Facts:

The 2nd appellant and the 1st respondent entered into a ship management agreement on 18th February 2012 in Hong Kong for the management of the 1st appellant vessel. In clauses 23 and 25 of the agreement, the parties agreed that any dispute arising from or in respect of the agreement shall be referred to international arbitration in London.

However, when a dispute arose as to the payment of the management fees between the parties, the 1st respondent instituted Suit No. FHC/L/CS/1789/2013 at the Federal High Court, Lagos for the arrest of the 1st appellant. The 1st respondent sued the 1st appellant vessel and the owners of the vessel as the defendants. The 1st respondent gave an indemnity as to damages for any loss or damages that the appellants may suffer as a result of the arrest in the event that the application for the order was found frivolous.

Subsequently, on 27th February 2014, the 1st respondent withdrew the suit by a notice of discontinuance and the vessel was ordered to be released by the Federal High Court. The parties were represented by counsel and the 1st respondent’s counsel informed the court that parties had settled, which position was confirmed by the counsel appearing for the appellants.

In consequence of the arrest of the 1st appellant from 31st December 2013 to 27th February 2018, the appellants sued the respondents at the Federal High Court, Lagos claiming the sum of US$1,975,703.42 as damages caused by the wrongful arrest of the 1st appellant vessel by the respondents in violation of clause 23 of the ship management agreement and by virtue of the indemnity and undertaking as to damages given by the 1st respondent in suit No. FHC/L/CA/1789/2013; and 21% interest on the judgment sum from the day of the judgment till the debt was liquidated.

In its judgment, the trial court dismissed the appellants’ claim and held that the appellants submitted to its jurisdiction in Suit No. FHC/L/CA/1789/2013 by the payment and settlement of the 1st respondent’s claim in order to secure the release of the 1st appellant from the arrest and detention it placed under in the case. It further held that in that suit, the 2nd appellant, as owner of the 1st appellant vessel, was sued even though the name “Sea Tiger Tankers S.A.” was not written.

Dissatisfied with the judgment of the trial court, the appellants appealed to the Court of Appeal.