Ceekay Traders Ltd (the respondents) sued American International Insurance Co (the appellants) in the Federal High Court, claiming an indemnity under a marine insurance policy. That policy covered a cargo of rice shipped at Bangkok, Thailand, for Lagos, Nigeria. While carrying the cargo, the vessel sank. The appellants applied to dismiss the suit for want of jurisdiction, but the first instance Judge held that there was jurisdiction to hear the marine insurance claim under s 1(1) of the Administration of Justice Act 1956 (UK) (the Act).

A majority of the Federal Court of Appeal dismissed the appellants' appeal. Nnaemeka-Agu JCA (in the majority) found that admiralty jurisdiction in England by 1900 (which extended to marine insurance) was the jurisdiction conferred on the Federal High Court. He held that the Act was irrelevant to the jurisdiction of the Federal High Court as there was no specific Nigerian legislation which extended its application to Nigeria. In contrast, Mohammed JCA (also in the majority) held that the Act was relevant and concluded that the admiralty jurisdiction of the Federal High Court extends to marine insurance by virtue of ss 1(1)(g) and 1(1)(h) of the Act. Meanwhile, Coker JCA (in the minority) held that the Federal High Court lacked jurisdiction. He considered, first, that the claim did not fall within ss 1(1)(g) or 1(1)(h) of the Act. Second, the cause of action arose from a breach of contract which was subject to common law jurisdiction and not admiralty jurisdiction. He therefore held that the jurisdiction to try the action rested with the High Court of Lagos State instead.

The appellants appealed to the Supreme Court. The appellants argued that, apart from matters relating to Federal Government vessels or property or revenue, Nigerian legislation did not vest admiralty jurisdiction in the Federal High Court: Jammal Steel Structures Ltd v African Continental Bank Ltd [1973] 1 All NLR (Part 2) 206, 221 (Nigerian Supreme Court). They also argued that s 1(1)(h) of the Act cannot be over-stretched to apply to insurance claims, because marine insurance is distinguishable from admiralty matters.

The respondents argued that Nigerian legislation gave to the judges of the Federal High Court the powers of the Admiralty Court judges in England. Thus, the Federal High Court has admiralty jurisdiction to entertain the claim as specified by s 1(1) of the Act. Furthermore, the admiralty courts had always exercised their inherent jurisdiction to deal with claims on marine insurance: R v City of London Court Judge [1892] 1 QB 273 (CA); The Zeta [1893] AC 468 (HL) 481, 482, 485; The Beldis (1935) 18 Asp Mar Law Cas 598 (CA) 602 (also reported as [1936] P 51 (CA)); New England Mutual Insurance Co v Dunham (1871) 1 Asp Mar Law Cas 21 (also reported as (1871) 78 US 1).

Held: Appeal dismissed.

Uwais JSC wrote a unanimous judgment. There was jurisdiction. The claim fell under s 1(1)(h) of the Act, which reads:

(1) The Admiralty jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following questions or claims -

(h) any claim arising out of any agreement relating to the carriage of goods in a ship or to the use or hire of a ship;

By Nigerian legislation, the provisions of the Act were applicable to the Federal High Court. The appellants relied upon observations in Jammal that were incorrect and obiter dicta.

Separately, although in 1973 Nigeria ratified the Arrest Convention 1952, that Convention is yet to be directly part of Nigerian municipal laws. That Convention was therefore irrelevant to this case.

The appellants' argument that s 1(1)(h) of the Act cannot be over-stretched to apply to insurance claims was rejected. English cases have interpreted that provision. That provision is 'wide enough to cover claims whether in contract or tort arising out of any agreement relating to the carriage of goods in a ship': The St Elefterio [1957] P 179. Since the Act was intended to give effect to the Arrest Convention 1952, 'there is no longer any reason for putting a restricted construction on the words used in the [Act] to describe such heads of claim': The Eschersheim [1975] 1 WLR 83, 94. Subject to judgments 'which can be regarded as having been endorsed by the legislature', s 1(1) of the Act 'should be construed in the usual way', ie 'by giving the words used their ordinary and natural meaning in the context in which they appear'. '[T]he court, in deciding whether a particular agreement is an agreement relating to the use of a ship or not, should look at the substance of the matter': The Eschersheim [1975] 1 WLR 83, 95. According to Cairns LJ in The Eschersheim [1976] 1 WLR 339 (CA) 348:

there is no good reason for excluding from the expression 'an agreement for the use or hire of a ship' any agreement which an ordinary business man would regard as being within it.

Finally, Lord Diplock in The Eschersheim [1976] 1 WLR 430, 438 (HL) (CMI2166) had referred to R v City of London Court Judge [1892] 1 QB 273 (CA) and stated that:

this was not a decision which ascribed a specific and precise meaning to the words 'an agreement relating to the use or hire of a ship'. The reasons given in the judgment for giving a restricted meaning to words conferring admiralty jurisdiction on county courts, in the context in which they appeared in the 1869 Act, have no application in the context of Part I of the Administration of Justice Act 1956, which is dealing with the jurisdiction of the High Court itself. I see no reason in that context for not giving to them their ordinary wide meaning.

Obaseki JSC wrote a separate judgment to reject the appellants' argument that marine insurance claims do not fall within the admiralty jurisdiction. There is much substance in the appellants' argument that marine insurance claims should be viewed more as contractual claims within the general jurisdiction of the States' High Courts rather than the admiralty jurisdiction of the Federal High Court. Their argument is that whereas admiralty matters deal with and involve damage to and arrest of ships, marine insurance cases deal with money for goods or ships damaged or lost at sea or on waters and does not involve the arrest of ships. But there is no doubt that admiralty courts in England in the past exercised jurisdiction in insurance matters and that the rivalry between the Court of Admiralty and the common law courts in England died down by the turn of the 19th century. In contrast, the Nigerian High Court was never split into several divisions each exercising jurisdiction limited to specified areas of law (eg admiralty). The absence of these divisions freed the Nigerian High Court from the pains associated with the history and evolution of admiralty jurisdiction in England.

Nnamani JSC also wrote a separate judgment. Marine insurance was within the admiralty jurisdiction of the High Court of Justice in England and this power was not extinguished by England's other courts: The Zeta [1893] AC 468, 481, 482, 485 (HL). Marine insurance is a contract of insurance between two persons on land. But it cannot be excised from its maritime nature. It is a maritime contract. It relates to something which happens at sea, and to the perils of the sea.