JOSEPH N. McCARTHY MBADUGHA** LL. B, LL.M (Wales), B.L, MCI. Arb. (London), FCILS Barrister & Solicitor of the Supreme Court of Nigeria McCarthy Mbadugha & Co. Lagos, Nigeria. mbadughaj@mccarthymbadugha.com


International sale of goods may in a sense be said to be incomplete until the goods sold are delivered to the purchaser’s or consignee’s designated port. The process of delivery involves transportation, and carriage of goods by sea seems the most convenient means of transporting bulky goods. It is beyond dispute that the only mechanics of carriage by sea is ship. A ship carrying goods may be that of the carrier or a chartered ship in the event of which a charterparty exists.

A Charterparty is an agreement where a ship-owner lets or hires out his ship(s) to another party called the Charterer for carriage of goods by sea for a consideration known as hire. The charterparty would be either, time, vovage or demise. The Charterer may charter the ship for the purpose of carrying his goods wholly or partly and/or to enter into a subcontract of carriage with other shippers who would provide all or part of the goods, or to employ the ship as a general ship. In each case a bill of lading will be issued when the goods covered by the Bill of Lading has been loaded or shipped1.

When a Charterer ships his own goods, a bill of lading issued to him in such circumstance acts merely as a receipt for the goods shipped and as a potential document of title in the event he elects to sell the goods while they are in transit. The bill of lading in the circumstance is not an evidence of terms of the contract of carriage between the shipowner and the Charterer since their relationship is governed solely by the charterparty2. On the other hand, where the Charterer carries or ships third parties goods, a bill of lading will be issued to the shipper (third party). In such a situation, the bill of lading will inter alia, be the evidence of the contract of carriage between the shipper and the carrier (who may be the Shipowner or the demise Charterer) whilst the terms of the Charterparty will have no relevance between them except it is expressly incorporated in the bill of lading.

Often, in International sales, the seller is less concerned about what happens to the goods whilst on board a vessel and in transit given that he would have been paid in advance or his payment would have been guaranteed through a letter of credit, the value of which he appropriates upon presentation of the agreed documents, usually, the shipping documents. Conversely, the buyer or the consignee is more concerned about what happens to the goods whilst in transit. To this end, issues like whether a dispute arising during the carriage would be classified as either admiralty or commercial and which court would have the jurisdiction to entertain such dispute assuming there is no jurisdiction or arbitration clause in the charterparty or bill of lading3 are of great interest to the buyer or consignee.

The importance of the jurisdiction of a court to try a dispute cannot be over emphasised. Thus, jurisdiction may be defined as the authority, which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision4. Jurisdiction is further said to be the very basis on which any tribunal tries a case. Being the lifeline of all trials, a trial without jurisdiction is a nullity. The issue of jurisdiction can be raised at any stage of a case, be it at the trial or on appeal. It can be raised once it is apparent to any party that the court lacks jurisdiction; afortior it can be raised suo motu by the court5.

To every prudent counsel, one of the issues to consider when litigation is contemplated is which court has jurisdiction over the subject matter and this will depend greatly on the court structure in every jurisdiction6. The effect of lack of jurisdiction may be fatal to party’s case. Given that it could be raised at any stage, a skilful defence counsel may raise an objection to the jurisdiction of the court at the time when the action may be time barred. A successful objection to lack of jurisdiction over a subject matter by a court leads to a suit therein being struck out; and if there is a time limit within which to commence a suit in such a subject matter, there will be little merit commencing a suit afresh in the court that has jurisdiction over the subject matter if the time limit is exceeded at the successful determination of the objection.

With that said, to determine whether a dispute arising from a charter party or carriage by sea pursuant to a charter party is commercial or admiralty and which court had jurisdiction to entertain the dispute depends on the jurisdiction where the dispute occurred. For the purposes of this paper, Nigeria and UK are used as examples given that both countries have incorporated the International Convention for Unification of Certain Rules Relating to the Arrest of Sea – Going Ships, 1952, The Arrest Convention.


In Nigeria, claims arising out of use or hire of a ship, whether by Charter party or otherwise is by virtue of sections 1 (1)(a) and 2 (3)(f) of the Admiralty Jurisdiction Act, CAP A5, Laws of the Federation of Nigeria 2004 within the Admiralty jurisdiction of the Federal High Court of Nigeria. The section provides thus: Section 1. “The.


* This paper (which title is modified) was presented by the author at Salzburg, Austria in a symposium captioned “Legal Dimensions of International Sales Service” organized by the Center For International Legal Studies on 13th October 2006
** The Author is the Principal Partner of McCarthy Mbadugha & Co., Lagos, Nigeria. He heads the Admiralty & Cross-Border Commercial Practice Group of the firm.

  1. Scrutton on Charter Parties and Bills of Lading 20th Edition, Sweet & Maxwell, page 3 Article 3.
  2. John F. Wilson: Carriage of Goods by Sea, 5th Edition, Peason Longmand, Page 7, paragraph 1.3.
  3. Where such a clause provides for a foreign jurisdiction, a different consideration and interpretation applies and that is outside the scope of this work.
  4. Words and phrases legally defined, 3rd Ed. Vol.2p.497.
  5. P. E. Ltd. v. Leventis Trading Co. Ltd. (1992) 5 NWLR (Pt.244) 675 @ 693 paragraphs E – H; page 696, paragraph F.
  6. Nigeria for example is a Federal Republic with States and Federal High Courts, and the jurisdiction to try certain matters (including admiralty) are exclusively conferred on the Federal High Court by the Constitution of Federal Republic of Nigeria.
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