The Court of Appeal in the recent Judgment of Transocean Support Services Nigeria Limited & 3 Ors v Nigerian Maritime Administration and Safety Agency & 1 Or: Appeal No:CA/L/ 503/2016, held that drilling rigs cannot be deemed to be vessels for the purpose of the Coastal and Inland Shipping (Cabotage) Act, 2003 and liable to the 2% surcharge as stipulated in the Cabotage Act. In arriving at its decision, the Court of Appeal gave consideration to the provisions of the Cabotage Act and held that either both or one of two conditions had to be met in order for a drilling rig to be classified as a vessel under the Cabotage Act.
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. It is crucial to note that the Court of Appeal expressly stated that either both or one of these two conditions are necessary to make a drilling rig a vessel under the Cabotage Act.
The Respondents in Transocean failed to show that the drilling rig in contention satisfied any of the two conditions identified by the Court of Appeal. As a result, the Court of Appeal held that a drilling rig could not be classified as a vessel under the Cabotage Act and further held that the listing of drilling rigs under the head of foreign vessels in the Guidelines on Implementation of Coastal and Inland Shipping (Cabotage) Act 2003, Revised 2007, was beyond the powers of the Minister of Transport.
At first blush, the Court of Appeal’s decision would appear to have overturned the judgment delivered in the recent Federal High Court case of Seadrill Mobile Units Nigeria Limited v The Honourable Minister for Transportation & 2 Ors, however, this is not so. 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 Transocean, which is that the rig must be capable of being used for marine navigation and for the carriage of property and persons.
This is different from the position in Transocean where 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. This clearly reflects that the decision in Seadrill is distinguishable from the decision in Transocean.
From the above, the effect of the Court of Appeal’s decision in Transocean is that a drilling rig could be considered as a vessel under the Act, if it satisfied the condition that it is capable of being used for marine navigation and for the carriage of property and persons without regard to method or lack of propulsion, irrespective that the drilling rig is not expressly listed as a vessel under the Cabotage Act.
Given this position, there is the likelihood that there could be more cases seeking the determination of whether a particular drilling rig is a vessel under the Cabotage Act, which will be decided on a case by case basis. In light of this position, it would appear that the final word is yet to be heard regarding the controversial matter of whether a drilling rig is a vessel under the Cabotage Act.