Author: Oyewunmi Fikayo,
Student (LL.B.), Faculty of Law, University of Lagos.
The word Cabotage is defined by the Webster Dictionary as “the navigation and involvement of ships in coastal waters…or the restriction of the use of coastal waters and airspace by a country to its own domestic traffic”. Another definition is given by Black’s Law Dictionary (6th Edition) which defines Cabotage as “The carrying on of trade along a country’s coast; the transport of goods or passengers from one port or place to another in the same country”.
In Nigeria, the relevant law is the Coastal and Inland Shipping (Cabotage) Act (2003). This act is the extant law on Cabotage and Section 2 copiously defines cabotage as
(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;
(b) The carriage of passengers by vessel from any place in Nigeria situated on lake of river to the same place, or to any other place in Nigeria, either directly or a place outside Nigeria to the same place without any call at any port outside Nigeria or to any other place in Nigeria, other than as an in -transit or emergency call, either directly or via a place outside Nigeria;
(c) The carriage of passengers by vessel from any place in Nigeria to any place above or under Nigerian waters to any place in Nigeria, or from any place above Nigerian waters to the same place or to any other place above or under Nigerian waters where the carriage of the passengers is in relation to the exploration, exploitation or transportation of the mineral or non -living natural resources in or under Nigerian waters; and
(d) The engaging, by vessel, in any other marine transportation activity of a commercial nature in Nigerian waters and, the carriage of any goods or substances whether or not of commercial value within the waters of Nigeria;
What can be gleaned from the above definitions is that Cabotage Law is the law reserving the coastal trade of a nation to vessels flying its national flag. It is the Law restricting the coastal and inland water trade in a country to vessels flying its state flag.
To properly analyse the impact and efficacy of the Cabotage Act, it is necessary to review its sections in relation to its purpose. The purpose of the Act, as was stated in the Preamble, is to restrict the use of foreign vessels in domestic coastal trade and promote the development of indigenous tonnage. The salient provisions of the act cut across restrictions, waivers to meet lack of capacity and enforcement. This review will however focus on provisions relating to restrictions and waivers.
Part II of the Act provides for the Restriction Of Vessels In Domestic Coastal Trade. Section 3 provides that:
A vessel other than a vessel wholly owned and manned by a Nigerian citizen, 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.
This restriction order is one that generally applies to the ownership, manning, building and registration of vessels by non-Nigerians and is applicable to the carriage of all manner of cargo and passengers. Its influence extends to towage and salvage services and what this means is that such services are also restricted where the relevant vessel or tug is not wholly owned by a Nigerian citizen. In the words of Section 4(1),
a tug or vessel not wholly owned by a Nigerian citizen shall not tow any vessel from or into any port or point in Nigerian 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 port or point within Nigerian waters
The restriction does not preclude a foreign vessel from rendering assistance to persons, vessels or aircraft in danger or distress in Nigerian waters (Section 4(2)) thereby acknowledging the salvage convention and international customary law for vessels on distress as can be seen in (Articles 10, 11, & 12 Salvage Convention and Articles 18 & 21, UN Convention on the Law of the Sea.)
There are some gaps in this laudable provision. A critical look at the words of the Act will reveal that although the vessel must be owned by Nigerians, it need not be built or registered in Nigeria nor does it have to be manned by Nigerians. The attempted ‘Nigerianization’ of the Cabotage industry in this regard runs the risk of failing woefully. This is because nothing precludes a crafty foreign investor from setting up shell companies and hiding behind the principle of corporate personality just to circumvent this rule. For the industry to grow and be dominated by Nigerians there is a need for Nigerians themselves to be given equal and fair opportunity to participate in its affairs. Were the act to go further and amend the act while taking these suggestions into consideration, it will result in the building of industries, an increase in capable local content and the development of Nigerian shipping facilities.
The Minister is given powers under the Act (Sections 9-11) to grant waivers to foreign vessels to partake in Cabotage trade where he is satisfied that there is no capacity on the part of Nigerians with respect to satisfying the requirements as contained in Sections 3-6 of the Act. This is premised on the fact that Nigerian capacity at this time is not such that can carry the volume of business trade usually associated with the cabotage trade. Currently, Nigerian owned vessels are few and limited in number relative to activities to be undertaken under the Act. This sad reality is what necessitates the allowance of foreign vessels to operate in Cabotage trade activities.
The Minister may on the receipt of an application, grant a waiver to a duly registered vessel on the requirement for a vessel under the Act to be wholly owned by Nigerian citizens where he is satisfied that there is no wholly Nigerian owned vessel that is suitable and available to provide the services or perform the activity described in the application (Section 9). Also where there are no qualified Nigerian seafarers in an application which has been made, the Minister may grant a waiver to a duly registered vessel where he is satisfied that there is no qualified Nigerian officer or crew for the position specified in the application (Section 10). Furthermore, where the Minister is satisfied that no Nigerian Shipbuilding Company has the capacity to construct the particular type of vessel specified in an application, the Minister may grant a waiver to a duly registered vessel on the requirement for a vessel under the Act to be built in Nigeria (Section 11(1). The granting of waivers by the Minister is a discretionary power and he cannot be compelled to exercise it. However where an applicant feels strongly about the Minister’s refusal, he may seek judicial review of the Minister’s exercise of his discretion.
It is important to note that even where the fact of inadequacy of indigenous capacity is established, the Act provides that a waiver should be granted by the Minister, in the first instance, to a shipping company and vessels owned by a joint venture arrangement between Nigerian citizens and non-Nigerians and the shareholding or equity participation of the Nigerian joint venture partner in the vessel and the shipping company shall not be less than 60% free from any trust or obligation in favour of non-Nigerians (Section 12a). It is only in the absence of such joint venture company that in the second instance, the waiver may be granted to a vessel registered in Nigeria and owned by a shipping company registered in Nigeria, provided that the applicant company complies with the relevant provisions of the Act. The policy consideration here is to make it possible for Nigerian operators, in the spirit of the cabotage regime, to participate in the coastal maritime trade thereby acquiring relevant experience, even in the present circumstance of gross domestic inadequacy.
The waivers granted under Part 3 of the act are time bound. They operate for a specific duration only, after which they become invalid and must be renewed (Section 13). Section 13 pegs this period at one (1) year. Were this period were to become inadequate or in need of review, then recourse can be made to Section 14 which states that the waiver system provided for under the Act may be reviewed after five(5) years by the National Assembly. This measure has the attribute of transforming Nigeria from a relaxed cabotage regime to a stricter cabotage regime with improvement in maritime experience and capacity of the citizenry.
The provisions of the Coastal and Inland Shipping (Cabotage) Act 2003 represent the foundation of the Nigerian Maritime Cabotage System. As is common with most Nigerian Legislations, there will be some difficulty in its implementation and this will give rise to a significant volume of adjudication that should be expected in the Courts. There is however cause for optimism and the cup can be looked at as half-full instead of half-empty. This is because it is in the course of implementation that loose ends will be highlighted and tightened. Institutional, operational and economic challenges have been identified as the key considerations for a successful implementation of the Cabotage Act in Nigeria and where these are met, they will result in countless benefits to the nation and its citizenry.
Fikayo Oyewunmi is a 500 Level Law Student of the University of Lagos and is the President of the Oil and Gas Bar. He is deeply interested in Intellectual Property law, Maritime law, Oil & Gas law and Arbitration.