L/CS/2081/24, filed by the two companies under the Fundamental Rights (Enforcement Procedure) Rules 2009, in which they accused the service of unlawfully auctioning one of six containers of specialised equipment imported for a Federal Government rice-processing project.
According to the applicants, the first applicant, a Nigerian agricultural engineering company, had secured a contract from the Federal Ministry of Agriculture and Rural Development for the design, engineering, manufacture and construction of integrated rice-processing plants across the country, with the second applicant, an Indian company, serving as its sister company and procurement agent.
They said they imported specialised rice-processing equipment valued at about 502,500 dollars from India, with the shipment arriving through Apapa Port in 2020, and that the equipment qualified for import-duty exemption because it was intended exclusively for the Federal Government project, previous consignments under the same contract having enjoyed similar exemptions.
The service, they said, demanded an Import Duty Exemption Certificate, causing delays in clearing the shipment. They eventually obtained the certificate from the Federal Ministry of Finance, Budget and National Planning, but were then informed that the shipment was subject to an investigation by the Office of the National Security Adviser.
The applicants said that investigation lasted several years before the office approved the release of the cargo and communicated its decision to them, to the service and to the terminal operator. Despite that approval, they alleged, the service continued to withhold the shipment, and they later discovered through the terminal operator that one of the containers had been auctioned and removed from the terminal.
They alleged that they were not notified of the proposed auction, were not served with any notice declaring the goods abandoned or overtime cargo, and were given no opportunity to challenge the proposed sale.
They accordingly asked the court to declare the auction a violation of their right to property under section 44 of the 1999 Constitution and Article 14 of the African Charter on Human and Peoples’ Rights.
The service opposed the action and urged the court to dismiss it, arguing that the applicants had failed to establish that the container was compulsorily acquired, and maintaining that the cargo had become overtime and abandoned because it was not cleared within the stipulated period.
It also challenged the claim for 307,000 dollars, arguing that the alleged value of the contents of the auctioned container had not been strictly proved.
In a preliminary objection, the service argued that the dispute concerned an alleged unlawful auction rather than compulsory acquisition, and therefore did not fall within the Fundamental Rights (Enforcement Procedure) Rules.
The court dismissed the objection, holding that the applicants’ originating process disclosed an alleged violation of their constitutional right to own property.
Relying on the Supreme Court’s decision in Niger Delta Power Holding Company Limited v Ulonna Michael (2024), the judge held that the auction of a person’s goods without consent could fall within the constitutional right to acquire and own property.
On the substance, the court found it established that the service had auctioned the applicants’ container.
The judge faulted the service for failing to produce the court order which it claimed had authorised the condemnation and auction. The service had asserted that the container was “condemned by the order of this court and auctioned accordingly,” but no such order was exhibited.
The court examined the documentary evidence and established a chronology which it held contradicted the claim that the cargo had simply been abandoned.
The Bill of Lading was dated 9 January 2020. The import-duty exemption was issued on 28 July 2020. The Office of the National Security Adviser wrote to the service and to the terminal operator on 27 February 2024, approving the release of the cargo.
The service’s own records, however, showed that the container was allocated to an auction buyer on 1 July 2024, while the terminal operator’s records showed that it left the terminal on 15 August 2024.
The judge held that both the import-duty exemption and the approval for release predated the listing of the container for auction, and rejected the position that the container had become abandoned merely because it was not cleared within the prescribed period.
The court held that an importer should not be penalised for delays arising from a government security investigation beyond the importer’s control.
The judge said he had taken judicial notice of the growing number of cases in which importers were left with “humongous demurrage Bills” arising from prolonged government investigations into their cargoes, describing the practice as an “anti-commercial attitude” that should be “deprecated in the strongest term.”
Having found merit in the applicants’ case, the court granted the two principal declarations sought.
The judge declined, however, to award the full 307,000 dollars claimed as special damages, noting that only one of the six containers had been auctioned, and awarded 150,000 dollars in special damages alongside 500,000 naira in general damages.
The judgment sum attracts 10 per cent interest annually from 6 July 2026 until fully liquidated.
Dissatisfied with the judgment, the service has filed a Notice of Appeal at the Court of Appeal, Lagos Judicial Division, challenging the decision on six grounds and asking the appellate court to set aside the judgment and dismiss the suit.
It argues, among other things, that the auction of overtime cargo following an importer’s failure to clear it within the statutory period constituted enforcement of customs law rather than compulsory acquisition of property under section 44 of the Constitution.
The service is also challenging the trial court’s findings on the timeline of the shipment and on the effect of the investigation by the Office of the National Security Adviser, maintaining that the container had become overtime cargo before the security clearance was issued in February 2024, and arguing that delays arising from an investigation by an office which was not a party to the suit could not lawfully be attributed to it.
It further contests the award of 150,000 dollars in special damages, arguing that the applicants failed to strictly prove the actual value of the contents of the auctioned container.
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