To proceed in an action in rem and action in personam- which way oh claimant? (2)

Ogunsakin Mustapha
6 Min Read
Foluke Akinmoladun

By Foluke Akinmoladun 

In Nigeria, a common law jurisdiction, the “relevant person” is defined by Section 25 of the Admiralty Jurisdiction Act 1991 and Order 5, Rules 1 and 2 of the Admiralty Jurisdiction Procedure Rules. Both pieces of legislation provides that a “relevant person” in relation to a maritime claim, means a person who would be liable on the claim in a proceeding commenced on an action in personam. The Rules also provides that the “relevant party” must be named as a defendant along with the res. 

Here, the relevant person can be the ship owner, demise charterer or the beneficial owner. The requirement for beneficial ownership and demise charterer is a way to generate an in personam link between the ship, against which the in rem action is brought, the arrest effected and the Plaintiff’s claim. Thus, if the ship has been sold and its ownership changed after the cause of action has risen but before the writ is issued, the ship cannot be arrested because the relevant person is no longer the beneficial owner of the ship, but an in personam action can be maintained against the relevant person. This is different from a situation whereby at the time of the change in the ship’s beneficial ownership a maritime lien had attached to the ship before the action was brought because in such a case, the ship can still be arrested notwithstanding the change of ownership.

An in personam proceeding decides the personal rights and interests of the parties named in the action. The word ‘in personam’ derived from Latin word ‘in personam’ which means against a person. For example, a claimant may bring an in personam action against a defendant for breach of a contract. An in personam proceeding is distinct from an in rem proceeding, which decides the rights specifically to a vessel. 

Right in rem means right against whole world and right in personam is right against. An action in rem is therefore in addition to an action in personam and not instead of an action in personam. The person who would be liable in personam is still the relevant person in a claim brought by way of an action in rem. This maybe the ship owner or a demise charterer. The main idea behind an action in rem is to make the person or persons present themselves for an in personam order to be made.

To bring an in personam proceeding against a defendant, the claimant needs to show that the court or tribunal has both personal jurisdiction over the defendant and subject matter jurisdiction to preside over the case. The judgment in an in personam proceeding binds only the parties. The disadvantage of in personam proceeding in comparison to in rem here is that even when an invitation is made by a court or tribunal (service processes within or outside jurisdiction), it is almost impossible to compel attendance.

Another advantage of in rem proceedings is the issue of priorities. This refers to the pecking order of the various creditors against the funds in court produced by the sale of the vessel. It is the ship, or cargo, or freight, or even the proceeds of a sale, that is sued and not the owner of the ship, cargo or freight. It is the ship that suffers the consequences. The owner suffers the consequences if it is an action in personam.

An action in rem is an action against the ship. It is easier to effect an arrest against a ship than it is to compel the appearance of the ship owner, beneficial owner, demise charterer, who for the purposes of an in rem application is the relevant person. An in personam application however is directly against a person and compelling appearance is a major issue. Secondly, the in rem proceeding will more likely compel the appearance of the relevant persons. Thirdly, the ship can be arrested in any jurisdiction depending on the laws of the country. Despite these advantages however, a claimant must ensure that the claim can proceed in rem and legally arrest the vessel otherwise the claimant could find themselves paying damages that may be well above the claims that were initially brought against the ship. 

Foluke Akinmoladun is the Managing Solicitor of Trizon Law Chambers Nigeria. She is a lawyer, accountant, mediator and arbitrator. She is also a Chartered Secretary and Business Rescue & Insolvency Practitioner.

She belongs to the panel of neutrals of numerous arbitral institutions.She was a onetime Director General of the African Ship owners Association of Nigeria and is a member of the Presidential National Action Committee on Nigeria’s Implementation of the African Continental Free Trade Agreement (AfCFTA) (Transportation stream). She is the secretary of the Lagos Chamber of Commerce (LCCI) Maritime Sector. She can be reached at: Foluke.A@trizonlawchambers.com

 

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