4.5 The assessment of the concrete reason for the arrest of the vessel
The last step in the decision was to assess the concrete reason for the navy to take control over the vessel and detain the vessel and cargo. The tribunal points out that Elephant had not received import permission for urea from the NAFDAC, did not have EUC, and did not notify the navy on arrival, as required in the legislation. There were also other permissions that were not in order.
The tribunal found it self-evident that the lack of necessary permissions and notifications gave the Nigerian authorities a legal basis for detaining the vessel and cargo. Even so, the question was whether the overriding political considerations for control of urea meant that the detainment must be considered a war peril. The tribunal repeated the starting point from the Chemical Ruby case: that, for an intervention to constitute a war peril, the intervention must be made for the furtherance of political goals, typical for war and times of crisis, and that the intervention should not be connected to regulation and control of normal trade and shipping.
This assessment was not completely clear in this case, but the main point for the tribunal was that Nigeria had import regulation for fertilizer and for a long list of other commodities, where permission etc. was required. This kind of regulation was not specific to Nigeria or for states in war or crisis. The reason for import regulations could differ from country to country. If the rules are not followed, for instance because the required permissions are not obtained or notification not sent, it is quite normal for the authorities to intervene by detaining vessel and cargo. In most states, breach of such rules would result in confiscation, criminal punishment and other economic sanctions.
The assured had argued that the war peril struck the vessel when Team Tango was ordered to change anchor position and naval guards were placed onboard. The tribunal found that it was not proved that the intervention against the vessel was motivated by considerations of security. For the Nigerian authorities the situation must have appeared to be an attempt of illegal import, because Elephant had tried to avoid all import requirements and control measures. Intervention against illegal import was not something that per se pointed to more than enforcement of rules for trade and import. The detainment of vessel and cargo would be a normal sanction against breaches of such regulation. It was not extraordinary for the navy to have boarded the vessel, because Nigeria did not have a functional police or custom institution to control and detain vessels in breach of import regulation or other breaches of shipping trade.
Even so, the tribunal accepted that it could be argued that the time period of the detainment, close to 2 years and 5 months, meant that the intervention was a result of overriding political goals typical for war and time of crisis. The starting point in NP is that the peril strikes at a certain period of time. In relation to NP Clause 2-9 sub-clause 1 (b), this occurs when the intervention takes place. The length of the intervention is decisive for whether it results in total loss according to NP Clause 15-11, but not for the character of the casualty. The tribunal still found that the length of the time period could shed light on the kind of peril that struck the vessel in the first place.
The tribunal referred to documents presented in the case explaining that the NSA accepted that the vessel was not involved in the illegal import, and that “they may be looking at discharging the cargo into a controlled area by them and afterwards, the vessel can sail”, but that “because the cargo is bulk and they do not have facilities to discharge it, this might constitute a challenge, but they hope this can be overcome, working with the Ministry of Agriculture”.(1)Email from the ship owner’s legal adviser in Nigeria, Femi Atoyebi, to Alexandra Davison in North of England P&I (23 March 2017).The NSA was also concerned about “what effect any directive to release the vessel might have on the ongoing court proceedings”.(2)Email from the ship owner’s legal adviser in Nigeria, Femi Atoyebi, to Alexandra Davison in North of England P&I (23 March 2017 and 30 March 2017).
It was clear that Elephant in all the court proceedings had opposed any solution that would not result in the cargo being discharged to storage facilities under Elephant’s control. The tribunal found it probable that this resulted in significant delay in the discharge of the cargo and thus also in freeing the vessel. The tribunal also pointed out that the cargo was eventually discharged and the vessel was freed because of diplomatic intervention, even if the claim from Elephant was still pending before the Nigerian Supreme Court.
The tribunal found that even if the underlying reason for denial of an import permit to Elephant was an overriding goal typical for war and times of crisis, this was too remote to be the decisive cause for detainment of the vessel. The main causative factor was that the import of urea was in breach of the established import regulation, and that detainment is a regular sanction against such breach, independent of any overriding political goal. Based on this, the timing aspect of the detainment appeared to be a consequence of non-compliant performance from Elephant.
The tribunal thus concluded that it had not been established that the vessel was detained due to political goals typical for war and times of crisis. The overriding political goal behind the regulation and practice with regard to the import of urea was overshadowed by Elephant breaching the regulation when they tried to import the cargo without the required permits, together with Elephant’s obstructive behaviour when they refused to participate in the discharge of the cargo so that the vessel could sail. Thus, the intervention could not be considered to be motivated by overriding political goals typical for war and times of crisis, and the claim for compensation for total loss under the war risk insurance was denied.
The assured had argued that it was not correct that the assured should carry the risk for Elephant’s actions. The tribunal remarked that the decisive question for the interpretation of the expression “similar intervention” is whether the intervention is for the furtherance of overriding political goals typical for war or times of crisis. With regard to this assessment, it would not be correct to disregard causative factors tied to the behaviour of those responsible for the import. In this context, the risk for Elephant’s behaviour rested with the assured.(3)The arbitration award (n 1) 15-18.